Quarterly Report • Aug 6, 2018
Quarterly Report
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T_001
| Three months ended June 30, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | CHANGE | % CHANGE |
| Revenue | 250.2 | 233.5 | 16.7 | 7.2% |
| EBIT | 35.1 | 31.1 | 4.0 | 12.9% |
| Adjusted EBIT | 39.5 | 35.6 | 3.9 | 11.0% |
| Profit for the period | 25.3 | 24.6 | 0.7 | 2.8% |
| Capital expenditure | (8.7) | (11.1) | 2.4 | (21.6)% |
| Free cash flow (FCF) | 40.4 | 30.5 | 9.9 | 32.5% |
| EBIT as % of revenue | 14.0% | 13.3% | ||
| Adjusted EBIT as % of revenue | 15.8% | 15.2% | ||
| Profit in % of revenue | 10.1% | 10.5% | ||
| Capital expenditure as % of revenue | 3.5% | 4.8% | ||
| FCF in % of revenue | 16.1% | 13.1% |
| Nine months ended June 30, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | CHANGE | % CHANGE |
| Revenue | 731.7 | 689.1 | 42.6 | 6.2% |
| EBIT | 99.6 | 88.5 | 11.1 | 12.5% |
| Adjusted EBIT | 112.7 | 103.4 | 9.3 | 9.0% |
| Profit for the period | 72.6 | 69.0 | 3.6 | 5.2% |
| Capital expenditure | (27.6) | (33.8) | 6.2 | (18.3)% |
| Free cash flow (FCF) | 71.9 | 52.6 | 19.3 | 36.7% |
| EBIT as % of revenue | 13.6% | 12.8% | ||
| Adjusted EBIT as % of revenue | 15.4% | 15.0% |
|---|---|---|
| Profit in % of revenue | 9.9% | 10.0% |
| Capital expenditure as % of revenue | 3.8% | 4.9% |
| FCF in % of revenue | 9.8% | 7.6% |
| Net leverage ratio | 1.2x | 1.7x |
| 23% | Industrial / Capital Goods |
|---|---|
| 11% | Vibration & Velocity Control |
| 3% | Commercial Furniture |
for the three and nine months ended June 30, 2018
The tables below set out Stabilus Group's consolidated income statement for the third quarter and the first nine months of fiscal 2018 and 2017:
| Three months ended June 30, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Revenue | 250.2 | 233.5 | 16.7 | 7.2% |
| Cost of sales | (177.0) | (167.4) | (9.6) | 5.7% |
| Gross profit | 73.2 | 66.1 | 7.1 | 10.7% |
| Research and development expenses | (10.1) | (9.0) | (1.1) | 12.2% |
| Selling expenses | (20.4) | (15.8) | (4.6) | 29.1% |
| Administrative expenses | (9.4) | (9.3) | (0.1) | 1.1% |
| Other income | 4.0 | 2.2 | 1.8 | 81.8% |
| Other expenses | (2.2) | (3.1) | 0.9 | (29.0)% |
| Profit from operating activities (EBIT) | 35.1 | 31.1 | 4.0 | 12.9% |
| Finance income | 2.3 | 17.6 | (15.3) | (86.9)% |
| Finance costs | (2.1) | (20.8) | 18.7 | (89.9)% |
| Profit / (loss) before income tax | 35.3 | 28.0 | 7.3 | 26.1% |
| Income tax income / (expense) | (10.0) | (3.4) | (6.6) | >100.0% |
| Profit / (loss) for the period | 25.3 | 24.6 | 0.7 | 2.8% |
| Nine months ended June 30, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Revenue | 731.7 | 689.1 | 42.6 | 6.2% |
| Cost of sales | (512.7) | (487.9) | (24.8) | 5.1% |
| Gross profit | 219.0 | 201.2 | 17.8 | 8.8% |
| Research and development expenses | (31.8) | (27.6) | (4.2) | 15.2% |
| Selling expenses | (61.2) | (56.4) | (4.8) | 8.5% |
| Administrative expenses | (28.8) | (27.1) | (1.7) | 6.3% |
| Other income | 9.4 | 9.4 | – | 0.0% |
| Other expenses | (7.0) | (10.9) | 3.9 | (35.8)% |
| Profit from operating activities (EBIT) | 99.6 | 88.5 | 11.1 | 12.5% |
| Finance income | 1.5 | 17.8 | (16.3) | (91.6)% |
| Finance costs | (9.0) | (14.6) | 5.6 | (38.4)% |
| Profit / (loss) before income tax | 92.1 | 91.7 | 0.4 | 0.4% |
| Income tax income / (expense) | (19.5) | (22.7) | 3.2 | (14.1)% |
| Profit / (loss) for the period | 72.6 | 69.0 | 3.6 | 5.2% |
Group's total revenue developed as follows:
| Asia / Pacific and RoW1) Revenue1) |
32.5 250.2 |
24.2 233.5 |
8.3 16.7 |
34.3% 7.2% |
|---|---|---|---|---|
| NAFTA1) | 88.9 | 92.3 | (3.4) | (3.7)% |
| Europe1) | 128.8 | 117.1 | 11.7 | 10.0% |
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Three months ended June 30, |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| 261.9 92.9 |
267.6 76.0 |
(5.7) 16.9 |
(2.1)% 22.2% |
|---|---|---|---|
| 376.9 | 345.4 | 31.5 | 9.1% |
| 2018 | 2017 | Change | % change |
| Nine months ended June 30, |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
Total revenue of €731.7 million in the first nine months of fiscal 2018 increased by 6.2% compared to the first nine months of fiscal 2017.
