Manitou Group — Earnings Release 2019

Mar 3, 2020

Manitou Group: 2019 annual results

• Sales revenue of €2 094 million growing at a rate of +11% against 2018 (+10% like for like*)
• Recurring operating income at €149 million (7.1% of net sales) against €129 million (6.9%) in 2018
• · EBITDA (1) of €186 million** (8.9%) against €162 million in 2018
• · Net income group share of £96 million vs. €84 million in 2018
• Net debt** at €190 million, gearing 21 of 29 %
• Dividend to be proposed at the upcoming Shareholders' meeting of € 0,78 per share
• Anticipation of a decrease in sales for 2020 of around -10% compared to 2019
• Anticipation for 2020 of current operating income rate of around 6% of net sales, excluding the effect of the coronavirus

Ancenis, 03 March 2020 – The board of directors of Manitou BF, meeting on this day, approved the accounts

for 2019. Michel Denis, President and Chief Executive Officer stated: "With a revenue of more than €2 billion and a net profit of €96 million, Manitou Group ended the 2019 financial year on an all-time high. In line with our strategy, we continued to develop both geographically and in terms of expanding our product and service ranges. This performance was the result of the strengthening of our worldwide presence, particularly in the United States, the implementation of additional research and development resources and the increase in production capacity undertaken year after year.

In a general economic slowdown since mid-2019, the Group's business has been gradually reduced while maintaining a good increase in our profitability during the year. As a result, our recurring income increased by 15% compared to 2018 and stands at 7.1% of sales.

Since the beginning of 2020, we have been seeing good order intake and very limited effects of export restrictions from China. We anticipate, for 2020, a 10% decrease in sales compared to 2019 and, taking into account the above-mentioned factors, a current operating profit of around 6% of sales, with uncertainty about the impact of the coronavirus, not estimated at present time".

	MHA	CEP	ટે રિકેટ	Total	MHA	CEP	ટેકેટ	Total
In millions of €	2018	2018	2018	2018	2019	2019	2019	2019	Var.
Net sales	1 294,1	313,5	276,0	1 883,6	1 455,8	328,3	309,4	2 093,6	+11%
Sales margin	198,1	43,0	72,7	313,8	220,3	38,5	87,3	346,1	+10%
Sales margin as a % of sales	15,3%	13,7%	26,3%	16,7%	15,1%	11,7%	28,2%	16,5%
Recurring OI	100,0	9,4	20,0	129,3	116,3	2,4	30,0	148,6	+15%
Recurring OI as a % of sales	7,7%	3,0%	7,2%	6,9%	8,0%	0,7%	9,7%	7,1%
OP.	97,4	9,0	19,7	126,1	114,2	2,1	29,7	146,1	+16%
Net income attributable to the group	n/a	n/a	n/a	84,1	n/a	n/a	n/a	95,6	+14%
Net debt excluding IFRS 16				148,1				190,2	+28%
Net debt including IFRS 16				n/a				208,2
Shareholder's equity				597,0				664,6	+11%
% Gearing(4) excluding IFRS 16				n/a				31%
% Gearing(4) including IFRS 16				25%				29%
Working capital				536				606	+13%

Percentage figures in brackets express a percentage of turnover.

First-time application of IFRS 16 standard as from 1 January 2019 (the financial impacts are described in appendix; no restatement for 2018) Auditing procedures performed

* like for like, at constant scope and exchange rate:

• for 2019 acquisitions (Mawsley Machinery Ltd at the end of their contribution, from the date of their acquisition, to December 31, 2019. There is no exit in 2019. There is no acquisition nor exit in 2018.
• application of the prior year's exchange rate
• ** at constant accounting standard (IAS17)

4 EBITDA: Earnings before interest, taxes, depreciation, restated from IFRS 16 impact

4 Gearing : Financial ratio measuring the net debt divided by shareholders' equity, restated from IFRS 16 impact .

Business review by division

The Material Handling & Access Division (MHA) reported revenue of €1,456 million in 2019, up +13% compared to 2018 (+12% at constant exchange rate and scope).

The division continued its capacity building and innovation efforts. The construction of a new production site for aerial work platforms has been initiated, with work scheduled to begin in early 2021.

