JOST Werke AG — Investor Presentation 2017

Sep 27, 2017

H1 2017 Update presentation

Lars Brorsen (CEO) Christoph Hobo (CFO)

Disclaimer

THIS FINANCIAL REPORT IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. THIS FINANCIAL REPORT, WHICH HAS BEEN PREPARED BY JOST WERKE AG (THE "COMPANY"), SHOULD NOT BE TREATED AS GIVING INVESTMENT ADVICE AND MAY NOT BE REPRODUCED IN ANY FORM, PASSED ON OR OTHERWISE MADE AVAILABLE, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON, OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. IN PARTICULAR, THIS FINANCIAL REPORT MUST NOT BE RELEASED, PUBLISHED OR DISTRIBUTED IN THE UNITED STATES OF AMERICA (THE "UNITED STATES"), AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION WHERE SUCH DISTRIBUTION IS UNLAWFUL. ANY FAILURE TO COMPLY WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF APPLICABLE SECURITIES LAWS.

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This report is neither an advertisement nor a prospectus and should not be relied upon in making any investment decision to purchase, subscribe for or otherwise acquire any securities. The information and opinions contained in this report are provided as at the date of this report and may be subject to updating, revision, amendment or change without notice. This report is selective in nature and does not purport to contain all information that may be required to evaluate the Company and/or its shares. Neither the Company nor any other person is under any obligation to update or keep current the information contained in this report or to correct any inaccuracies in any such information which may become apparent or to provide you with any additional information. No reliance may or should be placed for any purpose whatsoever on the information contained in this report, or any other information discussed verbally, or on its completeness, accuracy or fairness.

Certain information in this report is based on management estimates. Such estimates have been made in good faith and represent the current beliefs of applicable members of management. Those management members believe that such estimates are founded on reasonable grounds. However, by their nature, estimates may not be correct or complete. Accordingly, no representation or warranty (express or implied) is given that such estimates are correct or complete. Where this report quotes any information or statistics from any external source, it should not be interpreted that the Company has adopted or endorsed such information or statistics as being accurate. This report contains forward-looking statements. These statements reflect the Company's current knowledge and its expectations and projections about future events and may be identified by the context of such statements or words such as "anticipate," "believe", "estimate", "expect", "intend", "plan", "project", "target", "may", "will", "would", "could" or "should" or similar terminology. Forwardlooking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's prospects, growth, strategies, the industry in which it operates and potential or ongoing acquisitions. By their nature, forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control that could cause the Company's actual results and performance to differ materially from any expected future results or performance expressed or implied by any forward-looking statements. Forward-looking statements should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. Similarly, past performance should not be taken as an indication of future results, and no representation or warranty, express or implied, is made regarding future performance. The development of the Company's prospects, growth, strategies, the industry in which it operates, and the effect of acquisitions on the Company may differ materially from those made in or suggested by the forwardlooking statements contained in this report or past performance. In addition, even if the development of the Company's prospects, growth, strategies and the industry in which it operates are consistent with the forward-looking statements contained in this report or past performance, those developments may not be indicative of the Company's results, liquidity or financial position or of results or developments in subsequent periods not covered by this report. Any forward-looking statements only speak as at the date of this report is provided to the recipient and it is up to the recipient to make its own assessment of the validity of any forward-looking statements and assumptions. The Company undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this report that may occur due to any change in its expectations or to reflect events or circumstances after the date of this report.

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Company overview and key highlights

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%

Rockinger Agriculture Coupling Varioblock Turntable Cylinder Turntable Towing Hitch Cross Member Container Technology, Supporting Leg Axles Landing Gear Fifth Wheel Forced Steering Overview of our main products Drawbar Drawbar King Pin Vehicle interface (74% sales) Handling solution (10% sales)⁷ Manoeuvring (16% sales)

Key takeaways

1

2

Key investment highlights

• Leadership – Global leadership in branded products
• Attractive company growth – Market outperformance: upselling, market expansion and bolt-on M&A
• Market growth – Sustained growth on the back of strong fundamentals 3
• 4 Diversification – High aftermarket content and high diversification by customer and geography
• 5 Business model – Flexible and asset-light business model
• 6 Track record – Industry-leading margins and cash generation profile

Additional investment back up highlights in appendix

1 Global leadership in branded products

One of the leading global suppliers of truck and trailer systems with high market share in core segments

