Virtual AIM Italia Conference 2020 - Comer Industries€¦ · Virtual AIM Italia Conference 2020 25th May 2020. COMER INDUSTRIES Property 2 DISCLAIMER This document has been prepared

COMER INDUSTRIES PropertyCOMER INDUSTRIES Property

Virtual AIM Italia Conference 2020

25th May 2020

COMER INDUSTRIES Property

2

DISCLAIMERThis document has been prepared by Comer Industries S.p.A (“Comer Industries”) for use during meetings with investors and

financial analysts and is solely for information purposes. The information set out herein has not been verified by an independent audit

company. Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the “Group”), as well as any of

their directors, officers, employees, advisers or agents (the “Group Representatives”) accepts any responsibility for/or makes any

representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or

any other related information regarding the Group, whether written, oral or in visual or electronic form, transmitted or made available.

This document may contain forward-looking statements about the Company and/or the Group based on current expectations and

opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group.

These forward-looking statements are subject to significant risks and uncertainties (many of which are outside the control of the

Company and/or the Group) which could cause a material difference between forward-looking information and actual future results.

The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws and

regulations, the Company assumes no obligation to provide updates of any of the aforesaid forward-looking statements. Under no

circumstances shall the Group and/or any of the Group Representatives be held liable (for negligence or otherwise) for any loss or

damage howsoever arising from any use of this document or its contents or otherwise in connection with the document or the

aforesaid forward-looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe to

Company shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or to

conclude any legal act of any kind whatsoever. This document may not be reproduced or distributed, in whole or in part, by any

person other than the Company. By viewing and/or accepting a copy of this document, you agree to be bound by the foregoing

limitations.

COMER INDUSTRIES SPA

www.comerindustries.com

[email protected]

http://www.comerindustries.com/

mailto:[email protected]

COMER INDUSTRIES PropertyCOMER INDUSTRIES Property

AG

EN

DA

01 Comer Industries

in a nutshell

02

03 Market and

strategy

05 Shareholders structure

& Corporate Governance

06 COVID-19Business model

07 Appendix

Key financials04


1. COMER INDUSTRIES IN A NUTSHELL


5

VISION, MISSION AND VALUES

VISION

MISSION

We run vertical innovative solutions for agriculture and

industrial business.

We boost our strong global leadership position.

Aware of our roots and challenging in depth our identity,

we attract talents and encourage disruptive mindset.

OUR VALUES

✓HONESTY AND TRANSPARENCY

✓COURAGE AND PASSION

✓ PEOPLE AT THE CENTER

✓ TEAMWORK

✓COMMITMENT TO STAKEHOLDERS

Creating an easy world through sustainable food, streets,

houses and energy.


6

CORPORATE SOCIAL RESPONSIBILITY

In 2019 Comer Industries has launched a new project:

OUR BRIGHT IMPACT.

An important responsibility towards the environment

and the society.

The courage to take on a strong commitment, starting

from adherence to the Global Goals for the

sustainable development.

The ambition to leave our positive mark and to create

something new, making “bright” the world around us.

The promise we make to ourselves and to the

environment in which we act.


39m379m

7

MAIN TRENDS

NET REVENUES

342m

405m

Eu

ro in

millio

ns

30m

45m

Eu

ro in

millio

ns

EBITDA (adjusted)

2017 2018 2019

+10,8%

+16,7%

+8,8%

CAGR

17-19

+28,5%+6,7%

2017 2018 2019

1387

1362

1388

2017 2018 2019

+25

+1

PEOPLE

Avera

ge e

mp

loyees

+22,5%

CAGR

17-19

9%

10%11%

[…]% of revenues

Note: EBITDA [adjusted] excludes the impacts from the application of IFRS 2 standard for stock

grant plans, listing costs and IFRS 16 standard for lease contracts.


2. BUSINESS MODEL


9

AG

RI

OEM Construction

OEM Energy

Tier 2 raw material

suppliers

Tier 1 supplier

Original Equipment

Manufactures (OEM)

Customers

Farmers

Oil & GasConstruction playersMining

Wind plants owners

WHERE WE ARE IN THE VALUE CHAIN

IND

US

TR

IAL


10

WHO WE ARE, WHAT WE DO & OUR MAIN CUSTOMER

Comer Industries is a global player in mechatronic solutions and integrated systems for power transmission. Transmissions are

designed to move or to bring power to the various parts of customer’s vehicles.

