Wacker Neuson Group May 2019
Agenda 01 Overview 02 Financials Q1/19 03 Outlook Wacker Neuson SE, May 2019 2
Product range to meet the full spectrum of customer needs Light Equipment Compact Equipment Services Concrete technology Compaction Excavators Used machines 2 Academy Dumpers Backhoe-loaders Skid Steers Repair 2 & Genuine parts Maintenance 2 Power & Lighting Pumps Demolition Rental service 2 Telematics Wheel loaders Telehandlers E-Store 2 Financing Heating Concrete solutions 27% of sales 1 53% of sales 1 20% of sales 1 1 FY 2018. Wacker Neuson SE, May 2019 3 2 In selected countries.
Target industries besides construction Most industries demand both light an compact equipment Business segments Target group oriented sales: Revenue split (FY 2018, as %) Markets Light equipment Compact equipment Agriculture Renovation/rehabilitation Development Infrastructure (road and highway construction, bridge construction) Gardening and landscaping Handling logistics/port logistics Residential construction Demolition Maintenance/repairs Industry & Recycling Underground construction Light equipment 27% Oil & gas/energy industry Compact equipment 53% Events Services 20% Municipalities Wacker Neuson SE, May 2019 4
Our brands and target groups Agriculture, horse breeders, tree nurseries etc. Construction, gardening/landscaping, energy sector etc. Wacker Neuson SE, May 2019 5
Global footprint Sales by region Core markets: EMENA & NAM, further internationalization ongoing Revenue split (FY 2018) Europe 73% Americas 23% Asia-Pacific 4% Wacker Neuson SE, May 2019 6
5 year comparison Revenue and EBIT margin 2014-2018 CAGR +7.4% [€ m] 2,000 20% 1,707 18% 1,534 16% 1,500 1,375 1,361 1,284 14% 12% 10.2% 9.4% 1,000 10% 8.6% 7.4% 8% 6.5% 6% 500 4% 2% 0 0% 2014 2015 2016 2017 2018 Wacker Neuson SE, May 2019 7
Agenda 01 Overview 02 Financials Q1/19 03 Outlook Wacker Neuson SE, May 2019 8
Key figures Q1/19 Revenue yoy EBIT yoy +17% +31% (€ 435m) (margin: 6.9%) Op. CF FCF € -116m € -143m (Q1/18: € -41m) (Q1/18: € -45m) March 31, 2019 NWC ratio 1 : 45.8% DIO 2 : 179 days Equity ratio: 57.7% (+6.5PP yoy) (+26 days yoy) (-7.8PP yoy) 1 Net working capital/annualized revenue for the quarter. Wacker Neuson SE, May 2019 9 2 Days inventory outstanding: (inventory/annualized cost of sales for the quarter)*365.
Revenue and earnings Q1/19: Accelerated revenue growth continues from Q4/18 Q1/19: Comments Revenue EBIT +17% Revenue +17.3% yoy (adj. for FX effects: +15.6%) [€ m] margin ▪ Double-digit growth in all reporting regions 466 500 455 20% 435 425 416 ▪ Compact equipment for the agricultural sector grew at a significantly 392 379 371 400 339 15% higher-than-average rate (+42% yoy) 12.3% 11.0% 10.6% 300 10.1% 8.4% 10% 7.8% Gross profit +15.3% yoy (gross profit margin -0.5PP) 6.9% 6.2% 200 4.2% ▪ Restructuring at the plant in Wisconsin, USA, continued as planned 5% 100 ▪ Increased costs in production and logistics caused by changes in the 0 0% product mix, additional shifts required to manage increased production Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 volumes and handle unfinished machines Income statement (excerpt) EBIT +31.3% yoy (EBIT margin: +0.7PP) ▪ Operating costs increased at a disproportionately low rate despite a moderate increase in headcount, wage increases and costs for Bauma € million Δ trade show Q1/19 Q1/18 Revenue 434.6 370.5 17.3% ▪ Operating costs as a share of revenue fell by 1.2PP on the prior year Gross profit 110.9 96.2 15.3% as a % of revenue 25.5% 26.0% -0.5PP Earnings per share +42.9% yoy SG&A incl. other income/expenses -80.7 -73.2 10.2% ▪ as a % of revenue -18.6% -19.8% 1.2PP The financial result was EUR 2.1m up on the previous year: Positive FX EBIT 30.2 23.0 31.3% effects (EUR +2.9m yoy) in particular due to the appreciation of as a % of revenue 6.9% 6.2% 0.7PP currencies in several emerging economies; interest income slightly below Profit for the period 20.8 14.6 42.5% prior year (EUR -0.8m yoy), mostly due to the initial application of IFRS 16 EPS (in €) 0.30 0.21 42.9% ▪ The tax rate increased slightly to 30.4% (Q1/18: 29.1%) Wacker Neuson SE, May 2019 10
