Envipco Holding N.V.

Good morning, everyone, and welcome. It gives me great pleasure to introduce you to the Q4 23 results from Vipco. I'm Simon Bolton, CEO in Vipco, and I'm joined in this presentation by Bob Lincoln and Michael Clement. The normal disclaimer. It's been a fantastic quarter for Invipco. We've had record group revenues of 35.4 million, that's 165% over Q4 2022. Combination of volume and also increasing gross margin of the quarter to 35.5% has meant that we've trebled gross profit to 12.6 million. The combination of this volume and also our operational investments, leveraging our operational investments that we've been talking about over the last few years, means that we've had an all-time high EBITDA of this quarter of 5.9 million euros. That's 16.6% relative to sales. Also this quarter, we've seen really good, strong working capital management. If those who we talked with in Q3 remember that that was one of our focused areas for Q4 and receivables and inventory, that's now come through to cash. So overall cash has increased to 9.9 million by the quarter end. So fantastic busy quarter for the business. For those who may be joining for the first time, just a reminder, so we're a recycling technology business. We've been around 40 years, started in the US where we have a fantastic platform and high market share business, but we've also now increased into the high growth market of Europe. And really, Europe is increasing because of legislation. So obviously, concern as citizens has led through to political processes, directives and regulations which are strengthening. is really driving now the recovery of beverage containers. And that's our business. We're a pure play technology company looking at reverse vending machines, so automating the recovery of beverage containers. And this is really driving our growth. And so overall for the year then, adding the very strong Q4, we're 87.6 million. which is 2.3 times what we had in 2021. Again, those who have joined us for the last few quarters know that in 2021, we set out some very clear targets. We wanted to grow the business four to six X. We've already got 2.3 and we're well on our way to that. We're focusing on greenfield markets. So these new European markets that are coming up, and we'll go through a few of those in a little bit more detail in the next slide, that's our real focus. It's a level playing field, and we have really our best chance of success. And we've really got some proof points what we've done on that, which we'll go through. So 30% on new markets. And you can see that our gross margin is increasing. So we're at 35.5% for the quarter. Our target as we end 2025 is to be at 40%. Again, ambitious targets set out in 2021, and we're well on our way. Taking a slightly longer-term view, our business has said we've got a very strong and stable business in the US, but you'll see in the last few years this acceleration in Europe. So three or four years ago, we had one market in Europe, which was Sweden. Fantastic case study for the bulk feed innovative quantum product. Now we operate in seven European countries all generating revenue and particularly Greece, Romania and Hungary are some key markets that have been contributing in 2023 and will continue in 24 and 25. A little bit more detail on those. So Greece actually is interesting. It's a so-called kind of pre-DRS market. So at the moment, there's no DRS deposit return scheme legislation in Greece. However, the government is committed to increase the recovery rate of these containers. And so we're using our quantum with one of our glass machines for municipal recycling centres, and that's proving very popular. Over 270 of those recycling centres installed so far are really fantastic. opportunities in 24 and 25. In Hungary, as we reported on previous periods, we were successful in winning the contract with Moho, and we have installed over 700 units in Hungary, and certainly we have a great runway to complete the contract to 2,300 during this year and possibly the extension order of 2000. Romania started very well. Also, we've installed units there. And then Ireland, that Bob will talk about in a little bit more detail, we've won a frame agreement for the largest independent retailer, which again is a fantastic base of business. Really though, if we look slightly broader, driven through European legislation, this market is a vast opportunity. So at the moment, there's roughly 100,000 reverse vending machines operating in the world, of which Invipco has slightly over 10%. In the next few years, industry estimates think there will be another 200,000 needed, and an average sales price of 20,000 euro, that's 4 billion market opportunity. And that is driven by these strong legislative tailwinds, demand by consumers to really tackle this waste and increase the recovery of beverage containers. And so this momentum is then driving EU countries that already don't have a scheme to put one in place. With billions of containers operating in all of these countries, they need to automate that. And to automate that, they'll need the products and services that we, as in WIPCO, supply. So we're already working in Romania, Hungary and Ireland, as you see on this chart. We have a group of countries, Poland, Austria, UK, Portugal, that have plans to go live with DRS in the next few years. And then thereafter, we have some very large countries, Turkey, Spain, France and so on, who are also... we anticipate to go live with DRS. And there's a number of other countries, Czech Republic, Bulgaria, and so on, that are not on this slide, but are now in active discussions to look at planning deposit return schemes. So fantastic opportunity for the business. And to go through a little bit more detail on operations, I'd like to hand over to Bob. Bob?

