SAF-HOLLAND SE

Quarterly Report • Nov 10, 2022

CONFERENCE CALL PRESENTATION

SAF-HOLLAND SE Q3 2022

NOVEMBER 10, 2022

Q3 2022 Highlights

Strong sales increase y-o-y in all regions mainly driven by disproportionately high Trading Review growth in the Americas and APAC region
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Inflation Mitigation	Price increases and efficiency step-ups prove effective in compensating for input cost
	inflation

Aftermarket Strength Group sales	In spite of strong OE growth, the AM managed to keep pace featuring a 27.7% share in
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Pending Haldex	Expected imminent completion. On track to create a stronger, more resilient business
Merger	model, enhanced customer offering and enhanced earnings profile

Guidance	Group sales now expected to come in around the upper end of the range of EUR 1.4 to 1.5 billion. Adjusted EBIT margin projection unchanged between 7.0% to 8.0%
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Strong execution despite challenging economic environment

* Pre-acquisition / pre-acquisition of HLDX shares

Group YTD and Q3 2022 – Sustained sales growth across all regions

YTD

• Upbeat sales trend characterised by catch-up effects and market share gains despite difficult underlying market conditions
• Q3 2022 sales up 27.1% featuring organic sales growth rate of 16.1%
• All regions and customer segments posting sales growth
• Robust aftermarket business based upon consistently increasing addressable product basis

Sales by Quarter

(in EUR million)

Top line: Trailer demand and share gains boosting the Americas region

Sales development (by region, by customer category)

Group YTD and Q3 2022 – Gross Profit Margin sequentially stronger in Q3

2021 2022

Gross Profit by Quarter (in EUR mn and % of sales)

• Q3 gross margin reached 17.3% (PY 16.9%) despite impairment losses of EUR 1.2 mn, which were recognised in cost of sales
• Gross profit increased by 30.6% to EUR 69.7 mn (PY EUR 53.4 mn) due to improving supply chain tensions, execution of price pass-on and cost savings

Group YTD and Q3 2022 – Adj. EBIT

2021 2022

Adj. EBIT by Quarter (in EUR mn and % of sales)

YTD

• At EUR 36.7 mn the company achieved the highest quarterly EBIT ever
• Q3 adj. EBIT margin reached 9.1% driven by gross margin expansion versus PY and sequentially and the factors mentioned above
• Both the Americas and APAC regions maintained the high margin levels of Q2
• The EMEA region further improved margin level

EMEA YTD and Q3 2022 – Sales

Sales (in EUR mn)

• 9M 2022 sales up 14.5%
• Organic growth came in at 11.7% driven by comparable OE growth rates in both customer segments and in-line aftermarket performance
• Recuperation axle SAF TRAKr starting to contribute: provides electric energy e.g. for refrigerated vehicles

Sales by Quarter (in EUR mn)

• Q3 2022 sales adjusted for FX and M&A effects increased by + 4.0% as compared to a strong PY quarter
• Still pent-up demand from fleets for new trailers due to lower production figures during the pandemic
• By contrast, high material price inflation and the associated increase in manufacturing costs and selling prices has a dampening effect on customer demand
• Solid aftermarket business

EMEA YTD and Q3 2022 – Adj. EBIT

• soaring freight and energy cost burdened gross margin in the region
  • Consequently 9M margin decreased by 3.5 PP

Adj. EBIT by Quarter (in EUR mn and % of sales)

2021 2022

• Adj. EBIT margin in Q3 2022 came in at 7.9% and has thus further improved compared to Q2 (6.2%) and Q1 (4.9%)
• Reason is that the passing on of significant parts of material price inflation and manufacturing cost increase was possible but with a time lag
• Normalisation of input costs within some product groups and efficiency measures proved to be marginsupportive
• Strong aftermarket business

Americas YTD and Q3 2022 – Sales

• Q3 2022 sales adjusted for FX and M&A effects increased by 31.8%
• Ongoing strong sales growth in the trailer OE business with market share gains
• Expansion of the fifth wheel production capacities in Mexico on track (SOP in Q3/2023)
• Aftermarket business gains further momentum

Sales by Quarter

(in EUR mn)

2021 2022

• Q3 adj. EBIT margin reached excellent 10.3%
• Favourable product mix in Q3 2022

APAC YTD and Q3 2022 – Sales

• 9M 2022 sales up 41.0%
• Organic growth came in at 33.0%
• Strong sales growth driven by excellent position in India and growth in trailer OE business in Australia
• Aftermarket business grew noticeably, but at 17.6% of total sales, its contribution to the region's total sales is still significantly lower than in the EMEA and APAC regions

