Befesa Sa · XETR:BFSA
Befesa Sa — Kepler Cheuvreux ESG Conference 2022
44 slides from Befesa Sa's conference presentation, June 2022
Slide 1: Business Update
Business Update 2022 Kepler Cheuvreux ESG Conference 2022 June 2022
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements and information relating to Befesa and its affiliates that are based on the beliefs of its management, including assumptions, opinions and views of Befesa and its affiliates as well as information cited from third party sources. Such s
Slide 3: 01 Business update
Electric arc furnace steel dust (EAFD) recycling plant at Asúa-Erandio, Spain 01 Business update
Slide 4: Executive summary
Executive summary €61.1m €25.7m €27.0m FY’22 Guidance Q1’22 adjusted EBITDA Q1’22 Operating cash flow Net profit +8.9% yoy (Q1’21: €24.8m), FY EBITDA of €220m to 270m, 25% up yoy (Q1’21: €48.8m) ~stable yoy (Q1’21: €26.5m) corresponding to a €0.67 EPS 11% to 37% yoy growth 23% margin (Q1’21: 25%) (Q
Slide 5: Mid-term growth roadmap
Mid-term growth roadmap Executing well defined growth roadmap even during COVID-19 pandemic; In commercial operations at 1st China plant (Jiangsu) and completed construction of 2 nd plant (Henan); Driving progress on the integration of AZR and related synergies 1 HEDGING • Hedge book extended up to
Slide 6: Zinc prices & hedging strategy
Zinc prices & hedging strategy Hedge book fully extended up to Jan’25, c.2.5 years; Improving earnings & cash flows visibility Zinc LME1) Befesa’s hedges2) Average blended Zinc LME price vs. Befesa’s hedging prices (€/t) c.€2,375 c.€2,450 €2,317 €2,239 c.€2,275 €2,275 €2,280 €2,136 €2,151 2019 2020
Slide 7: EAF steel production and Befesa's steel portfolio growth & diversification
EAF steel production -&- Befesa’s steel portfolio growth & diversification China is the largest and growing EAF steel producer worldwide; Befesa growing and diversifying its portfolio to capture China and US addressable markets EAF steel production: EU-27 / US / China, million tonnes Befesa’s EAFD r
Slide 8: Befesa closed AZR acquisition; global leader in EAFD recycling
Befesa closed AZR acquisition on 17 August; Operations delivering as expected; Driving progress on integration & related synergies BEFESA #1 Europe (Steel Dust & Salt Slags) a US / North American leader (Steel Dust) #1 Asia1) (Steel Dust) Global leader1) in EAFD recycling EAFD recycling EAFD recycli
Slide 9: China I / China II
China I Changzhou plant, Jiangsu province Key facts of the plant: 1 • 1st EAFD recycling plant in China • Capacity to recycle 110kt EAFD p.a. • Total investment: c.€42m • Location: Changzhou (Jiangsu province) Status update: Long-term financing closed Jul’20 Construction completed on budget In comme
Slide 10: FY 2022 Guidance
FY 2022 Guidance Global diversified footprint and expansion initiatives delivering between +11% to 37% yoy growth; Wider guidance range driven by market (volume), energy & base metal price volatility … Lower-end: €220m Upper-end: €270m +€22m / +11% yoy +€72m / +37% yoy EBITDA • Midpoint of €245m is
Slide 11: ESG at Befesa
ESG at Befesa Key player within the circular economy, with c.2 million tonnes recycled and c.1.5 million tonnes of valuable materials recovered annually, that contributes significantly to increase efficiency of raw material use in the metals industry and promotes the transition towards a more sustai
Slide 12: BEFESA acquired creating a global leader in EAFD recycling
BEFESA acquired creating a global leader in EAFD recycling 02 Acquisition of AZR closed on 17 August 2021