The MHA division's recurring operating income thus rose by €16.3%) to £116.3 million (8.0% of sales) compared with €100.0 million in 2018 (7.7% of sales).

The Compact Equipment Products Division (CEP) achieved revenue of €328 million in 2019, a rise of +5% over the 12 months (+1% at constant exchange rate and scope).

The division's performance was impacted by recurring difficulties in recruiting staff for production sites and by the strengthening dollar, which had a negative impact on the profitability of products exported from the United States. In addition, the division was affected by the shutdown of its main US site (Madison), which was blocked for six weeks due to flooding, the financial impact of which was almost entirely covered by insurance.

Taking into account these elements, the CEP division's recurring operating income is down to € 2.4 million (0.7% of sales) compared to € 9.4 million in 2018 (3.0% of sales).

With sales revenues of €309 million, the Services & Solutions Division (S&S) recorded a +12% sales increase year-on-year (+11% at constant exchange rate and scope). The strongest growth in revenue was recorded in the service activities that have been strengthened over the last few years. The development of service activities provides the division with greater profitability and resilience.

As a result, the division's profitability has increased by 50% to €30.0 million, or 9.7% of sales (7.2% in 2018).

Dividend proposed at the next Shareholders' Meeting

The Board decided to propose a dividend payment of €0,78 per share at the next Shareholders' Meeting, which will be held on 18 June 2020.

Coronavirus crisis

Due to its worldwide presence and global activities, the group is likely to face the coronavirus crisis in many ways (supply disruption, market downturn or blockage, temporary site closure, absenteeism, etc.).

As of the date of publication of this information, the group has not been affected by any direct material impact likely to call into question its revenue forecast for 2020. The recent extension of the territories concerned by the coronavirus to Europe, particularly Italy, could have a greater impact, in the coming weeks, on certain supplies, including second-tier supplies, on the industrial activity of some sites or on the accessibility and performance of specific markets.

Warning regarding forward-looking items

This presentation may include forward-looking statements, which are based on current beliefs, including without limitation assumptions regarding present and future business environment in which the Company operates, and involve known and unknown risk, uncertainties and other factors, which may cause or achievements, or industry results, to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements speak only as of this presentation and the Company expressly disclaims any obligation or undertaking to revisions to revisions to any forward-looking statements that this presentation may contain to reflect any change in expectations or any change in events, conditions or circumstances on which these forward-looking statements are based. Forward looking statements are for illustrative purposes only. Recipients of this presentation are cautioned that forward-looking information and statements are not guarantees nor undertakings of future performances and are subject to various risks and uncertainties, many of which are difficult to predict and beyond the control of the Company.

ISIN code: FR0000038606

Indices: CAC ALL SHARES, CAC ALL-TRADABLE, CAC INDUSTRIALS, CAC MID&SMALL, CAC SMALL, EN FAMILY BUSINESS

April 28, 2020 (after market closing): Q1'20 Sales Revenues

Manitou Group is a worldwide reference in the handling, access platforms, and earthmoving. By improving workplace conditions, safety, and performance, our environment remains renewable and sustainable for man kind.

Through its 3 iconic brands-Manitou, Gehl, and Mustang by Manitou-the group develops, manufactures, and provides equipment and services for the construction, agriculture, and industrial markets.

By constantly innovating its products & services, Manitou Group constantly adds value to exceed its stakeholders' expectations.

Always attuned to its customers via its expert network of over 1,050 dealers, the group continues to be true to its roots by keeping its headquarters in France. That focus, which powered sales to €2.1 billion in 2019, informs its talented worldwide team of 4,600 whose passion ceaselessly motivates the group.

Appendix

Impact of the application of IFRS 16 :

IFRS 16 is the new standard for leases, with first application as of 1 January 2019.

The group recognizes a "right of use" and a rental liability at the lease, respectively booked in the asset and liability sides of its balance sheet.

The group has applied the simplified retrospective method with the cight of use from the outset for contracts ongoing on January 1, 2019. Therefore, the previous year's figures are not displayed with restated values.

