Stabilus SE — Investor Presentation 2020

May 4, 2020

Q2 FY2020 RESULTS

May 4, 2020

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.

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

• 1. Operational update
• 1. Financial results
• 1. Results by operating segment
• 1. Outlook
• 1. Appendix

• Operational update

Impact of COVID-19 pandemic on Stabilus operations

reliably quantified at this moment in time

Status quo	Corporate actions
Light vehicle production in Q2 FY20 decreased by almost a quarter (-23% y/y); current LVP forecast for FY20 (Oct-Sept) expects a reduction by one fifth (c. -21% y/y)	Top priorities: ensuring safety of our employees and business continuity (keeping the production running) as far as possible
Production shut-downs at major western OEMs from mid March to the beginning of May, with slow start in May	Pandemic plan activated: strict hygiene rules, social distancing, shift crew mixing stopped, home office enabled et al.
All Stabilus plants have been in operation (though, at reduced capacity in March 2020) and continue to be up and running, with the exception of New Zealand (headcount < 10) due to a government order in NZ	Cost flexibilization (EBIT recovery) program intensified Aligning/adjusting our production capacity to customer demand
Chinese plant is in a ramp-up phase since the end of March 2020, current capacity utilization above 90% for Powerise and above 70% for gas springs; no reduction in customer demand at our Korean plan	by utilizing short-time work scheme, plant shut-downs for several days, selected layoffs et al. State of the balance sheet: stable net leverage ratio of 1.1x
Financial impact of the expected deep recession (following the coronavirus pandemic) on the Stabilus FY20 results can not be	EBITDA, c. €120m cash as of March 2020

Diligent capex phasing started

1.

2. Financial results

Q2 FY2020 financial results

Revenue	Revenue at €221.0m (vs. €239.1m in Q2 FY19), - 7.6% y/y Acquisition effect: + 1.9% y/y, currency translation effect: 0.0% y/y, organic growth: - 9.5% y/y
Adj. EBIT	Adj. EBIT at €31.1m (vs. €35.7m in Q2 FY19), - 12.9% y/y Adj. EBIT margin at 14.1% (vs. 14.9% in Q2 FY19)
Profit	Profit at €18.1m in Q2 FY20 (vs. €20.4m in Q2 FY19) Profit margin at 8.2% (vs. 8.5% in Q2 FY19)
Adj. FCF	Adj. FCF (i.e. FCF before acquisitions) = FCF adjusted by payments for acquisitions in Q2 FY20 of €1.1m Adj. FCF at €13.0m (vs. €6.6m in Q2 FY19) and FCF at €11.9m (vs. €6.6m in Q2 FY19)
Net leverage ratio	Net leverage ratio at 1.1x (vs. 1.1x as of end Q2 FY19 and 1.0x as of end FY19) Net financial debt at €205.1m (vs. €205.5 as of end Q2 FY19 and €189.1m as of end FY19), after €27.2m dividend payment in February 2020
Outlook	On March 17, 2020, the FY2020 revenue and adj. EBIT guidance from November 2019 was withdrawn A new forecast can only be given at a later point in time

Q2 FY2020 – Key figures

H1 FY2020 – Key figures

1. Results by operating segment

Q2 FY2020 – EMEA

Adj. EBIT (€m)

• Light vehicle production in Europe, Middle East and Africa in Q2 FY20 at 5.0m units, i.e. - 19.2% vs. Q2 FY19
• EMEA's Q2 revenue down by €7.6m or 6.0% y/y, despite positive acquisition effect (+3.5% y/y); currency translation effect at - 0.3% y/y at organic growth at - 9.2% y/y
• EMEA's Automotive Gas Spring (- 13.3% y/y organically) and Automotive Powerise (- 9.4% y/y organically) revenue in Q2 FY20 impacted by weaker automotive markets, as consequence of COVID-19 pandemic
• Industrial revenue grew by 0.2% y/y, up to €63.0m (vs. 62.9m in Q2 FY19) and up to 53% share of EMEA's sales (from a share of 50% in Q2 FY19); organically the revenue decreased by 6.7% y/y
• Adj. EBIT margin decreased by 1.7pp to 13.1% due to limited short-term cost flexibility

