RENK : Analystenkonferenz Q1 2024 Presentation (806.74 KB)

Trusted Partner

Q1 2024 Investor & Analyst Presentation

15 May 2024

Disclaimer

By accessing this presentation, you agree to be bound by the following limitations.

This presentation has been prepared for information and background purposes only. It does not constitute or form part of, and should not be construed as, an offer of, a solicitation of an offer to buy, or an invitation to subscribe for, underwrite or otherwise acquire, any securities of RENK Group AG (the "Company", and together with its subsidiaries, the "Group"), nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or with any other contract, commitment or investment decision whatsoever.

Certain financial data included in this presentation consists of non-IFRS financial measures. These non-IFRS financial measures may not be comparable to similarly titled measures presented by other companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS. You are cautioned not to place undue reliance on any non-IFRS financial measures included herein. Past events or performances should not be taken as a guarantee or indication of future events or performance. Financial information presented in parentheses denotes the negative of such number presented. Any assumptions, views or opinions (including statements, projections, forecasts or other for-ward-looking statements) contained in this presentation represent the assumptions, views or opinions of the Company as of the date indicated and are subject to change without notice. All information not separately sourced is from Company data and estimates. To the extent available and unless denoted otherwise, the industry and market data contained in this presentation has been derived from Company estimates as well as official or third-party sources. Market and market share data has been derived from Company estimates as well as official or third-party sources. Market and market share data are based on company internal estimates derived from continuous analysis and aggregation of local management feedback on market share and ongoing market development. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company believes that each of these publications, studies and surveys has been prepared by a reputable source, the Company has not independently verified the data contained therein. In addition, certain of the industry and market data, if not labelled otherwise, contained in this presentation are derived from the Company's internal research and estimates based on the knowledge and experience of its management in the markets in which it operates. The Company believes that such research and estimates are reasonable and reliable, but their underlying methodology and assumptions have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should not be placed on any of the industry or market data contained in this presentation. Information contained in this presentation related to past performance is not an indication of future performance. The information in this presentation is not intended to predict actual results, and no assurances are given with respect thereto.

Certain Information included in this Presentation is taken or derived from third-party market studies or reports, including a market study commissioned by RENK from Roland Berger. Market studies are usually based on certain assumptions and expectations that may not be accurate or appropriate, and their methodology is by nature predictive and speculative and therefore subject to uncertainties. The data reflected in market studies is typically based on other industry publications as well as market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market. Accordingly, market studies generally state that the information contained therein is believed to be accurate but that no representation or warranty is given by the market study provider as to the accuracy or completeness of such information and that the opinions and analyses provided in the relevant market study are not representations of fact. The information contained in this presentation has not been independently verified, and no representation or warranty, express or implied, is made by the Company nor its affiliates, advisers, connected persons or any other person as to the fairness, accuracy, completeness or correctness of the information contained herein, and no reliance should be placed on it. Neither the Company nor its affiliates, advisers, connected persons, and/or any third-party provider of industry and market data referred to in this Presentation (including Roland Berger) or any other person accepts any liability for any loss howsoever arising (in negligence or other-wise), directly or indirectly, from this presentation or its contents or otherwise arising in connection with this presentation. This shall not, however, restrict or exclude or limit any duty or liability to a person under any applicable law or regulation of any jurisdiction which may not lawfully be disclaimed (including in relation to fraudulent misrepresentation). This presentation includes "forward-looking statements". These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" or words of similar meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including cost savings and productivity improvement plans) are forward-looking statements. By their nature, such forward- looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the market environment in which the Company will operate in the future. These forward-looking statements speak only as of the date of this presentation. Each of the Company, the relevant subsidiaries and their respective agents, employees and advisers, expressly disclaims any obligation or undertaking to update any forward -looking statements contained herein. You are urged to consider these factors carefully in evaluating the forward-looking statements in this presentation and not to place undue reliance on such statements.

This presentation is confidential and its distribution in certain jurisdictions is restricted by law. Therefore, it must not be distributed, published or reproduced (in whole or in part) or disclosed by its recipients to any other person for any purpose without the Company's consent.

The information contained in this presentation is provided as of the date of this presentation and is subject to change without notice.

