Saf Holland Se

Dear ladies and gentlemen, welcome to the SAF Holland SE Q3 2025 results. Today's presenters are CEO Alexander Gais and CFO Frank Lorenz-Dietz. The presentation slides are available on the SAF Holland corporate website. The presentation will be followed by a Q&A session. Please note, this conference call will be recorded and published on the corporate website of SAF Holland SE. Everything spoken through the unmuted microphone will be processed during the online meeting and published on the website of SAF Holland SE. If a participant does not wish to be recorded, they should refrain from participating in the Q&A session and keep the microphone muted. The Q&A session is exclusively for institutional investors and analysts. All other participants of the conference call are kindly asked to contact the investor relations team directly if they have any questions. Mr. Geis, the floor is yours.

Thank you. Good morning, everyone, and welcome to our conference call on our Q3 25 results. Let me begin with the Q3 25 financial highlights on page three, please. Good. The past quarter was again characterized by a challenging market environment. which SRF Holland mastered well thanks to its resilient business model and operational discipline. In numbers, group sales declined organically by 2.5% and ultimately reached 417.2 million euro, which is around 5% below the prior year. Despite softer demand from OE customers and additional tariff-related expenses, we were able to maintain a solid profitability of 9.1% and an adjusted EBITDA margin of 13.2%. And in addition, the company generated a solid operating free cash flow of plus 38.5 million Euro. That's a clear improvement compared to the second quarter. Leverage remained stable at 2.4 times due to the cash outflow for the dividend payment M&A activities, and additional lease liabilities for our new Texas plant in Rowlett. Given the continued softness of the North American truck market and muted demand from Southeast Asian customers with U.S.-based end clients, we have adjusted our full year 25 sales outlook accordingly. Now let me continue with the group sales and adjusted EBIT development on page 4, please. you can see that group sales in the third quarter of 25 continue to reflect the lower demand in the global CV market. In particular, the North American OE markets, as well as demand from the Southeast Asian customers, for instance, in Thailand and Vietnam, were affected by the US tariff policy. As a result, OE sales declined by 6.9% year over year, leading to an organic sales decline of 2.5% in Q3. And in addition, FX effects weighed on top-line performance by 3.3 percentage points, while Asali Steffen provided a low single-digit euro-million contribution to group sales. Overall, group sales declined by 5.2% compared to the prior year. And in the first nine months of 2025, group sales were 9.9% below the previous year's level, with organic sales down 9.7% year-over-year. Between July and September, adjusted EBIT was again affected by a net effect of a tariff-related cost in the low single-digit million euro range, which we expect to largely offset through further price measures over the next month. In addition, profitability was impacted by a moderately higher depreciation ratio. Consequently, adjusted EBIT declined by 12% year-over-year, resulting in a 9.1% adjusted EBIT margin. For the first nine months of this year, adjusted EBIT totalled 121.1 million Euro corresponding to a solid margin of 9.3%, while the adjusted EBITDA margin remained nearly on the prior year level of 13.1%. So now moving to the sales split by region and customer group. On page five, please, you can see here that the overall distribution of group sales by region and customer segment continued to reflect investment hesitation among truck and trailer customers, particularly in North America, India, and Asia. In this context, the EMEA region performed quite well, accounting for around 52% of group sales, supported by the acquisition-related contribution of Asani Steffens. The Americas region represented 37.1% of total sales, while the APEC share declined to 10.9%, mainly due to the softer demand of AGM trailer manufacturers with end customers in the U.S., as well as a weaker mining business. Looking at the split by customer segment, you can see that OE sales declined by 6.9% year-over-year to 246.7 million euros, driven by the overall weakness of the CV market. Within this, the trailer OE segment accounted for 48.1% of third quarter sales, up by one percentage point due to the