SAF-HOLLAND SE

Investor Presentation • Nov 18, 2020

ALEXANDER GEIS (CEO) INKA KOLJONEN (CFO)

Financial results 9M 2020

18 NOVEMBER 2020

AGENDA

Welcome

1 Performance 9M 2020 – Very solid performance in a challenging market environment

2 Outlook

Today's speakers – Welcome to our 9M 2020 Financial Results Conference

Alexander Geis

Chairman of the Management Board and Chief Executive Officer

• With the company since 1992
• Responsible for Strategy, Key Accounts, Purchasing, Human Resources, M&A, Digital, Research & Development and Regions
• Most recently member of the Group Management Board, President EMEA and Chief Procurement Officer
• Prior to that member of the Group Management Board responsible for the Business Unit Aftermarket

Inka Koljonen

Member of the Management Board and Chief Financial Officer

• With the company since September 2020
• Responsible for Finance, Accounting and Controlling, IT, Legal and Compliance, Investor Relations and Internal Audit
• Previously CFO positions at Clariant AG (Business Unit Catalysts) and Siemens Russia
• Prio to that Head of IR at MTU Aero Engines

1 Performance 9M 2020 – Very solid performance in a challenging market environment

Group – Adj. EBIT margin above the upper end of the previous guidance range

• Sales 9M 2020 down by 29.7 per cent yoy
• But Q3 2020 sales figure shows recovery compared to Q2 2020 (+ 20.5 per cent) led by the EMEA region
• Adj. EBIT margin 9M 2020 already slightly above previous FY guidance reflecting resilience of the business model and actions to reduce costs
  • Main drivers: higher share of aftermarket business and SG&A cost savings
  • Includes inventory write-downs of € 8.8 mn in the EMEA and Americas region and fixed-cost progression effect
• Adj. EBIT margin in Q3 2020 exceeds pre-corona value for the same quarter of last year
• Restructuring expenses (€ 11.7 mn)
  • Severance payments (€ 3.3 mn)
  • Corpco wind-down (€ 2.6 mn)
  • Closure of subsidiaries (€ 1.8 mn)
  • Project FORWARD 2.0 (€ 2.3 mn)
  • Change of legal form (€ 1.2 mn)
• No goodwill impairments

EMEA – Adj. EBIT margin very robust despite COVID-19

• Sales 9M 2020 down by 17.8 per cent yoy
• Q3 2020 sales figure down only 5.4 per cent yoy; good recovery in all areas
• Adj. EBIT margin 9M 2020 at 8.7 per cent (9M 2019: 9.5 per cent)
  • Main driver: higher share of aftermarket business
  • Includes inventory write-downs of € 4.7 mn and fixed-cost progression effect
• Adj. EBIT margin in Q3 2020 with 10.0 per cent above previous year's pre-corona level
• Restructuring expenses (€ 2.8 mn) Mainly severance payments and costs related to the change of the legal form and transfer of the registered office to Germany (S.A. SE)

Americas – Improved adj. EBIT margin despite massive sales decline

• Sales 9M 2020 down by 39.9 per cent yoy
• Americas region strongly hit by COVID-19 even in Q3 with sales down by 47.0 per cent yoy
• Adj. EBIT margin 9M 2020 at 3.5 per cent reflecting successful restructuring efforts
  • Main drivers: higher share of aftermarket business and substantial SG&A cost savings
  • Includes Inventory write downs of € 4.1 mn and fixed-cost progression effect
• Adj. EBIT margin in Q3 2020 with 5.6 per cent significantly better than Q1 2020, Q2 2020 and even above previous year's pre-corona level
• Adj. EBIT margin 9M 2019 included positive one-offs (contractually agreed passing on of the 2018 steel price increases)
• Restructuring expenses (€ 4.0 mn) Mainly severance payments and costs related to Program FORWARD 2.0

