Company Presentation December 2017
At a Glance
Befesa – European market leader in providing mission critical hazardous waste recycling services to the steel and aluminium industry.
Q3 LTM 2017 Sales4: €709m
Q3 LTM 2017 Adj. EBIT4: €142m 2nd Alu 4%
Steel Dust Services 43%
2nd Alu 46%
Salt Slags 14%
Salt Slags 11%
Steel Dust Services 81%
More than 90% of EBITDA generated from two core >30% EBITDA margin operations; low capital intensity Steel Dust Recycling Services
Aluminium Salt Slags Recycling Services
#1
Position in Europe (c. 45-50% Market Share by Capacity1) and Asia5
#1
Position in Europe in Salt Slags (c. 45-50% Market Share by Capacity1)
35%
Adj. EBIT Margin (Q3 LTM 2017)2,4
24%
Adj. EBIT Margin in Salt Slags (Q3 LTM 2017)3,4
713kt
Steel Dust Volume Treated in Q3 LTM 20172
Relationships >15yrs McKinsey market study (commissioned by Befesa). Including Stainless Steel. Including Spent Pot Lining (SPL). 4 Unaudited. 5 Excluding China
509kt
Salt Slags Volume Recycled in Q3 LTM 20173
Relationships >15yrs
1 2 3
1
Company History
Befesa has grown successfully through organic initiatives and acquisitions in Europe as well as in emerging markets. Founded in Germany 1987
Metallgesellschaft, German industrial conglomerate, creates Berzelius Umwelt Service (B.U.S)
Successful Greenfield Project
Acquisitions and Turnarounds 2006
Befesa acquires a 100% stake in B.U.S, becoming the European leader in steel dust recycling
2007
Acquisition of Alcasa, Spanish leader in the secondary aluminium market from Qualitas Equity Partners
Successful IPO
(State of the Art Technology)
2014
2009
Inauguration of the 2nd Befesa becomes the aluminium plant in Bernburg European leader in salt slags recycling after acquiring 3 plants in Germany from Agor
2017
Successful IPO on Frankfurt Stock Exchange
1993
B.U.S AB, together with two other companies, group their environmental assets in Spain creating Berzelius Felguera (Befesa)
1998
Befesa IPO at the Madrid and Bilbao Stock Exchanges
2012
2000
Abengoa acquires a 51% stake in Befesa from B.U.S to develop its environmental services business (stake increased over time)
2011
Delisting from the Madrid and Bilbao Stock Exchanges
1
Befesa subsequently acquired 100%.
2010
Entry in the Turkish market through JV with Canadian Silvermet
▪ Entry in the Asian market by acquiring successive stakes in the Korean Hankook1 ▪ Inauguration of WOX washing plant at Gravelines
Entered 2 New Markets Through a JV and Acquisition with a Subsequent Turnaround
2013
Triton acquires Befesa
2015
Commissioning of the second kiln in Korea, converting it into the largest treatment plant and further acquisition of stakes
Successful Expansion in South Korea 2
Market Leader with Close Proximity to Clients Befesa has 11 plants in the steel dust recycling segment as well as 8 plants in the aluminium salt slags recycling service segment and is present in 7 countries in Europe and Asia. Employees5: Headquarters:
Steel Dust Recycling Services
1,144 Ratingen (Germany) #1
ScanDust
Whitchurch Capacity:
Capacity:
80kt
Lünen
Capacity: 170kt
Valera
Duisburg
Capacity: 110kt
Capacity:
64kt
#1
Hannover
Capacity: 130kt
87kt
Gravelines
Bernburg Capacity:
74kt
#1
Capacity: 194kt
Recytech1 Erandio Capacity:
11 Plants
6 Countries
Asia2 (c.20%)
Aluminium Salt Slags Recycling Services
Freiberg
Capacity: 100kt
Europe (c.45-50%)
Europe (c.45-50%)
7 Plants3
3 Countries
Capacity: 110kt 64kt
Oxide
Aser
Capacity: 160kt
Valladolid
Capacity: 150kt
Barcelona Capacity:
66kt
Iskenderun4 Steel Dust Recycling Services
Aluminium Salt Slags Recycling Services
Oxide
Salt Slags /Recycling Plants
Leaching
Secondary Aluminium Production Plants
Capacity:
65kt
Korea
Capacity:
220kt
Crude Steel Dust Recycling Services Stainless Steel Dust Recycling Services 1 50/50
JV. China (lack of publicly available information). 3 Excluding idle plant Töging (Germany). 4 Joint venture with Canadian Silvermet. 5 Average number of employees as of September 30, 2017 2 Excl.
3
Critical Services for Steel Producers
A leading services business, Befesa helps steel producers manage their environmental liability by collecting and recycling their hazardous waste.
Clients/Suppliers: Steel Producers (Mini-Mills)
Steel Dust Recycling Services Collection of Steel Dust and Regulatory Services
Sale of WOX1
Input: Steel Dust
Clients: Consumers of Zinc Concentrates (Smelters) Input: Zinc Concentrate / WOX
Upfront Service Fee
€
Payment for Zinc Content
Zinc Content in Dust
€
Revenue Contribution3 Create Environmental Liability with Legal Obligation to Recycle Hazardous Waste
Service Fee ~10-20%
Waelz Kiln Waelz Oxide
Slags
Revenue Contribution3
Output: WOX Waelz Oxide1
Output: Zinc2 WOX Sale ~80-90%
Collection fees provide stable revenues supplemented by the sale of recovered metal content 1 Zinc
contained product. Ultimately again used for steel production. 3 Illustrative, split depends on the zinc price. 2
4
Critical Services for Aluminium Industry
Similar service model as steel dust, focused on collecting and treating hazardous waste from secondary aluminium producers.
