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TRANSCRIPT
Handelsbanken Mid/Small Cap Seminar21 June 2011 in Stockholm
Stefan RanstrandPresident/CEOTomra Systems ASA
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“A tiny blue and green oasis of life in a cold universe.” – David Suzuki
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TRANSFORMATION
The world population and standard of living is increasing dramatically
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World resources are under unprecedented pressure
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Resource productivity must increase to ensure sustainable development
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TRANSFORMATION
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At TOMRA we have always thought this way. From inventing the world’s first reverse vending machine in 1972 to providing the most innovative sensor-based sorting systems today.
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TOMRA is transforming how we obtain our resources…
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Our sorters can increase recovery of valuable minerals by up to 25%
Our sorters can reduce water consumption with 3-4 cubic meters per ton ore
Our sorters can reduce energy consumption in mining by 15%
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TOMRA is transforming how we use our resources…
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More than 30 per cent of fruits and vegetables grown for North American consumers are discarded before they reach grocery store shelves because of cosmetic imperfections*
One of our optical sorters can individually analyze millions of potatoes, tomatoes etc. per day and quality sort each and every one to maximize efficient use of the produce
Up to 100% reduction on manual labor alternative and productivity increases up to 20%. Yield improvement > 1.5%
12* According to MAF Roda
TOMRA is transforming how we reuse our resources…
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30 billion used beverage containers are every year captured by our reverse vending machines
Our optical waste sorter can analyze and sort a football stadium covered with waste in less than 15 minutes
450 000 tons of metal is recovered every year by our metal recycling machines
Our vertical balers enable daily savings of 45,000 transport movements, 700,000 liters of fuel and up to 50% of customers’ waste handling costs
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TOMRA creates sensor-based solutions for optimal resource productivity
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Today we are seeing more opportunities for transformative solutions than ever before.
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Deposits into refunds…
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Waste into wealth…
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Source into resource…
Purpose into profits…
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Profits into progress…
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TOMRA is showing that we can move past the false choice between the earth and the economy
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This is the resource revolution
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TOMRA is leading it
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TOMRA Collection Technology
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RVM TECHNOLOGY
SERVICE/SUPPORT
DATA ADMIN/CLEARING
MATERIALPICK-UP
MATERIALBROKERAGE
MATERIALPROCESSING
MATERIALRECYCLING
The used beverage container recycling value chain
Generic used beverage container (UBC) recycling value chain
RVM-based UBC recycling value chain
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Value proposition
• RVMs reduce need for manual labor and will typically have a payback period of 12-18 months for medium sized stores
• Improved logistics and handling
• RVMs keep track of all deposit transactions – in Germany alone the total transaction volume has an annual value in excess of ~4 bn EUR
• RVMs have several fraud detection features to prevent paying out deposit on non-eligible containers
• RVMs make it convenient and easy for consumers to return their empty containers
• RVMs are clean and efficient and ensure correct redemption of containers
Reduced costs
Clearing of deposits
High convenience
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Current global installed base of RVMs in deposit markets
South America: ~1,000
Nordic: ~20,000
Germany: ~30,000 / 45,000*
North America: ~19,000
Other Europe: ~20,000
Japan: ~500
All deposit (7)
Non-refillable
Refillable
ESTIMATES
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New markets
* Trautwein has ~20,000 small RVMs installed in corporate cantinas, factories etc. Source: TOMRA analysis
INDICATIVE
Proposed expansion/amendments
Industry Funded Repeal Campaign
CDL campaign
North America Europe/Other
UK: 20,000-25,000 RVMsfully penetrated
Australia: 4,000-5,000 RVMs fullypenetrated
Spain: 15,000-20,000 RVMs fullypenetrated
Protect and defendexisting business
Spur growth in existing markets
Succeed in new markets
• Cost leadership
• Increased differentiation
• Accelerated machine replacement
• Incremental revenue streams on installed base
• New segments/channels
• New deposit markets
• Viable non-deposit business models
Our strategy
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Highlights – Collection Technology
• TOMRA is the number 1 player in the reverse vending machine (RVM) industry
• Installed base of more than 65,000 machines across more than 30 markets
• Annual revenue of ~2 bn NOK
• Current EBITA margin of 15-20% after R&D charges
• Opportunities for introduction of new (deposit) legislation and expansion of existing deposit systems
• Opportunities to leverage installed base– Accelerated replacement of old
machines in existing markets through increased innovation
– Incremental revenue streams on installed base (value added services etc.) such as PANTO
– New material streams handled by RVMs – odd shapes
– Penetration of new segments/channels
Business characteristics Investment opportunities
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TOMRA Sorting Technology
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RECYCLING MINING FOOD
Sorting and inspection business streams
SEGMENT
SHARE OF
REVENUE
MATERIALS
CUSTOMERS
INDUSTRY
POSITION
1 1 Top 5 overall, number 1 in certain segments
~45%
Plastics, paper, metals etc.
