SAF Holland : Presentation Q3 2020 (1.8 MB)

ALEXANDER GEIS (CEO)

INKA KOLJONEN (CFO)

Financial results 9M 2020

18 NOVEMBER 2020

AGENDA

Welcome

1. Performance 9M 2020 - Very solid performance in a challenging market environment
2. Outlook

Financial Results 9M 2020 < 2 >

Today's speakers - Welcome to our 9M 2020 Financial Results Conference

Alexander Geis

Chairman of the Management Board and Chief Executive Officer

• With the company since 1992
• Responsible for Strategy, Key Accounts, Purchasing, Human Resources, M&A, Digital, Research & Development and Regions
• Most recently member of the Group Management Board, President EMEA and Chief Procurement Officer
• Prior to that member of the Group Management Board responsible for the Business Unit Aftermarket

Inka Koljonen

Member of the Management Board and Chief

Financial Officer

• With the company since September 2020
• Responsible for Finance, Accounting and Controlling, IT, Legal and Compliance, Investor Relations and Internal Audit
• Previously CFO positions at Clariant AG (Business Unit Catalysts) and Siemens Russia
• Prio to that Head of IR at MTU Aero Engines

Financial Results 9M 2020 < 3 >

1 Performance 9M 2020 - Very solid performance in a challenging market environment

Financial Results 9M 2020 < 4 >

Disciplined capex investment policy executed

9M 2020 results demonstrate resilience of our business model - guidance raised

Adj. EBIT

Sales	margin
€ 709 MN
5.4%

• 9M 2020 adj. EBIT margin with 5.4 per cent above the P upper end of the FY guidance range of 3 to 5 per cent

• High share of aftermarket business safeguards P profitability in crisis times
• Comprehensive cost-cutting programs continued P• (blue collar & white collar)

P•

• Solid financial profile;

P• Net debt reduced by € 42.3 MN in Q3 2020

Operating free	Capex ratio
cash flow
2.3%
€ 64.4 MN

Financial Results 9M 2020 < 5 >

Group - Adj. EBIT margin above the upper end of the previous guidance range

SALES (€ MN)

• Sales 9M 2020 down by 29.7 per cent yoy

SALES BY QUARTER (€ MN)		2019

2020

• But Q3 2020 sales figure shows recovery compared to Q2 2020 (+ 20.5 per cent) led by the EMEA region

1.009

709

YTD

	346		283		349		313		232		276
							193
	Q1			Q2			Q3			Q4

• Adj. EBIT margin 9M 2020 already slightly above previous FY guidance reflecting resilience of the business model and actions to reduce costs
• • Main drivers: higher share of aftermarket business and SG&A cost savings
  • Includes inventory write-downs of € 8.8 mn in the EMEA and Americas region and fixed-cost progression effect

ADJ. EBIT MARGIN

ADJ. EBIT MARGIN BY QUARTER

• Adj. EBIT margin in Q3 2020 exceeds pre-corona value for the same quarter of last year

7,2%		7,2%
6,6%		6,5%		6,4%
5,4%			5,4%	•	Restructuring expenses (€ 11.7 mn)
				4,7%
					•	Severance payments (€ 3.3 mn)
		2,7%			•	Corpco wind-down (€ 2.6 mn)
					•	Closure of subsidiaries (€ 1.8 mn)
					•	Project FORWARD 2.0 (€ 2.3 mn)
YTD	Q1	Q2	Q3	Q4	•	Change of legal form (€ 1.2 mn)

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

• Nogoodwill impairments

Financial Results 9M 2020 < 6 >

EMEA - Adj. EBIT margin very robust despite COVID-19

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

2020

492
	405
	176	157	172	144	137	134
				111
YTD		Q1		Q2	Q3	Q4

•	Sales 9M 2020 down by 17.8 per cent yoy
•	Q3 2020 sales figure down only 5.4 per
	cent yoy; good recovery in all areas
•	Adj. EBIT margin 9M 2020 at 8.7 per cent
	(9M 2019: 9.5 per cent)
	•	Main driver: higher share of aftermarket
		business
	•	Includes inventory write-downs of € 4.7 mn
		and fixed-cost progression effect
•	Adj. EBIT margin in Q3 2020 with 10.0 per
	cent above previous year's pre-corona

