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Q3 Report September 30, 2014
Investors presentation
November 27, 2014
Confidentiality This presentation has been prepared by Marcolin S.p.A. and its affiliates. The information contained herein is confidential and has been prepared solely for the needs of the adressee and is not to be relied upon by any other person or entity. Hence, if you wish to disclose copies of this report to any other person or entity, you must inform they that they may not use these reports for any purpose without Marcolin written consent. No representation, warranty or undertaking, express or implied, is made as to, and no reliance shoud be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein.
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3
At a glance
Key consolidated financials: Q3 2014
Viva Integration Project
Agenda
Appendix
Key consolidated financials: LTM
At a glance Key facts 2014
> Joint venture China announcement
> Project Fortogna
> Portfolio licences (RC)
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5
At a glance
Key consolidated financials: Q3 2014
Viva Integration Project
Agenda
Appendix
Key consolidated financials: LTM
Key consolidated financials
* EBITDA is affected by a number of extraordinary items. For this reason it has been adjusted to restate the one-off effects deriving from the re-organization as
represented in “Consolidated Adjusted EBITDA” page.
Sales Consolidated Net sales increased +1,6% vs. PY; at constant FX sales increased
+3,7%.
Upside from TF (+€ 9.5m) and good performance of TB (+€ 2.6m) and DL
(+€ 1.4m).
272.2 Million EUR
EBITDA 2014 Q3 EBITDA Reported is € 22.0m (€ 25.0m previous year).
2014 Q3 Adjusted EBITDA* (excluding one-offs) is € 29.5m in line with
previous year.
LTM Adjusted Run-Rate EBITDA for 2014 is € 46.2m.
Negative fluctuation of the exchange rate effect of about -€0,5m vs. previous year.
Q3 29.5 10.8% On Net
sales
Net Debt
277.9 2014 Constant FX
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Consolidated Net Debt as of September 2014 is € 184.4m (€ 166,2m end of
December 2013) with a cash absorption of € 4.8m mostly due to Bond
issuance expenses and other non recurring outflows.
The ratio Net financial position to LTM Adjusted run-rate EBITDA is 3.85;
including the Bond interest accruals in the Net Debt, the ratio would be 3.99
Million EUR in 2013
267.9
3.85 NFP /
Adj LTM RR Ebitda
LTM 46,2 13.2% On Net
sales
184.4 Million EUR
YTD Q3 Consolidated Sales 272.2 million EUR
2014 YTD Q3
@ const FOREX
+1.6% vs PY
Global sales By market destination
277.9 mill EUR +3.7% vs PY
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North America
Europe Asia
RoW
107.3 Mill. EUR
98.9 Mill. EUR
21.1 Mill. EUR
44.9 Mill. EUR
39.4%
36.3% 7.8%
16.5%
+2.9%
+1.4%*
+6.0%
* +5,0% costant forex
-2.5%*
* + 1 % costant forex
• Net Sales were positive: above last year +€4.3m (+1.6%) in particular is growing fast in Italy (+11,8%) and in
export, especially in Far East and Key Accounts channel, driven by TF, TB and BA.
• Net Sales @ constant FX +€10.0m or +3.7% vs. PY.
• GM% in September 2014YTD was 110bps below PY, mainly due to VIVA for worse channel mix and higher close-out
sales. Negative impact for € 3.1m due to fluctuation on exchange rate vs. same period of last year.
• EBITDA Reported in September 2014YTD is €22.0m vs. €25.0m last year (respectively 8.1% vs. 9.3% of Net sales).
• EBITDA Adjusted, excluding one off items, would be 10.8% (or €29.5m).
• Financial of €8.4m is including €12,7m for Bond interests (of which paid in May €8.5m).