Material recovery facilities, scrap dealers, metal shredder operators
~20%
Minerals, gems, coal, metal slag etc.
Mining companies
~35%
Potatoes, tomatoes, carrots etc.
Food growers, packers and processors
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1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
• Revenue growth, organic plus inorganic, of nearly 40% per year from 2004-10
• Technology base and segment/application knowledge expanded both through acquisitions and in-house ventures
• Growth driven by
− Favorable changes in regulatory framework (DSD, WEEE, ELV, etc)
− Price increases in food, commodities & landfill costs
− Strong sales and service network
− Technology leadership
− Higher quality and food safety demands
TITECH Visionsort AS established
CommoDas acquired
Ultrasort acquired
QVision AS established
>100
Strong revenue growth since inception in 1996
Revenue development and key milestones for TITECH GroupEUR million
Real Vision Systems acquired
TITECH acquired by TOMRA
14.5
0.5
Odenberg acquired
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Total annual market size for different sensor-based sorting segments
EUR million
Market size and potential
ESTIMATES
Source: TOMRA analysis
~500-550
~850-900
50 90407020
60
400
650
2010 2015
Food
Mining
Metal
Waste
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Maintain technology leadership position
Expand geographically
Use M&A to consolidate market and enter new business streams
• Continue to invest heavily in R&D
• Bring new and enabling technology to the market
• Further develop web of partners
• Aggressively target promising regions and markets
• Leverage market presence across entire portfolio
• New verticals/business streams in sensor-based sorting
• Increase footprint and scale through consolidation
Our strategy
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• World leader in sensor-based sorting
• Focused on recycling, mining and food -number 1 in waste and mining and a key player in food
• Installed base of ~5,000 optical sorters and 500 peelers across 45 markets
• Total 2010 revenue of more than 100 MEUR
• Strong value propositions and attractive ROI for customers based on reduction of operational costs and/or increased quality/output of material stream
• Expansion into new segments (new verticals/industries) and new geographies
• Potential for increased scale benefits and rapid growth through industry consolidation
Business characteristics Investment opportunities
Highlights – Sensor Based Sorting
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TITECH – Waste to wealth
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Value proposition for PET sorting
Reducescosts
Increasesrevenues
Ensures consistent,
stable and fast operations
• Reduces person-hours by up to 75 %
• Low operating and maintenance costs and reduced space requirements
• Avoids high turnover of personnel
• High precision (over 99% purity –ready for BtB processes)
• Easy to adapt to changing needs and sorting tasks
• Sorting of up to 10 tons per hour
• MTBF >7,000 hours, i.e., two years of two-shift operations
• Reduced accidents and less strain on staff
• Constant quality and performance
• Some sorting tasks impossible/difficult for manual sorters
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Market segments in recycling
Waste recycling Metal recycling
PackagingSorting
Commercial & Industrial Wate Sorting
Construction & demolition WasteSorting
Single Stream Recycling
Paper Sorting
Mixed MunicipalSolid WasteSorting
RefuseDerived Fuel
Pre-sortedMaterial Sorting
End of Life VehiclesScrap Sorting
Electronic Scrap Sorting
Non-FerrousMetals Sorting
Ash Sorting
WireRecovery
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Total annual market size
EUR million
Growth potential
• Market expected to grow at an annual rate of 10-15% overall
• TITECH expects to maintain its overall market share
Drivers
• Increased demand for raw material
• Higher labor costs
• Higher commodity prices
• Legislation (landfills, ELV, WEEE etc.)
• Adoption of technology in new markets (Asia, Latin America, Eastern Europe)
• New applications such as flake sorting
Market size and potential
90
160
Source: TOMRA analysis
50
90
40
70
2010 2015
Waste Metal
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ESTIMATES
• TITECH pioneered optical sorting of waste and is the number 1 player in this industry
• Serves all key market segments such as recycling of plastics, paper, metals etc.
