Wacker Neuson Group Quarterly report Q1/23

9 May 2023, unaudited

Overview Q1/23

Q1/23
Revenue	EBIT margin	NWC ratio	FCF1
€ 667 m	13.2%	30.0%	€ -17 m
(+27.9% yoy)	(PY: 7.5%)	(PY: 28.5%)	(PY: € -68 m)

Revenue up 28% yoy, high growth in Q1 as customer demand remains strong

Price increases take effect, positive one-time effect with significant impact on Q1

NWC ratio in Q1 within strat. target range (≤ 30%), but inventories still decisive for high NWC ratio Slight easing of supply chains, still challenging environment; increased price sensitivity on customer side

Revenue and earnings Q1/23

Continued high growth, above-average profitability

Profit and loss account (extract)

m €	Q1/23	Q1/22	Δ
Revenue	667.2	521.6	27.9%
Gross profit	167.3	119.8	39.6%
as a % of revenue	25.1%	23.0%	2.1PP
Operating costs	-97.9	-81.9	19.5%
as a % of revenue	-14.7%	-15.7%	1.0PP
EBIT	87.8	39.1	124.6%
as a % of revenue	13.2%	7.5%	5.7PP
Financial result	-2.6	0.0
Taxes on income	-22.8	-10.5	-117.1%
Profit for the period	62.4	28.6	118.2%
EPS (€)	0.92	0.42	119.0%

Comments

Revenue +27.9% yoy (adj. for currency effects: +27.5%)

Significant double-digit growth driven by Europe and North America
Continued stable development in construction and agriculture

Gross profit +39.6% yoy (gross profit margin +2.1 PP)

Gross margin benefits significantly from effects of price adjustments in 2022, which will be reflected in Q1 2023
Old contracts with lower margins are becoming fewer

EBIT +124.6% yoy (EBIT margin: +5.7 PP)

Significantly disproportionate growth compared to already strong increase in revenue
Positive special effect from property sale (+2.3 margin pp)
Share of operating costs (total sales, R&D and administrative expenses) in revenue further reduced (-1.0 PP yoy)

Earnings per share +119.0% yoy

Financial result marked by higher interest rates
Tax rate at 26.8% slightly below previous year (Q1/22: 26.9%)

Development of the regions and business areas

Americas and Europe remain strong revenue drivers Comments

Compact equipment business segment with biggest growth

Revenue Europe (EMEA) +22.4% yoy (adj. for FX effects +22.9%)

Double-digit growth rates in DACH, the UK, France, Poland and the Czech Republic continue to support growth
Finland and Italy with doubled revenue
Continued strong growth in excavators, wheel loaders and dumpers
Unchanged high growth in agricultural machinery business (+44.3%)

Americas revenue +57.0% yoy (adj. for FX effects +22.9%)

Another very satisfactory development in the USA and Canada
Development of the US dollar has a dampening effect
Continued high demand for construction site equipment, including generators, light towers and pumps, as well as for excavators and compaction equipment
Continued strong demand from key accounts

Asia-Pacific revenue +7.3% yoy (adj. for FX effects +22.9%)

Australia and also India again with double-digit growth, with strong demand for excavators and dumpers
Market-related decline in revenue in China dampening overall development of the region

² Revenue per business unit before cash discounts.

Supply chain situation slightly improved, inventories still increased

Inventories

Trade payables

Trade receivables

Comments

Supply chain situation slightly improved but still challenging
Continued increased need for stockpiling to ensure growth
Unfinished machinery inventory volatile but overall below highs again
Increase in trade receivables in relation to increase in revenue

Days inventory outstanding = (inventories/(cost of sales*4))*365 days;² Days sales outstanding = (receivables/(revenue*4))*365 days. (receivables/(cost of sales*4))*365 days;³ Days payables outstanding = (payables/(cost of sales*4))*365 days. Net working capital as a % of annualised quarterly revenue.

NWC ratio in the strategic target range

Net working capital

Free cash flow

Free cash flow² [€ m]

Operating cash flow

Comments

Net working capital ratio within strategic target range of ≤ 30%.
Capital expenditure of EUR 33.6 million at the end of Q1 on target
Operating cash flow of -7.8 million euros noticeably improved compared to Q1 2022, driven in particular by profitability improvement
Free cash flow (adjusted for release of fixed-term deposits in Q1 2022) also noticeably improved at EUR -17.1 million

Unchanged solid financial structure, equity ratio remains high

Net financial debt and gearing

Equity and equity ratio

Net financial debt/EBITDA³

Comments

Net financial debt¹ still characterized by high inventory levels
Gearing² at solid level of 17.8%
Net financial debt to EBITDA to be classified as conservative at 0.6
Equity ratio almost unchanged at 58.9% high
Dividend proposal to the Annual General Meeting on May 26, 2023: EUR 1.00 per share (PY: EUR 0.90 per share)

¹ Non-current financial liabilities + current liabilities to banks + current portion of current liabilities - liquid funds - fresh fixed-term deposits. ² Net financial debt/equity. ³ Net financial debt/annualised EBITDA for the quarter.

