Norma Group Ag Name Akt

A warm welcome from my side to our Q3 analyst call 2021. Today with me is Andreas Drösch, our Vice President, Investor Relations, Communications and Corporate Responsibility. And Andreas will take the finance part today as Annette Stiever, our CFO, unfortunately is ill today. with the cold and so far our best wishes to Annette to recover soon. Maybe a short overview on Q3 financials. It is page two of our presentation. In Q3, our sales were up by 8%, which means 265.7 million, while we had in the previous year Q3 246 million. And out of these 265.7 million, we generated an adjusted EBITDA of 24.7 million, which is 9.3% of EBITDA margin in Q3. Respectively, an EBIT of 22.8 million, meaning 8.6% of adjusted EBIT margin. Our net operating cash flow amounted to $31.2 million, while we have an equity ratio of 44.1%, which increased slightly versus December last year from 41.7%. And our net debt as of September 30 was at $332 million, while we had 338 million December 31st last year. Our leverage amounted to 1.9 times end of September. End of December, it was at 3.4 times. So based on our good cash flow development, we had the chance to delever in the first nine months of 2021. We had to update our guidance for 2021, which we did in September. We see an adjusted EBITDA margin of more than 11%. Previously, we had our guidance at more than 13%. And accordingly, we also adjusted our EBIT margin being more than 10%, previously at more than 12%. Looking at the top line development, which is page three of our presentation, we see that we generated in the first nine months of 2021 nearly 834 million of sales, which is an organic increase of 24% versus 2020. Of course, we had, especially in the first two quarters, mainly in the second quarter, this, let's say, COVID-19 impact, which was very much negatively impacting last year, and is so far 24% year-to-date organic growth for the first nine months. In Q3 itself, it was an increase of 7.6%, and we will have a closer look in a few minutes on these organic growth ratios. Our organic growth overall, mainly due to strong growth in the Americas region and organic growth of 24%, as mentioned, year to date, related also to the COVID-19 aspects. EJT sales showing an almost stable development on an organic basis. It's nearly on the level of Q3 2021. with, as mentioned, very strong organic growth in the first nine months. SJT, our standard product, showing strong organic growth of 18% in Q3, especially also related to the water management business, and nearly 20% year-to-date in the first nine months in Q1 to Q3 2021. driven by EMEA and or mainly driven by EMEA and America's region. We had some currency effects, positive translation effects of 1 million. It's around 0.4% positive in Q3. And overall, for the first nine months, a negative impact of 3.3%, which is around 22.7 million. You see on the right-hand side also the regional split, where we have a share of our sales in EMEA of 44%, while we have 41% in Americas and 15% of our sales in APEC. Looking into the segment reporting, which follows on page four, We see in EMEA an increase of 4.3% of sales. EJT sales slightly organically declining by 2.5% in Q3 due to the volatility in production related to the material shortages, mainly related to steel, logistics, capacities, containers, etc., and semiconductors. But as mentioned in the first nine months, year-to-date, Q1 to Q3, a high double-digit development of 25.9% organic growth. Standard joining technology in EMEA, strong double-digit organic growth of nearly 23% in Q3 and even year-to-date. due to a good business development and even a restocking impact in EMEA in the first nine months of 2021. America's development, a strong organic growth development of 9.2% in Q3 and ongoing high double digit increase of 31.7% in the first nine months. Of course, comparing to a week prior year nine month period. We had a very good development in Americas in the commercial vehicles area, mainly related to the heavy trucks, class seven, class eight, so that we had a quite strong development of the Americas business. The Americas business in standardized joint technology also had a strong double digit organic growth. 20% in Q3 and 20.8% in the first nine months, mainly driven by the water management. And water management showing another double-digit organic growth of 15.4% in Q3 and 19.4% for the first nine months 2021. Strong water management development in Americas. APIC. We remember APEC EJT business started to recover very early. So they already had in the second half of 2020 a good development. So EJT business in APEC organically declined by 6.7% in Q3, but still is on a high double-digit organic growth level of 21.5% for the first nine months of 2021. The standardized joining technology business in Asia-Pacific showed a slight organic growth, 0.9% in the third quarter, which then leads to an organic growth of 9.7% in Q1 to Q3 2021, after a, of course, also COVID-19-related organic decline of 14.8% in 2020 in the first nine months. Coming from the top line to some margin developments, you see that in an overview on page five. The adjusted EBIT A and EBIT margin in Q3 2021 was negatively impacted by significantly lower production volumes in relevant industries as well as higher material and freight costs in all regions. We all know the reasons for this crisis development, if it's container capacities, freight costs, truck availability, semiconductors, steel shortages, etc. So this is heavily impacting the cost side and with that the margin development so that we have a 9.3% EBITDA margin in Q3 2021 and on a year-to-date basis an EBIT margin of 8.6% in Q3 and year-to-date 11.5%. To go into some details regarding financials and P&L, I hand over to Andreas.

