Munters
Q2 report 2021
Klas Forsström, President and CEO
Annette Kumlien, GVP and CFO

AgendaHighlights Q2 2021
Implementation of strategy
Q2 2021 financial highlights
Summary2

Solid underlying demand in the second quarter
Good demand and stable net sales
Order intake
MSEK
2500

+13%

2000
1500
1000

1,870

2,118

1000

+3%

1,773

1,822

500

500
0

1500

Q2 2020 Q2 2021

0

Q2 2020 Q2 2021

MSEK
300
250
200
150
100
50
0

-1%

260

259

Q2 2020 Q2 2021

• Order intake increased FX-adj. by +23% (+1)- Increase driven by the battery sub-segment in Industrial segment in
AirTech; swine segment in the US for FoodTech and growth inServices• Net sales increased FX-adj. by +13% (-6)- AirTech strong increase in the battery sub-segment in APAC andAmericas; good development in the US for FoodTech• Adj. EBITA at MSEK 259 (260), EBITA-margin of 14.2% (14.7)- Constraints in supply chain, increased costs and changed productmix negative impact on margin
3

Strategy implementation

Adj. EBITA

Net sales

MSEK
2000

Constraints in supply chain• Constraints in supply chain• Execution of our long-term
increased throughout the quarter
strategy continued
leading to longer lead times and Examples of actions taken:
sourcing related production• IP acquisition to strengthen
disturbances
technology position in core
• Costs increased for raw material
business of AirTech
and freights; majority effect of• FoodTech strategy launched inconsecutive price increases in
the quarter aiming at accelerating
2022 due to extended lead times
the digital journey and strengthen• Constraints in supply chain
the equipment position
expected to remain in 2021

Raw material and supply chain headwind• Sharp increase in freight costs and raw material andcomponent prices in 2021
‒ Example: Price increases of about 100% for freight shippingfrom Europe-Asia and Europe-North America

Iron ore price development since 2016

(USD/MT)250

200• Largest raw material exposures for Munters:‒ Steel, Copper, Zinc/Magnesium, Aluminum• Constraints in supply chain led to longer lead times andsourcing related production disturbances
Consecutive price increases 2021;
effect over coming quarters with majority next year due
to extended lead times

150

100

50

0
2016-01-04

2017-01-04

Source: Kairos Commodity Indices4

2018-01-04
China Iron Ore

2019-01-04

2020-01-04

Australia Iron Ore

2021-01-04

Order intake Q2 – Growth in the US
Americas• AirTech - growth driven by primarily battery sub-segment in Industrial
segment, offsetting negative effect from exit of non-core Commercial
segment. Services showed good growth• FoodTech – good growth in broiler, swine, layer and dairy segments

EMEA• AirTech – good development driven by the battery sub-segment• FoodTech – growth driven by orders for controllers to the US broiler
segment

Asia• AirTech – strong growth in APAC driven by the battery sub-segment inIndustrial segment and Services. Component business grew, partly
offset by a weak development of Mist Elimination• FoodTech – decline in APAC on the back of very strong growth in theswine segment in China last year

5

*As reported, not currency adjusted.

Regional split

Americas

EMEA

APAC

Share of total order intake

40%

36%

24%

Y/Y change in %*

17%

10%

12%

Y/Y FX-adj. change in %

35%

15%

20%

Market trends – AirTech
Customer segment
Customer segment
Industrial% Order intake Current
trend
H1 2021
TrendsMarket comments
Market comments

48%

Battery segment good growth; other segments solid development…whereof Battery

20%

Continued rapid growth driven by APAC, increasing activities across EMEA and Americas
Growth will come in waves as battery producers step up to meet demand…whereof Food processing

7%

Good underlying market – however weaker during pandemic…whereof Other

21%

Solid underlying industrial markets with recent boost in Pharma during pandemic

Data Centers

13%

Continued increasing demand in Hyperscalers and Co-Location operators

Components*

12%

Main end markets Data Centers and Battery producers strong demand

Mist Elimination

6%

Power segment and Marine relatively weak, positive trajectory in Process

Commercial

4%

Solid replenishment market for Supermarkets

Services

17%

Growth of installed base and increasing interest in energy upgrades, etc* Dehumidification rotors and humidification pads sold through OEM channels
6Booming battery industry drives order intake in AirTech• Currently, electrification is continuing at a high speed• High expansion of battery factories in need of cooling anddehumidification solutions– primarily in Asia, but also in Europe and Americas

