Wacker Neuson SE — Interim / Quarterly Report 2024

Nov 21, 2024

Wacker Neuson Group Quarterly report Q3 2024

Overview Q3/2024 // 9M/2024 ${ }^{1}$

Revenue 9M/2024 -14.5\% compared to 9M/2023 due to persistently weak markets and high dealer stocks

EBIT margin 9M/2024
at $6.3 \%$ after weak Q3/2024

NWC ratio ${ }^{2}$ elevated due to annualized lower revenue base and trade payables

Positive momentum in free cash flow continues due to net working capital reduction

Revenue and profitability - Q3/2024

Declining growth and profitability, strained market

Profit and loss statement (excerpt)

€ m	Q3/24	Q3/23	A
Revenue	517.6	648.0	$-20.1 \%$
Gross profit	118.7	162.1	$-26.8 \%$
as a \% of revenue	22.9	25.0	$-2.1 P P$
Operating costs ${ }^{1}$	$-94.0$	$-98.4$	$-4.5 \%$
as a \% of revenue	18.2	$-15.2 \%$	$-3.0 P P$
EBIT	24.7	63.7	$-61.2 \%$
as a \% of revenue	4.8	9.8\%	$-5.0 P P$
Financial result	$-8.3$	$-4.8$	72.9\%
Taxes on income	$-6.7$	$-15.9$	$-57.9 \%$
Profit for the period	9.7	43.0	$-77.4 \%$
EPS (in €)	0.14	0.63	$-77.8 \%$

Comments on Q3/2024

Revenue -20.1\% YoY (adj. for FX effects -19.9\%)

• Weak market environment continues to burden the results
• No sustainable order intake growth, current order book shrinks further, full dealer stocks

Gross profit -26.8\% YoY (Gross profit margin -2.1 PP)

• Cost measures in production cannot fully compensate weak market conditions

EBIT -61.2\% YoY (EBIT margin: -5.0 PP)

• EBIT margin in Q3/2024 mainly impacted by lower gross profit
• Operating costs $-4.5 \%$ YoY as a result of cost measures in SG\&A

Earnings per share -77.8\% YoY

• Financial result affected by increase of net debt compared to previous year

Revenue and profitability - 9M/2024

Declining growth and profitability, strained market

Profit and loss statement (excerpt)

€ m	9M/24	9M/23	A
Revenue	1,722.4	2,013.9	$-14.5 \%$
Gross profit	464.4	506.7	$-20.2 \%$
as a \% of revenue	27.67	25.2\%	$-1.7 P P$
Operating costs ${ }^{1}$ as a \% of revenue	955.9	$-266.3$	$11.1 \%$
	17.2\%	$-13.2 \%$	$-4.0 P P$
EBIT	108.8	240.4	$-54.9 \%$
as a \% of revenue	6.3	11.9\%	$-5.6 P P$
Financial result	$-17.0$	$-8.6$	$97.7 \%$
Taxes on income	$-27.1$	$-62.8$	$-56.8 \%$
Profit for the period	64.4	169.0	$-61.9 \%$
EPS (in €)	0.95	2.48	$-61.7 \%$

Comments on 9M/2024

Revenue -14.5\% YoY (adj. for FX effects -14.4\%)

• Weak market environment continues to burden the results
• Both construction and agriculture industries facing a substantial downturn

Gross profit -20.2\% YoY (Gross profit margin -1.7 PP)

• Cost measures in production cannot fully compensate weak market demand also driven through full dealer stocks

EBIT -54.9\% YoY (EBIT margin: -5.6 PP)

• Other operating income amounting to $€ 26.5$ million from one-offs is included in 9M/2023
• Higher operating costs YoY but improvements throughout the year 2024 as a result of cost measures in SG\&A
• EBIT margin in 9M/2024 mainly impacted by lower gross profit margin

Earnings per share -61.7\% YoY

• Financial result driven by interest result of $€-15.3$ million (9M/2023: $€-7.5$ million), higher interest expenses due to higher net financial debt
• Tax rate of $29.6 \%$ slightly higher than previous year (9M/2023: 27.0\%)

[^0]
[^0]: ${ }^{1}$ Including other operating income (9M/2023: € 26.5 million from one-offs) / other operating expenses.