Thank you very much and also warm welcome from my side to all participants. Let's have a look at some details of the P&L, starting with the material costs on page six. You see that the material costs went up in the third quarter as well as in the first nine months. That has something to do in the third quarter with the increase and build up of inventory of finished goods and semi-finished goods. And due to the method of our accounting, more detailed look in the cross-profit. If you look at cross-profit in Q3, it went down by 1.6% due to the factors that Michael already mentioned, material cost. But looking at the nine months, and that's the good news here, is that it's almost stable. It improved even by 20 basis points in the first nine months when you look at the cross-profit. Personal costs improved there as well. Starting with the nine-month view there, it went down substantially. That's due to the fact that in the previous year, we had the provision built up for our Get on Track program. but also in Q3 it went better from 27.2% to 26.4% due to the improvements that we made during the course of the year. On the other hand side, looking at OPEX, OPEX went up in the quarter. Main reasons there is on the one hand side the volatile order behavior of the OEMs on the automotive side, meaning that short-term cancellations and changing in order behavior leads to more than normal tool changes and extra costs on our side. Then temp workers are up in the quarter as well on the one hand side due to still the ongoing corona situation and temp workers needed in order to replace our own personnel being in quarantine and also our improvements on the factory landscape lead to the fact that we have double personnel and more temp workers in order to cope with transfers of machinery. Freight costs is another factor which leads to higher than usual OPEX costs. And then on the EBIT A and EBIT side, the numbers have been mentioned in the beginning of the presentation already. We see year on year, first nine months, a nice development leading to 12.3% on EBIT A and 11.5% on adjusted EBIT for the first nine months, while the quarter with all the mentioned factors went down from 11.7 to 9.3 on adjusted EBIT A and 10.7 to 8.6 on adjusted EBIT. On the next page, some housekeeping for the operational adjustments. As you know, we do not adjust anything on EBIT DA, so the costs for the Get on Track program are not adjusted. leading to the fact that reported EBITDA is equal to adjusted EBITDA. The only adjustments that we are doing on a regular basis is PPA purchase price allocation from the past acquisitions. On the one hand side, 1.1 million on depreciation PPA, and then another 15 million on amortization PPA. After tax, that leads to a difference between reported and adjusted EPS of 38 cents, 160 at reported and 198 at adjusted EPS for the first nine months. That brings me to the next page. Speaking about EPS, you see also there the NICE development in the first nine months on adjusted EPS up to 198 in the first nine months, reported EPS 160 per share. the first nine months in the quarter on the other hand side slightly down from 50 cent to 44 cent on the adjusted eps and 36 to 32 cents for reported eps switching from the p l to the balance sheet on page number nine Starting with net debt, it decreased slightly by 1.7%, comparing December 31st to September 30 this year, which is a nice development due to the strict cash control measures and the cash collection that we did. Equity ratio improved very well to 44.1% from last year's 41.7%, and also The leverage improved as already mentioned in the beginning to 1.9 times compared to the pandemic number of 3.4 times at the end of last year. Gearing improved as well from 0.6 net debt to equity to 0.5 at the end of September net debt to equity. From the balance sheet onwards to the cash flow statement, looking into the quarter on page 10, our adjusted EBITDA went down, as mentioned, from 40 to 36 million, trade working capital inflow of another 6 million, and the investments increased because of higher business activities to 10.8 million, leading to the fact that we had a a solid net operating cash flow of 31.2 million. Cumulated for the first nine months from last year's 49 million, we improved in net operating cash flow to 70.5 million, 70.5 million in the first nine months of cash flow development. Then from my side, last but not least, normal value added. Our NOVA is also negatively affected as the whole P&L in the quarter. We closed the quarter with minus 2 million NOVA in Q3. Year-to-date September, it is plus 16 million from last year's minus 43 million, so a strong improvement in the first nine months to 16 million NOVA. normal value added in the first nine months. With these details, I hand back to Michael.

Andreas, thanks a lot. Two more charts. Get on track program, cost and savings timeline. Overall, we are on track with our program. We are well underway with the major savings in 2021. Looking on the net effect of that program, of 25 million in 2021. We will see these 25 million out of the improvement program, coming from additional measures and the one-time cost net effect, 25 million, especially also in the purchasing area. Our outlook for 2021, updated company guidance, as of 14th of September. We expect organic sales growth in the low double-digit area with an adjusted EBITDA margin of more than 11% and an adjusted EBIT margin of 10%, generating a net operating cash flow of more than 110 million. and a normal value added between 10 million and 25 million in 2021. With that, we end over to you and are happy to take your questions and discussions.