Investor Briefing September 26, PDF Free Download

Investor Briefing September 26, 2017

DISCLAIMER CONFIDENTIALITY THIS PRESENTATION (THE PRESENTATION ) HAS BEEN PREPARED IN CONNECTION WITH THE EXTENSION OF THE TERM LOAN INDEBTEDNESS OF COVERIS HOLDINGS S.A. AND CERTAIN OF ITS SUBSIDIARIES AND CERTAIN AMENDMENTS AND MODIFICATIONS TO THE DEFINITIVE DOCUMENTATION EVIDENCING SUCH INDEBTEDNESS. THIS PRESENTATION CONTAINS CONFIDENTIAL MATERIAL AND NON-PUBLIC INFORMATION. DISTRIBUTION OF THIS PRESENTATION, OR OF ANY INFORMATION CONTAINED IN THIS PRESENTATION, TO ANY PERSON OTHER THAN AN ORIGINAL RECIPIENT (OR TO SUCH RECIPIENT S ADVISORS) IS PROHIBITED. ANY REPRODUCTION OF THIS PRESENTATION IN WHOLE OR IN PART, OR DISCLOSURE OF ANY OF ITS CONTENTS, WITHOUT PRIOR CONSENT OF COVERIS HOLDINGS S.A., IS PROHIBITED. THIS PRESENTATION REMAINS THE PROPERTY OF COVERIS HOLDINGS S.A. AND ON REQUEST MUST BE RETURNED AND ANY COPIES DESTROYED. THE PRESENTATION MAY ONLY BE DISTRIBUTED TO PERSONS THAT ARE QUALIFIED INSTITUTIONAL BUYERS AS DEFINED IN RULE 144A UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT ), AN INSTITUTIONAL ACCREDITED INVESTOR AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT, OR TO PERSONS WHO ARE NON-US PERSONS AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT AND WHO ARE OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT. THE PROPOSALS CONTAINED IN THIS PRESENTATION ARE PRELIMINARY. THIS PRESENTATION DOES NOT CONSTITUTE A PROSPECTUS OR FORM PART OF ANY OFFER FOR SALE OR SUBSCRIPTION OF, OR SOLICITATION OF ANY OFFER TO BUY, APPLY OR SUBSCRIBE FOR, ANY SECURITIES IN THE COVERIS HOLDINGS S.A. OR ANY OF THE COMPANIES THAT MAY TOGETHER CONSTITUTE COVERIS HOLDINGS S.A., NOR SHALL IT FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, OR ACT AS AN INDUCEMENT TO ENTER INTO, ANY CONTRACT OR COMMITMENT WHATSOEVERWITH RESPECT TO COVERIS HOLDINGS S.A. OR SUCH COMPANIES. THE INFORMATION CONTAINED IN THIS PRESENTATION IS SUBJECT TO MATERIAL UPDATING, COMPLETION, REVISION, AMENDMENT AND VERIFICATION. NO RELIANCE SHOULD BE PLACED ON THE INFORMATION AND NO REPRESENTATION OR WARRANTY (WHETHER EXPRESS OR IMPLIED) IS GIVEN OR MADE IN RELATION TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION SET OUT IN THIS PRESENTATION AND NO RESPONSIBILITY, OBLIGATION OR LIABILITY WHATSOEVER IS OR WILL BE ACCEPTED FOR THE ACCURACY OR SUFFICIENCY THEREOF OR FOR ANY ERRORS OR OMISSIONS THEREIN. FORWARD LOOKING STATEMENTS ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACTS, INCLUDED IN THIS PRESENTATION THAT ADDRESS ACTIVITIES, EVENTS OR DEVELOPMENTS WHICH ARE EXPECTED OR ANTICIPATED TO OCCUR OR WHICH MAY OCCUR IN THE FUTURE ARE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS CONVEY THE CURRENT EXPECTATIONS AND PROJECTIONS RELATING TO THE ANTICIPATED FINANCIAL CONDITION, RESULTS OF OPERATIONS, PLANS, OBJECTIVES, FUTURE PERFORMANCE AND BUSINESSES OF COVERIS HOLDINGS S.A. THESE STATEMENTS CAN BE IDENTIFIED BY THE FACT THAT THEY DO NOT RELATE STRICTLY TO HISTORICAL OR CURRENT FACTS. THEY ARE SUBJECT TO UNCERTAINTIES AND FACTORS RELATING TO THE OPERATIONS AND BUSINESS ENVIRONMENT OF THE BUSINESSES THAT IT IS ANTICIPATED WILL TOGETHER COMPRISE COVERIS HOLDINGS S.A., ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE CONTROL OF THESE BUSINESSES. SUCH UNCERTAINTIES AND FACTORS COULD CAUSE THE COVERIS HOLDINGS S.A. S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN THE FORWARD-LOOKING STATEMENTS. FURTHER, ANY FORWARD-LOOKING STATEMENT SPEAKS ONLY AS OF THE DATE ON WHICH IT IS MADE, AND EXCEPT AS REQUIRED BY LAW, NO OBLIGATION IS ASSUMED TO UPDATE ANY FORWARD-LOOKING STATEMENT TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON WHICH IT IS MADE OR TO REFLECT THE OCCURRENCE OF ANTICIPATED OR UNANTICIPATED EVENTS OR CIRCUMSTANCES. MARKET DATA INFORMATION CERTAIN MARKET DATA INFORMATION IN THIS PRESENTATION IS BASED ON ESTIMATES. THE INDUSTRY, MARKET AND COMPETITIVE POSITION DATA USED THROUGHOUT THIS PRESENTATION WAS OBTAINED FROM INTERNAL ESTIMATES AND RESEARCH AS WELL AS FROM INDUSTRY PUBLICATIONS AND RESEARCH, SURVEYS AND STUDIES CONDUCTED BY THIRD PARTIES. THE ESTIMATES ARE BELIEVED TO BE ACCURATE AS OF THE DATE OF THIS PRESENTATION. HOWEVER, THIS INFORMATION MAY PROVE TO BE INACCURATE BECAUSE OF THE METHOD BY WHICH IT WAS OBTAINED OR BECAUSE THIS INFORMATION CANNOT ALWAYS BE VERIFIED DUE TO THE LIMITS ON THE AVAILABILITY AND RELIABILITY OF RAW DATA, THE VOLUNTARY NATURE OF THE DATA GATHERING PROCESS AND OTHER LIMITATIONS AND UNCERTAINTIES. NO REPRESENTATION, WARRANTY OR UNDERTAKING WHATSOEVER IS GIVEN OR MADE REGARDING SUCH INFORMATION AND THE RECIPIENT SHOULD INFORM ITSELF AS TO THE ACCURACY OF SUCH DATA AND THE REASONABLENESS OF SUCH FORECASTS AND THEIR APPROPRIATENESS FOR THE PROPOSED COVERIS HOLDINGS S.A. 2

