Wacker Neuson SE — Investor Presentation 2022

May 10, 2022

Wacker Neuson Group Quarterly report Q1/22

May 10, 2022, unaudited

Overview Q1/22

Revenue up 20% on PY, double-digit growth in all reporting regions

Inefficiencies due to repeatedly disrupted supply chains as well as the sharp rise in input costs impact profitability

NWC within the strategic target range of ≤ 30%; expected increase in NWC results in negative FCF

Supply chains and price dynamics in procurement market remain biggest challenges

Revenue and earnings Q1/22

Dynamic growth, profitability burdened

Income statement (excerpt)

€ m	Q1/22	Q1/21	Δ
Revenue	521.6	434.0	20.2%
Gross profit	119.8	118.5	1.1%
as a % of revenue	23.0%	27.3%	-4.3PP
Operating costs	-81.9	-77.3	6.0%
as a % of revenue	-15.7%	-17.8%	-2.1PP
EBIT	39.1	43.6	-10.3%
as a % of revenue	7.5%	10.0%	-2.5PP
Financial result	0.0	0.1	-100.0%
Taxes on income	-10.5	-14.6	-28.1%
Profit for the period	28.6	29.1	-1.7%
EPS (in €)	0.42	0.41	+2.4%

Comments

Revenue +20.2% yoy (adj. for currency effects: +18.4%)

• Double-digit growth in all reporting regions
• Positive development in construction and agricultural industries, business with key accounts in strong position

Gross profit +1.1% yoy (gross profit margin -4.3 PP)

• Impacted by
• inefficiencies in production and rework as a result of overstretched and repeatedly disrupted supply chains
• sharp rises in material, energy and transport costs
• Sale price increases unable to fully compensate for negative effects

EBIT -10.3% yoy (EBIT margin: -2.5 PP)

• Negative effects on gross profit cannot be fully compensated for
• Strong revenue growth with strict cost controls
• Operating costs (total sales, R&D and administrative expenses) as a share of revenue further reduced (-2.1 PP yoy)

Earnings per share +2.4% yoy

• Financial result balanced out
• Tax rate lower than prior year at 26.9% (Q1/21: 33.4%)

Business development by region and business segment

Strongest growth in compact equipment segment

Double-digit growth in all reporting regions Comments

Revenue Europe (EMEA) +17.9% yoy (adj. for FX effects +17.6%)

• Double-digit growth rates in Germany, Austria, the UK, France, Poland and the Czech Republic drive growth
• Strong growth in excavators, wheel loaders and dumpers for the construction industry
• Positive development in Group's own rental business
• Agricultural equipment business also well up on previous year (+32.2%)

Revenue Americas +32.9% yoy (adj. for FX effects +23.7%)

• Positive development in USA and Canada continues
• Strong growth in worksite technology products, including generators and light towers, as well as in excavators and compact track loaders
• Strong demand from key accounts

Revenue Asia-Pacific +16.4% yoy (adj. for FX effects +12.7%)

• Continuation of strong growth in Australia, particularly in excavators and rollers
• Market conditions remain challenging in China

¹ EBIT for regions before consolidation.

² Revenue by business segment before cash discounts.

Increase in inventory and receivables drive NWC

Inventories

Trade payables

Trade receivables

Comments

• Significantly higher inventory of unfinished machines, materials and components as a result of overstretched and repeatedly disrupted supply chains
• Trade receivables significantly higher than at the end of 2021 due to strong revenue growth
• Trade payables at a high level

• → Net working capital ratio⁴ within strategic target range of ≤ 30%

• Days sales outstanding = (receivables/(revenue*4))*365 days;

• Days payables outstanding = (payables/(cost of sales*4))*365 days.

Net working capital as a % of annualized revenue for the quarter.

Days inventory outstanding = (inventory/(cost of sales*4))*365 days;

Cash flow impacted by expected increase in NWC

Net working capital

Free cash flow

Free cash flow [€ m]

Cash flow from operating activities

Comments

2

• Net working capital ratio within the strategic target range of ≤ 30% despite the significant build-up of inventory and rise in trade receivables relative to year-end
• Investments in the first quarter still behind schedule; cash flow from investment activities impacted by the discontinuation of a fixed-term investment (inflows of € 30 m; Q1/21: outflows of € 100 m)
• Expected increase in NWC impacts cash flow development in the first quarter; Free cash flow before above-mentioned fixed-term investment at € -68.4 m (Q1/21: € 9.8 m); free cash flow (reported) at € -38.4 m (Q1/21: € -90.2 million).

¹ Before outflows from fixed-term investments amounting to € 15 m in Q4/20, € 100 m in Q1/21 and € 15 m in Q4/21 as well as inflows of € 30 m in Q1/22. ² Net working capital as a % of annualized revenue for the quarter.

