SAF Holland : Presentation H1 2020

ALEXANDER GEIS (CEO)

ALF HOSPES (VP GROUP TREASURY)

Financial results H1 2020

13 AUGUST 2020

AGENDA

Welcome

1. Performance H1 2020 - Resilient business model pays off
2. Outlook

Financial Results H1 2020 < 2 >

Today's speakers - Welcome to our H1 2020 Financial Results Conference

Alexander Geis

Chairman of the Management Board (CEO)

• CEO of the SAF-HOLLAND Group since February 26, 2019 and member of the Group Management Board since July 2011
• With SAF-HOLLAND since 1995 and most recently President of the EMEA region and Chief Procurement Officer
• Previously member of the Management Board and responsible for the Business Unit Aftermarket and for the strategic and operative alignment of the global spare parts business
• MBA-degreeof University of Maryland, USA

Alf Hospes

VP Group Treasury

• With the company since 2007 and most recently Director Finance of the SAF-HOLLAND GmbH and VP Treasury and Accounting of the SAF- HOLLAND Group
• Responsible for Finance and Controlling at SAF- HOLLAND GmbH and Group Treasury
• Previously several other positions as Chief Accountant

Financial Results H1 2020 < 3 >

1 Performance H1 2020 - Resilient business model pays off

Financial Results H1 2020 < 4 >

Summary: Adjusted EBIT margin at the upper end of the guidance range

Adj. EBIT

Sales	margin
€ 476 MN
5.0%

Operating free		Capex ratio
cash flow
	2.5%
€ 11.2 MN

P• Despite COVID-19 adj. EBIT margin in Q2 at 2.7 per cent

P• Aftermarket business safeguards profitability

P• Comprehensive cost-cutting program continued

P• Disciplined investment policy

P• Solid financial profile

• Next stage in operational excellence
• Execute SG&A savings programs
• Further accelerate efforts on inventory & receivables management and free cash flow generation
• Sustainably improve quality of earnings

Financial Results H1 2020 < 5 >

Truck and trailer production H1 2020 - COVID-19 strongly impacts already weakening markets

WESTERN &		NORTH		CHINA		SOUTH		INDIA
EASTERN EUROPE		AMERICA			AMERICA

Truck

Trailer

Truck

Trailer

Truck

Trailer

Truck

Trailer

Truck

Trailer

-45% to -50%	-35% to -40%	-50%	-40%	-25%	-30%	-20%	-15%	-45%	-45%

NOTE: Market figures for trucks and trailers based on ACT, FTR and local sources

Financial Results H1 2020 < 6 >

Group - Positive adj. EBIT margin in Q2 despite very challenging market environment

SALES (€ MN)

695

476

YTD

SALES BY QUARTER (€ MN)		2019
			2020

	346	283		349	313	276
				193

Q1

Q2

Q3

Q4

•	Sales in H1 2020 influenced by market downturn
	and COVID-19
	•	Acquisition effects (+0.2 per cent
		respectively € +1.6 mn)
	•	FX effects (-0.1 per cent respectively
		€ -0.8 mn)
	•	Organic effects (-31.6 per cent respectively
		€ -219.9 mn)
•	Adj. EBIT margin in H1 2020 affected by
	•	Almost stable gross profit margin due to significantly
		higher share of high-margin aftermarket business
	•	Fixed-cost progression effect (-)
	•	Inventory write-downs (€ 5.6 mn) in the EMEA and

ADJ. EBIT MARGIN	ADJ. EBIT MARGIN BY QUARTER

7.2%	7.2%	7.2%
		6.5%
	5.0%		5.4%	4.7%
			2.7%
YTD	Q1	Q2	Q3	Q4

		Americas regions (-)
	•	SG&A cost savings (+)
•	Restructuring expenses (€ 9.4 mn)
	•	Severance payments (€ 2.7 mn)
	•	Corpco wind-down (€ 2.2 mn)
	•	Closure of subsidiaries (€ 1.8 mn)
	•	Project FORWARD 2.0 (1.4 mn)
	•	Change of legal form (€ 1.1 mn)
•	Nogoodwill impairments