APAC – Lockdown and delayed ramp-up weigh on sales and profitability

• Sales 9M 2020 down by 46.2 per cent yoy

• Several weeks lockdown of the Chinese, Australian, Indian and Singapore entities
• Ceased export business as a result of the trade dispute between China and the USA
• Delayed ramp-up of the new Chinese facility in Yangzhou
• Sales Q3 2020 down by 22.1 per cent yoy
• Adj. EBIT margin 9M 2020 at – 9.9 per cent
  • Main drivers: continuing low volumes and special sale of old stock
• Adj. EBIT Margin Q3 2020 at – 15.1 per cent
• Restructuring expenses (€ 4.9 mn) Mainly costs related to Corpco wind-down and closure of subsidiaries

Truck and trailer production 9M 2020 vs. 9M 2019 – COVID-19 strongly impacted already weakening markets

EUROPE		NORTH AMERICA		CHINA			SOUTH AMERICA*	INDIA
Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer	Truck	Trailer
-30% to -35%	-25% to -30%	-45% to -50%	-40% to -45%	+10% to +20%	+10%	-35% to -40%	-10% to -15%	-70%	-60%

* Mainly Brazil

Investments and D&A – Capex ratio within target range of 2.0 to 2.5 per cent

• Investments in plant, property, equipment and intangible assets reached 2.3 per cent of Group sales (FY 2020 guidance: around 2.5 per cent of Group sales)
• Operating cash flow with € 79.8 mn (149.2 per cent of EBITDA) covers investments by far
• Focus of investments: Rationalisation investments in the US and Germany
• Close monitoring of the investment approval process to streamline capital allocation
• Depreciation and Amortization ratio (excl. PPA, impairment of goodwill and R&D projects) increased due to higher investments in recent years and significantly lower sales

Net working capital – Cash-is-King program well on track

• Net working capital (NWC) in Q3 significantly down both in absolute and relative terms compared to previous year
  • Minus 36.2 per cent from € 217.3 mn to € 138.7 mn
  • Main driver:
    • Trade receivables down 33.6 per cent due to cash collection
    • Inventories down 26.9 per cent with a decrease in sales of 29.7 per cent
  • NWC ratio down from 16.4 per cent to 14.1 per cent
• Cash-is-King program shows good results and will be continued with enhanced scope and focus on inventories

Operating free cash flow significantly improved due to successful NWC management and lower capex

in EUR thousands	Q1 2019	Q2 2019	Q3 2019	Q1-Q3 2019	Q4 2019	Q1-Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q1-Q3 2020
EBITDA	28,411	29,195	12,120	69,726	18,487	88,213	25,876	6,550	21,061	53,486
Delta NWC	-14,914	-7,298	-1,741	-24,583	33,334	8,750	13,927	-19,937	27,560	21,550
Net cash flow from operating activities	8,559	19,046	17,116	44,721	45,825	90,546	32,014	-9,487	57,260	79,787
Purchase of PP&E	-13,304	-7,772	-10,859	-31,935	-13,656	-45,591	-5,446	-3,719	-3,672	-12,837
Purchase of intangible assets	-1,112	-2,048	-1,766	-4,926	-2,464	-7,390	-1,295	-1,374	-643	-3,312
Proceeds from sale of PP&E	164	1,292	3,009	4,465	789	5,254	418	63	242	723
Operating free cash flow*	-5,693	10,518	7,500	12,325	30,494	42,819	25,691	-14,517	53,187	64,361

• 9M operating cash flow at € 79.8 mn (9M 2019: € 44.7 mn)
• 9M operating free cash flow at € 64.4 mn (9M 2019: € 12.3 mn)
• 9M net investing cash flow at € -15.4 mn (PP&E and intangible assets) (9M 2019: € -32.4 mn)
• Factoring volume at € 35.5 mn (9M 2019: € 35.2 mn)

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts. * Operating Free Cash Flow = Net cash flow from operating activities less Net cash flow from investing activities (purchase of PP&E and intangible assets less proceeds from sales of PP&E); Operating free cash flow for Q1 2018 to Q4 2019 retrospectively adjusted according to the new definition