Q2 FY2020 – AMERICAS

Revenue (€m) Comments

Adj. EBIT (€m)

• Light vehicle production in Americas in Q2 FY20 at 4.5m units, i.e. - 11.3% vs. Q2 FY19
• Americas' revenue down by €7.8m or 8.6% y/y; organically revenue was 9.4% lower than in Q2 of the previous fiscal year
• Organically, automotive Gas Spring revenue declined by 15.6% y/y (product mix impact) and Automotive Powerise revenue by 7.8% y/y
• Industrial revenue down by €0.3m or 1.1% y/y, organically - 4.2% y/y: growth in IAM was offset by lower revenues in transportation (bus, truck, rail, aerospace), agriculture and construction machinery, less business with distributors
• Americas' adj. EBIT margin improved from 17.1% in Q2 FY19 to 19.0% in Q2 FY20 due to cost and sourcing management

Q2 FY2020 – APAC

Q2 FY2020 – Revenue by business unit

1. Outlook

5.

Outlook

Guidance				Comments
	FY2019 Actual	FY2020 Guidance		Guidance from November 2019 is no longer realistic. In light of
Revenue	€951.3m	TBD at a later point in time		the dynamics and ongoing uncertainties of the global developments in connection with COVID-19, a new forecast of revenue and adj. EBIT margin can only be given at a later point in time.
Adj. EBIT margin	15.0%	TBD at a later point in time		As of April 27, 2020, global light vehicle production (LVP) in FY2020 (Oct-Sept) is expected to be c. 21% below the prior year's level (i.e. c. 71m in FY20 vs. c. 90m in FY19). The return to the annual production level of c. 90m is expected for FY2024. (Source: leading forecast institutes, IHS Markit et al.)
				We continue to pursue our long-term strategy STAR 2025 focusing on sustainable, profitable growth, globalization, excellence, innovation as well as team spirit (One Stabilus).The currently significantly lower forecasts for global GDP and LVP impact our expectations for group's mid-term growth. Based on these assumptions, organic revenue CAGR 2019-25 of at least 6% appears to be uncertain. Stabilus will update its forecast at a later point in time.

1. Appendix

Revenue overview (3M ended March 31, 2020)

Revenue (€m)

	Q2 FY2019 Actual	Q2 FY2020 Actual	Change	% change	Acquisition effect	Currency effect	Organic growth
Automotive Gas Spring	38.4	33.3	(5.1)	(13.3)%	-	0.0%	(13.3)%
Automotive Powerise	24.7	22.1	(2.6)	(10.5)%	-	(1.1)%	(9.4)%
Industrial	62.9	63.0	0.1	0.2%	7.0%	(0.1)%	(6.7)%
EMEA	126.0	118.4	(7.6)	(6.0)%	3.5%	(0.3)%	(9.2)%
Automotive Gas Spring	30.4	25.8	(4.6)	(15.1)%	-	0.5%	(15.6)%
Automotive Powerise	32.0	29.1	(2.9)	(9.1)%	-	(1.3)%	(7.8)%
Industrial	28.1	27.8	(0.3)	(1.1)%	0.8%	2.3%	(4.2)%
AMERICAS	90.5	82.7	(7.8)	(8.6)%	0.3%	0.5%	(9.4)%
Automotive Gas Spring	15.2	12.5	(2.7)	(17.8)%	-	(0.6)%	(17.2)%
Automotive Powerise	3.5	3.5	-	0.0%	-	(1.5)%	1.5%
Industrial	3.9	3.9	-	0.0%	-	(1.2)%	1.2%
APAC	22.6	20.0	(2.6)	(11.5)%	-	(0.8)%	(10.7)%
Total Automotive Gas Spring (AGS)	84.1	71.6	(12.5)	(14.9)%	-	0.1%	(15.0)%
Total Automotive Powerise (APR)	60.1	54.7	(5.4)	(9.0)%	-	(1.2)%	(7.8)%
Total Industrial (IND)	94.9	94.7	(0.2)	(0.2)%	4.9%	0.6%	(5.7)%
Total	239.1	221.0	(18.1)	(7.6)%	1.9%	0.0%	(9.5)%

Revenue overview (H1 ended March 31, 2020)

Revenue (€m)