OUR CUSTOMERS


11

BUSINESS OVERVIEW

BUSINESS AREA PRODUCTS LINES TECHNOLOGYREGIONS STRUCTURE

AG

RI

IND

US

TR

IAL

Gearboxes

Planetary drives

Powertrain systems

Wheel drives

Driveshafts

23% NAM

17% APAC

54% EU

5% LATAM

Mechanical

100%

Hydraulic

0%

Electric

0%

Electronic

0%

✓ 10 legal entities;

✓ 6 trading

companies;

✓ 7 production

areas;

✓ C. 1.400 employees.

Note: the […]% represents FY19 net revenues breakdown.

54% (61% in FY18)

32% (27% in FY18)

14% (12% in FY18)


3. MARKET AND STRATEGY


13

FOOD SECURITY

In 10 years the world may not be able to feed

itself according to WEF, World Economic Forum.

By 2027 the world could be facing

a 214 trillion calorie deficit – in just a decade we

won’t have enough food to feed the planet. By 2050,

the world’s population is expected to

reach 9.1 billion, and the United Nation’s Food and

Agriculture Organization(FAO) predicts that at that

point, the world would need to produce 70% more

food than today.


3+ €b 5+ €b 0.2 €b

14

OPPORTUNITY AND STRATEGY PILLARS

STRATEGY PILLARS

✓ Maintain leadership in the Agri

Business

✓ Size growth driving economies of scale

✓ Increase margins

✓ Simplification and digitization


15

MAIN COMPETITORS BY MARKET SEGMENT

BUSINESS AREA MAIN COMPETITORS

AG

RI

IND

US

TR

IAL

(LISTED IN ITALY MTA) (LISTED IN US-NYSE)

AN

D IN

CU

BA

NT

CO

MP

ET

ITO

RS


4. KEY FINANCIAL


Euro in millions 2016 2017 2018 2019 2017 2018 2019

Net revenues 303,7 342,1 379,0 404,6 12,6% 10,8% 6,7%

EBITDA 22,0 29,8 38,4 45,7 35,6% 28,9% 18,9%

Margin 7,2% 8,7% 10,1% 11,3% 1,5p.p. 1,4p.p. 1,2p.p.

EBITDA [adjusted] 22,3 30,0 38,6 45,0 34,8% 28,5% 16,7%

Margin 7,3% 8,8% 10,2% 11,1% 1,4p.p. 1,4p.p. 1,0p.p.

EBIT 9,8 17,1 24,9 27,8 73,9% 45,7% 11,7%

Margin 3,2% 5,0% 6,6% 6,9% 1,8p.p. 1,6p.p. 0,3p.p.

Net income 6,7 11,4 15,7 18,5 70,9% 38,3% 17,7%

Margin 2,2% 3,3% 4,1% 4,6% 1,1p.p. 0,8p.p. 0,4p.p.

TWC 76,0 74,5 84,4 85,1

TWC % of net revenues 25,0% 21,8% 22,3% 21,0%

Net Equity 71,3 76,3 88,9 129,1

Net Debt / (cash) [adjusted] 55,3 40,7 36,7 2,9

Net Debt / EBITDA [adjusted] (*) 2,55x 1,37x 0,96x 0,06x

Net Debt [adjusted] /Net Equity 0,78x 0,53x 0,41x 0,02x

Var.% YoY

17

KEY CONSOLIDATED RESULTS

KEY MATTERS

• FY19 net revenues increased by +6,7%

vs FY18.

• Top 10 customers generated

approximately 50% of total revenues.

• FY19 EBITDA [adjusted] margin equals

to 11,1% of net revenues, +95 bps vs

FY18.

• Operating cash flow generation of c.

€16,6m in FY19.

• The dividends’ distribution of €0,35 per

share has been approved by the

General Shareholders meeting and

already paid on the 29th April 2020.

(*) On EBITDA since 2018.

Source: Consolidated Statutory Financial Statements

To note that:

• EBITDA [adjusted] excludes the impacts from the application of IFRS 2 standard for stock grant plans and listing costs and

IFRS 16 standard for lease contracts.