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results H1 2020 < 7 >

EMEA - Robust adj. EBIT margin even in Q2

SALES (€ MN)	SALES BY QUARTER (€ MN)

2019 2020

• Sales in H1 2020 influenced by market downturn and COVID-19
• • Acquisition effects (+0.4 per cent respectively € +1.6 mn)

348						•	FX effects (-0.5 per cent
	268						respectively € -1.9 mn)
					•	Organic effects (-22.9 per cent
	176	157	172	144			respectively € -79.8 mn)
		134
				111
				•	Adj. EBIT margin in H1 2020 affected by
						•	Improved gross profit margin (+)
YTD		Q1	Q2	Q3	Q4		•	Aftermarket business (+)
		•	OE business (-)

ADJ. EBIT MARGIN	ADJ. EBIT MARGIN BY QUARTER

• Fixed-costprogression effect (-)
• Inventory write-downs (€ 2.5 mn) as COVID-19 led to lower turnover rates (-)

						•	SG&A cost savings (+)
9.7%	9.7%	9.4%	9.8%	8.9%	10.0%
	8.0%			•
				Restructuring expenses (€ 2.2 mn)
				6.0%
					Mainly severance payments and costs related to
						the change of the legal form and transfer of the
						registered office to Germany (S.A.  SE)
YTD		Q1	Q2	Q3	Q4

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results H1 2020 < 8 >

Americas - Slightly positive adj. EBIT margin in Q2 despite massive sales decline

SALES (€ MN)

273

174

YTD

SALES BY QUARTER (€ MN)		2019
			2020

	131			141	144	118
	105
				69

Q1

Q2

Q3

Q4

•	Sales in H1 2020 massively influenced by
	market downturn and COVID-19
	•	FX effects (+0.7 per cent respectively
		€ +1.8 mn)
	•	Organic effects (-36.8 per cent
		respectively € -100.3 mn)
•	Adj. EBIT margin in H1 2020 affected by
	•	Lower gross profit margin (-)
		•	Aftermarket business (+)
		•	OE business (-)
	•	Fixed-cost progression effect (-)
	•	Inventory write downs (€ 3.3 mn) due to

ADJ. EBIT MARGIN	ADJ. EBIT MARGIN BY QUARTER

		8.1%
6.7%
	5.2%		5.4%
		3.9%
2.6%				2.7%
			0.6%
YTD	Q1	Q2	Q3	Q4

		streamlining of the product portfolio and
		lower turnover rates due to COVID-19(-)
	•	SG&A cost savings (+)
•	Adj. EBIT margin in H1 2019 affected by
	•	Contractually agreed passing on of the
		2018 steel price increases (+)
•	Restructuring expenses (€ 2.6 mn)

Mainly severance payments and costs related to Program FORWARD 2.0

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results H1 2020 < 9 >

APAC - Lockdown weighs on sales and profitability in Q2

SALES (€ MN)	SALES BY QUARTER (€ MN)		2019

2020

75
	39	36
	34
		25	23
		21
			13
YTD	Q1	Q2	Q3	Q4

ADJ. EBIT MARGIN	ADJ. EBIT MARGIN BY QUARTER

			2.4%
	-2.9%			-2.4%
		-6.9%
									-8.5%
										-14.0%
											-14.7%
	YTD										-15.5%
					Q1	Q2	Q3	Q4

• Sales in H1 2020 massively influenced by market downturn and COVID-19
• • FX effects (-1.0 per cent respectively
  • • -0.8mn)
  • Organic effects (-53.3 per cent respectively
  • • -39.9mn) due to the several weeks lockdown of the Indian and Singapore entities, the ceased export business as a result of the trade dispute between China and the USA and the delayed ramp-up of the new Chinese facility in Yangzhou
• Adj. EBIT margin in H1 2020 affected by
• • Significantly lower gross profit margin (-)
  • • Aftermarket business (+)
    • OE business (-)
    • Special sale of old stock (-)
  • Volume effect still missing (-)
  • SG&A cost savings (+)
• Restructuring expenses (€ 4.6 mn)

