Stabilus SE — Earnings Release 2018

Nov 16, 2018

FY2018 PRELIMINARY RESULTS

November 16, 2018

Disclaimer

Stabilus S.A. (the "Company", later "Stabilus") has prepared this presentation solely for your information. It should not be treated as giving investment advice. Neither the Company, nor any of its directors, officers, employees, direct or indirect shareholders and advisors nor any other person shall have any liability whatsoever for any direct or indirect losses arising from any use of this presentation.

While the Company has taken all reasonable care to ensure that the facts stated in this presentation are accurate and that the opinions contained in it are fair and reasonable, this presentation is selective in nature. Any opinions expressed in this presentation are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information contained in this presentation. Where this presentation quotes any information or statistics from any external source, you should not interpret that the Company has adopted or endorsed such information or statistics as being accurate. This presentation contains forward-looking statements, which involve risks, uncertainties and assumptions that could cause actual results, performance or events to differ materially from those described in, or expressed or implied by, such 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" and "target". No obligation is assumed to update any such statement.

Agenda

• 1. Financial highlights
• 1. Results by region
• 1. Results by market
• 1. Outlook
• 1. Appendix

Agenda

1. Financial highlights

FY2018 highlights

Fiscal year-end September

Revenue	Revenue up by 5.8% to €962.6m (+€52.6m vs. FY17); revenue growth w/o FX: +8.8% y/y Asia / Pacific and RoW up by 19.5% y/y, Europe up by 7.7% y/y, NAFTA - 0.7% y/y (+ 7.0% y/y w/o FX) Automotive Powerise + 10.3% y/y, Commercial Furniture + 8.6% y/y, Vibration & Velocity Control + 8.2% y/y, Capital Goods + 7.6% y/y and Automotive Gas Spring + 0.5% y/y
Adj. EBIT	Adj. EBIT1 up by 8.5% to €149.3m (vs. €137.6m in FY17) Adj. EBIT margin at 15.5% (vs. 15.1% in FY17)
Profit	Profit at €105.4m in FY18 (vs. €79.2m in FY17) Profit margin at 10.9% (vs. 8.7% in FY17) Earnings per share at €4.27 (vs. €3.21 in FY17)
Net leverage ratio	Net leverage ratio1 at 1.1x (vs. 1.5x as of end FY17) Net financial debt1 at €199.2m
Outlook	FY2019 revenue outlook: c. 5% y/y at constant \$/€ rate vs. FY18 of 1.19; STAR 2025 mid- and long-term guidance for average annual growth of at least 6% confirmed FY2019 adj. EBIT margin forecasted at c. 15.5%

Note:

¹ For definition/calculation of KPIs like adj. EBIT, net leverage ratio etc. refer to appendix and/or our financial reports and quarterly statements under www.ir.stabilus.com. FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.16\$/€ in Q4 FY18 versus 1.18\$/€ in Q4 FY17. Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

Stabilus shows strong operating performance in Q4 FY2018 (y-o-y)

Note: FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.16\$/€ in Q4 FY18 versus 1.18\$/€ in Q4 FY17.

Stabilus shows strong operating performance in FY2018 (y-o-y)

Note: FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17.

1.

Agenda

1. Results by region

Q4 FY2018 revenue and adj. EBIT growth – by region (y-o-y)

Note: Stabilus fiscal year-end is September. Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.16\$/€ in Q4 FY18 versus 1.18\$/€ in Q4 FY17.

¹ Billed-from view, without intersegment revenue.

FY2018 revenue and adj. EBIT growth – by region (y-o-y)

Note: Stabilus fiscal year-end is September. Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17.

FXe = currency effect resulting from translation of NAFTA's adj. EBIT from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17.

¹ Billed-from view, without intersegment revenue.

FY2018 – Europe

¹ External revenue only.

