Sogefi S p A : May 27, 2020 – Star Conference 2020

STAR CONFERENCE 2020

Milano - May 27, 2020

Mauro FENZI - Chief Executive Officer

Yann ALBRAND - Chief Financial Officer

Stefano CANU - Investor Relations

Agenda

1

2

3

4

Overview

Q1 2020 Results

Covid update

Perspectives

2 I

Overview

3 I

Group profile

• Automotive company created in Listed in Milano Stock Exchange STAR Segment
• Strong Entrepreneurship DNA and flexibility developed through:
• • a series of strategic moves
  • tight cost control
  • lean organization
• Revenues at € 1,5m in 2019
• Present in 23 countries with 41 plants, 10 development centers and 6,800 employees
• Multi product portfolio focused on Powertrain and Body Components

4

3 Global Businesses

Suspensions

MAIN	o Stabilizer Bars
o Coil Springs
PRODUCTS

€ 1,519M	€ 550M
2019 Sales	36%

o o o o

Filtration	Air & Cooling

Oil Filters	o Manifolds
Engine Air Filters	o Coolant Pumps
Fuel Filters	o Coolant Outlet
Cabin Air Filters	Housings
€ 546M	€ 421M
36%	28%

5

Sogefi Customers

CARS		AFTERMARKET		TRUCKS		2 WHEELERS		3 WHEELERS

MAIN BRANDS

6

Sales by key client

Q1 2019

Q1 2020

5%10%

7

Hybrid Powertrain

Volume Effect

New Product

Air & Cooling

Manifold	Coolant	Coolant Outlet
Pump
	+ E Pump	Housing

Battery Pack				Filtration
coolant Manifold
						High performance
	Oil Filter	Engine Air	Fuel Filter
Coolant Valve	Cabin Air Filter
	E-Axle/E-transmission			Battery/E-Motor and
		Filters	Coolant Filter	Power electronic Filters

8

BEV Powertrain

Volume Effect

New Product

Air & Cooling

Battery Pack Coolant

Manifold Module

Coolant Module

						Filtration
						E-Axle/E-	Coolant Filter
		Coolant			transmission Filters
Electric	Coolant Outlet	High performance		Battery/E-Motor and
Coolant Pump	Housing	Valve
Cabin Air Filter
				Power electronic Filters

9

FCEV Powertrain

New Product

Air & Cooling

Electric Coolant	Coolant Outlet
Pump	Housing

Coolant Valve	Hydrogen
	Manifold

Filtration

Fuel Cell Air
Filter	Fuel Cell	Water	High performance	Battery/E-Motor and
	Filters	Separator	Cabin Air Filter	Power electronic Filters

10

Businesses awarded and new agreement on EV vehicles

Customer

Swedish

OEM

French OEM

German

OEM

Other OEMs

Technology Geo/SOP	Product
Hybrid	Motor
China
(2019)	Coolant
	Pump
BEV
Europe	Battery Pack
Cooling
(2021)
Manifold
BEV
Europe	Coolant
(2019)	Module
FCEV	Hydrogen
Nafta	intake
(2021)	manifold &
	exhaust

VolumesDescription

• Distribute the coolant to the motor

• Distribute coolant in the battery pack (thermal regulation of the battery)
• Distribute the coolant to the battery, the electric motor and the power electronics
• Hydrogen, Air and Cooling components

BEV Hybrid Lion E Mobility and Sogefi entered into an agreement, combining Lion's technology in Light

EV joint dev Battery, Battery Management Systems and Module design with Sogefi's industrial capability in engineering and manufacturing of high tech automotive cooling components, as well as access to global sales and distribution capabilities.

