Waberer International : First Quarter 2021 Financial Report

FIRST QUARTER 2021 FINANCIAL REPORT

Continuously improving trends, positive reported net income

Budapest, 7 May 2021 - WABERER'S INTERNATIONAL Nyrt. today reports its financial results for the three months ended 31 March 2021.

Highlights Q1 2021

• Revenue was stable compared to the previous quarter at 142.3 million (Q4 2020 143.0 million) but 18.1% less compared to the first quarter of 2020. The decrease compared to Q1 2020 principally reflects Waberer's adoption in July 2020 of the new Trade Lane strategy in our ITS segment under which we focus on serving particular trade routes and customers which we can serve profitably.
• Recurring EBIT was positive in the 3rd consecutive quarter and reached EUR 4.5 million in the first quarter of 2021 which is a EUR 4.4 million improvement compared to last year's first quarter and a EUR 1 million improvement compared to the previous (Q4 2020) quarter. Despite BREXIT, the operational challenges generated by the pandemic situation and the fluctuation of industrial production and retail trade across Europe, quarterly EBIT is the highest since the fourth quarter of 2017. The ITS segment has continuously decreased its loss since the launch of the new business model in July 2020 and reached positive EBIT in the last month of the first quarter of 2021.
• Recurring Net income increased to EUR 2.7 million in the first quarter of 2021 which is a EUR 5.2 million improvement compared to the first quarter of 2020 while reported EBIT increased by EUR 5.8 million compared to the same base period's reported EBIT.
• Net financial indebtedness at 31 March 2021 was EUR 116.7 million, a decrease of EUR 69.9 million compared to 31 March 2020, and the net leverage ratio at 31 March 2021 was 2.1x LTM (Last twelve months) recurring EBITDA (31 March 2020: 3.2x). The continuous net debt decrease since the second quarter of 2019 has been driven by the fleet size decrease in the ITS segment, the postponement of fleet replacements and has also been supported by improved cash generation in recent quarters.
• Non-recurringitems were not incurred in the first quarter of 2021 as the majority of the expenses related to the change of the business model of the ITS segment were incurred in 2020.
• Management believes that
• • The improvement compared to first quarter of 2020 - which was not yet significantly affected by COVID - and the continuous improvement compared to previous quarters confirms the current strategy and the sustainability of the trend;
  • Brexit generated operational difficulties for all international transportation companies delivering to and from the UK however Waberer's managed to maintain its services and intends to keep its long term commitment to this geographical trade-lane;
  • We experienced temporary factory closures at our partners during the quarter due to component shortages and the pandemic situation but these have not had a material effect on our financial results. Provided there is no significant deterioration in the business environment in the coming period, we expect continuing operational challenges but do not expect that these will have a material effect on our profitability.

|Key figures1 (EUR mn unless otherwise stated)
			Q1 2021		Q1 2020	Better		Q4 2020	Better
				(worse)3		(worse)3
Revenue	142.3	173.8	(18.1%)	143.0	(0.5%)
EBITDA (recurring)	16.6	15.4	7.9%	16.0	4.1%
EBIT (recurring)	4.5	0.1		3.5	28.1%
Net income (recurring)	2.7		(2.5)		(0.0)
EBITDA margin (recurring)	11.7%		8.9%	2.8 pp		11.2%	0.5 pp
EBIT margin (recurring)	3.2%	0.1%	3.1 pp	2.5%	0.7 pp
Net income margin (recurring)	1.9%	(1.5%)	3.3 pp	(0.0%)	1.9 pp
Net financial indebtedness2	116.7	186.6	37.5%	119.3	2.1%
Net leverage ratio2	2.1	3.2	35.2%	2.2	4.2%

1 Management updated non-recurring classification in 2020 and one-of cost of ITS restructuring is categorised as non-recurring for all 2020. Please see details on page 10. For the definitions of non-IFRS measures, please refer to the Glossary on page 14. Due to rounding, numbers presented throughout this document may not add up precisely

to the totals provided and percentages may not precisely reflect the absolute figures.

1. As of end of the period
2. Compared to Q1 2021 figures

This report may contain forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore should not have undue reliance placed upon them. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors are described in, among other things, the Annual Report 2020 dated 22 April 2021, which is available on our website for investors at https://www.waberers.com/files/document/document/1237/Consolidated%20Annual%20Report_2020.pdf.

