SAF-Holland SE · XETR:SFQ
SAF-Holland — FY2017 Earnings Presentation
40 slides from SAF-Holland's earnings presentation, Mar 16, 2018
Slide 1: SMART STEEL Analysts and Investors Conference 2018
SMART STEEL Analysts and Investors Conference 2018 Detlef Borghardt, CEO Dr. Matthias Heiden, CFO Stephan Haas, Head of IR / Corp. Comm. March 16, 2018
Slide 2: Agenda
Agenda 1 Highlights business year 2017 2 Market trend 3 Financial information 4 Outlook 2018 5 Takeover V.Orlandi S.p.A 2
Slide 3: Business summary: Sales target 2017 overachieved
Business summary: Sales target 2017 overachieved FY 2017 sales driven by soaring customer demand from the US truck and trailer industries, a solid increase in Europe and dynamic sales growth in China, sales revenue picked up 9.3% equalling € 1,138.9 mn (py: 1,042.0) Negative FX effects (€ 9.1 mn
Slide 4: Business summary: Adj. EBIT margin within target range despite cost overshoot in Americas
Business summary: Adj. EBIT margin within target range despite burdening cost overshoot in the Americas region FY 2017 adj. EBIT increased to € 91.2 mn (py: 90.4) As expected, adj. EBIT margin came in at 8.0% (py: 8.7%) at the lower end of the 8 to 9% range, mostly due to an unexpected, swift in
Slide 5: Business summary: Final phase of US plant consolidation weighing on Q4 2017
Business summary: Final phase of US plant consolidation weighing in on Q4 2017 Q4 saw significant negative impact on earnings from the US plant consolidation as OEM sales in the US picked up 13.7% organically while plants were transitioned Q4 included € 1.6 mn (Group total € 1.7 mn) in one-time
Slide 6: Agenda
Agenda 1 Highlights business year 2017 2 Market trend 3 Financial information 4 Outlook 2018 5 Takeover V.Orlandi S.p.A 6
Slide 7: Market trend 2017 and forecast 2018
Market trend 2017 and forecast 2018 Global trailer forecast in thousand Change Change Change Share in group 2014 2015 2016 in % yoy 2017 in % yoy 2018 in % yoy sales FY17* ACT Trailer Shipm.1) 296 334 313 -6.4 316 +1.0 332 +5.1 North America approx. 20 % FTR Trailer Build2) 292 331 309 -6.6 314 +2.0
Slide 8: Agenda
Agenda 1 Highlights business year 2017 2 Market trend 3 Financial information 4 Outlook 2018 5 Takeover V.Orlandi S.p.A 8
Slide 9: Strong organic sales growth of 9.3% in FY 2017
Strong organic sales growth of 9.3% or almost € 100 mn in FY 2017 in € mn 1200 1,138.9 96.8 9.2 -9.1 1100 1,042.0 1000 900 Sales in FY 2016 Organic growth FX effects M&A Sales in FY 2017 Reported sales in FY 2017 increased by 9.3% yoy to € 1,138.9 mn featuring strong organic growth of 9.3%; Negative
Slide 10: Sustained strong organic growth in Q4 2017: Plus 13.1%
Sustained strong organic growth in Q4 2017: Plus 13.1% in € mn 300 33.0 -11.4 274.2 252.6 200 Sales in Q4 2016 Organic growth FX effects Sales in Q4 2017 Q4 2017 top line momentum continued in all regions resulting in an overall revenue increase of 8.5%; Despite negative FX effects of € 11.4 mn, org
Slide 11: Upbeat trend in organic sales continued in all regions in Q4 2017
Upbeat trend in organic sales continued in all regions in Q4 2017 – organic growth rate versus py quarters 60% 52.9% 50% 41.9% 40% 35.8% 30% 26.0% 20% 13.7% 9.9% 11.0% 10% 8.6% 8.1% 4.3% 5.4% 6.4% 1.6% 0% EMEA/I Americas APAC/China Q1 17 Q2 17 Q3 17 Q4 17 prel. Q4 17 prel. OE (at constant currencies
Slide 12: Group sales and group adj. EBIT in FY 2017
Group sales and group adj. EBIT in FY 2017 Sales in € mn Adj. EBIT in € mn and margin in % 1,200 100 14% 90.4 91.2 1,138.9 90 + 0.8 12% 1,100 80 + 96.9 1,042.0 10% 70 1,000 60 8% 8.7% 50 8.0% 6% 900 40 30 4% 800 20 2% 10 700 0 0% 2016 2017 2016 2017 12
Slide 13: Group sales and group adj. EBIT by quarter
Group sales and group adj. EBIT by quarter Sales in € mn Adj. EBIT in € mn and margin in % 30 16% 300.3 26.7 300 287.3 25.1 277.1 274.2 252.6 20.9 12% 19.8 20 18.5 200 8.7% 8.9% 8% 7.8% 7.5% 6.7% 10 100 4% 0 0 0% Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 2017 2017 13
Slide 14: Reconciliation of sales to gross profit FY 2017