• Q3 2022 sales adjusted for FX effects: +37.3%
• Sales increased further in Q3 compared to the strong previous quarter driven by India and Australia
• To meet increasing customer demand in India, new facility in Pune will start operations in the course of the first quarter 2023 with capacities expanded by 50% in a first step

APAC YTD and Q3 2022 – Adj. EBIT

• Product mix, successfully implemented efficiency enhancement measures and automation steps in production in particular have a beneficial effect
• The aftermarket business, which at 17.3% of total sales still contributed significantly less than the EMEA and Americas regions, also grew noticeably
• Impairment losses of EUR 2.0 mn recognised for a Chinese subsidiary in cost of sales (EUR 1.2 mn) and in administrative expenses (EUR 0.8 mn) were adjusted accordingly

Adj. EBIT by Quarter (in EUR mn and % of sales)

Financials Q3 2022

in EUR thousands	Q3 2022	Q3 2021	Change absolute	Change in %
EBIT	26,957	21,396	5,561	26.0%
EBIT margin in %	6.7%	6.8%	–	–
Additional depreciation and amortisation of property, plant and equipment and intangible assets from PPA	2,416	2,258	158	7.0%
Valuation effects from call and put options	35	–	35	–
Restructuring and transactions costs	5,271	669	4,602	687.9%
Impairment	1,985	–	1,985	–
Adjusted EBIT	36,664	24,323	12,341	50.7%
Adjusted EBIT margin in %	9.1%	7.7%	–	–

• Q3 2022 impairment includes China write-down

	Q1-Q3	Q1-Q3	Change	Change			Change	Change
in EUR thousands	2022	2021	abs.	in %	Q3 2022	Q3 2021	abs.	in %
Sales	1,175,641	924,762	250,879	27.1%	402,388	316,638	85,750	27.1%
Cost of sales	–979,212	-759,384	-219,828	28.9%	-332,703	-263,281	-69,422	26.4%
Gross profit	196,429	165,378	31,051	18.8%	69,685	53,357	16,328	30.6%
in % of sales	16.7%	17.9%			17.3%	16.9%
Gross profit adjusted	199,916	167,563	32,353	19,3%	71,906	54,337	17,569	32.3%
in % of sales	17.0%	18.1%			17.9%	17.2%
SG&A	-121,950	-103,722	-18,228	17.6%	-43,149	-32,384	-10,765	33.2%
in % of sales	-10.4%	-11.2%			-10.7%	-10.2%
Operating profit	74,479	61,656	12,823	20.8%	26,536	20,973	5,563	26.5%
Share of net profit of
investments accounted
for using the equity	1,197	1,002	195	19.5%	421	423	-2	-0.5%
method
EBIT	75,676	62,658	13,018	20.8%	26,957	21,396	5,561	26.0%
in % of sales	6.4%	6.8%			6.7%	6.8%
EBIT adjusted	92,281	71,276	21,005	29.5%	36,664	24,323	12,341	50.7%
in % of sales	7.8%	7.7%			9.1%	7.7%
Finance result	-6,510	-6,597	87	-1.3%	-3,167	-2,174	-993	45.7%
Result before taxes	69,166	56,061	13,105	23.4%	23,790	19,222	4,568	23.8%
Income taxes	-21,427	-18,950	-2,477	13.1%	-7,322	-4,659	-2,663	57.2%
Tax rate (%)	31.0%	33.8%			30.8%	24.2%
Result for the period	47,739	37,111	10,628	28.6%	16,468	14,563	1,905	13.1%
in % of sales	4.1%	4.0%			4.1%	4.6%

Equity up significantly with equity ratio coming in lower sequentially

EUR MN	12/31/ 2020	03/31/ 2021	06/30/ 2021	09/30/ 2021	12/31/ 2021	03/31/ 2022	06/30/ 2022	09/30/ 2022
Equity	300.5	325.2	334.8	353.7	371.1	390.5	431.1	468.5
Balance Sheet total	920.5	998.6	1,010.4	1,022.9	1,014.3	1,060.4	1,156.4	1,456.9

• Compared to 31 Dec. 2021, equity as of 30 Sept. 2022 improved by EUR 97.4 mn respectively 26.3% to EUR 468.5 mn
• Equity as of 30 Sept. 2022 increased mostly due to the profit for the period of EUR 47.7 mn combined with exchange differences on translation of foreign operations amounting to EUR 55.2 mn whilst dividend payout of EUR 15.9 mn in Q2 had a dampening effect
• Yet, as of 30 Sept. 2022 when compared to 30 June 2022, the equity ratio decreased to 32.2% (30 June 2022: 37.3%) due to the Haldex transaction