Mainly costs related to Corpco wind-down and closure of subsidiaries

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results H1 2020 < 10 >

Investments and D&A - Disciplined investment policy is paying off

INVESTMENTS (IN % OF SALES) INVESTMENTS BY QUARTER (IN % OF SALES)			2019
			5.9%		2020

	4.2%		4.0%
3.5%
2.5%	2.4%	2.8%	2.6%
YTD	Q1	Q2	Q3	Q4

D&A (IN % OF SALES)		D&A BY QUARTER (IN % OF SALES)

			4.7%
3.8%		3.2%		3.9%
2.3%	2.1%	2.6%	2.4%
YTD	Q1	Q2	Q3	Q4

• Investments in plant, property, equipment and intangible assets reached 2.5 per cent of Group sales (New FY 2020 guidance: around 2.5 per cent of Group sales)
• Operating cash flow (4.7 cent of Group sales) covers investments by far
• Focus of investments: Rationalisation investments in the US and Germany
• Close monitoring of the investment approval process to streamline capital allocation
• Depreciation and Amortization ratio (excl. PPA, impairment of goodwill and R&D projects) increased due to higher investments in recent years and lower sales

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results H1 2020 < 11 >

Net working capital - Cash-is-King program on track

NET WORKING CAPITAL (€ MN)

NET WORKING CAPITAL (IN % OF SALES)*

300											20%	•
		18.9%	19.2%
250
											18%
200	16.1%						16.4%			16.5%
				15.9%	15.9%
									16%
150
				14.5%								•
										14%
100								14.3%
									13.0%
	184	225	241	189	214	215	217	184	159	176	12%	•
50
0											10%
	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19	Q3 19	Q4 19	Q1 20	Q2 20

Net working capital (NWC) 18.3 per cent

or € 39.3 mn below previous year's figure

• Inventories 21.2 per cent below prior year's level with a decrease in sales of 31.5 per cent
• Trade receivables down 39.7 per cent on substantially improved cash collection
• Trade payables down 46.3 per cent or € 69.9 mn compared to previous year's figure

NWC ratio increased from 15.9 per cent to 16.5 per cent due to market and corona related sales decline (LTM) of 21.4 per cent

Start of Cash-is-King program in April; already significant improvement in cash collection, further reduction of inventories in the remainder of the year

• Net working capital ratio (ratio of inventories and trade receivables less trade payables to LTM sales); Ratios for Q1 2018 to Q4 2019 retrospectively adjusted according to the new definition

Financial Results H1 2020 < 12 >

Operating free cash flow - H1 positive

OPERATING FREE CASH FLOW (€ MN)*

•

Operating free cash flow at € 11.2 mn

58.1

(H1 2019: € 4.8 mn)

•

Operating cash flow at € 22.5 mn

(H1 2019: € 27.6 mn)

30.5

•

Net investing cash flow at € -11.4 mn

25.7

(PP&E and intangible assets)

10.5

•

(H1 2019: € -22.8 mn)

7.5

Factoring volume at € 26.9 mn

(H1 2019: € 39.3 mn)

-5.7

-11.0

-14.5

-16.4

-29.4

Q1 18

Q2 18

Q3 18

Q4 18

Q1 19

Q2 19

Q3 19

Q4 19

Q1 20

Q2 20

• Operating Free Cash Flow = Net cash flow from operating activities less Net cash flow from investing activities (purchase of PP&E and intangible assets less proceeds from sales of PP&E); Operating free cash flow for Q1 2018 to Q4 2019 retrospectively adjusted according to the new definition

