Passion for Taste & Health Continued Journey of Growth October 2017
DISCLAIMER This presentation includes statements data, forecasts, goals and Company plans that are "forward-looking statements, as defined in the Securities Law - 1968, whose occurrence is not certain and which are not solely in the Company's control. These forward-looking statements are included, inter alia, in discussions of strategy, objectives, goals, plans, events, future intentions or other information relating to future events or issues whose occurrence is not certain. By their nature, forward-looking statements involve risk and uncertainty. Whether the forward looking information occurs or not is affected, inter alia, by risk factors characteristic to the Company's operations and developments in the general environment and external factors which impact the Frutarom Group and its area of activities. This forward looking information could include facts and data based on the Company's subjective assessment, including with regards to the ability of the company to consummate the Enzymotec acquisition on the anticipated timing, or at all, the current status of the Company and its business, the current situation in the industry in which the Frutarom Group operates, macro-financial facts and information, all as are known to the Company on the date on which this presentation was prepared, some of which were given to the Company by external sources, the content of which was not independently examined by the Company, and therefore the Company is not responsible for their verity. This presentation must be read together with the Company's periodic and immediate reports, and was not meant to replace the need for study of reports the Company has published, including, inter alia, the Company's periodic report for 2016, published on March 2017, and the Company's periodic and immediate reports subsequently published. These reports could include, inter alia, updates to the information regarding the Company's activities or of the forward looking statements appearing in this presentation. Subject to the requirements of applicable law, the Company does not intend to update any industry information or forward-looking statements appearing in this presentation, and is not required to publish any additional presentations for its shareholders in future. It is to be emphasized that the financial estimations and the pro-forma figures included in this presentation are based on figures which were not audited or reviewed by an auditor and therefore the actual results may differ from these financial estimations.
A Leading Fast Growing Global Flavor & Fine Ingredient House Global Presence Broad Product Portfolio Financial Success 2000-2016 Public Company A Top 10 flavor house Sales in over 160 countries Over 30,000 customers 60,000 products Over 6,000 raw materials Innovative pipeline 14x growth in sales (CAGR 18%) 24x growth in EBITDA * 35x growth in Net Profit * Listed on London & TLV Stock Exchanges From $13M to above $4.5 B market cap <1500 * Excluding non-recurrent expenses ** As of Oct 2017, following its accelerated internal growth and acquisitions made so far, Frutarom s annual sales run-rate already reaches close to 1.5B$
Global Expansion throughout the years 1996 Tel Aviv stock exchange Baltimore Botanicare HK F&F Tohar Flavour Key Meer Kunshan Sales office Acquisition Ukraine Russia Turkey Brazil India Kazakhsta n Rayner Hong Kong CPL Aroma 2000-2016 Sales CAGR of 18% Mexico Canada Flachsmann France IFF FS London stock exchange Poland AM Todd Acatris Nesse Rad Gewurzmulle r Abaco Adumim Raychan Jupiter Belmay S. Africa CH Hansen DE FSI Corona Oxford Czech Rep. Costa Rica FSI OH Aromco CH Hansen IT EAFI Rieber Etol Mylner Savoury Flavours JannDeRee PTI Aroma Hagelin CitraSource Montana Vitiva Ingrenat Food Blenders Taiga Sonarome BSA Foote&Jenks Taura Scandia Nutrfur Amco Wiberg Algalo Grow Extrakt Chemie Redbrook Nardi Aromas Piasa Unique Flavors Rene Laurent WFF SDFLC F&E MÜHLEHOF GEWÜRZE Turpaz Mighty Enzymotec Inventive 1990-2000 2001-2004 2005 2006 2007 2009 2011 2012 2013-2014 2015 2016 2017
Global Presence 66 Production sites 79 R&D laboratories 102 Sales & Marketing offices
A Profitable Growth Story <1500 * Excluding non-recurrent expenses ** As of Oct 2017, following its accelerated internal growth and acquisitions made so far, Frutarom s annual sales run-rate already reaches close to 1.5B$