• Net debt presented aside has been adjusted to exclude the impact of new IFRS 16 (€26.2m at 31Dec19)


Euro in millions 2016 2017 2018 2019 2017 2018 2019

Net revenues 119,4 126,2 147,7 186,9 5,7% 17,1% 26,6%

As % of tot. Group revenues 39,3% 36,9% 39,0% 46,2%

EBITDA [adjusted] 5,8 7,8 10,6 19,0 34,1% 35,2% 80,2%

Margin 4,9% 6,2% 7,2% 10,2% 1,3p.p. 1,0p.p. 3,0p.p.

EBIT 1,6 3,2 5,3 10,7 93,1% 66,1% 102,3%

Margin 1,4% 2,5% 3,6% 5,7% 1,1p.p. 1,1p.p. 2,1p.p.

Var.% YoY

Euro in millions 2016 2017 2018 2019 2017 2018 2019

Net revenues 184,4 215,9 231,4 217,7 17,1% 7,2% (5,9%)

As % of tot. Group revenues 60,7% 63,1% 61,0% 53,8%

EBITDA [adjusted] 16,4 22,2 28,0 26,0 34,9% 26,3% (7,2%)

Margin 8,9% 10,3% 12,1% 11,9% 1,4p.p. 1,8p.p. (0,2)p.p.

EBIT 8,2 13,9 19,6 17,2 69,9% 41,0% (12,6%)

Margin 4,4% 6,4% 8,5% 7,9% 2,0p.p. 2,0p.p. (0,6)p.p.

Var.% YoY

KEY MATTERS

• FY19 net revenues growth mainly driven by new products (c. €50m or c. 12% of revenues), mainly in the Industrial area.

• The FY19 decrease in the AGRI area (-6%) is primarily due to cyclical market trends.

18

REVENUES BY BUSINESS AREA


AG

RI

IND

US

TR

IAL


182,8209,1

91,8

27,313,9

EMEA NORTH AMERICA ASIA PACIFIC LATIN AMERICA

228,1

91,6

44,315,0

220,4

94,1

70,7

19,4

19

REVENUES BY GEOGRAPHY

KEY MATTERS

• FY19 Export turnover amounts to 88,3% of total and confirms the Group’s propensity for international growth.

• Net revenues primarily grew in the emerging markets, in particular in Asia Pacific (+€26m or +60%) and Latin Americain

(+€4m or +29%), in particular in the Industrial business, both in Wind and Construction sectors.

2017

€342m

2018

€379m

2019

€405m



20

TWC EVOLUTION

KEY MATTERS

• On average DSO are approximately 30 days lower than DPO.

• Supply chain and Stock management improvement over 2019.

• At 31Dec19 DOI (*) are c. 20 days lower than at 31Dec18 (142 days).

68,5 69,5 77,4 77,3

76,4 85,693,0 85,5

(68,9) (80,6) (86,1) (77,7)

25,0%21,8% 22,3% 21,0%

(30,0%)

(20,0%)

(10,0%)

0,0%

10,0%

20,0%

30,0%

(100,0)

(50,0)

-

50,0

100,0

150,0

200,0

31Dec16A 31Dec17A 31Dec18A 31Dec19A

Eu

ro m

Evolution of TWC

Trade receivables Stock Trade payables TWC as % of net revenues

(*) Calculated on COGS (purchases + change inventory).Source: Consolidated Statutory Financial Statements


55,3

40,736,7

2,9

55,3

40,736,7

29,1

0

10

20

30

40

50

60


Euro

m

Evolution of Net Debt / (cash) [adjusted]

Net Debt / (cash) [adjusted] Net Debt / (cash)

KEY MATTERS

• The €33,9m decrease of Net debt [adjusted] in 2019 reflects:

1) the continuous generation of operating cash flow (€16,6m in 2019);

2) the capital contribution acquired through the listing process and the subsequent exercise of the first tranche of

warrants (€29,5m);

3) the payment of 2018 dividends (-€12,2m).

• The additional bank lines (up to €80m) of the new facility agreement signed in Jun19 were not utilized at 31Dec19.

• Net debt [adjusted] excludes the impacts traceable to the application IFRS 16 standard in relation to lease contracts.

21

NET DEBT/(CASH) EVOLUTION



22

NET DEBT RATIOS

KEY MATTERS

• The Group is not leveraged.

• At 31Dec9 Net debt [adjusted] as a

proportion of EBITDA [adjusted] is

close to zero (0,96 at 31Dec18).