1 player in key products³ that account for 64% of total sales

¹By sales

²Includes Brazil JV ³Fifth wheel and landing gear

2 Market outperformance: upselling, market expansion and bolt-on M&A

JOST's strategy is focused on further enhancing its cash generative baseline business while developing advanced solution systems to provide long-term growth

2 Market outperformance: upselling, market expansion and bolt-on M&A

JOST's successful strategy to outgrow the market

	JOST's approach to outperform the market
				Manual landing gear	E-Drive landing gear Increased content
1	Higher content		 Upselling through innovations		(e.g >4x	compared to base version for landing gear)
	per product			Manual fifth wheel	LubeTronic fifth wheel Comfort Coupling System
2		on gi Re uct Prod	 Growth in US: gain market share with OEMs	By region	By product
	Growth		 Localisation of Rockinger and Tridec in China
	initiatives		 Growth in axles: expand in aftermarket
			 Growth in hydraulics: expand capacity
3	Accretive M&A		 Strong M&A track record  Potential add-on M&A opportunities
					Trailer Axle Systems

3 Sustained growth on the back of strong fundamentals

Truck and trailer in all other regions are expected to outperform GDP growth on the back of favorable long-term economic factors

(>15 to GVW)

²Includes medium and heavy duty commercial vehicle trailers ³Western Europe, Eastern Europe, Russia

⁵China, India, Asia Pacific, RoW Source: Roland Berger 2017

Sustained growth on the back of strong fundamentals

China's newly implemented truck overload restrictions positively impact truck and trailer demand in China

• Implementation of new regulation on truck overload restrictions (GB1589)
• No transition phase permitted

3

• New restrictions on truck and trailer dimensions:
• Length of maximum 22.0 meters of truck and trailer combination
• For example, car carriage capacity significantly drops
• From c.22 cars per vehicle to 6 10 cars per vehicle depending¹
• The key positive implications for JOST:
• Higher number of swivel points in a truck (eg replacement of rigid with articulated trucks)
• Replacement demand for existing fleet
• Higher focus on quality and safety of couplings

Truck overload restrictions Traditional car carrier in China

Car carriage capacity

Historical

Current¹

New China policies are expected to provide short- and long-term support to the market

¹ Semitrailer with a capacity of 6 cars; drawbar trailer with a capacity of 10 cars Source: Roland Berger 2017

4 High aftermarket content and high diversification by customer and geography

High resilience due to high customers fragmentation and leading AM business

1 Including Brazil JV

² Top 20 customers with average relationship of 33 years represent 45% of sales

³ Value based

5 Flexible and asset light business model

Ability to quickly adapt to changing market environment due to asset light and efficient supply and production platform

Employees located in low cost countries Purchasing from low cost countries⁴

¹ On the example of fifth wheel

²Low-cost countries include Russia, Poland, Hungary, Portugal, South Africa, China, India

³High-cost countries include Germany, France, Spain, Italy, UK, The Netherlands, Australia, USA, Singapore and Japan

⁴ High-cost regions include Western Europe and North America; Low-cost regions include Eastern Europe, Asia and Brazil

6 Industry-leading margins and cash generation profile

JOST has continuously outperformed the truck market since 2003 showing high profitability and strong cash generation

¹ Weighted by approximate weight of truck and trailer revenues

² Cash flow defined as Adjusted EBITDA-Capex and cash conversion defined as (Adjusted EBITDA-Capex) / Adjusted EBITDA

Key financials

H1 2017 best half year in JOST's history with strong improvement in margins across all regions

¹ Sales split by origin

² CAGR assuming MBTAS reflected in 2014 sales

³Adjusted EBIT split by origin, including pro-rata net income from Brazil JV

⁴ Pro-rata net income from Brazil JV not allocated to segments and therefore shown separately

Strong cash generation profile supported by low capex spend and disciplined working capital planning

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 Source: Company information

H1 2017 highlights

Sales +7%

• Record H1 sales performance
• Continuing strong growth in APA
• Recovering truck markets in North America
• Stable development in Europe

High capital efficiency

ROCE¹ of 18%

Cash conversion² of 90%

to €362m Adj. EBIT +18% to €44m

Outlook 2017 confirmed

Mid single digit sales growth rate High single adj. EBIT growth rate

¹LTM adj. EBIT / interest bearing capital employed (interest bearing capital: shareholders equity + financial liabilities – liquid assets + provisions for pensions) ² adj. EBITDA – capex / adj. EBITDA

