Q2 2020 Presentation 17 July 2020 Johan Ek, President and CEO Pernilla Lindén, CFO
Summary Q2 2020 – Good progress despite heavy disruption Trading Update • Revenues decreased organically in the quarter, due to impact of Covid-19 - Revenue decline for all segments, gradual sequential monthly improvement into June and further improvements expected in July • Cost reduction measures implemented, and governmental support received • Adjusted EBITA margin declined vs last year due to Covid-19 • Leverage of 2.2x (excluding IFRS 16), and significant liquidity, remains comfortable Strategic Update • Divestment of Patient Handling Europe closed in May • New President Patient Handling North America, Randi Binstock, from 1 July 2020 • Launch of the Lift Up Program – progress ahead of plan • Decision to establish a local stairlift production site in the United States during 2021 Outlook • Operational leverage in place as trading conditions continue to improve • Fundamental macro / thematic drivers support our plan • Repositioned Handicare geared to reach medium-term objectives 2
Significant Covid-19 impact – mitigated by cost-down initiatives Q2 impact on the business Focused measures to mitigate impact – very active management • Furlough and short-term layoffs • Q2: 31.6% organic Group revenue decline versus last year Reducing costs • External spend reduction and general spend and short term investment freezes of non-critical items / • In Quarter Q2 trading investments • ~35% organic Group • 90% of savings implemented by July revenue decline April-May Lift Up program – versus last year Phase 1 • ~25% organic Group • Virtual sales processes introduced revenue decline June versus last year • Training and best practice sharing for partners to Initiatives to • Disruption in sales processes due win protect the top to lockdowns • Health and safety measures, e.g.; line and prepare • Delay of certain projects for a bounce back • Social distancing, fogging units, cleaning kits 3
Financial highlights – Group EBITA profitability maintained Adjusted EBITA bridge April - June January - June LTM Full year MEUR 2020 2019 ∆% 2020 2019 ∆% 2019/20 2019 5.3 Revenue 39.0 62.9 -38.0 % 92.5 123.2 -24.9 % 214.1 244.9 Organic revenue growth -31.6 % -17.7 % Gross margin 40.1 % 41.2 % 40.9 % 40.8 % 40.3 % 40.3 % 0.9 0.3 5.6 Adjusted EBITA 0.9 5.3 -82.8 % 3.2 9.2 -65.2 % 10.8 16.8 Adjusted EBITA margin 2.4 % 8.5 % 3.5 % 7.5 % 5.1 % 6.9 % Adj. EBITA (ex. Veh Acc DK) 0.9 5.3 -82.7 % 3.2 9.0 -64.5 % 10.8 16.6 Adjusted EBITA margin (ex. Veh Acc DK) 2.4 % 9.2 % 3.5 % 8.0 % 5.2 % 7.3 % -9.8 -0.4 Note: All P&L numbers in this report exclude the divested businesses Puls and Patient Handling Europe. No change to the balance sheet. Note: Numbers include Vehicle Accessibility Denmark for the period prior the divestment December 2019 Q2-19 Sales Margin Opex Depreciation Q2-20 Note: Organic revenue growth exclude Vehicle Accessibility Denmark Revenue Q2: organic decline - 31.6% • Significant impact from Covid-19, but gradual improvement during the quarter from -35% in Apr-May to -25% in June. EBITA Q2: adjusted margin 2.4% (8.5%) • Gross margin decreased to 40.1% (41.2%). Margin held up despite the significant revenue decline through capacity adjustments and strong efficiency, but is lower than last year, mainly due to higher costs for freight and unfavourable product mix. • Operating expenses -5.6 MEUR vs LY, driven mainly by cost reduction activities and the Lift Up Program. • Group-wide expenses 2.6 MEUR (2.9 MEUR). • Government subsidies of 1.6 MEUR impacting EBITA positively. OCF Q2: 2.0 MEUR (0.9 MEUR) • Operating cash conversion: 73%. • Leverage 2.2x (excluding IFRS 16). PH Europe divestment: Capital loss of 13.9 MEUR, including transaction costs. 4
Accessibility – Significant cost-down measures April - June January - June LTM Full year Revenue and Organic growth vs previous year (%)* – Stairlifts NA MEUR 2020 2019 ∆% 2020 2019 ∆% 2019/20 2019 24% 22% -37% 15% 16% 6% 6% 9% Q-vs LY %* Revenue 26.0 39.6 -34.4 % 65.0 78.4 -17.0 % 143.9 157.3 Organic revenue growth -33.9 % -17.0 % Adjusted EBITA 2.7 6.6 -59.4 % 8.8 12.9 -31.8 % 20.7 24.8 Adjusted EBITA margin 10.3 % 16.7 % 13.5 % 16.5 % 14.4 % 15.8 % Revenue (MEUR) Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 *e.g. Q2 2020 vs Q2 2019 Revenue Q2: organic decline - 33.9% • Significant impact of Covid-19, gradual improvement in June • 40% organic revenue decline April-May versus last year • 23% organic revenue decline June versus last year • Countries such as Germany and Netherlands have performed better than the average of Accessibility, while countries such as Italy, France, the UK and the US have performed worse than the average of the business unit. EBITA Q2: adjusted margin 10.3% (16.7) • Adjusted EBITA margin decreased with 6.4ppts. Capacity adjustments and general cost reductions could not cover for the revenue decline due to Covid-19. Gross Margin was slightly down mainly due to increased freight costs and unfavourable product mix. 5