In millions of €	2019 published figures including IFRS 16	IFRS 16 Impact	2019 figures excluding IFRS 16
Income statement
Operating income	146,1	1,0 l	145,1
Of which EBITDA	192,2	6,7 -	185,5
Of which amortization	- 46,5	+ 5,7	-40,8
Financial result	-7,5	+ 1,1	-6,4
Consolidated balance sheet
Right of use	16,5	- 16,5	0
Net debt	208,2	- 17,9	190,2
Gearing	31,31 %		28,6 %

Definitions :

• EBITDA restated from the IFRS 16 impact

EBITDA calculated on the basis of IFRS standards application of IFRS 16 (from January 1, 2019)

• Net debt and Gearing excluding IFRS 16

Net debt calculated on the basis of IFRS standards applicable in 2018, i.e. before the application of IFRS 16 (from January 1, 2019)

CONSOLIDATED INCOME STATEMENT

	In thousands of euros	31 december 2018	31 december 2019
FINANCIAL RESULT

EARNINGS PER SHARE (IN EUROS)

In thousands of euros	31 december 2018	31 december 2019

OTHER COMPONENTS OF COMPREHENSIVE INCOME AND EXPENSE & COMPREHENSIVE INCOME

In thousands of d'euros 31 december 2018	31 december 2019

THE OTHER COMPONENTS OF COMPREHENSIVE INCOME AND LOSS ARE PRESENTED NET OF THE ASSOCIATED TAXES. THE TAX IMPACT MAY BE SPLIT AS FOLLOWS:

In thousands of euros	31 december 2018	31 december 2019

ASSETS

In thousands of euros 31 december 2018	Net amount as at 31 december 2019

EQUITY & LIABILITIES

	In thousands of euros 31 december 2018	Net amount as at 31 december 2019
TOTAL EQUITY
NON-CURRENT LIABILITIES
CURRENT LIABILITIES

CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY

In thousands of euros	Share capital	Share Premiums	Treasury shares	Reserves	Group net income	Translation differences	Revaluation surplus	TOTAL SHAREHOLDERS' EQUITY (Group part)	Minority interests	TOTAL EQUITY
BALANCE AT 31 DECEMBER 2017
BALANCE AT 31 DECEMBER 2018
BALANCE AT 31 DECEMBER 2019	39 668	46 098	-23 714	490 157	95 625	10 089	908	658 831	5 815	664 646

4. CASH FLOW STATEMENT

	In thousands of euros	31 december 2018	31 december 2019
	INCOME (LOSS) FOR THE YEAR	84 354	95 757
	Less share of profits of associates	-2 326	-2 192
	Elimination of income and expense with no effect on operating cash-fow and not linked to operating activities
+	Amortization and depreciation	35 925	45 602
	Provisions and impairment	728	3829
	Change in deferred taxes	2 662	ਰੇਂਤੇ
+/-	Income (loss) from non-current asset disposal	-47	420
+/-	Other	1 207	135
	EARNINGS BEFORE DEPRECIATION AND AMORTIZATION	122 502	144 513
	Changes in working capital	-108 068	-60 386
+/-	Change in inventories	-114 396	-1275
+ / -	Change in trade receivables	-35 548	-10 734
+/-	Change in finance contracts receivables	-5 ਰੇਰੇਰ	290
+ / -	Change in other operating receivables	-9 756	-852
+/-	Change in trade accounts payable	35 450	-46 818
+ / -	Change in other operating liabilities	18 534	3 256
+/-	Change in taxes payable and receivable	3648	-4 250
+ / -	Change in liabilities linked to finance contracts receivables	O	0
	Change in capitalized leased machines	-19 146	-21 060
	CASH FLOW FROM OPERATING ACTIVITIES	-4 712	63 070
	Changes in cash flows from investing activities
+	Proceeds from sale of property, plant and equipment	165	883
	Proceeds from sale of long-term investments	-35	1 186
	Purchase of intangible assets, property, plant and equipment (excl. rental fleet)	-46 412	-68 344
	Decrease (increase) of other financial assets	-132	-1211
	Acquisition of subsidiaries or minority interests	63	-2 668
	Capital increase of associated companies	0	0
	Dividends received from associates	4 886	3 567
	CASH FLOW FROM INVESTING ACTIVITIES	-41 464	- 66 586
	Changes in cash flows from financing activities
+	Increase in capital	615	171
	Decrease in capital	0	0
	Merger operation	0	0
	Dividends paid	-23 855	-30 162
+/-	Purchase / sale of treasury shares	-65	O
+/-	Change in financial liabilities	30 805	32 430
	Of which loans taken during the year	40 087	132 306
	Of which loans repaid during the year	-9 282	-99 877
+/-	Other	4630	-4 080
	CASH FLOW FROM FINANCING ACTIVITIES
		12 130	-1 642
	NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND BANK OVERDRAFTS	-34 046	-5 158
	Cash, cash equivalents and bank overdrafts at beginning of the year	34 135	-609
	Exchange gains (losses) on cash and bank overdrafts	-698	769
	CASH, CASH EQUIVALENTS, AND BANK OVERDRAFTS AT END OF THE YEAR	-609	-4 997