	H1 FY2019 Actual	H1 FY2020 Actual	Change	% change	Acquisition effect	Currency effect	Organic growth
Automotive Gas Spring	73.8	65.5	(8.3)	(11.2)%	-	0.0%	(11.2)%
Automotive Powerise	49.3	45.9	(3.4)	(6.9)%	-	(1.7)%	(5.2)%
Industrial	115.4	117.1	1.7	1.5%	8.5%	(0.1)%	(6.9)%
EMEA	238.5	228.6	(9.9)	(4.2)%	4.1%	(0.4)%	(7.9)%
Automotive Gas Spring	58.4	51.7	(6.7)	(11.5)%	-	1.9%	(13.4)%
Automotive Powerise	64.5	62.1	(2.4)	(3.7)%	-	2.3%	(6.0)%
Industrial	52.9	59.3	6.4	12.1%	0.9%	3.1%	8.1%
AMERICAS	175.8	173.0	(2.8)	(1.6)%	0.3%	2.4%	(4.3)%
Automotive Gas Spring	33.3	32.3	(1.0)	(3.0)%	-	0.5%	(3.5)%
Automotive Powerise	8.4	10.3	1.9	22.6%	-	0.2%	22.4%
Industrial	8.0	8.1	0.1	1.3%	-	(0.1)%	1.4%
APAC	49.6	50.7	1.1	2.2%	-	0.3%	1.9%
Total Automotive Gas Spring (AGS)	165.5	149.5	(16.0)	(9.7)%	-	0.8%	(10.5)%
Total Automotive Powerise (APR)	122.1	118.3	(3.8)	(3.1)%	-	0.6%	(3.7)%
Total Industrial (IND)	176.4	184.5	8.1	4.6%	5.9%	0.8%	(2.1)%
Total	464.0	452.3	(11.7)	(2.5)%	2.2%	0.7%	(5.4)%

P&L overview (3M ended March 30, 2020)

P&L (€m)
----------	--

	Q2 FY2019 Actual	Q2 FY2020 Actual	Change	% change
Revenue	239.1	221.0	(18.1)	(7.6)%
Cost of sales	(169.0)	(156.5)	12.5	(7.4)%
Gross Profit	70.1	64.5	(5.6)	(8.0)%
% margin	29.3%	29.2%
R&D expenses	(9.8)	(10.9)	(1.1)	11.2%
Selling expenses	(21.0)	(22.0)	(1.0)	4.8%
Administrative expenses	(8.9)	(10.0)	(1.1)	12.4%
Other income/expenses	0.9	4.8	3.9	>100.0%
EBIT	31.3	26.5	(4.8)	(15.3)%
% margin	13.1%	12.0%
Adjustments	4.4	4.6	0.2	4.5%
Adj. EBIT	35.7	31.1	(4.6)	(12.9)%
% margin	14.9%	14.1%
PPA adjustments (2010 PPA)	2.3	1.7
PPA adjustments (2016 PPA)	2.1	2.1

PPA adjustments (2019 PPA) - 0.8 Advisory costs (M&A) - - Total adjustments 4.4 4.6

Comments

IFRS 16 impact: Recognition of all leases in the balance sheet leads to depreciation (instead of leasing expenses) in the same functional costs and in similar magnitude, i.e. there is no significant impact from IFRS 16 on the functional costs; interest expense from leases amounted to €0.3m in Q2 FY20 ( = positive effect on Q2 FY20's EBIT)

P&L overview (H1 ended March 30, 2020)

P&L (€m)
----------	--

	H1 FY2019 Actual	H1 FY2020 Actual	Change	% change
Revenue	464.0	452.3	(11.7)	(2.5)%
Cost of sales	(330.3)	(321.1)	9.2	(2.8)%
Gross Profit	133.8	131.2	(2.6)	(1.9)%
% margin	28.8%	29.0%
R&D expenses	(19.6)	(21.4)	(1.8)	9.2%
Selling expenses	(41.3)	(44.0)	(2.7)	6.5%
Administrative expenses	(18.0)	(18.4)	(0.4)	2.2%
Other income/expenses	2.4	4.5	2.1	87.5%
EBIT	57.1	51.9	(5.2)	(9.1)%
% margin	12.3%	11.5%
Adjustments	9.3	9.2	(0.1)	(1.1)%
Adj. EBIT	66.4	61.1	(5.3)	(8.0)%
% margin	14.3%	13.5%
PPA adjustments (2010 PPA)	4.6	3.5