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results H1 2020 < 13 >

Net debt | Equity ratio - Solid financial profile

NET DEBT INCL. FINANCE LEASE LIABILITIES (€ MN)	EQUITY RATIO

Σ 251.7	Σ 278.9
	488.2
382.8
-131.2	-209.4
Dec 31, 2019	Jun 30, 2020
Cash	Debt

32.5%	30.5%

	€ 318 MN		€ 310 MN

Dec 31, 2019

Jun 30, 2020

• Gross liquidity of € 412.0 mn (cash and cash equivalents € 209.4 mn, undrawn credit lines € 202.6 mn) as of Jun 30, 2020 vs. gross liquidity of € 242.7 mn (cash and cash equivalents € 131.2 mn, undrawn credit lines € 111.5 mn) as of Dec 31, 2019
• Cash and debt position temporarily influenced by cash inflow from promissory note (March 2020)
• Cash inflow will be used to refinance the convertible bond that falls due on 12 September 2020 (volume: € 94.8 mn) and the 5-year tranches of
  the promissory note issued in November 2015 that falls due on 27 November 2020 (volume: € 52.0 mn).
• Equity ratio temporarily influenced by balance sheet extension due to refinancing

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results H1 2020 < 14 >

2 Outlook

Financial Results H1 2020 < 15 >

2020 Outlook truck and trailer production - Global downturn expected

WESTERN &

NORTH

CHINA

SOUTH

INDIA

EASTERN EUROPE

AMERICA

AMERICA

Truck

Trailer

Truck

Trailer

Truck

Trailer

Truck

Trailer

Truck

Trailer

New*

-35% to

-20%

New*

-40% to

-40% to

New*

-20%

-25%

New*

-35%

-15%

New*

-40%

-40%

-40%

-50%

-50%

Old**

-35% to

-20%

Old**

-40% to

-40% to

Old**

-30%

-40%

Old**

-30%

-35%

Old**

-25%

-30%

-40%

-50%

-50%

2020E:

• Lower volumes in Europe, China and South America
• Significant declines in North America and India

NOTE: Market estimates for trucks and trailers based on ACT, FTR and local sources * As of August 2020, ** As of May 2020

Financial Results H1 2020 < 16 >

Financial guidance 2020

FY 2019		FY 2020*

Sales

€ 1,284 mn

Decline by 20 to 30 per cent

Adj. EBIT margin

6.2 per cent

Between 3 and 5 per cent

Around 2.5 per cent of sales

CAPEX4.1 per cent of sales(previously around 3 per cent of sales)

• The forecast takes into account the foreseeable adverse effects on our business due to the coronavirus at the time of preparation (August 13, 2020). However, the economic effects on SAF-HOLLAND cannot currently be adequately determined or reliably quantified in full.
  The forecast is therefore subject to a high degree of uncertainty.

Financial Results H1 2020 < 17 >

Your key takeaways

• Consistent aftermarket business safeguards profitability
• SG&A savings programs will be continued
• Cash-is-Kingprogram on track
• Solid financial profile
• Operational excellence as key driver

Financial Results H1 2020 < 18 >

Financial calendar & IR contact

DATEEVENT

09.09.2020 Hauck & Aufhäuser Virtual Roadshow

Investor Relations Contact

Michael Schickling

21.09.2020

Berenberg / Goldman Sachs

Virtual German Corporate Conference

1. [phone]

1. [e-mail]

14.10.2020 Jefferies European Mid-Cap Industrial Forum

10.11.2020 CIC Market Solutions Forum

18.11.2020 Quarterly Statement Q1-Q3 2020

25.11.2020 SAF-HOLLAND Virtual Investor & Analyst Day

Alexander Pöschl

1. [phone]

1. [e-mail]

Klaus Breitenbach

1. + 49 (0) 6095 301 565

1. [e-mail]

Financial Results H1 2020 < 19 >

»WE ARE HAPPY TO ANSWER

YOUR QUESTIONS.«

Financial Results H1 2020 < 20 >

Appendix

Financial Results H1 2020 < 21 >

P&L H1 2020 - Organisational and personnel adaption measures consistently executed

