Q1 2021 results

April 30, 2021

Important information
Forward-looking statements
This release contains forward-looking statements that reflect the intentions, beliefs or current expectations and projections of Signify, including statements regarding strategy, estimates of sales growth and future operational results.
By their nature, these statements involve risks and uncertainties facing Signify, and a number of important factors could cause actual results or outcomes to differ materially from those expressed or implied in any forward-looking
statement as a result of risks and uncertainties. Such risks, uncertainties and other important factors include but are not limited to: adverse economic and political developments, the impacts of COVID-19, technological change,
competition in the general lighting market, development of lighting systems and services, successful implementation of cost-savings initiatives and business transformation programs, impact of acquisitions and other transactions,
reputational and adverse effects on business due to activities in Environment, Health & Safety, compliance risks, ability to attract and retain talented personnel, adverse currency effects, pension liabilities, and exposure tointernational tax laws. Signify undertakes no duty to and will not necessarily update any of the forward-looking statements in light of new information or future events, except to the extent required by applicable law.
Market and Industry Information
All references to market share, market data, industry statistics and industry forecasts in this document consist of estimates compiled by industry professionals, competitors, organizations or analysts, of publicly available information
or of the Group’s own assessment of its sales and markets. Rankings are based on sales unless otherwise stated.
Non-IFRS Financial Statements
Certain parts of this document contain non-IFRS financial measures and ratios, such as comparable sales growth, adjusted gross margin, EBITA, adjusted EBITA, EBITDA, adjusted EBITDA and free cash flow, and other related ratios,
which are not recognized measures of financial performance or liquidity under IFRS. The non-IFRS financial measures presented are measures used by management to monitor the underlying performance of the Group’s businessand operations and, accordingly, they have not been audited or reviewed. Not all companies calculate non-IFRS financial measures in the same manner or on a consistent basis and these measures and ratios may not be comparable
to measures used by other companies under the same or similar names. A reconciliation of these non-IFRS financial measures to the most directly comparable IFRS financial measures is contained in this document. For further
information on non-IFRS financial measures, see “Chapter 18 Reconciliation of non-IFRS measures” in the Annual Report 2020.
Presentation
All amounts are in millions of euros unless otherwise stated. Due to rounding, amounts may not add up to totals provided. All reported data are unaudited. Unless otherwise indicated, financial information has been prepared inaccordance with the accounting policies as stated in the Annual Report 2020.
Market Abuse Regulation
This presentation contains information within the meaning of Article 7(1) of the EU Market Abuse Regulation.

2

Content
Business and operational performance by Eric Rondolat

Financial performance by Javier van Engelen
Outlook & conclusion by Eric Rondolat
Q&A3

Signify achieved Q1 21 comparable sales growth of 3.2%, an Adj. EBITA
margin of 10.8% and a free cash flow of EUR 168mSales (in EURm) & comparable sales growth (in %)-15.3%

3.2%-22.5%-8.3%

Key observations for Q1 21•

Installed base of connected light points increased from77m in Q4 20 to 83m in Q1 21•

LED-based sales represented 82% of total sales•

Sales growth of 12.0% to EUR 1,599m; CSG of 3.2%•

Adj. EBITA margin increased by 290 bps to 10.8%•

Adjusted indirect costs as percentage of sales decreased by
120 bps to 31.0% supported by continued spending disciplineand positive operating leverage•

Net income increased to EUR 60m (Q1 20: EUR 27m)

•Free Cash Flow increased to EUR 168m (Q1 20: EUR 112m)-5.9%

1,4271

1,5991

1,4691

1,7281

1,8781

Q1 20

Q1 21

Q2 20

Q3 20

Q4 20

Adjusted EBITA (in EURm & as % of sales)

13.4%
11.5%

10.8%
9.0%

7.9%

41121

1721

1331

1991

2511

Q1 20

Q1 21

Q2 20

Q3 20

Q4 20

1Cooper Lighting has been consolidated from March 2nd, 2020

Digital Solutions Adj. EBITA margin improved by 230 bps, mainly driven bygross margin and cost management
Sales (in EURm) & comparable sales growth (in %)Key observations for Q1 21••-11.2%-10.2%-1.8%-22.4%

6391

7931

7811

9161

9171

Q1 20

Q1 21

Q2 20

Q3 20

Q4 20

-14.2%•Adjusted EBITA (in EURm & as % of sales)

11.7%

11.5%

9.0%

9.6%

431

711

751

1071

1051

Q1 20

Q1 21

Q2 20

Q3 20

Q4 20

8.2%26.7%

5

1Cooper Lighting has been consolidated from March 2nd, 2020
2Adj. EBITA margin when including the pro-forma Cooper Lighting financials in Q1 20•

