SAF-HOLLAND SE

Investor Presentation • May 10, 2022

CONFERENCE CALL PRESENTATION

SAF-HOLLAND SE Q1 2022

MAY 10, 2022

Sales	EUR 369.7m (Q1 2021: EUR 285.6m)
Adj. EBIT margin	6.4% (Q1 2021: 7.7%) Adjusted EBIT EUR 23.5m (Q1 2021: EUR 22.0m)
Capex ratio	1.4% (Q1 2021: 1.9%) Capex EUR 5.3m (Q1 2021: EUR 5.3m)
Net working capital ratio	15.7% (December 31, 2021: 14.8%) Net working capital EUR 208.7m (December 31, 2021: EUR 184.4m)
Operating free cash flow	EUR -10.0m (Q1 2021: EUR 0.5m)
Adjusted EPS	EUR 0.33 (Q1 2021: EUR 0.32)
Dividend proposal	Dividend proposal of EUR 0.35 (2021: EUR 0.0) per share for FY 2021 to be confirmed by the Annual General Meeting on May 19, 2022
Guidance 2022	Sales guidance slightly raised and EBIT margin guidance specified

EMEA Q1 2022

Sales

(in EUR million)

Adj. EBIT (in EUR million and % of sales)

• Q1 2022 sales adjusted for FX effects: +24.5%
• Very strong trailer OE business despite Russia-Ukraine conflict

• Strong aftermarket and truck OE business

• Margin burdened by high cost inflation

• Higher input costs will be passed on with a time lag
• Adj. admin and R&D expenses ratio down to 4.4% and 1.3% respectively
• More dynamic pricing as of Q2

Americas Q1 2022

Sales

(in EUR million)

Adj. EBIT (in EUR million and % of sales)

• Q1 2022 sales adjusted for FX effects: +30.7%
• Very strong trailer OE with market share gains in air disc brakes
• Strong truck OE and aftermarket business
• Truck and bus suspension market share gains in Brazil

• Successful launch of fifth wheel assembly line dedicated for aftermarket business

• Margin well on track based on

• Price increases to customers realized in Q1
• Favourable impacts from efficiency programme FORWARD 2.0
• Successful product portfolio complexity reduction
• Positive product mix
• Lower adj. admin and R&D expenses ratio of 4.3% and 1.0% respectively

APAC Q1 2022

Sales

(in EUR million)

Adj. EBIT

• Q1 2022 sales adjusted for FX effects: +22.7%
• Very strong trailer OE business driven by India and Australia
• Strong aftermarket business
• Much higher export sales from India

• Successful launch of new trailer products in India

• Strong margin development based on

• Economies of scale
• Fast passing on of higher input costs to customers
• Lower adj. SG&A expenses ratio of 7.1%
• Planned capacity increase in India on time

Financials Q1 2022

Sales development (by quarter, by region, by customer category)

Margin development and net profit

• Adjusted gross profit increased by 4.5% y-o-y
• Cost of sales impacted by high cost inflation (steel prices, freight rates, energy costs and cost for materials)

• Price increases and efficiency improvements could not offset overproportional high cost increases

• Adjusted EBIT increased by 7.0% y-o-y

• Significantly lower SG&A and R&D expenses ratio could only partially offset higher cost of sales ratio, leading to a significantly lower adjusted EBIT margin

• Adjusted net profit 1.8% up y-o-y

• Financial result increased to EUR -2.8m (Q1 2021: EUR -1.7m)
• Adjusted tax rate of 26.8% on prior year level
• Undiluted adjusted EPS of EUR 0.33 (Q1 2021: EUR 0.32)

		Q1 2021			Q1 2022
in EUR million	Reported	Adjustments	Adjusted	Reported	Adjustments	Adjusted
Sales	285.6	–	285.6	369.7	–	369.7
Gross profit	55.5	0.5	56.0	58.0	0.5	58.5
EBIT	19.5	2.5	22.0	21.0	2.4	23.5
EBIT margin	6.8%		7.7%	5.7%		6.4%
Earnings before tax	17.8	2.5	20.3	18.2	2.4	20.7
Net profit for the period	11.3	3.6	14.9	13.1	2.1	15.1