Reconciliation of sales to gross profit FY 2017 in € mn Impacts on gross margin in FY 17 1400 1200 933.8 Temp. Workforce - 1000 1,138.9 total Volume +- 800 Steel Price - 600 Segment Mix - 400 10.3 Additional operating cost Restructuring Cost - 200 10.9 Restructuring cost US 205.1 Exchange Rate - Ope
Slide 15: Reconciliation of sales to gross profit Q4 2017
Reconciliation of sales to gross profit Q4 2017 in € mn Impacts on gross margin in Q4 17 300 250 274.2 227.8 total Temp. Workforce - 200 Volume +- 150 Raw Materials - 100 Product Mix - 6.3 Additional operating costs Restructuring Cost - 50 1.6 Restructuring cost US 46.4 Exchange Rate - 0 Q4 2017 sal
Slide 16: Reconciliation reported EBIT to adj. EBIT FY 2017
Reconciliation reported EBIT to adj. EBIT FY 2017 in € mn 100 13.2 91.2 90 5.3 80 72.7 70 60 50 40 30 20 10 0 Reported EBIT Depreciation and amortization from Restructuring costs Adjusted EBIT PPA Incl. restructuring and transaction costs totaling € 13.2 (6.6) mn and PPA of € 5.3 (5.3) mn, the adj.
Slide 17: Reconciliation reported EBIT to adj. EBIT Q4 2017
Reconciliation reported EBIT to adj. EBIT Q4 2017 in € mn 20 1.7 18.5 1.3 15.5 10 0 Reported EBIT Depreciation and amortization from Restructuring costs Adjusted EBIT PPA Incl. restructuring and transaction costs totaling € 1.7 (0.9) mn and PPA of € 1.3 (1.3) mn, the adj. EBIT amounted to € 18.5 (19
Slide 18: Negative effects on Q4 EBIT and adj. EBIT in the Americas region
Negative effects on Q4 EBIT and adj. EBIT in the AMERICAS region in € mn Add-on operating expenses € 6.3 mn 7 6 5 -1.1 4 -2.3 3 5.7 2 -1.0 1 -1.9 0 -1 -2 -3.9 -3.3 -3 -4 -5 Adj. EBIT Q4 2016 Compensation Expedited freight Increased Plant inefficiencies Mix / Other Adj. EBIT Q4 2017 payments subcontr
Slide 19: Share of group sales by channel and region in 2017
Share of group sales by channel and region in 2017 8.6 % (py: 6.8%) 24.4 % (py: 25.9 %) 37.7% (py: 38.6%) 75.6 % 53.7% (py: 74.1 %) (py: 54.6%) OE business Aftermarket business EMEA/I Americas APAC/China Share of OEM business increases due to well-above trend line sales growth; Well-balanced geograp
Slide 20: Business performance by region – EMEA/I: Solid organic growth
Business performance by region – EMEA/I: Solid organic growth Sales in € mn Summary 700 • Robust market environment in most countries. Significant 611.8 600 568.8 growth impetus from Southern European countries such as 500 Spain, Italy, and France combined with market share gains. 400 • Well-above m
Slide 21: Business performance by region – Americas
Business performance by region – Americas: Unexpectedly high OEM sales growth in HY 2 coinciding with US plant transition measures Sales in € mn Summary 500 • In 2017 sales increased 6.7% to € 429.4 mn (402.3) 429.4 402.3 • Adj. for FX and KLL (approx. € 9.7 mn), sales organically 400 picked up 6.0%
Slide 22: Business performance by region – APAC/China: Strong sales growth
Business performance by region – APAC/ China: Strong sales growth and enhanced profitability Sales in € mn Summary 110 97.7 • Sales in 2017 increased 37.8% to € 97.7 mn (70.9), organically 100 90 sales rose by 40.5% 80 70.9 • Business development in the APAC/China region was driven 70 60 by strong d
Slide 23: From pre-tax earnings to EPS FY 2017
From pre-tax earnings to EPS FY 2017 in € mn 2017 2016 Financial result -16.5 -13.5 Result before tax 56.2 65.0 Income tax -15.2 -21.5 Result for the period 41.0 43.5 Result for the period attributable to equity holders of the parent 42.9 44.2 Adj. Result for the period 52.7 53.7 Basic EPS 0.95 0.98
Slide 24: Extraordinary effect from US tax reform on net income
Extraordinary effect from US tax reform on net income: Overall € 2.0 mn positive effect 50 41.0 39.1 4.5 -2.6 40 30 20 10 0 Normalized result for the period Effect from US tax reform Recognized deferred tax assets Result for the period While the US tax effects, including the statutory changes from t
Slide 25: Reconciliation from result before tax to free cash flow
Reconciliation from result before tax to free cash flow in € mn 2017 2016 Result before tax 56.2 65.0 Finance result -16.5 -13.5 Amortization/depreciation 24.6 22.6 Changes in Net Working Capital -25.4 1.9 Other items cash flow 2.2 3.4 Operating cash flow before income tax 74.1 106.4 Income tax paid