Q3 2020 – Net debt reduced by € 46.5 mn vs. Q2 2020 due to improved cash generation

EUROPE		NORTH AMERICA		CHINA		SOUTH AMERICA***			INDIA
	Truck	Trailer		Truck	Trailer		Truck	Trailer		Truck	Trailer		Truck	Trailer
New*	-30% to -35%	-15% to -20%	New*	-40% to -45%	-40% to -45%	New*	0% to +5%	-5% to -10%	New*	-30% to -35%	-5% to -10%	New*	-40% to -50%	-40% to -50%
Old**	-35% to -40%	-20%	Old**	-40% to -50%	-40% to -50%	Old**	-20%	-25%	Old**	-35%	-15%	Old**	-40%	-40%

2020E:

• China with stable volumes
• Lower volumes in Europe and South America
• Significant declines in North America and India

	FY 2019	FY 2020* (new)	FY 2020 (old)
Sales	€ 1,284 mn	Decline by 20 to 30 per cent	Decline by 20 to 30 per cent
Adj. EBIT margin	6.2	Between 5 and 6	Between 3 and 5
	per cent	per cent	per cent
CAPEX	4.1 per cent of	Around 2.5 per	Around 2.5 per
	sales	cent of sales	cent of sales

• The new EBIT guidance for FY 2020 is based on the assumption that in the remainder of the year there will be no new, unexpected impacts from the ongoing COVID-19 pandemic on the production and supply chains.

• Consistent aftermarket business safeguards profitability
• SG&A savings programs will be continued

• Cash-is-King program on track

• Solid financial profile
• Operational excellence as key driver

Financial calendar & IR contact

DATE EVENT

25.11.2020 SAF-HOLLAND Virtual Investor & Analyst Day

Investor Relations Contact

Michael Schickling T: +49 (0) 6095 301 617 E: ir@safholland.de

Alexander Pöschl T: +49 (0) 6095 301 117 E: ir@safholland.de

Klaus Breitenbach T: + 49 (0) 6095 301 565 E: ir@safholland.de

»WE ARE HAPPY TO ANSWER YOUR QUESTIONS.«

Appendix

P&L 9M 2020 – Extraordinary items

in EUR thousands	Q1-Q3/2020	Total Adjustments	Q1-Q3/2020 adjusted*	in % of sales	Q1-Q3/2019	Total Adjustments	Q1-Q3/2019 adjusted*	in % of sales
Sales	708,698	–	708,698	100.0%	1008,626	–	1008,626	100.0%
Cost of sales	-589,694	8,504	-581,190	-82.0%	-844,385	9,116	-835,269	-82.8%
Gross profit	119,004	8,504	127,508	18.0%	164,241	9,116	173,357	17.2%
Other income	1,713	-522	1,191	0.2%	3,109	-1,850	1,259	0.1%
Impairment of goodwill	–	–	-	0.0%	-6,691	6,691	-	0.0%
Selling expenses	-44,324	6,315	-38,009	-5.4%	-53,181	5,590	-47,591	-4.7%
Administrative expenses	-47,139	5,040	-42,099	-5.9%	-54,258	8,195	-46,063	-4.6%
Research and development costs	-11,421	256	-11,165	-1.6%	-15,746	279	-15,467	-1.5%
Operating profit	17,833	19,593	37,426	5.3%	37,474	28,021	65,495	6.5%
Share of net profit of investments accounted for using the equity method	1,110	–	1,110	0.2%	1,421	–	1,421	0.1%
EBIT	18,943	19,593	38,536	5.4%	38,895	28,021	66,916	6.6%
Finance income	1,762	–	1,762	0.2%	1,404	–	1,404	0.1%
Finance expenses	-10,483	–	-10,483	-1.5%	-10,151	–	-10,151	-1.0%
Finance result	-8,721	–	-8,721	-1.2%	-8,747	–	-8,747	-0.9%
Result before taxes	10,222	19,593	29,815	4.2%	30,148	28,021	58,169	5.8%
Income taxes	-2,270	-5,992	-8,262	-1.2%	-12,868	-2,430	-15,298	-1.5%
Tax rate (%)	22.2%		27.7%		42.7%		26.3%
Result for the period	7,952	13,601	21,553	3.0%	17,280	25,591	42,871	4.3%

