Jacquet Metal Service: Third Quarter 2015

Regulatory News:

JACQUET METAL SERVICE (Paris:JCQ):

On November 12, 2015, the Board of Directors, chaired by Eric Jacquet, examined the unaudited consolidated financial statements for the nine months ended September 30, 2015.

(1) Including the distribution business purchased from Schmolz+Bickenbach from July 22, 2015
(2) Adjusted for non-recurring items (non-IFRS financial indicators)

Third quarter 2015 sales and earnings

On July 22, 2015, via its IMS group division, the Group acquired certain Schmolz+Bickenbach group's distribution businesses, based mainly in Germany. The business generates annual sales of around €600 million. The new operations are consolidated in the Group financial statements from July 22, 2015.

Group third quarter sales including this acquisition amounted to €378.0 million, +35.4% higher than Q3 2014:

• volume effect at constant consolidation: up 3.1%; all divisions increased their volumes distributed (Jacquet-Abraservice +9.9%, Stappert +0.2%, IMS group +2.1%),
• change in consolidation: up 39.6%, mainly due to the Schmolz+Bickenbach distribution acquisition (sales of €104 million recorded between July 22 and September 30, 2015),
• price effect: down 7.3%; the third quarter was marked by a decline in raw material prices that had a knock-on effect on sale prices.

The consolidated gross margin rate amounted to 20.7% of sales (22.9% at constant consolidation) versus 24.9% in Q3 2014.

EBITDA adjusted for non-recurring items came to €9.4 million (2.5% of sales) and operating income before non-recurring items amounted to €3.7 million.

Third quarter operating income amounted to €52.7 million, which includes non-recurring expenses of €8.5 million mainly related to the Schmolz+Bickenbach distribution acquisition. It includes a provisional €57 million badwill gain arising from first consolidation.

Third quarter net income (Group share) came to €48.7 million.

Acting in an environment characterized by low prices, the Group is focusing on continuously improving the operating efficiency of its divisions and, in particular, turning round the Schmolz+Bickenbach distribution companies currently generating insufficient results.

Sales and earnings for the period ended September 30, 2015

Sales for the nine months ended September 30, 2015 amounted to €1,000.8 million, up 16.8% versus the same period in 2014 (+17.9% volume effect, including a 3.4% volume increase at constant consolidation and consolidation changes of +14.5%; -1.1% price effect).

EBITDA adjusted for non-recurring items came to €37.4 million (3.7% of sales), operating income to €73.3 million and net income (Group share) was €59.6 million.

Proforma sales for the period ended September 30, 2015 (i.e. including Schmolz+Bickenbach distribution sales as from January 1, 2015) amounted to €1,330 million, generating adjusted EBITDA of €36.9 million.

Financial position at September 30, 2015

The Group consolidated balance sheet shows total assets of over €1 billion. Operating working capital amounted to €394 million, or 22% of sales.

Group net debt stood at €216.8 million compared to shareholders' equity of €302 million, resulting in a net debt to equity ratio of 72%.

On October 30, 2015 the Group, advised by Bayern LB, carried out a Schuldschein issue (private placement of debt securities under German law), which enabled it to raise €88 million (5-year bullet loan), mainly used to refinance the €48.6 million paid out for the acquisition of Schmolz+Bickenbach distribution.

Earnings per division

As of the third quarter 2015, the Jacquet Metal Service group has reorganized its financial communication on the basis of three divisions:

• Jacquet-Abraservice: the two brands, specialized in the distribution of quarto plates respectively in stainless steel and wear-resistant steel, now form a single division under the same operating management, given that they offer opportunities for synergies in terms of procurement. This combination will not affect the sales networks, which will remain separate.
• Stappert: division specialized in the distribution of long stainless steel products.
• IMS group: division specialized in the distribution of engineering steels, mainly in the form of long products. This division now includes the Schmolz+Bickenbach distribution businesses.

⁽¹⁾ Non-brand operations (including Jacquet Metal Service SA) contributed €3.7 million to Q3 2015 adjusted EBITDA and €5.6 million to 2015 9-month adjusted EBITDA.
⁽²⁾ Including the distribution business purchased from Schmolz+Bickenbach from July 22, 2015
⁽³⁾ Adjusted for non-recurring items (non-IFRS financial indicators)

• Jacquet-Abraservice
  
  Q3 2015 sales totaled €79.8 million, up 7.2% versus Q3 2014 (+18.6% volume effect, including a 9.9% volume increase at constant consolidation and consolidation changes of +8.7%; -11,4% price effect), while adjusted EBITDA came to €1.4 million. Third quarter earnings were impacted by falling prices and challenging market conditions in the United States.
  
  The division posted sales of €261.6 million for the nine months ended September 30, 2015, up 19.3% versus 2014 (+19.7% volume effect including consolidation changes of +10.5%; -0.4% price effect). Accordingly, Jacquet-Abraservice reported adjusted EBITDA of €7.6 million.

• Stappert
  
  For the third quarter of 2015, the division posted sales of €109.1 million, down 6.6% from the same period in 2014 (+0.2% volume effect; -6.9% price effect), and adjusted EBITDA of €3.1 million. Quarterly earnings were impacted by falling prices.
  
  The division posted sales of €345.9 million for the nine months ended September 30, 2015, down 1.3% versus 2014 (-2.1% volume effect; +0.7% price effect). Adjusted EBITDA came to €13.5 million.

• IMS group
  
  For the third quarter of 2015, sales amounted to €189.8 million, up 118.4% versus Q3 2014 (+121.9% volume effect, including a +2.1% volume increase at constant consolidation and consolidation changes of +119.8% resulting from the consolidation of Schmolz+Bickenbach distribution; -3.5% price effect). Accordingly, adjusted EBITDA came to €1.2 million, including a €1.4 million loss generated by Schmolz+Bickenbach distribution.
  
  The division posted sales of €395 million for the nine months ended September 30, 2015, up 37.4% versus 2014 (+40.7% volume effect including consolidation changes of +36.2%; -3.3% price effect). IMS group posted adjusted EBITDA of €10.7 million.

September 30, 2015 interim report available: www.jacquetmetalservice.com.

2015 Annual report: Thursday, March 10, 2016 after close of trading

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