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Barna Erdélyi, CEO of WABERER'S INTERNATIONAL Nyrt. commented: ""I am very pleased that all three segments of our Group were able to improve their results compared to the first quarter of 2020, i.e. the last period not yet affected by the pandemic situation, despite the difficult macroeconomic environment. Since the turnaround started in the third quarter of 2020, we have now operated at a positive and improving recurring EBIT level for the three consecutive quarters, and in the first quarter of 2021 we managed to return the Group to a positive net profit level.

The results of the successful turnaround at the Group are well represented by the following figures showing the trend of the main financial indicators:

In Hungarian operation of the ITS segment, we achieved monthly mileage/truck performance by the end of the quarter that we last experienced in mid-2017, while the Polish based operation (LINK) of ITS managed to recover from Brexit related difficulties to the last month of the quarter. Our RCL segment was able to support AUDI produce the highest number of engines during the quarter since the start of our cooperation, and we further deepened our cooperation with one of the country's largest meat companies. Our insurance segment was able to further improve its level of operational efficiency, which is already higher than the industry average.

Our improving financial situation makes it possible to replace our fleets related to both transportation and warehousing activities, which will improve our operational efficiency and lower emissions in the medium term. As a first step, we signed an agreement to replace 540 new trucks, which are expected to join our fleet in the last quarter of this year and in the first quarter of next year, and we have also begun replacing the forklifts used in the warehouses. In parallel, we will begin testing alternative fuel-driven vehicles, which will hopefully become permanent members of our fleet in the coming period, supporting both low operating cost levels and the reduction of both our own and our customers' environmental footprint, an issue which has an increasing focus in our customer negotiations.

In addition to the positive trends and ongoing business developments, we are constantly monitoring both the pandemic situation and the anomalies in global supply chains. We expect these to remain part of our everyday lives in the coming months. However, we are confident that we will be able to serve our customers at least at the level of the first quarter, which was significantly more successful than in previous periods. We are also confident that we will manage to reach a stable positive operation in the ITS segment as well as a result of the additional finetuning of ITS restructuring and strict cost control in the remaining period of the year."

1Pro forma figures restated according to IFRS 16.

2 Buy back value of leased vehicles at ITS segment is not represented in the books since Q4 2019

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Management analysis

Group result

|Income Statement1 (EUR mn)

Revenue

Direct costs

Gross profit (recurring)

OPEX

EBITDA (recurring)

Depreciation and Amortisation

EBIT (recurring)

Financial result

Taxes

Net income (recurring)

Non-recurring items3

Gross margin (recurring) EBITDA margin (recurring) EBIT margin (recurring)

Net income margin (recurring)

Average number of trucks Average number of employees Average number of truck drivers

Q1 2021	Q1 2020	Better (worse)
142.3	173.8	(18.1%)
(112.4)	(144.4)	22.1%
29.9	29.4	1.5%
(13.3)	(14.0)	5.4%
16.6	15.4	7.9%
(12.1)	(15.3)	21.0%
4.5	0.1
(0.4)	(1.6)	75.4%
(1.5)	(1.1)	(40.6%)
2.7	(2.5)
-	(0.6)
21.0%	16.9%	4.1 pp
11.7%	8.9%	2.8 pp
3.2%	0.1%	3.1 pp
1.9%	(1.5%)	3.3 pp
2 821	3 758	(24.9%)
5 984	8 002	(25.2%)
3 541	5 055	(30.0%)

1 Figures adjusted for better comparability, re-categorising the effect of insurance-related provisions, an OPEX item, as Direct Costs. EBITDA is not affected. For exact figures on the effect on the re-categorisation, please refer to page 9.

Economic environment

In the first two months of 2021, European industrial production was at the level of the last month of 2020 (December), but significantly below the level of the first two months of 2020, i.e. the last "peaceful" months before the coronavirus. The annual change compared to January and February 2020 was -2.4% and -3.7%, respectively, in Waberer's major Western European markets. Above-average declines were observed in Germany, France and the United Kingdom. In contrast, in the main Eastern European markets, industrial production was 1.3% and 4.1% higher in January and February 2021 than a year earlier, respectively.

