Presentation Q3 2012 - saf

3rd Quarter Results 2012
November 8, 2012
Detlef Borghardt, CEO
Wilfried Trepels, CFO
Executive Summary – business performance 3rd quarter 2012 YTD
2
1
Group sales increased yoy by 4.9% from €627.0mn to €657.5mn.
2
Expected decrease yoy of adj. EBIT and adj. EBIT margin from 45.0 to €43.1mn
resp. from 7.2% to 6.6% due to the anticipated expiry of the major portion of a
lucrative project in N.A. in the 3rd quarter 2011.
3
Sustainable cash flow and net working capital performance.
4
• Optimization of business processes in Powered Vehicle Systems by merging VKT
with Holland Europe GmbH in order to react flexible and fast to the rather cyclical
truck markets.
• New financing agreement until 2017 and issue of €75mn Bond in Oct. 2012.
5
Sales of approx. €850mn with stable earnings development for 2012 and profitable
growth for 2013, anticipating that politicians will be able to manage the European
sovereign debt crises.
Business performance – group sales and group adjusted EBIT
Sales in €mn
Adjusted EBIT in €mn
700
60
657.5
627.0
600
50
500
45.0
43.1
40
400
+4.9%
30
300
-4.2%
20
200
10
100
0
0
Q1-Q3/2011
Q1-Q3/2011
Q1-Q3/2012
20
250
200
Q1-Q3/2012
202.4
215.5
209.1
204.3
216.6
223.7
14%
217.2
16
14.6
15.4
12%
15.0
14.0
14.9
14.2
10%
12.3
150
12
100
8
8%
7.2%
7.1%
7.2%
6.0%
6.5%
6.7%
6.5%
6%
4%
50
4
2%
0
0
Q1
Q2
Q3
2011
3
Q4
Q1
Q2
2012
Q3
0%
Q1
Q2
Q3
2011
Q4
Q1
Q2
2012
Q3
Business performance – sales by region and business unit
Sales in €mn by region
North America
700
600
Sales in €mn by business unit
Europe
+39.7%
31.0
(4.9%)
Other
43.3
(6.6%)
Trailer Systems
400
349.6
(55.8%)
-4.5%
333.7
(50.7%)
Aftermarket
700
600
152.9
500
Powered Vehicle Systems
500
(24.4%)
400
111.9
(17.8%)
+14.7%
175.4
(26.7%)
+7.8%
120.6
(18.3%)
300
300
-0.2%
200
100
+13.8%
246.4
(39.3%)
200
280.5
(42.7%)
361.5
(55.0%)
Q1-Q3/2011
Q1-Q3/2012
100
0
0
Q1-Q3/2011
4
362.2
(57.8%)
Q1-Q3/2012
Business performance – Trailer Systems
Sales in €mn
Summary
140
127.3
120
114.5
120.4
120.9
121.9
118.7
Q1
Q2
Q3
• Sales of €361.5mn YTD 2012 (YTD 2011: 362.2), which
equals a slight decrease yoy of 0.2%
• Pent up demand and growing interest in SAF-HOLLAND
axle and suspension systems in N.A.
• Stable sales development in Europe despite cautious market
environment and still outstanding realization of pent up
demand; market share gains in Europe due to the withdrawal
of the competitor Meritor
110.6
100
80
60
40
20
0
Q1
Q2
Q3
Q4
2011
2012
Adjusted EBIT in €mn and margin in %
5
6%
4.4
4.3
3.9
4
5%
3.8
3.4
3.4
4%
3
3.4%
2
3.7%
2.7
3.3%
3.0%
3.1%
3.0%
2.4%
2%
1
1%
0
0%
Q1
Q2
Q3
2011
5
3%
Q4
Q1
Q2
2012
Q3
• Slight decline yoy of adj. EBIT from 12.1 to €11.1mn
• Slight decrease yoy of adj. EBIT margin from 3.3% to 3.1.%
• Despite good gross margin development the adjusted EBIT
margin decreased yoy due to higher R&D and sales efforts in
order to ensure future growth
Business performance – Powered Vehicle Systems
Sales in €mn
Summary
50
42.1
40
37.3
36.5
Q1
Q2
38.1
40.8
40.9
Q1
Q2
• Sales of €120.6mn YTD 2012 (YTD 2011: 111.9), which
equals a growth yoy of 7.8%
• Growth in sales in N.A. due to realization of pent up demand
from Q4/11to Q2/12 followed by normalization in Q3/2012
• Expected weaker truck sales in Europe and deterioration of
pent up demand caused by European financial debt crisis
and related economic uncertainties
38.9
30
20
10
0
Q3
Q4
2011