Order Intake, Industrial segment in business area AirTech• Munters total order backlog has continuously increased
during the last four quarters, driven by AirTech• Battery segment, similar to Data Centers, receives orders
for larger solutions with longer lead times than the rest of
Munters operations

Strong order backlog in Munters driven by AirTech
and the sub-segment Battery

H2 2019
Rest Industrial

7

H1 2020
Batteries

H2 2020

H1 2021Dry, cold air needed for lithium battery production• Lithium battery production requires strictly controlled
ultra-low humidity to ensure process consistency,
storage capacity and maximize quality
Munters Low Dew Point Dehumidifiers provides:• Maximizes operational flexibility through performance
24/7, during all seasons, all production modes, andvarying numbers of personnel• Precise control of humidity and temperature ensureshigh quality, repeatable products• Consistent low dew point improves cycle life, productyield and storage capacity in batteries

Munters product design can save significantly on energy requirements

8Service major opportunity in battery sub-segment• Munters products are installed in most production lines of
top battery manufacturers in China• Evolving opportunities of daily maintenance and after-saleservice• New retrofit PlugFan introduced, achieving reduction ofoperating costs• Power consumption in test installation was reduced andpay-back of new installation only 2.1 years
Power consumption reduced by appr. 30%

9Market trends – FoodTech
Customer segment% Order intake
H1 2021

TrendsMarket comments

Broiler~45%

US market showing signs of turning

Swine

~30%

Lower growth in China, stronger sentiment in US

Layer

~15%

Higher global steel prices lower cage-free driven growth

Greenhouse~5%

Growth driven by increased demand

Dairy

<5%

Good milk prices continue to support investments in US

AgendaHighlights Q2 2021
Implementation of strategy
Q2 2021 financial highlights
Summary11

Strategic priorities – second quarter 2021
Focus areas

Q2 achievement

Customers

Improve go-to-market models and pricing strategies

Consecutive price increases in 2021, more efficient pricing
because of improved go-to-market models

Innovation

Focus investments in R&D and product portfolioalignment and adjustment

Acquisition of IP to strengthen core-business in AirTech,product portfolio alignment well on track

Markets

Growing in prioritized markets and strengthen
Services

Excellence ineverything we doContinuous improvements, lean activities in complete
value chain, manufacturing footprint and working
capitalExpansion of Services into two new markets, growth inprioritized areas e.g. Batteries and Services, new FoodTech
organization for Connected Farms
Progress of implementation long-term strategic measures
for increased efficiency in AirTech and FoodTech,continued solid cash generation

PeopleLeadership and competence development in line withstrategic priorities

Change management training on-going,
Management Sustainability training launched

Strategic priorities:

12Delivery on our long-term strategy
AirTech: Growth in priorities markets & strengthened technology

FoodTech: Taking the next steps• Acquisition of IP to strengthen technology position in core-business US• Digital solutions: accelerating growth in IoT and SaaS solutions byleveraging current strong market position• Expansion of Services business through entry into Norway and Ireland• Mist Elimination to become Clean Technologies; increase focus on
renewables in both energy generation and fuels• Secured frame agreement with larger data center hyper scaler,
resulting in increased recurring revenues to this segment• Decision on delaying some strategy implementation measures into
2022/23• Climate solutions: focus on increasing valuebased selling,strengthening market position for equipment by continued innovation,
product rationalizations and efficiency improvements• Implementation started in Q2 2021; new organizational structure andHead of Connected Farms appointed

Climate change major driving force for Munters
Munters Lansing now 100% renewable power sources

Progress during second quarter 2021

Quality

Environment

Governance

FoodTech’s production facility in the US (Lansing) is now 100%
powered by renewable sources using the GreenWise Power programwith for example wind and solar power sources

Munters
Decision taken
implementation
ISO certification
9001:2015 (quality);
14001:2015(environment);
45001:2018 (safety)
for all production
sites

Target set:
We strive for net
zero emissions fromour operations by
2030.