2,55x

1,37x

0,96x

0,06x

0,0

0,5

1,0

1,5

2,0

2,5

3,0


Net debt - ratios (Net Debt [adj] / EBITDA [adj])

Net Debt [adj] / EBITDA [adj] (*)

0,78x

0,53x

0,41x

0,02x

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9


Net debt ratios (Net Debt [adj] / Net Equity)

Net Debt [adj] / Net Equity


5. SHAREHOLDERS STRUCTURE & CORPORATE GOVERNANCE


71,7%

28,3%

Nr. of shares % of share

capital

% of voting

rights

Lock up

shares

Lock up

duration

█ Eagles OAK S.r.l. 14.640.089 71,73% 71,73% 14.450.000 18/36 months (A)

█ Market (*) 5.769.191 28,27% 28,27% 659.911 36 months (B)

TOTAL ORDINARY SHARES 20.409.280 100,00% 100,00% 74,03%

Latest Update: 23 March 2020

24

SHAREHOLDERS’ STRUCTURE

WARRANT “COMER INDUSTRIES 2019-2021”

• Comer Industries SpA issued 300.000 warrants during the listing process on March 2019.

• In July 2019, at the end of the first exercise period, 59.280 warrants have been exercised, leading to the issue of

59.280 shares and the capital increase of c. €0,6m (fixed conversion rate: €10 per warrant).

• 240.720 warrants are currently outstanding on the AIM Italia market.

• As at today, there is a potential cash-in / maximum capital increase of c. €2,4m deriving from the outstanding

warrants (fixed conversion rate: €10 per warrant).

SHARES AND RIGHTS

(A) From the business combination effective date. (B) From the approval date of 2019 statutory financial

statements. (*) Including Finregg (8,3% of share capital).


25

2020-2021 SHARE BUYBACK PLAN

APPROVAL

• On 22nd April 2020, Comer Industries’ Shareholders’ meeting authorized the purchase and disposal of own shares.

PURCHASE THRESHOLD

• 10 % of the share capital;

• Amount of distributable results of prior years and available reserves indicated in the latest available approved financial

statement at the time of each single purchase.

DURATION

• 18 months from the 22nd April 2020 (i.e. due date 22nd October 2021).

AIMS OF THE PLAN

• Retention for subsequent uses (e.g. extraordinary transactions, etc.);

• Regularization of negotiations and support to the shares’ liquidity (in compliance with the provisions in force);

• Support for future compensation and incentive plans dedicated to directors and employees;

• Base for free share assignment programs to shareholders.

PRICES AND DAILY LIMIT

• The purchase price must be between €1,00 and €20,00 per share.

• The limit of daily purchases is the 25% of the daily average volume of shares where the purchase is made.

CURRENT NUMBER OF OWN SHARES

• At the time of this document neither Comer Industries S.p.A. nor its subsidiaries have treasury shares.

For further details please refer to the Company web-site and the minutes of the 22nd April 2020 shareholders' meeting.


6. COVID-19


27

COVID-19: IMPACTED AREAS

• The evolution of the COVID-19 epidemic and the current alarming situation at global level have underlined

a risk of downside in the worldwide economic scenario that does not allow today to express assessments

on its future evolution.

• This evolving scenario may lead to changes and challenges on the following areas:

PEOPLE /

EMPLOYEES

SUPPLY

CHAIN

SHORT-TERM

LIQUIDITYCUSTOMERS

Behaviours,

productivity,

processes,

etc.

Inventory,

reliability,

demand,

etc.

Demand,

inventory,

loyalty,

etc.

Cash-flow

management,

resilience,

relations, etc.


28

COVID-19: OUR APPROACH

• Thanks to our capital and financial strength, the Group has implemented and will implemented all adequate

and required measures to mitigate and contain the negative impacts deriving from the current scenario.

• In order to face this new challenge, Comer Industries undertook the following action plan:

✓ Identification and prioritization of key risks, by country, sector and business area to define focused actions.

✓ Development of tailored scenarios, according to the identified risks and priorities.

✓ Simulation of stress testing of financials, with different scenario at balance sheet, cash-flow and P&L level.

✓ Definition of a portfolio of interventions, identifying actions and measurable goals.

