WashTec AG — Earnings Release 2017

Nov 6, 2017

Financial Statement Q1–3 2017

Strong revenue and earnings growth

• Revenue increased by 20.3% or €52.7m to €312.5m (prior year: €259.8m)
• EBIT up by 49.2% or €12.4m to €37.6m (prior year: €25.2m)
• Growth in Europe and North America driven by Equipment and Service
• Full-year outlook unaltered: revenue expected to be at least €420m with EBIT margin at least 12.0%

Q1–3		Jan 1 to	Jan 1 to		Change
(rounding differences may occur)		Sep 30, 2017	Sep 30, 2016	absolute	in %
Revenue	€ m	312.5	259.8	52.7	20.3
EBITDA	€ m	44.9	32.0	12.9	40.3
EBIT	€ m	37.6	25.2	12.4	49.2
EBIT margin	in %	12.0	9.7	2.3	–
EBT	€ m	37.2	25.0	12.2	48.8
Employees at reporting date	persons	1,812	1,769	43	2.4
Average number of shares	units	13,382,324	13,382,324	0	–
Earnings per share1	€	1.96	1.30	0.66	50.8
Free cash flow2	€ m	11.0	14.8	–3.8	–25.7
Capital expenditure	€ m	8.3	14.2	–5.9	–41.5
Capital ratio at reporting date3	in %	35.4	36.3	–0.9	–

Q3		Jan 1 to	Jan 1 to		Change
(rounding differences may occur)		Sep 30, 2017	Sep 30, 2016	absolut	in %
Revenue	€ m	102.6	90.6	12.0	13.2
EBITDA	€ m	15.2	12.1	3.1	25.6
EBIT	€ m	12.7	9.7	3.0	30.9
EBIT margin	in %	12.3	10.7	1.6	–
EBT	€ m	12.5	9.6	2.9	30.2
Average number of shares	units	13,382,324	13,382,324	0	–
Earnings per share1	€	0.66	0.50	0.16	32.0

Basic = diluted

3

2 Net cash flow – net cash flows from investing activities

Equity capital/balance sheet total

Content

Highlights and Key Figures for Q1–3 2017

1.	Revenue and earnings development .	5
2.	Report on economic position .	5
2.1	Earnings .	5
2.2	Net assets .	8
2.3	Financial position .	8
3.	Report on expected developments
	and on opportunities and risks .	9
3.1	Outlook	9
3.2	Opportunities and risks for group development .	9
4.	WashTec shares and investor relations .	9
4.1	Share price performance .	9
4.2	Shareholder structure .	9

Selected Financial Information for Q1–3 2017

Consolidated Income Statement	11
Consolidated Balance Sheet	12
Consolidated Cash Flow Statement	13
Statement of Changes in Consolidated Equity	14
Consolidated Segment Reporting	15
Contact	16
Financial Calendar	16

Quarterly Statement

1. Revenue and earnings development

Revenue growth of 20.3%, EBIT growth of

After another strong third quarter (Q3 2017: €102.6m; prior year: €90.6m), revenue for the nine months ending September 2017 was €312.5m, €52.7m or 20.3% higher than in the prior-year period (€259.8m). As in previous quarters, the revenue growth was primarily generated in Equipment and Service. Third-quarter revenue growth was once again in double figures, at 13.2%. 49.2% Revenue by segment, Q1–3

Mainly due to the positive revenue performance, EBIT improved disproportionately by 49.2% to €37.6m (prior year: €25.2m) at the same time as investment was made in further growth. Third-quarter EBIT increased by 30.9% or €3.0m to €12.7m (prior year: €9.7m), EBIT margin was at 12.3% (prior year: 10.7%).

2. Report on economic position

2.1 Earnings

2.1.1 Revenue by segments and products

in € m, IFRS	Jan 1 to	Jan 1 to	Change	Change
(rounding differences may occur)	Sep 30, 2017	Sep 30, 2016	absolute	in %
Europe	246.1	213.7	32.4	15.2
North America	61.9	38.5	23.4	60.8
Asia/Pacific	11.1	13.1	–2.0	–15.3
Consolidation	–6.5	–5.5	–1.0	–
Total Group	312.5	259.8	52.7	20.3