Development of regions and business areas

Lower market demand in all regions

Services business segment grows further

	Share	YoY
Light Equipment	354.0	20\%
Compact Equipment		1,002.6
Services	377.2	22\%

Share	$1,6 \%$
59\%	$-19 \%$
22\%	$>3 \%$
100\%	$-15 \%$

Share	YoY
20\%	$-16 \%$
59\%	$-19 \%$
22\%	$>3 \%$
100\%	$-15 \%$

Comments on 9M/2024

Revenue Europe (EMEA) -12.1\% YoY (adj. for FX effects -12.2\%)

• Revenue decreases in Germany, France and United Kingdom could not be offset by revenue increases in the Netherlands, Portugal, Spain and Switzerland
• Negative demand trends in Eastern and Northern European markets
• Agricultural business also faces recessional environment (9M/2024: $-19.2 \%$ YoY)

Revenue Americas -20.3\% YoY (adj. for FX effects -19.9\%)

• Negative growth in the USA, Canada as well as Mexico driven through high dealer stocks

Revenue Asia-Pacific -30.1\% YoY (adj. for FX effects -29.2\%)

• Industry downturn continues in Asia as well
• Revenue decreases driven by further deteriorating demand in Australia and China

Inventory reduction continues in Q3/2024

Inventories

Trade payables

[^0]

Trade receivables

Trade receivables
$[\mathrm{€} \mathrm{m}]$

Comments

• Inventories reduced by $14.1 \%$ since year-end 2023, driven by reduction in raw materials (-22.8\%) and finished goods (-11.2\%)
• Trade receivables reduced by $8.2 \%$ compared to December 31, 2023
• Trade payables decrease compared to December 31, 2023 due to lower purchasing volume of production plants

[^0]: ${ }^{1}$ Days inventory outstanding (ann.) $=($ inventory/(cost of sales4)) $ 365$ days. ${ }^{2}$ Days sales outstanding (ann.) $=$ (receivables/(revenue4))365 days. ${ }^{3}$ Days payables outstanding (ann.) $=($ payables/(cost of sales4))365 days.

Successful free cash flow generation

Net Working Capital

Free cash flow

Other

Operating cash flow

Operating cash flow

Comments

• Annualized net working capital ratio of $39.0 \%$ still elevated, mainly due to low revenue in Q3/2024
• Operative cash flow continues to grow and reaches $€ 109.8$ million in Q3/2024, driven by inventory reduction
• Investments amounting to $€ 68.2$ million in 9M/2024 (-36.6\% YoY), thereof $€ 40.4$ million in property, plant and equipment and $€ 27.8$ million in intangible assets
• Free cash flow positive in 9M/2024 and above the previous year, as a result of the higher operative cash flow

Still robust financial structure with slightly higher equity ratio

Net financial debt ${ }^{1}$ and gearing ${ }^{2}$

Equity and equity ratio

Net financial debt/EBITDA ${ }^{3}$

Comments

• Net financial debt ${ }^{1}$ on September 30, 2024 still slightly higher than on December 31, 2023, nevertheless significantly declined by
  € 76 million since June 30, 2024 mainly due to repayment of short-term debt
• Equity slightly decreased since year-end 2023 (-1.0\%) due to dividend payout and partially offsetting net income, equity ratio slightly higher by the end of Q3/2024 due to lower liabilities
• Gearing ${ }^{2}$ decreases since June 30, 2024 due to lower net financial debt

Industry barometers reflect a continuing economic downturn

Construction:
CECE business climate index on a downward trend

Agriculture:
CEMA business climate index still negative

2016
2018
2022
2024
Source: CEMA (European Agricultural Machinery Industry Association), October 2024.
${ }^{1}$ Investments in property, plant and equipment and intangible assets. Investments in the Group's own rental portfolio, equity investments and financial assets are not included.

Outlook

• CECE business climate index decreases further, sales on the European market decline significantly
• CEMA business climate index increases slightly and reaches -52 points solely due to marginally less negative turnover expectations, nevertheless revenue decreases are still expected for the most part
• Business cycle risks for H2 2024 remain:
• High dealer stocks
• Persistently weak market demand
• Challenging economic and geopolitical environment
• Adjusted revenue and earnings forecast for 2024:
• Revenue between $€ 2,200$ and $€ 2,300$ million (prev.: between $€ 2,300$ and $€ 2,400$ million)
• EBIT margin between $5.5 \%$ and $6.5 \%$ (prev.: between $6.0 \%$ and $7.0 \%$ )
• Investments of around $€ 100$ million ${ }^{1}$
• Net working capital as a percentage of turnover around $34 \%$

Consolidated Financial Statements

(unaudited)

