JOST Werke AG — Call Transcript 2017

Nov 27, 2017

9M 2017 Results – Conference Call

Lars Brorsen (CEO) Christoph Hobo (CFO)

November 27, 2017

Disclaimer

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1. Highlights 9M 2017

• 2. Market outlook
• 3. Detailed results review
• 4. Company outlook

5. Q&A

Appendix

JOST – leading global supplier of safety critical truck and trailer solutions

JOST has ~55% market share globally in products representing 64% of sales⁸

¹CAGR assuming MBTAS reflected in 2014 sales, ²Excluding PPA D&A and exceptional items, including pro rata net income from Brazil JV, ³Cash flow (CF) defined as adjusted EBITDA – capex; cash conversion defined as (adjusted EBITDA – capex)/adjusted EBITDA, ⁴ Sales by region including consolidation effects, ⁵ Sales by region represent global sales of JOST's branded products including 100% of Brazil JV, which had sales of €29m in 2016, ⁶ Includes aftermarket and trading, ⁷ Including other, ⁸ Fifth wheel: JOST 54%, Other 46%; Landing gear: JOST 56%, Other 44%

Highlights 9M 2017

Listing on Frankfurt stock exchange

• 4.875m new shares issued
• Placement price €27.00
• €132m raised from capital increase
• +41% share price increase by end of Q3 2017

Sales +10% to €533m

Adj. EBIT +24% to €64m

Adj. net income +76% to €41m

Equity ratio 32%

Attractive new financing

• €180m term loan raised, maturing in 2022
• Significantly reduced leverage and interest expenses

Outlook 2017 raised

High single-digit sales growth rate Moderate double-digit adj. EBIT growth rate

Agenda
--------	--

	1. Highlights 9M 2017
--	-----------------------

2. Market outlook

3. Detailed results review

4. Company outlook

5. Q&A

Appendix

Note: JOST estimates based on Berger, LMC, Clear, FTR

Agenda
--------	--

1. Highlights 9M 2017
2. Market outlook
3. Detailed results review
4. Company outlook
5. Q&A
Appendix

• Growth driven by high activity level in APA and recovering truck market in North America
• Seasonal effect in Q3 not as pronounced as in previous year
• Adj. EBIT grew by 24% resulting in margin expanding to 12% in 9M 2017
• Main reasons: completed integration of axle business, efficiency improvements, favorable mix effects and operating leverage benefits

¹ Reported sales figures do not include sales of Brazil JV

Group's sales and adjusted EBIT by quarter

Sales (€m)

Typical seasonality has not been as pronounced in Q3 2017 as in previous years

• Steady sales growth on an elevated level

• Typical seasonal Q3 slow-down from vacation period not as pronounced as in previous year

• 14% adj. EBIT growth in 9M resulting in margin expanding to 10.6%

• The completed integration of the axle business and general efficiency gains were main drivers for margin improvement

• Sales grew by 6% in 9M driven by rapidly recovering truck market

• Trailer market remained stable on an elevated basis

• 9M adj. EBIT grew by 17% with margins improving by 110bp to 10.7% due to higher efficiencies from automation

• Q3 2017 adj. EBIT impacted by increasing raw material prices

• Stronger than anticipated sales growth in Q3, offsetting the usual seasonal slowdown

• High demand in China continued
• Sales in other markets in the region also grew stronger than expected
• 51% adj. EBIT growth in 9M resulting in margin expanding to 15.8%
• Improvements due to favourable product mix as well as the resulting operating leverage combined with continuous efficiency gains

Reconciliation of adjusted earnings 9M 2017

Key highlights

• Adjustments to EBIT mainly from D&A of PPA

• Further adjustments from costs associated with the stock listing

• For comparability the adjusted net income excludes shareholder loan (SHL) effects on net finance result and income taxes

• Shareholder loan fully converted prior to stock listing on July 20th

¹ Cash flow defined as adjusted EBITDA – capex; cash conversion defined as (adjusted EBITDA – capex)/adjusted EBITDA ² Capex calculated as payments to acquire property, plant and equipment as well as intangible assets

Balance sheet strengthened

ROCE¹ increase by 1.7%-points to 19.7%

¹ ROCE=LTM adj. EBIT / interest bearing capital employed (interest bearing capital: equity + financial liabilities – cash + provisions for pensions) ² Other: Cinven, current and former members of the Management and Supervisory Board, other