Revenue by segment, Q3					Revenue increase by
in € m, IFRS	Jul 1 to	Jul 1 to	Change	Change	13.2% in third quarter
(rounding differences may occur)	Sep 30, 2017	Sep 30, 2016	absolut	in %
Europe	81.8	75.2	6.6	8.8
North America	18.4	13.6	4.8	35.3
Asia/Pacific	4.1	4.0	0.1	2.5
Consolidation	–1.7	–2.3	0.6	–
Total Group	102.6	90.6	12.0	13.2

Revenue increase by

The positive performance trend was sustained across all customer 2.1.2 Expense items and earnings segments both in Europe (revenue increase of 15.2% or €32.4m) and North America (revenue increase of 60.8% or €23.4m). Major customers notably contributed to the above-average growth in North America. In US dollars, revenue in North America was USD 68.6m (prior year: USD 42.8m). After a moderate start to the fiscal year, Asia/Pacific was able to achieve a slight increase in revenue in the third quarter compared with 2016. Orders received and the order backlog in this region were slightly higher than in the prior-year period. Revenue in China was once again substantially higher than in the prior year. EBIT margin 12.3% in

Earnings, Q1–3
in € m, IFRS	Jan 1 to	Jan 1 to	Change	Change
(rounding differences may occur)	Sep 30, 2017	Sep 30, 2016	absolute	in %
Gross profit*	180.0	156.0	24.0	15.4
EBITDA	44.9	32.0	12.9	40.3
EBIT	37.6	25.2	12.4	49.2
EBT	37.2	25.0	12.2	48.8

* Revenue plus change in inventory minus cost of materials

	Earnings, Q3
	in € m, IFRS	Jul 1 to	Jul 1 to	Change	Change
	(rounding differences may occur)	Sep 30, 2017	Sep 30, 2016	absolut	in %
Change in %	Gross profit*	59.8	54.2	5.6	10.3
	EBITDA	15.2	12.1	3.1	25.6
	EBIT	12.7	9.7	3.0	30.9
	EBT	12.5	9.6	2.9	30.2

third quarter

Revenue by product, Q1–3
in € m, IFRS	Jan 1 to	Jan 1 to	Change	Change
(rounding differences may occur)	Sep 30, 2017	Sep 30, 2016	absolute	in %
Equipment and Service	268.8	220.2	48.6	22.1
Chemicals	33.5	29.8	3.7	12.4
Operations business and others	10.2	9.8	0.4	4.1
Total	312.5	259.8	52.7	20.3

* Revenue plus change in inventory minus cost of materials

Revenue by product, Q3
in € m, IFRS	Jul 1 to	Jul 1 to	Change	Change
(rounding differences may occur)	Sep 30, 2017	Sep 30, 2016	absolut	in %
Equipment and Service	90.0	77.6	12.4	16.0
Chemicals	9.6	9.4	0.2	2.1
Operations business and others	3.0	3.6	–0.6	–16.7
Total	102.6	90.6	12.0	13.2

The gross profit margin (relative to revenue) decreased by 2.4 percentage points to 57.6% (prior year: 60.0%). The change mainly relates to an increased share of purchased services, primarily for the installation of wash systems, and the implementation of special projects with some major customers. A different product and region mix with a higher proportion of machinery also led to the reduction in the gross profit margin.

Personnel expenses went up compared with the prior-year quarter by €7.6m to €97.7m (prior year: €90.1m) as a result of the larger workforce and wage increases. The Group reported a 2.4% or 43 FTE increase in the workforce as of the end of September relative to a year earlier.

Other operating expenses (including other taxes) increased by €4.0m to €42.7m (prior year: €38.7m). The increase in other operating expenses notably reflected higher costs of contract workers due to higher capacity utilization. There was also a project-related increase among other things in travel expenses in connection with the introduction of SAP in North America.

EBIT by segments, Q1–3
in € m, IFRS	Jan 1 to	Jan 1 to	Change	Change
(rounding differences may occur)	Sep 30, 2017	Sep 30, 2016	absolute	in %
Europe	32.9	23.8	9.1	38.2
North America	4.8	0.1	4.7	–
Asia/Pacific	–0.2	1.1	–1.3	–
Consolidation	0.1	0.2	–0.1	–
Group	37.6	25.2	12.4	49.2

EBIT by segments, Q3

in € m, IFRS	Jul 1 to	Jul 1 to	Change	Change
(rounding differences may occur)	Sep 30, 2017	Sep 30, 2016	absolut	in %
Europe	10.9	9.6	1.3	13.5
North America	1.2	0.1	1.1	–
Asia/Pacific	0.2	0.0	0.2	–
Consolidation	0.4	0.0	0.4	–
Group	12.7	9.7	3.0	30.9

The EBIT increase in Europe and North America is mainly a result of the revenue growth and economies of scale. Despite the costs for implementing the optimization program in sales and service Germany and foreign exchange losses, EBIT of Europe increased from Q1 to Q3 2017 by 38.2%.

