SAF-HOLLAND SE

Investor Presentation • Nov 9, 2023

SAF-HOLLAND SE Q3 2023

ALEXANDER GEIS (CEO), FRANK LORENZ-DIETZ (CFO)

NOVEMBER 9, 2023

Strong performance across all metrics in Q3 and 9M 2023, despite OEM demand normalization in 1 EMEA. On track to deliver on targeted Haldex synergies and cross-selling targets for FY 2023

Increased profitability combined with strict NWC-management led to strong cash generation and 2 deleveraging close to FY 2024 leverage target

3 Double-digit ROCE constantly above WACC, creating notable shareholder value

Q3 2023 Highlights and regional performance

Trading Review	up strongly by 37.4%, driven by Americas and APAC, robust aftermarket and Haldex Sales consolidation. Organic sales +13.2%
Development by Region	Strong double-digit organic sales growth in Americas and APAC, EMEA organically slightly down y-o-y due to demand normalization in Q3
Aftermarket	of 68.3% to EUR 187.7 mn, driven by the consolidation of Significant aftermarket growth Haldex as well as prior OEM-business growth, increasing addressable aftermarket
Adj. EBIT margin	due to improvements in Americas and APAC, stable Increased adj. EBIT margin of 10.6% margin in EMEA. Avg. LTM margin of 9.3% in line with long-term target of 9 to 9.5%
Cash flow & leverage	Strong cash generation with operating free cash flow of EUR 71.1 mn led to a substantial from 2.6x (Dec'22) to 2.1x, close to FY 2024 target decrease in leverage
FY 2023 Outlook	Increased FY 2023 outlook is targeting sales of around EUR 2.1 bn and an adj. EBIT margin of around 9.5%

Robust aftermarket and continuous OEM demand especially in APAC led to strong Q3 2023 results with significant improvements on all metrics

Group sales strongly up due to Haldex consolidation. Robust OEM and aftermarket demand led to double digit organic growth

• Robust demand from customers for trailer and truck components in Americas and EMEA, very strong demand in APAC
• Both, higher volumes and prior price increases supported sales growth
• 9M 2023 sales increased 35.2%, adjusted for FX and M&A effects +11.8%
• Q3 2023 sales up 37.4%; adjusted for FX and M&A effects +13.2%
• Haldex contributed EUR 120.6 mn to Group sales in Q3 2023

(in EUR mn)

Strong growth increases Americas and APAC-share, aftermarket share around 34% for the Group

Group sales split (by region, by customer category)

Robust OEM business and increased after market share supportive for Group adj. EBIT

8.3%

Q1 Q2 Q3 Q4

Group adj. EBIT by quarter (in EUR mn and % of sales) 6.4% 8.0% 9.1% 9.0% 9.1% 10.6% 23.5 43.4 32.1 36.7 32.3 50.8 58.6

• In the first nine months of 2023 adj. EBIT improved strongly by 65.6% to EUR 152.8 mn, leading to a significant margin improvement from 7.8% to 9.6%
• Q3 2023 adj. EBIT was EUR 58.6 mn, up by 59.8%, equal to a margin of 10.6%
• Improvement in adjusted EBIT resulted mainly from resilient OEM volumes in Americas, higher volumes in APAC as well as an increased aftermarket share
• Process optimizations, cost efficiencies and economies of scale especially in SG&A supportive
• Synergies from the Haldex acquisition beneficial to adj. EBIT increase
• FX tailwind y-o-y also with a slightly positive impact on margin
• Average LTM margin of 9.3% in line with FY 2027 adj. EBIT margin target of 9 to 9.5%

Organic sales development above market in EMEA, mild sales decline in Q3 vs. Q2 2023 due to demand normalization for trailers

191.4

200.5

Q1 Q2 Q3 Q4

230.9

• 9M 2023 sales increased 14.1%, adjusted for FX and M&A effects -0.7%
• Q3 2023 sales up 15.2%; adjusted for FX and M&A effects -1.1%
  • Organic sales development above market
  • Mild sales decline in Q3 vs. Q2 2023 reflects demand normalization for trailers
  • The EMEA region recorded solid aftermarket sales growth in Q3 2023, due to Haldex consolidation, as well as an increased addressable aftermarket due to prior strong OEM-business growth