Realizing Strategy through Acquisitions Geographic Focus Natural & Healthy North America Hagelin Enhancing market position in the US and EM Expertise in Beverages CitraSource Enhancing Citrus capabilities & leadership Presence in Florida World Center for Citrus Scandia Citrus Enhancing market position in the US Expertise in specialty Citrus solutions BSA Canada, India Enhancing savory position in North America and India Wiberg USA, Canada Enhancing savory position in North America Leveraging Synergies Emerging Markets PTI Russia & CIS Savory Solution leadership position in Eastern Europe Amco Poland Enhancing savory solutions leadership in Eastern Europe Aroma Guatemala Enhancing market position in Central America Montana Food Peru & Chile Enhancing market position in LATAM Sonarome India Enhancing market position in India and Africa Inventive China Enhancing market position in Southeast Asia Nardi Aromas beverage flavoring in Brazil Piasa Savory solutions leadership in Mexico Unique Flavors S. Africa WFF Vietnam SDFLC Brazil MIGHTY Thailand Montana Food Peru & Chile Enhancing market position in LATAM Vitiva Slovenia Food protection Natural Colors Health Ingredients Continuing to improve product mix and Enhancing position in Health & Wellness Ingrenat Spain Food protection Natural Colors Nutrafur Specialty natural plant extracts for food, health and food protection Algalo Israel Biotechnology startup for Algae-Based products Extrakt Chemie Natural extracts for Pharma CitraSource Enhancing Citrus capabilities & leadership Presence in Florida World Center for Citrus Scandia Citrus Enhancing market position in the US Specialty Citrus solutions Expertise Taura Belgium, New Zealand, Australia Enhancing market position in Natural Fruit-Based Ingredients and specialty solutions Inventive China Enhancing market position in Southeast Asia Grow USA Biotechnology products for the supplement and nutraceutical market Enzymotec Israel Innovative specialty nutrition Solutions Strong management, R&D and sales Cross-selling opportunities Additional improvement in margins Optimization & Savings
Mighty Savory Solutions Acquisition Transaction Highlights Frutarom signed an agreement to acquire 60% of Mighty, Thailand s leading savory flavoring company, for 12M$ Mighty revenues for the LTM ended in Aug 17 totaled at approx. 15M$ reflects 4 years CAGR of 12% The company has a leading position in Thailand s flavors market and is among the most innovative flavors companies in Southeast Asia based on independent R&D Product portfolio includes flavors, seasoning blends and marinades as well as specialty functional raw materials for the F&B industry with emphasis on the field of convenience foods, snacks, noodles, fish, meats, baked goods, beverages and dairy Advanced innovative R&D activity with an interesting pipeline of patent protected flavoring products including two major patent based solutions for mallard reaction and infused oils savory blends Founded Sales (LTM Aug 2017) Employees Location Acquisition Date 1989 15M$ 180 Bangkok, Thailand October, 2017
Global Leadership in Savory Solutions Tohar Nesse Chr. Hansen Etol Savory Flavors Food Blenders BSA Wiberg Rene Laurent 1992 1999 2006 2007 2009 2011 2012 2013 2015 2016 2017 Baltimore Spice Reyhan Rad Gewurzmuller Riber EAFI Chr. Hansen FSI PTI JannDeRee New Plant China Amco Redbrook Piasa Unique Flavors Mighty A Leading Player in the global Savory market Presence in over 120 countries Value-added functional savory solutions for the food industry (snacks, convenient food, meat, fish, organic and culinary) Innovative and diversified product range - flavors, seasoning blends, marinades, functional ingredients, starter cultures, natural food protection and natural colors Over 150 industry-leading experts in R&D and applications State-of-the-art production facilities, modern labs and application centers Highest quality brands, providing innovative solutions and excellent service Innovative solutions - meeting consumer trends of natural, healthy and tasty products
Enzymotec Acquisition Transaction Highlights Frutarom entered into agreement to acquire 100% of Enzymotec (Nasdaq: ENZY) at net investment of approx. 210M$ * Frutarom currently holds ~19% of Enzymotec shares, which were purchased according to a PPS of 9.6 USD, and agreed with Enzymotec s BOD to acquire its remaining shares by a way of a full merger at a PPS of 11.9 USD Closing of the transaction is expected at Q1/2018 ** Founded Sales (LTM June 2017) Employees Main Locations 1998 47M$ 235 Israel, US, China * Including cost of vested options and RSU s and estimated transaction expenses ** Closing is pending to Enzymotec shareholders approval