The Group´s revenue growth in the first nine months of fiscal 2018 was primarily driven by our entities in Europe (€31.5 million or 9.1%) and Asia / Pacific and RoW (€16.9 million or 22.2%), whereas revenue from our NAFTA entities decreased by €(5.7) million or (2.1)%.
The decrease in NAFTA is driven by the relatively weaker US dollar, i.e. the currency translation of NAFTA´s revenue from US dollar to euro (average rate per €1: \$1.20 in 9M FY2018 versus \$1.08 in 9M FY2017). This currency translation effect amounted to €(28.9) million. At constant US dollar rates NAFTA´s revenue grew by 8.7%.
| Three months ended June 30, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Automotive Gas Spring | 89.1 | 85.1 | 4.0 | 4.7% |
| Automotive Powerise® | 71.6 | 63.6 | 8.0 | 12.6% |
| Automotive business | 160.7 | 148.7 | 12.0 | 8.1% |
| Industrial / Capital Goods | 56.0 | 53.7 | 2.3 | 4.3% |
| Vibration & Velocity Control | 25.6 | 23.7 | 1.9 | 8.0% |
| Commercial Furniture | 7.9 | 7.4 | 0.5 | 6.8% |
| Industrial business | 89.5 | 84.8 | 4.7 | 5.5% |
| Revenue | 250.2 | 233.5 | 16.7 | 7.2% |
| Nine months ended June 30, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Automotive Gas Spring | 259.8 | 259.8 | – | 0.0% |
| Automotive Powerise® | 203.9 | 182.6 | 21.3 | 11.7% |
| Automotive business | 463.7 | 442.4 | 21.3 | 4.8% |
| Industrial / Capital Goods | 168.2 | 154.6 | 13.6 | 8.8% |
| Vibration & Velocity Control | 77.0 | 70.3 | 6.7 | 9.5% |
| Commercial Furniture | 22.8 | 21.7 | 1.1 | 5.1% |
| Industrial business | 268.0 | 246.7 | 21.3 | 8.6% |
| Revenue | 731.7 | 689.1 | 42.6 | 6.2% |
The revenue of our Automotive business increased by €21.3 million or 4.8% from €442.4 million in the first nine months of fiscal 2017 to €463.7 million in the first nine months of fiscal 2018. This is due to our Automotive Powerise® business which increased by €21.3 million or 11.7% to €203.9 million, reflecting stronger sales in China and the continuing general trend of opting for this extra equipment. The revenue in the Automotive Gas Spring business amounting to €259.8 million was on prior year´s level.
The revenue of our Industrial business increased by €21.3 million or 8.6% from €246.7 million in the first nine months of fiscal 2017 to €268.0 million in the first nine months of fiscal 2018. This increase was primarily driven by our Industrial / Capital Goods business which grew by €13.6 million or 8.8% and our Vibration & Velocity business which grew by €6.7 million or 9.5%. Both businesses benefit from the strong growth in several key segments (e.g. independent
aftermarket, bus / truck / transportation, agricultural machinery, construction machinery).
Commercial Furniture revenue increased by 5.1% from €21.7 million in the first nine months of fiscal 2017 to €22.8 million in the first nine months of fiscal 2018.
Cost of sales increased from €(487.9) million in the first nine months of fiscal 2017 by 5.1% to €(512.7) million in first nine months of fiscal 2018, primarily due to stronger sales. The cost of sales increase (5.1%) is less than the increase in revenue (6.2%). Consequently, cost of sales as a percentage of revenue decreased by 70 basis points to 70.1% (PY: 70.8%) and the gross profit margin improved to 29.9% (PY: 29.2%).
R&D expenses (net of R&D cost capitalization) increased by 15.2% from €(27.6) million in the first nine months of fiscal 2017 to €(31.8) million in the first nine months of fiscal 2018. The increase in R&D expenses reflects additional engineering activities to develop new products and product applications to open new areas of business for Stabilus as well as general cost inflation. The non-capitalizable R&D costs increased even more as resources are currently reassigned from capitalizable activities to others. As a percentage of revenue, R&D expenses increased by 30 basis points to 4.3% (PY: 4.0%). The capitalization of R&D expenses decreased from €(9.0) million in the first nine months of fiscal 2017 to €(6.3) million in the first nine months of fiscal 2018.
Selling expenses increased from €(56.4) million in the first nine months of fiscal 2017 by 8.5% to €(61.2) million in the first nine months of fiscal 2018. As a percentage of revenue, selling expenses increased by 20 basis points to 8.4% (PY: 8.2%).
Administrative expenses increased from €(27.1) million in the first nine months of fiscal 2017 by 6.3% to €(28.8) million in the first nine months of fiscal 2018. This is due to slightly increased headcount addressing the overall growth of the Stabilus Group and increased personnel-related provisions. As a percentage of revenue, administrative expenses were unchanged at 3.9% (PY: 3.9%).
