Munters
Q3 report 2021
Klas Forsström, President and CEO
Annette Kumlien, GVP and CFO

AgendaHighlights Q3 2021

Implementation of strategy
Q3 2021 financial highlights
Summary2

Strong order intake and lower margin in Q3
Strong demand, stable net sales with lower margin
Order intake

Net sales

MSEK
2500

MSEK
2000

+20%

2000
1500

1000

1,919

1000

+1%

1,833

1,857

500

500
00

Q3 2020 Q3 2021

Q3 2020 Q3 2021

MSEK
300
250
200
150
100
500-21%271

215

Q3 2020 Q3 2021

• Order intake FX-adj. +21%
• Strong increase in prioritized areas - mainly Battery and DataCenters• Net sales FX-adj. +3%• Increase in AirTech - Battery sub-segment and Services
showed good development• Demand negatively impacted by weak swine market in China• Adj. EBITA at MSEK 215 (271), EBITA-margin 11.6% (14.8)• Margin decreased due to supply chain constraints, higher raw
material prices, freight costs, changed business mix as well as
the time lag of the impact of our price increases
3

Strategy implementation

Adj. EBITA

1500

2,295

Supply chain challenges to continue• The supply chain constraints along• AirTech: Larger Battery and Datawith higher raw material prices andCenter project wins further
freight costs increases seen
strengthen our market andthroughout Q2, continued to impact our technology position, andbusiness during Q3
increase our potential
aftermarket services sales• We now expect supply chain
challenges to continue throughout the • FoodTech: Focus on climate andfirst half of 2022
digital solutions

Supply chain challenges and improved
internal efficiencies

Raw material price development since 2016

• Supply chain constraints, higher raw material prices andfreight cost increases seen throughout Q2 continued toimpact our business during Q3• Most of our consecutive price increases implemented
2021 will come into effect next year due to the orderbacklog and extended lead times• Positive impact from high utilization rates and efficiency
improvements

Container rate development since 2016

In Q2 we predicted the supply chain challenges to remain in
the second half of 2021 and we now expect this challenge tocontinue throughout the first half of 2022
Source: Kairos Commodity Indices4

Order intake Q3 – Good development in EMEA and Americas
Americas• AirTech - growth driven by Data Centers with strong demand from colocation operators• FoodTech – strong growth in Dairy, Greenhouse and Swine segments

EMEA• AirTech – strong development driven by Battery sub-segment• FoodTech – good growth driven mainly by controllers to the US broiler
segment

APAC• AirTech – strong growth driven by Battery sub-segment. Services
especially strong growth• FoodTech – negatively impacted by weak swine market in China due
to overcapacity and outbreak of ASF. Growth in other APAC markets

5*As reported, not currency adjusted.

Regional splitAmericas

EMEA

APAC

Share of total order intake

44%

32%

23%

Y/Y change in %*

21%

33%

3%

Y/Y FX-adj. change in %

25%

33%

2%

Market trends during Q3 – AirTech
Customer segment
Customer segment
Industrial% order intake CurrentMarketMarket comments
Q1-3 2021 trendTrends
Comments
48%

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

20%

Continued rapid growth across all regions, with APAC in the lead
Growth will come in waves as battery producers step up to meet demand…whereof Food processing

7%

Slow during the first phases of the pandemic, but picking up…whereof Other

21%

Solid underlying industrial markets performance, though Pharma pandemic boost tapering off

Data Centers

13%

Continued increasing demand from Hyperscalers and Co-Location operators

Components*

12%

Strong demand from primary end markets Data Centers and Battery

Mist Elimination

6%

Power segment and Marine relatively weak, however positive trajectory in Process

Commercial

4%

Solid replenishment market for Supermarkets

Services

17%

Growing of installed base and increasing interest in energy upgrades, etc* Dehumidification rotors and humidification pads sold through OEM channels
6Scandinavian lithium battery laboratory project• Munters signs strategic turnkey project to design and build afull-scale laboratory for lithium batteries in Scandinavia• Lithium battery production requires a highly controlledenvironment with stable temperature and humidity• A controlled climate guarantees high quality in the end-productand safety in production• The project will be delivered over the coming six months andthe order value is estimated to MSEK 84

Munters is a clear leader in complete climate solutions forproduction of the world’s lithium batteries
7Market trends during Q3 – FoodTech
Customer segment% order intake
Q1-3 2021

MarketTrends
CommentsBroiler~50%

Stable demand in all markets

Swine

~25%

Weak development in China, improving in Americas

Layer

~15%

Good development in Americas

Greenhouse~5%

Growth driven by increased demand

Dairy~5%

Good milk prices continue to support American investments

An affordable, easy-to-use and high-performing heat recovery solution
Benefits of Munters Heat exchanger:• No filtration required - no costs and pressure losses due to preliminaryfiltration• Self-cleaning functionality• Easy access for service - no risk of contamination or hygienic issues• Up to 85% efficiency of heat recovery• No condensation and water waste“It has been important for us to choose a heat exchanger that is
operationally reliable and easy to maintain”, says Axel Månsson, a leading
Danish producer of organic vegetables and eggs, who chose Munterscutting-edge Heat-X Rotate air-air heat exchanger.