ADJ. EBIT MARGIN

9,5%	8,7%
	YTD

ADJ. EBIT MARGIN BY QUARTER

	9,7%	9,4%		9,8%	10,0%	10,0%
					8,9%
					6,0%

Q1

Q2

Q3

Q4

	level
•	Restructuring expenses (€ 2.8 mn)

Mainly severance payments and costs related to the change of the legal form and transfer of the registered office to Germany (S.A.  SE)

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

Financial Results 9M 2020 < 7 >

Americas - Improved adj. EBIT margin despite massive sales decline

SALES (€ MN)

416

250

• Sales 9M 2020 down by 39.9 per cent yoy

SALES BY QUARTER (€ MN)		2019

2020	•	Americas region strongly hit by COVID-19
	even in Q3 with sales down by 47.0 per
		cent yoy
	•	Adj. EBIT margin 9M 2020 at 3.5 per cent
		reflecting successful restructuring efforts

YTD

	131		105		141		144		118
							69				76
	Q1			Q2			Q3			Q4

• Main drivers: higher share of aftermarket business and substantial SG&A cost savings
• Includes Inventory write downs of € 4.1 mn and fixed-cost progression effect

					• Adj. EBIT margin in Q3 2020 with 5.6 per
ADJ. EBIT MARGIN	ADJ. EBIT MARGIN BY QUARTER
	cent significantly better than Q1 2020,
					Q2 2020 and even above previous year's
		8,1%		pre-corona level

6,3%				5,6%
	5,2%		5,4%
	3,5%	3,9%
			2,7%
			0,6%
YTD	Q1	Q2	Q3	Q4

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

• Adj. EBIT margin 9M 2019 included positive one-offs (contractually agreed passing on of the 2018 steel price increases)
• Restructuring expenses (€ 4.0 mn)

Mainly severance payments and costs related to Program FORWARD 2.0

Financial Results 9M 2020 < 8 >

APAC - Lockdown and delayed ramp-up weigh on sales and profitability

SALES (€ MN)	SALES BY QUARTER (€ MN)

• Sales 9M 2020 down by 46.2 per cent yoy

2019	•	Several weeks lockdown of the Chinese,
2020		Australian, Indian and Singapore entities
	•	Ceased export business as a result of the
		trade dispute between China and the USA

100						•	Delayed ramp-up of the new Chinese
							facility in Yangzhou
	54				•	Sales Q3 2020 down by 22.1 per cent yoy
	39	36
		25		23
		21	20
		13			•	Adj. EBIT margin 9M 2020 at - 9.9 per
						cent
YTD	Q1	Q2		Q3	Q4	•	Main drivers: continuing low volumes and
							special sale of old stock

ADJ. EBIT MARGIN

ADJ. EBIT MARGIN BY QUARTER

• Adj. EBIT Margin Q3 2020 at - 15.1 per cent

2,4%

•

Restructuring expenses (€ 4.9 mn)

-5,9%

-9,9%

YTD

-2,4%
				-8,5%
				-14,0%
					-14,7%-15,1%
						-15,5%
	Q1	Q2	Q3	Q4

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 9M 2020 < 9 >

Truck and trailer production 9M 2020 vs. 9M 2019 - COVID-19 strongly impacted already weakening markets

EUROPE		NORTH		CHINA		SOUTH		INDIA
	AMERICA			AMERICA*

Truck

Trailer

Truck

Trailer

Truck

Trailer

Truck

Trailer

Truck

Trailer

-30% to -35%	-25% to -30%	-45% to -50%	-40% to -45%	+10% to +20%	+10%	-35% to -40%	-10% to -15%	-70%	-60%

* Mainly Brazil

NOTE: Market figures for trucks and trailers based on ACT, FTR and local sources as of November 2020

Financial Results 9M 2020 < 10 >

Investments and D&A - Capex ratio within target range of 2.0 to 2.5 per cent

INVESTMENTS (IN % OF SALES) INVESTMENTS BY QUARTER (IN % OF SALES)			2019
			5,9%		2020

• Investments in plant, property, equipment and intangible assets reached 2.3 per cent of Group sales (FY 2020 guidance: around 2.5 per cent of Group sales)

3,7%

2,3%

4,2%	4,0%

2,4% 2,8% 2,6%

1,9%

• Operating cash flow with € 79.8 mn
  (149.2 per cent of EBITDA) covers investments by far
• Focus of investments: Rationalisation investments in the US and Germany

