SAF-Holland SE · XETR:SFQ
SAF-Holland — Q3 2018 Earnings Presentation
28 slides from SAF-Holland's earnings presentation, Nov 8, 2018
Slide 1: SMART STEEL Q3 2018 Results
SMART STEEL Q3 2018 Results Detlef Borghardt, CEO Dr. Matthias Heiden, CFO November 8, 2018
Slide 2: Agenda
Agenda Business Summary – Preliminaries confirmed Market update Segments: Status and profitability trend in the regions Group targets in sales and earnings FY 2018 2
Slide 3: Business Summary: Q3 2018 – Preliminaries confirmed
Business Summary: Q3 2018 – Preliminaries confirmed Q3 2018 sales growth of 22.9%; Highest Q3 sales level ever of € 340.6 (py: 277.1) mn Organic sales growth of 15.0% Continued burden from increased operating cost related to realignment of the new US production network and high steel prices in
Slide 4: Trailer market trend North America: Sustained strong order intake
Trailer market trend North America: Sustained strong order intake, backlog extending up to six months Trailer net orders 60,000 50,000 40,000 30,000 20,000 10,000 0 Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec. 2016 17,649 21,360 13,789 15,840 13,302 11,931 9,482 14,031 11,746 20,158
Slide 5: Truck market trend North America: Order boom meets stressed supply chain
Truck market trend North America: Order boom meets stressed supply chain Class-8 net orders 60,000 50,000 40,000 30,000 20,000 10,000 0 Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec. 2016 18,062 17,650 16,147 13,500 14,095 13,000 10,263 14,078 13,753 13,775 19,300 21,200 2017 21,863 22
Slide 6: Heavy truck market in the EU: Solid trend persists
Heavy truck market in the EU: Solid trend persists New registrations of heavy commercial vehicles (HCV) >16 tons 30,000 20,000 10,000 0 Jan Feb March April May June July Aug Sep Oct Nov Dec 2016 21,989 21,052 28,250 26,756 23,402 26,571 19,453 18,387 27,305 26,324 26,727 24,044 2017 23,195 21,531 29
Slide 7: Group sales and adjusted EBIT by quarter
Group sales and adjusted EBIT by quarter Sales in € mn Adj. EBIT in € mn. and adj. EBIT margin in % 400 35 14% 345.4 340.6 350 30 26.7 27.1 12% 300.3 26.3 287.3 294.9 25.1 300 277.1 274.2 23.8 273.7 25 259.9 255.8 252.6 22.7 21.6 10% 250 8.9% 20.9 20.3 9.6% 19.8 20 7.5% 18.5 8.0% 8.7% 8% 200 8.7% 8.
Slide 8: Share of group sales by channel and region in Q3 2018
Share of group sales by channel and region in Q3 2018 16.4% (py: 8.3%) 24.1% (py: 24.8%) 45.7% (py: 52.0%) 75.9% (py: 75.2%) 37.9% (py: 39.7%) OE business Aftermarket business EMEA Americas APAC/China Share of the OEM business increases slightly to 75.9% driven by higher than expected demand in all
Slide 9: Development of sales from Q3 2017 to Q3 2018
Development of sales from Q3 2017 to Q3 2018 in € mn 400 350 340.6 25.6 -3.7 300 41.7 277.1 250 200 Sales Q3 2017 Organic Growth FX effects M&A Sales in Q3 2018 Reported top line in Q3 2018 increased by 22.9 % to € 340.6 (py: 277.1) mn, incl. contributions from V.Orlandi, York and Axscend acquisitio
Slide 10: Sustained above-plan organic sales growth in all regions
Sustained above-plan organic sales growth in all regions paving the way for realizing value in the AM 70% 66.2%* 60% 52.9% 49.2% 50% 40% 38.3% 30% 20% 18.6% 15.1% 11.0% 10% 8.1% 7.6% 5.1% 5.2% 4.1%* 0% EMEA Americas APAC/China Q4 17 Q1 18 Q2 18 Q3 18 (Versus py quarter) (* As compared to Q3 2018 pre
Slide 11: Segment Americas: Cost for realignment of plant network and high steel prices
Segment Americas: Cost for realignment of plant network and high steel prices impact earnings - Sequential improvement in soaring markets Sales in € mn Summary Soaring customer demand and net order intake coincide 150 129.0 with completely strained industry supply chain 110.0 Despite ongoing rea
Slide 12: HRC steel price index peaking in Q3 2018
HRC steel price index peaking in Q3 2018 – negative effects expected to gradually decline in the mid-term HRC price index In view of the current trend in commodity prices, the company reckons the negative effects of the sharp rise in steel prices to have peaked and in the mid-term expects these effe
Slide 13: Americas Region: Adj. EBIT and burdening effects Q3 2018
Americas Region: Adj. EBIT and burdening effects Q3 2018 in € mn Adj. EBIT and clean adj. EBIT Burdening effects 8 6.5 6 4 -4.4 2.1 2 Add-on operating Steel price expenses increase 0 Adj. EBIT Q3 Extraordinary Clean adj. 2018 income EBIT Q3 2018 -2 -2.0 -4 -3.9 -6 -8 Clean adj. EBIT margin (pre extr
Slide 14: Segment Americas: Add-on operating cost and clean adjusted EBIT margin
Segment Americas: Add-on operating cost and clean adjusted EBIT margin trend continues to improve successively Add-on operating cost in € mn Clean adj. EBIT margin in % 7.0 6.3 10% 6.0 8% 6% 5.0 4.5% 4% 4.0 3.9 1.6% 4.0 2% 0.6% 0% 3.0 -0.7% 2.3 -2% 2.0 2.0 -4% -4.1% -6% 1.0 -8% 0.0 -10% Q3 2017 Q4 2
