WashTec AG — Interim / Quarterly Report 2021

Oct 27, 2021

Financial Statement Q3 2021 #WashTecInside

Further significant increase in revenue and earnings in third quarter

Q1–3
rounding differences may occur		Q1–Q3			Change
	2021 2020		Q1–Q3	absolute	in %
Revenue	€m	306.3	269.3	37.0	13.7
EBIT	€m	33.0	12.5	20.5	164.0
EBIT margin	in %	10.8	4.6	6.2	–
EBT	€m	32.4	11.9	20.5	172.3
Net income	€m	22.9	7.4	15.5	209.5
Employees at reporting date	people	1.773	1.767	6	0.3
Number of shares	units	13,382,324	13,382,324	0	0
Earnings per share	€	1.71	0.55	1.16	209.5
Free cash flow*	€m	19.4	19.0	0.4	2.1
Capital expenditure	€m	1.5	2.6	–1.1	–42.3
Equity ratio	in %	34.0	35.5	–1.5	–

* including the repayment of lease liabilities

Q3

rounding differences may occur		Q3 2021	Q32020	Change
				absolute	in %
Revenue	€m	111.3	93.9	17.4	18.5
EBIT	€m	15.0	7.3	7.7	105.5
EBIT margin	in %	13.5	7.8	5.7	–
EBT	€m	14.8	7.1	7.7	108.5
Net income	€m	10.9	5.3	5.6	105.7
Number of shares	units	13,382,324	13,382,324	0	0
Earnings per share	€	0.82	0.39	0.43	105.7

13.7% revenue growth

Revenue in nine months to September €306.3m (prior year: €269.3m). Third quarter revenue up by 18.5% to €111.3m (prior year: €93.9m)

EBIT more than doubled

EBIT in nine months to September improved to €33.0m (prior year: €12.5m). Third quarter EBIT of €15.0m significantly higher than prior year (€7.3m)

Free cash flow slightly above prior year

Free cash flow (including repayment of lease liabilities) of €19.4m in nine months to September slightly above prior year (€19.0m)

Full year guidance for 2021 confirmed

Revenue is expected to increase by over 9% with an EBIT margin in the region of 10%

Contents

Quarterly Statement for the period January 1 to September 30, 2021

	Report on economic position 5
	1. Group revenue and earnings 5
2.	Revenue and earnings by region 8
3.	Financial position and cash flows 9
4.	Outlook, opportunities and risk report . 10
4.1	Outlook . 10
4.2	Opportunities and risks for Group development . 10

Selected financial Information for the period January 1 to September 30, 2021

Consolidated Income Statement .	12
Consolidated Balance Sheet13
Consolidated Cash Flow Statement .	15
Contact .	16

Financial calendar .	16

Earnings, Q1–3
in €m, rounding differences may occur	Q1–Q3 2021	Q1–Q32020	Change
			absolute	in %
Revenue	306.3	269.3	37.0	13.7
EBIT	33.0	12.5	20.5	164.0
EBIT margin in %	10.8	4.6	6.2	–
EBT	32.4	11.9	20.5	172.3
Net income	22.9	7.4	15.5	209.5

Earnings, Q3

in €m, rounding differences may occur	Q3 2021	Q32020	Change
			absolute	in %
Revenue	111.3	93.9	17.4	18.5
EBIT	15.0	7.3	7.7	105.5
EBIT margin in %	13.5	7.8	5.7	–
EBT	14.8	7.1	7.7	108.5
Net income	10.9	5.3	5.6	105.7

Report on economic position 1. Group revenue and earnings

The Group generated revenue of €306.3m in the year to date, up 13.7% on the prior year (€269.3m). Significant revenue growth was recorded in all product and customer segments relative to the prior year.

Revenue as of September 30 was slightly down compared with 2018 and 2019. This exclusively relates to key account revenue, which is still below pre-crisis levels despite a significant recovery in the third quarter.

At constant exchange rates, the year-on-year revenue growth was 14.3%.

Revenue of €111.3m was generated in the third quarter (prior year: €93.9m). This corresponds to 18.5% revenue growth (17.9% at constant exchange rates). Third quarter revenue was thus slightly up on 2019 (€110.1m) and slightly down on 2018 (€112.6m).

The year-on-year revenue growth in the third quarter primarily related to increases with key accounts. Key account revenue went up by more than 50%. Despite this, it was still below pre-crisis levels in the third quarter.

Revenue in the direct sales business was also once again higher than in the prior year. As in the second quarter, direct sales revenue was higher than in the pre-crisis years.