Other income remained unchanged at €9.4 million in the first nine months of fiscal 2017 compared to the first nine months of fiscal 2018. This mainly comprises foreign currency translation gains from the operating business.
Other expenses decreased from €(10.9) million in the first nine months of fiscal 2017 by €3.9 million to €(7.0) million in the first nine months of fiscal 2018. This mainly comprises foreign currency translation losses from the operating business.
Finance income decreased from €17.8 million in the first nine months of fiscal 2017 to €1.5 million in the first nine months of fiscal 2018. In the prior year €17.5 million were due to the adjustment of the carrying value of the term loan facility. In the current year €1.3 million were due to the adjustment of the carrying value of the term loan facility reflecting the decrease in the margin in February 2018 based on the further improved net leverage ratio of the Group.
Finance costs decreased from €(14.6) million in the first nine months of fiscal 2017 to €(9.0) million in the first nine months of fiscal 2018. Finance costs in the first nine months of fiscal 2018 comprised interest expense of €(6.2) million (PY: €(7.7) million) and net foreign exchange losses of €(2.4) million (PY: €(6.5) million).
Interest expense on financial liabilities include ongoing interest expense of €(6.2) million (PY: €(7.7) million) especially related to the euro term loan facility. Thereof, an amount of €(2.8) million (PY: €(6.5) million) is cash interest. This decrease reflects the lower margin based on the improved net leverage ratio of the Group and the reduced outstanding nominal amount. In addition, an amount of €(3.6) million (PY: €(1.2) million) is due to the amortization of
debt issuance cost and the amortization of the adjustment of the carrying value by using the effective interest rate method.
Net foreign exchange losses are due to financial assets and liabilities of group entities denominated in foreign currency. The reduction compared to prior year is due to certain measures we took to reduce the foreign exchange exposure.
The income tax expense decreased from €(22.7) million in the first nine months of fiscal 2017 to €(19.5) million in the first nine months of fiscal 2018. The Group´s tax rate in the first nine months of fiscal 2018 is 21.2% (PY: 24.8%). The decrease in the tax rate was due to effects from the US tax reform signed in December 2017 and to the optimization of the legal structure of our US operations in the second quarter of fiscal 2018. The US tax reform reduces the federal income tax rate from 35% to 21% with effect from January 1, 2018, and
consequently requires a remeasurement of the deferred tax position of our US operations. The non-recurring net effect reflected in the first nine months of fiscal 2018 amounted to €3.9 million. The optimization of the legal structure of the US entities in the second quarter of fiscal 2018 effects the recoverability of interest expense from prior years. The non-recurring net effect reflected in the first nine months of fiscal 2018 amounted to €4.3 million. In comparison to the first six months of fiscal 2018 the expected net tax benefit has increased by €0.9 million. Prior years profit before income tax includes income of €17.5 million from the adjustments of the carrying value of the term loan facility, which is not relevant for tax purposes.
The following table shows a reconciliation of EBIT (earnings before interest and taxes) to adjusted EBIT for the third quarter and the first nine months of fiscal 2018 and 2017:
| Reconciliation of EBIT to adjusted EBIT | T _ 008 | |||
|---|---|---|---|---|
| Three months ended June 30, | ||||
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Profit from operating activities (EBIT) | 35.1 | 31.1 | 4.0 | 12.9% |
| PPA adjustments - depreciation and amortization | 4.4 | 4.5 | (0.1) | (2.2)% |
| Adjusted EBIT | 39.5 | 35.6 | 3.9 | 11.0% |
| Nine months ended June 30, | ||||
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Profit from operating activities (EBIT) | 99.6 | 88.5 | 11.1 | 12.5% |
| PPA adjustments - depreciation and amortization | 13.1 | 14.9 | (1.8) | (12.1)% |
| Adjusted EBIT | 112.7 | 103.4 | 9.3 | 9.0% |
Adjusted EBIT represents 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 (PPAs).
Adjusted EBIT is represented because we believe it is a useful indicator of the Group´s operating performance before items which are considered exceptional and not relevant to an assessment of our operational performance.
The PPA adjustments in the current year contain €7.0 million (PY: €8.5 million) related to the April 2010 PPA and €6.1 million (PY: €6.4 million) to the June 2016 PPA.
The Stabilus Group is organized and managed primarily on a regional level. The three reportable operating segments of the Group are Europe, NAFTA, Asia / Pacific and RoW.