Slide 15: Segment EMEA: Solid organic sales growth enables operational leverage
Segment EMEA: Solid organic sales growth enables operational leverage Sales in € mn Summary 200 Q3 2018 sales growth of 8.0 % to € 155.5 (py: 144.0) mn 155.5 144.0 On an organic basis – adj. for forex and acquisition 150 effects – sales were up +4.0% yoy 100 Aftermarket (AM) growth of 6.3% on
Slide 16: Segment APAC/China: Highest percentage organic sales growth
Segment APAC/China: Highest percentage organic sales growth within the Group stepped up by the York acquisition Sales in € mn Summary 100 Acquired York Group consolidated as of May 2018 contributing close to € 20 mn in sales in Q3 2018 80 56.1 Q3 2018 sales more than doubled from € 23.2 mn 60 to
Slide 17: Reconciliation of sales to gross profit Q3 2018
Reconciliation of sales to gross profit Q3 2018 in € mn Impact on gross margin in Q3 2018 400 350 340.6 289.8 Temp. workforce - 300 total Volume +- - 250 Raw materials 200 150 Product mix - - Thereof: Effects from US steel price Restructuring cost 100 3.9 Additional op. costs related to US - 2.0 0.6
Slide 18: Reconciliation of reported EBIT to clean adjusted EBIT Q3 2018
Reconciliation of reported EBIT to clean adjusted EBIT Q3 2018 in € mn 30 27.1 1.7 -4.4 22.5 2.8 22.7 20 10 0 Reported EBIT Depreciation and Restructuring costs Adj. EBIT Extraordinary income Clean adjusted EBIT amortization from PPA Excl. restructuring and transaction costs totaling € 1.7 mn and PP
Slide 19: From EBIT to net income Q3 2018
From EBIT to net income Q3 2018 in € mn 30 22.5 -3.1 20 -4.2 15.3 10 0 EBIT Finance result Income taxes Net income Net income rose to € 15.3 (py: 7.5) mn driven by higher EBIT (excl. extraordinary income of € 4.4 mn) of € 22.5 (py: 20.9) mn, lower net finance cost of € 3.1 (py: 4.5) mn and lower Gro
Slide 20: Strong increase in basic EPS and adjusted EPS
Stong increase in basic EPS and adjusted EPS in € 0.50 0.40 0.39 0.34 0.30 0.25 0.20 0.17 0.10 0.00 Basic earnings per share Adjusted basic earnings per share Q3 2017 Q3 2018 Based on 45.4 mn shares outstanding, basic EPS doubled to € 0.34 (py: 0.17); Adjusted basic EPS was up 56.0% ánd amounted to
Slide 21: Financial key figures Q3 2018
Financial key figures Q3 2018 Q3 2018 Q3 2017 Chg yoy Net finance cost - € 3.1 mn - € 4.5 mn - € 1.4 mn Pre-tax profit € 19.5 mn € 11.0 mn + 77.3% Income taxes - € 4.2 mn - € 3.5 mn + € 0.7 mn Net income € 15.3 mn € 7.5 mn + 104% Basic EPS € 0.34 € 0.17 + 100% Pre-tax profit in Q3 2018 increased to
Slide 22: Inventories and net working capital (NWC)
Inventories and net working capital (NWC) Inventories in € mn and days of inventories Summary 200 194.4 194.0 75 Inventories increased to € 194.0 mn (End of Q3 2018) 151.8 versus Dec. 31, 2017 (€ 133.7 mn) driven by strong 160 145.7 138.9 139.3 65 133.7 organic sales growth and soaring steel price
Slide 23: Operating free cash flow by quarter
Operating free cash flow by quarter in € mn 30 26.8 20 10.9 10 7.5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 -10 -12.2 -15.6 2017 -16.6 2018 -20 -16.6 -30 -29.5 (OFCF: net cash flow from operating activities less investments in PPE and intangible assets, pre M&A, pre-dividend) Q3 2018 Operating FCF came in negative bu
Slide 24: Net debt at € 268.6 mn - Equity ratio remains solid at 31.5%
Net debt at € 268.6 mn - Equity ratio remains solid at 31.5% Net debt Equity ratio in € mn Σ 105.5* Σ 268.6* 500 400 31.5% 300 30.2% 200 442.6 368.4 100 0 -99.8 -100 -200 -337.1 -300 -400 Dec 31, 2017 Sept 30, 2018 Dec 31, 2017 Sept 30, 2018 Cash Debt * Net debt (incl. cash and cash equivalents and
Slide 25: Development of net debt Q2 2018 to Q3 2018
Development of net debt Q2 2018 to Q3 2018 in € mn 300 -3.6 268.6 12.2 252.0 8.0 250 200 Net debt June 30 2018 M&A FCF Others Net debt Sept 30 2018 Net debt increased by € 16.6 mn compared to June 30 2018, mainly due to working capital requirements and cash outflow for M&A (Axscend Ltd., remainder f
Slide 26: Financial targets 2018 and mid-term planning 2020 confirmed
Financial targets 2018 (refined on Oct. 19 2018) and mid-term planning 2020 confirmed FY 2018 outlook refined* FY 2018* Strategy 2020 Organic increase of 9 to 10% Organic increase of 5 to 7% Organic: € 1,250 mn assuming stable FX rates and assuming stable FX rates and unchanged scope of unchanged sc
Slide 27: 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 28: IR Contact
IR Contact SAF-HOLLAND GmbH Hauptstraße 26 63856 Bessenbach Germany www.safholland.com Stephan Haas Vice President Investor Relations / Corporate Communications [email protected] Phone: +49 - 6095 301-617 Alexander Pöschl Manager Investor Relations / Corporate Communications alexander.poesc