Net working capital ratio sequentially improved

11,9% 14,4% 14,8% 15,5% 14,8% 15,7% 17,4% 15,9% 12/31/2020 03/31/2021 06/30/2021 09/30/2021 12/31/2021 03/31/2022 06/30/2022 09/30/2022 10% 12% 14% 16% 18% 20%

EUR MN	12/31/ 2020	03/31/ 2021	06/30/ 2021	09/30/ 2021	12/31/ 2021	03/31 2022	06/30/ 2022	09/30/ 2022
Inventories	126.4	155.8	176.0	195.3	194.0	211.9	237.0	237.9
Trade receivables	95.3	130.0	148.9	147.2	136.3	176.1	184.6	187.0
Trade payables	-107.2	-147.4	-163.4	-160.6	-145.8	-179.3	-176.2	-187.3
NWC	114.6	138.4	161.5	181.9	184.4	208.7	245.5	237.6
Sales (LTM)	959.5	961.7	1,091.4	1,175.6	1,246.6	1,330.7	1,411.7	1,497.5

Net working capital (in % of sales)

• Net working capital decreased slightly in Q3 despite sustained strong sales growth
• Inventory level still determined by too high safety stocks
• Trade receivables remained largely unchanged
• Trade payables up by EUR 11.1 mn
• Net working capital ratio in Q3 improved sequentially by 150 BPS to 15.9%
• Cash-is-King program to be stepped up until year-end 2022 to focus on inventories by reducing DIO

First improvements in all NWC-relevant components

Inventories (in EUR mn of sales) and DIO(in days)

Trade payables (in EUR mn of sales) and DPO(in days)

Trade receivables (in EUR mn of sales) and DSO(in days)

• Strong sales growth and increased safety stock levels with some product groups still produced high DIO level; Nevertheless successful lowering of DIO in Q3 from 72 to 68 days
• Potential to reduce DIO further as supply chain issues with regard to availability have started to clear
• Trade receivables largely stable with DSO improving slightly to 45 days
• DPO expanded slightly in absolute terms in Q3, focus on step-up plan to increase DPO level to 60 days

Cash Flows YTD and Q3 2022 – Sharp pick-up in operating cash flow in Q3

Net free cash flow from operating activities* (EUR million)

Net cash flow from operating activities (EUR million)

• In 9M 2022 net cash flow from operating activities reached EUR 73.5 mn, up from EUR 21.3 mn in the first 9 months of 2021
• The company generated 54.8 mn in net cash from operating activities (post changes in NWC) in Q3;
• This corresponds to a noticeable increase of EUR 48.5 mn from Q3 2021 (EUR 6.3 mn)
• Cash generation was driven by improved earnings with higher depreciation as well as decreased NWC requirements
• Net cash flow from investing activities reached EUR 16.0 mn in 9M 2022 and EUR 5.9 mn in Q3

2021

• Net free cash flow from operating activities (before acquisition of Haldex shares) reached EUR 57.5 mn in 9M 2022 as compared to EUR 9.3 mn in the previous year
• In Q3 the improvement amounted to EUR 46.3 mn on the previous year's level and came in at EUR 48.8 mn

• For comparability reasons, we have adjusted the net financial debt for the second quarter and third quarter of 2022 for the purchase of the Haldex shares
• Without the acquisition of Haldex shares the net debt to EBITDA ratio in Q2/2022 would have been at 1,6x instead of 1,8x
• Without the acquisition of the Haldex shares the net debt to EBITDA ratio in Q3/2022 would have been at 1.1x due to the strong operating free cash flow generated in the quarter
• For FY 2024 a net debt to EBITDA ratio of 2x or below is targeted

* Unadjusted EBITDA (LTM)

Haldex Financials Q3 2022

Sales	Strong sales increase y-o-y.
Adj. EBIT margin	Further sequential improvement of EBIT margin in Q3 to 9.9%.
SAF-HOLLAND cash offer	After the extended acceptance period which expired on 31 August 2022, SAF-HOLLAND controlled in total 46,746,597 Haldex shares, corresponding to approx. 96.14% of the total number of outstanding shares.
Delisting	The last trading day of the Haldex share was 19 September 2022.
Squeeze out	SAF HOLLAND has initiated compulsory acquisition proceedings under the Swedish Companies Act to acquire all shares in Haldex not already owned by SAF HOLLAND.
Polish merger control clearance	Merger control clearance from the Polish competition authority is currently still outstanding. The Polish authority has not expressed concerns that the takeover would significantly restrict competition. It has stated though that the case is complex as the relevant markets are interrelated and the parties to the transaction have different roles in these markets. The Polish authority intends to better understand these relationships prior to their clearance decision. As no competition issues have been identified so far (neither by the German nor the US authorities), SAF-HOLLAND is confident that the unconditional clearance will be granted in the next few weeks.