Q3
2012
Adjusted EBIT in €mn and margin in %
5
20%
4.5
4
3.2
3.1
3
16%
3.7
3.4
3.4
3.2
12%
12.1%
2
8.5%
8.4%
8.1%
9.0%
7.7%
8.7%
1
4%
0
0%
Q1
Q2
Q3
2011
6
8%
Q4
Q1
Q2
2012
Q3
• Expected decline in profitability due to the anticipated expiry
of the major portion of a project in N.A.
• Slight decrease yoy of adj. EBIT from 10.8. to €10.3mn
• Decrease yoy of adj. EBIT margin from 9.7% to 8.5%
Business performance – Aftermarket
Sales in €mn
Summary
70
60
50
50.6
51.7
Q1
Q2
50.6
51.6
Q3
Q4
60.9
59.6
Q2
Q3
• Sales of €175.4mn YTD 2012 (YTD 2011: 152.9), which
equals a growth yoy of 14.7%
• Strong growth in sales due to the independence of economic
trends and a high installed product base
54.9
40
30
20
10
0
Q1
2011
2012
Adjusted EBIT in €mn and margin in %
10
8
35%
9.1
8.6
8.1
7.5
7.4
8.8
30%
7.9
25%
6
4
20%
17.6%
14.8%
16.0%
15%
14.3%
14.4%
14.1%
14.8%
10%
2
5%
0
0%
Q1
Q2
Q3
2011
7
Q4
Q1
Q2
2012
Q3
• Increase of adj. EBIT from 24.7 to €25.3mn
• Although cumulative adjusted EBIT margin decreased from
16.2% to 14.4%, quarterly adjusted EBIT margin rose from
14.1% to 14.8%
Recent News
SAF-HOLLAND
Trailer Systems
Business Unit
• 07/2012:
Establishment of a new assembly line for trailer axles in
Johannesburg, South Africa.
• 09/2012:
Agreement with SAG Motion Group outlining joint business
activities in sales and marketing in Brazil.
• Considered: Assembly line for trailer axles and suspension systems in Turkey
• 08/2012:
Further optimized business processes in Powered Vehicle
Systems Business Unit by merging SAF-HOLLAND
Verkehrstechnik GmbH with parent company Holland Europe
GmbH until mid of 2013 in order to react flexible and fast to
the more cyclical truck market.
• Q1/2013:
Establishment of a Parts Distribution Center (PDC) in Mexico
expanding sales activities in Central and South America.
Powered Vehicle Systems
Business Unit
Aftermarket
Business Unit
• Considered: Establishment of a PDC in Asia.
October 2012: New financing agreement for the group ahead of schedule with reduced number of banks
Successful issuing of a bond in prime standard segment „Deutsche Börse Frankfurt‟
8
Business performance – operating cash flow
Summary
• Operating cash flow of €39.4mn YTD 2012 (YTD 2011: 24.3)
influenced by the effects of a higher business volume.
Negative one-time effect of €6.0mn in January partly balanced
by factoring effect of €8.2mn in total.
• Net Working Capital increased to €89.8mn (Q3/2011: 87.9) due
to higher business volume. It therefore totaled 10.3% of sales
(Q3/2011: 10.5%) and almost reached the target of <10%.
• Days of inventory were 48 days and therefore slightly above
the target of 45 days.
Operating cash flow before income tax in €mn
24
22,2
20
Prepayments
related to
Q1/2012,
received in
Q4/2011
(€6mn)
Termination
of discount
program
ca. -€12mn
16
12,8
12
Factoring effect of
€3.9mn in June
and additionally
€4.3mn in
September
17,5
15,8
10,8
8
6,1
4
0,7
0
Q1
Q2
Q3
Q4
Q1
2011
Q2
Q3
2012
Net Working Capital in €mn
Inventories in €mn
Net Working Capital/Sales in %
100
30%
88.4
87.9
89.8
89.8
86.4
25%
78.2
80
71.5
64.2
100
80
Days of inventories
90.4
94.8
94.6
65
76.2
55
60
15%
47
40
40
10.5%
7.9%
8.3%
Q1
Q2
9.6%
10.2%
10.0%
10.3%
10%
5%
0
0%
Q3
2011
9
93.7
20%
60
20
90.4
Q4
Q1
Q2
2012
Q3
42
48
47
47
48
45
44
35
20
0
25
Q1
Q2
Q3
2011
Q4
Q1
Q2
2012
Q3
Financials – balance sheet
in €mn
9/30/2012
%
12/31/2011
%
328.2