Strategy:
Solid governanceestablishedSustainability KPIs
integrated in strategy
framework.

We will reduce
Green House Gas
emissions from ouroperations.**Scope 1 and Scope 2 according to the Green House Gas (GHG) protocol
14

Sustainability
training for top
managers.

AgendaHighlights Q2 2021
Implementation of strategy
Q2 2021 financial highlights
Summary15

Q2 and YTD 2021 vs. Mid-term targets and YTD 2020
1

Net sales growth
Org. growth p.a. over abusiness cycle

Mid-term
targets

Q2
2020

Q2
2021

YTD
2020

YTD
2021

5%

-6%

13%

-6%

13%

14%

14.7%

14.2%

11.7%

13.3%

1.5x2.5x

n.a.

n.a.

2.7x

1.9x

2

Adjusted EBITAmargin
3

Capital structure(LTM*)(Leverage: Net debt / adj.
EBITDA)*LTM = Last Twelve Months

16

1

Net sales growthGroup: Strong order intake and net sales
Q2 Order intake
MSEK

MSEK

+13%

1500

1,870

2.118

1000

1000

500

500

0

0

Q2 2020

Q2 2021

1,773

Q2 2020

1,822

Q2 2021

Order intake, Q2: +13%, FX-adjusted +23% Book-to-bill 1.2• AirTech: Strong growth mainly driven by the battery sub-segment in regions APAC
and Americas• FoodTech: Decline in APAC on the back of a strong swine segment in China lastyear. Partly offset by growth in EMEA and Americas
Net sales, Q2: +3%, FX-adjusted +13%
• AirTech: Strong growth driven mainly by the battery sub-segment in APAC andAmericas and Components segment. Services grew in all regions• FoodTech: Growth in Americas and EMEA; decline in APAC
• Services represented 15% of NS
17

YTD Order intake and Net sales
MSEK

+3%

2000

2000
1500

Q2 Net sales

4000
3500
3000
2500
2000
1500
1000
500
0

MSEK

+11%
+3%

3,719

4,113

YTD Order backlog

3,340

3,434

OI YTD OI YTD NS YTD NS YTD
2020
2021
2020
2021

4000
3500
3000
2500
2000
1500
1000
500
0

+13%

3,018

2,660

FoodTech
MSEK 700

AirTechMSEK 2,003

AirTechMSEK 2,318

YTD 2020

YTD 2021

FoodTech
MSEK 656

Order intake, YTD 2021: +11%, FX-adjusted 22%, Book-to-bill 1.2• AirTech: Strong growth driven mainly by the battery and pharma sub-segment• FoodTech: Americas and EMEA good growth, offset by decline in APAC on theback of a strong Swine segment last year
Order backlog, YTD 2021: +13%, FX-adjusted +21%
Net Sales, YTD 2021: +3%, FX-adjusted 13%• AirTech: Strong growth driven by an increase in the battery and pharma subsegments and Services• FoodTech: Growth mainly driven by swine segment in China and the US• Services represented 14% of NS

1

Net sales growth

AirTech: Growth in battery sub-segment and Services
Q2 Order intake
MSEK

1600
1400
1200
1000
800
600
400
200
0

Q2 Net sales
MSEK

+21%

MSEK

+5%

1400

3000

1200

1,231

1,495

1000
800

1,207

1,265

0

Q2 2020

Q2 2021

Order intake, Q2: +21%, FX-adjusted +33%, Book-to-bill 1.2• Strong growth driven mainly by the battery sub-segment in regions APAC andAmericas; good growth for Services in all regions
Net sales, Q2: +5%, FX-adjusted +15%
• Growth driven mainly by the battery sub-segment in APAC and Americas andComponents segment• Data Centers US and Mist Elimination grew slightly.
• Services grew in all regions• Services 21% of NS