Solid financing structure, further increase in equity ratio

Net financial debt and gearing

Equity and equity ratio

¹ Long- and short-term borrowings + current portion of long-term borrowings - cash and cash equivalents fixed term investments with terms of less than one year. ² Net financial debt/equity. ³ Net financial debt/annualized EBITDA for the quarter.

Net financial debt/EBITDA³

Comments

• Slight increase in net financial debt¹ due to negative cash flow development in the first quarter; gearing² still low at 5.7%
• Repayment of a euro promissory note (Schuldschein) in the amount of € 125 m as scheduled; early partial repayment of a USD promissory note in the amount of USD 40 m
• Equity ratio rises to 59.7%
• Dividend proposal for the AGM on June 3, 2022: € 0.90 per share (PY: € 0.60 per share)

Outlook: Dynamic demand, overstretched supply chains

Construction: CECE business barometer remains at high level

Source: CECE (Committee for European Construction Equipment), April 2022.

Agriculture: CEMA business barometer recently on the decline

Source: CEMA (European Agricultural Machinery Industry Association), April 2022.

1 Investments in property, plant and equipment and intangible assets. Investments in the Group's own rental equipment, purchases of investments and investments in financial assets are not included.

Outlook

• CECE business barometer for the European construction equipment sector at a high level despite slight downturn in recent months
• CEMA business barometer for the European agricultural equipment sector still in decline due to rising prices and supply chain disruptions.
• Mood in important end markets for Wacker Neuson Group remains highly positive; dynamic development of order intake and order backlog is well above average.
• Risk situation more pressing:
• − Supply chain disruptions could further increase in the short-term
• − Material, energy and shipping costs developing dynamically
• − Further implications of war in Ukraine and coronavirus measures in China not predictable
• Revenue and earnings forecast for 2022 unchanged
• − Revenue between € 1,900 and 2,100 m
• − EBIT margin between 9.0% and 10.5%
• − Investments of approx. € 100 m¹
• − Net working capital as a percentage of revenue at 30 percent or lower

The guidance for fiscal 2022 does not consider further implications of the war in Ukraine on the general economic climate or the health of global supply chains. Similarly, the impact of coronavirus containment measures in China is not reflected in the guidance.

Consolidated Financial Statements

(unaudited)

Consolidated Income Statement

	Q1/22	Q1/21
Revenue	521.6	434.0
Cost of sales	-401.8	-315.5
Gross profit	119.8	118.5
Sales and service expenses	-50.8	-47.1
Research and development expenses	-12.7	-12.4
General administrative expenses	-18.4	-17.8
Other income	2.3	2.7
Other expenses	-1.1	-0.3
Financial income	4.5	2.7
Financial expenses	-4.5	-2.6
Earnings before tax (EBT)	39.1	43.7
Taxes on income	-10.5	-14.6
Profit for the period	28.6	29.1
Earnings per share in € (diluted and undiluted)	0.42	0.41

Consolidated Balance Sheet

IN € MILLION				IN € MILLION
	March 31, 2022	Dec. 31, 2021	March 31, 2021		March 31, 2022	Dec. 31, 2021	March 31, 2021
Assets				Equity and liabilities
Property, plant and equipment	392.5	393.9	389.2	Subscribed capital	70.1	70.1	70.1
Property held as financial investment	24.1	24.2	25.9	Other reserves	596.5	587.1	570.3
Goodwill	228.6	228.6	228.6	Net profit/loss	710.6	682.0	614.9
Other intangible assets	190.7	188.6	180.7	Treasury shares	-53.0	-53.0	0.0
Investments	3.8	3.8	7.0	Equity	1,324.2	1,286.2	1,255.3
Deferred tax assets	25.8	29.4	27.9	Long-term financial borrowings	212.3	295.1	291.5
Non-current financial assets	20.6	19.0	109.3	Long-term lease liabilities	45.3	50.4	52.6
Other non-current non-financial assets	0.0	0.0	0.1	Deferred tax liabilities	50.7	49.8	44.0
Total non-current assets	886.1	887.5	968.7	Provisions for pensions and similar obligations	47.6	54.6	61.7
				Long-term provisions	9.6	10.0	10.1
				Long-term contract liabilities	7.6	6.8	5.5
				Total non-current liabilities	373.1	466.7	465.4
				Trade payables	242.6	230.5	176.2
Rental equipment	187.4	191.6	162.1	Short-term liabilities to financial institutions	77.7	138.7	137.2
Inventories	543.8	490.2	437.7	Current portion of long-term borrowings	0.8	0.9	0.9
Trade receivables	294.1	237.9	281.2	Short-term lease liabilities	21.4	22.2	24.3
Tax offsets	26.0	15.1	11.8	Short-term provisions	21.5	20.5	18.7
Other current financial assets	128.0	158.4	154.9	Short-term contract liabilities	4.8	5.5	4.9
Other current non-financial assets	28.9	23.5	19.4	Income tax liabilities	18.1	22.8	43.8
Cash and cash equivalents	114.7	305.5	186.0	Other current financial liabilities	61.4	74.6	37.2
Non-current assets held for sale	9.0	11.1	3.3	Other current non-financial liabilities	72.4	52.2	61.2
Total current assets	1,331.9	1,433.3	1,256.4	Total current liabilities	520.7	567.9	504.4
Total assets	2,218.0	2,320.8	2,225.1	Total liabilities	2,218.0	2,320.8	2,225.1