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YTD Q3 P&L Executive Summary
Consolidated Profit & Loss
9 9 2014 Reported and 2013 Pro-Forma: both considering Marcolin, Cristallo and Viva
Key financials: YTD Q3
YTD Sept
(EURm)Actual 14
Reported
Actual 14
Reported %NS
Actual 13
Pro-Forma
Actual 13
Pro-Forma %NS
Net sales 272,2 100,0% 267,9 100,0%
Cost of sales (108,1) -39,7% (103,4) -38,6%
-- Gross Margin 164,0 60,3% 164,4 61,4%
Selling and marketing costs (129,1) -47,4% (125,0) -46,7%
General and administrative expenses (22,8) -8,4% (25,0) -9,3%
Other operating income and expenses 2,0 0,7% 3,3 1,2%
Effects of accounting for associates 0,2 0,1% 0,3 0,1%
-- OPERATING PROFIT (EBIT) 14,3 5,3% 18,1 6,8%
Net finance costs (8,4) -3,1% (10,7) -4,0%
-- Profit before taxes 5,9 2,2% 7,4 2,8%
Income tax expense (2,8) -1,0% (5,1) -1,9%
-- Net Result 3,1 1,1% 2,3 0,9%
-- EBITDA 22,0 8,1% 25,0 9,3%
-- EBITDA ADJUSTED 29,5 10,8% 29,7 11,1%
• Inventory: compared to December 2013 has risen for €16.1m (which is mostly due to turnover increase and
service level improvement)
• Net Trade Receivables: +€5.3m increase compared to Dec 13 due to seasonality and turnover increase
• Other Current Financials (Cash and Cash liquidity): are decreasing -€4.8m strongly affected by the following
items
o 2014 Bond Expenses non recurring payments (€ 3,3m)
o Non recurring payment to HVHC (price adjustment of € 3,4m)
o One-offs Viva integration project (€ 5,7m)
o Interests on the Bond notes paid in May for € 8.5m
• Intangible assets: include renewal fees for SK and DL licenses, partially paid in 2014; in addition include € 1.8m
Viva’s ERP new software
• Payables: the increase of €11.9m is in primarily attributable to the turnover increase.
• Net Financial Position: versus same period of previous year is affected by Bond issuance; September 2014
increased from €166.2m (Dec. 13) to €184.4m, with a change of €18.2m as detailed in the consolidated cash flow
statement
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B/S Executive Summary
Consolidated Balance Sheet
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Sept. 2014 and Dec 2013 Reported: both considering Marcolin, Cristallo and Viva
Key financials: Q3
Balance Sheet (EURm) Sept-14 Dec-13 Change vs Dec
Net trade receivables 67,5 62,2 5,3
Inventory 89,0 72,9 16,1
Payables to suppliers (76,6) (64,7) (11,9)
TRADE WORKING CAPITAL 79,9 70,4 9,5
Other receivables 18,0 14,0 4,0
Other payables (26,0) (23,1) (2,9)
NET WORKING CAPITAL 71,9 61,3 10,6
Other receivables - medium/long term 24,4 25,2 (0,8)
Equity investments 2,1 2,0 0,1
Net tangible assets 24,5 23,5 1,0
Net intangible assets 41,5 34,7 6,8
Goodwill 263,4 256,9 6,5
FIXED ASSETS 355,9 342,3 13,6
Funds and reserves (20,2) (22,4) 2,2
NET INVESTED CAPITAL 407,6 381,1 26,5
Financial debts - short term 28,6 17,7 10,9
Financial debts - medium/long term 196,9 195,9 1,0
FINANCIAL POSITION 225,5 213,6 11,9
Other current financial (35,6) (40,3) 4,7
Other non current financial (5,4) (7,1) 1,7
NET FINANCIAL POSITION 184,4 166,2 18,2
NET EQUITY 223,2 215,0 8,2
COVERAGE OF NIC 407,6 381,1 26,5
Net Financial Position
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Key financials: Q3
1
2
(EURm) September 2014 December 2013
Short Term borrowings 28,6 17,7
Medium Long Term borrowings 205,0 205,2
Gross borrowings 233,6 222,9
Cash and cash equivalents 33,7 38,5
Financial receivables current 1,8 1,8
Financial receivables non current 5,5 7,1
Reported Net indebtedness befor Amortized Fees 192,6 175,5
Bond issue amortized fees (8,2) (9,3)
Reported Net indebtedness after Amortized Fees 184,4 166,2
Revolving Credit Facility €25mn 12,0 0,0
Short term borrowings from Banks 7,7 8,6
Receivable Factoring 0,0 1,1
Vendor Loan (HVHC) - Short Term 1,5 4,6
Bond accrued interests 6,5 2,3
Ministry of productive activities 0,1 0,1
Financial leasing VIVA 0,8 0,7
Other 0,0 0,3
Short Term gross borrowing 28,6 17,7
Senior Secured bonds €200mn 200,0 200,0
Vendor Loan (HVHC) - Long Term 3,4 3,0
Financial leasing VIVA 1,5 2,0
