DGAP-News: R. STAHL increased sales and earnings again in Q3 2021

R. STAHL increased sales and earnings again in Q3 2021

• Sales increase 4.3 % or €2.6 million year-on-year to €62.1 million in Q3 2021 (Q3 2020: €59.6 million)
• EBITDA pre exceptionals up 2.3% to €5.1 million (Q3 2020: €5.0 million)
• Exceptionals in the third quarter 2021 of €-0.1 million at low level of previous year (Q3 2020: €-0.1 million)
• Net profit improves by €0.5 million to €-0.1 million (Q3 2020: €-0.6 million) and earnings per share to €-0.01 (Q3 2020: €-0.09)
• Orders received in the third quarter 2021 of €63.2 million well above prior year (Q3 2020: €55.3 million)
• FY 2021 outlook adapted: sales now expected between €246 million to €250 million, EBITDA pre exceptionals between €14 million to €16 million

Waldenburg, 10 November 2021 - R. STAHL today publishes financial figures for Q3 2021. Buoyed by sustained global economic growth, R. STAHL's business recovery also continued in the third quarter of 2021 compared with the previous year, which was still severely impacted by the COVID 19 pandemic. Sales were up 4.3% to €62.1 million in the third quarter of 2021 as compared to the previous year (Q3 2020: €59.6 million). A significant upturn of major investment projects in the oil and gas sector failed to materialize, however. Increasing supply bottlenecks and resulting price increases for raw materials, including electronic products and some plastic granules in particular, dampened development in sales and earnings. The sales growth also resulted in an increase in earnings before interest, taxes, depreciation and amortization (EBITDA) pre exceptionals of 2.3% to €5.1 million (Q3 2020: €5.0 million), though higher personnel costs and lower other operating income resulted in a slight decline in the EBITDA margin pre exceptionals to 8.2% (Q3 2020: 8.3%). At €-0.1 million (Q3 2020: €-0.1 million) exceptionals stayed at the low level of the previous year. Net profit increased by €0.5 million year-on-year to €-0.1 million (Q3 2020: €-0.6 million), corresponding to earnings per share of €-0.01 (Q3 2020: €-0.09)

"Compared to the prior year that was severely impacted by the COVID-19 pandemic, the sales growth in the third quarter 2021 confirmed our view of a recovery in our markets, though it has not fully met our expectations yet. In addition, we have been quite successful to manage the rising shortages and prices of raw materials in the period under review", said Dr Mathias Hallmann, CEO of R. STAHL. "However, the currently further increasing procurement risks, a resurgence of the COVID-19 pandemic in key markets as well as cost increases for materials, energy and transport to a previously unexpected extent forced us to adjust our outlook for FY 2021", Dr Hallmann added.
Business development in Q3 2021

Development in Germany was encouraging, increasing by 16.7% to €18.1 million (Q3 2020: €15.5 million). This development reflects the strong order situation in the chemical and pharmaceutical industries and in mechanical engineering, in particular, as well as larger deliveries for a major project. At €24.6 million, sales in the Central Region - which includes Africa and Europe excluding Germany - were down 8.3% in the quarter under review, well below the level of the previous year (Q2 2020: €26.8 million). This was especially attributable to a decline in business with customers in the oil processing industry. Raw material shortages and on-going limitations to customer interaction due to the COVID-19 pandemic also contributed. In the Americas region, sales were slightly higher than the previous year, rising by 2.2% to €6.1 million (Q3 2020: €6.0 million), though they remained at low level. Continuing reluctance to invest in the oil and gas business were particularly prevalent here. The Asia/Pacific region posted significant growth, with sales increasing by 18.1% to €13.4 million (Q3 2020: €11.3 million). In addition to stronger demand from the mechanical engineering sector and growing sales with wholesale partners, a number of smaller projects entered the delivery phase.
Noticeably stronger demand in the third quarter of 2021 compared to the previous year resulted in a 14.4% increase in order intake to €63.2 million (Q3 2020: €55.3 million).
The order backlog as of 30 September 2021 remained at a continued strong level compared to the end of the previous quarter at €68.1 million (June 30, 2021: €67.9 million). The year-on-year decline (order backlog as of 30 September 2020: €74.2 million) is attributable to the unusually high prior-year figure; due to the pandemic, there were significant customer delays in the acceptance of finished products in the prior-year quarter.

Development of earnings, financial and asset position in Q3 2021

In line with sales, total operating performance in the third quarter of 2021 increased by 4.4% year-on-year to €63.4 million (Q3 2020: €60.7 million).

The cost of materials increased by 7.6% in the reporting period to €-21.9 million (Q3 2020: €-20.4 million) and thus noticeably stronger than total performance, resulting in an increase in the cost of materials ratio to 34.6% of total operating performance (Q3 2020: 33.6% of total operating performance). In addition to lower-margin major orders in the reporting period, this development was also due in part to significantly higher raw material costs.

There was a 2.2% increase in personnel expenses in the reporting period to €-28.0 million (Q3 2020: €-27.3 million), driven for the most part by negotiated wage increases and the payment of collectively agreed special payments, as well as lower utilization of short-time work.