• Europe car production in FY18 at 22.4m units, i.e. + 2.2% vs. FY17
• Europe's revenue increased by 7.7% or €35.0m y/y
• The increase was primarily driven by our Capital Goods and Powerise business units: Capital Goods revenue grew by 12.2% or €15.9m to €146.6m (vs. €130.7m in FY17), Powerise revenue increased by 8.9% or €8.9m to €109.0m (vs. €100.1m in FY17)
• Stronger growth in Capital Goods supported adj. EBIT margin improvement to 15.8% in FY18 (vs. 14.9% in FY17)

FY2018 – NAFTA

Note: Stabilus fiscal year-end is September. ¹ External revenue only.

• NAFTA car production in FY18 at 16.9m units, i.e. - 2.1% vs. FY17
• NAFTA's revenue 0.7% y/y due to weaker US dollar in FY18 (+7.0% y/y excluding the \$/€ currency translation effect)
• NAFTA's development in FY18 was primarily driven by our Vibration & Velocity Control and Automotive Powerise business: Vibration & Velocity Control revenue +5.7% y/y (+ 14.1% y/y excl. currency effect), Automotive Powerise revenue - 0.4% y/y (+ 7.4% y/y excl. currency effect)
• Adj. EBIT margin at 14.9% (vs. 15.7% in FY7), - 80bp due to higher expenses in Q2 FY18, in Capital Goods – for subsequent product amendments (cf. Q2 FY18 results presentation, p. 11)

FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17. FXe = currency effect resulting from translation of NAFTA's adj. EBIT from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17.

FY2018 – Asia / Pacific and RoW

Note: Stabilus fiscal year-end is September. ¹ External revenue only.

• Asia/Pacific and RoW car production in FY18 at 56.7m units, i.e. + 1.5% vs. FY17 (China: + 1.0%, Japan/Korea: - 3.1%, South America: + 11.0%)
• Asia/Pacific and RoW's revenue increased by 19.5%
• The increase was primarily driven by our Powerise business: Powerise revenue grew from €5.8m in FY17 to €22.4m in FY18 reflecting increased shipments to VW, GM, Chrysler as well as local Chinese OEMs
• Adj. EBIT margin improved from 14.1% in FY17 to 16.2% in FY18 primarily due to higher capacity utilization of the Powerise line in China

Agenda

1. 1.

4.

5.

1. Results by market

Q4 FY2018 revenue growth – by market / business (y-o-y)

Note: Stabilus fiscal year-end is September.

¹Industrial including Capital Goods, Vibration & Velocity Control and Commercial Furniture revenue.

FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.16\$/€ in Q4 FY18 versus 1.18\$/€ in Q4 FY17.

Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

FY2018 revenue growth – by market / business (y-o-y)

Note: Stabilus fiscal year-end is September.

¹Industrial including Capital Goods, Vibration & Velocity Control and Commercial Furniture revenue.

FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17.

Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

FY2018 revenue growth – Automotive business (y-o-y)

Note: Stabilus fiscal year-end is September.

FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17. Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

FY2018 revenue growth – Industrial business (y-o-y)

• Industrial revenue increased by 7.9% (10.4% excluding \$/€ currency translation effect)
• Excluding \$/€ currency translation effect Capital Goods grew by 9.9%, Vibration & Velocity Control by 11.5%, and Commercial Furniture by 10.0%
• Continuing strong growth e.g. in the following segments: construction machinery, bus/truck/transportation, medical technology
• From October 1, 2018 onwards, Commercial Furniture business unit will be integrated into Capital Goods business unit

Note: Stabilus fiscal year-end is September.

FX = currency effect resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17. Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

Agenda

1. Outlook

5.

Outlook

	FY2018 Actual	FY2019 Guidance
		€ million	percent
Revenue	€962.6m (@ 1.19 \$/€)	~ €1,010m (@ 1.19 \$/€)	~ 5% y/y (at constant \$/€ rate)
% Adj. EBIT margin	15.5%		~ 15.5%

Comments

• Revenue outlook for FY2019: c. 5% y/y at constant avg. \$/€ rate vs. FY18 of 1.19 to approx. €1,010m; STAR 2025 mid- and long-term guidance for average annual growth of at least 6% confirmed
• Decrease of US\$/€ avg. fx rate by 0.10 \$/€ leads to a revenue increase by approx. €30m and vice versa.
• FY2019 adj. EBIT margin estimated at c. 15.5%

Note: Stabilus fiscal year-end is September.