The tables below set out the development of our operating segments for the third quarter and the first nine months of fiscal 2018 and 2017:
| Three months ended June 30, | ||||
|---|---|---|---|---|
| $IN \in MILLIONS$ | 2018 | 2017 | Change | % change |
| Europe | ||||
| External revenue 1) | 128.8 | 117.1 | 11.7 | 10.0% |
| Intersegment revenue 1) | 8.0 | 7.2 | 0.8 | 11.1% |
| Total revenue 1) | 136.8 | 124.3 | 12.5 | 10.1% |
| Adjusted EBIT | 19.3 | 18.5 | 0.8 | 4.3% |
| as % of total revenue | 14.1% | 14.9% | ||
| as % of external revenue | 15.0% | 15.8% | ||
| NAFTA | ||||
| External revenue 1) | 88.9 | 92.3 | (3.4) | (3.7)% |
| Intersegment revenue 1) | 6.5 | 6.4 | 0.1 | 1.6% |
| Total revenue 1) | 95.4 | 98.7 | (3.3) | (3.3)% |
| Adjusted EBIT | 14.3 | 14.5 | (0.2) | (1.4)% |
| as % of total revenue | 15.0% | 14.7% | ||
| as % of external revenue | 16.1% | 15.7% | ||
| Asia / Pacific and RoW | ||||
| External revenue 1) | 32.5 | 24.2 | 8.3 | 34.3% |
| Intersegment revenue 1) | 0.1 | (0.1) | $(100.0)\%$ | |
| Total revenue 1) | 32.5 | 24.3 | 8.2 | 33.7% |
| Adjusted EBIT | 5.9 | 2.6 | 3.3 | $>100.0\%$ |
| as % of total revenue | 18.2% | 10.7% | ||
| as % of external revenue | 18.2% | 10.7% | ||
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| Nine months ended June 30, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Europe | ||||
| External revenue1) | 376.9 | 345.4 | 31.5 | 9.1% |
| Intersegment revenue1) | 24.5 | 22.8 | 1.7 | 7.5% |
| Total revenue1) | 401.4 | 368.3 | 33.1 | 9.0% |
| Adjusted EBIT | 58.1 | 50.1 | 8.0 | 16.0% |
| as % of total revenue | 14.5% | 13.6% | ||
| as % of external revenue | 15.4% | 14.5% | ||
| NAFTA | ||||
| External revenue1) | 261.9 | 267.6 | (5.7) | (2.1)% |
| Intersegment revenue1) | 19.1 | 18.9 | 0.2 | 1.1% |
| Total revenue1) | 281.0 | 286.5 | (5.5) | (1.9)% |
| Adjusted EBIT | 39.2 | 42.6 | (3.4) | (8.0)% |
| as % of total revenue | 14.0% | 14.9% | ||
| as % of external revenue | 15.0% | 15.9% | ||
| Asia / Pacific and RoW | ||||
| External revenue1) | 92.9 | 76.0 | 16.9 | 22.2% |
| Intersegment revenue1) | 0.1 | 0.5 | (0.4) | (80.0)% |
| Total revenue1) | 93.0 | 76.5 | 16.5 | 21.6% |
| Adjusted EBIT | 15.4 | 10.8 | 4.6 | 42.6% |
| as % of total revenue | 16.6% | 14.1% | ||
| as % of external revenue | 16.6% | 14.2% | ||
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
The external revenue generated by our European companies increased from €345.4 million in the first nine months of fiscal 2017 by 9.1% to €376.9 million in the first nine months of fiscal 2018. This is driven by the Automotive business and the Industrial business respectively. Within the European Industrial business a major growth driver was the Industrial / Capital Goods business with €12.8 million or 12.7%. In the Automotive business Automotive Powerise® grew by 11.1% and contributed €8.4 million while Automotive Gas Spring grew by 6.1% and contributed €6.9 million to Europe's revenue growth. The adjusted EBIT of the European segment increased by 16.0% or €8.0 million and the adjusted EBIT margin, i.e. adjusted EBIT in percent of external revenue, increased in the first nine months of fiscal 2018 by 90 basis points to 15.4% (PY: 14.5%).
The external revenue of our companies located in the NAFTA region decreased from €267.6 million in the first nine months of fiscal 2017
by (2.1)% to €261.9 million in the first nine months of fiscal 2018 at incurred rates. At constant US dollar rates NAFTA´s revenue grew by 8.7%. The Industrial business contributed €1.3 million offset by a contribution of €(7.0) million from the Automotive business. The decrease in NAFTA is generally driven by the relatively weaker US dollar, i.e. the currency translation of NAFTA´s revenue from US dollar to euro (average rate per €1: \$1.20 in 9M FY2018 versus \$1.08 in 9M FY2017). The currency translation effect was €(28.9) million. Measured in US dollars the Automotive business grew by 6.9%. This is due to our Powerise® business with a growth rate of 9.2% and our Automotive Gas Spring business with a growth rate of 4.0%. The Industrial business grew by 13.0%, especially due to the Vibration & Velocity business with a growth rate of 19.2%. The adjusted EBIT of the NAFTA segment decreased by 8.0% or €3.4 million and the adjusted EBIT margin decreased in the first nine months of fiscal 2018 by 90 basis points to 15.0% (PY: 15.9%).
