Envipco Holding N.V.

Good morning, everyone, and welcome. It gives me great pleasure to introduce to you the Q3 23 results from Invipco. My name is Simon Bolton, CEO of the business, and I'll be joined with this presentation by Bob Lincoln, my colleague who's president of the US business. Usual disclaimer. First of all, it's fantastic to be able to present the quarterly report this time. We've had a record quarter. Group revenues are at 25.3 million. That's 49% growth versus a year ago. I think this quarter really shows that we're delivering on our European growth strategy. European revenue itself was at 16.9 million. That's up over 133%. This is mainly due to growth in existing markets, We've had a fantastic quarter in Greece. As we mentioned last quarters, we're starting there to deliver recycling centres to municipalities, and that's carried on very strongly in the quarter. And also, very exciting, we have initial deliveries and sales to both Hungary and Romania. From a gross profit point of view, we've also done very well. So our gross profit margin continues to improve step by step. So it's at 34.9% for the quarter. And overall, that gives a gross profit of 8.8 million, which is 67% higher than a year ago. Overall, with higher top line, very good gross profit, and a good control of operational OPEX costs. Overall, we've delivered all-time high EBITDA of 3.8 million, which is a 15.2% EBITDA margin. So a fantastic and very exciting quarter. We just want to take a moment just to position Q3 for the whole of our growth strategy. So for those particularly who have joined over the last few quarters, what were our key objectives when we started this a few years ago? The first one was to have a really solid market share and a strong and stable business in North America. The second was to pivot the business to be able to capture significant share in these new greenfield markets that are opening up in Europe. And so how have we done on that? The first thing is North America, which Bob will tell you about a little bit later. We've now got just over 40% market share, up from 24% in 2012. In Europe, we have great positions in a number of growth markets. That's actually now moving through into revenue. And Europe now represents two thirds of our revenue this quarter, whereas three years ago, it was only 10%. We've been able to do that by three things. First of all, we've developed and grown a European organisation to support this growth. We've also opened up more production capacity. So as we've announced previous quarters, we've now full stream with our Romanian production facility and we've relocated and expanded Germany as well. And we're continuing to invest in innovation. We're a technology business. So we continue to invest in R&D. And that's really now filled out our product portfolio such that we can service all the needs that customers have. What do we do when Bob and I wake up and the rest of the organization of nearly 400 people? We're looking at creating a cleaner world for future generations through our recycling technology. That's what drives us. That's our principal focus. And that's what we've been working on over these years. How are we actually going to deliver that? What are the strategies? One of the main ones is to focus on these growth markets, particularly in Europe. They're greenfield. They're opening up. And that's a fine opportunity for us to come in and show what we can do. As we mentioned, we're a technology business, so we continue to invest and develop and improve our innovative and superior products. We're a nimble, agile business, so we get into the markets early and we really work with customers to tailor our solutions to meet their needs. And the feedback on that is really very positive. We're not going to be able to do this without a fantastic team. So we've grown the team. We were under 300 people. Now we're nearly 400 people in the business during this year. And it's those ambitious and talented people that drive this organisation forward. And the performance today is we want more for tomorrow. So we're continually driving and relentlessly trying to improve what we do. This is great because we have a huge, huge market in front of us. Industry estimates think that there's about 200,000 reverse vending machines, so the products that we deliver to support deposit markets, which will be needed in the next few years in Europe and also in North America. That's about a 4 billion euro market opportunity. What's driving this? It's really legislation. So particularly in the EU, the single-use plastics directive is driving both recovery of beverage containers and also the reuse of that material in for new containers into the market. So great drivers that are really going to motor the business. To satisfy this legislation, countries are going to need to put in systems to capture these containers. The best way of doing that, which has been proven over the decades, is to put in a deposit return scheme. So Bob and I here are in Norway, has a fantastic deposit return scheme. So effectively, when you buy a beverage container, you pay a small deposit, and that incentivizes the end user to return that beverage container to a recycling point and to get their money back. Many markets in Europe don't have that. And so, as you see on this slide, and as we presented before, we have waves of countries from now to 26, 27, putting in those systems. And of course, those systems, when you're talking about billions of containers, which most European markets are, needs automation, which is where our innovative solutions and when our software comes in. I won't go through all these in detail, but the first few, Romania, is where we have our plant. At the end of this month, we'll have an initial go-live of the system. We're delivering products to support Romania. Hungary, with the Mole Group, we've already now started installation in Hungary for a go-live in January. Ireland, which Bob will talk about later, A little bit later, again, we've won a significant order for an independent retailer, and that's starting to roll out and will continue in Q4 and in Q1. After those three immediate countries, then we have a second wave, including countries like the UK, Scotland, Portugal and Poland, again, which we want to really be active in and get our fair share of. And then after that, we have a number of larger countries which are still working on setting up legislation, including Spain and France. Greece here is, we are very active in Greece. Greece at the moment is what we call a pre-DRS market. So we're using technology with our distribution partner to capture the material, but there is no DRS legislation at the moment. Now that may come at some point in the future. Okay, so now just to talk about why we're winning with our customers. Bob, you want to talk us through that?