Slide 13: Transaction highlights
Transaction highlights • On 16 June 2021, Befesa signed the acquisition of 100% of American Zinc Recycling (AZR)’s recycling assets for a purchase price of $450m / €372m – implying an attractive c. 6x post near-term synergies EBITDA acquisition multiple, about half of Befesa’s current 2021E trading
Slide 14: Acquired 100% of recycling assets upfront; option on zinc refining plant
Acquired 100% of recycling assets upfront; incremental add-on option for new zinc refining plant (ramping up) AZR is one of the largest EAFD recycler in North America1) with 4 plants with c. 620kt total capacity EAFD recycling assets Zinc refining 1 Barnwell, SC 2 Rockwood, TN 5 Rutherford County, N
Slide 15: Decarbonisation driving further growth of EAF steel production in the US
Decarbonisation driving further growth of EAF steel production in the US EAF method expected to grow further to >70% share by 2025 Crude steel production by process in the US, % share 37% 29% 28% BOF • US has one of the largest and growing markets of EAF steelmakers globally EAF 63% 71% 72% • EAF is
Slide 16: Befesa closed AZR acquisition; global leader in EAFD recycling
Befesa closed AZR acquisition on 17 August; Operations delivering as expected; Driving progress on integration & related synergies BEFESA #1 Europe (Steel Dust & Salt Slags) a US / North American leader (Steel Dust) #1 Asia1) (Steel Dust) Global leader1) in EAFD recycling EAFD recycling EAFD recycli
Slide 17: Attractive acquisition multiple with additional upside potential
Attractive acquisition multiple with additional upside potential – 2021E pro forma view1) BEFESA (Steel Dust – current perimeter) (Recycling operations) 2) Further EBITDA8), €m 138 mid-term potential 62 45 3) 17 4) 2021E 2021E PF Near-term 2021E PF mid-point pre near-term synergies post near-term sy
Slide 18: Strong near- & mid-term synergy potential identified
Strong near– & mid– term synergy potential identified Total pre-tax near-term synergies of c. $20/€17m expected within first three years of combination (Recycling operations) EBITDA / ton throughput Up to Near-term synergies c. €185/t of c. $20m / €17m c. 35% mid-term efficiency potential €138/t €10
Slide 19: Leverage-neutral transaction with strong EPS accretion
Leverage–neutral transaction with expected strong double–digit EPS accretion1) Funding of transaction (at closing) Financial profile – 2021E Combined Pro Forma3) Total price, $m EBITDA, €m 2) Mid-point of 450 10 460 €165 to €190m 2021E guidance 240 62 178 Price for Price for Zinc Total BEFESA Befesa
Slide 20: Diversifying the highest margin business unit
Diversifying the highest margin business unit and further improving Befesa’s overall profitability EAFD recycling capacity1) EBITDA by segment c. 1,665kt c. €240m4) 2nd Alu 6% Salt Slags 10% US 620 €178m3) 1,045kt2) 8% 14% 550 Asia 550 Steel Dust 84% 78% 495 Europe 495 BEFESA Befesa BEFESA Befesa+AZ
Slide 21: AZR's zinc refining asset: strategic integration opportunity
AZR’s zinc refining asset: strategic integration opportunity to support EAFD recycling operations in the US Plant footprint • Close proximity to AZR recycling plants, at Rutherford County, NC • Applies new solvent extraction technology for zinc refining • Restarted operations in 2020; Ramping up; Ca
Slide 22: Option to acquire AZR's zinc refining asset upon milestones