The external revenue of our companies located in the region Asia / Pacific and RoW increased from €76.0 million in the first nine months of fiscal 2017 by 22.2% to €92.9 million in the first nine months of fiscal 2018. This increase is mainly driven by the Automotive Powerise® business which grew by €14.6 million, due to the ramp-up of the Powerise® production in our Chinese entity and our
Vibration and Velocity Control business which grew by €2.4 million. The adjusted EBIT of the Asia / Pacific and RoW segment increased by €4.6 million or 42.6% and the adjusted EBIT margin increased in the first nine months of fiscal 2018 by 240 basis points to 16.6% (PY: 14.2%).
| IN € MILLIONS | June 30, 2018 | Sept 30, 2017 | Change | % change |
|---|---|---|---|---|
| Assets | ||||
| Non-current assets | 636.7 | 647.8 | (11.1) | (1.7)% |
| Current assets | 351.8 | 282.2 | 69.6 | 24.7% |
| Total assets | 988.5 | 930.0 | 58.5 | 6.3% |
| Equity and liabilities | ||||
| Equity | 392.7 | 336.4 | 56.3 | 16.7% |
| Non-current liabilities | 421.8 | 430.8 | (9.0) | (2.1)% |
| Current liabilities | 174.0 | 162.8 | 11.2 | 6.9% |
| Total liabilities | 595.8 | 593.6 | 2.2 | 0.4% |
| Total equity and liabilities | 988.5 | 930.0 | 58.5 | 6.3% |
The Group's balance sheet total increased from €930.0 million as of September 30, 2017, by 6.3% to €988.5 million as of June 30, 2018.
Our non-current assets decreased from €647.8 million as of September 30, 2017, by (1.7)% or €(11.1) million to €636.7 million as of June 30, 2018. This reduction is mainly attributable to the €(18.3) million decrease of other intangible assets substantially resulting from the ongoing amortization of intangible assets from the 2010 and 2016 purchase price allocations. This was partly offset by ongoing capacity expansions, i.e. the purchase of property, plant and equipment (€21.3 million) and intangible assets
(€6.3 million). Furthermore the deferred tax assets increased by €5.1 million, mainly driven by the optimization of the legal structure of our US entities.
Current assets increased from €282.2 million as of September 30, 2017, by 24.7% or €69.6 million to €351.8 million as of June 30, 2018. This is driven by an increase in the cash balance by €47.7 million which results from our strong cash flow in the first nine months of fiscal 2018 as well as a €21.1 million increase of trade accounts receivable.
The Group's equity increased from €336.4 million as of September 30, 2017, by €56.3 million to €392.7 million as of June 30, 2018. This increase results from the profit of €72.6 million that was generated in the first nine months of fiscal 2018 and from other comprehensive income of €3.5 million. Other comprehensive income comprises unrealized actuarial gains on pensions (net of tax) amounting to €0.6 million and unrealized gains from foreign currency translation amounting to €2.9 million. In February 2018 dividends amounting to €(19.8) million were paid to our shareholders.
Non-current liabilities decreased from €430.8 million as of September 30, 2017, by (2.1)% or €(9.0) million to €421.8 million as of June 30, 2018. This decrease is primarily due to the reduction of deferred tax liabilities by €(6.8) million which essentially due to the US tax reform and the necessary remeasurement of deferred tax positions of our US entities.
In addition, pension liabilities decreased by €(1.3) million as a consequence of a slightly increased discount rate (June 30, 2018: 2.03% versus September 30, 2017: 1.87%) and other financial liabilities decreased by €(1.0) million due to an early settlement of a finance lease arrangement for one of the Romania Powerise® production buildings that is now completely owned by Stabilus.
Current liabilities increased from €162.8 million as of September 30, 2017, by €11.2 million or 6.9% to €174.0 million as of June 30, 2018. This was essentially driven by an increase of current provisions. The warranties increased by €4.7 million to €17.7 million (e.g. warranties driven by higher sales for the current fiscal year) and an increase in our current tax liabilities by €4.8 million.
In addition, other financial liabilities increased by €2.5 million attributable to increased liabilities to employees and liabilities for social security contributions. This increase was partly offset by a reduction of our trade accounts payable by €(1.4) million or (1.7)% which is a consequence of shorter payment cycles for trade payables to benefit from early payment discounts.
| Nine months ended June 30, | ||||
|---|---|---|---|---|
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Cash flow from operating activities | 98.9 | 85.4 | 13.5 | 15.8% |
| Cash flow from investing activities | (27.0) | (32.8) | 5.8 | (17.7)% |
| Cash flow from financing activities | (24.0) | (31.8) | 7.8 | (24.5)% |
| Net increase / (decrease) in cash | 47.9 | 20.8 | 27.1 | >(100.0)% |
| Effect of movements in exchange rates on cash held | (0.1) | (0.5) | 0.4 | (80.0)% |
| Cash as of beginning of the period | 68.1 | 75.0 | (6.9) | (9.2)% |
| Cash as of end of the period | 115.8 | 95.3 | 20.5 | 21.5% |
Cash flow from operating activities increased from €85.4 million in the first nine months of fiscal 2017 by €13.5 million to €98.9 million in the first nine months of fiscal 2018. This increase is mainly due to the strong revenue and earnings growth and partly offset by higher net working capital as a consequence of the continuing growth and shorter payment cycles for trade payables.
Cash outflow for investing activities decreased from €(32.8) million in the first nine months of fiscal 2017 by €5.8 million to €(27.0) million in the first nine months of fiscal 2018 due to lower capital expenditure in property, plant and equipment of €(3.7) million and reduced investments in intangible assets, especially due to a reduction of capitalized R&D costs (less related customer contributions) amounting to €(2.4) million, as we allocate more R&D resources to develop new products and product applications.