• Installed base of more than 2,500 units
• Strong sales and service network
• Unrivalled technology platform
• Growing business, historically the annual growth rate has been in excess of 20%
• Favorable macro drivers– Increasing waste volumes– More ambitious recycling targets and
programs– Labor costs continue to increase– Attractive commodity prices
• Continued strong organic growth driven by geographical expansion and new sorting applications– Asia, Middle East and South America
are growing markets– Demand for more advanced sorting
solutions as markets become more sophisticated and experienced with sensor based sorting
Highlights - TITECH
Business characteristics Investment opportunities
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Commodas Ultrasort –Finding mindful solutions
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Value proposition
Increased access to resources
Cost savings
Environ-mental
benefits
• Lower head grade can be processed
• Better utilization of existing deposits
• Old dumps turn into resources
• Significant capacity increase of the traditional beneficiation plant
• Energy costs savings
• Less wear and tear and chemicals costs
• Better carbon footprint
• Reduction of acid mine drainage
• Less pollution
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PreciousMetals
IndustrialMinerals
Calcite
Feldspar
Dolomite
Talc
Quartz
Magnesite
Salt
Diamonds
Tanzanite
Emeralds
Diamonds& Gems
Gold
Platinum
BaseMetals
Iron
Manganese
Chromite
FerrousMetals
Copper
Zinc
Nickel
Tungsten
Lead
Fuel
Coal
Uranium
StainlessSteel
Copper
Chromite
Slag
Bold = High Volume Mining
Market segments
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Market size and potential
Total annual market size
EUR million Growth Potential• Market expected to grow at an
annual rate of around 20-30% overall
• Commodas Ultrasort expects to maintain its overall market share
Drivers• Increasing demand for
commodities from emerging markets
• Increased pressure on costs but high/increasing energy and water costs
Source: TOMRA analysis
20
60
2010 2015
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ESTIMATES
• CommoDas UltraSort is the number 1 player in sensor-based sorting of mining materials
• Covers all key industry segments such as minerals, metals, gemstones etc.
• ~160 units installed worldwide
• Rapidly growing business
• Increasing demand for commodities from emerging markets
• Increased pressure on costs but high/increasing energy and water costs
• Tougher environmental regulations
• Lower head grade
Business characteristics Investment opportunities
Highlights - Commodas Ultrasort
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Odenberg – Securing quality, efficiency and productivity
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Value proposition
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Operational Efficiency
Reduces Costs
Assured Consumer
Food Quality & Safety
Increases Revenue
• Up to 100% reduction on manual labor alternative
• Productivity Increases -~ 20%
• In many cases sorting cannot be completed manually due to product size or defect types
• Yield improvement > 1.5%
• Protects customers reputations. Automated control helps protect against ‘undesirables’ or ‘harmful’ items entering the food chain. Mitigates against the ‘cost’ and damage of failure, recalls, etc
• Legislation for food quality becoming more and more demanding with full traceability
• High precision and multiple sort grades (by size & quality) maximizes raw product utilization and product sales value
• Easy to achieve customer requirements regardless of incoming product quality.
• Analyses the crop quality, size and line efficiency as it sorts. Provides real time data to customers to become more productive [effective real time control], maximizing yield and select/monitor suppliers.
Market segments and technologies for food sorting
Source: TOMRA analysis 49
SK
Seeds &
Kernels
PFV
Processed
Fruits &
Veg incl
Frozen /
diced..
FF
Fresh Fruits
FV
Fresh Vegetables
NDF
Nuts &
Dried Fruit
Circa 45% of global production (volume)
Circa 40% of global production (volume)
Source: TiTech analysis
M&A opportunities within sensor-based sorting/inspection
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Fruits and vegetables
StaplesMeat & fish
Dairy BeveragesBread and bakery
SweetsFeed & pet food
Key
Odenberg
MAF
Greefa
Aweta
Citrus
BEST
Buhler (Sortex)
SEA
Satake
Concept Engineers
Visys
QVision
InLine Process
Buchi
Perten
Process Sensors
TermoScientific
Bruker Optics
NIR-Online
NDC
ESE
Concept Engineers
Concept Engineers
S+S
Foss
Prediktor
NDC
NIR-Online
Prediktor
Process Sensors
Carl Zeiss Carl Zeiss
Mettler Toledo
Loma
Anritsu
Ischida
Smiths Detection
Foss
Process Sensors
Food sorting
Process analytics
Product inspection
RayTech
Target-rich environment
Focus for this presentation
Market size and potential
Total annual market size
EUR million
400
650
2010 2015
Growth potential
• Market expected to grow at an annual rate of >10% overall
• Odenberg expects to increase its overall market share
Drivers
• More sophisticated and demanding consumers with more disposable income and changing eating habits
• Consolidation in the retail and processing sectors
− Improving yield and quality
− Reducing labor costs
• Globalization & increasing export
− Verifiable quality & safety processes
− Traceability Requirements
Source: TOMRA analysis 51
ESTIMATES
• Top 5 player in optical sorting and processing solutions for food.