18

3000

+5%

+16%

2500

2,574

2,979

2,334

2,460

2000
1500

2,003

2,318

YTD 2020

YTD 2021

1000

500

200

Q2 2021

1500
1000

400

Q2 2020

2000

YTD Order backlog
MSEK

+16%

2500

600

0

YTD Order intake and Net sales

500

OI YTD OI YTD NS YTD NS YTD
2021
2020
2021
2020

0

Order intake, YTD 2021: +16%, FX-adjusted 28%, Book-to-bill 1.2• Growth driven mainly by the battery sub-segment in Americas and APAC andpharma sub-segment in the US• Components good growth, Mist Elimination continued weak order intake andData Centers US flat
Order backlog, YTD 2021: +16%, FX-adjusted +24%
Net Sales, YTD 2021: +5%, FX-adjusted 16%• Growth driven mainly by the battery sub-segment in APAC and Americas and thepharma sub-segment in the US• Services 20% of NS

1

Net sales growth

FoodTech: Good growth in the US offset by decline in China
Q2 Order intake
MSEK

MSEK

-3%

700

-1%

600

500

656

636

500
400

300

300

200

200

100

100

0

0

Q2 2020

Q2 2021YTD Order intake and Net sales
MSEK

700

600
400

Q2 Net sales

575

Q2 2020567

Q2 2021

1400
1200
1000
800
600
400
200
0

YTD Order backlog
+7%

MSEK

-1%

1,172

700

-3%

1,156

600
500

1,023

992

400
300

656

700

YTD 2020

YTD 2021

200
100

OI YTD OI YTD NS YTD NS YTD
2021
2020
2021
2020

0

Order intake, Q2: -3%, FX-adjusted +5%, Book-to-bill 1.0• Good growth in broiler, swine, layer and dairy segments in the US• EMEA grew driven mainly by increased order for controllers to the US
broiler segment• APAC declined, on the back of a very strong order intake in the swine
segment in China previous year

Order Intake, YTD: -1% FX-adjusted +8%, Book-to-bill 1.0• Americas growth (currency adjusted) mainly driven by US swine, layer anddairy segments• Region EMEA grew as demand for controllers and greenhouse solutions
increased, APAC declined on the back of a strong swine segment 2020

Net sales, Q2: -1%, FX-adjusted +7%• Americas had good growth driven by the layer, swine and dairy segments• Region EMEA grew because of good development in greenhouse segment• Sales declined in APAC

Net Sales, YTD: -3% FX-adjusted +6%• Good growth in equipment business in Americas driven by broiler, swine,
layer and dairy segments. EMEA weaker development and APAC declined

19

Order backlog, YTD: +7%, FX-adjusted +12%

2 Adjusted EBITA-margin

Flat adjusted EBITA Q2 and improved YTD 2021
MSEK

500
450
400
350
300
250
200
150
100
50
0

+17%

14.7%

14.2%
11.7%
-1%

260

259

390

18%

13.3%

16%
14%
12%

457

10%
8%
6%
4%
2%

Q2 2020

Q2 2021

YTD 2020

YTD 2021

0%

Adjusted EBITA, Q2: weakened margin• Increased net sales and high utilization rates offset by constraints in the
supply chain, increased freight costs and a changed business mix
Adjusted EBITA, YTD: Improved margin• Improved mainly because of increased net sales, high utilization rates
and continued efficiency improvements

20

FoodTech

AirTech

Group
MSEK

400
350
300
250
200
150
100
50
0

15.0%

Q2
2020

15.7%

12.0%

+13%

181

+37%

16.2%

205

Q2
2021

281

YTD
2020

385

YTD
2021

18%
16%
14%
12%
10%
8%
6%
4%
2%
0%

MSEK

300

17.1%
14.1%

250

14.6%

200
150

-21%

-18%

100
50
0

12.0%

98

80

Q2
2020

Q2
2021

150

119

YTD
2020

YTD
2021

18%
16%
14%
12%
10%
8%
6%
4%
2%
0%

AirTech: Improved margin Q2 and YTD• Increased net sales and high utilization rates improved the margin, partly offset
by constraints in the supply chain, increased freight costs and for Q2 a changed
business mix
FoodTech: weakened margin Q2 and YTD
199

176

• Margin negatively impacted by increased raw material, freights costs and achanged business mix. 2020 Q2 margin strong mainly because of growth in theswine market in China

Delivering on our strategic journey2020
2nd step in strategy implementation
July: Sharpening measures, mainly AirTech

3rd step in strategy implementation
May: Accelerating the strategy implementation, FoodTech

