Wacker Neuson SE — Interim / Quarterly Report 2021

May 10, 2021

Wacker Neuson Group Quarterly report Q1/21

May 10, 2021, unaudited

Q1/21
Revenue	EBIT margin	FCF (before fixed-term inv.)1
€ 434 m	10.0%	€ 10 m
(+5.6% yoy)	(PY: 7.0%)	(PY: € 4 m)

Back on growth path, dynamic trends in order intake

Marked rise in profitability thanks to reduced cost base and increased productivity

NWC ratio as a percentage of revenue close to target figure, FCF¹ positive

Significant uncertainties related to supply chains

Q1/21: Marked increase in profitability

Income statement (excerpt)

€ million	Q1/21	Q1/20	Δ
Revenue	434.0	410.8	5.6%
Gross profit	118.5	109.1	8.6%
as a % of revenue	27.3%	26.6%	+0.7PP
Operating costs	-77.3	-82.6	-6.4%
as a % of revenue	-17.8%	-20.1%	-2.3PP
EBIT	43.6	28.9	50.9%
as a % of revenue	10.0%	7.0%	+3.0PP
Financial result	0.1	-12.2	–
Taxes on income	-14.6	-6.3	>100%
Profit for the period	29.1	10.4	>100%
Earnings per share (€)	0.41	0.15	>100%

Comments

Revenue +5.6% yoy (adj. for currency effects: +7.4%)

• Positive development in target markets: Europe reports strong growth; Americas below previous year but business picked up markedly towards the end of the first quarter; revenue in Asia more than doubled following marked slump in previous year
• Services segment grew at above-average rate

Gross profit +8.6% yoy (gross profit margin +0.7 PP)

• Product mix remains favorable thanks to strong services segment, in particular increased sales from rental fleet
• Improved productivity at production plants

EBIT +50.9% yoy (EBIT margin: +3.0 PP)

• Operating costs below previous year, reduction in fixed costs (in particular lower personnel costs, travel expenses and marketing costs)
• Profit in previous year negatively affected by restructuring costs

Earnings per share more than doubled

• Financial result almost balanced out due to positive currency effects (significantly impacted by currency effects in prev. year)
• Tax rate at 33.4% (Q1/20: 37.7%): Impacted in previous year by negative currency effects (could not be recognized as operating expenses) and reversal / non-recognition of deferred tax assets

Wacker Neuson SE, quarterly report Q1/21 (unaudited), May 10, 2021

Growth driven by Europe and Asia-Pacific

Services segment continues to grow above par

Comments

Revenue Europe +7.0% yoy (adj. for currency effects: +7.8%)

• Dynamic development in DACH, Eastern Europe, UK and Benelux (Wacker Neuson brand); positive development in particular with excavators, dumpers and compaction equipment
• Above-par gains in services business (aftermarket, rental equipment sales)
• Business with compact equipment for the agricultural sector down 9.0% due to pull-forward effects in the previous year related to the transition to the EU Stage V emissions standard

Revenue Americas -11.2% yoy (adj. for currency effects: -4.3%)

• After a cautious start to the year, business improved markedly towards the end of the first quarter, positive development with compact equipment
• Sharp rise in profitability due among other things to a much lower cost base

Revenue Asia-Pacific +120.0% yoy (adj. for currency effects +112.0%)

• Exceptionally positive performance in Australia/New Zealand due to expansion of dealer network and a product portfolio tailored to local needs; growth driven by major orders for compaction equipment, excavators and dumpers
• Strong sales of excavators in China, previous year heavily impacted by extensive shutdowns

Net working capital ratio close to target figure at 31%

Inventories

Trade payables

Trade receivables

Comments

• Slight seasonal rise in inventory in light of high order book but still well below prior-year figure
• Dynamic business trends towards the end of the first quarter prompt temporary rise in receivables; however, the figure remains significantly lower than the previous year
• Trade payables markedly higher than figure at end of 2020 due to increase in production volumes
• → NWC ratio close to strategic target at 31% (see next slide)

Net working capital

Free cash flow

Cash flow from operating activities

Comments

• At 31%, the net working capital ratio² is significantly lower than the prior-year level and within reach of the strategic target set at ≤ 30%
• Cash flow from operating activities positively affected by increase in profitability; in contrast, (absolute) net working capital rose slightly relative to the end of 2020
• Investments in Q1 below plan; cash flow from investment activities impacted by fixed-term financial investment of EUR 100 m
• Free cash flow before the above-mentioned fixed-term investment amounts to EUR 9.8 m; free cash flow (reported) at EUR -90.2 m (Q1/20: EUR 4.3 m)

Net financial debt and gearing

Equity and equity ratio

Net financial debt/EBITDA³

Comments

7

• Net financial debt¹ remains at low level; gearing² at 11%
• At 0.5, net financial debt/EBITDA³is at a very low level
• Dividend proposal for the AGM on May 26, 2021: EUR 0.60 per share (previous year: Dividend suspended)
• Share buyback program: Within the framework of the share buyback program initiated in April 2021, up to 2,454,900 treasury shares (3.5 percent of share capital) may be repurchased for a maximum total purchase price of EUR 53 m.