5. EXTRACT FROM THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND FROM THE CHAPTER 2 : « ACTIVITIES, FINANCIAL RESULTS 2019 AND OUTLOOK 2020 » OF THE URD

HIGHLIGHTS

APPLICATION OF IFRS 16

As of January 1, 2019, the Group applies IFRS 16 "Leases", which changes the method of accounting for leases and imposes a single method of accounting for leases by lessees.

The Group has applied the simplified retrospective method with the calculation of the right of use from inception for contracts in force as of January 1, 2019. The cumulative effect of the initial application was recognized as of January 1, 2019. The Group has therefore reduced its opening equity by € 1.0 million, net of deferred taxes, to reflect the cumulative effect of the first-time application of the standard. The application of IFRS 16 generated an increase in net debt of €15.5 millicn and in assets for rights of use of €14.2 million. Over 2019, the application of this standard has a positive impact on current operating income of € 1.0 million and a negative impact on financial income of € 1.1 million.

FUNDING

In June 2019, Manitou BF issued a new private bond of €105 million. The bonds are divided into 3 tranches with 6, 7 and mostly 8 years. This private placement, concluded on favourable terms for the Manitou group, will enable it to extend the maturity of its debt and pursue its strategy of diversifying its sources of financing. The proceeds of these issues will be used to refinance the existing bond debt on a term basis and will be allocated mainly to the development of the company.

ACQUISITION OF MAWSLEY COMPANY

On 29 October 2019, Manitou Group acquired a majority stake in the British company Mawsley Machinery Ltd, based near Northampton (United Kingdom), following the retirement of its main shareholders. Founded in 1981, Mawsley Machinery Ltd distributes construction equipment and related services to its customers. Mawsley Machinery is the historical Manitou Group distributor in the Midlands. The company has a turnover of £19.2 million in 2018 and 27 employees.

The group carried out this operation thanks to its British holding company Manitou PS, in which it holds 85% and which acquired all the shares in Mawsley Machinery Ltd, together with two managers of Mawsley Machinery Ltd. Manitou has an additional call option enabling it to buy the remaining 15% of the UK holding company Manitou ps

SHUTDOWN OF MADISON'S SITE FOR 6 WEEKS

After flooding in September 2019, the Group's activity was affected by a six-week shutdown of the Madison (USA) plant. Business gradually resumed during the 4th quarter.

The insurance indemnity, net of the deductible and net of shutdown and restoration costs, generated net income of €2.8 million, which is recognized in other current operating income.

MONITORING OF LITIGATION FOR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS

In May 2017, the Manitou Group was sued by JC Bamford Excavators Limited (JCB) in France, the United Kingdom and then Italy for alleged infringement of two European patents relating to certain features concerning the overload cut-cff control system of certain telescopic forklift trucks manufactured and/or marketed in these three countries.

In May 2017, the plaintiff filed a claim in the French court for a provision of 20 million euros, to be increased to 50 million euros in June 2018. The financial claims before the English court were not quantified and are still not quantified at the date of publication of this report, but the summons indicates that for procedural purposes the commercial value of the claim is estimated to be in excess of £ 10 million. For Italy, the summons does not specify any quantified claim.