Thank you. Thank you, Simon, and welcome all. We're often asked the question, why are we winning in the market and winning in different countries? And it really falls under four primary categories. First off, the technology matters. The product matters. We have a very broad technology platform. It's all commercialized. It's in the market. Retailers are using it. Consumers are using it. We also have a collection of the world's, among the world's largest retailers, some of which we've been working with for 20 plus years. So we have the proof points that we can execute with large, what we call tier one retailers. The other important thing is production capacity. So if you're meeting with a very large retailer that needs, in some cases for us, thousands of machines, you have to prove you have the production capacity to meet that need. And lastly, and very importantly, our go-to-market strategy is very consultative. So we spend a lot of time on the front end making sure we understand retailer needs, and then we design a solution. So by the time we get to the RFP, we're already well-positioned to win. This is just a little more breadth of the technology. So we moved from a very small platform machine we call FLAT. It's plug and play, and they're immediately compliant. We move all the way up in terms of volume, storage, technology capacity to Quantum, which is a big outdoor unit that we sell into Sweden and to Greece, a very impressive platform. up to including Modula, which is our backroom system. And this system takes containers to an RVM at the front end, conveys them back to large storage capacity behind. A little more on production. We have three primary production facilities, Naugatuck, Connecticut. They build our standalone platform, Flex, Optima, we have a mere plant in Romania, which is great because it's located close to the EU markets we're tackling, that make the same suite of products. In Germany, we build the Quantum, our bulk feed platform, and the new Modula platform. So if we scale production, we can do 30,000 machines per year and 3,000 in these larger format platforms. And I would argue we're one of only two RBM suppliers that can actually scale production at this level. So where does all this lead us? It leads us to the fact that we're actually executing in the market. And here's a sample of four markets. In Greece, as Simon referred to, this is a pre-DRS market. We're selling to a partner who's developing the market. We sold 140 recycling centers. And if you're in front of these, they're very impressive. They're 5 to 8x higher ASP than a standard RBM. We have great confidence moving into next year that that momentum will continue and so Greece is a very important market and we're really the only player in Greece. As regards Hungary, the Mole Group is responsible for putting the technology platform across the entire country. We want a very large order. We've done the first tranche of 200 RBMs. We have 4,000 plus in front of us. That sets up well for next year and the following years. In Ireland, as we announced, we secured a large preferred vendor relationship where this is a headquarter account that feeds all independent owners and retailers in Ireland, and they're promoting our platform as preferred, and that could result in 800 plus RVMs as we move through that territory. And of course, we're continuing to prosecute commercial cases. The go-live here is in February, so there's a lot of activity occurring in Ireland. Lastly, in Romania, we received an order for 250 RVMs. We built, installed them. The customer was so happy with the quality and our commitment to the timeline, we got a follow-on order this quarter of 100 machines. We also have placed 30 of our new modular platforms in Romania. So we're performing across many countries with different platforms and that's starting to read through as you can see from the highlights in our financial performance.

Very good. Bob, thanks very much. So maybe a little bit more detail now on some of the numbers. So summary P&L. The headline really is group revenue. So as you see, we've made a significant step in group revenue, up 49% year on year, with Europe, as you see now, comprising 2 thirds of that group revenue from much lower percentages even just a year or two ago. Gross margin, we're pleased with the trajectory of group margin. So a year ago, it was just over 31%. Step by step, as you've seen from the previous quarters, we've increased it to just under 35% up up 35% now. Why is this? Well, a couple of things. First of all, generally, as a manufacturer, we're seeing some normalization of supply chains, but really we're focused on manufacturing efficiencies. So Romania now is on full stream. We've done work over the last 12 or 18 months in expanding and localizing our supply chain, and we're very happy with the progress, and we expect that to continue. Operating expenses, we've got a bit more detail on this later, but we've made significant investments in the last few years to be able to cope and deliver with this level of volume. And those expenses now, we're getting good leverage from those expenses as the rate of increase is slowing, but our revenue is accelerating. So overall as a share of sales, that's reduced from 36% to 26%. The result of all of that is really a record EBITDA for the quarter of 3.8 million. That's 15.2% EBITDA margin. And that's obviously significantly higher than the adjusted 3.5% a year ago. So really fantastic quarter. And we see this as the start of a great development of business and really very strong momentum. A little bit more to Europe. So again, Q3 revenues up itself 133% to a record of just under 17 million for the quarter. We talked about three key projects. So Greece, continued progress there in delivering recycling centers, which is very large machines, as Bob had just said. Great start in Hungary. That's a big contract that will continue for the medium term. So we started those deliveries and that will continue to support Hungary go live at the early part of next year and Romania. We are significantly invested in the country with our manufacturing plant. We have now some specific deliveries we're making for international retailers, and we have more of the market to go. Local retailers, municipalities, and that's ahead of us, which we're very actively engaged in. In terms of business development, we've announced follow-on orders in Romania. As Bob said, we've got exciting development in Ireland. That opens a new market for us in Ireland and continued good work both in Greece and Hungary going forward. Maybe North America, Bob, do you want to take that?