Improved Haldex profitability, PMI synergies and robust aftermarket led to sequential margin increase in EMEA

9M 2023

• Double-digit increase in adj. EBIT in both the first nine months and Q3 2023
• Higher aftermarket share, internal efficiency improvements, as well as synergies from the Haldex acquisitions had a positive impact on adj. EBIT and margin
• Q3 2023 vs. Q2 2023 adj. EBIT improved due to improvement in Haldex stand-alone profitability
• Average LTM adj. EBIT margin of 7.5%

EMEA adj. EBIT by quarter

(in EUR mn and % of sales)

Americas with strong growth due to robust customer demand and Haldex consolidation

• Overall, demand for trailer and truck components remained robust in the region due to solid OEMbacklogs
• Due to its strong position, SAF-HOLLAND also benefitted from the trend towards disc brake axle systems
• 9M 2023 sales increased 54.1%, as Haldex generates c. 50% of sales in the Americas region
• Adjusted for FX and M&A effects Americas sales grew 15.1% in the first nine months
• Q3 2023 sales up 51.3%; adjusted for FX and M&A effects strong increase of 13.4%

Operating leverage, efficiency improvements and aftermarket business support strong margin step-up

9M 2023

Q1 Q2 Q3 Q4

• The Americas region saw very strong double-digit adjusted EBIT improvement both in the first nine months (+78.7%) and Q3 2023 (+81.5%)
• Strong increase in profitability was primarily the result of the operating leverage due to strong sales growth
• Successfully implemented efficiency enhancements and savings in the overhead area are showing the expected benefits
• Increase in adj. EBIT margin in Q3 2023 supported by a reduction in aftermarket backlog
• Average LTM adj. EBIT margin of 10.5% and incl. Q3 2023 the sixth consecutive quarter around the double-digit margin territory

Further growth in APAC driven by strong demand in India, Southeast Asia and Australia

• 9M 2023 sales increased 78.1%, adjusted for FX and M&A effects +68.6%
• Q3 2023 sales up significantly with 91.9%; adjusted for FX and M&A effects +83.3%
• Substantial growth in the APAC region driven by ongoing strong development in India due to government infrastructure measures causing an expansion of the transport sector. Increasing population and positive economic development also supportive for transportation demand
• Customer demand also remained solid in the specialty market of Southeast Asia and Australia

Strong profitability driven by scale and mix effects as well as Chinese business being close to break-even per Q3 2023

APAC adj. EBIT by quarter

(in EUR mn and % of sales)

• Overall economies of scale from the higher business volume in India and a favorable product mix were supportive both all quarters of 2023
• Highly profitable business in the mining sector in Southeast Asia contributed to the adj. EBIT increase
• China being close to break-even in Q3 2023 beneficial to the earnings improvement
• In sum adj. EBIT more than doubled both in Q3 and in the first nine months of 2023
• Q3 2023 was the seventh consecutive quarter with an adj. EBIT margin around the double-digit territory

Financials 9M and Q3 2023

EBIT to adjusted EBIT reconciliation for the Group

in EUR mn	9M 2023	9M 2022	Change in %	Q3 2023	Q3 2022	Change in %
EBIT	124.9	75.7	65.1	52.6 1	27.0	95.3
EBIT margin in %	7.9	6.4	-	9.5	6.7	–
Additional depreciation and amortization from PPA	14.1	7.1	99.9	2 5.9	2.4	>100
Valuation effects from call and put options	1.3	1.3	-2.8	0.0	0.1	-62.9
Restructuring and transactions costs	7.2	6.3	14.4	0.1 3	5.3	-98.6
Other adjustments	5.3	2.0	>100	-	2.0	-100
Adjusted EBIT	152.8	92.3	65.6	58.6	36.7	59.8
Adjusted EBIT margin in %	9.6	7.8	-	10.6	9.1	–