IN € MILLION	Q3/24	Q3/23	9M/24	9M/23
Revenue	517.6	648.0	1,722.4	2,013.9
Cost of sales	$-398.9$	$-485.9$	$-1,318.0$	$-1,507.2$
Gross profit	118.7	162.1	404.4	506.7
Sales and service expenses	$-59.5$	$-61.0$	$-189.3$	$-182.6$
Research and development expenses	$-12.3$	$-16.1$	$-43.3$	$-47.7$
General administrative expenses	$-24.0$	$-24.2$	$-70.4$	$-70.7$
Other income	3.3	4.1	10.2	37.1
Other expenses	$-1.5$	$-1.2$	$-3.1$	$-2.4$
Earnings before interest and tax (EBIT)	24.7	63.7	108.5	240.4
Result from investments accounted for using the equity method*	$-0.4$	$-0.5$	$-0.5$	$-0.5$
Financial income	3.3	6.6	23.2	25.4
Financial expenses	$-11.2$	$-10.9$	$-39.7$	$-33.5$
Earnings before tax (EBT)	16.4	58.9	91.5	231.8
Taxes on income	$-6.7$	$-15.9$	$-27.1$	$-62.8$
Profit for the period	9.7	43.0	64.4	169.0
Earnings per share in $€$ (diluted and undiluted)	0.14	0.63	0.95	2.48
* As a result of changes in reporting due to a new Consolidated Income Statement item "Result from investments accounted for using the equity method", the Consolidated Income Statement has been adjusted compared to the previous year. Refer to "Changes in accounting under IFRS" of the Annual Report 2023 for more information.

Consolidated balance sheet

IN € MILLION
Sept. 30, 2023
Sept. 30, 2023

Assets
Property, plant and equipment	608.3	581.8	531.2
Property held as financial investment	27.3	27.8	29.5
Goodwill	238.9	232.5	232.5
Other intangible assets	224.0	219.1	213.8
Investments accounted for using the equity method*	4.6	0.0	0.3
Other Investments	4.0	4.0	3.9
Deferred tax assets	57.2	54.9	33.1
Non-current financial assets	31.9	24.3	20.5
Rental equipment	278.3	260.9	254.0
Total non-current assets	1,474.5	1,405.3	1,318.8
Inventories	665.0	774.4	818.6
Trade receivables	318.3	346.6	392.6
Tax assets	7.5	9.8	15.3
Other current financial assets	40.8	44.2	43.0
Other current non-financial assets	31.5	36.8	42.1
Cash and cash equivalents	26.8	27.8	28.4
Total current assets	1,089.9	1,239.6	1,340.0
Total assets	2,564.4	2,644.9	2,658.8

IN € MILLION

Sept. 30, 2023

Equity and liabilities	70.1	70.1	70.1
Subscribed capital	601.5	603.2	608.0
Other reserves	865.7	879.4	862.4
Net profit/loss*	-83.0	-53.0	-53.0
Treasury shares	1,484.3	1,499.7	1,487.5
Equity	192.9	97.3	104.3
Non-current financial borrowings	104.7	88.4	75.3
Non-current lease liabilities	62.9	63.2	61.7
Deferred tax liabilities	37.1	40.0	35.8
Provisions for pensions and similar obligations	14.2	14.0	10.1
Non-current provisions	17.6	16.1	17.0
Non-current contract liabilities*	429.6	319.0	304.2
Total non-current liabilities	175.0	251.5	292.0
Trade payables	221.9	296.1	299.7
Current liabilities to financial institutions	1.7	0.2	0.2
Current portion of non-current borrowings	29.6	29.7	26.5
Current lease liabilities	26.3	26.2	23.8
Current provisions	12.6	10.0	7.9
Current contract liabilities*	23.1	33.9	27.8
Income tax liabilities	97.9	106.9	112.4
Other current financial liabilities	62.2	71.7	76.8
Other current non-financial liabilities	650.5	826.2	867.1
Total current liabilities	2,554.4	2,644.9	2,658.8

• As a result of changes in reporting due to a new Consolidated Balance Sheet item for Investments accounted for using the equity method as well as an error correction in connection with the revenue recognition of extended warranty obligations, the Consolidated Balance Sheet has been adjusted compared to the previous year. Refer to "Changes in accounting under IFRS" of the Annual Report 2023 for more information.

	Q3/24	Q3/23	9M/24	9M/23
EBT	16.4	58.9	91.5	231.8
Depreciation, amortization, impairment and reversal of impairment of non-current assets	23.7	22.9	70.8	63.6
Unrealized foreign exchange gains/losses	$-0.6$	$-2.1$	0.4	$-4.0$
Financial result	8.3	4.8	17.0	8.6
Gains from the sale of intangible assets and property, plant and equipment	0.3	0.1	0.5	$-15.6$
Changes in rental equipment, net	$-3.6$	$-19.3$	$-14.3$	$-46.8$
Changes in misc. assets	$-1.4$	1.0	0.5	$-22.2$
Changes in provisions	1.2	0.7	$-0.8$	2.4
Changes in misc. liabilities	$-12.7$	8.8	$-14.2$	58.2
Gross cash flow	21.4	75.8	151.4	276.0
Changes in inventories	52.3	$-30.3$	107.9	$-138.9$
Changes in trade receivables	64.3	13.7	28.7	$-91.1$
Changes in trade payables	$-28.0$	$-14.2$	$-77.0$	30.6
Changes in net working capital	87.0	$-30.8$	59.6	$-199.4$
Cash flow from operating activities before income tax paid	119.2	45.0	211.0	76.6
Income tax paid	$-9.4$	$-16.5$	$-38.5$	$-33.5$
Cash flow from operating activities	109.0	28.5	172.5	43.1