Particularly worthy of note is the positive performance in the Chemicals segment, with doubledigit growth both year on year and compared with 2018 and 2019.

The upward trend in orders received continued in the third quarter.

The order backlog at the end of September was significantly above the prior year.

	Revenue by product, Q1–3
--	--------------------------	--

in €m, rounding differences may occur	Q1–Q3 2021	Q1–Q3 2020	Change
			absolute	in %
Equipment and service	263.2	228.6	34.6	15.1
Chemicals	38.2	34.6	3.6	10.4
Others	4.9	6.1	–1.2	–19.7
Total	306.3	269.3	37.0	13.7

Revenue by product, Q3

in €m, rounding differences may occur	Q32021	Q32020	Change
			absolute	in %
Equipment and service	97.2	80.9	16.3	20.1
Chemicals	12.4	10.8	1.6	14.8
Others	1.7	2.2	–0.5	–22.7
Total	111.3	93.9	17.4	18.5

Revenue Q3 in €m, in a multi-year comparison

EBIT Q3 in multi-year comparison in €m

At €33.0m in the nine months to September, Group EBIT more than doubled relative to the prior year (prior year: €12.5m). The EBIT margin was 10.8% (prior year: 4.6%). This includes a €2.7m positive non-recurring item resulting from the recognition in profit or loss of a loan under the US government support program granted in the prior year. The administration's final assessment was issued at the end of the quarter. As the underlying conditions were met, the loan was converted in full into a non-repayable grant and recognized in profit or loss under other operating income.

Adjusted for the non-recurring item, Group EBIT was €30.3m, 142% higher than in the prior year. The adjusted EBIT margin was 9.9%. EBIT in the year to date thus exceeded EBIT for 2019 by nearly 50% on the basis of about 1% lower revenue. This is notably due to the structural adjustments and efficiency improvements made last year and the resulting cost reductions.

Third quarter EBIT was €15.0m. Adjusted for the described non-recurring item, third quarter EBIT was €12.3m, which is likewise significantly higher than the €7.3m seen in the third quarter of the prior year and above the €11.1 EBIT recorded in 2019. The EBIT margin in the third quarter was 13.5% (11.1% adjusted for the non-recurring item). Ongoing vaccination campaign and the gradual lifting of travel and contact restrictions means that costs are returning to normal levels with increased travel and participation in trade fairs and other events. Structural adjustments are also being made in selected areas due to the increasing volume of orders and business.

2. Revenue and earnings by region

In Europe, revenue in the first nine months of the year rose by 15.9% from €216.9m last year to €251.3m. The year-on-year revenue growth cut across all product and customer groups. As in the Group as a whole, the revenue growth relative to pre-crisis years in Europe was mainly achieved in the direct sales business, while key account revenue is still significantly down. The positive revenue trend in the first half of the year continued in the third quarter with growth of 15.3% to €88.2m.

Revenue in North America in the nine months to September was up 7.3% year-on-year to €51.6m (prior year: €48.1m). The large mid-year order backlog led to an expected positive revenue trend in the third quarter. Third quarter revenue was up by 51.7% to €22.3m (prior year: €14.7m). This increase was mainly due to a significant improvement in key account business compared to the first half of the year.

In the Asia/Pacific region, revenue of €12.3m was generated in the year to date. This represents a year-on-year decrease of 8.2% (prior year: €13.4m). In addition to the difficult revenue trend in China, business in Australia in particular was hit by renewed lockdowns there during the third quarter.

Revenue by region, Q1–Q3
in €m, rounding differences may occur	Q1–Q3 2021	Q1–Q3 2020	Change
			absolute	in %
Europe	251.3	216.9	34.4	15.9
North America	51.6	48.1	3.5	7.3
Asia/Pacific	12.3	13.4	–1.1	–8.2
Consolidation	–8.9	–9.1	0.2	–
Group	306.3	269.3	37.0	13.7

Revenue by region, Q3

in €m, rounding differences may occur	Q3 2021	Q3 2020	Change
			absolute	in %
Europe	88.2	76.5	11.7	15.3
North America	22.3	14.7	7.6	51.7
Asia/Pacific	4.7	6.0	–1.3	–21.7
Consolidation	–3.9	–3.3	–0.6	–
Group	111.3	93.9	17.4	18.5

EBIT in the Europe region amounted to €28.6m in the nine months to September and more than doubled compared to the prior year (€13.7m). Third quarter EBIT was €11.5m (prior year: €6.0m).