Significantly lower one-off items as well as efficiency improvements led to significantly improved EBIT 1

Includes PPA from prior acquisitions and Haldex. Slightly above run-rate of ~ EUR 5 mn, due to FX-rate developments 2

Restructuring and transaction costs significantly reduced as initial post-merger integration for Haldex has been mostly completed. Upcoming topics will be legal entity consolidation as well as supply chain improvements at Haldex 3

Strong sequential increase in adj. EBIT margin due to positive mix, Haldex synergies and FX-effects

• Positive mix effect due to aftermarket share increase from 31.7% in the past quarter to 33.9% in Q3 2023, overcompensating slightly negative volume and price effects from sequentially lower OEM sales (-3.8% q-o-q) 1
• Some Haldex synergies were reached faster than expected in Q3 2023 2
• One-off FX-effects impacted adj. EBIT margin positively 3

Both basic and adjusted EPS significantly up

Finance result includes FX-effects: Q3 2023 FX-effect was slightly negative against prior quarter, when a positive FX-effect was recorded. Run-rate for finance expenses expected to be ~ EUR -9 mn 1

Above usual tax rate of around 30% due to non-capitalized deferred tax assets on loss carryforwards and foreign tax rate differences at some subsidiaries. FY 2023 tax rate is expected to be around 35% 2

Equity ratio significantly improved against June 2023 levels

• Strong operating performance in the first nine months lead to equity having increased 6.2% and close to EUR 470 mn
• Balance sheet total is up 13.9% against 31 December 2022 primarily due to the acquisition of Haldex

Strict NWC-management leads to another improvement in net working capital ratio

Net working capital (in % of sales)	11.9%	14.4%	14.8%	15.5%	14.8%	15.7%	17.4%	15.9%	12.0%	15.6%	15.4%	14.5%	• •	NWC ratio of SAF-HOLLAND was 14.5%, showing another sequential improvement due to ongoing strict NWC management Against Dec 2022 NWC increased due to the consolidation of Haldex, which had a significantly higher NWC ratio at around the 20%-mark
EUR mn	Dec 2020	Mar 2021	Jun 2021	Sep 2021	Dec 2021	Mar 2022	Jun 2022	Sep 2022	Dec 2022	Mar 2023	Jun 2023	Sep 2023	•	For better comparability, NWC of sales calculation, considers
Inventories	126.4	155.8	176.0	195.3	194.0	211.9	237.0	237.9	202.2	308.4	305.7	308.3		Haldex's contribution to sales
Trade receivables	95.3	130.0	148.9	147.2	136.3	176.1	184.6	187.0	144.7	283.0	286.4	253.2		on a pro forma basis for the last twelve months, as Haldex's
Trade payables	-107.2	-147.4	-163.4	-160.6	-145.8	-179.3	-176.2	-187.3	-159.0	-262.2	-261.4	-248.5		contribution to NWC is also
NWC	114.6	138.4	161.5	181.9	184.4	208.7	245.5	237.6	188.0	329.2	330.7	313.0		fully included since Q1 2023
Sales (LTM)	959.5	961.7	1,091.4	1,175.6	1,246.6	1,330.7	1,411.7	1,497.5	1,565.1	2,112.8	2,143.2	2,165.1

• was 14.5%, showing another sequential improvement due to ongoing strict NWCmanagement
• Against Dec 2022 NWC increased due to the consolidation of Haldex, which had a significantly higher NWCratio at around the 20%-mark
• For better comparability, NWC of sales calculation, considers Haldex's contribution to sales on a pro forma basis for the last twelve months, as Haldex's contribution to NWC is also fully included since Q1 2023

Operating and free cash flow significantly up due to SAF-HOLLAND's strong cash generation capabilities with cash flow conversion of > 50% in the first nine months

• The increase in operating cash flow was mainly due to higher earnings before taxes as well as strict NWC-management
• Cash taxes were EUR 38.5 mn in 9M 2023, up from around EUR 19.3 mn due to increased earnings before taxes in prior periods