Business development by region and business segment Q1/19: Double-digit growth in all regions Q1/19: Comments Revenue [€ m] share yoy EBIT 1 Revenue Europe +18.3% yoy (adj. for FX effects: +18.4%) Europe 316.7 73% +18% 46.1 ▪ Strong demand for compact and light equipment in all regions ▪ Rapid growth in the UK (significant gains with dumpers and excavators), Americas 104.5 24% +14% 2.5 above-average growth in France, Poland and Austria with increased market shares Asia-Pacific 13.4 3% +22% -1.7 ▪ Revenue generated with Weidemann- and Kramer-brand compact equipment for the agricultural sector +42% yoy Total Q1/19 434.6 100% +17% 30.2 Revenue Americas +14.0% yoy (adj. for FX effects: +6.7%) ▪ Worksite technology (especially generators and light towers) and compact equipment were key growth drivers Q1/19: Compact equipment driving growth ▪ Growth dampened by pre-buy effects in Q4/18 related to changes in Revenue [€ m] 2 emissions legislation in Canada share yoy ▪ Positive developments in South America, uncertainties remain Light equipment 109.8 25% +6% ▪ Earnings bolstered by improved currency situation, restructuring in the US continued as planned Compact equipment 245.8 56% +25% Revenue Asia-Pacific +21.8% yoy (adj. for FX effects: +20.9%) Services 82.3 19% +12% ▪ Production in China ramped up on schedule, positive development with light equipment and excavators Total Q1/19 434.6 100% +17% ▪ First mini and compact excavators delivered to John Deere 1 EBIT for regions before consolidation. Wacker Neuson SE, May 2019 11 2 Revenue by business segment before cash discounts.
Rise in inventories and receivables drive up net working capital Inventories Trade receivables Trade receivables [€ m] DIO 1 DSO 2 Inventories [€ m] [days] [days] 371 700 400 400 200 633 320 553 600 304 303 500 273 272 462 462 300 300 150 459 500 439 249 434 428 241 235 400 179 171 200 200 100 78 153 150 151 144 141 67 300 67 129 130 65 64 60 59 58 55 200 100 100 50 100 0 0 0 0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Trade payables Comment Trade payables [€ m] DPO 3 ▪ Seasonal rise in inventories, further increase in pre-buy engines [days] ▪ Rise in trade receivables due to the increased volume of business and 300 400 expansion of the dealer network in North America 213 208 300 200 ▪ 167 Rise in trade payables due to the increased volume of business and an 163 149 134 200 120 increase in inventory compared with the prior-year quarter. 113 114 100 → Significant, temporary rise in net working capital (see the following 100 59 56 50 50 43 46 42 41 34 slide) 0 0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 1 Days inventory outstanding = (inventories/(cost of sales*4))*365 days; 2 Days sales outstanding = Wacker Neuson SE, May 2019 12 (receivables/(revenue*4))*365 days; 3 Days payables outstanding = (payables/(cost of sales*4))*365 days.
Cash flow impacted by a rise in net working capital Net working capital Cash flow from operating activities Net working capital Cash flow from operating activities Net working capital [€ m] [€ m] [as a % of sales] 150 100% 797 800 100 63 61 644 80% 638 620 590 586 583 568 33 8 536 50 10 600 6 60% 46% 44% 0 39% 38% 38% 400 35% 34% 34% 34% Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 40% -50 -19 -41 200 20% -100 -116 -150 0 0% Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Free cash flow Comment Free cash flow ▪ Increase in net working capital due to a temporary rise in inventory and [€ m] increased trade receivables (see previous slide) ▪ Financing programs used to establish a network of anchor dealers in 80 57 51 46 North America (rise in other assets) 28 40 -3 0 ▪ Increased investments in growth Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 -40 -26 -12 ▪ -45 Major yet temporary impact on free cash flow, normalization of -80 inventory levels and reduction in trade receivables expected over the -120 coming months -160 -143 Wacker Neuson SE, May 2019 13
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