New strategy launched in 2020,
shortly after measuresannounced

FoodTech strategy presented May 2021
aiming at creating a unique connected offering
throughout the food production value chain• Exit non-core part of thecommercial business in the US• Expand Data Centers US
manufacturing in Texas• In the Netherlands, operations
to be consolidated• In addition, several othermeasures to be taken to
ensure execution of thestrategy212021• Savings MSEK
70 oncemeasuresrealized••• Total cost:est. MSEK 176••

Accelerate the digital journey
E.g., Shift from 1st to 2nd generation IoToffering & scaling software operations
Strengthen footprint and offering
E.g. Set-up of distribution hub in Asia,
improve production excellence inAmericas and Europe as well as
streamlined product offering in Europe

Status Q2 2021

AirTech• Full-year positive
impact on EBITA
of est. MSEK 70
in 2023• Total cost:est. MSEK 140• Full implementation
pushed to end
2022/early 2023
due to Covid-19

FoodTech• Strategy launch;
implementation
started, Head ofConnected Farms
appointed

3Capital structure

Strong cash flow development
Cash flow development, LTM*

Cash conversion (LTM OCF**/Adj. EBITA)

Cash flow from operating activities

MSEK

1200

Cash flow for the period

1000

100%

800

80%

600

60%

400

40%

200

20%

0
-200

Apr-Mar2019

Jul-Jun2019

Oct-Sep Jan-Dec Apr-Mar
2019
2019
2020

Jul-Jun
2020

Oct-Sep Jan-Dec Apr-Mar
2020
2020
2021

Jul-Jun2021• Cash flow from changes in working capital had a positive impact on
cash flow of MSEK 39 (85) in the second quarter and a negative
impact of MSEK -99 (28) for the first six months of 2021
• Positive effect from working capital in 2nd quarter from both
operational activities and a mix of various other items

22

120%

*LTM = Last Twelve Months
Cash flow development includes discontinued operations**Operating cash flow

0%Jul-Jun2019

Oct-Sep Jan-Dec Apr-Mar
2019
2019
2020

Jul-Jun
2020

Oct-Sep Jan-Dec Apr-Mar
2020
2020
2021

Jul-Jun2021• Cash conversion continued to be at a high level, although slightly
lower than last quarter, mainly as a result of intense work to improve
cash management and working capital management

3

Capital structure

Leverage in line with mid-term financial target range
Development of leverage
Net debt / adj. EBITDAx, LTM

5
4,5
4
3,5
3
2,5
2
1,5
1
0,5
0

Development of leverage• Net debt at the end of June amounted to MSEK 2,209 comparedto MSEK 2,208 at the end of March 2021
• The leverage ratio per end of June was 1.9x which is the sameratio as per end of March 2021 and end of December 2020
despite dividend pay-out and negative FX-rate effect relating to
USD/SEK
Re-financing enables long-term strategy execution

Apr-Mar Jul-Jun Oct-Sep Jan-Dec Apr-Mar Jul-Jun Oct-Sep Jan-Dec Apr-Mar Jul-Jun
2019
2019
2019
2019
2020
2020
2020
2020
2021
2021

•

•

* Loan Market Association23

New primary 5-year financing facilities established•

MEUR 250 Revolving Credit Facility & MUSD 165 Term
Loan Facility; same total commitment as previous set-up•

One financial covenant – Net debt / Adjusted EBITDA

Facilities agreement based on LMA* standard, different baskets
under the agreement has been increased and made more
dynamic

AgendaHighlights Q2 2021
Implementation of strategy
Q2 2021 financial highlights
Summary24

Continued good demand in the second quarter
Strong demand

Supply chain constraints to remain

Delivery on long-term strategy• Solid demand in main markets• Constraints in supply chain increased;leading to longer lead times and sourcing
related production disturbances• Increased raw material and freights costs• Constraints in supply chain expected toremain in 2021

Execution of long-term strategy continued:• Strong increase of order intake and sales;
driven by battery sub-segment in Industrial
segment in AirTech and swine segment in
the US for FoodTech• Adj EBITA-margin impacted by constraints
in supply chain and change in business mix
25• AirTech: IP acquisition to strengthen
technology position; expansion Services• FoodTech: Launched updated strategy;
focus on climate solutions and digitalsolutions

Questions & Answers