Restructuring expenses of EUR 0.2m on previous year's level (Q1 2021: EUR 0.2m)

EPS development

Dividend proposal of EUR 0.35 (43% payout ratio) to the AGM on May 19, 2022 corresponds to SAF-HOLLAND's general dividend policy

* after minorities

Net debt and equity

Net debt (in EUR million)

	Dec. 31, 2021	Mar. 31, 2022
Leverage (Net debt / unadjusted EBITDA (LTM)	1.58	1.66

• Leverage slightly up due to seasonally higher net debt

Equity (in EUR million and % of balance sheet total)

• Equity up due to
• Net profit for the period of EUR 13.1m
• FX differences from the translation of foreign operations of EUR 6.4m

Net working capital and ROCE

Net Working Capital (in EUR million and % of LTM sales)

• Inventories up to secure delivery performance
• Trade receivables and trade payables up due to higher demand and higher production volumes

• ROCE improved by 390 bps mainly driven by higher adjusted EBIT (LTM)

Capex and cash flow

Capex (in EUR million and % of sales)

• Efficiency improvements focused on Germany and USA
• Capacity expansion in India, Mexico and Turkey

Operating free cash flow (in EUR million)

• Operating net cash flow of EUR -5.2m mainly driven by
• Changes in "Other provisions and pensions"
• Changes in "Other assets"
• Higher tax payments
• Net cash flow from investing activities of EUR -4.8m
• Operating free cash flow down to EUR -10.0m

Outlook 2022

Update on development of trailer and truck markets in 2022

	Trailer	Trucks
EMEA	+8%*	-6%
North America	+19%	+12%
Brazil	-7%	+9%
China	-33%	-37%
India	+41%	+4%

Sources: Market data for trucks and trailers based on IHS Markit (April 2022), ACT Research (April 2022), ANFAVEA (April 2022), ARTSA (April 2022), SIAM (April 2022)

* Based on own market intelligence as new data from CLEAR is not yet available at the moment

• EMEA

• Trailer production in 2022 expected to remain on a high level despite Russia-Ukraine crisis
• Truck business impacted by Ukraine war and supply chain disruptions

• North America

• Trailer OE order intake on all time high
• Trailer OEMs fully booked until the beginning of 2023; staffing and supply chain issues seem to improve
• Truck production to be still impacted by supply shortages which could gradually diminish towards the end of 2022 / beginning of 2023

• Brazil

• Infrastructure projects including focus on e-mobility
• Trailer business in 2021 on very high level: small pullback in 2022 was to be expected
• China
• Declining markets expected in 2022 as China still struggles with COVID-19 and lockdowns as well as inflation
• India
• Trailer expected to further increase significantly
• Large infrastructure and investment projects drive growth in coming years

	March 17, 2022	May 5, 2022
Sales	EUR 1.15bn to EUR 1.3bn	EUR 1.2bn to EUR 1.35bn
Adjusted EBIT margin	Significantly below 2021	6.5% to 7.0%
Capex ratio	2% to 2.5%	2% to 2.5%

Comments

• Encouraging strong demand and revenue dynamics in all 3 regions in Q1 2022
• Expect a gradual recovery of margin profile in the EMEA region over the upcoming quarters
• Americas on a good way to achieve old margin levels of 8% to 9%
• Loss of Russia business already incorporated in full year 2022 guidance
• Implementing a more dynamic pricing from Q2 onwards, including energy and freight cost adjustments in response to strong hikes in input costs
• Expect a gradual recovery of the Group margin in the upcoming quarters

Contact and additional information

Financial calendar & IR contact

SAF-HOLLAND SE Hauptstrasse 26 63856 Bessenbach

Investor Relations Email: ir@safholland.de

Tel: +49 6095 301 – 918 / 617 / 117

Additional information
------------------------	--

ISIN	DE000SAFH001
WKN	SAFH00
Deutsche Börse	SFQ
Listing	Frankfurt Stock Exchange Prime Standard