11

Supplying premium customers & models

FERRARI 488

PORSCHE TAYCAN

AUDI A6

MASERATI QUATTROPORTE

BMW X series 1 to 5

MERCEDES A/ B/ CLA / C

VOLVO XC90

PORSCHE CAYENNE

CORVETTE

ID CROZZ

BMW series 8

TIGUAN E

12

Selective investments to improve competitiveness

Air & Cooling	✓
Filtration	✓
Suspensions	✓
59	68	60
58

Capex 51

In M EUR

2015

2016

2017

2018

2019

ROMANIA

2018: A&C

2019-2022 : Suspensions

✓✓

✓	✓
		CHINA
MEXICO	MOROCCO	2017: Suspensions
2016	2017-2018

13

Q1 2020 Results

14 I

Q1 2020 Highlights

Revenues at €350,2m

vs. €389.9m in Q1 2019

EBITDA at € 34.9m

vs. €41.3m in Q1 2019

EBIT at € 3.7m

vs. €11.3m in Q1 2019

Net Income at € -5.6

vs. € 1.6m end Q1 2019

FCF1 at -€ 0.4m

vs. €-1.6m in Q1 2019

Net debt1 at € 256.7

vs. € 256.2m end of 2019

1. FCF and Net debt excluding IFRS 16

• Down 10.2% on a reported basis and -8.8% at constant exchange rate (overperforming the market by 1591 bps)
• In YTD February at constant exchange rates +1.0%, thanks to the good performance of all geographic areas except for China, in March at -30%
• 10.0% on sales vs 10.6% in PY.
• In YTD February at 11.4% vs 9.6% thanks to Suspensions improvement, March at 6.2%
• 1.1% on sales in Q1 2020 vs 2.9% on sales in Q1 2019. Q1 2020 affected by € 5.3m of negative exchange rate effect (North and South America).
• March € -4.9m due to the higher % incidence on revenues of fixed costs and despite € 3m of first cost efficiency measures
• After tax charges for € 2.5 million vs €3.6 million in Q1 2019
• Free Cash Flow - € 0.4 million vs €-1.6m in Q1 2019
• Net debt down to € 256.7 vs € 256.2m end of 2019 and € 262.1m end March
  2019

15

Revenues by Geographical Area

			reported	constant	reference	performance	weight
	Q1 2019	Q1 2020	exchange	market	vs market	based on
	change
€m			rates	production	(bps)	Q1 2020
Europe	244.3	222.4	-9.0%	-9.0%	-21.3%	1230	63.5%
North America	74.1	72.7	-1.9%	-4.0%	-10.8%	680	20.8%
South America	37.6	29.0	-22.8%	-3.1%	-16.3%	1320	8.3%
Asia	36.1	27.9	-22.7%	-22.8%	-44.7%	2190	8.0%
- of which China	17.2	11.8	-31.2%	-30.9%	-49.5%	1860	3.4%
Intercompany	(2.2)	-1.8
Total	389.9	350.2	-10.2%	-8.8%	-24.4%	1560	100.0%
					Overperforming the market by 1560
					bps due to overperformance in

Europe (new Morocco plant and

Aftermarket) and USA (new SOPs)

Source: Sogefi and IHS data. Passenger cars and Light commercial vehicles only. Europe is Europe 28 and Asia is China + India

16

Revenues by Business Unit

			reported	constant	performance
	Q1 2019	Q1 2020	exchange	vs market
	change
			rates change	(bps)
€m
Air&Cooling	108.9	100.0	-8.2%	-8.7%	1570
Filtration	134.8	134.7	0.0%	1.8%	2620
Suspensions	147.0	116.3	-20.9%	-18.5%	590
Intercompany	(0.8)	(0.8)
Total	389.9	350.2	-10.2%	-8.8%	1560

17

Q1 2020 EBIT performance breakdown - Sogefi Group - €m / % sales

3.5%	2.9%

18

Suspensions

Sales (€m)		EBIT (%)

• Down 20.9% (-18.5% at constant	• EBITDA margin up from 7.9% to
exchange)	9.4% benefiting lower material
• Nord America sales up	costs
• EBIT margin reflecting higher
• China -38.7%
incidence of depreciation
	Suspensions	19

Filtration

Sales (€m)		EBIT (%)

• Stable revenues (+1.8% at constant exchange)
• The activity recorded growth in Europe thanks to Morocco and to Aftermarket
• Sales sustainably stable in North and South America

Filtration

• Negative exchange rate effect of - € 3.2m mainly in South America
• Decline in India
• EBIT at 1.3% without Morocco start up costs

20

Air & Cooling

Sales (€m)		EBIT (%)

• Down 8.2% (-8.7% at constant exchange)
• Major decline in China but overperforming the market thanks to new SOPs

• Higher EBIT in Europe was more than offset by the lower profitability in the other areas due to volume decline
• Negative exchange rate effect for € 3.3 millions (North America)

Air & Cooling

21

Q1 2020 P&L - Sogefi Group - €m / % sales

	€m	Q1 2019	%		Q1 2020	%
	EBITDA	41.3	10.6%		34.9	10.0%
	EBIT	11.3	2.9%		3.7	1.1%
	Financial results	6.3	1.6%		6.8	1.9%
	Income Tax	3.6	0.9%		2.5	0.7%
	Minority Interest	1.2	0.3%		0.0	0.0%
	NET INCOME OF	0.3	0.1%		(5.6)	-1.6%
	OPERATING ACTIVITIES
	Net income from	1.3	0.3%		0.0	0.0%	Fraize plant contribution in 2019
	discontinued operations
	NET INCOME	1.6	0.4%		(5.6)	-1.6%

22

Q1 2020 FCF Highlights - Cash Flow generation

• Figures excluding IFRS16
	€m	Q1 2019		Q1 2020
	FUNDS PROVIDED BY OPERATIONS	32.2		23.2
	Working Capital	(10.6)		(2.0)
					of which € 4.3m for new
	Tangible Capex	(8.9)		(11.1)
					plants
	Intangibles & IFRS15	(17.5)		(14.3)
	Others	3.2		3.8
	FREE CASH FLOW (NET)	(1.6)		(0.4)
	NET DEBT	262.1		256.7