LED-based sales accounted for 92% of total sales
Nominal sales increase of 24.1% as a result of theconsolidation of Cooper Lighting
CSG decline of 1.8%
• Continued lockdowns• Component shortages• Continued softness in the Americas• Strong performance in China, the Middle East andIndia• Partial recovery across Europe

Adj. EBITA margin of 9.0%, an increase of 230 bps

Digital Solutions highlights
Validating effectiveness ofUV-C lighting on
disinfecting the air

Helping North American ice
rinks switch to sustainable
lighting with NHL

Expanding eco-friendly
fish growth to Yellowtail
fish with aquaculture LEDProviding safe & secureconnectivity to guests ofWorld Forum The Hague••••In lab tests by Innovative
Bioanalysis, our Philips UV-C
disinfection upper airluminaires inactivated99.99% of SARS-CoV-2 inthe air in 10 minutes
Installed UV-C disinfection
upper air luminaires atdifferent customers,
including rugby union club
Harlequins in the UK•

6•

Partnership to help themore than 4,800 ice rinks
across North America
transition to sustainable LED& connected lighting
Can reduce carbon
footprint, energy
consumption andoperational costs of major
arenas and community
sports facilities••

Reduces stress levels infish and promotes
consistent growth
Helps fish farmers to
improve energy efficiency,
optimize feed conversion
and reduce costs
Enables Kingfish company
to achieve 30% higher
output than facility was
designed for••Illustrates value of LiFi inproviding safe & secureconnectivity to congress
centers around the globe
Enables guests to enjoy
safe, secure, reliable andhigh-speed connectivity
Offers specific control
over security throughcustom encryption andspecific access keys

Digital Products delivered a CSG of 15.7% and an Adj. EBITA margin of 14.2%,driven by the consumer segment
Sales (in EURm) & comparable sales growth (in %)2.5%-14.8%•CSG increased by 15.7%• Continued strong growth in the consumer segment
for both connected home and LED lamps andluminaires categories• Lower recovery speed in the professional segment•Adjusted EBITA margin improved by 530 bps to 14.2%• Operating leverage• Solid gross margin• Higher contribution and improvement fromconnected home lighting

-2.0%

15.7%

-21.1%

529575473575711

Q1 20

Q1 21

Q2 20Q3 20

Q4 20

Adjusted EBITA (in EURm & as % of sales)
18.0%
14.2%
8.9%

7

Key observations for Q1 21

13.1%
9.3%

4782

4476

128

Q1 20

Q1 21

Q2 20

Q3 20

Q4 20

Digital Products highlights
Offering additional layerof protection to moreconsumers around globe

Providing consumers withbroader range of Philips
Hue products & accessories

Addressing new interior
trend with deep recessed
downlight range in China

Expanding ConstantVoltage Driver range withDigital control features••••••

8

Expanded the availabilityof the UV-C disinfectionbox in countries inEurope, Korea andVietnam
Effectively disinfects
viruses and bacteria fromsmall objects
Box switches off
automatically when lid isopened••

Includes two outdoor lights
to further personalize
gardens and porches,
New wall switch module
makes existing lightswitches smart
Redesigned Philips Hue
dimmer switch enables
intuitive wireless control forPhilips Hue lighting without
using the app••

Delivers high brightness
without glare thanks to
deep recessed mechanics
and well-designed optics
Long lifetime andwaterproof design makeit suitable for multipleapplications
Launched in consumer
channel in China•••

Taps into growing
business of “ConstantVoltage” Drivers
Easy and flexible to apply
in decorative lighting
Digital control features are
standard and up-to-dateThis set of features enable
sales through professional
trade channels

Conventional Products delivered an Adj. EBITA margin of 20.6%, helped bylower CSG decline
Sales (in EURm) & comparable sales growth (in %)-17.8%-6.1%-25.2%-11.0%-11.6%

257

227

211

233

242

Q1 20

Q1 21

Q2 20

Q3 20

Q4 20

Adjusted EBITA (in EURm & as % of sales)

17.6%

920.6%
17.5%

17.9%

18.9%

4547374246

Q1 20

Q1 21

Q2 20

Q3 20

Q4 20

Key observations for Q1 21•

CSG decreased by 6.1%
• Continued strong traction in consumer andhorticulture segments•

Adjusted EBITA margin increased by 300 bps to 20.6%• Pricing discipline• Operational efficiencies

Brighter Lives, Better World 2025 Q1 2021 results

Brighter Lives

Better World

Doubling our positive impact on the environment and society

10102019
Baseline

Q1 2021Result2025Target

Climate action

Carbon reduction over value chainagainst Paris Agreement

018 MT

340 MT

Circular economy

Circular revenues

16%

19%

32%

Food availability
Safety & security
Health & wellbeing

Brighter lives revenues

16%

23%

32%

Women in leadership positions

17%

24%

34%

Great place to work

A list for climate and supply
chain

DJSI World Index since
IPO for 4 consecutive
years

EcoVadis Platinum Medal andtop 1%

Content
Business and operational performance by Eric Rondolat

Financial performance by Javier van Engelen
Outlook & conclusion by Eric Rondolat
Q&A11Adj. EBITA growth and margin improvement driven by higher volume and
COGS improvements
In EURm / as % of sales

7.9%

10.8%

+290 bps

172

17-8

21-4-3

CoGS

Indirect Costs

Currency

36112

Q1 20

12Volume / Mix

Price

Scope / Other

Q1 21

Continued structural improvements across all working capital levers
In EURm / as % of sales

6.1%1470-73

3.5%-99236-111
48

Q1 20

13Inventories

Trade & otherreceivables

1Includes sales of both Cooper Lighting and Klite on a 12-month pro-forma basis.