Movements in the US dollar-euro exchange rate had a negative impact on translation of a US dollar loan into the Group currency. Measurement of foreign currency-denominated assets and liabilities as of the reporting date had a €–0.9m impact on earnings (prior year: €–0.4m).

Consolidated net income increased to €26.2m (prior year: €17.4m).

2.2 Net assets

Sustained strong balance sheet structure

Net working capital (current trade receivables + inventories – current trade payables) increased slightly, mainly due to an orders-driven rise in inventories, by 7.5% from €91.5m as of December 31, 2016 to €97.7m.

Equity decreased due to the €28.1m dividend payout to €83.9m as of September 30, 2017 (December 31, 2016: €87.4m). Compared with the 2016 year-end, the equity ratio went down from 40.1% to 35.4%, on a level with the same time a year earlier.

Net debt (current and non-current bank liabilities – bank deposits) stood at €20.0m (December 31, 2016: €1.5m).

Net financial debt (short-term and long-term finance leasing + net debt) increased to €23.3m (December 31, 2016: €4.5m).

2.3 Financial position

The cash inflow from operating activities (net cash flow) decreased to €18.8m as of September (prior year: €28.5m). It should be noted that in connection with this, exceptionally large tax payments have been made this year on earnings from previous years, whereas in the prior year there was a refund of tax on investment income. Adjusted for these one-off items, the net cash inflow from operating activities increased by 3.0% or €0.7m.

The cash outflow from investing activities decreased as expected by €5.9m to €7.7m (prior year: €13.6m). For the full year, capital expenditure will be substantially below the prior-year figure of €19.1m.

Free cash flow (net cash flow – cash outflow from investing activities) decreased to €11.0m (prior year: €14.8m).

Overall, cash and cash equivalents decreased relative to December 31, 2016 by €18.5m to €–20.0m.

3. Report on expected developments and on opportunities and risks

3.1 Outlook

The outlook remains unaltered relative to the half-year report. For the final quarter, the Company expects revenue of the same order as in the prior-year quarter.

3.2 Opportunities and risks for group development

The WashTec Group's risk management system is described in the Annual Report 2016. There have been no material changes in the risks described therein.

4. WashTec shares and investor relations

The Management communicated with shareholders, journalists and the financial community on an ongoing basis through the year. In the course of investor relations activities during the third quarter, the Management held roadshows in countries including Spain, Canada and the USA and took part in the Baader Bank Investment Conference and the Bankhaus Lampe Small Cap Conference.

4.1 Share price performance

The WashTec share price stood at €74.30 on September 29, 2017, the last trading day in the third quarter, and with that attained its high point for the third quarter. This marks a 50.10% increase on the prior year-end closing price of €49.50 on December 30, 2016. WashTec shares thus performed better than the SDAX, which gained 25.11% since the beginning of the year. performance Shareholding in % Oct 1, 2017

WashTec AG is currently covered by Hauck & Aufhäuser, HSBC Trinkaus & Burkhardt, MM Warburg and Bankhaus Lampe. The target share prices stated by all analysts are at least €67.00 and range up to €75.00 (as of October 2017).

4.2 Shareholder structure

WashTec AG received the following voting rights notifications under the Securities Trading Act (Wertpapierhandelsgesetz) in the third quarter of 2017:

Paradigm Capital Value Fund, Senningerberg, Luxembourg, notified WashTec AG that its share of the voting rights on July 4, 2017 was now 4.58% instead of previously 6.01%.

Lazard Frères Gestion S.A.S., Paris, France, notified WashTec AG that its share of the voting rights on July 24, 2017 was now 2.96% instead of previously 4.94%. It is attributed the shares held by Objectif Small Caps Euro Sicav. Objectif Small Caps Euro Sicav, Paris, France, notified WashTec AG that its share of the voting rights on July 24, 2017 was now 2.96% instead of previously 3.04%.