Factoring at € 96.3m end March 2020 vs € 94.2m end 2019 vs € 114.1m end March 2019

23

Financial Position

• In November Sogefi completed the issuance of a € 75m non-convertible unsecured bond (coupon 3%, mature in November 2025)
• At March 31, 2020, the Group has financing in excess for € 298 million (of which €
  125 banks lines not utilized) in relation to which all the conditions are met and therefore available for use on simple request
• In Q2 2020 is scheduled the repayment of the Euro PP and a tranche of the US
  PP (both issued in 2013) for a total amount of € 37.5 million

24

Covid update

25 I

Covid update - Takeaways

Safety:

Actions taken to protect

workforce

Plants:

Most of plant close within

18 / 30 March

Main actions:

Using all government

incentives + cost

efficiency

Expectation:

Some customers plants are expected to reopen

• China travel ban and travel limitations, "quarantine" for employees coming back from zones at risk
• Reducing visits from customers/suppliers, wide spreads use of smart working
• Implemented all health safety means defined by local authorities
• Closing plants/ offices involving unions all countries (only exception Argentina)
• Worldwide (excluding China) most of plants closed within 18 and 30 of March
• As of today Sogefi, with the exceptions of South America and India, has reopened (partially) NAFTA plants. EMEA plants to restart beginning of June.
• China is running at speed
• Of the 6.800 employees ~85% are in «technical unemployment.
• Local government support is high in western Europe and not-existing in other regions (i.e. South America or India) where the situation was managed trough local union agreements
• In addition taking all necessary steps to manage the crisis by assessing liquidity, containing cash-out by reducing costs and investments that are not strictly necessary.
• China to reach "pre Covid" volumes by June
• Nafta is ramping up fast
• EMEA slow speed reopening beginning of June

26

Covid update - Plants situation & incentives/agreements

Europe

(61% of sales)

North America

(19% of sales)

France

↑↑↑

USA

↑↑

Italy

↑↑↑

Canada

↑↑

Asia

↑

Slovenia

(with few

↑↑↑

(10% of sales)

Mexico

•Closing March 23 / 26

Others

exceptions)

↑↑↑

China

•Currently reopening

•Closing March 8 / 27

India

↑

•Currently reopening

•China reopened March 16

•India closed March 23

Plants

Governments'

Union

South America

Status

Incentives

Agreements

(11% of sales)

Closed

↑↑↑

High

↑↑↑

Brazil

↑

Open partially

↑↑

Middle

↑↑

Argentina

↑

Open

↑

Low

↑

•March 19 Argentina

•March 30 Brazil

27

Perspectives

28 I

Market production evolution

			IHS Forecast
			(May 2020)
	€m		2Q 2020E	FY 2020E
	Europe		-70.4%	-24.0%
	North America		-70.4%	-25.1%
	South America		-83.4%	-29.7%
	Asia		-14.5%	-18.0%
	- of which China		-1.5%	-15.8%
	Total		-48.0%	-21.2%
	Source: Sogefi e IHS data

Primary brokers, institutes,

consulting firms estimating within

1. range -20/25% depending on different scenarios

Source: Sogefi and IHS data. Passenger cars and Light commercial vehicles only. Europe is Europe 28 and Asia is China + India

29

2020 OUTLOOK

• In an environment with extremely limited visibility, the most recent sector sources are estimating that world car production may fall by between 20% and 25% in 2020 according to different scenarios as to the effects of Covid-19
• Indeed at present all the elements that contribute to the formulation of forecasts for the year remain totally uncertain: the evolution of the pandemic, the decisions to be made by the authorities on the subject of resuming and managing production activity, and lastly, the reaction of demand, in a context of the deep recession that could affect various parts of the world. At present the circumstances described above make any forecast that the company could make highly uncertain
• The group is focused on doing all it can to manage the crisis: it has put in place actions to reduce costs and limit, as far as possible, current costs and investments that are not strictly necessary, it regularly assesses liquidity positions, keeping the Board of Directors informed, liaising with its financial partners, and is starting operating again, introducing higher safety standards for personnel and cost flexibility in relation to volumes that will be affected by circumstances for a certain period of time

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CONTACTS

Yann Albrand, Group CFO Stefano Canu, Investor Relations

SOGEFI

Via Ciovassino, 1/a

20121 Milano - Italia

Tel: [phone]

Fax: [phone]

Mail: [e-mail]

31

Any reference to past performance of the SOGEFI Group shall not be taken as an indication of future performance.

DISCLAIMER

o This document has been prepared by SOGEFI S.p.A. for information purposes only and for use in presentations of the Group's results and strategies.

o For further details on the SOGEFI Group. reference should be made to publicly available information. including the Annual Report. the Semi-Annual and Quarterly Reports.

o Statements contained in this document. particularly the ones regarding any SOGEFI Group possible or assumed future performance are or may be forward looking statements and in this respect they involve some risks and uncertainties.

o

o This document does not constitute an offer or invitation to purchase or subscribe for any shares and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

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