Cash outflow from financing activities decreased from €(31.8) million in the first nine months of fiscal 2017 by €7.8 million to €(24.0) million in the first nine months of fiscal 2018. In the first nine months of fiscal 2017 we made a voluntary repayment of €12.5 million of the term loan facility and no comparable repayment in the first nine months of fiscal 2018. In addition, the cash interest in the first nine months of fiscal 2018 was €(3.6) million lower compared to the first nine months of fiscal 2017. This reflects the lower margin based on the improved net leverage ratio of the Group and the reduced outstanding nominal amount. This was offset by the dividend payments of €(19.8) million (PY: €(12.4) million) made to our shareholders in February 2018.
Free cash flow (FCF) is defined as the total of cash flow from operating and investing activities. The following table sets out the composition of FCF.
| Free cash flow | T _ 012 | |||
|---|---|---|---|---|
| Nine months ended June 30, | ||||
| IN € MILLIONS | 2018 | 2017 | Change | % change |
| Cash flow from operating activities | 98.9 | 85.4 | 13.5 | 15.8% |
| Cash flow from investing activities | (27.0) | (32.8) | 5.8 | (17.7)% |
| Free cash flow | 71.9 | 52.6 | 19.3 | 36.7% |
The net leverage ratio is defined as net financial debt divided by adjusted EBITDA for the last twelve months (adjusted EBITDA LTM).
Net financial debt is the nominal amount of financial debt, i.e. current and non-current financial liabilities, less cash and cash equivalents. Adjusted EBITDA is defined as adjusted EBIT before depreciation and amortization.
The net leverage ratio is presented because we believe it is a useful indicator to evaluate the Group's debt leverage and financing structure.
The net leverage ratio decreased from 1.7x for the twelve months ending June 30, 2017, to 1.2x for the twelve months ending June 30, 2018. See the following table:
| IN € MILLIONS | June 30, 2018 | June 30, 2017 | Change | % change |
|---|---|---|---|---|
| Financial debt | 342.4 | 392.5 | (50.1) | (12.8)% |
| Cash and cash equivalents | (115.8) | (95.3) | (20.5) | 21.5% |
| Net financial debt | 226.6 | 297.2 | (70.6) | (23.7)% |
| Adjusted EBITDA (LTM ended June 30) | 187.3 | 173.4 | 13.9 | 8.0% |
| Net leverage ratio 1) | 1.2x | 1.7x |
1) The net leverage ratio is defined as net financial debt divided by adjusted EBITDA for the last twelve months.
We refer to the risk-related disclosures in the Group Management Report and in the audited Consolidated Financial Statements as of and for the fiscal year ended September 30, 2017.
We confirm our latest guidance for fiscal year 2018 given in May 2018 with a revenue growth rate of circa 8.8% (at constant US dollar rates), revenue of about €960 million (assuming an average currency rate of €1: \$1.20) and an adjusted EBIT margin of approximately 15.5%.
On July 9, 2018, Stabilus announced that the Chief Executive Officer Dietmar Siemssen will leave the Company at the end of fiscal 2018 at his own request. The Chairman of the Supervisory Board Dr. Stephan Kessel will temporarily suspend his Supervisory Board mandate to take the role as interim Chief Executive Officer starting August 1, 2018.
Stabilus has opted for the second extension of the Senior Facility Agreement by one year to June 2023. On July 9, 2018, the Facility Agent confirmed that €284.8 million of €336.1 million outstanding principal will be extended by one year to June 2023. This extension will result in finance income and an adjustment (reduction) of the carrying value of the euro term loan facility of €3.5 million in July 2018.
As of August 2, 2018, there were no other events or developments that could have materially affected the measurement and presentation of Group's assets and liabilities as of June 30, 2018.
Luxembourg, August 2, 2018
Management Board Dr. Stephan Kessel Mark Wilhelms Andreas Schröder Andreas Sievers Markus Schädlich
as of and for the three and nine months ended June 30, 2018
for the three and nine months ended June 30, 2018 (unaudited)
Three months ended June 30, Nine months ended June 30, IN € THOUSANDS 2018 2017 2018 2017 Revenue 250,162 233,521 731,709 689,069 Cost of sales (177,007) (167,408) (512,728) (487,874) Gross profit 73,155 66,113 218,981 201,195 Research and development expenses (10,133) (9,004) (31,803) (27,644) Selling expenses (20,389) (15,835) (61,183) (56,416) Administrative expenses (9,372) (9,268) (28,802) (27,071) Other income 4,023 2,187 9,387 9,380 Other expenses (2,211) (3,058) (6,987) (10,909) Profit from operating activities 35,073 31,135 99,593 88,535 Finance income 2,305 17,597 1,500 17,803 Finance costs (2,098) (20,774) (9,027) (14,642) Profit / (loss) before income tax 35,280 27,958 92,066 91,696 Income tax income / (expense) (10,007) (3,368) (19,464) (22,733) Profit / (loss) for the period 25,273 24,590 72,602 68,963 thereof attributable to non-controlling interests (7) 8 (103) 22 thereof attributable to shareholders of Stabilus 25,280 24,582 72,705 68,941 Other comprehensive income / (expense) Foreign currency translation difference 1) 6,876 2,681 2,855 2,333 Unrealized actuarial gains and losses 2) (257) (1) 627 2,765 Other comprehensive income / (expense), net of taxes 6,619 2,680 3,482 5,098 Total comprehensive income / (expense) for the period 31,893 27,270 76,084 74,061 thereof attributable to non-controlling interests (7) 8 (103) 22 thereof attributable to shareholders of Stabilus 31,900 27,262 76,187 74,039 Earnings per share (in €): basic 1.02 1.00 2.94 2.79 diluted 1.02 1.00 2.94 2.79
1) Item that may be reclassified ('recycled') to profit and loss at a future point in time when specific conditions are met.