Group – Reconciliation EBIT to adjusted EBIT

in EUR thousands	Q1-Q3 2020	Q1-Q3 2019	Change absolute	Change in %
EBIT	18,943	38,895	-19,952	-51.3%
EBIT margin in %	2.7%	3.9%	-	-
Additional depreciation and amortization of property, plant and equipment and intangible assets from PPA	7,876	7,288	588	8.1%
Impairment	-	6,691	-6,691	-
PPA step-up from inventory measuring of acquisitions	-	43	-43	-
Restructuring and transactions costs	11,717	13,999	-2,282	-16.3%
Adjusted EBIT	38,536	66,916	-28,380	-42.4%
Adjusted EBIT margin in %	5.4%	6.6%	-	-

EMEA – Reconciliation EBIT to adjusted EBIT

in EUR thousands	Q1-Q3 2020	Q1-Q3 2019	Change absolute	Change in %
EBIT	28,823	40,518	-11,695	-28.9%
EBIT margin in %	7.1%	8.2%	-	-
Additional depreciation and amortization of property, plant and equipment and intangible assets from PPA	3,478	3,449	29	0.8%
Impairment	-	-	-	-
PPA step-up from inventory measuring of acquisitions	-	3	-3	-
Restructuring and transactions costs	2,809	2,768	41	1.5%
Adjusted EBIT	35,110	46,738	-11,628	-24.9%
Adjusted EBIT margin in %	8.7%	9.5%	-	-

Americas – Reconciliation EBIT to adjusted EBIT

in EUR thousands	Q1-Q3 2020	Q1-Q3 2019	Change absolute	Change in %
EBIT	2,949	18,567	-15,618	-84.1%
EBIT margin in %	1.2%	4.5%	-	-
Additional depreciation and amortization of property, plant and equipment and intangible assets from PPA	1,794	1,912	-118	-6.2%
Impairment	-	-	-	-
PPA step-up from inventory measuring of acquisitions	-	-	-	-
Restructuring and transactions costs	4,005	5,571	-1,566	-28.1%
Adjusted EBIT	8,748	26,050	-17,302	-66.4%
Adjusted EBIT margin in %	3.5%	6.3%	-	-

APAC – Reconciliation EBIT to adjusted EBIT

in EUR thousands	Q1-Q3 2020	Q1-Q3 2019	Change absolute	Change in %
EBIT	-12,829	-20,190	7,361	-36.5%
EBIT margin in %	-23.8%	-20.2%	-	-
Additional depreciation and amortization of property, plant and equipment and intangible assets from PPA	2,604	1,927	677	35.1%
Impairment	-	6,691	-6,691	-
PPA step-up from inventory measuring of acquisitions	-	40	-40	-
Restructuring and transactions costs	4,903	5,660	-757	-13.4%
Adjusted EBIT	-5,322	-5,872	550	-9.4%
Adjusted EBIT margin in %	-9.9%	-5.9%	-	-

Adj. EBITDA margin

NOTE: All figures shown are rounded, minor discrepancies may arise from additions of these amounts.

Financial Results 9M 2020 < 27 >

• RCF mostly undrawn
• ** option for an additional € 100 mn

*** additional one year extension possible

Disclaimer

Not for general release, publication or distribution in the United States, Australia, Canada or Japan.

By attending this presentation you agree to be bound by the following limitations:

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. 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 its directors, 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 materialize, 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 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.

This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. This presentation is for information purposes only and does neither constitute an offer to sell securities, nor any recommendation of, or solicitation of an offer to buy, any securities of SAF-HOLLAND in the United States, Germany or any other jurisdiction. In the United States, any securities may not be offered or sold absent registration or an exemption from registration under the U.S. Securities Act of 1933.