Haldex Q3 2022 – Sales and adjusted EBIT

• Sustained strong sales growth in Q3 also driven by price increases and FX effects
• All regions and all customer segments especially the Americas region – and customer segments – especially the aftermarket business – contributed to sales growth

Adj. EBIT by Quarter (in EUR mn and as % of sales)

(in EUR million)

2021 2022

• Further sequential improvement of EBIT margin in Q3
• Price increases to customers more than compensated for the net burden of higher manufacturing costs (direct material and freight minus direct material savings)

Haldex – Highly resilient Aftermarket business gaining share

33,7% 14,5% 51,8% Trailer OE Truck OE Aftermarket Q3 2022 33,3% 13,7% 53,0% Trailer OE Truck OE Aftermarket Q3 2021

Sales development (by region, by customer category)

Q3 2022 Call Presentation < 26 >

P&L in EUR thousands	Q3 2022	Q3 2021	Q1-Q3 2022	Q1-Q3 2021
Sales	142.828	118.042	401.215	337.200
Gross profit	41.193	30.915	113.894	95.007
Gross margin	28.8%	26.2%	28.4%	28.2%
Operating income	13.268	9.402	29.968	28.274
Operating margin	9.3%	8.0%	7.5%	8.4%
Adj. operating income	14.232	9.833	33.192	29.286
Adj. operating margin	9.9%	8.3%	8.3%	8.7%
Profit before tax	12.820	7.384	26.754	24.396
Taxes	-3.587	-2.016	-7.484	-6.691
Net income (incl. minorities)	9.233	5.369	19.270	17.704
Net Income (excl. minorities)	9.092	5.266	18.865	17.535
Sales by region in EUR thousands	Q3 2022	Q3 2021	Q1-Q3 2022	Q1-Q3 2021
Americas	84.774	60.718	230.113	171.840
EMEA	49.495	49.629	145.356	140.877
APAC	8.559	7.695	25.746	24.483

Outlook 2022

Update on development of trailer and truck production for full year 2022

	Trailer	Trucks
EMEA	-5%	+3%
North America	+25%	+17%
Brazil	-10%	0%
China	-49%	-49%
India	+91%	+53%

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

• EMEA
  • European trailer market expected to be slightly weaker compared with strong prior-year
  • Truck business still impacted by semiconductor shortages and supply chain disruptions but improving; Overall slight increase in production levels expected for the full year 2022
• North America
  • Trailer OE segment remains strong with OEs booked into HY2/2023. Staffing and supply chain issues have improved
  • Truck production picking up from PYs depressed levels but to some extent still impacted by supply shortages despite the fact that the issues have started to clear
• Brazil
  • As expected, normalization of demand following up on an extraordinary strong trailer market in 2021
• China
  • Severely declining markets in 2022 as China still struggles with COVID-19 lockdowns as well as lower GDP growth rates
• India
  • Trailer production expected to further increase supported by continued large-scale infrastructure and governmental investment projects

	March 17, 2022	May 5, 2022	July 28, 2022
Sales	EUR 1.15bn to EUR 1.3bn	EUR 1.2bn to EUR 1.35bn	EUR 1.4 bn to EUR 1.5 bn
Adjusted EBIT margin	Significantly below 2021	6.5% to 7.0%	7.0% to 8.0%
Capex ratio	2% to 2.5%	2% to 2.5%	2% to 2.5%

Comments

• Based on the expected overall economic environment, the current level of orders on the books in the OE business and sustained solid demand in the aftermarket business, the Management Board now forecasts Group sales for the full year 2022 around the upper end of the forecast range of between EUR 1.4 billion to 1.5 billion.
• In July 2022, the company had already raised its sales projection for the second time ranging from EUR 1.4 to 1.5 billion.
• Unchanged the company projects an adjusted EBIT margin of between 7.0% to 8.0%.

Contact and additional information

Financial calendar & IR contact

Issuer & contact	Additional information
SAF-HOLLAND SE	ISIN	DE000SAFH001
Hauptstrasse 26	WKN	SAFH00
63856 Bessenbach	Listing	Frankfurt Stock Exchange Prime Standard
Stephan Haas Tel: +49 6095 301 – 803
	Financial calendar 2022
Michael Schickling
Tel: +49 6095 301 – 617	November 10, 2022	Q3 2022 Quarterly Statement
Alexander Pöschl Tel: +49 6095 301 – 117	November 15 + 16, 2022	Roadshow Helsinki and Stockholm
Email: ir@safholland.de	December 8, 2022	Berenberg European Conference 2022
	January 10, 2022	Oddo BHF Forum 2023
	January 17, 2022	UniCredit /Kepler Cheuvreux German Corporate Conference 2023

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.