				Total	Q1-Q2/2020			in %				Total	Q1-Q2/2019			in %
TEUR		Q1-Q2/2020		Adjustments	adjusted*			of sales		Q1-Q2/2019		Adjustments	adjusted*			of sales
Sales		476,253		-		476,253	100.0%	695,466		-	695,466	100.0%
Cost of sales		-398,550		6,524		-392,026			-82.3%		-576,741		4,887		-571,854			-82.2%
Gross profit		77,703		6,524		84,227			17.7%		118,725		4,887		123,612			17.8%
Other income		803		-18		785			0.2%		715		-		715			0.1%
Other expenses		-		-		-			0.0%		-		-		-			0.0%
Impairment of goodwill		-		-		-			0.0%		-		-		-			0.0%
Selling expenses		-28,758		4,040		-24,718			-5.1%		-36,787		3,684		-33,103			-4.8%
Administrative expenses		-32,914		3,501		-29,413			-6.2%		-36,132		4,456		-31,676			-4.6%
Research and development costs		-8,157		177		-7,980			-1.7%		-10,728		172		-10,556			-1.5%
Operating profit		8,677		14,224		22,901			4.8%		35,793		13,199		48,992			7.0%
Share of net profit of investments
accounted for using the equity	754		-	754	0.2%	951		-	951	0.1%
method
EBIT		9,431		14,224		23,655	5.0%	36,744	13,199		49,943	7.2%
Depreciation & Amortization		22,996		-4,856		18,140			3.8%		20,862		-4,695		16,167			2.3%
EBITDA		32,427		9,368		41,795			8.8%		57,606		8,504		66,110			9.5%
Finance income		1,214		-		1,214			0.3%		701		-		701			0.1%
Finance expenses		-7,327		-		-7,327			-1.5%		-5,826		-		-5,826			-0.8%
Finance result		-6,113		-		-6,113			-1.3%		-5,125		-		-5,125			-0.7%
Result before taxes		3,318		14,224		17,542			3.7%		31,619		13,199		44,818			6.4%
Income taxes		-1,640		-3,221		-4,861			-1.0%		-10,851		-936		-11,787			-1.7%
Tax rate (%)		49.4%				27.7%					34.3%				26.3%
Result for the period		1,678		11,003		12,681			2.7%		20,768		12,263		33,030			4.7%

• Adjusted earnings correspond to the management perspective. The adjustments essentially include restructuring and transactions costs, write-off of goodwill, depreciation and amortization arising from purchase price allocations, expenses arising from the step-up of inventories arising from purchase price allocations and remeasurement effects related to call and put options.

Financial Results H1 2020 < 22 >

Adj. EBITDA margin

Group

ADJ. EBITDA MARGIN

9.5%	8.8%
	YTD

ADJ. EBITDA MARGIN BY QUARTER

										2019
	9.2%	9.7%		9.8%						2020
					8.6%
						7.8%
					7.4%

Q1

Q2

Q3

Q4

EMEA

ADJ. EBITDA MARGIN		ADJ. EBITDA MARGIN BY QUARTER

						14.3%	2019
11.7%	11.3%	11.5%	12.3%	11.9%	12.0%		2020
				10.0%
	YTD		Q1	Q2	Q3	Q4

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results H1 2020 < 23 >

Adj. EBITDA margin

Americas

ADJ. EBITDA MARGIN		ADJ. EBITDA MARGIN BY QUARTER

				2019
		10.2%		2020
8.8%
		8.0%
7.0%	7.3%	7.6%
		6.1%		5.8%
YTD	Q1	Q2	Q3	Q4

APAC

		ADJ. EBITDA MARGIN				ADJ. EBITDA MARGIN BY QUARTER
																							2019
1.7%			5.1%
															2020
							0.9%
-2.3%										-1.8%
													-7.5%
																-10.5%
		YTD												-18.0%
						Q1	Q2		Q3		Q4
NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.							Financial Results H1 2020 < 24 >