• #1 in sorting of potatoes, tomatoes & peaches and # 1 in steam peeling of potatoes
• Diversified both geographically and by customer type
• Proven & loyal partner to some of worlds top food companies
• Installed base of ~2,200 optical sorters and ~500 steam peelers
• Rapidly growing business, revenue doubled from 2005 to 2010
Business characteristics Investment opportunities
Highlights - Odenberg
• Increasing global consumption of food
• Growing middle class population (70 million per year) with increasing demands for food quality, in particular from BRIC countries
• Relentless industry focus on reducing costs through automation and improved quality control
• Stricter rules and regulations regarding food safety [farm to fork]
• Huge liability issues for food manufacturers if products are defect or contaminated
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Financial performance and targets
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Collection Technology - Segment financials
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Gross and EBITA margin developmentPercent
Revenue developmentNOK million
0
500
1000
1500
2000
2500
2007 2008 2009 2010
Q1 Q2 Q3 Q4 Full year
4345 46
48
16 16
2119
0
5
10
15
20
25
30
35
40
45
50
2007 2008 2009 2010
GM EBITA
Collection Technology - Financial Dashboard
55
~75%
~35%
Industry growth
Profitability (ROCE)
Recurringrevenue
Dashboard
20-30 markets
~65%
Low
Market share
Geographicaldiversity
Cyclicality
0-5%
TARGETS 2010 -2015
• Yearly growth 5 – 10%
• 40% reduced COGS on machines from 2010 to 2015
• EBITA-margin 20-25%
Industrial Processing Technology - Segment financials
56
Gross and EBITA margin developmentPercent
Revenue developmentNOK million
0
100
200
300
400
500
600
700
800
900
2007 2008 2009 2010
Q1 Q2 Q3 Q4 Full year
51 52 52 53
1719
5
18
0
10
20
30
40
50
60
2007 2008 2009 2010
GM EBITA
Financial Dashboard - Industrial Processing Technology
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10-15%
’15-40%
Industry growth
Profitability (ROCE)
Recurringrevenue
Dashboard
40-50 markets
10-60%
Medium to high
Market share
Geographicaldiversity
10-15%
TARGETS 2010 -2015
• Yearly organic growth 15%
• Acquisitions on top
• EBITA-margin 20-25%
Cyclicality
Material Handling - Segment financials
58
Gross and EBITA margin developmentPercent
Revenue developmentNOK million
0
200
400
600
800
1000
1200
2007 2008 2009 2010
Q1 Q2 Q3 Q4 Full year
21
17
10
22
10
7
-8
9
-10
-5
0
5
10
15
20
25
2007 2008 2009 2010
GM EBITA
Financial Dashboard - Material Handling
59
90-100%
~14%
Industry growth
Profitability (ROCE)
Recurringrevenue
Dashboard
10 markets
30-80%
Market share
Geographicaldiversity
0-3%
TARGETS 2010 -2015
• Yearly organic growth 0-3%
• EBITA-margin >10%
Low
Cyclicality
• Cash flow from operations
• 40 MNOK in 1Q 2011 versus 109 MNOK in 1Q 2010, which was positively influenced by prepayments
• Cash flow from investments
• Investment of 55 MEUR in Odenberg in 1Q 2011
• Other investments of 48 MNOK 1Q 2011
• Interest bearing debt
• Increased by 422 MNOK during 1st quarter due to the Odenberg acquisition
• 500 MNOK 5 year revolving debt facility, established in January 2011, replacing previous 250 MNOK facility due to expire in October 2011
• Additional 500 MNOK to be refinanced during 2Q 2011
• Solid financial position
• 48% equity
• NIBD/EBITDA* =1.2
Amounts in NOK million
31 Mar 2011
31 Mar 2010
ASSETS 3831 3123
• Intangible assets 1394 904
• Leasing equipment 158 124
• Other fixed assets 615 606
• Inventory 614 568
• Short-term receivables 941 891
• Cash and cash equivalents 109 30
LIABILITIES AND EQUITY 3831 3123
• Equity 1833 1919
• Interest bearing liabilities 957 269
• Non-interest bearing liabilities
1041 935
* Rolling 12 months based upon EBITDA before other items
Financial highlights – balance sheet, cash flow and capital structure
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TOMRA creates transformative sensor-based solutions for optimal resource productivity
61
Today we are seeing more opportunities for transformative solutions than ever before.
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Deposits into refunds…
63
Waste into wealth…
64
65
Source into resource…
Purpose into profits…
66
Profits into progress…
67
TOMRA is showing that we can move past the false choice between the earth and the economy
68
This is the resource revolution
69
TOMRA is leading it
70