Agenda
--------	--

1. Highlights 9M 2017
-----------------------	--

2. Market outlook

3. Detailed results review

4. Company outlook

5. Q&A

Appendix

Future business developments in Q4 2017

• Relocation of trailer parts production from Shanghai to existing plant in Wuhan
• Shanghai will continue to serve as sales and administration hub
• Relocation started beginning of Q4 2017 Due to asset light business and expertise in truck parts closer will help offset cost increases in blue collar labor, and counter sharply rising production footprint Quick implementation of machines transfer due to asset light business model and expertise in relocating production units
• trailer parts is expected to recommence in Expected synergies will help:
• December 2017 offset cost increases in blue collar labor
• counter rising production footprint costs in the Shanghai area
• maintain margin levels
• Capex plans of approx. 2.5% of sales remain unchanged

	FY 2016 (€m)	2016 (% of sales)	Outlook 2017 (old)	Outlook 2017 (new)
Sales	634		Mid single digit growth	High single digit growth
Adjusted EBIT (% margin)	62	9.8%	High single digit growth	Moderate double digit growth
Capex1 (% of sales)	18	2.9%	2.0 – 2.5% of sales	2.0 – 2.5% of sales
Net working capital (% of sales)	123	19.4%	<20%	<20%
Leverage	3.5x		~ 1.5x	< 1.5x

¹ Capex calculated as payments to acquire property, plant and equipment as well as intangible assets

2018
March 22	May 4 22
Publication	Annual
of	General
2017	Publication of
Annual	Meeting
Results	Q1 2018 Results
August	November
27	22
Publication	Publication
of	of
H1	9M
2018	2018
Results	Results

1. Highlights 9M 2017
2. Market outlook
3. Detailed results review
4. Company outlook
5. Q&A
Appendix

Organic sales development

Profit & loss statement adjusted for exceptionals, PPA and shareholder loan effects

(€m)	9M 2016	9M 2017	%
Sales	487.0	533.3	10%
Cost of sales	(355.6)	(384.9)	8%
Gross profit	131.4	148.4	13%
Selling expenses adj. for PPA	(42.1)	(44.3)	5%
R&D expenses	(7.8)	(7.7)	-1%
Administrative expenses	(33.8)	(37.7)	12%
Other income / expenses	0.4	(0.2)
Share of JV profit	1.0	1.6	69%
Exceptionals	2.4	3.7	53%
Adj. EBIT	51.5	63.8	24%
% ofsales	10.6%	12.0%
Adj. Net finance result	(18.2)	(10.5)	-43%
Adj. Profit before tax	33.3	53.3	60%
Adj. Income taxes	(10.3)	(12.8)	25%
Adj. Consolidated net income	23.0	40.5	76%

Profit & loss statement

(€m)	9M 2016	9M 2017
Sales	487.0	533.3
Cost of sales	(355.6)	(384.9)
Gross profit	131.4	148.4
Selling expenses	(61.0)	(63.2)
R&D expenses	(7.8)	(7.7)
Administrative expenses	(33.8)	(37.7)
Other income / expenses	0.4	(0.2)
Share of JV profit	1.0	1.6
EBIT	30.2	41.2
Net finance result	(28.5)	(144.4)
Profit before tax	1.7	(103.2)
Income taxes	(9.6)	27.6
Consolidated net income	(7.9)	(75.6)

Balance sheet as at September 30, 2017

Assets (m€)	31 Dec 2016	30 Sep 2017
Noncurrent assets	365.9	337.2
Intangible assets	261.5	238.2
Property, plant, and equipment	80.1	74.8
Investments accounted for using the equity method	13.8	12.9
Deferred tax assets	10.3	11.2
Other noncurrent financial assets	0	0
Other noncurrent assets	0	0
Current assets	238.5	273.3
Inventories	90.4	91.5
Trade receivables	90.1	113.8
Receivables from income taxes	3.5	3.3
Other current financial assets	1.1	1.5
Other current assets	6.3	6.8
Cash and cash equivalents	47.2	56.4
Total assets	604.4	610.5

Equity and liabilities (m€)	31 Dec 2016	30 Sep 2017
Equity	(137.4)	195.1
Subscribed capital	0	14.9
Capital reserves	79.7	542.0
Other reserves	(22.5)	-31.0
Retained earnings	(194.6)	-330.8
Noncurrent liabilities	641.4	304.0
Liabilities to shareholders	132.5	0
Pension obligations	60.7	57.8
Other provisions	3.0	2.8
Interest-bearing loans and borrowings	314.0	177.8
Deferred tax liabilities	126.2	60.5
Other noncurrent liabilities	5.0	5.1
Current liabilities	100.4	111.4
Pension obligations	1.7	1.7
Other provisions	15.0	17.0
Interest-bearing loans and borrowings	6.0	0
Trade payables	57.7	67.6
Liabilities from income taxes	3.1	5.0
Other current financial liabilities	0.5	0.5
Other current liabilities	16.4	19.5
Total equity and liabilities	604.4	610.5