Retail trade of non-food products also decreased in the first 2 months of 2021 compared to the same period last year. The year-on-year change in the retail trade of non-food products was -9.6% and -4.0%, respectively in January and February. The change in retail trade in Hungary in January and February 2021 was 1.9% and 5.9% lower than in the same period of the previous year, respectively.2

Revenue

Revenue decreased by 18.1% year-on-year in the first quarter of 2021 to EUR

142.3 million. Compared to the first quarter of last year, revenue was 26.9% lower in the International Transportation Segment (ITS) as a result of fleet reduction program under the revised business strategy. In the Regional Contract Logistics (RCL) segment, revenue decreased by 4.1% in the first quarter on year-on-year level. The year-on-year revenue growth in the Other segment was 2.5%

| Revenue (top) and recurring EBITDA (bottom) split by segments in Q1 2021 (EUR mn)

Notes: Revenue not filtered for inter-segment

eliminations. ITS: International Transportation

Segment; RCL: Regional Contract Logistics segment;

Other: All other activities including mainly 3rd party insurance services.

1. Source: Eurostat seasonally and calendar day adjusted data for the Eurozone and Hungary. Percentage figures denote the change compared to the same period in the previous year. March 2021 figures not yet available.
2. Please see details of updated non-recurring classification on page 9.

FIRST QUARTER FINANCIAL REPORT, 7 MAY 2021

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Headcount

Average number of employees further decreased in Q1 2021 compared to previous quarter by 151 and by 2,018 compared to first quarter of 2020. Average number of employees was 5,984 in Q1 2021.

The decrease compared to Q4 2020 was caused by a slight fluctuation of blue-collar employees while the decrease compared to Q1 2020 is due to the lower driver number as a result of the fleet size reduction in the ITS segment and lower indirect employee number resized to the lower fleet size.

Gross profit, EBITDA and EBIT

In the first quarter of 2021, - despite the 25% smaller fleet size on Group level - recurring gross profit increased by 1.5% compared to the same period of 2020, while the gross profit margin improved by a significant 4.1% points to 21.0%. The Gross profit margin improvement is partly due to improving efficiency in all 3 segments and also to the increasing share of the RCL segment which has the highest margin level within the Group. Quarterly gross profit was EUR 29.9 m of which EUR 14.1 m is attributable to ITS segment, EUR 12.9 m to RCL segment and EUR 3.4 m to Other segment.1

Group level recurring EBITDA increased by 7.9% compared to Q1 2020 to EUR 16.6 million and EBITDA margin also improved by 2.8%points to 11.7%. The EBITDA increase was driven by the increase of gross profit and 5.4% lower OPEX level. The indirect cost level decreased by 14.5% in the ITS segment compared to Q1 2020 and increased by 1.3% in the RCL segment while indirect costs increased by EUR 0.4 million in the Other segment compared to same period last year as a result of a one-time positive effect in the base period.

Recurring EBIT increased by EUR 4.4 million in Q1 2021 in comparison with Q1 2020 and reached EUR 4.5 million. Q1 2021 is the 3rd quarter with positive recurring EBIT in a row and the highest since Q4 2017. Quarterly depreciation & amortisation (D&A) decreased by EUR 3.2 million mostly as a result of the fleet size decrease in ITS. The EUR - 1.9 million EBIT of ITS segment - that is an EUR 2.5 million improvement - was offset by EUR 3.5 million EBIT of RCL segment and EUR 2.9 million EBIT of Other segment.

Net income

Financial result showed EUR 0.4 million loss in the first quarter of 2021 which is a 1.2 million improvement compared to the same period last year. Interest paid was EUR 0.1 million higher compared to same period of 2020 as a result of the agreement with our financing partners to pay the total amount of interest on the overdraft loans not paid during the loan and leasing moratorium in 2020. However the net FX gain (realised and unrealised) was EUR 0.9 million during the quarter which is EUR 1.4 million more favourable than Q1 2020.

Tax expenses, which include corporate income tax as well as revenue-based local taxes and also non-cash deferred tax, amounted to EUR - 1.5 million in the quarter, EUR 0.4 million higher than in the first quarter of last year. A change in deferred tax was the major driver of the year-on-year change.

Recurring net income reached EUR 2.7 million for the quarter compared to a loss of EUR 2.5 million in the first quarter of last year. Quarterly recurring net income is the highest since Q4 2017 and equals reported net income for the first time since 2017.