Subsequent events

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

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

² Current and non-current interest-bearing loans and borrowings less cash and cash equivalents

Appendix

Reconciliation of earnings

Key highlights

• Adjustments to EBIT predominantly from D&A of PPA
• Costs associated with the stock listing expected in H2
• For comparability, the adjusted net income excludes shareholder loan effects on net finance result and income taxes
• Shareholder loan was fully converted prior to the stock listing on July 20th

Organic sales development

Profit & loss statement adjusted for exceptionals, PPA and shareholder loan effects
(€m)	FY2014A	FY2015A	FY2016A	H1 2016	H1 2017	%
Sales	516.3	649.8	633.9	337.6	361.9	7%
Cost of sales	(376.2)	(485.2)	(456.1)	(247.2)	(260.7)	5%
Gross profit	140.1	164.6	177.9	90.4	101.2	12%
Selling expenses adj. for PPA	(45.7)	(52.5)	(56.9)	(27.7)	(29.8)	8%
R&D expenses	(7.6)	(9.4)	(10.7)	(5.3)	(5.3)	0%
Administrative expenses	(35.6)	(55.5)	(54.4)	(23.2)	(23.1)	0%
Other income / expenses	(1.1)	4.4	1.1	0.7	(0.2)	(123)%
Share of JV profit	2.7	1.4	1.4	0.7	1.1	57%
Exceptionals	6.0	9.1	3.6	1.7	0.5	(74)%
Adj. EBIT	58.8	62.2	61.9	37.4	44.3	19%
% ofsales	11.4%	9.6%	9.8%	11.1%	12.2%
Adj. Net finance result	(8.3)	(17.8)	(19.6)	(9.7)	(7.8)	(19)%
Adj. Profit before tax	50.5	44.4	42.3	27.7	36.5	32%
Adj. Income taxes	(10.2)	(15.2)	(10.6)	(7.7)	(9.3)	21%
Adj. Consolidated net income	40.4	29.2	31.7	20.0	27.1	36%

Profit & loss statement
(€m)	FY2014A	FY2015A	FY2016A	H1 2016	H1 2017
Sales revenues	516.3	649.8	633.9	337.6	361.9
Cost of sales	(376.2)	(485.2)	(456.1)	(247.2)	(260.7)
Gross profit	140.1	164.6	177.9	90.4	101.2
Selling expenses	(1.2)	(81.0)	(82.1)	(40.3)	(42.4)
Research and development expenses	(7.6)	(9.4)	(10.7)	(5.3)	(5.3)
Administrative expenses	(35.6)	(55.5)	(54.4)	(23.2)	(23.1)
Other income / expenses	(1.1)	4.4	1.1	0.7	(0.2)
Share of profit of loss of equity method investments	2.7	1.4	1.4	0.7	1.1
Operating profit (EBIT)	97.4	24.6	33.1	23.0	31.2
Net financial result	(47.1)	(75.5)	(35.2)	(19.4)	(141.8)
Profit before tax	50.2	(50.9)	(2.1)	3.7	(110.5)
Income taxes	(21.9)	(1.2)	(13.1)	(7.2)	28.6
Consolidated net income for the year	28.3	(52.1)	(15.2)	(3.5)	(81.9)
Non-controlling interests	(0.0)	0.0	0.0	0.0	0.0
Profit attributable to owners of the parent	28.3	(52.1)	(15.2)	(3.5)	(81.9)

Global leadership

JOST's leading market positions – focus on fifth wheel and landing gear

JOST is the global leader in fifth wheel and landing gear

¹Includes the following countries: AUT, BEL, DEN, FIN, FRA, GER, ITA, NED, NOR, POR, ESP, SWE, CH, UK, CRO, SRB, BLR, BGR, CZE, EST, HUN, LAT, LTU, POL, ROM, SVK, SVN, TUR, UKR 2 Includes the following countries: CAN, MEX, USA, COL, ECU, VEN, ARG

³Includes the following countries: IDN, MYS, THA, PHL, KOR, JAP, AUS, PAK, TWN, IND, CHN, DZA, EGY, MOR, TUN, SAU, UAE, other MEA

⁴Including Brazil JV

Source: Roland Berger 2017