Operating free cash flow* (EUR mn)

Net cash flow from operating activities (EUR mn)

• Payments for investments in property, plant and equipment and intangible assets were EUR 27.8 mn or 1.7% of sales in the first nine months or EUR 13.8 mn (2.5% of sales) in Q3 2023
• Strong adj. EBITDA to operating free cash flow conversion of 52.2% in the first nine months and even 97.1% in Q3 2023

* Pre acquisitions / acquisition of Haldex shares

Further increased ROCE of 18.3% in Q3 2023. ROCE constantly above WACC, creating considerable shareholder value

Return on capital employed (in %)

EUR mn	Dec 2020	Mar 2021	Jun 2021	Sep 2021	Dec 2021	Mar 2022	Jun 2022	Sep 2022	Dec 2022	Mar 2023	Jun 2023	Sep 2023
Equity	300.5	325.2	334.8	353.7	371.1	390.5	431.1	468.5	441.4	449.8	433.4	468.8
Financial liabilities	324.1	332.4	323.7	318.5	322.2	318.9	369.9	614.5	715.7	663.3	683.8	663.6
Lease liabilities	43.6	42.7	41.6	41.7	41.1	40.4	40.9	39.9	38.4	62.7	68.0	67.4
Pension provisions	31.4	32.2	32.2	32.7	22.3	22.5	16.8	16.9	15.3	43.1	41.6	42.3
Cash/cash equivalents	-171.0	-179.5	-164.9	-159.5	-165.2	-148.9	-173.0	-206.2	-243.5	-218.0	-215.3	-255.7
Capital employed	528.6	553.0	567.4	587.1	591.4	623.4	685.7	933.7	967.3	1,000.9	1,011.5	986.5
Adjusted EBIT (LTM)	58.8	62.3	82.1	91.5	93.1	94.7	101.8	114.1	124.6	165.0	172.6	180.3

• Strong shareholder value creation with ROCE constantly above WACC*
• Q3 2023 ROCE at 18.3%, up vs. Q2 2023 due to reduced capital employed while EBIT (LTM) further improved
• As of Q1 2023 the calculation includes Haldex's contribution to adjusted EBIT on a pro forma basis for the last twelve months, as Haldex's contribution to capital employed is also fully included

* WACC calculation based on SAF-HOLLAND annual report FY 2021 and FY 2022

Strong cash generation led to a decrease in leverage already close to FY 2024 target

• Net debt/EBITDA Dec 2022 net debt/EBITDA ratio of 0.7x did not include additional debt to finance the acquisition of Haldex
  • Including pro-forma EBITDA contribution of Haldex and related debt, net debt/EBITDA ratio amounted to 2.1x per Sep 2023, down from Dec. 2022 value of 2.6x
  • Significant deleveraging in Q3 2023 was due to ongoing strict working capital management as well as strong operating performance
  • The target for 2024 is a net debt to EBITDA ratio of 2.0x or lower

* Reported EBITDA (LTM) ** Excl. Haldex related debt Note: Net debt / EBITDA calculation from Dec 2022 onwards incl. Haldex related debt and pro-forma EBITDA (LTM) contribution

Outlook FY 2023 and key takeaways

FY 2023 market outlook - European trailer market normalizes while other important market are set to keep on growing, especially N. America and Indian trailer market

	FY 2023e Trailer Market	FY 2023e Trucks Market
EMEA	~ -5%	~ +10%
North America	~ +8%	~ +10%
Brazil	~ -3%	~ -20%
China	~ +35%	~ +20%
India	~ +70%	~ +14%
EMEA North America Brazil China India	Exposure of Trailer OEM business*	Exposure of Truck OEM business*

* Indicative view showing the market exposure of the original equipment manufacturing (OEM) business of SAF-HOLLAND, based on the Groups Q3 2023 OEM sales

Note: Market forecasts are internal management assumptions based on truck-OEM communication, CLEAR int. (WEU and EEU, June and April 2023), ACT Research (North America, Sep 2023), ANFAVEA (Brazil, July 2022)

