Strauss Group Financial Results Q 1 201 9 Earnings Presentation May 20 th , 2019 1
Disclaimer GAAP to Non-GAAP Reconciliations This presentation does not constitute an offering to purchase or sell securities of Strauss Group Ltd. (the In addition to reporting financial results in accordance with generally accepted accounting principles “ Company ” ) or an offer for the receipt of such offerings. The presentation's sole purpose is to provide (GAAP), the Company provides non-GAAP operating results which include the results of jointly controlled information. The information contained in the presentation and any other information provided during the entities as if they were proportionately consolidated. Strauss Group has a number of jointly controlled presentation (the “ Information ” ) does not constitute a basis for investment decisions and does not companies: the Três Corações joint venture (3C) - Brazil (a company jointly held by Strauss Group (50%) and by the São Miguel Group (50%) in Brazil), Sabra Dipping Company (a 50%/50% JV with PepsiCo in comprise a recommendation, an opinion or a substitute for the investor's sole discretion. The Information provided in the presentation concerning the analysis of the Company's activity is only an extract, and in the U.S. and Canada), Strauss Frito-Lay Ltd. (a 50%/50% JV with PepsiCo Frito-Lay in Israel) and order to receive a complete picture of the Company's activity and the risks it faces, one should review PepsiCo Strauss Fresh Dips & Spreads International (a 50%/50% JV with PepsiCo outside the U.S. and the Company's reports to the Israel Securities Authority and the Tel Aviv Stock Exchange. The Company Canada)(1). is not liable, and will not be held liable, for any damage and/or loss that may be caused as a result of use In addition, non-GAAP figures exclude any share-based payments, mark to market of commodity hedging of the Information. transactions as at end-of-period, other expenses or income and taxes referring to these adjustments. The presentation may contain forward-looking statements as defined in the Israeli Securities Law, 5728- 1968. All forward-looking statements in this presentation are made based on the Company's current Company Management believes that these measures provide investors with transparency by helping to expectations, evaluations and forecasts, and actual results may differ materially from those anticipated, illustrate the underlying financial and business trends relating to the Company's results of operations and in whole or in part, as a result of different factors including, but not limited to, changes in market financial position and comparability between current and prior periods. Management uses these measures conditions and in the competitive and business environment, regulatory changes, currency fluctuations to establish and monitor budgets and operational goals and to evaluate the performance of the Company. or the occurrence of one or more of the Company's risk factors. In addition, forward-looking forecasts Please see the GAAP to non-GAAP reconciliation tables in the Company's MD&A Report for a full and evaluations are based on information in the Company ’ s possession while preparing the reconciliation of the Company's GAAP to non-GAAP results. presentation. The Company does not undertake any obligation to update forward-looking forecasts and evaluations made herein to reflect events and/or circumstances that may occur after this presentation was prepared. 2 2
Financial Highlights Q1 2019 Q1'19 Sales: NIS 2106mm; growth: -2.8% Q1'19 Organic growth excluding FX: -0.1% Q1'19 gross margins: 40.1% (up 170 bps vs. Q1'18) EBIT and EBIT margins: NIS 269mm (up 5.7%); 12.8% (up 110 bps vs. Q1'18) Net income and net margins: NIS 172mm (up 16.8%); 8.1% (up 130 bps vs. Q1'18) EPS: 1.49 (up 16.3% VS. Q1'18) The group paid a dividend of NIS 200mm (NIS 1.74 per share) on April 2 nd , 2019 3 3
2016-2019 FY | Strauss Group growth journey Net Sales EBIT & Net Income 269 5.7% 254 13.9% 4.8% 2,167 4.0% -2.8% 223 12.8% 2,106 213 10.8% 2,083 11.7% 11.3% 10.7% 172 16.8% 1,880 146 25.7% 8.1% 116 8.4% 107 6.8% 5.7% 5.5% EBIT Net Income % EBIT % NI EPS 1.00 1.08 1.28 1.49 +8% CAGR EBIT increase in 3Y 4% CAGR growth from 2016 With key currencies devaluing +17% CAGR Net Income increase in 3Y 4