2) Item that will not be reclassified to profit and loss.
The accompanying Notes form an integral part of these Consolidated Financial Statements.
as of June 30, 2018 (unaudited)
| Consolidated Statement of Financial Position | T _ 015 | ||
|---|---|---|---|
| IN € THOUSANDS | June 30, 2018 | Sept 30, 2017 | |
| Assets | |||
| Property, plant and equipment | 170,700 | 169,659 | |
| Goodwill | 194,859 | 194,184 | |
| Other intangible assets | 250,636 | 268,911 | |
| Other assets | 3,317 | 2,951 | |
| Deferred tax assets | 17,219 | 12,083 | |
| Total non-current assets | 636,731 | 647,788 | |
| Inventories | 86,618 | 85,262 | |
| Trade accounts receivable | 126,208 | 105,147 | |
| Current tax assets | 3,869 | 5,802 | |
| Other financial assets | 3,213 | 5,155 | |
| Other assets | 15,990 | 12,718 | |
| Cash and cash equivalents | 115,846 | 68,123 | |
| Total current assets | 351,744 | 282,207 | |
| Total assets | 988,475 | 929,995 | |
| IN € THOUSANDS | June 30, 2018 | Sept 30, 2017 |
|---|---|---|
| Equity and liabilities | ||
| Issued capital | 247 | 247 |
| Capital reserves | 225,848 | 225,848 |
| Retained earnings | 192,384 | 139,440 |
| Other reserves | (25,716) | (29,198) |
| Equity attributable to shareholders of Stabilus | 392,763 | 336,337 |
| Non-controlling interests | (98) | 43 |
| Total equity | 392,665 | 336,380 |
| Financial liabilities | 312,979 | 311,951 |
| Other financial liabilities | 824 | 1,830 |
| Provisions | 2,878 | 3,771 |
| Pension plans and similar obligations | 51,896 | 53,236 |
| Deferred tax liabilities | 53,244 | 60,036 |
| Total non-current liabilities | 421,821 | 430,824 |
| Trade accounts payable | 77,696 | 79,073 |
| Financial liabilities | 11,092 | 10,000 |
| Other financial liabilities | 12,154 | 9,613 |
| Current tax liabilities | 20,384 | 15,612 |
| Provisions | 38,103 | 33,061 |
| Other liabilities | 14,560 | 15,432 |
| Total current liabilities | 173,989 | 162,791 |
| Total liabilities | 595,810 | 593,615 |
| Total equity and liabilities | 988,475 | 929,995 |
The accompanying Notes form an integral part of these Consolidated Financial Statements.
for the nine months ended June 30, 2018 (unaudited)
| Nine months ended June 30, | |||
|---|---|---|---|
| IN € THOUSANDS | 2018 | 2017 1) | |
| Profit / (loss) for the period | 72,602 | 68,963 | |
| Income tax expense | 19,464 | 22,733 | |
| Net finance result | 7,527 | (3,479) | |
| Interest received | 209 | 318 | |
| Depreciation and amortization (incl. impairment losses) | 42,939 | 46,141 | |
| Gains / losses from the disposal of assets | (57) | – | |
| Changes in inventories | (1,356) | (6,742) | |
| Changes in trade accounts receivable | (21,061) | (11,519) | |
| Changes in trade accounts payable | (1,377) | (8,032) | |
| Changes in other assets and liabilities | 1,807 | (940) | |
| Changes in provisions | 3,708 | 790 | |
| Income tax payments | (25,543) | (22,809) | |
| Cash flow from operating activities | 98,862 | 85,424 | |
| Proceeds from disposal of property, plant and equipment | 647 | 942 | |
| Purchase of intangible assets | (6,295) | (8,729) | |
| Purchase of property, plant and equipment | (21,330) | (25,048) | |
| Cash flow from investing activities | (26,978) | (32,835) | |
| Receipts from financial liabilities | 6,427 | – | |
| Receipts from non-controlling interests | – | 15 | |
| Payments for redemption of financial liabilities | (347) | – | |
| Payments for redemption of senior facilities | (6,427) | (12,500) | |
| Payments for finance leases | (1,039) | (471) | |
| Dividends paid | (19,760) | (12,350) | |
| Dividends paid to non-controlling interests | (38) | (54) | |
| Payments for interest | (2,837) | (6,454) | |
| Cash flow from financing activities | (24,021) | (31,814) | |
| Net increase / (decrease) in cash and cash equivalents | 47,863 | 20,775 | |
| Effect of movements in exchange rates on cash held | (140) | (475) | |
| Cash and cash equivalents as of beginning of the period | 68,123 | 75,037 | |
| Cash and cash equivalents as of end of the period | 115,846 | 95,337 |
1) Prior-year figures have been reported following the adjusted structure of the year ended September 30, 2017. The accompanying Notes form an integral part of these Consolidated Financial Statements.