Financial calendar 2022
May 19, 2022	Annual General Meeting (virtual)
August 11, 2022	H1 2022 Report
November 10, 2022	Q3 2022 Quarterly Statement

Appendix

Group P&L unadjusted / adjusted

		Total	Q1 2022	in %		Total	Q1 2021	in %
in EUR million	Q1 2022	Adjustments	adjusted*	of sales	Q1 2021	Adjustments	adjusted*	of sales
Sales	369.7	–	369.7	100.0%	285.6	–	285.6	100.0%
Cost of sales	-311.7	0.5	-311.2	-84.2%	-230.2	0.5	-229.6	-80.4%
Gross profit	58.0	0.5	58.5	15.8%	55.5	0.5	56.0	19.6%
Other income	0.3	–	0.3	0.1%	0.3	–	0.3	0.1%
Selling expenses	-17.1	1.7	-15.4	-4.2%	-14.7	1.8	-12.9	-4.5%
Administrative expenses	-16.3	0.1	-16.1	-4.4%	-15.8	-0.1	-16.0	-5.6%
Research and development costs	-4.3	0.1	-4.2	-1.1%	-6.0	0.3	-5.7	-2.0%
Operating profit	20.7	2.4	23.1	6.3%	19.2	2.5	21.7	7.6%
Share of net profit of investments
accounted for using the equity	0.4	–	0.4	0.1%	0.3	–	0.3	0.1%
method
EBIT	21.0	2.4	23.5	6.4%	19.5	2.5	22.0	7.7%
Finance income	0.9	–	0.9	0.2%	0.9	–	0.9	0.3%
Finance expenses	-3.7	–	-3.7	-1.0%	-2.6	–	-2.6	-0.9%
Finance result	-2.8	–	-2.8	-0.8%	-1.7	–	-1.7	-0.6%
Result before taxes	18.2	2.4	20.7	5.6%	17.8	2.5	20.3	7.1%
Income taxes	-5.2	-0.4	-5.5	-1.5%	-6.5	1.1	-5.4	-1.9%
Tax rate (%)	28.3%	–	26.8%		36.6%	–	26.7%
Result for the period	13.1	2.1	15.1	4.1%	11.3	3.6	14.9	5.2%

* Adjusted earnings correspond to the management perspective. The adjustments essentially include restructuring and transactions costs, write-off of goodwill, depreciation and amortisation arising from purchase price allocations, expenses arising from the step-up of inventories arising from purchase price allocations and remeasurement effects related to call and put options.

Group: Reconciliation EBIT to adjusted EBIT

in EUR million	Q1 2022	Q1 2021	Change absolute	Change in %
EBIT	21.0	19.5	1.5	8.0%
EBIT margin in %	5.7%	6.8%
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	2.3	2.3	–	–
Valuation effects from call and put options	–	–	–	–
Impairment of tangible and intangible assets	–	–	–	–
Restructuring and transactions costs	0.2	0.2	–	–
Adjusted EBIT	23.5	22.0	1.5	7.0%
Adjusted EBIT margin in %	6.4%	7.7%

in EUR million	Q1 2022	Q1 2021	Change absolute	Change in %
EBIT	8.9	15.1	-6.2	-41.3%
EBIT margin in %	4.3%	9.0%
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	1.1	1.2	-0.1	-4.6%
Valuation effects from call and put options	–	–		–
Restructuring and transactions costs	0.1	-0.1	0.2	–
Adjusted EBIT	10.1	16.2	-6.1	-37.4%
Adjusted EBIT margin in %	4.9%	9.6%

Americas: Reconciliation EBIT to adjusted EBIT

in EUR million	Q1 2022	Q1 2021	Change absolute	Change in %
EBIT	9.3	4.7	4.6	98.6%
EBIT margin in %	7.3%	5.2%
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	0.6	0.5	0.0	1.5%
Valuation effects from call and put options	–	–	–	–
Restructuring and transactions costs	0.0	0.1	-0.1	-82.2%
Adjusted EBIT	9.9	5.4	4.5	84.3%
Adjusted EBIT margin in %	7.8%	6.0%

in EUR million	Q1 2022	Q1 2021	Change absolute	Change in %
EBIT	2.8	-0.4	3.2	–
EBIT margin in %	8.3%	-1.3%
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	0.6	0.6	0.0	7.3%
Impairment of tangible and intangible assets	–	–	–	–
Restructuring and transactions costs	0.0	0.2	-0.2	–
Adjusted EBIT	3.5	0.4	3.1	>100%
Adjusted EBIT margin in %	10.1%	1.4%