At the time of preparation of this report, BNY Mellon Service Kapitalanlagegesellschaft, Frankfurt am Main, Germany, gave notice that its share of the voting rights on October 1, 2017 was now 0.00% instead of previously 5.61%, as management of Frankfurter Aktienfonds für Stiftungen had been transferred with the associated voting rights to Axxion S.A. Axxion S.A., Grevenmacher, Luxembourg, notified WashTec AG that its share of the voting rights on October 1, 2017 was now 9.99% instead of previously 0.00%.

Axxion S.A.	9.99
EQMC Europe Development Capital Fund plc	9.78
Kempen Oranje Participaties N.V.	9.60
Dr. Kurt Schwarz 1	8.38
Investment AG für langfristige Investoren TGV	5.43
Paradigm Capital Value Fund	4.58
Eigene Aktien	4.25
Diversity Industrie Holding AG	4.00
Free float	43.99
1 Leifina GmbH & Co. KG et al
Based on notifications made pursuant to the WpHG

Good share price

Consolidated Income Statement

Rounding differences may

Rounding differences may occur.	in €k	Jan 1 to Sep	Jan 1 to Sep	Jul 1 to Sep	Jul 1 to Sep
		30, 2017	30, 2016	30, 2017	30, 2016
	Revenue	312,459	259,799	102,595	90,555
	Other operating income	2,568	3,734	746	1,048
	Capitalized development costs	2,768	1,156	1,040	673
	Change in inventory	2,724	4,369	361	2,353
	Total	320,518	269,058	104,742	94,629
	Cost of materials
	Cost of raw materials, consumables and supplies and of purchased material	107,042	87,217	34,100	31,364
	Cost of purchased services	28,186	20,985	9,085	7,283
		135,229	108,202	43,185	38,647
	Personnel expenses	97,691	90,083	32,363	30,570
	Amortization, depreciation and impairment of
	tangible and intangible assets	7,286	6,806	2,486	2,348
	Other operating expenses	42,020	38,075	13,822	13,145
	Other taxes	656	654	219	212
	Total operating expenses	282,881	243,820	92,074	84,923
	EBIT	37,637	25,237	12,668	9,706
	Financial income	39	284	26	11
	Financial expenses	460	510	201	162
	Financial result	–421	–225	–175	–152
	EBT	37,216	25,012	12,493	9,554
	Income taxes	10,989	7,639	3,671	2,880
	Consolidated net income	26,226	17,374	8,822	6,674
	Weighted average number of outstanding shares	13,382,324	13,382,324	13,382,324	13,382,324
	Earnings per share (basic = diluted)	1.96	1.30	0.66	0.50

Consolidated Balance Sheet

Rounding differences may occur.	Assets in €k	Sep 30, 2017 Dec 31, 2016		Equity and Liabilities in €k
	Non-current assets			Equity
	Property, plant and equipment	40,420	40,773
	Goodwill	42,312	42,312
	Intangible assets	8,751	6,666
	Trade receivables	9,003	2,926
	Other assets	622	612	Other reserves and currency
	Deferred tax assets	3,335	3,791
	Total non-current assets	104,443	97,080
	Current assets
	Inventories	50,165	42,877	Non-current liabilities
	Trade receivables	61,670	60,427
	Tax receivables	8,071	7,562
	Other assets	4,676	3,271
	Cash and cash equivalents	7,661	6,837
	Total current assets	132,243	120,974
				Current liabilities
	Total assets	236,686	218,054

Equity and Liabilities		Sep 30, 2017 Dec 31, 2016
in €k
Equity
Subscribed capital	40,000	40,000
Contingent capital	8,000	8,000
Capital reserves	36,463	36,463
Treasury shares	–13,177	–13,177
Other reserves and currency
translation effects	–5,207	–3,550
Profit carried forward	–427	–2,906
Consolidated net income	26,226	30,582
	83,879	87,413
Non-current liabilities
Finance lease liabilities	1,922	1,871
Provisions for pensions	10,388	10,491
Trade payables	5	5
Other non-current provisions	3,445	3,564
Other non-current liabilities	1,271	2,471
Deferred income	1,701	1,473
Deferred tax liabilities	2,716	3,062
Total non-current liabilities	21,447	22,937
Current liabilities
Interest-bearing loans	27,695	8,342
Finance lease liabilities	1,339	1,173
Prepayments on orders	10,514	7,187
Trade payables	14,185	11,773
Taxes and levies	5,750	6,196
Liabilities for social security	1,194	1,108
Tax provisions	7,623	12,369
Other current liabilities	41,219	39,224
Other current provisions	11,701	11,731
Deferred income	10,141	8,602
Total current liabilities	131,360	107,704
Total equity and liabilities	236,686	218,054