Trade & other payables

Other working
capital items

Q1 21

Reduction of leverage ratio from 1.7x in Q4 to 1.4x in Q1, driven by solid free
cash flow generation of EUR 168m
In EURm
1,810

1,275

1,141-162-30-1022-333

Change inprovisions

Interest & Tax

Other
FCF items

Other1

16
FCF: EUR +168m

Net debt
end of Q1 20

Net
leverage: 2.7x
14Net debt
end of Q4 20

EBITDA

Change inworking capital

Net capex

1.7x

1Other includes cash used for derivatives, acquisitions, new lease liabilities, dividends to minority shareholders and FX effect on cash, cash equivalents and debt

Net debt
end of Q1 211.4x

Content
Business and operational performance by Eric Rondolat

Financial performance by Javier van Engelen
Outlook & conclusion by Eric Rondolat
Q&A15

Economic recovery plans around the globe
Green and digital initiatives
EU Green Deal••

American Jobs Plan

European Green Deal agreed with EUR 1.8
trillion for green growth and economic
recovery 2021-2027•American Jobs Plan announced with USD 2.3
trillion infrastructure spending 2022-2031•

Congress bill expected August/September

Funds available as of H2 2021•

Funds availability expected end 2021

Signify•Significant business potential in all segments•

Green Switch program launched•

Green Deal inspired project wins Q116•

OUiD Kalisz, Poland•

Residential Lighting Enschede

Rest of world•

Exploring comparable economic recovery
initiatives, no major funding yet•

Carbon-neutral trend accelerating in run-up
to COP26

Sustainable economic recovery must be green & digital and accelerate a carbon neutral futureOutlook 2021
• Economic recovery, easing of lockdowns and stimulus packages to drive an upswing in demandfor our professional portfolio in H2 2021

• Component shortages to impact supply chain in H1 2021 and to a lesser extent in H2 2021%

• Signify expects comparable sales growth between 3% and 6% for the full year 2021

• Signify expects to achieve an Adjusted EBITA margin of 11.5% to 12.5% and continues toexpect free cash flow to exceed 8% of sales• Signify is fully committed to repaying EUR 350m of debt in Q4 2021
17

Q&A

18

Currency movements had a negative impact on sales and Adjusted EBITA
Q1 21 Sales FX Footprint (% of total)

Other Currencies,30%

EUR, 28%

CNY, 7%

USD, 35%

19Key observations•

Currency movements negatively impacted sales andAdjusted EBITA•

Sales impact of -6.4%, mainly from US dollardepreciation.

•

Adjusted EBITA impact of EUR -3m, and +40 bps on
the Adjusted EBITA margin, mainly coming from US
dollar depreciation.

•Our policy is to hedge 100% of committed FXtransactions and anticipated transactions up to 80% inlayers over the next 15 months

Net income increased by EUR 33m to EUR 60m, mainly driven by higher
operating profitability
Key observations

From Adjusted EBITA to net income (in EURm)
Q1 20

Q1 21

Adjusted EBITA

112

172

- Restructuring-13-47

1 - Acquisition related charges-18-142 - Other incidental items
EBITA

-11

470

115

Amortization

-27

-30

EBIT

4385

Net financial income / expenses-10-10-6-15--2760

3 Income tax expense
Results from investments in associates
Net income

20

123

Related to Cooper Lighting and Klite
Non-recurring by nature and relate to real estate gains
and transformation

Income tax expense increased by EUR 9m, mainly due
to a higher income before tax

Free Cash Flow of EUR 168m
Key observations

Free cash flow (in EURm)
Income from operations
Depreciation and amortization
Additions to (releases of) provisions
Utilizations of provisions
Change in working capital
Net interest and financing costs paid
Income taxes paid
Net capex
Other
Free cash flow
As % of sales

21

Q1 20
4378
33-52
52-10-28-17
12112
7.9%

Q1 21857760-5030-1-21-16
3168
10.5%

•

Free cash flow of EUR 168m versus EUR 112m last year•

Reflects higher income from operations and a lower
albeit continued inflow from working capital•

Restructuring pay-out of EUR 13m (Q1 20: EUR 18m)