Patient Handling – Better cost structure in place April - June January - June LTM Full year MEUR 2020 2019 ∆% 2020 2019 ∆% 2019/20 2019 Revenue 8.9 12.8 -30.0 % 19.2 24.9 -22.6 % 44.1 49.7 Organic revenue growth -30.0 % -23.2 % Adjusted EBITA 0.5 1.0 -47.8 % -0.8 0.9 n/a -0.4 1.2 Adjusted EBITA margin 6.0 % 8.0 % -3.9 % 3.7 % -1.0 % 2.5 % Revenue Q2: organic decline - 30.0% • Significant impact of Covid-19 • 31% organic revenue decline April-May versus last year • 30% organic revenue decline June versus last year EBITA Q2: adjusted margin 6.0% (8.0%) • Adjusted EBITA margin decreased with 2.0ppts. Positive impact from substantial capacity adjustments and cost reductions could not cover for the revenue decline due to Covid-19. Gross Margin was down mainly due unfavourable product mix. • Operating expenses (excl costs of goods sold) significantly reduced in the period both in absolute terms and in relation to revenue. 6
Vehicle Accessibility April - June January - June LTM Full year MEUR 2020 2019 ∆% 2020 2019 ∆% 2019/20 2019 Revenue 4.1 5.5 -26.5 % 8.2 9.9 -17.1 % 18.2 19.9 Organic revenue growth -17.1 % -8.1 % Adjusted EBITA 0.3 0.6 -52.2 % 0.5 0.9 -44.2 % 1.1 1.6 Adjusted EBITA margin 6.5 % 10.0 % 6.4 % 9.5 % 6.3 % 7.8 % Revenue Q2: organic growth - 17.1% • Organic decline driven by decreased sales due to Covid-19 but also due to lower ambulance conversion compared with last year EBITA Q2: adjusted margin 6.5% (10.0) • Gross margin in line with last year, but negatively impacted by unfavourable FX rate fluctuations (weaker NOK against the EUR). • Operating expenses (excl costs of goods sold) significantly reduced in the period in absolute terms but increased in relation to revenue 7
Robust Cash & Capital Structure Leverage improvement from cash generation and divestments Net debt, (MEUR) Strong cash conversion development Net debt / adj. EBITDA excl. IFRS 16 77 63 111% 54 120 3.1 3.0 29 100 2.6 Target 2.5x 2.4 73% 2.2 70% 80 64% 30 Jun 2019 31 Dec 2019 31 Mar 2020 30 Jun 2020 60 39% Loan repayment of 10 MEUR in the quarter 40 55 MEUR of cash and ~37 MEUR of unutilized back-up 20 facilities gives a liquidity of 92 MEUR 0 2017 2018 2019 2020 2020 2017 2018 2019 2020 Q1 2020 Q2 Q1 Q2 Borrowing maturity schedule, (%) Adj. OCF / adj. EBITDA 100.0% 0.0% 0.0% 0.0% 2020 2021 2022 2023 8
Focus & Simplify Profitability Growth The Lift Up Program Build a focused Accessibility company poised for growth
Half of EBITA impact already in 2020 with full run-rate impact end of year Full adj EBITA 2020 adj EBITA 2021 adj EBITA impact impact impact One–time costs Cash payback 8 MEUR 3-4 MEUR 8 MEUR 8 MEUR 1 year Cash: 6.5 MEUR Non-cash: 1.5 MEUR 10
The Lift Up Program in summary • Establish a more focused and agile organization • Create a Group that reflects our focus on Stairlifts • Optimize processes and avoid duplication of efforts • Simplify structures and streamline cost base – best fit for purpose • Increase profitability, strengthen margins and drive for growth • Improve margins by better procurement processes and pricing mechanisms • Expand market presence • Strengthen product portfolio • Drive focused M&A agenda • Patient Handling North America under review • Take actions to ensure profitable growth • Assessment of options to follow Build a focused Accessibility company poised for growth 11
Summary Q2 2020 and Outlook Summary • Handicare response to pandemic – swift and effective • Structural improvements in place – stronger & more focused Handicare • Evidence that trading trends continue to improve into July Outlook • Fundamental macro / thematic drivers support our plan – perhaps intensified • Operational leverage in place as trading conditions continue to improve • Underpins our conviction we will deliver medium-term objectives 12
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