Guidance unchanged

Construction industry: CECE business barometer at all-time high Outlook

Agricultural industry: Upturn continues according to CEMA Source: CECE (Committee for European Construction Equipment), April 2021.

• CECE business barometer for the European construction sector reaches new all-time high
• Rapid upturn in CEMA business index for the European agricultural sector continues
• Mood in key target markets for the Wacker Neuson Group currently very positive
• Dynamic development of order intake, order backlog at a high level
• Significant uncertainties related to global supply chains; German Mechanical and Plant Engineering Association (VDMA) describes the supply chain situation as "problematic"
• Guidance for fiscal 2021 unchanged
  • − Revenue between EUR 1,700 m and EUR 1,800 m
  • − EBIT margin between 8.0% and 9.5%
  • − Investments between EUR 100 m and EUR 110 m¹
  • − Net working capital as a percentage of revenue stagnating / slightly lower than previous year (baseline for comparison: yearend 2020)

1

Consolidated Financial Statements

(unaudited)

Consolidated Income Statement

IN € MILLION

	Q1/21	Q1/20
Revenue	434.0	410.8
Cost of sales	-315.5	-301.7
Gross profit	118.5	109.1
Sales and service expenses	-47.1	-55.4
Research and development expenses	-12.4	-9.5
General administrative expenses	-17.8	-17.7
Other income	2.7	2.8
Other expenses	-0.3	-0.4
Financial income	2.7	7.9
Financial expenses	-2.6	-20.1
Profit before tax (EBT)	43.7	16.7
Taxes on income	-14.6	-6.3
Profit for the period	29.1	10.4
Earnings per share in € (diluted and undiluted)	0.41	0.15

Publication of the 2020 half-year report gave rise to a retrospective adjustment to the 'taxes on income' line for Q1/20. A weighted average income tax rate was applied to spread the effects of one-off items over the fiscal year as a whole. For further information on this, refer to page 26 in the 2020 half-year report.

¹⁰ Wacker Neuson SE, quarterly report Q1/21 (unaudited), May 10, 2021

IN € MILLION				IN € MILLION
	March 31, 2021	Dec. 31, 2020	March 31, 2020		March 31, 2021	Dec. 31, 2020	March 31, 2020
Assets				Equity and liabilities
Property, plant and equipment	389,2	391,6	400,9	Subscribed capital	70,1	70,1	70,1
Property held as financial investment	25,9	26,2	25,2	Other reserves	570,3	562,2	587,9
Goodwill	228,6	228,6	238,0	Net profit/loss	614,9	585,8	582,1
Other intangible assets	180,7	178,9	172,3	Equity	1.255,3	1.218,1	1.240,1
Investments	7,0	6,8	11,7	Long-term financial borrowings	291,5	411,6	373,8
Deferred tax assets	27,9	29,4	45,9	Long-term lease liabilities	52,6	57,1	67,3
Non-current financial assets	109,3	109,7	123,8	Deferred tax liabilities	44,0	43,9	40,0
Other non-current non-financial assets	0,1	–	0,1	Provisions for pensions and similar obligations	61,7	64,8	58,5
Total non-current assets	968,7	971,2	1.017,9	Long-term provisions	10,1	9,8	8,2
				Long-term contract liabilities	5,5	5,0	3,9
				Total non-current liabilities	465,4	592,2	551,7
				Trade payables	176,2	137,1	188,5
Rental equipment	162,1	159,5	169,6	Short-term liabilities to financial institutions	137,2	9,2	155,5
Inventories	437,7	412,2	622,9	Current portion of long-term borrowings	0,9	0,2	0,8
Trade receivables	281,2	222,4	344,5	Short-term lease liabilities	24,3	25,7	25,7
Tax offsets	11,8	12,2	6,2	Short-term provisions	18,7	19,0	16,6
Other current financial assets	154,9	45,5	27,0	Short-term contract liabilities	4,9	5,1	4,7
Other current non-financial assets	19,4	16,5	21,6	Income tax liabilities	43,8	32,8	17,8
Cash and cash equivalents	186,0	283,1	84,0	Other current financial liabilities	37,2	38,5	34,1
Non-current assets held for sale	3,3	4,2	0,1	Other current non-financial liabilities	61,2	48,9	58,3
Total current assets	1.256,4	1.155,6	1.275,9	Total current liabilities	504,4	316,5	502,0
Total assets	2.225,1	2.126,8	2.293,8	Total liabilities	2.225,1	2.126,8	2.293,8