Enzymotec Acquisition Company ID Enzymotec develops and manufactures specialty nutritional ingredients and medical foods based on cutting-edge, proprietary technologies Global leader in lipids technology providing key ingredients for use in products spanning across the entire human life-cycle from infancy to old age, in both infant formula and nutritional supplements Clinically validated products that address dietary needs, medical disorders and common diseases, using molecules familiar to the human body Fully integrated from research through manufacturing to marketing and sales with proprietary, scalable technology platform and clinical research capabilities integrated across segments State of the art GMP certified production site in Migdal Ha emeq, Israel with offices in China and US 235
Enzymotec Acquisition Key Businesses Acquired in Aug 17 Union Spring Health Products
Enzymotec Acquisition Transaction Rational Frutarom will take steps to utilize and integrate Enzymotec s R&D, sales and marketing infrastructure and production and supply chain platform with Frutarom s global Health business This merger transaction offers significant advantages and efficient implementation of the strategic change in Enzymotec s operations as well as effective and much faster realization of the significant synergies Frutarom will leverage and realize the many cross-selling opportunities, knowledge base and capabilities of Enzymotec s nutrition ingredients business which generated sales of 36.5M$ and adjusted * EBITDA of 15.7M$ (for the LTM ended in June 2017) Frutarom will decide on an appropriate strategy for future VAYA Medical food supplements B2C activity with the goal of it delivering a positive contribution as quickly as possible to Frutarom shareholders Frutarom will finance the acquisition through bank or financial institutional debt * Frutarom s Estimation, on Non-GAAP basis, net of non-recurring expenses for inventories write-down
Frutarom Health Business What we offer Innovative and market-oriented ingredients geared toward growing markets, such as cognitive health, cardiovascular health and overall wellness Concepts and healthy solutionsfor: FUNCTIONAL FOODS & BEVERAGES PHARMA DIETARY SUPPLEMENTS COSMETICS 14
Frutarom Health Business Where we are USA Health Fermentation Grow NJ Formulation ; OH Sales and Marketing NJ,FL,CA Asia Health Sales and Marketing Japan,Korea, Australia, Indonesia, Malaysia, India Philippines LATAM Health Extraction: Peru Sales and Marketing - Lima EUR Health Extraction: Spain: Germany ; Slovenia ; Switzerland Algae, Elderly Nutrition : Israel Sales and Marketing Belgium, Netherlands, Germany, Switzerland, Spain
Customer in the Centre A Unique product offering
Positive Outlook for 2017 & 2018 and Onwards Strategy Recent Acquisitions Financial Strength As of Oct 2017, following its accelerated internal growth and acquisitions made so far, Frutarom s annual sales run-rate already reaches close to 1.5B$ Product Focus - unique offering and product portfolio focused on innovative integrated solutions combining taste and health, natural and clean label products Customer Focus - mid-size and local customers, the private label sector and unique added value solutions to MNCs Geographic Focus - Global leading position with focus on North America and on high growth Emerging Economies Announced 42 acquisitions since 2011 and 28 acquisitions since 2015 17 companies acquired since 2016 for ~570M$ 9 companies acquired since the beginning of 2017 Cross-selling will contribute to improved accelerated growth of the combined activities Operational efficiencies and synergies from successful integration of acquisitions expected to generate savings of 20-22 M$ Vs Frutarom s Q2/2016 cost structure Global purchasing will further contribute to improvement in profits and margins Strong acquisitions pipeline for supporting growth strategy remains intact Maintaining a solid balance sheet based on strong business fundamentals, healthy profitability and robust cash flow from operations Cumulative cash flow since 2000 - approx. 900M$
Positive Outlook for 2017 & 2018 and Onwards Profitable rapid internal growth in core business Focus on small, mid-size and private label customers with better organic growth rate than the MNC s Focus on innovative, health & wellness oriented, natural product mix Successful integration of the recent acquisitions Additional projects to improve efficiency, merge activities and operations Enhancing & leveraging global purchasing Strong acquisitions pipeline * Excluding non-recurrent expenses
Frutarom s Strategic Goals Above-industry Growth Continue Margin Expansion Continue Acquisitions Strategy Combining rapid profitable organic growth with strategic acquisitions $2 Billion in revenues in 2020 Above 22% EBITDA in our core business by 2020 * * Given current product mix
Frutarom s Vision To Be The Preferred Partner For Tasty And Healthy Success