Ministry of productive activities 0,1 0,2
Other 0,1 0,0
Medium Long Term gross borrowing 205,0 205,2
Consolidated Cash Flow Statement
13 Dec 2013 Reported: Marcolin, Cristallo and Viva (Viva for the month from the acquisition date to the annual closing date)
Key financials: Q3
(EURm) September 2014 Dec 2013 Reported
Operating activities
Profit before income tax expense 5,9 (11,8)
Depreciation, amortization and impairments 7,0 5,4
Accruals to provisions/ other non cash items 0,3 18,1
CF from operating activities before changes in WC, tax and int. 13,2 11,7
Movements in working capital (10,7) (14,8)
Income taxes paid (3,1) (1,9)
Interest paid (9,0) (17,5)
Net cash flows provided by operating activities (9,6) (22,5)
Investing activities
(Purchase) of property, plant and equipment (4,0) (2,6)
Proceeds from the sale of property, plant and equipment 0,4 (0,0)
(Purchase) of intangible assets (5,3) (1,5)
(Acquisition) of investment - Marcolin e Viva 0,0 (127,7)
Net cash (used in) investing activities (8,8) (131,9)
Adjustments to other non-cash items 2,9 5,5
Financing activities
Net proceeds from/(repayments of) borrowings 8,0 91,6
Other cash flows from financing activities 0,0 51,3
Net cash from/(used in) financing activities 8,0 142,9
Net increase/(decrease) in cash and cash equivalents (7,5) (6,0)
Effect of foreign exchange rate changes 2,7 (0,7)
Cash and cash equivalents at beginning of period 38,5 45,2
Cash and cash equivalents at end of period 33,7 38,5
Cash Flow Focus
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Key financials: Q3
(EURm) September 2014
Net increase/(decrease) in cash and cash equivalents (4,8)
Bond interests paid in May 8,5
Bond Expenses paid in Jan/Feb 3,3
Vendor Loan - Price adjustment due to HVHC 3,4
Renewal Fees 2,9
One-offs Viva integration project 5,7
Adj. Net increase/(decrease) in cash and cash equivalents 18,9
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At a glance
Key consolidated financials: Q3 2014
Viva Integration Project
Agenda
Appendix
Key consolidated financials: LTM
Revenues Analisys by market destination
Europe million eur Row ASIA North america million eur million eur million eur
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1,3549 1,3171 Ex rate EUR/USD
+2.9%
+2.2%
+1.4% or 5,0% constant forex
1.12%
+6.0%
+4.4% -2.0%
Key financials: LTM
-2.5% or +1% constant forex
As of September, 30st Full Year
2014 Q3 % 2013 Q3 % 2014 LTM % 2013 %
Europe 98,9 36,3% 96,1 35,9% 126,8 36,3% 124,1 36,0%
North America 107,3 39,4% 105,8 39,5% 138,1 39,5% 136,6 39,6%
Asia 21,1 7,8% 19,9 7,4% 28,4 8,1% 27,2 7,9%
Rest of World 44,9 16,5% 46,0 17,2% 55,9 16,0% 57,0 16,5%
Total 272,2 100,0% 267,9 100,0% 349,2 100,0% 344,9 100,0%
Total @ constant FX (€ Mln) 277,9
change vs. PY 3,7%
in € Mln, except percentages in € Mln, except percentages
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EBITDA REPORTED EBITDA ADJUSTED *
6.8%
ADJ RUN-RATE EBITDA **
% 2014 LTM on net sales
10.8% % 2014 LTM on net sales
7,8% in 2013 13.2% % 2014 LTM on net sales
11,4% in 2013 13,9% in 2013
* excluding one-offs * including synergies
LTM Ebitda performance (million eur) Key financials: LTM
2014 LTM FY 2013 2014 LTM FY 2013 2014 LTM FY 20132013 JUNE
LTM
NET SALES 218,2 204,2 130,9 140,7 349,2 344,9 348,2
% vs. PY 6,9% -6,9% 1,3%
EBITDA 16,3 16,6 7,4 10,2 23,7 26,8 18,0Adjustment 9,5 10,4 3,7 0,0 13,2 10,4 16,8
25,8 26,9 11,1 10,2 36,9 37,1 34,8
Management Fees 0,3 1,8 0,3 1,8 1,8Germany J/V 0,4 0,4 0,4 0,4 0,8
EBITDA ADJUSTED 25,8 26,9 11,9 12,4 37,7 39,3 37,4Synergies 8,5 8,5 8,5
ADJ RUN-RATE EBITDA 46,2 47,8 45,9
EBITDA ADJ % on Net sales 11,83% 13,20% 9,06% 8,80% 10,79% 11,41% 10,75%
EBITDA ADJ RR % on Net sales 13,23% 13,87% 13,20%
in € Mln, except percentagesin € Mln, except percentages in € Mln, except percentages
CONSOLIDATEDMARCOLIN VIVA
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At a glance
Key consolidated financials: Q3 2014
Viva Integration Project
Agenda
Appendix
Key consolidated financials: LTM
Integration Plan
19 19
Viva Integration
TOTAL
(*)
18 months
6 months
3 m
