Masterflex SE — Investor Presentation 2019

Mar 29, 2019

Financial Figures

Key facts

Continuation of growth course for 9th consecutive year

• Uninterrupted momentum in key sales markets such as aviation and aerospace, medical technology and the automotive industry as well as in most regions
• Sustained growth in order intake
• Organic revenue growth of 3.4 % slightly below expectations
• Delayed revenue recognition (in particular due to high sick leave rate)
• Result: unusually high order backlog and increased inventories of finished products
• Adjusted for currency effects, the revenue target would have been achieved
• Earnings development affected by delayed revenue recognition
• Operating EBIT within the target corridor adjusted during the year

Revenue growth of 3.4%

Key figures

in € million

	2017	2018
Revenue	74.7	77.2
EBITDA	10.3	9.6
EBIT (operating)	7.1	6.3
Consolidated net income	4.3	3.4
EPS (in €)	0.45	0.35

Continued revenue growth

• Earnings development influenced, among other things, by high sick leave and corresponding personnel measures
• EBIT margin at 8.1%
• Continuation of active dividend policy with simultaneous strengthening of equity
• Proposed dividend of € 0.07 per share

9th year in a row with revenue growth

Consolidated revenue

in € million

Operating result inline with adjusted forecast

Consolidated EBIT and EBIT margin (operating)

in € million

Profitability affected by delayed

revenue recognition

• 2018 Earnings development inline with adjusted forecast and below previous year's forecast
• Burdens from raw material prices and lower personnel productivity
• Cost of materials ratio: 31.9% (previous year: 32.2%)
• Personnel expense ratio: 38.9% (previous year: 37.8%)

Net income enables continuation of dividend policy

Consolidated net income

in € million

Equity strengthened again

Consolidated shareholders' equity & equity ratio

in € million

Investments back at multi-year average

Cash flow & investments

in € million

	2017	2018
Operating cash flow	8.3	4.7
Cash flow from investment activities	-13.4	-5.2
Cash flow from financing activities	6.9	-0.8

Internal financing strength remains

solid

• Solid development of operating cash flow overshadowed by special effects in 2018
• Operating cash flow impacted by higher inventories and receivables and closed legal dispute
• Normalisation of investments in 2018; capital expenditures 2016 and 2017 well above multi-year average due to expansion of the Gelsenkirchen site and acquisition of APT

Single quarters 2018: potential for 2019

Revenue by quarter in € million

EBIT by quarter

in € million

Potential for further growth

• Dampening effects on revenue momentum lead to high order backlog as of 31.12.
• 4th quarter 2018 clearly below expectations

Growth strategy

• Developing disproportionately high potential in America and Asia

• Stronger revenue balance between Europe and America/Asia

• Digitization of own products Creating new service offerings

• Industry-4.0-capable machinery

• Increasing the company's agility

• Expanding technology leadership

• Highest customer proximity in development work

• Leading solutions for flexible connection systems with high-tech plastics

• Basis for profitable growth with revenue of over € 100 million

• Measures for scaling and improving efficiency

New areas of expertise

Digital transformation in the product segment

Network-compatible and intelligent hoses

• Implementation of added digital functions
• Customer- and application-specific added value
• Nucleus for smart services
• with potential for new business models
• First pilot projects in implementation since 2018
• R&D focus in 2018

Additional growth through M&A

Criteria for acquisitions in the hoses market

• Business model: Target company develops or manufactures hoses, hose systems or connection systems, or materials/components for those products
• Materials expertise: Focus on high-tech plastics and other synthetic polymers
• Regional focus: Regions of the internationalization strategy
• Customer sectors: Focus on "white" industries (medical technology, food, pharmaceuticals)
• Profitability: Focus on sustainable and good EBIT margins
• Products: Supplementing the Masterflex Group portfolio

Outlook

Forecast for 2019

• Revenue growth of between 3% and 6% (i.e. revenue of between € 79.5 million and € 81.8 million)
• Measures in 2018/2019 will allow operating EBIT to grow again
• EBIT margin of recently 8.1 % expected to increase slightly

Mid- and long-term perspective

Comprehensive package of measures with focus on subsidiaries with EBIT margins below 10% detailed presentation in summer 2019

• EBIT margin back above 10 % from 2020 (after adjustments for realignment costs); above 10 % from 2021 (without adjustments)
• Market leader in all addressed markets
• Growth also through further acquisitions on the market

© Masterflex SE

Appendix: Financial Calendar

Financial Calendar 2019

29 March	Annual report
10 May	Q1/2019 press release
14-15 May	Spring Conference, Frankfurt
28 May	Annual General Meeting, Gelsenkirchen
9 August	Half-year report 2019
8 November	Q3/2019 press release
25 to 27 November	Deutsches Eigenkapitalforum
Contact persons: ir@masterflexgroup.com
CFO	Mark Becks
IR	Frank Ostermair (Better Orange)

Appendix: Masterflex Group

Organizational chart of the Group

Appendix: Masterflex Group's Boards

Executive Board

Dr. Andreas Bastin Chairman (CEO)

Mark Becks Finance (CFO)

Supervisory Board

Georg van Hall Chairman

Dr. Gerson Link Deputy Chairman

Member

Appendix: Legal Notice

This presentation contains forward-looking statements about future developments which are based on management's current estimates and forecasts. Such forward-looking statements can be identified by words such as "expect," "would," "might," "as high as," "possibly," "assume" and similar words. These statements are subject to risks and uncertainties. If one of these uncertainty factors or other unpredictable events arise, or if the assumptions underlying the statements prove to be incorrect, actual developments may deviate materially from those specified in these statements or from the potential developments implicitly expressed in the statements. The company does not intend and assumes no obligation to routinely update forward-looking statements, as these are based exclusively on circumstances as of the date of their publication.

Photo credits: All photos © Masterflex SE except:

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