Kendrion N.v. · EURONEXT:KENDR
Kendrion — Q3 2019 Earnings Presentation
22 slides from Kendrion's earnings presentation, Nov 5, 2019
Slide 1: Q3 2019 Results
Q3 2019 RESULTS Amsterdam, 5 November 2019 1
Slide 2: Agenda
AGENDA ▪ Business review ▪ Operational update ▪ Acquisition of INTORQ GmbH & Co. KG ▪ Outlook ▪ Q&A 2
Slide 3: Cautionary Note Regarding Forward Looking Statements
Cautionary Note Regarding Forward Looking Statements Certain statements contained in this presentation constitute forward-looking statements. These statements may include, without limitation, statements concerning future results of operations, the Company's share of new and existing markets, general
Slide 4: Business review
KENDRION Business review
Slide 5: Group Financial Overview
GROUP FINANCIAL OVERVIEW Normalised (in EUR million) Q3 2019 Q3 2018 delta Revenue 102,8 107,1 -4% ▪ 4% revenue decrease (5% at constant exchange) EBITDA 10,8 13,5 -20% ▪ Q3 income comparable affected by reduction in inventories EBITA 4,8 7,7 -38% ▪ Staff costs 4% lower fueled by cost measures in 20
Slide 6: Automotive
AUTOMOTIVE ▪ Year to date global car sales down 5.6% (Q3 3.4%) ▪ 8% lower year to date total staff costs due to simplification measures and capacity adjustments to lower volumes ▪ High market interest in smart actuation products combining actuation and control ▪ Continuing strong growth in China wit
Slide 7: Industrial
INDUSTRIAL ▪ German manufacturing industry in downturn with export reliant manufacturers suffering from business uncertainty ▪ All three business units affected by lower revenues, with IDS decrease partially offset by strong growth in China ▪ Stable staff cost development, with reductions absorbing
Slide 8: Operational update
Operational update 8
Slide 9: Focus
FOCUS ▪ Continued focus on Autonomous, Connected, Electrified, Shared driving: ACES Passenger Cars ▪ Significant additions to project pipeline in both China and Europe ▪ First commercial contract for our "battery cooling valve and control system", one of six "Lighthouse" platforms ▪ Kendrion to acqu
Slide 10: Acquisition INTORQ GmbH & Co. KG
ACQUISITION INTORQ GMBH & CO. KG KENDRION TO ACQUIRE INTORQ TO CREATE A LEADING INDUSTRIAL BRAKE COMPANY
Slide 11: Transaction Highlights
TRANSACTION HIGHLIGHTS Transaction ▪ Kendrion to acquire INTORQ for EUR 80 million on a cash- and debt-free basis terms ▪ Multiple of 10.4X EBITDA and 8.0X EBITDA including expected run rate synergies* ▪ Substantial strengthening of position in industrial brakes ▪ Further expands footprint in China
Slide 12: INTORQ at a Glance
INTORQ AT A GLANCE Key stats Presence ▪ 2018 - 2019 revenue: EUR 57 million (April year- ▪ Aerzen (HQ, Germany) end) ▪ Shanghai (China) ▪ Employees: ~300 ▪ Atlanta (USA) ▪ Units per year: ~1 million ▪ Pune (India) ▪ Global network: 63 sales partners in 49 countries Application areas Main products ▪
Slide 13: Compelling Strategic Rationale
COMPELLING STRATEGIC RATIONALE ▪ Substantial strengthening of our position in industrial brakes ▪ Further expansion of our footprint in the Chinese growth market ▪ INTORQ's strength in spring-applied brake technology complementary to Kendrion's Strong leading position in permanent magnet brake techn
Slide 14: Transaction Will Lead to a More Balanced Revenue Mix
TRANSACTION WILL LEAD TO A MORE BALANCED REVENUE MIX* Kendrion Kendrion + INTORQ Industrial 37% Industrial 44% Automotive Automotive 56% 63% Industrial Drive Systems applications Industrial Drive Systems applications ✓ Servomotors ✓ Geared & servomotors ✓ Elevators ✓ Electric forklifts ✓ Wind power
Slide 15: Substantial Run-Rate Cost Synergy Potential
SUBSTANTIAL RUN-RATE COST SYNERGY POTENTIAL ▪ Substantial run-rate cost synergy potential of more than EUR 2 million per year > EUR 2 million annual cost synergies ▪ Tangible and well-identified cost savings - Integration of selected manufacturing sites in Europe, China Manufacturing site and the U.
Slide 16: Financing
FINANCING ▪ EUR 75 million of committed bridge financing from ING Bank in place to fund the transaction ▪ Refinancing of the bridge anticipated with a combination of equity and debt ▪ Share buyback programme launched on 8 August 2019 will be cancelled per 5 November 2019 16
Slide 17: Strategic Intent
STRATEGIC INTENT GROWTH CASH ENGINES OPPORTUNITIES • Actuators for • Machinery Autonomous, • Transportation Connected, Electric, • Energy distribution Shared vehicles • Fluid control • Brakes for industrial automation and robots • China THE KENDRION GROUP
Slide 18: Strategic Intent
STRATEGIC INTENT GROWTH AUTO GROWTH CASH ENGINES BRAKES THE KENDRION GROUP
Slide 19: Outlook
KENDRION =— =| =
Slide 20: Outlook
OUTLOOK ▪ The overall sentiment regarding the global economic outlook continues to be weak ▪ Kendrion expects continued pressure for its Automotive activities and expects the weaker demand in these markets to continue in Q4 2019 and into 2020 ▪ Kendrion has a similar outlook for Industrial ▪ The med
Slide 21: Long-Term Targets 2023
LONG-TERM TARGETS 2023 ▪ ROI* 2023: > 20.0% ▪ EBITDA 2023: > 15% ▪ Dividend policy: 35 – 50% of net profit (unchanged) * Before potential acquisitions
Slide 22: Kendrion
KENDRION