Secured option to acquire AZR’s zinc refining asset only upon fulfilling operational & financial performance milestones Payment schedule to acquire AZR’s zinc refining asset1), $m $135m for remaining 93.1% stake in AZR’s zinc refining asset: • Only upon fulfillment of 2-phased operational and financ
Slide 23: AZR acquisition a key step on Befesa's accelerated growth path
The acquisition of AZR’s recycling business represents a key step on Befesa’s accelerated growth path … 2007 2017 2021E PF European leader1) European & European & Asian in EAFD recycling Asian leader1) & North American = a global leader1) 37% 37% 33% Befesa’s EAFD 495kt 780kt c. 1,665kt recycling ca
Slide 24: Q1 2022 results
Nanjing City, Location of Befesa China’s HQ 03 Q1 2022 results
Slide 25: Consolidated key financials
Consolidated key financials Q1 adj. EBITDA at €61.1m, +25% yoy; Driven mainly by all-time high base metal prices and US zinc operations delivering as planned, more than offsetting energy inflation & unfavourable Zinc TC Adjusted EBITDA bridge Q1 2021 to Q1 2022 (€m) +€12.2 / +25.1% 16 -16 61,1 1) 48
Slide 26: Steel Dust Recycling Services
Steel Dust Recycling Services Q1 EBITDA at €54.8m, +50% yoy; Driven mainly by highest zinc market prices on record, US operations delivering as planned, more than offsetting energy inflation & unfavourable TC; Continued strong 35% EBITDA margin EBITDA bridge Q1 2021 to Q1 2022 (€m) +€18.3 / +50.1% 1
Slide 27: Aluminium Salt Slags Recycling Services
Aluminium Salt Slags Recycling Services Q1 EBITDA at €7.6m, -38% yoy; Energy inflation and some volume pressure partially mitigated with all-time high aluminium metal prices; Overall plant utilisation at around 80% EBITDA bridge Q1 2021 to Q1 2022 (€m) -€4.7 / -38.2% 12,3 4 -1 -8 Lower aluminium all
Slide 28: Cash flow, net debt & leverage
Cash flow, net debt & leverage Continued strong liquidity of >€300m including record €237m cash on hand; Net leverage of x2.13 at Q1’22, improved vs. x2.16 at YE’21 Adjusted EBITDA to total cash flow (€m) 61,1 -23,5 Total capex = €25.8m Seasonality / -7,3 25,7 timing -4,6 Mainly China Mainly China -
Slide 29: Befesa overview
Secondary aluminium production plant at Bernburg, Germany 04 Befesa overview
Slide 30: Befesa at a glance
Befesa at a glance Global leader in Europe, Asia and US in providing regulated critical hazardous waste recycling services to the steel and aluminium industries LTM Q1 20221) Steel Dust Recycling1) Aluminium Salt Slags Recycling €890m Revenue2) #1 Position Global #1 Position in Europe in salt slags
Slide 31: Key milestones
Key milestones Befesa has grown successfully through organic initiatives and acquisitions EAFD expansion China First to market with state-of-the-art EAFD recycling plants in China: Changzhou, Jiangsu: ✓ Completed on budget EAFD expansion Korea & Turkey ✓ In commercial operations since Dec’21 Seconda
Slide 32: Investment highlights
Investment highlights Environmental Favourable Global Strong solutions mega trends leader regulation in high demand supporting secondary steel in Europe, Asia & US, getting stricter and for the steel and and aluminium markets in niche recycling markets, expanding into aluminium industry e.g. CO2 red
Slide 33: ESG at Befesa
ESG at Befesa Key player within the circular economy, with c.2 million tonnes recycled and c.1.5 million tonnes of valuable materials recovered annually, that contributes significantly to increase efficiency of raw material use in the metals industry and promotes the transition towards a more sustai
Slide 34: Global leader in Europe, Asia & North America