Total adjustments	9.3	9.2
Advisory costs (M&A)	0.5	-
PPA adjustments (2019 PPA)	-	1.5
PPA adjustments (2016 PPA)	4.2	4.2
PPA adjustments (2010 PPA)	4.6	3.5

Comments

Capitalized R&D expenses in H1 FY20 at €8.3m (vs. €5.9m in H1 FY19), due to expansion of Powerise product family

Increase in selling expenses results from acquired entities General Aerospace, Clevers and Piston which operate in industrial business with higher selling expenses ratio as well as comparative payroll inflation

IFRS 16 impact: Recognition of all leases in the balance sheet leads to depreciation (instead of leasing expenses) in the same functional costs and in similar magnitude, i.e. there is no significant impact from IFRS 16 on the functional costs; interest expense from leases amounted to €0.7m in H1 FY20 ( = positive effect on H1 FY20's EBIT)

Balance sheet overview

Balance sheet (€m)

	Sept 2019 Actual	March 2020 Actual	Change	% change
Property, plant and equipm.	199.9	232.4	32.5	16.3%
Goodwill	214.8	213.3	(1.5)	(0.7)%
Other intangible assets	276.2	267.2	(9.0)	(3.3)%
Inventories	100.3	104.7	4.4	4.4%
Trade receivables	130.3	114.4	(15.9)	(12.2)%
Other assets	38.7	46.9	8.2	21.2%
Cash	139.0	122.7	(16.3)	(11.7)%
Total assets	1,099.2	1,101.6	2.4	0.2%
Equity incl. minorities	499.6	493.1	(6.5)	(1.3)%
Debt (incl. accrued interest)	311.6	314.4	2.8	0.9%
Pension plans	59.9	50.7	(9.2)	(15.4)%
Deferred tax liabilities	55.9	54.9	(1.0)	(1.8)%
Trade accounts payable	91.0	74.4	(16.6)	(18.2)%
Other liabilities	81.2	114.1	32.9	40.5%
Total equity and liabilities	1,099.2	1,101.6	2.4	0.2%
Net leverage ratio	1.0x	1.1x

Comments

• First time adoption of the IFRS 16 in FY2020 (from Oct 1, 2019 on, recognition of all leases in the balance sheet) led to an increase of PPE and other liabilities by €43.7m; as of March 2020, change in PPE amounts to a lower amount of €32.5m, primarily due to scheduled depreciation; change in other liabilities amounts to €32.9m (March 20 vs. Sept 19)
• Decrease in other intangible assets by €9.0m comprises scheduled amortization of €16.6m, partially offset by capitalized development costs
• Trade receivables and payables decreased due to lower business activity
• Lower cash (- €16.3m vs. end of FY19) essentially due to dividend payment of €27.2m in Feb 2020, partially offset by lower capex (see following pages for further details)
• Pension liability decreased by €9.2m as a consequence of higher discount rate (0.93% as of Sept 2019 vs. 1.88% as of March 2020)
• Net leverage ratio as of March 2020 stable at 1.1x EBITDA (vs. 1.0x as of Sept 2019 and 1.1x as of March 2019)

Cash flow overview (3M ended March 31, 2020)

Cash Flow Statement (€m)
--------------------------

	Q2 FY2019 Actual	Q2 FY2020 Actual	Change	% change
Cash flow from operating activities	23.5	23.8	0.3	1.3%
Cash flow from investing activities	(16.9)	(11.9)	5.0	(29.6)%
Cash flow from financing activities	(25.9)	(29.4)	(3.5)	13.5%
Net increase / (decrease) in cash	(19.3)	(17.5)	1.8	(9.3)%
Effect of movements in exchange rates	1.6	(2.1)	(3.7)	<(100.0)%
Cash as of beginning of the period	154.3	142.3	(12.0)	(7.8)%
Cash as of end of the period	136.5	122.7	(13.8)	(10.1)%

Adj. FCF (€m)