Current financing structure

MATURITY PROFILE (€ MN)

				Amount	Maturity
			Product	€ mn	date
			Convertible bond	94.8	09/2020
			Promissory note loan old (5 years)	52.0	11/2020
	100**		Promissory note loan old (7 years)	5.0	11/2022
			Promissory note loan new (3 years)	141.0	03/2023
			Promissory note loan new (3.5 years)	20.0	11/2023
			Promissory note loan new (5 years)	69	03/2025
			Promissory note loan old (10 years)	9	10/2025
			Revolving credit facility	200.0	10/2025
			Non-current loan	50.0	06/2026
			Promissory note loan new (7 years)	15	03/2027
	20		Promissory note loan new (10 years)	5	03/2030
52	200*
	9
	141
94.8	69
	50
		15
	5		5

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

• RCF mostly undrawn

Financial Results H1 2020 < 25 >

** option for an additional € 100 mn

Disclaimer

Not for general release, publication or distribution in the United States, Australia, Canada or Japan.

By attending this presentation you agree to be bound by the following limitations:

This presentation has been prepared by SAF-HOLLAND SE ("SAF-HOLLAND") and comprises written materials concerning SAF-HOLLAND. It is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person. It contains summary information only and does not purport to be comprehensive and is not intended to be (and should not be used as) the sole basis of any analysis or other evaluation. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither SAF-HOLLAND nor any of its directors, officers, employees or advisors nor any other person shall have any responsibility or liability whatsoever (for negligence or otherwise) arising, directly or indirectly, from the use of this presentation, or its contents or otherwise in connection with this presentation.

This presentation contains certain statements related to our future business and financial performance and future events or developments involving SAF-HOLLAND and/or the industry in which SAF-HOLLAND operates that may constitute forward-looking statements. These statements may be identified by words such as "believes," "expects," "predicts," "intends," "projects," "plans," "estimates," "aims," "foresees," "anticipates," "targets," and similar expressions. Forward-looking statements are not historical facts, but solely opinions, views and forecasts which are based on current expectations and certain assumptions of SAF-HOLLAND's management or cited from third party sources which are uncertain and subject to risks. Actual events may differ significantly from the anticipated developments due to a number of factors, including without limitation, changes in general economic conditions, changes affecting the fair values of the assets held by SAF-HOLLAND and its subsidiaries, changes affecting interest rate levels, changes in competition levels, changes in laws and regulations, environmental damages, the potential impact of legal proceedings and actions and the Group's ability to achieve operational synergies from past or future acquisitions. Should any of these risks or uncertainties materialize, or should underlying expectations not occur or assumptions prove to be incorrect, actual results, performance or achievements of SAF- HOLLAND may (negatively or positively) vary materially from those described, explicitly or implicitly, in the relevant forward-looking statement.

The information contained in this presentation, including any forward-looking statements expressed herein, speaks only as of the date hereof and reflects current legislation and the business and financial affairs of the SAF-HOLLAND which are subject to change and audit. Neither the delivery of this presentation nor any further discussions of SAF-HOLLAND with any of the recipients thereof shall, under any circumstances, create any implication that there has been no change in the affairs of SAF-HOLLAND since such date. Consequently, SAF- HOLLAND neither accepts any responsibility for the future accuracy of the information contained in this presentation, including any forward-looking statements expressed herein, nor assumes any obligation, to update or revise this information to reflect subsequent events or developments which differ from those anticipated.

This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. This presentation is for information purposes only and does neither constitute an offer to sell securities, nor any recommendation of, or solicitation of an offer to buy, any securities of SAF- HOLLAND in the United States, Germany or any other jurisdiction. In the United States, any securities may not be offered or sold absent registration or an exemption from registration under the U.S. Securities Act of 1933.

Financial Results H1 2020 < 26 >