In the North America region, EBIT for the first nine months came to €3.9m (prior year: EBIT loss of €0.9m). This includes a €2.7m positive non-recurring item resulting from the recognition in profit or loss of a loan under the government support program granted in the prior year. Adjusted for this, EBIT in the region was €1.2m. Third quarter EBIT amounted to €3.3m. Adjusted for non-recurring items, third quarter EBIT came to €0.6m (prior year: €0.9m). When comparing with the prior year, it should be noted that the quarterly EBIT includes higher material costs of approximately €0.5m in connection with significantly higher key account revenue and a normalization of cost levels.

In the Asia/Pacific region, EBIT was in positive figures at €0.9m after breaking even in the first nine months of the prior year.

EBIT by region, Q1–Q3

in €m, rounding differences may occur	Q1–Q3 2021	Q1–Q3 2020	Change
			absolute	in %
Europe	28.6	13.7	14.9	108.8
North America*	3.9	–0.9	4.8	533.3
Asia/Pacific	0.9	0.0	0.9	–
Consolidation	–0.4	–0.3	–0.1	–
Group	33.0	12.5	20.5	164.0

*EBIT in 2021 includes a positive non-recurring item in the amount of €2.7m resulting from the government support program.

EBIT by region, Q3
in €m, rounding differences may occur	Q3 2021	Q1 2020	Change
			absolute	in %
Europe	11.5	6.0	5.5	91.7
North America*	3.3	0.9	2.4	266.7
Asia/Pacific	0.4	0.3	0.1	33.3
Consolidation	–0.2	0.1	–0.3	–
Group	15.0	7.3	7.7	105.5

*EBIT in 2021 includes a positive non-recurring item in the amount of €2.7m resulting from the government support program.

3. Financial position and cash flows

Net operating working capital (trade receivables + inventories – trade payables – prepayments on orders) increased by €7.4m from €80.6m as of December 31, 2020 to €88.0m. This figure rose only slightly by €1.6m relative to September of the prior year (when it was €86.4m), despite significantly higher business volume.

Equity decreased due to the €30.8m dividend payout to €89.5m as of September 30, 2021 (December 31, 2020: €96.2m). Compared with the 2020 year-end, the equity ratio went down from 39.4% to 34.0%.

Free cash flow including repayment of lease liabilities (net cash flow – cash outflow from investing activities – repayment of lease liabilities), at €19.4m, is slightly up on the prior year (€19.0m) and significantly higher than the levels seen in 2018 and 2019.

4. Outlook, opportunities and risk report

4.1 Outlook

The Company regards the third quarter performance as confirmation of the revised guidance of July 13, 2021 for the Group's onward business development in 2021 and continues to expect over 9% revenue growth and an EBIT margin in the region of 10%.

For the Europe and North America regions, the Company expects significant growth in revenue and earnings. The outlook for the remaining performance indicators given in the Annual Report 2020 (pages 72 to 74) remains unchanged.

This guidance is subject to uncertainties.

4.2 Opportunities and risks for group development

The WashTec Group's opportunity and risk management system is described in the Annual Report 2020.

Adjustments were made as of June 30, 2021 with regard to individual risks, which continue to apply. Details on this can be found in the Report on the First-Half Year 2021 (page 13).

The tight procurement market situation with regard to the availability of necessary materials has continued. WashTec successfully coped with this situation in recent months, with the result that there have been no interruptions in deliveries to customers. The situation remains very tight, however, and may change – potentially at short notice.

Aside from the availability of required materials, WashTec also faces double-digit price increases in some areas, notably including steel, electronic components and plastics. Initial impacts of this were already visible in the third quarter. The Group expects that the main increases, and the resulting impact on earnings for this year, will be seen in the course of the fourth quarter. Due to the lead time between quotation and delivery, price adjustments on the sales side will only be able to contribute marginally towards offsetting this effect in 2021.

Safeguarding delivery capability and adapting procurement policies to the changing conditions remain a key priority for the Group. For this reason, the Group expects higher inventories at the end of this year than in past years.

The remaining opportunities and risks in the 2020 report remain largely unaltered as of September 30, 2021.

Consolidated Income Statement

in €k	Q1–Q3 2021	Q1–Q3 2020*	Q3 2021	Q3 2020*
Revenue	306,311	269,324	111,280	93,901
Cost of sales	–211,912	–191,980	–77,791	–66,599
Gross profit	94,399	77,345	33,489	27,302
Research and development expenses	–10,078	–9,118	–3,418	–3,071
Selling and administrative expenses	–54,670	–53,885	–17,933	–16,855
Other operating income	5,750	3,805	3,551	1,394
Other operating expenses	–2,402	–5,670	–678	–1,476
EBIT	32,999	12,477	15,011	7,294
Financial result	–608	–543	–251	–180
EBT	32,391	11,934	14,760	7,114
Income taxes	–9,508	–4,532	–3,850	–1,851
Net income	22,883	7,402	10,910	5,263
Average number of shares in units	13,382,324	13,382,324	13,382,324	13,382,324
Earnings per share (basic = diluted) in €	1.71	0.55	0.82	0.39

Rounding differences may occur.