YTD

Q1	Q2	Q3	Q4	•	Close monitoring of the investment
					approval process to streamline capital

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

			4,7%
3,8%		3,2%	3,7%	3,9%
2,3%	2,1%	2,6%	2,4%
YTD	Q1	Q2	Q3	Q4

• Depreciation and Amortization ratio (excl. PPA, impairment of goodwill and R&D projects) increased due to higher investments in recent years and significantly lower sales

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

Financial Results 9M 2020 < 11 >

Net working capital - Cash-is-King program well 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											14,1%
				14,5%								14%	•
								14,3%
100
									13,0%
	184	225	241	189	214	215	217	184	159	176	139	12%
50
0												10%
	Q1 18	Q2 18	Q3 18	Q4 18	Q1 19	Q2 19	Q3 19	Q4 19	Q1 20	Q2 20	Q3 20

Net working capital (NWC) in Q3 significantly down both in absolute and relative terms compared to previous year

• Minus 36.2 per cent from € 217.3 mn to
• • 138.7 mn
• Main driver:
• • Trade receivables down 33.6 per cent due to cash collection
  • Inventories down 26.9 per cent with a decrease in sales of 29.7 per cent
• NWC ratio down from 16.4 per cent to 14.1 per cent

Cash-is-King program shows good results and will be continued with enhanced scope and focus on inventories

• 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 9M 2020 < 12 >

Operating free cash flow significantly improved due to successful NWC management and lower capex

in EUR thousands

EBITDA

Delta NWC

Net cash flow from operating activities

Purchase of PP&E

Purchase of intangible assets

Proceeds from sale of PP&E

Operating free cash flow*

Q1 2019

28,411

-14,914

8,559

-13,304

-1,112

164

-5,693

Q2 2019

29,195

-7,298

19,046

-7,772

-2,048

1,292

10,518

Q3 2019	Q1-Q3		Q4 2019		Q1-Q4			Q1 2020		Q2 2020		Q3 2020	Q1-Q3
		2019			2019									2020
12,120		69,726	18,487	88,213	25,876	6,550	21,061		53,486
-1,741		-24,583	33,334	8,750	13,927	-19,937	27,560		21,550
17,116		44,721	45,825	90,546	32,014	-9,487	57,260		79,787
-10,859		-31,935	-13,656	-45,591	-5,446	-3,719	-3,672		-12,837
-1,766		-4,926	-2,464	-7,390	-1,295	-1,374	-643		-3,312
3,009		4,465	789	5,254	418	63	242		723
7,500		12,325	30,494	42,819	25,691	-14,517	53,187		64,361

• 9M operating cash flow at € 79.8 mn
  (9M 2019: € 44.7 mn)
• 9M operating free cash flow at € 64.4 mn
  (9M 2019: € 12.3 mn)

• 9M net investing cash flow at € -15.4 mn (PP&E and intangible assets)
  (9M 2019: € -32.4 mn)
• Factoring volume at € 35.5 mn (9M 2019: € 35.2 mn)

• 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 9M 2020 < 13 >

Q3 2020 - Net debt reduced by € 46.5 mn vs. Q2 2020 due to improved cash generation

Net Debt incl. Finance Lease Liabilities (€ MN)

300
	282,8	274,7		278,9
250,9			251,7	256,2

250

200

150

100

232,4

50

0

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

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

Financial Results 9M 2020 < 14 >

2 Outlook

Financial Results 9M 2020 < 15 >

2020 Outlook truck and trailer production - Global downturn expected vs. 2019

EUROPE

NORTH

CHINA

SOUTH

INDIA

AMERICA

AMERICA***

Truck

Trailer

Truck

Trailer

Truck

Trailer

Truck

Trailer

Truck

Trailer

New*

-30% to

-15% to

New*

-40% to

-40% to

New*

0% to

-5% to

New*

-30% to

-5% to

New*

-40% to

-40% to

-35%

-20%

-45%

-45%

+5%

-10%

-35%

-10%

-50%

-50%

Old**

-35% to

-20%

Old**

-40% to

-40% to

Old**

-20%

-25%

Old**

-35%

-15%

Old**

-40%

-40%

-40%

-50%

-50%

2020E:

• China with stable volumes
• Lower volumes in Europe 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 November 2020, ** As of August 2020, *** mainly Brazil

Financial Results 9M 2020 < 16 >

Guidance 2020 raised

FY 2019		FY 2020* (new)		FY 2020 (old)

Sales	€ 1,284 mn	Decline by 20 to	Decline by 20 to
30 per cent	30 per cent

Adj. EBIT margin	6.2 per cent	Between 5 and 6	Between 3 and 5
per cent	per cent

CAPEX		4.1 per cent of		Around 2.5 per		Around 2.5 per
	sales		cent of sales		cent of sales

• The new EBIT guidance for FY 2020 is based on the assumption that in the remainder of the year there will be no new, unexpected impacts from the ongoing COVID-19 pandemic on the production and supply chains.

