Investing in Esprinet

Historical stable flow of profitability, diversification, highly efficient logistics processes and systems and very strong balance sheet: a leading and cutting edge company in an increasingly strategic industry.

ICT MARKET TREND

Resilient and increasingly strategic industry in the entire IT value chain, with 40.6 B€ of addressable market. Strong opportunity from new tech and White Goods.

Size of addressable end user market

In 2020 the addressable end user market is estimated at 29.2 B€. Including the strong White Goods opportunity, the addressable end user market is estimated to reach in 2020 40.1 B€.

EITO figures for IT Clients - Advanced Solutions & Smartphones - Euromonitor for other Consumer Electronics
End-user consumption converted to distri price assuming average 15% margin for resellers/retailers
Conversion from Context panel sales to Total distri sales assuming Context Panel represents around 90% of total consolidated distri sales with differences for product categories
Adjustment applied to Context panel gross sales of 6.5% (from gross revenue to net revenue)
2021 end user market estimates by EITO & Euromonitor as of November 2020
2021 distri sales estimated using a flat growth of 5%

Weight of distris on addressed market

Distributors, enablers of tech pervasiveness, are assuming an increasingly central role in the entire ICT value chain. Tech wholesaling, increasing efficiency, is the fastest growing go-to-market strategy of tech manufacturers.

This is underlined by share of distributors trend, which goes from 45% in 2017 to over 60% in 2021E.

STRATEGY

• Aim at being the best distributor in the region for all stakeholders

• Riding the mid-term evolution of the market

Aim at being the best distributor in the region for all stakeholders by:

Getting recognized as provider of the best Customer Satisfaction in the region

A redesign of procedures and incentive schemes aimed at measuring and sharply improving the level of Customer Satisfaction raising the «cost of switch» for customers therefore positively impacting Gross profits and revenues.

Better gross profit margin on existing customers

Leveraging the size in Italy and Spain to improve ROCE on IT Clients & Consumer Electronics

New procedures, tools and incentive schemes aimed at focusing teams on
better Working Capital management.

Leveraging achieved size and push for better opportunities with vendors/customers in a consolidating market.

Better working capital on existing combinations of Vendor/Customer

Pushing for an higher weight of Advanced Solutions sales

V-Valley Europe concept: move from 2 local Distri to a perceived multinational Advanced Solutions distri to get new contracts and grow in this higher margin market.

Better mix driving sales of higher gross profit margin products

Achieving size in Portugal

Invest in people and in warehousing capabilities to capture organic-growth opportunities offered by selected Vendors.

Grow in the Region also by acquisitions in order to complete the coverage of the market.

Top line growth driver and consolidation of leadership in the Iberian region

Riding the mid-term evolution of the market by:

Developing a state-of-the-art «XaaS» strategy

Invest further more in the programs already existing leveraging our web-portal to provide not only a one-stop-shopping opportunity for physical goods but an aggregator for IaaS, SaaS, MPS and Device as a Service contracts as well

Better gross profit margin and better predictability of revenue streams

Developing further Outsourcing initiatives for Vendors and Customers

Grow the high margin logistic outsourcing activities already in place as well as the tools to enable mid-size retailers as well as professional resellers to establish an «omnichannel» strategy

Higher EBIT margin activities driving better grip on Vendors/ Customers

Pushing on Distri adoption by the White goods manufacturers

A 10B€ market opportunity mostly direct where we are piloting with some vendors new distribution models similar to the ICT ones

Opportunity of Top line growth on higher gross margin products

Be ready for potential new markets: Robotics, A.I. Electrical Mobility, 3D Print

Long term developments offer potential opportunities in these markets

Begin assessing potential distribution scenarios

Begin testing distribution of 3D printing and Electrical mobility

Potential future developments for Top line and EBIT margin growth

A leading and cutting edge company in a growing and fast evolving market. Low risk levels characterize both the Group and the Industry.

The right industry

GROWTH POTENTIAL

Tech sector is booming thanks to constant innovation (IoT, Big data, Analytics, Cybersecurity) and changes in lifestyle and professional habits (smart working, e-learning, e-commerce, …)

Tech wholesaling is the fastest growing go-to-market strategy of tech manufacturers that look to increase efficiency

Growing demand of logistic services driven by retailer e-commerce

ATTRACTIVE RISK PROFILE

Resilient industry thanks to the strategic role of distribution in the IT value chain

The industry has developed in time a standard of risk-shielding techniques for key assets (credit insurance and stock protection) that provide low-risk balance sheets

High levels of automation of processes provide low cost operating models shielding the P&L from the impact of sudden swings in revenues

The right company

GROWTH POTENTIAL

Undisputed market leader (26,6% market share in 2020) with a track record of acquisition in a fast consolidating market

Leverage on strong foundation in the distribution businesses to provide high-margin services and solutions (advanced solutions and subscription/usage services)

Opportunity of growing ROCE by furtherly optimizing the trade-off between working capital and gross profit

ATTRACTIVE RISK PROFILE

Historical stable flow of profitability since 2001 even in market downturns: 472 M€ of cumulated Net Profit since 2001 and 135 M€ of cumulated dividends paid.

Diversification: 3 geographies (Italy, Spain and Portugal), complete Tech product range (IT clients, IT infrastructure, Consumer Electronics, Cloud and tech services), all possible customers (Resellers, VARs, System Integrators, Retailers, E-tailers)

Highly efficient logistics processes and systems, scalable with low cost sensitivity to volume upgrades; very strong balance sheet thanks to focus on Cash Conversion Cycle and ROCE

The right industry

GROWTH POTENTIAL

Tech sector is booming thanks to constant innovation (IoT, Big data, Analytics, Cybersecurity) and changes in lifestyle and professional habits (smart working, e-learning, e-commerce, …)

Tech wholesaling is the fastest growing go-to-market strategy of tech manufacturers that look to increase efficiency

Tech wholesaling is the fastest growing go-to-market strategy of tech manufacturers that look to increase efficiency

Growing demand of logistic services driven by retailer e-commerce

Undisputed market leader (26,6% market share in 2020) with a track record of acquisition in a fast consolidating market

Leverage on strong foundation in the distribution businesses to provide high-margin services and solutions (advanced solutions and subscription/usage services)

Opportunity of growing ROCE by furtherly optimizing the trade-off between working capital and gross profit

ATTRACTIVE RISK PROFILE

Resilient industry thanks to the strategic role of distribution in the IT value chain

The industry has developed in time a standard of risk-shielding techniques for key assets (credit insurance and stock protection) that provide low-risk balance sheets

High levels of automation of processes provide low cost operating models shielding the P&L from the impact of sudden swings in revenues

Historical stable flow of profitability since 2001 even in market downturns: 472 M€ of cumulated Net Profit since 2001 and 135 M€ of cumulated dividends paid.

Diversification: 3 geographies (Italy, Spain and Portugal), complete Tech product range (IT clients, IT infrastructure, Consumer Electronics, Cloud and tech services), all possible customers (Resellers, VARs, System Integrators, Retailers, E-tailers)

Highly efficient logistics processes and systems, scalable with low cost sensitivity to volume upgrades; very strong balance sheet thanks to focus on Cash Conversion Cycle and ROCE

Investing in Esprinet