Adjusted EBITDA margin

APAC

Q1 2022 Call Presentation < 25 >

Financing structure

Maturity profile (in EUR million)

Product	Amount EUR m	Maturity date
Loan RMB	9.0	06/2022
Promissory note loan old (7 years)	5.0	11/2022
Promissory note loan new (3 years)	141.0	03/2023
Promissory note loan new (3.5 years)	20.0	09/2023
Revolving credit facility***	200.0	10/2024
Promissory note loan new (5 years)	69.0	03/2025
Loan	5.0	09/2025
Promissory note loan old (10 years)	9.0	10/2025
Non-current loan	10.0	03/2026
Non-current loan	35.0	06/2026
Promissory note loan new (7 years)	15.0	03/2027
Promissory note loan new (10 years)	5.0	03/2030

• RCF mostly undrawn ** option for an additional EUR 100 m *** additional one year extension possible

Disclaimer

This presentation has been prepared by SAF-HOLLAND SE ("SAF-HOLLAND") and comprises written materials concerning SAF-HOLLAND. It is furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person. It contains summary information only and does not purport to be comprehensive and is not intended to be (and should not be used as) the sole basis of any analysis or other evaluation of SAF-HOLLAND or its business. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, neither SAF-HOLLAND nor any of the members of its management board or any of its officers, employees or advisors nor any other person shall have any responsibility or liability whatsoever (for negligence or otherwise) arising, directly or indirectly, from the use of this presentation, or its contents or otherwise in connection with this presentation.

This presentation contains certain statements related to our future business and financial performance and future events or developments involving SAF-HOLLAND and/or the industry in which SAF-HOLLAND operates that may constitute forward-looking statements. These statements may be identified by words such as "believes," "expects," "predicts," "intends," "projects," "plans," "estimates," "aims," "foresees," "anticipates," "targets," and similar expressions. Forward-looking statements are not historical facts, but solely opinions, views and forecasts which are based on current expectations and certain assumptions of SAF-HOLLAND's management or cited from third party sources which are uncertain and subject to risks. Actual events may differ significantly from the anticipated developments due to a number of factors, including without limitation, changes in general economic conditions, changes affecting the fair values of the assets held by SAF-HOLLAND and its subsidiaries, changes affecting interest rate levels, changes in competition levels, changes in laws and regulations, environmental damages, the potential impact of legal proceedings and actions and the Group's ability to achieve operational synergies from past or future acquisitions. Should any of these risks or uncertainties materialise or should underlying expectations not occur or assumptions prove to be incorrect, actual results, performance or achievements of SAF-HOLLAND may (negatively or positively) vary materially from those described, explicitly or implicitly, in the relevant forward-looking statement.

The information contained in this presentation, including any forward-looking statements expressed herein, speaks only as of the date hereof and reflects current legislation and the current business and financial affairs of the SAF-HOLLAND which are subject to change and audit. Neither the delivery of this presentation nor any further discussions of SAF-HOLLAND with any of the recipients thereof shall, under any circumstances, create any implication that there has been no change in the affairs of SAF-HOLLAND since such date. Consequently, SAF-HOLLAND neither accepts any responsibility for the future accuracy of the information contained in this presentation, including any forward-looking statements expressed herein, nor assumes any obligation, to update or revise this information to reflect subsequent events or developments which differ from those anticipated.

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The information contained in this document has not been subject to any independent audit or review. Information derived from unaudited financial information should be read in conjunction with the relevant audited financial statements, including the notes thereto. Certain financial data included in the document consists of "non-IFRS financial measures". These non-IFRS financial measures may not be comparable to similarly titled measures presented by other companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. You are cautioned not to place undue reliance on any non-IFRS financial measures and ratios included herein.