IMCD N.V.

Hello and welcome to IMCD's 2026 half-year results conference call, hosted by Marcus Jordan, CEO, and Hans Kooijmans, CFO. For the first part of this call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. If you wish to ask a question, please press pound key 5 on your telephone keypad. I would now like to give the floor to Marcus Jordan. Mr. Jordan, please go ahead.

Thank you very much, Elba. Good morning to you all and a warm welcome. I'm Marcus Jordan and I'm here today with our CFO, Hans Kooijmans, for the 2026 half-year results which we published in a press release earlier this morning. We had a positive first half of the year with both gross profit and EBITR organic growth and a strong cash conversion. When looking at the overall business during the first half of the year, I'm proud of how our teams navigated the dynamic environment which included the majority of our suppliers implementing price increases. The magnitude of these price increases varied significantly with the larger specialty part of the portfolio generally receiving much lower percentage increases and showing less volatility than our smaller semi-specialty component. We as IMCD have been particularly careful and responsible when passing on price increases as we maintain our focus on long-term partnerships with our customers and suppliers. If we now move on to the business from a demand perspective, As Hans and I highlighted on our last call, we did not see any significant pre-buying in Q1, but we did see some at the beginning of the second quarter. Although I must say that the amount appears to have been relatively limited, as we believe customers learned valuable lessons from post-COVID when they overstocked and ended up with high-priced inventory. Later in the quarter, demand was more stable, and we have not to date seen any significant reduction. Looking across our various markets, our pharmaceutical and signet business in India, as we anticipated, has returned back to its normal order pattern during the first half of the year. Food and nutrition continues to perform well and in beauty and personal care, we generally see stable demand versus last year. This is an area that we continue to focus on as there are good opportunities with the technical capabilities and lab infrastructure we have. On the industrial side, the best way to describe our business in the first half of the year is positive, with some nice bright pockets in areas such as medical plastics, wire and cable, and the lubricant market. This business was also supported by some nice supplier wins. Looking a bit forward, it is still early in the third quarter, but I can say that we have had a promising start in what are still dynamic market conditions and, as always, we have confidence in our specialty-focused and diverse business model. Moving on to the 2026 half-year numbers, you will find a summary of our financial results on slide 4, where we reported gross profit of €658 million, up 7% on a constant currency basis. EBITR was up to €285 million, which is plus 8% on a constant currency basis. and I'm happy to report that we increased our free cash flow to €222 million, leading to a cash conversion margin of 76.2%, which illustrates our close attention to work and capital management and at the same time ensuring that we have the right inventory in place to service our customers on a just-in-time basis. If we now look at M&A, you can see on slide 5 that we have made three acquisitions during the first half of the year. Firstly, Don Young FT in South Korea, a company active in beauty and personal care. The second acquisition was Willow's Ingredients in the UK and Ireland, a company active in human and animal nutrition. And the third acquisition we announced at the end of June is Merit Solutions, which will strengthen our position as a solution provider for the plastics and compounding market in Thailand. Moving on to the next slide for some updates on our strategic pillars. where you will see that we continue to expand the use of AI to support our commercial organization through a number of initiatives including further development of our sales assistant tool and more recently a fully automated pre-visit summary for our sales people which summarizes all major topics that they should cover when visiting or calling their customer. On the people pillar, with people being our greatest asset, we are pleased to add a global people director to IMCD's Executive Committee, and we look forward to working closely together to continue to further enhance our ability to attract, develop, and internally promote top talent within our organization. You will have seen some examples of this at managing director level during the first half of this year. And last year, we announced our commitment to setting SBTI near-term targets, and we will shortly submit our targets for validation. To summarize and to end my part of the introduction, I believe we have executed well in the first half of the year and I see good traction on the commercial, operational, and digital excellence initiatives we have been focused on, including supply development and expansion. In these unpredictable times, it is even more important that we have the highest level of sales activity, that we quickly adapt to changing market conditions, and that we remain a reliable partner for both customers and suppliers. We focus on the things that we can control and are committed to delivering long term growth for our partners and stakeholders in the years ahead. I would now like to hand over to our CFO, Hans Kooijmans, who will give you an update on the numbers.