• EMEA

• Due to the adverse economic environment and persistent uncertainties surrounding the Ukraine conflict, the European trailer market, measured in terms of production in 2023, is expected to decline slightly
• Truck market expected to increase, due to strong OEM order backlog and ongoing customer demand
• North America
  • Trailer and truck markets higher than previous year, due to strong OEM order backlog and continued market demand
• Brazil
  • For South America's most important commercial vehicle market, both trailer and truck markets are expected to decline in 2023
• China
  • Following previous year's sharp downturn in the truck and trailer markets, both trailer and truck markets are expected to grow in the high double-digits
• India
• Supported by the continued strong investment of India's government in infrastructure expansion, trailer production is expected to increase substantially by around 70% and truck production by around 14%

	Group FY 2023 Outlook as of 30 March 2023*	Group FY 2023 Outlook as of 08 August 2023*	Group FY 2023 Outlook as of 18 October 2023*
Sales	EUR 1,800 - 1,950 mn	Slightly above EUR 2,000 mn	Around EUR 2,100 mn
Adj. EBIT margin	7.5% to 8.5%	Up to 9%	Around 9.5%
Capex ratio**	Up to 3%	Up to 3%	Up to 3%

• Based on the strong performance in the financial year to date, continued solid demand for trailer and truck components, especially in the APAC and Americas regions, and a robust order backlog, group sales are expected to reach around EUR 2,100 mn, assuming stable exchange rates and the sales contribution of Haldex as of February 21, 2023
• SAF-HOLLAND expects to reach an adjusted EBIT margin, including Haldex, of around 9.5% based on ongoing strong market demand from higher-margin regions Americas and APAC, greater share of aftermarket sales and good progress in achieving targeted synergies from the Haldex acquisition
• For FY 2023, including Haldex, the Group plans expenditures for investments of up to 3% of Group sales, with a focus on expanding production capacities in Mexico, India and Brazil as well as the Group-wide implementation of SAP S4 HANA

* Incl. Haldex contribution, consolidated as of February 21, 2023

** Incl. payments for investments in property, plant and equipment and intangible assets as well as capitalized R&D

1 Strong performance across all metrics in Q3 and 9M 2023, despite OEM demand normalization in EMEA

Increased profitability combined with strict NWC-management led to strong operating free cash 2 flow and deleveraging to 2.1x, close to FY 2024 target

3 Double-digit ROCE constantly above WACC, creating notable shareholder value

SAF-HOLLAND is targeting an adj. EBIT margin of around 9.5% in FY 2023, 4 significantly up from the 8.0% adj. EBIT margin achieved in FY 2022

Contact and additional information

Investor relations contact & financial calendar

Issuer & contact	Financial calendar and road show activities
SAF-HOLLAND SE Hauptstrasse 26 63856 Bessenbach	November 23, 2023	Hauck Aufhäuser Lampe Roadshow Lugano / Milan, virtual & IR-only
Fabian Giese Interim Head of Investor Relations, Corporate & ESG Communications Tel: +49 6095 301 – 904	December 04, 2023	Kepler Cheuvreux Nordics Roadshow, virtual
	December 06, 2023	DZ Bank Roadshow, Frankfurt
Alexander Pöschl Senior Manager Investor Relations, Corporate & ESG Communications Tel: +49 6095 301 – 117	December 20, 2023	Berenberg Roadshow, Spain
	January 11, 2024	ODDO BHF Forum, Lyon
Marleen Prutky Junior Manager Investor Relations Tel: +49 6095 301 – 592	January 17, 2024	UniCredit / Kepler Chevreux German Corporate Conference, Frankfurt
	March 14, 2024	Publication of the FY 2023 Annual Report
Email: ir@safholland.de	May 08, 2024	Publication of the Quarterly Statement Q1 2024
	June 11, 2024	Annual General Meeting
	August 08, 2024	Publication of Half-Year Financial Report 2024
	November 07, 2024	Publication of the Quarterly

Statement Q3 2024

Disclaimer

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