Segment information for the nine months ended June 30, 2018, and 2017 is as follows:
| Europe | NAFTA | Asia / Pacific and RoW | ||||
|---|---|---|---|---|---|---|
| Nine months ended June 30, | Nine months ended June 30, | Nine months ended June 30, | ||||
| IN € THOUSANDS | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| External revenue1) | 376,937 | 345,449 | 261,888 | 267,608 | 92,884 | 76,012 |
| Intersegment revenue1) | 24,526 | 22,811 | 19,095 | 18,889 | 115 | 493 |
| Total revenue1) | 401,463 | 368,260 | 280,983 | 286,497 | 92,999 | 76,505 |
| Depreciation and amortization (incl. impairment losses) |
(22,310) | (24,454) | (9,174) | (9,593) | (4,495) | (3,614) |
| EBIT | 54,358 | 46,382 | 36,915 | 40,004 | 15,280 | 10,629 |
| Adjusted EBIT | 58,066 | 50,095 | 39,217 | 42,560 | 15,393 | 10,750 |
| Total segments Nine months ended June 30, |
Other / Consolidation | Stabilus Group | ||||
| Nine months ended June 30, | Nine months ended June 30, | |||||
| IN € THOUSANDS | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 |
| External revenue1) | 731,709 | 689,069 | – | – | 731,709 | 689,069 |
| Intersegment revenue1) | 43,736 | 42,193 | (43,736) | (42,193) | – | – |
| Total revenue1) | 775,445 | 731,262 | (43,736) | (42,193) | 731,709 | 689,069 |
| Depreciation and amortization (incl. impairment losses) |
(35,979) | (37,661) | (6,960) | (8,480) | (42,939) | (46,141) |
| EBIT | 106,553 | 97,015 | (6,960) | (8,480) | 99,593 | 88,535 |
| Adjusted EBIT | 112,676 | 103,405 | – | – | 112,676 | 103,405 |
1) Revenue breakdown by location of Stabilus company (i.e. "billed-from view").
| DATE 1)2) | PUBLICATION / EVENT |
|---|---|
| August 6, 2018 | Publication of the third-quarter results for fiscal year 2018 (Quarterly Statement Q3 FY18) |
| November 16, 2018 | Publication of preliminary financial results for fiscal year 2018 |
| December 14, 2018 | Publication of full year results for fiscal year 2018 (Annual Report 2018) |
| February 4, 2019 | Publication of the first-quarter results for fiscal year 2019 (Quarterly Statement Q1 FY19) |
| February 13, 2019 | Annual General Meeting |
| May 6, 2019 | Publication of the second-quarter results for fiscal year 2019 (Interim Report Q2 FY19) |
| August 5, 2019 | Publication of the third-quarter results for fiscal year 2019 (Quarterly Statement Q3 FY19) |
| November 15, 2019 | Publication of preliminary financial results for fiscal year 2019 |
| December 13, 2019 | Publication of full year results for fiscal year 2019 (Annual Report 2019) |
1) We cannot rule out changes of dates. We recommend checking them on our website in the Investor Relations / Financial Calendar section (www.ir.stabilus.com). 2) Please note that our fiscal year (FY) comprises a twelve-month period from October 1 until September 30 of the following calendar year, e.g. the fiscal year 2018 comprises a year ended September 30, 2018.
This quarterly statement contains forward-looking statements that relate to the current plans, objectives, forecasts and estimates of the management of Stabilus S.A. These statements take into account only information that was available up to and including the date that this quarterly statement was prepared. The management of Stabilus S.A. makes no guarantee that these forward-looking statements will prove to be right. The future development of Stabilus S.A. and its subsidiaries and the results that are actually achieved are subject to a variety of risks and uncertainties which could cause actual events or results to differ significantly from those reflected in the forward-looking statements. Many of these factors are beyond the control of Stabilus S.A. and its subsidiaries and therefore cannot be precisely predicted. Such factors include, but are not limited to, changes in economic conditions and the competitive situation, changes in the law, interest rate or exchange rate fluctuations, legal disputes and investigations, and the
availability of funds. These and other risks and uncertainties are set forth in the quarterly statement. However, other factors could also have an adverse effect on our business performance and results. Stabilus S.A. neither intends nor assumes any separate obligation to update forward-looking statements or to change these to reflect events or developments that occur after the publication of this quarterly statement.
Certain numbers in this quarterly statement have been rounded up or down. There may therefore be discrepancies between the actual totals of the individual amounts in the tables and the totals shown as well as between the numbers in the tables and the numbers given in the corresponding analyses in the text of the quarterly statement. All percentage changes and key figures in the quarterly statement were calculated using the underlying data in millions of euros to one decimal place (€ millions).
Further information including news, reports and publications can be found in the Investor Relations section of our website at www.ir.stabilus.com.
Phone: +352 286 770 21 Fax: +352 286 770 99 Email: [email protected]
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