Clients: Aluminium Industry Clients/Suppliers: Secondary Aluminium (Recyclers) Producers¹
Clients: Aluminium & Other Industries
Salt Slags Recycling Services Collection of Salt Slags and Regulatory Services
Input: Salt Slags
~40%2 Own usage of Alu Concentrate3 ~20%2
Upfront Service Fee Payment for Salt3
€ Alu Content
Input: Aluminium (Concentrate), Salt
€ <1%2
Alu Oxide4
Revenue Contribution5
Create Environmental Liability with Legal Obligation to Recycle Hazardous Waste
Service Fee ~40%
Revenue Contribution5
Output: Alu Concentrate, Salt, Alu Oxide
Output: Aluminium/ Aluminium Alloys Outputs ~60%
Service fee is significantly higher than in the steel dust service business but value of residues lower 1 Befesa
is a secondary aluminium producer as well and, therefore, is both a supplier (salt slags) and a consumer (aluminium concentrate) for Befesa’s recycling business. % of total salt slags segment revenues. 3 Used in secondary aluminium plants. 4 Low value by-product. 5 Illustrative. 2
5
Highly Resilient Business with Strong Cash Flow Generation
Befesa’s strong and stable sales and earnings paired with its strong cash conversion enable the company to fund its business expansion. Sales (in €m)
Adj. EBITDA (in €m)
5541
5351 253
262
68
6121
254
281
325
79
83
292
302
84
69
338
250
244
2013
2014
7091
6311
Steel Dust Recycling Services Margin Salt Slags Recycling Services Margin
31%
35%
40%
26%
31%
35%
31%
32%
123
123
133
87 21
78 30
99
95 18
2015
2016
Q3 LTM 17
8
2013
15
2014
24
15
2015
2016
169 129 9
26
14
Q3 LTM 17
…with profitability outpacing revenues over time
Adj. EBIT (in €m)
Salt Slags Recycling Services Margin
33%
69
Consistently and strongly growing revenues…
Steel Dust Recycling Services Margin
27%
Free Cash Flow2,5 (in €m) 21%
27%
24%
29%
35%
17%
22%
27%
23%
25%
97
95
103
71
61 23
81
70 53 12
2013
5
15
2014
12
2015
11
18 2016
Cash conversion3
142 88
113 4
20
68
9
Q3 LTM 17
High margin steel business accounts for vast majority of EBIT Note: Unaudited financials pro-forma for IES disposal. 1 Total sales are excluding internal revenues. 2 FCF = Adj. EBITDA – maintenance capex – tax paid +/- WC change. 3 FCF / Adj. EBITDA. 4 Including crude and stainless steel. 5 FCF figures show Salt slags services together with 2nd Alu services.
72%
20
2014
1
82%
83%
101
110
62
76
36
3
2015
27
81%
137 96 7
2016
33
9
Q3 LTM 17
Strong and stable cash conversion
Adjusted EBITDA (unaudited) is calculated by adjusting EBITDA (calculated based on operating result, adding back charges taken for amortization/depreciation, impairment and provisions) to account for the impact of the IES divestment and for one time effects (including holding and restructuring effects) and, in the case of 2013, for the impact of the first time consolidation with the Company’s results of Befesa’s first half year EBITDA. Adjusted EBIT (unaudited) is calculated based on the reported operating result adjusted for the impact of the divestment of IES and, in the case of 2013, for the impact of the first time consolidation with the Company’s results of Befesa’s first half year operating profit, further adjusted by holding, restructuring and one-time effects. Free Cash Flow is calculated from the operating result, adding back charges taken for amortization/depreciation, impairment and provisions, less maintenance capital expenditures and less taxes, summed with the change in working capital.
Steel Dust Recycling Services4 2nd Alu Services and Other
Salt Slags Recycling Services
6
Future Growth Opportunities
Befesa has successfully executed growth projects in the past and is well positioned to leverage its leading market position for further growth initiatives. Favourable Market and Underlying Mega Trends
Continue Operational Excellence and Utilization at Current Plants
Pursue Prudent Hedging to Manage Commodity Price Peak-to-Troughs
Steel Dust Recycling Services
Capture Upside Potential from Accretive M&A Opportunities
Salt Slags Recycling Services
Execute Well Defined and Accretive Organic Growth Projects
7
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
President and CEO
CFO; including responsibilities for Operational Excellence and IT
CFO since 2014
Runs Befesa for >15 Years
20+ years in operational finance and governance leadership roles
Federico Barredo
Vice President Steel Dust Recycling Services
Extensive experience in steel and aluminium recycling business
Strong performance results through focus on operational excellence
CEO since 2000
Asier Zarraonandia
Key Achievements/Track Record
Vice President Aluminium Salt Slags Recycling Services
16 years with Befesa
25 years with Befesa
Runs the Steel Dust Recycling Service Business for >10 Years
Runs the Salt Slags Recycling Service Business for >15 Years
Building strong business foundation of ESG, compliance and health & safety processes Successful international expansion Track record of successful acquisitions and turnarounds (BUS, Agor, Alcasa, Hankook, Silvermet etc.) Experience in developing greenfield projects (Gravelines, Bernburg)
8