In December 2018, JCB served the Manitou Group with a new patent infringement suit in France and the United Kingdom relating to a third European patent, also relating to certain features concerning the overload cut-off control system of certain telescopic forklift trucks. 50 million provision requested in the first proceedings brought in France. It was the subject of joint proceedings in the United Kingdom but remains separate in France.

In 2018, JCB had produced an expert opinion estimating its damages of EUR 160 million for the first two patents. At the end of 2019, in the first main proceedings, JCB increased its damage assessment to EUR 190 million in its final conclusions. This increase is due to an update of the injury in its duration, which according to JCB is until March 2019. This assessment also includes the estimated injury under the third patent.

1. In France, legal proceedings on the litigation relating to the first two patents continued during 2019.

In the context of a procedural in 2018. ICB applied for preliminary injunctions against Manitou BF. A decision was issued by the Pre-Trial Judge on 31 January 2019, which dismissed the applicant's request for preliminary injunction on the first patent on which JCB based its allegations and, regarding the second patent, prohibited Manitou BF from manufacturing, offering for sale, renting and owning an old configuration of certain telescopic forklift trucks. This decision has no impact on Manitou BF's business as it relates to the ordering system for certain models produced and sold before August 2017 which are therefore no longer manufactured by Manitou BF, as underlined in the order. Manitou BF immediately appealed this decision in order to challenge the prohibition order in so far as it related only to a configuration that Manitou had ceased to produce for 18 months. This immediate appeal on the grounds of abuse of authority was held to be inadmissible, reserving the possibility of appeal with judgment on the merits.

On the occasion of the same incident, Manitou BF had proposed in the alternative, if the judge considered the request for prohibition to be well-founded, the establishment of a bank guarantee of 470,000 euros for the two patents as a replacement for the prohibitions. This proposal became irrelevant for the first patent, for which the judge did not pronounce a prohibition. JCB requested that this guarantee, if ordered, be EUR 30 million (also for the two patents) on the basis of the expert opinion it had produced estimating its damages at EUR 160 million (for the two patents). This proposal was not accepted by the judge, nor was JCB's request for a penalty payment of EUR 100 C00 per day of delay, the penalty payment ordered by the judge being EUR 1 000 per infringement, the decision having emphasised that the damage alleged by the plaintiff relates to the overload cut-off control system alone and not to the machine as a whole.

1. In the United Kingdom, no progress was made in the course of 2018 as ICB did not carry out any due diligence in this respect. A case management conference was held in January 2019 after JCB finally performed its due diligence. The litigation schedule has been established. The hearing is scheduled for October 2020.

2. In Italy, the proceedings on the merits relating to these first two patents remain in a preliminary phase, the appointment of a court expert having been pronounced at the end of 2019.

In Italy, JCB had also requested interim injunctions against Manitou's Italian subsidiary on the second and third patents. This request was rejected by the Italian courts by decision of 30 January 2020.

The Manitou Group remains in complete disagreement with JCB's allegations and continues to defend itself with the utmost vigour.

The financial risk that may be incurred is difficult to estimate reliably at this stage of the procedures. Moreover, a significant outflow of resources in respect of these claims seems unlikely in view of the elements put forward by the Manitou group to defend itself. Consequently, no provision for these claims has been recognized in the Group's financial statements.

INFORMATION ON OPERATING SEGMENTS

The Group is organized around three divisions, two product divisions and a service divisions

• The MHA product division Material Handling and Access manufacturing telehandlers, rough terrain and industrial forklifts, truck-mounted forklifts and aerial working platforms. Its mission is to optimize the development and production of these equipments branded Manitou.
• The CEP product division Compact Equipment Production of skidster loaders, track loaders, articulated baders, backhoe loaders and telehandlers branded Gehl and Mustang.
• · The S&S division Services & Solutions includies to support sales financing approaches, warranty contracts, full service, full service, full service, full service, full se management, etc.), after-sales (parts, technical transgement, fleet management, etc.) and services to end users (geo-location, user raining, advice, etc.), The mission of the division is to develop service of each of our customers in our value chain and to increase resilient sales revenue for the group.