Thank you, Simon. And good morning, afternoon to everyone. I think Simon has laid the framework that we have really significant growth in front of us. And the question becomes, how are we going to gain our share of market? We state we want 30-plus percent. Ambitiously, we want well more than that. But the reason we're winning and feel we'll continue to win is we have a very strong value proposition. If you look at our product portfolio, it's arguably the broadest product portfolio in the space. We go from very small applications in Flex all the way up to hypermarkets. We launched this new modular project, which is our Backroom system, which is a fantastic product, and Quantum, which has proven to be a paradigm shift in the way consumers interact with it, and it's been a very important product for us. We've been at this for a while, and we've gained some very significant customers, all global. Our retention rate is huge. We have 95-plus retention rate, and that's because we're performing. The technology performs. The service we provide for our suite of equipment is also incredibly important, and very few companies understand what it takes to actually service thousands of machines, and we're very good at that. Production capacity is very key because these markets are huge and you're dealing with tier one retailers that have appetite for thousands of machines at a time. We have to prove we have the production capacity to meet that demand. And I'll talk a little bit about that in the next slide. The last point is we have a very good go-to-market strategy in terms of how we approach customers. We're very consultative in nature. We want to understand what the customer needs are first. Then we design the technology solution. Then we test that solution with the customer. So when we get to the RFP stage, yes, we're going to be competitive on pricing, but we're right there at the finish line in all these debates. In most cases, we're going to cross that finish line at 30-plus share. We've done better than that, 50 share, and in some markets, even better than that. So we're well-positioned to execute on these growth opportunities. Regards production, we have three primary plants. We have a plant in Romania, which is perfectly sited to attack these European markets. That plant builds our standalone equipment, which is Flex and Optima. It's a mirror plant to our plant in Connecticut, in Naugatuck, Connecticut. Those two plants can scale to 30,000 machines a year. That's very significant. And we believe we're one of only two RVM companies that can actually flex production to that level. The middle view here is our modular and quantum facility in Osnabrück, Germany, and that can scale to 3,000. And these are high-tech, large-format machines, and that is a very impressive number, 3,000. So combined, there's no opportunity we can't tackle in terms of production scale. A little deeper dive on Europe. We're certainly very pleased with the performance in Europe, up 500% for the quarter, 200% year over year. This is coming from machine sales, and all of our target markets are contributing to that revenue line. The big movers are Romania, Hungary, and Greece, but all markets are helping produce revenue for the quarter and going into 2025. In terms of development, you know, Greece has been a great story. We expect that to continue to be a momentum story going into this year in Greece. Ireland launched in February. We're in the midst of a rollout right now in Ireland. That rollout will commence during the first half of this year and pretty much through all of 2024. So we're very, you know, happy with the Irish opportunity and the potential in that market going forward in 2024. The Modula, which is our backroom system, has been a fantastic product. It's been launched with customers in Romania. Romania itself has done very well in the quarter and is also a growth story in 2024. But the Modula platform really has proven itself to be a high-quality, very competitive platform for us. And lastly, quantum. You know, quantum now is in five markets for us. You know, it's been in Malta, Greece, Sweden. But we're starting to see that this product really is going to play a very significant role, not only in Europe, but in North America as well. Moving to North America, our revenues are down 15%. That's on lower RVM sales. Program services is down slightly. But if you take out the effect of material prices, which we participate in the US, our program services revenues are actually slightly up. What that says is that our lease portfolio, our volume metric business in North America is very strong. It's a very good base. We're going to be building on that base because Connecticut passed a doubling of the deposit in January. We're seeing a lot of volume come through our platform because of that change. Massachusetts and New York are also looking to expand to $0.10. That has a big impact on volume. Massachusetts we're quite optimistic on. New York might lag. We should know something about Massachusetts this year. And California's been a recent very strong focus point for the company, and I'll just take you quickly through what's happening there. So there's a substantial law change in California that occurs in January 2025. The cumulative effect of these law changes, we believe, is going to drive more volume to centralized locations. That, of course, advantages our Quantum platform significantly, and we're targeting launching Quantum in California this year. This picture shows a live installation we've done in California with our Optimum platform for smaller collection locations. Difficult market. We've communicated that before, but we are very committed to cracking the code and making sure that we're present in this very large market opportunity. And with that, I will turn it over to Michael. Thanks, Bob.