Consolidated cash flow statement (2)

IN € MILLION

	Q3/24	Q3/23	9M/24	9M/23
Cash flow from operating activities	109.8	28.5	172.5	43.1
Purchase of property, plant and equipment	$-12.9$	$-31.4$	$-40.4$	$-85.7$
Purchase of intangible assets	$-7.0$	$-7.0$	$-27.8$	$-21.9$
Cash outflows for investments accounted for using the equity method and other investments	$-0.8$	$-0.1$	$-3.3$	$-0.6$
Cash outflows for additions to the consolidation structure	$-2.8$	0.0	$-11.0$	0.0
Cash outflows for loans to investments accounted for using the equity method	0.0	$-0.5$	0.0	$-1.1$
Proceeds from the sale of property, plant and equipment, intangible assets and assets held for sale	0.7	0.1	1.5	25.3
Cash flow from investment activities	$-22.8$	$-38.9$	$-81.0$	$-84.0$
Free cash flow	87.0	$-10.4$	91.5	$-40.9$
Dividends	0.0	0.0	$-78.2$	$-68.0$
Cash receipts from current borrowings	$-77.8$	65.6	117.2	205.2
Repayments from current borrowings	0.0	$-50.0$	$-195.0$	$-98.9$
Cash receipts from non-current borrowings	0.0	0.0	100.0	0.0
Repayments from non-current borrowings	$-0.2$	0.0	$-0.7$	0.0
Repayments from lease liabilities	$-7.9$	$-6.5$	$-20.1$	$-16.6$
Interest paid	$-5.5$	$-4.6$	$-18.1$	$-11.3$
Interest received	1.0	1.4	2.6	3.1
Cash flow from financial activities	$-90.4$	5.9	$-92.3$	13.5
Change in cash and cash equivalents before effect of exchange rates and changes in consolidation group	$-3.4$	$-4.5$	$-0.8$	$-27.4$
Effect of exchange rates on cash and cash equivalents	0.2	$-0.8$	$-0.7$	2.1
Change in consolidation group	0.1	0.0	0.5	0.0
Change in cash and cash equivalents	$-3.1$	$-5.3$	$-1.0$	$-25.3$
Cash and cash equivalents at the beginning of the period	29.5	33.7	$-27.8$	53.7
Cash and cash equivalents at the end of period	26.8	28.4	26.8	28.4

Group segment reporting

Geographical segments

IN € MILLION

IN € MILLION
9M
${ }^{1}$ EBIT of regions before consolidation

Business areas

IN € MILLION

Segment revenue from external customers	Q3/24	Q3/23	9M/24	9M/23
Light equipment	113.2	133.6	354.0	420.1
Compact equipment	276.4	391.4	1,002.6	1,242.2
Services	131.5	127.9	377.2	965.5
	521.1	652.9	1,733.8	2,027.8
Less cash discounts	-3.5	-4.9	-11.4	-13.9
Total	517.6	648.0	1,722.4	2,013.9

Financial calendar and contact

November 25-27, 2024
January 22, 2025
March 26, 2025
March 27, 2025
May 8, 2025
May 23, 2025
August 14, 2025
November 13, 2025

German Equity Forum 2024, Frankfurt
Kepler German Corporate Conference 2025, Frankfurt
Publication of Annual Report with Annual/Consolidated Financial Statements 2024, Earnings Call
Jefferies 5th Pan-European Mid-Cap Conference, London

Publication of Quarterly Statement Q1/2025, Earnings Call

Annual General Meeting, Munich
Publication of Half-Year Report H1/2025, Earnings Call
Publication of Nine-month Statement 9M/2025, Earnings call

Disclaimer

This presentation contains forward-looking statements which are based on the current estimates and assumptions by the corporate management of 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, uncertainties and other factors. Many of these factors, including, but not limited to, those described in disclosures, in particular in the risk report of the Company, are outside the Company's control and cannot be accurately estimated in advance, such as the future economic environment, the actions of competitors and others involved in the market-place or the legal and regulatory framework. If these risks or uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. Above and beyond legal requirements, the Company neither plans nor undertakes to update any forward-looking statements.
All rights reserved. As of November 2024. Wacker Neuson SE accepts no liability for the accuracy and completeness of information provided in this presentation. Reprint only with the written approval of Wacker Neuson SE in Munich, Germany.

Contact

Wacker Neuson SE Investor Relations
+49 - (0)89 - 35402 - 1823
ir@wackerneuson.com
www.wackerneusongroup.com