efd induction company presentation december 2020

PUTTING THE SMARTER HEAT TO SMARTER USE

SMART HEATING FOR A CLEAN AND GREEN FUTUREEFD INDUCTION COMPANY PRESENTATION DECEMBER 2020

1


DISCLAIMERThe information contained in this presentation (the “Presentation”) has been prepared by EFD Induction (“EFD" or the "Company" and, together with its subsidiaries the "Group").

This Presentation is being made available only to, and is only directed at, persons to whom such presentation may lawfully be communicated (the "Relevant Persons"). Any person who is not a Relevant Person should not act or rely on this Presentation nor any of its contents.

This Presentation has been prepared for information purposes only. This Presentation does not constitute an offer or an invitation to buy, subscribe for or sell shares of the Company or shares in any of the Company's subsidiaries or any other securities in any jurisdiction. Furthermore, this Presentation has not been prepared for the purposes of, and does not form part of any subscription material for, any offering of securities.

The information contained in this Presentation reflects the conditions and views as of the date set out in the Presentation. The information contained herein is subject to change, completion, or amendment without notice. Past performance information included in this Presentation is not an indication of future performance and the actual returns on investments may differ materially from the returns indicated herein.

No representation or warranty, express or implied, is made or will be given by EFD or its main shareholder Arendals Fossekompani ASA ("AFK") or by any of their respective affiliates, advisers, directors, employees or agents, and, without prejudice to any liability for, or remedy in respect of, fraudulent misrepresentation, no responsibility or liability or duty of care is or will be accepted by EFD, AFK nor any of their respective affiliates, advisers, directors, employees or agents, or any other person associated with any of the foregoing persons ("covered persons"), and no reliance may be placed on, the fairness, accuracy, completeness, currency, liability or reasonableness of the information or opinions contained in this Presentation or in any other written or oral information which may be made available to any Relevant Person in connection with this Presentation. Accordingly, neither the Company, AFK, nor any other covered person shall have any responsibility or liability whatsoever (for negligence or otherwise) and accepts no liability for any loss of any nature from the use of this Presentation or its contents or any additional information referred to above or otherwise arising in connection therewith, except as may follow from mandatory law. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the achievement or reasonableness of any future projections, forecasts, targeted or illustrative returns ("Forward-Looking Information"). Forward-Looking Information must not be construed as an indication of potential future results and are included for discussion purposes only. There can be no assurance to achieve comparable results or be able to avoid losses.

Any investment in EFD involves risks, including risk of loss of the entire investment. This Presentation must be read in connection with other publicly available information about EFD. The contents of this Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice.

This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdictions of Norwegian courts.

2


CLEAN AND GREEN HEATING FOR INDUSTRIAL PRECISION PERFORMANCE

Company highlights

World-leading competence and technology within inductive power and materials1

Diversified through sustainable solutions for a wide range of industries2

A strong and diverse customer base with a global footprint3

Global market leader with increasing green-tech adoption rate 5

Steady long term financial performance and cost position reduced with 20 MEUR last 12 months4

Ideally positioned to participate in the global electrification transformation6

COMPANY INTRODUCTION

3


• Induction is a flame-free, no-contact heating method that can heat all electrically conductive materials

• Induction exploits basic electromagnetic laws to produce heat directly in the workpiece. An alternating current flowing through a coil generates a magnetic field. Placing a workpiece within the field induces eddy currents which will create heat, due to the resistance of the material. Heat is produced where—and only where—these eddy currents flow

• Induction heating is fast, precise, clean, safe, energy efficient, controllable and repeatable

• EFD Induction has unique expertise in using induction technology for practically any industrial heating application

Induction technology Industries and applications

Automotive

Electrotechnical

Tube & Pipe

Aviation

Ø Hardening of parts in engine, transmission, gearbox, suspension and brakes to improve durability

Ø Efficient joining (brazing) of bars, stands, rings and wires in electric motors, generators and transformers

Ø Longitudinal induction welding. Seam or full body normalizing to reduce hardness, improve ductility and relieve internal stresses

Ø Brazing of fan blades, hydraulic components and various parts for fuel systems

Also active in several high growth market segments

Batteries Ø Brazing of cooling plates

Wind power Ø Brazing of rotors, turbine tips, stators transformers and generators: Hardening of bearings

Solar energy Ø Coils for production of silicone ingots

Electric cars Ø Hardening of key parts in suspension and brakes, and brazing of parts in electric motors

FAST:Induction can turn a

defined section of metalwhite hot in seconds

Selected applicationsSelected industries

SMARTEST AND MOST SUSTAINABLETHE BETTER AND GREENER WAY TO HEAT METAL

4

World-leading competence and technology within inductive power and materials1


EFD Induction offers unique tailor-made power solutions for specific industries

In-house materials experts provide fast and accurate solutions

for a range of materials

70 years of experience on how to use induction technology to get the best

performing components and processes

Long history of continuous and successful R&D projects, ensuring

strategic development and the latest induction technology

Applications knowledge

Power technology Materials technology

Strategic R&D focus

EFD Induction location

Global presence

ü IoT connected solutions

ü Stable performance

ü Strong service network

ü German-Norwegian quality with exceptional lifetime

Ø CopperØ SteelØ BrassØ AluminumØ IronØ Hard metalsØ TungstenØ Carbides

Ø ChromiumØ DiamondsØ NickelØ CobaltØ Noble metalsØ StelliteØ Silicon (glass)Ø Carbon fiber