The three divisions design and assemble witch are distributed by the Sales and Marketing organization to dealers and key accounts in 140 countries.

CONSOLIDATED P&L BY DIVISION MHA, CEP, S&S

	MHA		CEP			585
	Material Handling and Access		Compact Equipment Products		Services & Solutions		Total
In thousands of euros	31.12.2018	31.12.2019	31.12.2018	31.12.2019	31.12.2018	31.12.2019	31.12.2018	31.12.2019
Sales	1 294 087	1455 822	313 509	328 313	275 982	309 442	1 883 578	2093577
Cost of goods and services sold	-1095 976	-1235 507	-270 552	-289 828	-203 270	-222 174	-1569 798	-1747509
Gross profit	198 111	220 315	42 957	38 485	72 712	87 267	313 780	346 068
% of sales	15,3%	15,1%	13,7%	11,7%	26,3%	28,2%	16,7%	16,5%
Research and development costs	-19 888	-21 225	-4019	-6509		2	-23 908	-27 732
Selling and marketing et service expenses	-47 183	-48 127	-15 219	-17 257	-42 714	-48 120	-105 116	-113 504
Administrative expenses	-32 378	-35 423	-13 911	-16 175	-9863	-9573	-56 152	-61 170
Other operating income and expenses	1 289	710	-424	3822	-128	414	736	4 946
RECURRING OPERATING PROFIT	99 950	116 251	9 384	2 367	20 006	29 990	129 341	148 608
% of sales	7,7%	8,0%	3,0%	0,7%	7,2%	9,7%	6,9%	7,1%
Impairment of assets	-339	339					-339	339
Other non-recurring income and expenses	-2 188	-2343	-414	-286	-296	-244	-2 898	-2873
OPERATING PROFIT	97 423	114 247	8 970	2 081	19 710	29 746	126 104	146 074
% of sales	7,5%	7,8%	2,9%	0,6%	7,1%	9,6%	6,7%	7,0%
Share of profits of associates	16				2 310	2 192	2 326	2 192
OPERATING PROFIT INCLUDING NET INCOME EDOM ACCOCIATES	97 439	114 247	8 970	2 081	22 020	31 938	128 431	148 265

The spare parts and accessories distribution business within the Sevices & Solutions division, benefits from services provided by the MHA and the CEP divisions (R&D, qualification of parts, qualification of suders of sold units, as well as the brand name recognition built by those divisions.

In order to compensate for all of these benefits, the porting includes fees from the Services & Solutions division to the MHA and CEP divisions. This fee is calculated based on comparable indicators of exts distributors for which the median operating income over a five year period amounted to 4.25% and 4.87% in Europe and the US, respectively, the main the S8.5 division operates. That feel in the line item «Ost of goods and services solo» of each division, which therefore includes the charges related to goods and services sold plus or minus the interdivision fees.

Assets, cash flows or even liblities are not allocal divisions, as the operating segment information used by the group's management does not incorporate those various item.

NET SALES BY DIVISION AND GEOGRAPHICAL REGION

		Net Sales 2018						Net Sales 2019
Southern Europe	Northern Europe	Americas	APAM *	TOTAL	in millions of euros and % of total	Southern Europe	Northern Europe	Americas	APAM*	TOTAL
463,2	622,0	99,2	109,7	1 294,1	MHA	542,7	664,9	129,4	118,9	1 455,8
25%	33%	5%	6%	69%		26%	32%	6%	6%	70%
18,5	42,9	202,6	49,6	313,5	CEP	23,1	45,5	218,9	40,9	328,3
1%	2%	11%	3%	17%		1%	2%	10%	2%	16%
ರಿ, ಶಿ	91,0	48,5	39,6	276,0		111,1	103,1	54,4	40,8	309,4
5%	5%	3%	2%	15%	ટક્ષર	5%	5%	3%	2%	15%
578,6	755,8	350,3	198,9	1 883,6		676,9	813,5	402,6	200,6	2 093,5
31%	40%	19%	10%	100%	TOTAL	32%	39%	19%	10%	100%

Asia, Pacific, Africa and Middle East.

Consolidated companies	Consolidation method	% control	% interest