59.4%
327.8
61.1%
94.6
17.1%
90.4
16.8%
114.7
20.8%
103.0
19.2%
14.7
2.7%
15.3
2.9%
Total assets
552.2
100.0%
536.5
100.0%
Equity
211.4
38.3%
192.2
35.8%
57.7
10.4%
56.4
10.5%
Interest bearing loans and borrowings
167.2
30.3%
175.0
32.7%
Other current liabilities
115.9
21.0%
112.9
21.0%
Non-current assets
Inventories
Other current assets
Cash and cash equivalents
Other non-current liabilities
Net debt as of September 30, 2012: €152.7mn (12/31/11: €159.7mn)
10
Financials – profit and loss statement
in €mn
Sales
Q1-Q3/2012
%
Q1-Q3/2011
%
657.5 100.0%
627.0
100.0%
Cost of Sales
-538.1
-81.8%
-513.2
-81.9%
Gross Profit
119.4
18.2%
113.8
18.1%
Selling expenses
-40.3
-6.1%
-35.8
-5.7%
Administrative expenses
-30.2
-4.6%
-28.7
-4.6%
R&D
-13.7
-2.1%
-10.9
-1.7%
1.3
0.1%
0.6
0.1%
36.5
5.5%
39.0
6.2%
-12.4
-1.9%
-19.8
-3.1%
Earnings before tax
24.1
3.6%
19.2
3.1%
Income tax
-7.5
-1.1%
2.5
0.4%
Result for the period
16.6
2.5%
21.7
3.5%
Other
Operating result
Financial result
11
Financials – cash flow statement
in €mn
Q1-Q3/2012
Q1-Q3/2011
Result before tax
24.1
19.2
Finance result
13.1
20.2
Amortization/depreciation
15.9
15.5
-14.4
-31.5
0.7
0.9
Operating cash flow before income tax
39.4
24.3
Income tax paid
-6.2
-4.9
Operating cash flow
33.2
19.4
Cash flow from investing
-13.6
-7.9
Cash flow from financing
-20.2
-7.1
Effect of f/x changes
0.0
-0.1
Net change in cash
-0.6
4.3
Change in Net Working Capital
Other items cash flow
12
Financing Strategy
Financial policy
• Significantly improved financial profile
through capital increase and bond
placement
• Sustainable growth in sales and
earnings
• Reduction of interest costs
• Further improvement of the equity ratio
to approximately 40%
• Dividend payment of 40-50% of the
available net earnings when equity
ratio meets about 40% reported in the
annual financial statements
13
Financing
• New financing agreement with new
syndicated loan, as of Oct. 5, 2012:
− Increased volume from €218mn to
€260mn
− Improved Covenants
− Unsecured financing
− Reduction of the bank syndicate
from 14 to 8 banks
• Placement of prime standard bond, as
of Oct. 18, 2012:
− Diversification of financing
• Further reduction of net debt
− Further independence of banks
• Long-term safeguarding of liquidity
− Additional sector of private investors
• Increase the diversification of funding
sources
− Final step of the successful renewal
of SAF-HOLLAND‟s capital structure
New financing agreement of SAF-HOLLAND
 In October 2012, renewal of Credit Facility Agreement with a total volume of c. €260mn, consisting of
 €120mn Term Loan and €20mn EIB Term Loan
 €80mn and $50mn Revolving Credit Facilities
 Structure of the new SFA
 Maturity: Oct. 2017
 Currently unsecured financing
 Improved interest margin of 2.35% to 2.85%
 Repayments of € 7.8 mn p.a. starting in 2013
 With the new facility, SAF-HOLLAND reached a number of objectives:
 Extension of debt maturity profile to 2017
 Increased flexibility and free liquidity
 Focus on core banks and optimization of financing costs
Covenants1)
Covenants
31/03/2013
Net Debt/EBITDA
EBITDA/Net Interest
Equity Ratio
3.00 x2); 3.50 x3)
3.50 x
30.0%
Key Terms
Terms
Key
30/09/2013ff
3.00 x2); 3.50 x3)
4.00 x
30.0%
TL A
EIB
€ RCF
$ RCF
1)
Calculated on basis of frozen GAAP
> 3.0 x; creation of securities
3) > 3.5 x; if free liquidity is > € 30 mn, but never five quarters in a row > 3.0 x
2)