UNIQUE SELLING POINTS WORLD-LEADING EXPERTISE IN POWER AND MATERIALS TECHNOLOGY

5

Diversified through sustainable solutions for a wide range of industries (1/3)2

A BUSINESS MODEL ENSURING SIGNIFICANT RECURRING REVENUE FROM AFTERMARKET SALES

IHM Induction Hardening Machines SAS Service & Aftermarket


1 3

• EFD Induction’s family of heat treatment systems for surface- and through-hardening

• Handles complex geometries: vertical, horizontal centerless, rotary table, crankshaft and customized machines

• EFD Induction SINAC - The industry’s most advanced induction frequency converter

IPS Induction Power Source2

DIGITAL TO THE COREPREPARED FOR INDUSTRY 4.0

With easy updates to new features: • Advanced analytics and predictive maintenance

• Interconnectivity• Condition monitoring and advanced alarms

• Automation and real-time data• Machine learning • Remote service and augmented reality

POWERFUL MACHINESTHAT MAKE A DIFFERENCE

Support Maintenance

Remote Diagnostics

Spare Parts

1/3 1/3 1/3Approximate share of revenue 2019 (119 MEUR)

THREE BUSINESS SEGMENTSNEARLY EQUAL IN SIZE

6



Furnace Flame

Ease of integration into production lineRamp-up time

Heat pattern controlTemperature level accuracy

Ramp-up time controlDwell-time accuracy

Repeatability

YieldEnergySpaceSafety

FASTER: Higher throughput

BETTER: Higher quality

CHEAPER: Lower cost

TOTAL RATING* 23 30 50

*The scores used the table above are approximations only, designed as a general guide. The performance rating of the three heating methods can vary from case to case, depending on the application involved, workpiece characteristics, operator skills, etc.

Assessment according to UN Sustainability Goals

CLEAR SUSTAINABILITY ADVANTAGESSUPERIOR TO COMPETING TECHNOLOGIES

7



Automotive

Tube & Pipe Wind Energy

Electrotechnical

Industrial Suppliers Other trade

A STRONG AND DIVERSE CUSTOMER BASESOLID PORTFOLIO OF GLOBAL INDUSTRIAL CUSTOMERS

EFD INDUCTION IS RIGGED FOR SCALING TO OTHER MARKETS

8

A strong and diverse customer base with a global footprint3

PUTTING THE SMARTER HEAT TO SMARTER USE 9

’14-19 Average (%)

Revenue (MEUR)

EBIT (MEUR)

ROCE (%)

6.1%

EBIT (%) EBIT (%) before restructuring

costs

5.3%

12.8%

7

1514

0

67 8

07

-1-2

1816

010

17

09

-42

19

79 9

Restructuring costs

EBIT before restr.

124

5%

17

120

8% 7%111

18 19

108

130

119

14

6%

15 16

-1%7%

+2%CAGR

Revenue EBIT (%)

Triggered restructuring

FINANCIAL OVERVIEWHISTORICALLY STABLE PERFORMANCE

Restructuring in 2019/20reduced cost base with 19.8 MEUR

Return on Capital Employed (ROCE)

13,2% 14,8% 11,7% 18,8% 20,8% -2,4%

Steady long term financial performance and cost position reduced with 20 MEUR4

Before

-1.5

After

-6.4-5.1-6.8

Cost reduction

83.8 -19.8

64.0

Other direct costs

Net op. costs (ex. indirect staff & restr.) Indirect staff costs

Direct staff costs

EFD HAS FLEXIBILITY TO HANDLE FLUCTUATIONS OF 15 – 20%, WHILE REMAINING IN BLACK NUMBERS

PUTTING THE SMARTER HEAT TO SMARTER USE 10

GENERAL MARKET TRENDS SUPPORT HIGHER DEMAND FOR EFD INDUCTION’S COMPETANCE

Short-term automotive market is weak due to

Covid-19, but long-term potential is good amid shift to electric vehicles

A strong growth in markets for windmill

components, especially in China

Product development based on Industry 4.0

standards trigger renewal of customer equipment range, while enhancing

recurring service revenue potential

Overall shift to green solutions in most

industries strongly favor induction technology

HIGH-GROWTH MARKET SEGMENTSSELECTIVE SEGMENTS

Global market leader with increasing green-tech adoption rate (1/2) 5


IHM MARKET & COMPETITORS IPS MARKET & COMPETITORS

0%

20%

40%

60%

80%

100%

Other smaller

IHM0%

20%

40%

60%

80%

100%

3.

Other smaller

IPS

EUR 260m

Largestplayer in

IHM marketglobally

EFD total IHM market share

16% by value

IHM market EUR 430mIPS marketEFD Applications

EFD INDUCTION IS UNIQUELY POSITIONED FOR FUTURE MARKET CONSOLIDATION

INDUCTION MARKET LANDSCAPEEFD INDUCTION HAS SUBSTANTIAL MARKET SHARES

11

Global market leader with increasing green-tech adoption rate (2/2) 5

1 2

2nd largestplayer in

IPS marketglobally

EFD total IPS market share

14% by value

1.2.3.


KEY TAKEAWAYS

Sustainable EFD Induction technology enables broad industry segments to make the required electrification and green shift, with strong cost and quality advantages

Technology leader with global presence and substantial market share provides a strong position for driving consolidation and further strengthen market leader position

Focused R&D pipeline to drive improved profitability and growth as well as enhancing ability to offer service programs with recurring revenue agreements

12

Ideally positioned to participate in the global electrification drive6

efd induction company presentation december 2020

Documents