INVESTOR BRIEFING OBJECTIVES 1 2 3 Discuss Recent Management Changes Discuss Recent News Articles Provide General Guidance on Q3 and Full-Year 3

MANAGEMENT UPDATE David Mezzanotte, our Chairman for the past 4+ years, is retiring in October Dave also served as Interim CEO since February 2017 Dimitri Panayotopoulos appointed to replace Dave as Chairman and Interim CEO Dimitri was at P&G for the past 37 years, where he led multiple businesses and served as Vice Chairman. The CEO search is continuing and we expect to name a permanent CEO in the near future. Meanwhile, each of our business units have a strong leader in place to continue executing our strategy. Dimitri Panayotopoulos 4

RECENT PRESS There have been several recent articles suggesting our Americas or other business units may be for sale. Coveris is owned by Sun Capital Partners, which has been very supportive of the company s growth plans. Under Sun s leadership, the Company has completed eight acquisitions and invested over $600 million in capital since the company s formation. Our owners frequently evaluate various exit strategies. While we do not comment on M&A speculation, we do acknowledge that market multiples in North America are very high for businesses like ours. 5

REFINANCING ACTIVITIES Term Loan June 2022 US ABL August 2022 European Credit Facilities: France May 2022 Germany May 2022 UK June 2022 Bonds Bonds become callable at 102 in November. While no specific plans have been announced, we are considering various options to refinance these bonds well ahead of the November 2019 maturity. 6 Note: The term loan and credit facilities have springing maturities ahead of the bonds should those bonds not be refinanced ahead of the current maturity date.

