Business Model VTG AG – Growing together - BAADERbaaderinvestmentconference.com/pdf/VTG.pdf · VTG business model 1 ... 150 145 138 126 136 ... Improvement of fleet balance (age,

Panel Presentation VTG AG – Moving potential towards success

Baader Investment Conference

September 2017

VTG business model

1

Founded in 1951

More than 80,000 railcars

Europe (73,900)

US (5,200)

Russia (3,300)

Solid asset base

Strong and stable cash

generation

Complementary logistics

services

Reliable dividend payer

Investor Presentation, ©2017 VTG Aktiengesellschaft

Rail Logistics Leading European rail forwarder

Tank Container Logistics Major global TC operator

Europe’s number 1

Railcar Division Europe’s largest railcar leasing company

32%

16%

52%

Segment distribution

2

Sales 2016

3%

95%

1%

99%

EBITDA 2016 Assets*

€ 987 m € 345 m € 2.2 bn

Railcar division contributes

52% of sales …

… but 95% of EBITDA and… … holds the vast majority of

assets.

Railcar

Rail Logistics

Tank Container Logistics


* Tangible fixed assets as of December 31, 2016

Railcar Division at a glance

3

Infrastructure character

High utilization rate (~90%)

Leasing model transfers utilization

risk mostly to customer

High contract renewal rates (>80%)

Stable pricing

Constant need for railcars (avg.

contract length ~3 years)

Unique industry dynamics

Profile


29,300x

36,600x * Incl. sliding wall wagons of TWA

36%

44%

Tank Cars

Standard Freight Cars*

16,500x 20%

Intermodal Cars

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Q1/2007 Q1/2009 Q1/2011 Q1/2013 Q1/2015 Q1/2017

Key figures reflect resilient business model

4

Comment

Stable utilization rate due to:

Average leasing contract length of 3 years

High renewal rate

Limited availability of specialized wagons

and/or high switching costs

2009/2010: During economic crisis only

slight decrease

93.9%

(Q4/2007)

87.0%

(Q1/2010)

Acquisition of AAE

(Q1/2015)

Utilization development


Operating Cash Flow

113137

155 149 154169 174 184 191

337 345

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

* Reduced by one-time effect of € 1.3 m in 2008

*

EBITDA development (in €m)

(in €m)

AA

E takeover

AA

E takeover

111 117

150 145 138126

136150 160

283

326

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

5 Investor Presentation, ©2017 VTG Aktiengesellschaft

Market Environment

6

Market Environment


Germany 12%

Poland 9%

France 4%

Austria 4%

Czech Republic 4%

Italy 4%

Slovakia 2%

Others 21%

Other railcar owners 7%

Others 10%

Nacco/CIT 1%

Touax 2%

GATX 3%

Ermewa (SNCF) 6%

VTG 11%

Source: Company Information, General Contract of Use for wagons (GCU)

Split of European wagon fleet

National Railroads Private wagon hire

~700,000 wagons

Sources: DB, Company Information, UMLER

DB fleet development*

Historical US fleet development

* DB fleet excl. rented wagons

50

60

70

80

90

100

110

120

130

140

150

2000 … 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

53%

47% 20%

80%

∆ Private and others:

+ 450,000 wagons

2000 2016

~1,700,000 wagons ~1,600,000 wagons

Private and others Railroads


Nacco Acquisition

Acquisition:

Rationale:

Transaction:

Transaction Highlights

11.09.2017 8 Investor Presentation, ©2017 VTG Aktiengesellschaft

VTG to acquire French-based railcar lessor Nacco

Acquisition supports VTG´s strategy to further strengthen its

position in the European railcar leasing market

Enlargement of customer base

Improvement of fleet balance (age, type mix,…)

Broader offerings to customers

Larger platform for digital offerings

Lower management costs per unit

Administrative and purchasing synergies

Higher free cash flow generation

&

Financing of transaction via debt and capital increase/other

capital markets instruments

Expected closing: Q4 2017

Snapshot of Nacco

11.09.2017 9


Nacco at a glance

Full service railcar lessor founded 1972

Headquartered in Paris with offices in Hamburg

and Crewe (UK)

Approx. 61 employees

Diversified fleet with 14,000 wagons in Europe

Over 180 customers in 16 countries

No. 4 in European railcar leasing market

Complementary customer base compared to VTG

Since 2014 indirect subsidiary of US-based CIT

Group (NYSE: CIT)

Fleet composition

44%

40%

16% Intermodal

Standard freight

Tank

By Type*

~ 14,000

By Age*

46%

15%

8%

16% 15%

0-10 11-20 21-30 31-40 >40

Ø ~19 yrs. !