3 m
2014 2015
3 m
6 months
18 months
3 m
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
US
UK
France
Hong
Kong
Brazil
Canada
Germany
Integration Updates
20 20
Viva Integration
TOTAL
(*)
15 months
3 m
2014 2015
3 m
4 months
15months
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
US
UK
France
Hong
Kong
Brazil
Canada
Germany
Integrated in MspA & MUK
Integrated in M HK
Keep JV
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At a glance
Key consolidated financials: Q3 2014
Viva Integration Project
Agenda
Appendix
Key consolidated financials: LTM
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CONSOLIDATED
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Introductory note on Consolidated Financial Reports
> Year 2013 is affected by a number of non recurring events
• Cristallo mandatory tender offer (OPA) on Marcolin shares (Feb. 2013)
• reverse merger of Marcolin Parent Company Cristallo (Oct. 2013)
• refinancing on existing indebtedness through HY Bond on Nov. 2013
• VIVA acquisition on Dec. 2013
Due to the scale of the non recurring events, comparison with the previous period in not always immediate, particularly as regards to the Group cash
flows. To enhance period-on-period comparability and whereas possible, financial information has been represented as “Pro-Forma” (including
Cristallo and Viva results).
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> Financial information presentation
In a departure from the previous financial report issued, this report focuses on the consolidated result for the Group. The results of operations of
the Group, which includes Marcolin, Cristallo and Viva are discussed as one entity (whereas previously the result of Marcolin and Viva were
discussed separately). This is consistent with the strategy to fully integrate Viva, its operations and its brands into the Marcolin Group.
Reasons for restatements
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Marcolin is still involved in new projects, in consolidation and in development activities, which in fact brought about a global
reorganization at all levels:
• Reorganization process with changes in top and middle management
• Reposition of collections, expanding the “vision” segment and integrating new lines or new models and relaunch of domestic
brand WEB
• Rationalization of the distribution networks both internationally and at domestic level
• In-depth review of the brand portfolio with the addition of new prestigious licensing agreements that will start in January
2015, and discontinuation of non performing licences
For the above reasons the EBITDA is also reported net of the impact of the one-off effects in order to provide comparability.
• Integration process of Viva Group
Consolidated Adjusted Ebitda
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Key financials: Q3
in € Mln, except percentages YTD Q3 2014 YTD Q3 2013
EBITDA pre-adjustment 22,0 25,0
Cost related to Cristallo impact 0,0 1,2
EBITDA Reported 22,0 26,2
Exceptional termination of licenses 0,0 1,2
Cost related to PAI Acquisition 0,0 0,3
Cost related to VIVA Acquisition 0,0 0,0
Senior management changes 1,2 1,7
Restructuring of sales force 0,0 0,0
Cost related to VIVA Integration 5,6 0,0
Other 0,7 0,2
Total adlustments 7,5 3,5
EBITDA ADJUSTED 29,5 29,7
Net Sales 272,2 267,9
% on Net Sales 10,84% 11,07%
in € Mln, except percentages LTM 2014 FY 2013
EBITDA pre-adjustment 23,7 26,8
Cost related to Cristallo impact 0,2 1,4
EBITDA Reported 23,9 28,1
Exceptional termination of licenses 1,1 2,3
Cost related to PAI Acquisition 0,3 0,5
Cost related to VIVA Acquisition 1,0 1,0
Senior management changes 2,3 2,8
Restructuring of sales force 1,4 1,4
Cost related to VIVA Integration 5,6 0,0
Other 1,4 0,9
Total adlustments 13,1 9,0
EBITDA ADJUSTED 36,9 37,1
Net Sales 349,2 344,9
% on Net Sales 10,58% 10,76%
Investor relation
Marcolin Contacts:
Massimo Stefanello
CFO and COO
+39 0437 777111
Alessandra Sartor
+39 0437 777204
Francesca Pellegrini
+39 0437 777152
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