FINANCIAL PERFORMANCE (IN $M) COVERIS P&L 2013 2014 2015 2016 Sales 2,309 2,759 2,606 2,520 Gross Profit 246 380 381 379 Gross Margin 10.6% 13.8% 14.6% 15.0% Adj. EBITDA 214 316 324 308 Adj. EBITDA Margin 9.3% 11.5% 12.4% 12.2% Flexible Packaging Adj. EBITDA 155 236 256 238 Adj. EBITDA Margin 10.2% 11.9% 12.9% 12.6% Rigid Packaging Adj. EBITDA 63 95 88 89 Adj. EBITDA Margin 8.0% 12.2% 14.0% 14.0% Operating Free Cash Flow 1 4 61 74 101 Sales 2015 global volume growth 2.3%; sales impacted by FX ($269M) and resin ($46M) 2016 sales impacted by volume decline of (0.8)%, especially in flexibles, lower resin pricing of $22 and FX Gross Profit Gross margin increased 80 bps in 2015 (vs. 2014) and another 40 bps in 2016 (vs. 2015) primarily through productivity Adjusted EBITDA 2016 Adjusted EBITDA reflects improvements from acquisitions, and productivity-driven COGS reductions, offset by unfavorable FX, volume/mix and resin passthrough lag. 7 1 Operating free cash flow defined as cash from operating activities, less capital expenditures, plus interest paid and income taxes paid. Financials do not include pre-acquisition results..

FINANCIAL PERFORMANCE (IN $M) COVERIS P&L YTD June - 2016 YTD June - 2017 % Change LTM Q2-2017 Sales 1,308.2 1,235.8 (5.5)% 2,446.9 Gross Profit 210.6 166.9 (20.8)% 338.0 Gross Margin 16.1% 13.5% 13.8% Adj. EBITDA 166.3 128.9 (22.5)% 270.6 Adj. EBITDA Margin 12.7% 10.4% 11.1% Sales Sales YTD-2017 decreased by 5.5% from the prior year driven by (i) unfavorable foreign currency impact ($63.2M) from weaker GBP and EUR vs. USD (ii) softer volumes in the Flexibles business Gross Profit Gross margin decreased 260 bps YTD- 2017 (vs. YTD-2016) largely due to competitive pressures in the UK and resin pass-through lag of $3.4M Adjusted EBITDA Flexible Packaging Adj. EBITDA 133.6 98.1 (26.6)% 202.9 Adj. EBITDA Margin 13.5% 10.5% 11.0% Rigid Packaging Adj. EBITDA 44.1 38.7 (12.2)% 83.5 Adj. EBITDA Margin 13.5% 12.6% 13.6% HQ EBITDA (11.2) (7.9) (15.8) Reducing G&A expenses through efficiencies while continuing to invest in selling expertise Adjusted EBITDA decreased $37M primarily due to competitive pressures in the UK; FX translation impact of ($9M); and resin lag impact of ($5M), offset by HQ cost reductions. 8

EXTERNAL FACTORS IMPACTING 2H FINANCIAL PERFORMANCE Hurricane Harvey s impact on North America Resin suppliers have taken some capacity off line North American business uses approximately 58 million pounds per quarter Suppliers have suggested price increases in August, September and October, totalling 10 cents per pound Limited impact on Q3 due to inventories and spot pass through Estimated unfavorable Q4 EBITDA impact from resin lag of $1-2M Evaluating options with contract customers to expedite the pass-through Foreign Exchange impact EUR and GBP have strengthened against the dollar June 30 Sept 22 EUR 1.1422 1.1910 GBP 1.3000 1.3523 Q4 expected favorable impact of $35-37M on sales and $3-4M on EBITDA 9

UPDATE ON CURRENT TRADING Net sales (constant currency) for Q3 2017 expected to increase by $5-$10M or approximately 1-1.5% vs. Q3 2016 Flat to stronger sales are expected across all business units Positive FX impact on sales of $4-6M expected Resin pass through expected to have a positive impact on sales of $3-$5M EBITDA (constant currency) for Q3 2017 expected to decrease by $7-$9M or approximately 10% vs. Q3 2016 due to sales mix and pricing Slight positive FX impact on EBITDA expected Q3 2017 GUIDANCE Resin pass through expected to have a negative impact on EBITDA of $1-2M Slight sequential improvement in EBITDA over Q2 2017 expected FY 2017 GUIDANCE Net sales (constant currency) for FY 2017 expected to increase by $2-$7M or approximately 0.25% vs. FY 2016 Negative FX impact on sales of $20-$25M expected Resin pass through expected to have a positive impact on sales of $15-$20M EBITDA (constant currency) for FY 2017 expected to decrease by $35-$40M or approximately 11% vs. FY 2016 Increased focus on commercial efforts and overhead cost efficiencies Negative FX impact on EBITDA of $4-$6M expected Resin pass through expected to have a negative impact on EBITDA of $7-$9M Significantly weaker profile than previously provided due to longer than expected turnaround in our UK and European businesses, higher than expected competitive pressures in the US and lower overall productivity gains 10 Note: All constant currency calculations are performed using 2016 Actual FX rates.