Thanks for the introduction Marcus and good morning ladies and gentlemen. I would like to start as usual on page 8 of the presentation where you will find a summary of the key figures taken from the press release with our 2026 first half year results. As you can see, Forex adjusted revenue increased 11%, which is a combination of 3% organic growth and 7% resulting from the impact of the first-time inclusion of acquisitions. Forex adjusted growth profit increase was 7% compared to the same period of last year, a combination of 5% resulting from acquisitions and 2% organic. We started the year, as you know, with a minus 4% organic growth in the first quarter, followed by a positive 7% organic growth in the second quarter. And in this second quarter, all regions reported organic gross profit growth. Gross profit in percentage of revenue was 24.9%, which is about 0.7% point lower than last year. It is important to mention that more than half of this decrease in percentage was the result of recently acquired companies, mainly in EMEA, with on average lower cost-profit margins than the legacy IMCD business. We further had the usual impact of changes in product mix, local market circumstances, price and currency fluctuations. Then Forex suggested operating EBITDA increased 8%, and this increase was a combination of modest organic growth and a positive contribution of acquisitions of 7%. Like gross profit, we started the year with minus 9% organic growth in the first quarter, followed by a positive 11% organic growth in the second quarter. And in this second quarter, all regions reported organic EBITDA growth. As explained to you in our Q1 call, we had quite some currency headwind in the first half of the year, both operational and when translating local currencies into the euro. The minus 4% currency translation impact on EBITDA in the first half of the year was in absolute numbers a minus 12 million euros. Operating EBITDA in percentage of revenue of 10.8 and a conversion margin of 43.3%, were both just slightly lower than the same period of last year. On the bottom of this slide, you see that IMCD has about 5,200 full-time employees. Compared to the end of June last year, we welcomed about 150 new colleagues as a result of acquisitions. We further invested in the quality of our sales and digital teams, and we rationalized the back office when needed to the back office structure and that lead to a net saving of about 200 employees. We exercised prudence in filling vacancies and maintained strict cost control resulting in no organic increase in our own cost compared to last year. Then Forex suggested net result and earnings per share all increased with double-digit percentages and Marcus already referred to the healthy cash flow. And I will come back on cash flow later in the presentation. Page 9, a bit more color on the year-on-year development of gross profit, EBITDA and conversion margin per operating segment, whereby the differences, as you see, are split in organic acquisition and currency impact. In EMEA in the first column was by far the best performing segment in the first half year. The organic growth profit growth in the first quarter was flat, followed by 11% growth in the second quarter, resulting in the reported 5%. The drop in growth profit margin in this segment from 27.5 to 26.7 this year was pure M&A related. When normalizing for the impact of recent acquisitions, The average growth profit margin would have been slightly higher than last year. Similar pattern for organic EBITDA growth in EMEA. A minus 4% in Q1 was followed by a very strong 20% organic growth in the second quarter, resulting in 7% organic growth in the first six months. The EBITDA margin was stable at 11.7% and conversion margin slightly improved to 43.6. In the Americas we had, as you might remember, a soft start of the year with substantial negative organic gross profit and EBITDA growth in the first quarter. Although still modest, we are happy to see that the second quarter improved. but by reported low single-digit organic growth profit and EBITDA growth. The organic growth in the second quarter was not enough to compensate the decrease in Q1, resulting in negative organic growth in the first half of this year and a decrease of EBITDA and conversion margin. In Asia-Pacific, after a low single-digit organic decrease in growth profit and EBITDA in Q1, we saw a much healthier second quarter, with positive mid-single-digit organic growth. Operating EBITDA and conversion margin were more or less similar as last year and still the best performing segment in the group. Holding costs in the last column were lower than last year at 0.6% of revenue compared to 0.7% last year. This decrease is partly due to lower cost and partly the result of a higher cost recharge to the operating segments. Then on page 10, a summary of the P&L lines between operating EBITDA and net result for the period. You can see net result is 12 million or 10% higher compared with the same period of last year. Higher income tax expenses were compensated by lower finance costs. Amortization of intangible assets increased as a result of acquisitions done and These are, as you know, non-cash costs related to the amortization of supplier relations, distribution rights, and other intangibles. Then the one-off costs are $6 million lower than last year. On this line, we reported a gain of $4 million on the sale of a warehouse as a profit and slightly lower costs related to acquisitions and one-off adjustments to the organization. On page 11, a specification of the net finance cost, and as you can see, lower changes in deferred considerations as a negative and lower currency exchange results as a positive are the main drivers of the reported decrease. Currency exchange results are, as you know, realized and unrealized results of translating the monetary assets that we have in foreign currencies into local currencies. and the IFRS hyperinflation adjustment relates to IMCD Turkey. Page 12, summary of the IMCD balance sheet and on most lines little changes compared to the year-end 2025 numbers. Property, plant and equipment, so the real fixed asset that we own, are still relatively low as a result of the asset-light business model. The combination of intangible assets and related deferred tax liabilities of about 2.5 billion in total are a result of acquisitions done since July 2014 and our history as a private equity-owned company. On the financing side, there is 1.6 billion of debt, and I will come back on that in a minute, and 2.1 billion of equity. This substantial equity position covers 58% of our capital employed. Page 13, a summary of reported working capital. Total working capital at the end of June was just over a billion, which is about 10% more than December 2025. 66 million more than June last year. The overall increase, that is a combination of the impact of working capital as a result of acquisitions done, yet some currency impact and some operational developments. The increase compared to December is the usual cycle during the year and mainly the result of higher debtor positions as a result of higher sales in the month of June compared to the month of December. When translating the amount of working capital in days of revenue, we reported 70 days end of June this year compared to the 69 days end of June 2025. And on the bottom of this slide, you could see the development of the days for the three most important working capital components. The increase depth of days from 60 last year to 68 this year is mainly driven by much higher sales in the second quarter this year compared to last year. Last year June, I explained to you that 54 days of stock was relatively high. You might remember at that time I spoke about external and internal factors having a negative impact and we discussed last year items like the Red Sea issue, customers postponing delivery dates due to changing market conditions like tariffs and corrective measures that we took to bring down stock levels in various segments. This year, the relatively high stock days number is more positive. As Marcus mentioned, we had a promising start of Q3, whereby current stock levels are needed to cover demand of our customers. On the next slide, a summary of our net debt position, leverage ratios, and the maturity profile of our debt. Net debt in the first six months was more or less stable at 1.6 billion. And in the first six months, we spent about 50 million on acquisitions. We paid a dividend of 107 million. and generated healthy cash flow. The leverage ratio end of June based on IFRS and our loan documentation was 2.8 times EBITDA. This level was well below the maximum set on our loan documentation. And as you know, we are historically cash generative in the second half of the year. So dependent upon our acquisition activity, expect our leverage to come down. On the right side of this slide you will find our debt maturity profile. I would like to finish this short summary with a cash flow overview on page 15. Free cash flow was 222 million, an increase of 49 million compared to the same period of last year. The main driver of this increase are higher operating EBITDA combined with lower working capital investments. CAPEX of approximately 3 million were lower than last year's spending and primarily directed towards IT investments, bit of office improvements and lab equipment. Last but not least, on page 17, you will find the outlook for this year. I assume everybody has already read the text in our press release, and therefore I won't repeat it aloud. I would like to hand over back to Elba, the operator, to open the lines for Q&A.