Outlook 2023 confirmed

Construction:

CECE Business Climate Index with continued good sentiment ▪ CECE Business Climate Index for the European Construction

Source: CECE (Committee for European Construction Equipment), April 2023. Business Index Current Business Situation Future Expectations

Agriculture: CEMA Business Climate Index tends sideways at a good level

Source: CEMA (European Agricultural Machinery Industry Association), April 2023.

Equipment Industry remains positive, European market continues to grow
CEMA Business Climate Index for the European agricultural machinery sector tends sideways at a good level, economic forecasts increasingly curb growth momentum
Economic risks remain for the second half of the year:
- − Supply chain situation slightly improved, but logistical bottlenecks still prevail; still challenging
- − Elevated interest rate environment fuels recessionary tendencies
- − Banking sector and real estate markets have lost stability
- − Difficult environment for numerous industries
- − Further course of the Ukraine war cannot be assessed
Revenue and earnings forecast for 2023 reaffirmed
- − Revenue between 2,300 and 2,500 million euros
- − EBIT margin between 9.5% and 10.5
- − Investments of around 120 million euros ¹
- − Net working capital as a percentage of turnover around 30 per cent

Outlook

Consolidated Financial Statements

(unaudited)

Consolidated income statement

IN € MILLION

	Q1/23	Q1/22
Revenues	667.2	521.6
Cost of sales	-499.9	-401.8
Gross profit from sales	167.3	119.8

Sales and service expenses	-60.4	-50.8
Research and development expenses	-14.8	-12.7
General administrative expenses	-22.7	-18.4
Other income	18.7	2.3
Other expenses	-0.3	-1.1
Earnings before interest and tax (EBIT)	87.8	39.1
Financial income*	11.1	12.2
Financial expenses*	-13.7	-12.2
Earnings before tax (EBT)	85.2	39.1
Taxes on income	-22.8	-10.5
Profit for the period	62.4	28.6
Earnings per share in € (diluted and undiluted)	0.92	0.42

* Currency gains and losses are reported gross in financial income and financial expenses (previously: reported net). Prior-year figures have been adjusted accordingly. Please also refer to Note 5 "Financial result" of the Annual Report 2022.

Consolidated balance sheet

IN € MILLION				IN € MILLION
	March 31, 2023	Dec. 31, 2022	March 31, 2022		March 31, 2023	Dec. 31, 2022	March 31, 2022
Assets				Equity and liabilities
Property, plant and equipment	463.5	452.8	392.5	Subscribed capital	70.1	70.1	70.1
Property held as financial investment	25.8	26.0	24.1	Other reserves	608.6	614.0	596.5
Goodwill	232.5	232.5	228.6	Net profit/loss	825.8	763.4	710.6
Other intangible assets	213.5	211.0	190.7	Treasury shares	-53.0	-53.0	-53.0
Investments	5.2	4.7	3.8	Equity	1,451.5	1,394.5	1,324.2
Deferred tax assets	32.3	35.9	25.8	Long-term financial borrowings	169.4	169.5	212.3
Non-current financial assets	26.7	13.5	20.6	Long-term lease liabilities	50.2	54.6	45.3
Rental equipment	214.7	206.3	187.4	Deferred tax liabilities	61.3	61.6	50.7
Total non-current assets	1,214.2	1,182.7	1,073.5	Provisions for pensions and similar obligations	36.5	37.6	47.6
				Long-term provisions	8.7	8.7	9.6
				Long-term contract liabilities	11.5	10.2	7.6
				Total non-current liabilities	337.6	342.2	373.1
				Trade payables	317.9	261.3	242.6
				Short-term liabilities to financial institutions	123.4	117.9	77.7
Inventories	742.4	678.9	543.8	Current portion of long-term liabilities	0.3	0.8	0.8
Trade receivables	377.4	301.3	294.1	Short-term lease liabilities	21.5	22.6	21.4
Tax offsets	24.0	25.7	26.0	Short-term provisions	21.1	20.9	21.5
Other current financial assets	38.6	41.3	128.0	Short-term contract liabilities	7.0	7.2	4.8
Other current non-financial assets	31.3	31.4	28.9	Income tax liabilities	19.8	12.0	18.1
Cash and cash equivalents	35.1	53.7	114.7	Other current financial liabilities	85.8	85.3	61.4
Non-current assets held for sale	0.0	8.9	9.0	Other current non-financial liabilities	77.1	59.2	72.4
Total current assets	1,248.8	1,141.2	1,144.5	Total current liabilities	673.9	587.2	520.7
Total assets	2,463.0	2,323.9	2,218.0	Total liabilities	2,463.0	2,323.9	2,218.0