Group cash flow, debt & balance sheet

Cash flow
|Cash Flow Statement (EUR mn)
			Q1 2021	Q1 2020
Net cash flows from operations	3.0	9.0
of which: change in working capital	(11.6)	(0.2)
Net cash flows from investing and financing activities		(11.6)	(25.3)
Change in cash and cash equivalents		(8.6)	(16.2)
Free cash flow	(6.5)	(6.6)
CAPEX	(0.7)	(1.1)

1 Effect of intersegment consolidation on Gross Profit is EUR - 0.5 m.

FIRST QUARTER FINANCIAL REPORT, 7 MAY 2021

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Net cash flows from operations in first quarter of 2021 was EUR 3.0 million, EUR 6.0 million lower than for Q1 2020. Lower cash generation in the period was due to reversal in the current quarter of the one-time positive effect of the working capital optimisation in the previous, Q4 2020, period. Working capital financing needs in the first quarter of 2021 was EUR 11.3 million higher compared to the same period in 2020. Net cash flow from operations before working capital financing was EUR 5.3 million higher compared to first quarter of 2020.

Net cash flows from investing and financing activities showed a net outflow of EUR 11.6 million in the first quarter of 2021, EUR 13.7 million lower than the last year's value. Lower investing and financing cash outflow is mostly due to the lower leasing payment obligation as a result of the fleet size decrease in the ITS segment (2020 Q1 cash flow was not yet affected by the leasing payment moratorium, while in Q1 2021 - despite the legal opportunity to extend the leasing moratorium - Waberer's Group restarted paying the leasing instalments as agreed with its major financing partners participating in the club agreement).

Free cash flow, which incorporates cash flow from operations, capital expenditures, and all elements of the lease-based financing of the fleet, was EUR -6.5 million in the quarter compared to EUR - 6.6 million in the first quarter of last year.

Debt
|Indebtedness figures (EUR mn)
			31 Mar. 2021	31 Dec. 2020		31 Mar. 2020
Net financial indebtedness	116.7	119.3	186.6
Net leverage ratio (recurring EBITDA multiple)	2.1	2.2	3.2

Net financial indebtedness decreased to EUR 116.7 million on 31 March 2021, EUR 69.9 million lower than one year earlier. The decrease in net indebtedness was partly due to the improving cash generation of the operation, the deleveraging effect of the fleet size decrease in ITS and the technical effect of accounting under IFRS16 for the capitalization of real estate related long term rentals (decrease of the remaining rental period decreases the relevant debt). The decrease in net indebtedness was also due to the postponement of the fleet renewal program in the last 2 years.

The 2020 lease payment moratorium was neutral from net indebtedness perspective. However, the cash balance of the Group increased as a result of the moratorium (as leasing instalments were not paid) while the leasing related liabilities didn't decrease during the year with the same amount. Unpaid leasing installments of the remaining fleet in the Hungarian operation of ITS and RCL segments totalled EUR 23 million of which EUR 21 million has been converted to a 5-year bullet loan as agreed with our major financing partners.

Net leverage ratio, a multiple of last twelve months recurring EBITDA, was at 2.1 on 31 March 2021, meaning 0.9 improvement compared to end of Q1 2020.

Balance Sheet

As a result of the long-term financing agreement with our financing partners, the majority of the moratorium related unpaid leasing (EUR 21 million) will be transformed to a 5-year bullet loan and reclassified to long term liabilities. The overdraft credit line is also available in the next 5 years and will be reclassified to long term liabilities (EUR 20 million at 31 March 2021). Reclassification is expected in the second quarter of 2021.

|Summary of above reclassification on Balance Sheet structure (EUR mn)

		31 March, 2021	31 March, 2021 \ After		Change
		reclassification
Current assets	176.3	176.3		0.0
Current liabilities		220.1	179.0		-41.0
Difference	-43.8	-2.7		41.0
Current ratio	0.8	1.0		0.2
Long term liabilities	219.1	260.2		41.0
Total liabilities	439.2	439.2		0.0

Shareholder equity of the parent company

Shareholder's equity of Waberer's International Nyrt. changed from EUR 9.0 million at 31 December, 2020 to EUR 8.8 million at 31 March, 2021. Shareholder's equity of Waberer's International Nyrt. is expected to increase by EUR 27 million as a result of dividend payment by its subsidiaries in the second quarter of 2021.

FIRST QUARTER FINANCIAL REPORT, 7 MAY 2021

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