✓ Preparation of a cash dashboard with availability, deadlines, collections to support cash flow management.

✓ Implementation of the resilience dashboard, identifying indicators by area to regularly monitor.


29

COVID-19: THE CHINESE EXPERIENCE


30

Solidarity at local level

COVID-19: MEASURES TO OPPOSE THE VIRUS (1 of 2)


31

5

6

of the people underwent to the

voluntary screening

77%

days of test

infirmaries activated

5 sites involved

2 Italian regions interested

COVID-19: MEASURES TO OPPOSE THE VIRUS (2 of 2)

Free serological test for employees on a voluntary basis


7. APPENDIX


33

PRODUCT LINES AND APPLICATIONSP

RO

DU

CT

LIN

ES

AP

PL

ICA

TIO

NS

GEARBOXES WHEEL DRIVESPLANETARY DRIVES POWERTRAIN SYSTEMS DRIVESHAFTS

TRACTORS

COMBINED HARVESTERS &

SELF PROPELLED MACHINES

AGRICULTURAL MACHINERY &

GARDEN EQUIPMENT

MINING MACHINERY

CRANES

CONSTRUCTION EQUIPMENT

WIND TOWER

GENERATORS

CONSTRUCTION EQUIPMENT

TELEHANDLERS

ROAD CONSTRUCTION MACHINERY

COMBINED

HARVESTERS & SELF PROPELLED

MACHINES

AGRICULTURAL & GARDEN

EQUIPMENT


34

EXAMPLES OF AGRI APPLICATIONS

• Land preparation

machines

• Soil tillage machines

• Crop treatment machines

• Forage and hay

machines

• Biogas systems

• Corn and grain headers

• Combines and forage

harvesters

• Forage mixing and

distribution machines

• Tractors

AGRI


35

EXAMPLES OF INDUSTRIAL APPLICATIONS

• Construction machines

• Road construction machines

• Forestry machines

• Mining machines

• Material handling Renewable Energy

• Water treatment machines

INDUSTRIAL


36

MAIN MILESTONES FROM 1970 TO DATE

1970: The Storchi family founds CO.ME.R. (Costruzioni Meccaniche Riduttori) specialized in the manufacture of mechanical transmissions for agricultural machinery.

1985: Subsidiaries are set up in France, Germany, Great Britain and the United States.

1985-1980: Comer grows both organically and through acquisitions.

1996: Opening of the Mechatronics Research Centre, a state-of-the-art laboratory dedicated to the company’s R&D activities.

1998: Opening of the representative office in Beijing for the industrial partnership with local suppliers.

2007: The Comer Industries Components Operating Unit is officially inaugurated in Matera. Comer (Shanghai) Trading Co. Ltd., the new sales Subsidiary and the Operating Unit Comer Industries (Shaoxing) Co. Ltd are also opened in China.

2013: Opening of a new sales subsidiary “Comer Industries do Brazil”, in the state of São Paulo.

2015: Re-building Reggiolo Plant and start up Comer Industries India Pvt. Ltd. in Bangalore for axles production.

2017: New governance due to succession plan.

2018: Start up Comer Industries (Jiaxing) Co. Ltd.

2019: Listing on the Milan Stock Exchange (in the AIM Italia Market trading platform).


37

GROUP STRUCTURE

Comer Industries SpA

Reggiolo (RE) (Italy)

(Head Quarter)

Comer Industries

(Shaoxing) Co Ltd

Shaoxing (China)

Comer Industries

Components Srl

Matera (MT) (Italy)

Comer Industries

(Jiaxing) Co Ltd

Jiaxing (China)

Comer Industries India

Pvt Ltd

Bangalore (India)

Comer Industries UK

Ltd

Leicester (UK)

Comer Industries

Inc

Charlotte NC (US)

Comer

GmbH

Schermbeck (Germany)

(Sales Office)

Comer Industries Sarl

Serris (France)

(Sales Office)

Comer Industries

do Brasil EIRELI

Limeira SP, Brazil

100% 100%

95%34,2%

65,8%

100% 100%

99,9%100%

100%

Sales office legal entity

Trading company

Production company


Thanks for your attention

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Virtual AIM Italia Conference 2020 - Comer Industries€¦ · Virtual AIM Italia Conference 2020 25th May 2020. COMER INDUSTRIES Property 2 DISCLAIMER This document has been prepared