Let's dig a little deeper into the financials for this quarter. We'll start out with a Q4. Revenues, as Simon mentioned, 35.4 million euros, growth of 165% year over year. So it's been a fantastic year and we've seen an accelerating growth quarter over quarter throughout 2023. Gross margins continue to trickle up, 35.5% in Q4, up from 31.2% in the corresponding period in 2022. Gross earnings 12.6 million, up more than 200%. Operating expenses coming down as a percentage of sales, driving EBITDA of 5.9 million euros for a margin of 16.6%, a record for the company. For the year as a whole, As Simon mentioned, we're on a very good trajectory towards our targeted goals in 2025. Record group revenues in 2023 of €87.6 million, up 55% year-over-year. Actually, over the last two years, our CAGR in revenues is at more than 50%. Europe, a key revenue driver for the year, representing close to two-thirds of our group revenues. Gross margins continue to increase 35% for the year, up from 32.8% in 2022. While revenues are up 55%, our OPEX increases 22%, showing the operating leverage that we are striving towards. EBITDA comes in at 8.8 million euros for a margin for the year of 10%. And we post a positive net profit of 1.4 million euros, up from a loss of 4 million euros in 2022. Invipco has been investing in building a strong, scalable organization in recent years to capture new growth opportunities in greenfield markets. This means that we've been building the team, we have been building production capacity, we've been building sales and service organizations. And these investments have continued through 2023. At the same time, the company has shown strong and solid operating leverage. In Q4, we reported OPEX of 8.8 million euros. This is up 34% year-over-year, while sales were up 165% year-over-year. The largest component of OPEX is G&A expenses. up 41% year-over-year to 7.2 million euros. The largest drivers being increased activity levels and IT implementation costs. Sales and distribution costs were flat year-over-year at around a million euros and R&D expenses are slightly up. Moving on to the balance sheets. Total assets 96.3 million euros up from around 79 million euros at the end of 2022. Non-current assets at 30.6 million euros. The largest components being PP&E at 17.5 million euros and activated development costs of 9.2 million euros. Gross working capital is up year over year, but down from Q3 at 55.8 million euros. We ended the year, as Simon mentioned, with a strong cash balance of 9.9 million euros. Total borrowings on the balance sheet is 16.7 million euros for a net debt of 6.8 million euros at year-end 2023. And we had total equity of around 43 million euros for an equity ratio of 44%. Finally, a look at the cash flows. We ended the year on very strong notes, and in Q4, we had cash flow from operations of 13 million euros, driven by a positive EBITDA of close to 6 billion euros, in addition to working capital release, as we sold off inventory and converted receivables. Cash flow from investments in the final quarter of the year was at around 4 million euros. Cash flow from financing, negative 3 million euros for a net change in cash of 5.9 million euros and ending cash balances of 9.9. For the year, cash from operations, 0.6 million euros, with a positive EBITDA of 8.8, being offset by working capital buildup of 8.3 million. Total investments, cash from investments for the year, 7.8 million euros. with PPE investments at around six, and activated R&D at around two million euros. Cash flow from financing came in at a positive one million euros, with additions from the private placement late 2022 being offset by debt reductions, ending the year, as mentioned, with 9.9 million euros in cash balances. And with that, I think we'll leave the word for Simon for a few concluding remarks.