stronger performance in EMEA. The truck OE segment, with a strong exposure to the Americas, was more impacted by the uncertainties related to the S-Trade policy. In contrast, the aftermarket business once again proved resilience, declining by only 2.5%, to now 170.5 million euro and underlines the continued robustness and stabilizing nature of our aftermarket operations. As a result, the aftermarket business contributed 40.9% of group sales in the third quarter of this year. So speaking about, having spoken about the different regions and the summary, we come now to the single regions and starting with EMEA on page six, please. Here you can see that the top line development in the EMEA region showed a return to positive growth, supported by slightly improving demand from both trailer and truck customers in recent months. And as a result, sales increased organically by 5.6% in Q3. The aftermarket business remained broadly stable compared to the prior year, continuing to provide a solid foundation for the region. In addition, Asali Steffen, as said before, contributed a low single digit Euro million amount to sales in the third quarter, following its first time consolidation at the end of July 24. For the first nine months of 25, total sales in EMEA were 3.1% below the prior year's level, reflecting an organic decline of 7%. Looking ahead, While the recent positive order momentum is not expected to continue at the same pace, current volumes remain sufficient to ensure efficient capacity utilization. On the earnings side, just EBIT grew to 8.2% in Q3, mainly driven by better fixed cost absorption from higher utilization levels. And as a result, profitability for the first nine months of this year stood at 7.8%, including a one-time FX valuation effect from Q1. Moving to America on the next page, please. Here, in addition to the cyclical downturn in the North American CV market, demand for both trucks and trailers remained subdued, primarily due to the ongoing uncertainties surrounding the U.S. trade policy. In contrast, the aftermarket business once again demonstrated its robustness, and resilience. And as a result, organic sales in the third quarter declined by 7.9% year over year, while negative currency effects further reduced sales by around 5.7%. Overall, third quarter sales in America were 13.6% below the previous year, contributing to a 14.4% decline over the first nine months of 2025. In addition to the lower top line, earnings were a little bit impacted by additional procurement-related costs linked to the U.S. tariff situation, amounting to a net effect of a low single-digit euro-million figure. While initial compensating effects from price adjustments were already visible, the regional teams are now working to further mitigate the impact of the Section 232 tariffs, which came into effect at the end of August. Consequently, adjusted EBIT decreased by 22.2% year-over-year, responding in a still double-digit adjusted EBIT margin of 10%. And looking ahead, we expect that the tariff-related cost burden on the procurement side to be largely compensated, among other measures, through pricing and efficiency measures in the coming months. So for the first nine months of 2025, adjusted EBIT totaled 53.1 billion euros, which equals to a margin of 10.6%. So last but not least, coming to APEC now. And here I can say that the market environment in APEC remained uneven and overall subdued, particularly in those segments that are strategically important to us. While the Indian domestic trailer market achieved moderate growth, despite the usual slowdown during the monsoon season, unfortunately customers in Vietnam and Thailand with end users in the U.S. continue to show purchasing restraints due to the uncertainty surrounding the U.S. trade policy. As a result, sales in the third quarter of this year amounted to 45.5 million Euro, representing a 21.5% year-over-year decline, which equals an organic decrease of 13.9%. And also here, in addition, Negative foreign exchange effects reduced sales by a further 7.6% year-over-year. On the earnings side, the decline in profitability was mainly due to the lower top line, particularly in higher margin markets. Nevertheless, despite continued market softness and tariff-related uncertainties, we maintained a solid adjusted EBIT margin of 10.8%, making the 11th consecutive quarter with a double-digit profitability. So overall, we closed the first nine months of 25 with a robust adjusted EBIT margin of 11%. And having said this, I hand over to Frank for the key financials.