Global leader in Europe, Asia & North America EAFD recycling plants Befesa is the global leader in steel dust and salt slags recycling services with a competitive advantage due to its close-proximity to key clients Salt slags & SPL recycling plants Lünen Clients Duisburg Hannover Fouquières-lès-Lens
Slide 35: Highly regulated & critical service model
Highly regulated & critical service model Befesa is the leading environmental services partner in the circular economy of the 2 nd steel and aluminium industry by recycling and avoiding the landfilling of c. 2 MT hazardous residues and recovering c. 1.5 MT of new valuable materials HAZARDOUS WASTE B
Slide 36: Befesa's Resilience During Latest Crises
Befesa’s Resilience During Latest Crises Befesa has demonstrated resilient volumes and capacity utilisation levels during the latest crises 2008 / 2009 / 2010 2019 / 2020 / 20213) 600 1000 2019 2020 2021 240 >1.1Mt Incl.240US acquisition 550 900 Befesa EAFD 220 500 474 482 800 220 throughput, kt 687
Slide 37: Experienced management team
Experienced management team Senior management team delivering results through long-standing industry expertise, entrepreneurial spirit and focus on operational excellence as well as governance and compliance processes Javier Molina Wolf Lehmann Key achievements / track record CEO CFO; incl. responsi
Slide 38: Investor agenda & appendix
Waelz kiln at EAFD recycling plant in Gyeongju, South Korea 05 Investor agenda & appendix
Slide 39: Investor's agenda
Investor’s agenda Financial calendar Next investor conferences 2022 Q2 2022 H2 2022 Annual General Meeting Paris – 2nd European SMID Mega Trends Frankfurt – Commerzbank & ODDO BHF Corporate Thursday, 16 June 2022 11 May 2022 – Kepler Cheuvreux Conference 2022 7 Sep 2022 – Commerzbank & ODDO BHF Miam
Slide 40: Q1 2022/21 – Key financials
Q1 2022/21 – Key financials (€m, unless otherwise stated) Steel Salt Secondary Corporate & Total Dust Slags Aluminium eliminations Befesa Revenue1) €155.9 €19.2 €97.9 -€11.6 €261.4 yoy change +€55.0 / +54.6% -€0.6 / -3.2% +€15.5 / +18.8% -€1.1 / - +€68.8 / +35.7% Reported EBITDA €54.8 €6.4 €1.2 -€2.
Slide 41: Multi-year trend – Key financials
Multi-year trend – Key financials1) (€m, unless otherwise stated) 2017 2018 2019 2020 2021 Revenue €667.42) €720.1 €647.9 €604.3 €821.6 Reported EBITDA €153.0 €176.0 €159.6 €123.5 €189.6 Reported EBITDA margin % 22.9%2) 24.4% 24.6% 20.4% 23.1% Adjusted EBITDA €172.43) €176.0 €159.6 €127.03) €197.63)
Slide 42: Q1 2022/21 – Operational data – Steel Dust Recycling Services
Q1 2022/21 – Operational data – Steel Dust Recycling Services Q1 2021 Q1 20221) yoy change EAFD 181.1 337.4 +156.3 / +86.3% throughput (kt) EAFD average 89.0% 88.0% -102 bps capacity utilisation (%) Waelz oxide 66.7 103.4 +36.7 / +55.0% (WOX) sold (kt) Zinc LME price €2,279 €3,337 +€1,058 / (€/t) +4
Slide 43: Q1 2022/21 – Operational data – Aluminium Salt Slags Recycling Services
Q1 2022/21 – Operational data – Aluminium Salt Slags Recycling Services Q1 2021 Q1 2022 yoy change Salt Slags & 104.4 87.5 -17.0 / -16.3% SPL treated (kt) Salt Slags & 94.1% 78.8% -1,530 bps SPL avg. cap. utilisation (%) Aluminium 51.3 42.2 -9.0 / -17.6% alloys produced (kt) Secondary Alu 101.5% 83.
Slide 44: Multi-year trend – Operational data
Multi-year trend – Operational data 2017 2018 2019 2020 2021 EAFD throughput (kt) 661.0 717.1 665.8 687.0 885.7 EAFD average capacity 84.7% 92.0% 80.7% / 90.1%1) 83.2% 83.3%2) utilisation (%) Waelz oxide (WOX) sold (kt) 217.8 240.9 217.6 239.2 291.0 Zinc LME price (€/t) €2,572 €2,468 €2,276 €1,979 €