Agenda

1. Appendix

Revenue by region and customer market (3M ended Sept 30, 2018)

External revenue (€m)
		Q4 FY2017 Actual	Q4 FY2018 Preliminary	Change	% change
Automotive Gas Spring		37.4	35.2	(2.2)	(5.9)%
Automotive Powerise		25.0	25.5	0.5	2.0%
Industrial / Capital Goods		30.3	33.4	3.1	10.2%
Vibration & Velocity Control		13.1	14.0	0.9	6.9%
Commercial Furniture		5.1	6.3	1.2	23.5%
Europe		110.9	114.3	3.4	3.1%
Automotive Gas Spring		24.2	27.2	3.0	12.4%
Automotive Powerise	FX effect: 1.1% y/y	32.3	33.6	1.3	4.0%
Industrial / Capital Goods	FY17: 1.1752\$/€	16.2	14.8	(1.4)	(8.6)%
Vibration & Velocity Control	FY18: 1.1626\$/€	9.2	9.3	0.1	1.1%
Commercial Furniture		1.2	1.3	0.1	8.3%
NAFTA1		83.1	86.2	3.1	3.7%
Automotive Gas Spring		19.0	19.9	0.9	4.7%
Automotive Powerise		3.4	5.5	2.1	61.8%
Industrial / Capital Goods		3.3	3.6	0.3	9.1%
Vibration & Velocity Control		1.2	1.3	0.1	8.3%
Commercial Furniture		-	0.1	0.1	n/a
Asia / Pacific and RoW		27.0	30.2	3.2	11.9%
Total Automotive Gas Spring		80.7	82.5	1.8	2.2%
Total Automotive Powerise		60.6	64.4	3.8	6.3%
Total Industrial / Capital Goods		49.7	51.8	2.1	4.2%
Total Vibration & Velocity Control		23.6	24.5	0.9	3.8%
Total Commercial Furniture		6.3	7.6	1.3	20.6%
Total		220.9	230.8	9.9	4.5%

Note: ¹ NAFTA Q4 FY18 revenue includes currency effect of €1.6m, resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.16\$/€ in Q4 FY18 versus 1.18\$/€ in Q4 FY17. Since there were no changes in the scope of consolidation in FY18, we don't use the term 'organic growth' in this presentation. Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

Revenue by region and customer market (year ended Sept 30, 2018)

External revenue (€m)
		FY2017 Actual	FY2018 Preliminary	Change	% change
Automotive Gas Spring		150.2	154.9	4.7	3.1%
Automotive Powerise		100.1	109.0	8.9	8.9%
Industrial / Capital Goods		130.7	146.6	15.9	12.2%
Vibration & Velocity Control		52.2	55.3	3.1	5.9%
Commercial Furniture		23.1	25.5	2.4	10.4%
Europe		456.3	491.3	35.0	7.7%
Automotive Gas Spring		108.8	106.6	(2.2)	(2.0)%
Automotive Powerise	FX effect: (7.8)% y/y	137.4	136.9	(0.5)	(0.4)%
Industrial / Capital Goods	FY17: 1.1041\$/€	62.7	60.6	(2.1)	(3.3)%
Vibration & Velocity Control	FY18: 1.1906\$/€	37.0	39.1	2.1	5.7%
Commercial Furniture		4.8	4.7	(0.1)	(2.1)%
NAFTA1		350.7	348.1	(2.6)	(0.7)%
Automotive Gas Spring		81.4	80.7	(0.7)	(0.9)%
Automotive Powerise		5.8	22.4	16.6	>100.0%
Industrial / Capital Goods		11.0	12.8	1.8	16.4%
Vibration & Velocity Control		4.7	7.2	2.5	53.2%
Commercial Furniture		0.1	0.1	-	0.0%
Asia / Pacific and RoW		103.0	123.1	20.1	19.5%
Total Automotive Gas Spring		340.5	342.3	1.8	0.5%
Total Automotive Powerise		243.2	268.3	25.1	10.3%
Total Industrial / Capital Goods		204.4	220.0	15.6	7.6%
Total Vibration & Velocity Control		93.9	101.6	7.7	8.2%
Total Commercial Furniture		28.0	30.4	2.4	8.6%
Total		910.0	962.6	52.6	5.8%

Note: ¹ NAFTA FY18 revenue includes currency effect of €(27.3)m, resulting from translation of NAFTA revenue from USD to EUR. Avg. fx rate of 1.19\$/€ in FY18 versus 1.10\$/€ in FY17.

Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

P&L overview (3M ended Sept 30, 2018)

P&L (€m)
	Q4 FY2017 Actual	Q4 FY2018 Preliminary	Change	% change
Revenue	220.9	230.8	9.9	4.5%
COGS	(149.2)	(158.8)	(9.6)	6.4%
Gross Profit	71.7	72.0	0.3	0.4%
% margin	32.5%	31.2%
R&D	(10.6)	(10.0)	0.6	(5.7)%
S&M	(24.0)	(20.1)	3.9	(16.3)%
G&A	(8.3)	(9.6)	(1.3)	15.7%
Other income/expenses	1.0	0.2	(0.8)	(80.0)%
EBIT	29.9	32.3	2.4	8.0%
% margin	13.5%	14.0%
Adjustments1	4.4	4.4	-	0.0%
Adj. EBIT1	34.2	36.6	2.4	7.0%
% margin	15.5%	15.9%

Note: ¹ Adjusted EBIT represents profit from operating activities (EBIT), adjusted for exceptional non-recurring items (e.g. restructuring or one-time advisory costs) and depreciation/amortization of fair value adjustments from purchase price allocations (PPA).

P&L overview (year ended Sept 30, 2018)

P&L (€m)
	FY2017 Actual	FY2018 Preliminary	Change	% change
Revenue	910.0	962.6	52.6	5.8%
COGS	(637.2)	(671.4)	(34.2)	5.4%
Gross Profit	272.9	291.2	18.3	6.7%
% margin	30.0%	30.3%
R&D	(38.2)	(42.0)	(3.8)	9.9%
S&M	(80.4)	(81.3)	(0.9)	1.1%
G&A	(35.3)	(38.5)	(3.2)	9.1%
Other income/expenses	(0.5)	2.6	3.1	<(100.0)%
EBIT	118.4	131.9	13.5	11.4%
% margin	13.0%	13.7%
Adjustments1	19.2	17.5	(1.7)	(8.9)%
Adj. EBIT1	137.6	149.3	11.7	8.5%
% margin	15.1%	15.5%

Note: ¹ Adjusted EBIT represents profit from operating activities (EBIT), adjusted for exceptional non-recurring items (e.g. restructuring or one-time advisory costs) and depreciation/amortization of fair value adjustments from purchase price allocations (PPA).

Balance sheet overview

Balance sheet (€m)
	Sept 2017 Actual	Sept 2018 Preliminary	Change	% change
Property, plant and equipment	169.7	179.2	9.5	5.6%
Goodwill	194.2	195.2	1.0	0.5%
Other intangible assets2	268.9	247.2	(21.7)	(8.1)%
Inventories	85.3	90.8	5.5	6.4%
Trade receivables	105.1	111.3	6.2	5.9%
Other assets	38.7	43.7	5.0	12.9%
Cash	68.1	143.0	74.9	>100.0%
Total assets	930.0	1,010.4	80.4	8.6%
Equity incl. minorities	336.4	426.5	90.1	26.8%
Debt (incl. accrued interest)	322.0	320.0	(2.0)	(0.6)%
Pension plans and similar obligations	53.2	52.2	(1.0)	(1.9)%
Deferred tax liabilities	60.0	47.8	(12.2)	(20.3)%
Trade accounts payable	79.1	83.2	4.1	5.2%
Other liabilities	79.3	80.7	1.4	1.8%
Total equity and liabilities	930.0	1,010.4	80.4	8.6%
Net leverage ratio1	1.5x	1.1x

Note:

¹ Net leverage ratio = net financial debt / adj. EBITDA LTM. Net financial debt defined as principal amount of financial debt less cash. Adj. EBITDA LTM = last-twelve-month adjusted earnings before interest, taxes, depreciation and amortization. Refer also to our financial reports and quarterly statements at www.ir.stabilus.com for further details. ² Change in other intangible assets mainly due to the amortization of fair value adjustments from purchase price allocations (PPA) in 2010 and 2016.

Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

Cash flow overview and free cash flow (3M ended Sept 30, 2018)

Cash Flow Statement (€m)
	Q4 FY2017 Actual	Q4 FY2018 Preliminary	Change	% change
Cash flow from operating activities	36.5	46.6	10.1	27.7%
Cash flow from investing activities	(11.3)	(18.3)	(7.0)	61.9%
Cash flow from financing activities	(51.9)	(1.5)	50.4	(97.1)%
Net increase / (decrease) in cash	(26.7)	26.8	53.5	<(100.0)%
Effect of movements in exchange rates	(0.5)	0.3	0.8	<(100.0)%
Cash as of beginning of the period	95.3	115.8	20.5	21.5%
Cash as of end of the period	68.1	143.0	74.9	>100.0%

Free Cash Flow (€m)

	Q4 FY2017 Actual	Q4 FY2018 Preliminary	Change	% change
Cash flow from operating activities	36.5	46.6	10.1	27.7%
Cash flow from investing activities	(11.3)	(18.3)	(7.0)	61.9%
Free cash flow	25.2	28.3	3.1	12.3%

Note:

Free Cash Flow (FCF) = cash flow from operating activities + cash flow from investing activities. It is presented because we believe it is a relevant measure for the assessment of the group's ability to generate cash which can be used for further investments, debt service and distributions to shareholders. Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

Cash flow overview and free cash flow (year ended Sept 30, 2018)

Cash Flow Statement (€m)
	FY2017 Actual	FY2018 Preliminary	Change	% change
Cash flow from operating activities	121.9	145.5	23.6	19.4%
Cash flow from investing activities	(44.1)	(45.3)	(1.2)	2.7%
Cash flow from financing activities	(83.7)	(25.5)	58.2	(69.5)%
Net increase / (decrease) in cash	(5.9)	74.7	80.6	<(100.0)%
Effect of movements in exchange rates	(1.0)	0.2	1.2	<(100.0)%
Cash as of beginning of the period	75.0	68.1	(6.9)	(9.2)%
Cash as of end of the period	68.1	143.0	74.9	>100.0%

Free Cash Flow (€m)

	FY2017 Actual	FY2018 Preliminary	Change	% change
Cash flow from operating activities	121.9	145.5	23.6	19.4%
Cash flow from investing activities	(44.1)	(45.3)	(1.2)	2.7%
Free cash flow	77.8	100.2	22.4	28.8%

Note:

Free Cash Flow (FCF) = cash flow from operating activities + cash flow from investing activities. It is presented because we believe it is a relevant measure for the assessment of the group's ability to generate cash which can be used for further investments, debt service and distributions to shareholders. Numbers rounded to one decimal. Due to rounding, numbers presented may not add up precisely to the totals provided.

Notes re pensions and leasing

Notes
	Pensions and similar obligations
	In FY2018 new demographic tables were issued in Germany (Heubeck Mortality Table 2018G)
	Changed assumptions for the calculation of pension obligations as of Sept 30, 2018: discount rate of 2.00% in FY18 (vs. 1.87% in FY17), Heubeck Mortality Table 2018G in FY18 (vs. Heubeck Mortality Table 2005G in FY17)
	As a consequence, liability for pension plans and similar obligations has decreased by €1m in FY18 from €53.2m as of Sept 30, 2017 to €52.2m as of Sept 30, 2018
Leases
	IFRS 16 is applicable for fiscal years beginning on or after January 1, 2019; Stabilus is planning to apply the new method from October 1, 2019
	Recognition of all leases in the balance sheet – non-current assets and financial debt will increase
	In the income statement: currently – operating expenses, in the future – depreciation and interest expenses
	Insignificant volume – no material impact on consolidated financial statements of Stabilus S.A.

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