Slide 26: Free cash flow reaches € 30 mn
Free cash flow reaches € 30 mn Operating free cash flow in € mn Inventories in € mn and days of inventories 160 145.7 75 35 138.9 139.3 133.7 29.2 140 127.2 123.7 124.6 129.4 26.8 65 25 120 19.4 100 57 55 13.0 55 54 57 54 15 10.9 80 51 51 53 7.5 45 6.1 60 5 40 35 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 20 -5 0 25 2
Slide 27: Sustainable dividend paid from own cash flow, yield around 3%
Sustainable dividend payed from own cash flow generated, yield around 3% in € per share 0.44 0.45 0.40 0.32 0.27 2013 2014 2015 2016 2017* 27 * To be proposed at Annual General Meeting 2017
Slide 28: Agenda
Agenda 1 Highlights business year 2017 2 Market trend 3 Financial information 4 Outlook 2018 5 Takeover V.Orlandi S.p.A 28
Slide 29: Outlook: Financial targets 2018 and mid-term planning 2020
Outlook: Financial targets 2018 and mid-term planning 2020 FY 2018* Strategy 2020 Organic increase of 4 to 5% Organic: € 1,250 mn + potential M&A Sales + M&A: Coops, JVs, acquisitions Assuming stable FX rates and unchanged scope of consolidation Total: € 1,500 mn Adj. EBIT margin 8 to 8.5% ≥ 8% NWC
Slide 30: Agenda
Agenda 1 Highlights business year 2017 2 Market trend 3 Financial information 4 Outlook 2018 5 Takeover V.Orlandi S.p.A 30
Slide 31: Takeover of V.Orlandi S.p.A.: The specialty fifth wheel and coupling specialist
Takeover of V.Orlandi S.p.A.: The specialty fifth wheel and coupling specialist Headquarter in Flero (Brescia), Italy Supplier of couplings for trucks and specialty fifth wheels Specialty business with couplings and drawbar eyes for trailers and specialized commercial vehicles systems Serves
Slide 32: V.Orlandi S.p.A.: Fully complementary product range
V.Orlandi S.p.A.: Fully complementary product range AGRICULTURAL AUTOMOTIVE DUAL INDUSTRY USE MINING SAF-HOLLAND is complementing and strengthening its position in coupling systems and specialty fifth wheels for trucks, trailers, semi-trailers and agricultural vehicles. Significant cross-selling pot
Slide 33: V. Orlandi S.p.A.: Sales turnover by region and business unit in 2017
V. Orlandi S.p.A.: Sales turnover by region and business unit in 2017 19% 28% 41% 81% 31% Overseas Europe Italy Automotive Agricultural Almost two thirds from overseas sales originate from the APAC region besides Russia, South America, the Middle East and Africa. 33
Slide 34: Impressions: A very specialized product range
Impressions: A very specialized product range 34
Slide 35: Terms and key financials
Terms and key financials SAF-HOLLAND acquires 70% stake in V.Orlandi S.p.A. Call option for SAF-HOLLAND for the remainder Expected full year sales: approx. € 22 million Expected annual growth rate: 3-5% Margin accretive: Adj. EBIT margin in the mid teens Pro rata tempore inclusion in the
Slide 36: Appendix
Appendix NLD)
Slide 37: SMART STEEL provides add-on business opportunities in a digitized transport world
SMART STEEL provides for add-on business opportunities in a digitized transport world 1 2 3 4 5 Upgrade to Digitize New business Integrate & Mechanics Electro- Information & models & Digital Connect mechanics Data solutions Predictive Maintenance RECOLUBE SAFH Connect App Big Data Analytics
Slide 38: Strong financial profile supporting further growth & dividend payments
Strong financial profile supporting further growth & dividend payments Strong financial profile* Corporate Bond Revolving Credit Convertible Bond Promissory note Non-current loan €75mn lines €100.2mn (SSD) €50mn due 04/2018 €159mn due 09/2020 €200mn due 06/2026 due 10/2020 with €140mn due in 11/2020
Slide 39: Disclaimer
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 S.A. (“SAF-HOLLAND”) and comprises written materials
Slide 40: Investor Relations
Investor Relations SAF-HOLLAND GmbH Stephan Haas Hauptstraße 26 63856 Bessenbach Phone +49 6095 301-617 Telefax +49 6095 301-102 Mobile +49 170 306 64 97 [email protected] www.safholland.com 40