1

Trusted Partner

Introduction

Experienced management team with strong track record

Today's speakers

Susanne Wiegand

CEO

Christian

Schulz

CFO

Dr. Alexander

Sagel

Board Member

2

Trusted Partner

1. RENK introduction
2. Update on Q1-24 performance
3. Summary and outlook

Trusted Partner

RENK introduction

RENK - Leading provider of drive technologies with high aftermarket share

Growth markets

~10%

2022A-2027E

Total addressable market CAGR(1)

~€4.6bn

Dec-2023

Total order backlog(2)

End markets(3)

Civil

Global leader

#1 Player

in mission-critical

drive technologies(4)

~75%

Global market presence

in tracked military vehicles(5)

Geographies(6)

APAC

20%

Strong financials

€926m

2023A

Revenue

16.2%

2023A

Adj. EBIT margin(7)

New build / aftermarket(8)

Aftermarket

~30%

~70%

Defense

Americas 23%

56%

EMEA

64%

4	Sources: Company information, Renaissance Strategic Advisors, Roland Berger where indicated above	Trusted Partner
	Further footnotes summarized at the end of the presentation.

1. RENK introduction
2. Update on Q1-24 performance
3. Summary and outlook

Trusted Partner

Update on Q1-24 performance

Order intake

Total order backlog at a high level (€4.7bn), strong pipeline

	Marine &	Conversion of improved order intake accelerates
	Industry (M&I)	revenue growth, higher Navy-share margin accretive
Executive summary
Vehicle Mobility	Operational improvement measures in Augsburg
Q1 2024
	Solutions (VMS)	facilitate strong revenue growth in the VMS segment

Gross margins Gross margins expanded: Mix and operating leverage

Free Cash Flow Successful reduction of NWC ratio to ~25%

6	Source: Company information
	Trusted Partner

Update on Q1-24 performance

Total order backlog stands at 4.8x annual revenues

Total order backlog (Mar-24),€bn

LTM revenue	1.8x	0.8x	2.2x	4.8x
coverage(1)

2.1

0.7	4.7

1.8 Significant additional recurring aftermarket business outside of framework contracts

Fixed order	Frame order	Soft order	Total order backlog
backlog(2)	backlog(3)	backlog(4)
1	2	3	4

Commentary

1 Fixed order backlog: Stable despite fewer large order wins in VMS. Encouraging order pipeline, including a large contract win in April 2024

2 Frame order backlog: Aftermarket and new business converted by signed frame contracts. Encouraging increase during Q1 points to further growth potential

3 Soft order backlog: Highly visible sole source projects and successor business until 2028 - increase driven by concretization of upcoming business

4 Total order backlog of ~€4.7bn and ~4.8x revenue coverage as of Mar-24

7	Source: Company information	Trusted Partner
	Further footnotes summarized at the end of the presentation.

Update on Q1-24 performance

Strong revenue growth in defense and aftermarket-related areas

Order intake, €m

Revenue, €m

Fixed order backlog(2), €m

2.4x 0.9x

	-0.8%
-54.5%	1,780	1,766
458
	22.5%
270	238
208	194

188

Q1-23Q1-24

Q1-23Q1-24

Dec-23Mar-24

YoY growth

Book-to-bill ratio(1)

Commentary

• Temporarily lower order intake and book-to- bill below 1.0x due to fewer large order wins in VMS (two large orders in Q1 2023
  ~€270m)
• Order pipeline promising
• Navy order intake strong, indicating further margin-accretive Navy growth going forward
• Considerable revenue growth of 22.5% YoY across all segments, driven by strong growth in Defence related areas
• Fixed order backlog stable vs. Q4 2023

8	Source: Company information
	Trusted Partner

Update on Q1-24 performance
	YoY growth	Adj. gross profit margin
Gross margin improvement drives EBIT margin expansion	Adj. EBIT margin	Net debt / LTM Adj. EBITDA(3)

Adj. gross profit, €m	Adj. EBIT(1), €m	Net debt(2), €m
24.8%	25.7%	9.9%	11.7%	2.4x	2.3x
				-2.5%
				441	430

	27.0%
	61
48	45.6%
	28
	19

Commentary

• Translation of strong revenue growth into considerable increase in adj. gross profit and adj. gross profit margin:
• • Solid volume growth, higher operating leverage and ongoing efficiency improvements across all segments
  • Mix (Navy, aftermarket) improvement
• Further increase in adj. EBIT to €28m, as other cost items remained stable as a percentage of sales
• Net debt stable despite refinancing-related cash outflows thanks to reduction of NWC ratio

Q1-23Q1-24

Q1-23Q1-24

Dec-23Mar-24

9	Source: Company information	Trusted Partner
	Further footnotes summarized at the end of the presentation.