*31.12.2016

(in yrs.)

Nacco Earnings Potential

11.09.2017 10 Investor Presentation, ©2017 VTG Aktiengesellschaft

P&L contribution* Synergy potential

Overlapping geographical footprint

Similar customers but different share of wallet

Identical regulatory environment

Comparable office locations, IT-systems, etc.

VTG operations only

Overlapping operations

Representations Nacco

Realization of up to €10 m in synergies from

SG&A savings expected

Further savings in procurement and

maintenance envisaged

Significant reduction of replacement CapEx in

the years to come estimated

Offices Nacco Headquarters Nacco

Expected sales

in 2018 Approx. EUR 120m

Expected

EBITDA in 2018

Approx. EUR 100m

(before transaction and integration costs)

Expected EPS Accretive from 2018 on

(before transaction and integration costs,

after envisaged capital increase)

Comments

* Assumption: Closing in Q4/2017 – Subject to antitrust approval


Any Questions?

Save the date 2017

Financial Calendar 2017:

March 7 Preliminary Results FY 2016

April 6 Annual Report FY 2016

April 6 Analyst Conference, Hamburg

May 4 Quarterly Statement Q1 2017

June 8 Annual General Meeting, Hamburg

August 29 Half-Yearly Financial Results 2017

November 16 Quarterly Statement Q3 2017

Alexander Drews

Investor Relations Manager

Phone: +49 40 2354 1352

Fax: +49 40 2354 1350

Email: [email protected]

VTG Aktiengesellschaft, Nagelsweg 34, 20097 Hamburg, Germany

Christoph Marx

Head of Investor Relations

Phone: +49 40 2354 1351

Fax: +49 40 2354 1350

Email: [email protected]

Contact Investor Relations



Appendix

N/A 0

0.30 0.300.33 0.35 0.37

0.420.45

0.50

0.75

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

VTG Group with strong anchor shareholders

Ownership structure

VTG Share

SDAX Performance Index

14

(IPO) Ø +7.6%


Kuehne Holding AG

20%

Joachim Herz Stiftung

10%

Freefloat 41%

Morgan Stanley

Infrastructure

29%

Share price development

Group dividend per share (in €) 0%

50%

100%

150%

200%

250%

300%

Jun-07 Jul-09 Jul-11 Jul-13 Aug-15 Aug-17

H1/2017 H1/2016 Δ*

Sales 498.8 493.3 + 1.1%

EBITDA 163.3 165.8 - 1.6%

EBIT 69.2 72.7 - 4.8 %

EBT 39.3 41.1 - 4.3 %

EPS (in €) 0.74 0.71 + 4.2 %

H1 2017 - Executive Summary

11.09.2017 15

Clear pick up in demand in Q2 2017

Rail Logistics with positive sales trend

Railcar significantly improved

Increase in utilization mainly attributable to

intermodal

Intended acquisition of Nacco announced

Revenue guidance confirmed – Update on

EBITDA outlook

Group figures


EBITDA Guidance (in € bn)

Highlights (in € m)

Outlook

Revenue guidance unchanged:

Slight increase of Sales in FY 2017 expected

EBITDA guidance updated:

Unexpected increase in demand leads to high

preparation expenses

Nacco effects included

EBITDA to range between 330 m€ and 360 m€ Original EBITDA

Guidance

> 345.3 m€

Updated EBITDA

Guidance

330 m€

360 m€

Documents

Business Model VTG AG – Growing together - BAADERbaaderinvestmentconference.com/pdf/VTG.pdf · VTG business model 1 ... 150 145 138 126 136 ... Improvement of fleet balance (age,