Okay, thank you, Alex, and hello to everybody on the line. As usual, let me start with a short overview on the EBIT to adjusted EBIT reconciliation for the group on page 10. Our report for the third quarter of 2025 declined by 21.7% to 28.9 million euros, mainly reflecting a lower top line, as well as some additional related expenses. Total adjustments for restructuring and transaction costs amounted to 3.8 million euros in Q3, primarily related to the integration expenses from recent acquisitions and expenses in North America and EMEA. These measures include, among other things, expenses for the footprint optimization in North America. In this context, we are relocating part of our production from Dumas to the new plant in Texas. In addition, depreciation and amortization from purchase price allocations were, as usual, adjusted accordingly and totaled to 5.4 million euros. As a result, we achieved an adjusted EBIT margin of 9.1% for the third quarter, while the adjusted EBITDA margin for Q3 remained robust at 13.2%, nearly reaching the prior year level. Moving on to page 11, where you see the bridge from EBIT to basic earnings per share. As mentioned earlier, EBIT amounted to €28.9 million for the third quarter of 2025, By implementing targeted measures to reduce FX valuation effects, mainly from intercompany financing, and benefiting from a favorable Euro-US dollar exchange rate, we were able to avoid any material valuation impacts in Q3. In addition, besides the improvement of the Euribor versus prior year, we further optimized our financing structure. leading in total to a 17% reduction of interest expenses compared to the prior year. As a result, the finance result, which had been significantly burdened by FX effects last year, improved to around €8 million in Q3 2025. Income taxes also declined significantly, partly because the prior year quarter was negatively impacted by which up effects from previous periods. As a result, the overall tax rate stood at 33.9% for Q3 and 35.8% for the first nine months of 2025. Overall, reposited APS improved by 49.4% to 31 euro cents in Q3, reflecting these positive financial developments despite the weaker top line. This would correspond to a distribution-relevant EPS of €1.07 for the first nine months of 2025. Moving to page 12, where you see the development of the equity ratio. Compared to year-end 2025, equity decreased by 9.5%, respectively €49.9 million, to €477 million. Mainly due to the dividend payment of around €39 million as well as negative valuation effects amounting to around €37 million. Since the balance sheet in total increased by 3.9%, the equity ratio declined to 26.9%. Turning to page 13, I would like to speak about networking capital development. Capital at the end of September 2025 was influenced by several factors. As the OE business remained substituted, the aftermarket business, which generally required higher inventory levels, continued to be relatively strong. In addition, we adjusted our networking capital management proactively as a precautionary measure in light of the ongoing trade policy uncertainties. And we built some additional stock buffer related to the relocation of production in the U.S. from Dumas to the Roles plant in Texas. As a result, networking capital increased by 11.2% to 297.3 million euro compared to the end of December and included factoring of 34.8 million euros. Moreover, it also reflects the usual seasonality in trade payables and trade receivables. Consequently, the net working capital ratio stood at 18.7% of sales, also reflecting the overall lower last 12 months top line development. By year end, we expect to return to our target corridor of 16 to 18%. And now let me address the cash flow development in page 14. After generating net cash flow from operating activities, of 30.5 million Euro in the first half of the year, we achieved an additional 48.8 million Euro in the third quarter. For the first nine months of 2025, this results in a total of 79.3 million Euro. Compared to prior year, this development was primarily driven by lower EBITDA and a higher networking capital level, reflecting the current market environment. As explained before, However, this impact was partly offset by lower tax payments. Investments in property, plant, and equipment and intangible assets totaled €31.7 million, representing 2.5% of group sales. As in the first half of 2025, these investments focused on further automation and modernization of production processes, for the new plant in Texas and capacity expansion for and localization of fifth field production at the in Turkey. Moving on to an overview of the leverage development on page 15. Despite the refinancing measures implemented in recent months, the left-to-EBITDA ratio remained unchanged at 2.4 times at the end of September. The increase versus year-end 2024 was primarily driven by higher net debt, including around 20 million in lease liabilities related to the new ROLES plan, which is scheduled to open in the coming months. Net debt also rose due to the financing of networking capital, as explained before. The dividend payment as well as the purchase price payment for the remaining 40% stake in the HALDEX transaction in the year. EBITDA declined to 227.5 million Euro, reflecting a stable margin at lower sales caused by the current market conditions. Excluding the IFRS 16 effect, our leverage would amount to only 2.2 times. Looking ahead, we expect to gradually reduce leverage in the coming quarters, supported by further operational measures. Our target remains to bring leveraged stepwise below two times over the coming quarter. Before I hand over to Alex, let me shortly also comment on the recently announced share buyback program on page 16. Following our successful implementation of a group-wide cash pool and hence the concentration of our cash flows in recent quarters, as well as the elimination of all debt maturities until 2027, we see this as the right time to initiate a share buyback program, reflecting our confidence in South Holland's financial strength and long-term value creation potential. We, therefore, plan to invest a total of up to €40 million in the repurchase of our own shares. The long-debt program, we will acquire up to 5% of our the outstanding shares as treasury shares, probably starting at the end of this month or earlier and continuing until the end of next year. To this end, we intend to renew the authorization for share repurchases at the 2026 Annual General Meeting. We are convinced that this share buyback represents an attractive investment and a clear signal of our confidence in the company's long-term growth potential. Our liquidity position remains strong, supported by a successful cash pooling and solid financing with no outstanding maturities before March 2027. And with that, I hand back to Alex.