Consolidated Cash Flow Statement (1)

IN € MILLION

	Q1/21	Q1/20
EBT	43.7	16.7
Adjustments to reconcile profit before tax with gross cash flows
Depreciation, amortization and impairment of non-current assets	17.6	16.9
Unrealized foreign exchange gains/losses	-4.5	5.3
Financial result	-0.1	12.2
Gains from the sale of intangible assets and property, plant and equipment	-0.6	0.1
Changes in rental equipment, net	-3.6	-3.7
Changes in misc. assets	-4.6	-33.9
Changes in provisions	-1.4	-1.0
Changes in misc. liabilities	15.4	0.6
Gross cash flow	61.9	13.2
Changes in inventories	-18.9	-24.9
Changes in trade receivables	-56.3	10.7
Changes in trade payables	38.0	38.3
Changes in net working capital	-37.2	24.1
Cash flow from operating activities before income tax paid	24.7	37.3
Income tax paid	-1.2	-14.9
Cash flow from operating activities	23.5	22.4

IN € MILLION

	Q1/21	Q1/20
Cash flow from operating activities	23.5	22.4
Purchase of property, plant and equipment	-8.4	-7.7
Purchase of intangible assets	-6.9	-10.6
Cash outflow from financial investments	-100.0	–
Proceeds from the sale of property, plant and equipment, intangible assets and assets held for sale	1.6	0.2
Cash flow from investment activities	-113.7	-18.1
Free cash flow	-90.2	4.3
Cash receipts from short-term borrowings	–	65.0
Repayments from short-term borrowings	-0.4	-22.0
Repayments from lease liabilities	-6.0	-5.9
Interest paid	-3.3	-3.6
Interest received	–	0.4
Cash flow from financial activities	-9.7	33.9
Change in cash and cash equivalents before effect of exchange rates	-99.9	38.2
Effect of exchange rates on cash and cash equivalents	2.8	-0.5
Change in cash and cash equivalents	-97.1	37.7
Cash and cash equivalents at the beginning of the period	283.1	46.3
Cash and cash equivalents at the end of period	186.0	84.0

Geographical segments

IN € MILLION

	Europe		Americas		Asia-Pacific		Consolidation		Group
	Q1/21	Q1/20	Q1/21	Q1/20	Q1/21	Q1/20	Q1/21	Q1/20	Q1/21	Q1/20
Total revenue	570.6	574.7	82.2	129.4	22.3	10.3			675.1	714.4
Revenue from external customers	349.2	326.4	68.3	76.9	16.5	7.5			434.0	410.8
EBIT1	40.6	49.1	6.3	-5.2	1.3	-1.4	-4.6	-13.6	43.6	28.9

Business segments

IN € MILLION

	Q1/21	Q1/20
Segment revenue from external customers
Light equipment	94.9	96.2
Compact equipment	241.6	227.4
Services	99.4	90.4
	435.9	414.0
Less cash discounts	-1.9	-3.2
Total	434.0	410.8

May 10, 2021	Publication of Q1 report 2021, analysts' & investors' conference call
May 26, 2021	Virtual Annual General Meeting, Munich
August 09, 2021	Publication of half-year report 2021, analysts' & investors' conference call
November 10, 2021	Publication of Q3 report 2021, analysts' & investors' conference call

Disclaimer

This report contains forward-looking statements which are based on current estimates and assumptions made by corporate management at Wacker Neuson SE. Forward-looking statements are characterized by the use of words such as expect, intend, plan, predict, assume, believe, estimate, anticipate and similar formulations. Such statements are not to be understood as in any way guaranteeing that those expectations will turn out to be accurate. Future performance and the results actually achieved by Wacker Neuson SE and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from forward-looking statements. Many of these factors are outside the Company's control and cannot be accurately estimated in advance, such as the future economic environment and the actions of competitors and market players. The Company neither plans nor undertakes to update any forward-looking statements.

All rights reserved. Valid May 2021. Wacker Neuson SE accepts no liability for the accuracy and completeness of information provided in this brochure. Reprint only with the written approval of Wacker Neuson SE in Munich, Germany. The German version shall govern in all instances.

Contact

Wacker Neuson SE Contact IR: +49 - (0)89 - 354 02 - 427 ir@wackerneuson.com www.wackerneusongroup.com