Consolidated Cash Flow Statement (1)

	Q1/22	Q1/21
EBT	39.1	43.7
Adjustments to reconcile profit before tax with gross cash flows
Depreciation, amortization and impairment of non-current assets	17.1	17.6
Unrealized foreign exchange gains/losses	2.3	-4.5
Financial result	0.0	-0.1
Gains from the sale of intangible assets and property, plant and equipment	-0.1	-0.6
Changes in rental equipment, net	4.5	-3.6
Changes in misc. assets	-5.7	-4.6
Changes in provisions	-2.0	-1.4
Changes in misc. liabilities	4.7	15.4
Gross cash flow	59.9	61.9
Changes in inventories	-49.4	-18.9
Changes in trade receivables	-54.2	-56.3
Changes in trade payables	11.3	38.0
Changes in net working capital	-92.3	-37.2
Cash flow from operating activities before income tax paid	-32.4	24.7
Income tax paid	-21.7	-1.2
Cash flow from operating activities	-54.1	23.5

Consolidated Cash Flow Statement (2)

	Q1/22	Q1/21
Cash flow from operating activities	-54.1	23.5
Purchase of property, plant and equipment	-9.8	-8.4
Purchase of intangible assets	-6.8	-6.9
Purchase of investments	0.0	0.0
Proceeds of investments	0.0	0.0
Cash inflow from financial investments	0.0	0.0
Cash outflow from financial investments	30.0	-100.0
Proceeds from the sale of property, plant and equipment, intangible assets
and assets held for sale	0.2	1.6
Proceeds from disposals from the consolidation group	2.1	0.0
Cash flow from investment activities	15.7	-113.7
Free cash flow	-38.4	-90.2
Dividends	0.0	0.0
Cash receipts from short-term borrowings	17.7	0.0
Repayments from short-term borrowings	-125.0	-0.4
Cash receipts from long-term borrowings	0.0	0.0
Repayments from long-term borrowings	-35.6	0.0
Repayments from lease liabilities	-6.2	-6.0
Interest paid	-3.0	-3.3
Interest received	0.1	0.0
Cash flow from financial activities	-152.0	-9.7
Change in cash and cash equivalents before effect of exchange rates	-190.4	-99.9
Effect of exchange rates on cash and cash equivalents	-0.4	2.8
Change in consolidation group	0.0	0.0
Change in cash and cash equivalents	-190.8	-97.1
Cash and cash equivalents at the beginning of the period	305.5	283.1
Cash and cash equivalents at the end of period	114.7	186.0

Consolidated Segmentation

Geographical segments

IN € MILLION

	Europe		Americas		Asia-Pacific		Consolidation		Group
	Q1/22	Q1/21	Q1/22	Q1/21	Q1/22	Q1/21	Q1/22	Q1/21	Q1/22	Q1/21
Total revenue	650.7	570.6	105.5	82.2	27.8	22.3			784.0	675.1
Revenue from external customers	411.6	349.2	90.8	68.3	19.2	16.5			521.6	434.0
EBIT1	37.0	45.9	1.2	1.9	1.4	0.4	-0.5	-4.6	39.1	43.6

¹ EBIT for regions before consolidation.

Business segments

	Q1/22	Q1/21
Segment revenue from external customers
Light equipment	110.0	94.9
Compact equipment	305.7	241.6
Services	108.4	99.4
	524.1	435.9
Less cash discounts	-2.5	-1.9
Total	521.6	434.0

Financial calendar and contact

May 10, 2022	Publication of Q1 report 2022, analysts' & investors' conference call
June 3, 2022	Annual General Meeting (virtual)
August 9, 2022	Publication of half-year report 2022, analysts' & investors' conference call
November 10, 2022	Publication of Q3 report 2022, analysts' & investors' conference call

Disclaimer

This presentation contains forward-looking statements which are based on the current estimates and assumptions by the corporate management of Wacker Neuson Group. 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 Group 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. Valid May 2022. Wacker Neuson Group accepts no liability for the accuracy and completeness of information provided in this presentation. Reprint only with the written approval of Wacker Neuson Group in Munich, Germany.

Contact

Wacker Neuson Group Contact IR: +49 - (0)89 - 354 02 - 1261 ir@wackerneuson.com www.wackerneusongroup.com