* With the beginning of the fiscal year 2021, the cost of sales method was applied. The prior year was adjusted accordingly.

Consolidated Balance Sheet – Assets

in €k	Sep 30, 2021	Dec 31, 2020
Non-current assets
Property, plant and equipment	25,001	27,268
Goodwill	42,312	42,312
Intangible assets	5,738	6,596
Right-of-use assets	17,929	19,532
Non-current trade receivables	3,676	6,487
Other non-current financial assets	197	198
Other non-current non-financial assets	504	502
Deferred tax assets	5,475	4,583
Total non-current assets	100,833	107,479
Current assets
Inventories	56,299	38,464
Current trade receivables	66,894	57,075
Tax receivables	19,186	18,160
Other current financial assets	1,390	1,116
Other current non-financial assets	3,206	1,812
Cash and cash equivalents	15,227	19,872
Total current assets	162,202	136,499
Total assets	263,035	243,979

Rounding differences may occur.

Consolidated Balance Sheet – Equity and Liabilities

in €k	Sep 30, 2021	Dec 31, 2020
Equity
Subscribed capital	40,000	40,000
Capital reserves	36,463	36,463
Treasury shares	–13,177	–13,177
Other reserves and currency translation effects	–5,852	–6,977
Profit carried forward	9,158	26,635
Net income	22,883	13,302
	89,476	96,247
Non-current liabilities
Non-current lease liabilities	11,155	13,148
Provisions for pensions	10,634	10,787
Other non-current provisions	4,351	4,136
Other non-current financial liabilities	196	185
Other non-current non-financial liabilities	938	132
Non-current contract liabilities	1,533	1,597
Deferred tax liabilities	1,006	989
Total non-current liabilities	29,814	30,975
Current liabilities
Interest-bearing loans	25,898	19,107
Current lease liabilities	7,382	7,023
Trade payables	20,999	10,486
Income tax liabilities	5,507	2,850
Other current financial liabilities	20,536	21,586
Other current non-financial liabilities	27,409	27,299
Other current provisions	10,979	11,081
Current contract liabilities	25,035	17,325
Total current liabilities	143,745	116,757
Total equity and liabilities	263,035	243,979

Rounding differences may occur.

Consolidated Cash Flow Statement

in €k	Q1–Q3 2021	Q1–Q3 2020	Rounding differences may occur.
EBT	32,391	11,934
Amortization, depreciation and impairment	10,794	12,548
Gain/loss from disposals of non-current assets	–197	414
Other gains/losses	–752	–794
Financial income	–60	–92
Financial expenses	668	636
Movements in provisions	–113	–615
Income tax paid	–8,825	–9,196
Gross cash flow	33,907	14,834
Increase/decrease in trade receivables	–6,141	24,029
Increase/decrease in inventories	–17,149	–10,600
Increase/decrease in trade payables	10,276	–7,697
Increase/decrease in prepayments on orders	6,699	853
Increase/decrease in net operating working capital	–6,315	6,585
Changes in other net working capital	–728	6,261
Net cash flow from operating activities	26,864	27,680
Purchase of property, plant and equipment (without leases)	–2,297	–3,254
Proceeds from sale of property, plant and equipment	767	661
Net cash flow from investing activities	–1,530	–2,592
Dividend payout	–30,779	0
Interest received	60	92
Interest paid	–665	–636
Repayment of lease liabilities	–5,936	–6,076
Net cash flow from financing activities	–37,320	–6,620
Net increase/decrease in cash and cash equivalents	–11,987	18,468
Net foreign exchange difference	550	–745
Cash and cash equivalents at January 1	765	–34,706
Cash and cash equivalents at September 30	–10,672	–16,983
Composition of cash and cash equivalents for cash flow purposes:
Cash and cash equivalents	15,227	15,445
Interest-bearing loans	–25,898	–32,428
Cash and cash equivalents at September 30	–10,672	–16,983

15 WashTec AG

Contact

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

Financial Calendar

Nov 22–24, 2021 Equity Forum, Online April 7, 2022 Investors' Day May 16, 2022 Annual General Meeting 2022