Consolidated cash flow statement (1)

IN € MILLION

	Q1/23	Q1/22
EBT	85.2	39.1
Adjustments to reconcile profit before tax with gross cash flows
Depreciation, amortisation and impairment of non-current assets	19.3	17.1
Unrealised foreign exchange gains/losses	0.4	2.3
Financial result	2.6	0.0
Gains from the sale of intangible assets and property, plant and equpiment	-15.7	-0.1
Change in the rental equpiment, net	-8.6	4.5
Change in misc. assets	-14.6	-5.7
Change in provisions	-0.6	-2.0
Change in misc. liabilities	22.9	4.7
Gross cash flow	90.9	59.9
Changes in inventories	-68.4	-49.4
Changes in trade receivables	-77.8	-54.2
Changes in trade payables	57.5	11.3
Changes in net working capital	-88.7	-92.3
Cash flow from operating activities before income tax paid	2.2	-32.4
Income tax paid	-10.0	-21.7
Cash flow from operating activities	-7.8	-54.1

Consolidated cash flow statement (2)

IN € MILLION
	Q1/23	Q1/22
Cash flow from operating activities	-7.8	-54.1
Purchase of property, plant and equipment	-25.0	-9.8
Purchase of intangible assets	-8.6	-6.8
Purchase of investments	-0.5	0.0
Cash inflow from financial investments	0.0	30.0
Proceeds from the sale of property, plant and equipment, intangible assets
and assets held for sale	24.8	0.2
Proceeds from disposals from the consolidation group	0.0	2.1
Cash flow from investing activities	-9.3	15.7
Free cash flow	-17.1	-38.4
Cash receipts from short-term borrowings	53.3	17.7
Repayments from short-term borrowings	-48.9	-125.0
Repayments from long-term borrowings	0.0	-35.6
Repayments from lease liabilities	-5.4	-6.2
Interest paid	-2.6	-3.0
Interest received	1.0	0.1
Cash flow from financial activities	-2.6	-152.0
Change in cash and cash equivalents before effect of exchange rates	-19.7	-190.4
Effect of exchange rates on cash and cash equivalents	1.1	-0.4
Change in cash and cash equivalents	-18.6	-190.8
Cash and cash equivalents at the beginning of the period	53.7	305.5
Cash and cash equivalents at the end of the period	35.1	114.7

Group segment reporting

Geographical segments

IN € MILLION

	Europe		Americas		Asia-Pacific		Consolidation		Group
	Q1/23	Q1/22	Q1/23	Q1/22	Q1/23	Q1/22	Q1/23	Q1/22	Q1/23	Q1/22

Total revenue	854.0	650.7	168.0	105.5	29.9	27.8			1,051.9	784.0
Revenue with third parties	504.0	411.6	142.6	90.8	20.6	19.2			667.2	521.6
EBIT1	85.9	37.0	18.3	1.2	1.4	1.4	-17.8	-0.5	87.8	39.1

¹ EBIT of the regions before consolidation.

Business areas

IN € MILLION

	Q1/23	Q1/22
Revenue with third parties
Light equipment	135.6	110.0
Compact equipment	416.1	305.7
Services	119.7	108.4
	671.4	524.1
Less cash discounts	-4.2	-2.5
Total	667.2	521.6

Financial calendar and contact

May 9, 2023	Publication of Quarterly report Q1/2023
May 26, 2023	Annual General Meeting 2023 (Munich)
August 8, 2023	Publication of half-year report H1/2023
November 9, 2023	Publication of nine-month report 9M/2023

Disclaimer

This report contains forward-looking statements based on current assumptions and estimates made by the management of the Wacker Neuson Group. Forward-looking statements are identified by the use of words such as expect, intend, plan, anticipate, assume, believe, estimate and similar formulations. These statements are not to be understood as guarantees that these expectations will prove to be correct. Future developments and the results actually achieved by the Wacker Neuson Group and its affiliated companies depend on a number of risks and uncertainties and may therefore differ materially from the forward-looking statements. Various of these factors are beyond the company's control and cannot be precisely predicted, such as the future economic environment and the behavior of competitors and other market participants. There are no plans to update the forward-looking statements, nor does the company assume any separate obligation to do so.

All rights reserved. Valid May 2023. The Wacker Neuson Group assumes no liability for the correctness and completeness of the data listed in this presentation. Reprinting only with the written permission of the Wacker Neuson Group, Munich.

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