14
Solid and flexible financing of the group until October 2017
Maturity
Oct. 2017
Oct. 2017
Oct. 2017
Oct. 2017
Volume
€ 120 mn
€ 20 mn
€ 80 mn
$ 50 mn
Successful placement of bond
Key characteristics
 Emission of €75mn bond in the Prime Standard for corporate bonds of the Deutsche Börse AG
 Five and a half year term with a 7.00% coupon p.a.
 Placement with institutional and retail investors
 Closing of the order book on October 18, 2012 after only a few hours
 Final step of the successful renewal of SAF-HOLLAND‟s capital structure after capital increase (March 2011)
and syndicated loan (October 2012)
 First price quote of 101.75% at Frankfurt Stock Exchange on Friday, October 19, 2012
 On November 1, 2012 start of trading in regulated market segment of Deutsche Börse AG; first price 104.75%
Key Benefits of bond emission
 Diversification of financing structure
 Further independence from banks and increase in flexibility
 Investment grade-rating BBB-, outlook stable by Euler Hermes
 Combination with new financing agreement until 2017 and bond leads to reduction of blended interest rate by
around 3%-points compared to the old financing agreement.
15
Share price and shareholder structure
Development of SAF-HOLLAND share price vs. SDAX (in %)
Shareholder Structure (in %)
Basic Data Share as of September 28, 2012
Share price increase of 33% in Q1-Q3/2012
ISIN
LU0307018795
• SAF-HOLLAND share price grew at a rate greater than
Number of shares
41,237,375
Closing price
€4.72
Adjusted EPS
€0.51
16
that of the SDAX index
• Share price development reflected uncertainties in the
financial policy situation
Targets and outlook
Targets 2012
Sales of approx. €850mn with stable earnings development for the full year 2012, anticipating that
politicians will be able to manage the European sovereign debt crises.
Targets 2013
Profitable growth for 2013.
Mid-term targets
• Sales: €1bn
• Net Working Capital: <10% of sales
• Earnings: 10% adj. EBIT margin
• Capex: < 2% of sales
Growth
Potentials
Trailer Systems
+ €100mn sales potential
• Own axle production in N.A.
• Full product range of
suspension systems in N.A.
• Strong participation in
growing US disc brake market
• Increase of N.A. market share
of up to 30% in medium term
Aftermarket
+ €100mn sales potential
• Increase of installed product
base driving the Aftermarket
business (…automatically)
• Enlarged product portfolio
(A2 brand and 3rd party
products)
• Regional expansion of
distribution & sales channels
BRIC Countries
+ €100mn sales potential
• Taylor-made products for
China and Brazil
• Localized operations
• Increase of market share
in strong growing market
environments (e.g. China 5%)
10% adj. EBIT Margin
Overproportional increase of A.M. share, economies of scale and underproportional increase of overheads.
17
Appendix
18
Key terms for bond of SAF-HOLLAND S.A.
19