Quarter Highlights Strauss Israel Strauss Coffee • Top line growth declines during the quarter by -9.4% in NIS, • Once again S. Israel exceeds the F&B market with top line excluding FX sales were down -3.6%, the negative currency growth of 1.3% versus a decline in the local F&B market of impact from the BRL was NIS 44 mm 0.6% during Q1 2019 • International coffee sales declined -5.4% in local currencies • These results were attained despite the negative impact of • In local currency Brazil (1) was down 4.1% and CIS down -5.7% the Passover timing this year in comparison to last mainly due to lower selling prices as a result of lower green • Innovation and product mix lead growth which is achieved coffee prices; yet again with no pricing increase • Growth in Israel was once again strong up 2.5% during Q1 • Market share continues to expand to 12.2% from 11.9% in 2019 as margins continue to expand the corresponding quarter • 3C (1) market share in Brazil R&G value grew to 28.1% (2) for Q1 • Gross margins improve mainly due to product mix 2019, up from 27.2% during the corresponding quarter • Gross margins expanded due to lower green coffee prices (1) Note: Três Corações joint venture (Brazil): a company jointly held by the Group (50%) and by the 5 São Miguel Group ( 50%) (3C) (2) Source: Nielsen
Quarter Highlights International Dips & Spreads Strauss Water • The Int ’ l D&S business grew 6.5% during Q1 2019; Sabra • Strauss Water sales (excluding HSW) were up 6% during the grew 5.8% and Obela 11.6% quarter on increased sales of water machines and a growing • customer base Hummus market share in North America was at 61.3% during Q1 2019 up from 59.4% in the corresponding quarter • EBIT was up 67.7% during Q1 2019, (including net income from HSW) as a result of improved efficiency measures and higher • EBIT continues to improve dramatically more than doubling profits from HSW to NIS 25 million from NIS11 million in Q1 2018 • Sales of HSW (1) (100%), water JV in China, grew by 27.6% (28.8% • EBIT margins continue to expand – for Sabra up to 16% from excluding FX) in Q1 2019 to NIS 155 million from NIS 121 million 8.9% in Q1 2018, and for the blended company 13% up from in Q1 2018 6.3% • Net profits at HSW grew by 134% (135.8% excluding FX) during • Obela sales were up 11.6% during Q1 2019, 15.8% the quarter to NIS 16 million from 7 million organically excluding FX • Market penetration efforts continue in new markets – Western Europe and New Zealand • Sabra continues to be a global market leader and the no. 1 producer of Hummus in North America (1) Note: HSW revenues are not included in Strauss water results; net income is added to Strauss water 6 6 EBIT in Non GAAP management reports
Q1 2019 7
Sales Q1 2019 Consolidated Sales NIS mm Non-GAAP Q1 2019 Sales by Segment NIS mm; Non-GAAP; % sales contribution Organic growth excluding FX : -0.1% 2,500 2300 120% 2,106 2200 2,000 2100 2,167 100% 2,106 2,083 100% 2000 80% 1,500 1900 Negative 60% 1,880 1800 translation 877 894 1,000 differences = NIS 1700 40% 50 million 42% 42% 1600 500 20% 192 1500 143 0 9% 7% 1400 - 0% Growth '19/ ’ 18 Overall Group Strauss Coffee Strauss Israel Dips & Spreads Water Other 1300 Q1'16 Q1'17 Q1'18 Q1'19 -2.8% -9.4% 1.3% 6.5% 6.0% na Organic growth excl. FX '19/ ’ 18 -0.1% -3.7% 1.3% 7.5% 6.0% na 8
Q1 Sales Bridge Sales growth in both Israel NIS mm; Non-GAAP; Q1 ’ 18 to Q1 ’ 19 and the UK, increased Mainly customer base Salsa disposal Primarily due to the weakening of the BRL (NIS -44mm) 8 11 13 (9) 2,167 (34) 2,106 (50) Higher volumes due to ongoing innovation and Sales growth in better mix Lower sales in Brazil and Hummus and Eastern Europe due to Guacamole lower green coffee prices Partially offset by stronger sales in Israel Group Sales, Q1 International Dips Strauss Israel Strauss Water M&A Coffee Translation Group Sales, Q1 2018 & Spreads Differences Effect 2019 9
Gross Profit Q1 2019 Consolidated Gross Profit and Gross Margins Q1 2019 Gross Profit and Gross Margins NIS mm; Non-GAAP; % Margin NIS mm; Non-GAAP Excl. FX: 3.1 % 900 90.0% Higher gross 900 margins due 845 845 80.0% 850 833 to lower 800 Higher green coffee 70.0% volumes, and prices 800 780 700 favorable Higher gross 60.0% sales mix 600 750 margins in 726 Water and 50.0% 500 Sabra 700 40.1% 38.4% 38.6% 400 350 37.4% 333 40.0% 300 650 30.0% 162 200 Negative 600 translation 20.0% 100 40.1% differences NIS - 48.4% 39.9% 37.2% 14 million 550 - 10.0% Overall Group Strauss Israel Strauss Coffee Spreads, Water & Other 500 0.0% Q1'16 Q1'17 Q1'18 Q1'19 D = 12mm D = 9mm D = -19mm D = 22mm Q1 2018 GP & GM NIS 833 NIS 341 NIS 352 NIS 140 38.4% 39.4% 35.7% 44.4% (1) Note: Três Corações joint venture (Brazil): a company jointly held by the Group (50%) and by the São Miguel Group ( 50%) (3C) 10
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