The balance of other operating income and other operating expenses decreased by 4.6 % to €-8.5 million in the third quarter of 2021 (Q3 2020: €-8.1 million). While - in contrast to the previous year - changes in foreign exchange rates had a positive impact in the reporting period, as did write-downs on receivables, transport costs, general service expenses, travel expenses and marketing expenses were higher than in the previous year.

Depreciation and amortization in the reporting period of €-4.1 million was slightly higher (Q3 2020: €-4.0 million).

Overall, EBIT in the third quarter of 2021 of €0.8 million remained at the level of the previous year (Q2 2020: €0.8 million).
Despite the negative net profit, equity improved by €1.0 million compared with the end of the previous year to €49.2 million (31 December 2020: €48.1 million). The primary positive factors here included beneficial effects from changes in foreign exchange rates and unrealized gains from pensions (including deferred taxes). As a result, the equity ratio increased slightly to 19.1% (31 December 2020: 18.8%).
In terms of net debt (excluding pension provisions and lease liabilities), there was an increase to €17.3 million as of 30 September 2021 due to the negative free cash flow in the reporting period (31 December 2020: €5.8 million).

Outlook for FY 2021

In contrast to the assumptions that R. STAHL communicated in July 2021, market and procurement risks as well as cost increases accelerated in the quarter under review. Against this backdrop, the FY 2021 outlook was updated on 5 November 2021 to sales in the range of €246 million and €250 million and to an EBITDA pre exceptionals of €14 million to €16 million. This was primarily driven by shortages of raw materials and the resurgence of the COVID-19 pandemic in key sales regions which both affected the development of sales and order intake at levels that have not been foreseeable until recently. Moreover, higher costs for raw materials, energy and transport will additionally weigh on earnings. Therefore, R. STAHL now expects an even free cash flow for FY 2021 and an equity ratio of around 18% until year-end 2021.

Key figures of the R. STAHL Group for Q3 2021 pursuant to IFRS

¹⁾ Africa and Europe excl. Germany

²⁾ Exceptionals: restructuring charges, non-scheduled depreciation and amortization, charges for designing and implementing IT projects, M&A costs as well as profit and loss from the disposal of assets no longer required for business operations

³⁾ Payments for investments in intangible assets and property, plant & equipment

⁴⁾ excl. pension provisions and without lease liabilities

⁵⁾ excl. apprentices

Percentages and figures in this report may include rounding differences. The signs used to indicate rates of change are based on economic aspects. Improvements are indicated by a "+" sign, deteriorations by a "-" sign. Rates of change >+100% are shown as >+100%, rates of change <-100% as "n/a" (not applicable).

Investors' and analysts' conference call of R. STAHL AG for Q3 2021

The Executive Board of R. STAHL AG, represented by the CEO Dr Mathias Hallmann, will explain the results of Q3 2021 in a conference call

today at 10:00 CET

and will be available for questions afterwards. The conference call will be held in English language.

Please dial one of the following numbers to join the call and provide the PIN as well as your full name and company when prompted:

DE: +49 (0)89 2030 35529
UK: +44 (0)330 336 9434
US: +1 323 994 2131

PIN: 3094855#

Along with the conference call, we will provide an online presentation via the internet. Please log on as a participant on the following website (no password required):

https://www.webcast-eqs.com/rstahl20211110/no-audio

A replay of the audio webcast will be available shortly after the conference call has ended on the company's website under the following link:

https://r-stahl.com/en/global/corporate/investor-relations/ir-news-and-publications/events-and-presentations

About R. STAHL - www.r-stahl.com
R. STAHL is the world's leading supplier of electrical and electronic products and systems for explosion protection. These products and systems prevent explosions in hazardous areas and contribute to the safety of people, machines and the environment. The portfolio ranges from products used in switching/distributing, installing, operating/monitoring, lighting and signalling/alarming up to automation. Typical customers are the oil & gas industry, the chemical and pharmaceutical industry and the food industry. In 2020, global sales amounting to €247 million were generated by 1,690 employees. The shares of R. STAHL AG are traded on the Regulated Market/Prime Standard of Deutsche Boerse (ISIN DE000A1PHBB5).

Forward-looking statements
This release contains forward-looking statements based on assumptions and estimates of R. STAHL's management. Although we assume that the expectations of these forward-looking statements are realistic, we cannot guarantee that these expectations will prove to be correct. The assumptions may involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Factors that may cause such discrepancies include: changes in the macroeconomic and business environment, exchange rate and interest rate fluctuations, the roll-out of competing products, a lack of acceptance of new products or services, and changes in business strategy. R. STAHL does not plan to update these forward-looking statements nor does it accept any obligation to do so.

Alternative performance indicators
The alternative performance indicator EBITDA pre exceptionals that is used in this release is not defined by international accounting standards. R. STAHL uses this indicator to improve the comparability of its business performance over time. EBITDA pre exceptionals is derived from earnings before interest, taxes, depreciation and amortization (EBITDA) less adjustments classified as exceptionals (restructuring charges, non-scheduled depreciation and amortization, charges for design and implementation of IT-projects, M&A costs as well as profit and loss from the disposal of non-current assets no longer required for business operations).