Financial Results 9M 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 9M 2020 < 18 >

Financial calendar & IR contact

DATEEVENT

25.11.2020 SAF-HOLLAND Virtual Investor & Analyst Day

Investor Relations Contact

Michael Schickling

1. [phone]

1. [e-mail]

Alexander Pöschl

1. [phone]

1. [e-mail]

Klaus Breitenbach

1. + 49 (0) 6095 301 565

1. [e-mail]

Financial Results 9M 2020 < 19 >

»WE ARE HAPPY TO ANSWER

YOUR QUESTIONS.«

Financial Results 9M 2020 < 20 >

Appendix

Financial Results 9M 2020 < 21 >

P&L 9M 2020 - Extraordinary items

				Total	Q1-Q3/2020			in %				Total	Q1-Q3/2019			in %
in EUR thousands		Q1-Q3/2020		Adjustments	adjusted*			of sales		Q1-Q3/2019		Adjustments	adjusted*			of sales
Sales		708,698		-		708,698	100.0%	1008,626		-	1008,626	100.0%
Cost of sales		-589,694		8,504		-581,190			-82.0%		-844,385		9,116		-835,269			-82.8%
Gross profit		119,004		8,504		127,508			18.0%		164,241		9,116		173,357			17.2%
Other income		1,713		-522		1,191			0.2%		3,109		-1,850		1,259			0.1%
Impairment of goodwill		-		-		-			0.0%		-6,691		6,691		-			0.0%
Selling expenses		-44,324		6,315		-38,009			-5.4%		-53,181		5,590		-47,591			-4.7%
Administrative expenses		-47,139		5,040		-42,099			-5.9%		-54,258		8,195		-46,063			-4.6%
Research and development costs		-11,421		256		-11,165			-1.6%		-15,746		279		-15,467			-1.5%
Operating profit		17,833		19,593		37,426			5.3%		37,474		28,021		65,495			6.5%
Share of net profit of investments
accounted for using the equity	1,110		-	1,110	0.2%	1,421		-	1,421	0.1%
method
EBIT		18,943		19,593		38,536	5.4%	38,895	28,021		66,916	6.6%
Finance income		1,762		-		1,762			0.2%		1,404		-		1,404			0.1%
Finance expenses		-10,483		-		-10,483			-1.5%		-10,151		-		-10,151			-1.0%
Finance result		-8,721		-		-8,721			-1.2%		-8,747		-		-8,747			-0.9%
Result before taxes		10,222		19,593		29,815			4.2%		30,148		28,021		58,169			5.8%
Income taxes		-2,270		-5,992		-8,262			-1.2%		-12,868		-2,430		-15,298			-1.5%
Tax rate (%)		22.2%				27.7%					42.7%				26.3%
Result for the period		7,952		13,601		21,553			3.0%		17,280		25,591		42,871			4.3%

• 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 9M 2020 < 22 >

Group - Reconciliation EBIT to adjusted EBIT

in EUR thousands

EBIT

EBIT margin in %

Additional depreciation and amortization of property, plant and equipment and intangible assets from PPA

Q1-Q3 2020		Q1-Q3 2019		Change absolute		Change in %
18,943	38,895	-19,952	-51.3%
2.7%	3.9%	-	-
7,876	7,288	588	8.1%

Impairment	-	6,691	-6,691	-
PPA step-up from inventory measuring of acquisitions	-	43	-43	-
Restructuring and transactions costs	11,717	13,999	-2,282	-16.3%
Adjusted EBIT	38,536	66,916	-28,380	-42.4%
Adjusted EBIT margin in %	5.4%	6.6%	-	-