	Q2 FY2019 Actual	Q2 FY2020 Actual	Change	% change
Cash flow from operating activities	23.5	23.8	0.3	1.3%
Cash flow from investing activities	(16.9)	(11.9)	5.0	(29.6)%
Free cash flow	6.6	11.9	5.3	80.3%
Adjustments	-	1.1	1.1	n/a
Adj. FCF	6.6	13.0	6.4	97.0%

Comments

Capex in Q2 FY20 at €10.9m (vs. €17.3m in Q2 FY19), -37% y/y

Cash outflow for financing activities in Q2 FY20 includes €27.2m dividend payments, €20.0m redemption of senior facilities (which was performed before the coronavirus outbreak) and €21.6m receipt under senior facility agreement, i.e. utilization of the revolving credit facility (as a precautionary measure after coronavirus outbreak)

IFRS 16 impact in Q2 FY20: no impact on net cash flow, positive effect of €2.5m on cash flow from operating activities (and consequently free cash flow) and negative effect on cash flow from financing activities in the same amount

Adjustment to FCF in Q2 FY20 amounting to €1.1m relates to acquisition of assets and liabilities within business combination, net of cash acquired

Cash flow overview (H1 ended March 31, 2020)

Cash Flow Statement (€m)

	H1 FY2019 Actual	H1 FY2020 Actual	Change	% change
Cash flow from operating activities	48.1	43.6	(4.5)	(9.4)%
Cash flow from investing activities	(29.1)	(23.9)	5.2	(17.9)%
Cash flow from financing activities	(27.2)	(33.0)	(5.8)	21.3%
Net increase / (decrease) in cash	(8.2)	(13.3)	(5.1)	62.2%
Effect of movements in exchange rates	1.7	(3.1)	(4.8)	<(100.0)%
Cash as of beginning of the period	143.0	139.0	(4.0)	(2.8)%
Cash as of end of the period	136.5	122.7	(13.8)	(10.1)%

Adj. FCF (€m)

	H1 FY2019 Actual	H1 FY2020 Actual	Change	% change
Cash flow from operating activities	48.1	43.6	(4.5)	(9.4)%
Cash flow from investing activities	(29.1)	(23.9)	5.2	(17.9)%
Free cash flow	19.0	19.7	0.7	3.7%
Adjustments	-	1.1	1.1	n/a
Adj. FCF	19.0	20.8	1.8	9.5%

Comments

Capex in H1 FY20 at €23.2m (vs. €29.8m in H1 FY19), -22.1% y/y

Cash outflow for financing activities in H1 FY20 includes €27.2m dividend payments, €20.0m redemption of senior facilities (which was performed before the coronavirus outbreak) and €21.6m receipt under senior facility agreement, i.e. utilization of the revolving credit facility (as a precautionary measure after coronavirus outbreak)

IFRS 16 impact in H1 FY20: no impact on net cash flow, positive effect of €4.9m (€2.4m in Q1 FY20 and €2.5m in Q2 FY20) on cash flow from operating activities (and consequently free cash flow) and negative effect on cash flow from financing activities in the same amount

Adjustment to FCF in H1 FY20 amounting to €1.1m relates to acquisition of assets and liabilities within business combination, net of cash acquired

Currency exchange rates overview (H1 ended March 31, 2020)

Closing and average currency exchange rates
1 EURO in	ISO code	Closing rate March 2019	Closing rate March 2020	Average rate H1 FY2019	Average rate H1 FY2020	Average rate % change
Australian dollar	AUD	1.5821	1.7967	1.5919	1.6490	3.6%
Argentine peso	ARS	48.6476	70.5479	43.3336	66.7026	53.9%
Brazilian real	BRL	4.3865	5.7001	4.3123	4.7357	9.8%
Chinese yuan (renminbi)	CNY	7.5397	7.7784	7.7769	7.7467	(0.4)%
South Korean won	KRW	1,276.4600	1,341.0300	1,282.4259	1,308.9539	2.1%
Mexican peso	MXP	21.6910	26.1772	22.2169	21.6844	(2.4)%
Romanian leu	RON	4.7608	4.8283	4.6983	4.7820	1.8%
Turkish lira	TRY	6.3446	7.2063	6.1947	6.5773	6.2%
United States dollar	USD	1.1235	1.0956	1.1384	1.1048	(3.0)%

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