Consolidated Cash Flow Statement

Rounding differences may

occur.

in €k	Jan 1 to	Jan 1 to
	Sep 30, 2017	Sep 30, 2016
EBT	37,216	25,013
Adjustments to reconcile EBT to net cash flows from operating activities:
Amortization, depreciation and impairment of tangible and intangible assets	7,286	6,806
Gain/loss from disposals of non-current assets	–87	–391
Other gains/losses	598	–1,230
Financial income	–39	–284
Financial expenses	460	510
Movements in provisions	–120	–653
Changes in net working capital:
Increase/decrease in trade receivables	–8,885	–4,179
Increase/decrease in inventories	–8,870	–4,524
Increase/decrease in trade payables	2,641	5,217
Changes in other net working capital	6,250	4,977
Income tax paid	–17,676	–2,793
Net cash flows from operating activities	18,774	28,469
Purchase of property, plant and equipment (excluding finance leases)	–8,331	–14,221
Proceeds from sale of property, plant and equipment	591	572
Net cash flows from investing activities	–7,740	–13,649
Dividend payout	–28,103	–22,750
Interest received	39	284
Interest paid	–407	–458
Repayment of finance lease liabilities	–998	–1,244
Net cash flows from financing activities	–29,469	–24,168
Net increase/decrease in cash and cash equivalents	–18,435	–9,348
Net foreign exchange difference	–94	–173
Cash and cash equivalents at January 1	–1,504	2,512
Cash and cash equivalents at September 30	–20,034	–7,009
Composition of cash and cash equivalents for cash flow purposes:
Cash and cash equivalents	7,661	7,246
Interest-bearing loans	–27,695	–14,255
Cash and cash equivalents at September 30	–20,034	–7,009

Statement of Changes in Consolidated Equity

Rounding differences may occur.	in €k	Number of shares (in units)	Subscribed capital	Capital reserves	Treasury shares	Other reserves and currency translation effects	Profit carried forward	Total
	As of January 1, 2017	13,382,324	40,000	36,464	–13,177	–3,550	27,677	87,412
	Income and expenses recognized
	directly in equity					–1,789		–1,789
	Taxes on transactions recognized
	directly in equity					132		132
	Dividend						–28,103	–28,103
	Consolidated net income						26,226	26,226
	As of September 30, 2017	13,382,324	40,000	36,464	–13,177	–5,207	25,800	83,879
	As of January 1, 2016	13,382,324	40,000	36,464	–13,177	–2,862	19,845	80,268
	Income and expenses recognized directly in equity					–1,285		–1,285
	Taxes on transactions recognized directly in equity					236		236
	Dividend						–22,750	–22,750
	Consolidated net income						17374	17,374
	As of September 30, 2016	13,382,324	40,000	36,464	–13,177	–3,911	14,469	73,843

Consolidated Segment Reporting

Rounding differences may occur.

Jan to Sep 2017	Europe	North	Asia/	Conso	Group
in €k		America	Pacific	lidation
Revenue	246,068	61,855	11,070	–6,534	312,459
with third parties	239,644	61,745	11,070	0	312,459
with other divisions	6,424	109	0	–6,534	0
EBIT	32,895	4,785	–157	114	37,637
Financial income					39
Financial expenses					460
EBT					37,216
Income taxes					10,989
Consolidated net income					26,226

Jan to Sep 2016	Europe	North	Asia/	Conso	Group
in €k		America	Pacific	lidation
Revenue	213,702	38,481	13,132	–5,517	259,799
with third parties	208,273	38,393	13,133	0	259,799
with other divisions	5,429	89	0	–5,517	0
EBIT	23,829	69	1,118	222	25,237
Financial income					284
Financial expenses					510
EBT					25,012
Income taxes					7,639
Consolidated net income					17,374

Contact

WashTec AG Phone +49 821 5584-0 Argonstraße 7 Fax +49 821 5584-1135 86153 Augsburg www.washtec.de washtec@washtec.de

Financial Calendar

November 21/22, 2017 Equity Capital Forum Frankfurt March 21, 2018 Annual Report April 30, 2018 Q1 2018 Report April 30, 2018 Annual General Meeting

q32017