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

Financial Results 9M 2020 < 23 >

EMEA - Reconciliation EBIT to adjusted EBIT

in EUR thousands

EBIT

EBIT margin in %

Additional depreciation and amortization of property, plant and equipment and intangible assets from PPA

Q1-Q3 2020		Q1-Q3 2019		Change absolute		Change in %
28,823	40,518	-11,695	-28.9%
7.1%	8.2%	-	-
3,478	3,449	29	0.8%

Impairment	-	-	-	-
PPA step-up from inventory measuring of acquisitions	-	3	-3	-
Restructuring and transactions costs	2,809	2,768	41	1.5%
Adjusted EBIT	35,110	46,738	-11,628	-24.9%
Adjusted EBIT margin in %	8.7%	9.5%	-	-

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

Financial Results 9M 2020 < 24 >

Americas - Reconciliation EBIT to adjusted EBIT

in EUR thousands

EBIT

EBIT margin in %

Additional depreciation and amortization of property, plant and equipment and intangible assets from PPA

Q1-Q3 2020		Q1-Q3 2019		Change absolute		Change in %
2,949	18,567	-15,618	-84.1%
1.2%	4.5%	-	-
1,794	1,912	-118	-6.2%

Impairment	-	-	-	-
PPA step-up from inventory measuring of acquisitions	-	-	-	-
Restructuring and transactions costs	4,005	5,571	-1,566	-28.1%
Adjusted EBIT	8,748	26,050	-17,302	-66.4%
Adjusted EBIT margin in %	3.5%	6.3%	-	-

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

Financial Results 9M 2020 < 25 >

APAC - Reconciliation EBIT to adjusted EBIT

in EUR thousands

EBIT

EBIT margin in %

Additional depreciation and amortization of property, plant and equipment and intangible assets from PPA

Impairment

Q1-Q3 2020		Q1-Q3 2019		Change absolute		Change in %
-12,829	-20,190	7,361	-36.5%
-23.8%	-20.2%	-	-
2,604	1,927	677	35.1%
-	6,691	-6,691	-

PPA step-up from inventory measuring of acquisitions	-	40	-40	-
Restructuring and transactions costs	4,903	5,660	-757	-13.4%
Adjusted EBIT	-5,322	-5,872	550	-9.4%
Adjusted EBIT margin in %	-9.9%	-5.9%	-	-

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

Financial Results 9M 2020 < 26 >

Adj. EBITDA margin

Group

ADJ. EBITDA MARGIN

9,0%	9,2%
	YTD

ADJ. EBITDA MARGIN BY QUARTER

												2019
	9,2%	9,7%		9,8%				10,1%				2020
						8,6%
					7,4%		7,8%

Q1

Q2

Q3

Q4

EMEA

ADJ. EBITDA MARGIN		ADJ. EBITDA MARGIN BY QUARTER

							14,3%	2019
						13,1%
11,8%	11,9%	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 9M 2020 < 27 >

Adj. EBITDA margin

Americas

ADJ. EBITDA MARGIN		ADJ. EBITDA MARGIN BY QUARTER

						2019
				10,2%	10,3%	2020
8,5%
8,0%	7,3%		7,6%	8,0%
				6,1%		5,8%
	YTD		Q1	Q2	Q3	Q4

APAC

		ADJ. EBITDA MARGIN				ADJ. EBITDA MARGIN BY QUARTER
																								2019
					5,1%
																			2020
										0,9%
													-1,8%
-3,2%
-5,8%										-7,5%
																		-10,5%
																		-12,0%
		YTD												-18,0%
						Q1	Q2		Q3			Q4
NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.							Financial Results 9M 2020 < 28 >

Current financing structure

MATURITY PROFILE (€ MN)

100**

20

		200*
			9
		141
			69
				50
52					15
9					5
	5

	Amount	Maturity
Product	€ mn	date
Promissory note loan old (5 years)	52.0	11/2020
Loan RMB	9.0	06/2022
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
Revolving credit facility***	200.0	10/2024
Promissory note loan new (5 years)	69	03/2025
Promissory note loan old (10 years)	9	10/2025
Non-current loan	50.0	06/2026
Promissory note loan new (7 years)	15	03/2027
Promissory note loan new (10 years)	5	03/2030

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

• RCF mostly undrawn

** option for an additional € 100 mn

Financial Results 9M 2020 < 29 >

*** additional one year extension possible

Disclaimer

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Financial Results 9M 2020 < 30 >