Issuer:
SAF-HOLLAND S.A.

Guarantors:
SAF-HOLLAND GmbH and SAF-HOLLAND USA, Inc

Rating:
BBB-, stable (issuer rating from Euler Hermes, as of 09/24/2012)

Status:
Senior unsecured

Use of proceeds:
Repayment of financial indebtedness, general corporate purposes

Size:
€75mn

Denomination:
€1,000

Maturity:
5.5 years, 04/26/2018

Coupon:
7.000% p.a., annually, act/act

Listing:
“Prime Standard Anleihen” of Deutsche Börse AG, regulated market

Covenants:
CoC, negative pledge, cross default, limitation on asset disposal

Lead manager:
IKB Deutsche Industriebank AG

Paying agent:
IKB Deutsche Industriebank AG
Source: Prospectus
Key financials
in €mn
Q1-Q3/2012
Q1-Q3/2011
Q3/2012
Q3/2011
Sales
657.5
627.0
217.2
209.1
Cost of sales
-538.1
-513.2
-178.2
-172.0
Gross profit
119.4
113.8
39.0
37.1
18.2%
18.1%
18.0%
17.7%
20.9
21.1
5.3
9.2
3.2%
3.4%
2.4%
4.4%
Adjusted EPS in €
0.51
0.60
0.13
0.22
Adjusted EBITDA
54.2
55.5
18.1
18.5
8.2%
8.9%
8.3%
8.8%
43.1
45.0
14.2
15.0
6.6%
7.2%
6.5
7.2%
39.4
24.3
15.8
0.7
Margin
Adjusted result
Margin
Margin
Adjusted EBIT
Margin
Operating cash flow (before income tax)
20
Reconciliation statement for adjusted EBIT
in €mn
Q1-Q3/2012
Q1-Q3/2011
Q3/2012
Q3/2011
16.6
21.7
4.9
7.3
7.5
-2.5
0.6
3.3
13.1
20.2
6.5
2.2
Depreciation and amortization from PPA
4.8
4.8
1.6
1.6
Restructuring and integration costs
1.1
0.8
0.6
0.6
43.1
45.0
14.2
15.0
6.6%
7.2%
6.5%
7.2%
Result of the period
Income tax
Finance Result
Adjusted EBIT
in % of sales
21
Disclaimer
This presentation contains certain statements that are neither reported financial results nor other historical information. These forward-looking
statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors that are beyond the Group‟s ability to control or estimate precisely, such as
future market and economic conditions, the behavior of other market participants, the ability to successfully integrate acquired businesses and
achieve anticipated synergies and the actions of government regulators. Readers are cautioned not to place undue reliance on these forwardlooking statements, which apply only as of the date of this presentation.
SAF-HOLLAND S.A. does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events
or circumstances after the date of these materials.
22
Investor Relations:
SAF-HOLLAND GmbH
Claudia Hoellen
Hauptstraße 26
63856 Bessenbach
Phone +49 6095 301-617
Telefax +49 6095 301-102
Mobile +49 170 306 64 97
[email protected]
www.safholland.com
23