9AgendaHighlights Q3 2021

Implementation of strategy
Q3 2021 financial highlights
Summary10

Strategic prioritiesStrategic priorities:

11

Focus areas

Customers

Improve go-to-market models and pricing strategies

Innovation

Focus investments in R&D and product portfolio alignment
and adjustment

Markets

Growing in prioritized markets and strengthen Services

Excellence ineverything we doContinuous improvements, lean activities in complete value
chain, manufacturing footprint and working capital

PeopleLeadership and competence development in line with strategic
priorities

Delivery on our long-term strategy
AirTech: Growth in larger projects & prioritized markets

FoodTech: Taking the next steps• Larger Battery and Data Center project wins further strengthen
our market and technology position and also increase ourpotential aftermarket services sales• Digital solutions: accelerating growth in IoT and SaaS solutions
by leveraging current strong market position• Mist Elimination to become Clean Technologies; increase focus • Climate solutions: focus on increasing value based selling,strengthening market position for equipment by continued
on renewables in both energy generation and fuels
innovation, product rationalizations and efficiency• Investments in our digital journey continue to build a stronger
improvements
business

Target to reduce product assortment by 40% achieved

Continuous strong focus on sustainability
PeopleEnvironment
Governance
Grete Solvang Stoltz
New Group Vice President HR and Sustainability

Progress during third quarter 2021

PeopleJoined UN Global
Compact Gender
Equality initiatives
New leadershipprogram launched

13

Environment

Sustainability
training on Scope 1,Scope 2 and Scope
3 CO2 emissions
held for top 50
managers.
Additional initiative
launched to reduce
CO2 emissions infactories initiatedGovernance

Sustainability
objectives andactivities
continuouslyintegrated instrategy framework.
Preparation for EU
Taxonomy reportingin progress

Grete Solvang Stoltz, currently Senior Vice
President Human Resources andSustainability at LKAB, will join the Munters’
management team as Group Vice President
HR and Sustainability.
Grete Solvang Stoltz has extensive
experience in running global strategic
programs with a focus on corporate culture aswell as organizational and sustainabledevelopment. She has previously held anumber of highly qualified HR positions atLKAB and SCA.

AgendaHighlights Q3 2021

Implementation of strategy
Q3 2021 financial highlights
Summary

14

Update on financial targets
1Net sales growth
Org. growth p.a. over abusiness cycle

Mid-termtargets

Q32020Q32021

YTD
2020

YTD
2021

5%

8%

3%

-2%

10%

14%

14.8%

11.6%

12.8%

12.7%

1.5x2.5x

n.a.

n.a.

2.7x

2.2x

2

Adjusted EBITAmargin
3

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

15

1

Net sales growthGroup: Strong order intake - flat net sales
Q3 Order intake
MSEK

Q3 Net sales
MSEK

+20%

MSEK

+1%2000

2000
1500

1500

1,919

2,295

1000

1000

500

500

00

Q3 2020

Q3 2021

1,833

Q3 2020

1,857

Q3 2021

Order intake, Q3: +20%, FX-adjusted +21%
• Strong growth mainly driven by large Battery and Data Center project winsin AirTech• FoodTech showed good growth in Americas and EMEA, offset by weakswine market in China.
Net sales, Q3: +1%, FX-adjusted +3%• Increase in AirTech - Battery sub-segment and Services showed gooddevelopment• Services 15% of total net sales• Offset by weak swine market in China for FoodTech16YTD Order intake and Net sales
7000
6000
5000
4000
3000
2000
1000
0MSEK+14%+2%

5,638

6,407

YTD Order backlog

5,173

5,291

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

4000
3500
3000
2500
2000
1500
1000
500
0+32%

2,664

3,525

YTD 2020

YTD 2021

Order intake, YTD: +14%, FX-adjusted +21%, Book-to-Bill 1.2• Good demand in Battery and Data Centers throughout the year
• Chinese market for FoodTech increasingly challenging, while Americas
showed good progress
Net Sales, YTD: +2%, FX-adjusted +10%
• Stable development in AirTech, increasing share of large orders and services• Services 14% of total net sales• Stable development in FoodTech, hit by weak Chinese market in Q3
Order backlog, YTD: +32%, FX-adjusted +34%
• Exceptional increase due to high order intake and extended
lead times

1Net sales growth

AirTech: Strong growth driven by Battery and Data Centers
Q3 Order intake
MSEK

MSEK

+33%

2000
1500

1000

Q3 Net sales

1,354

1,802

500
0Q3 2020

Q3 2021

1600
1400
1200
1000
800
600
400
200
0MSEK+5%

5000

+22%

3000

1,280

Q3 2020

1,341

Q3 2021Net sales, Q3: +5%, FX-adjusted +7%• Growth driven mainly by Battery sub-segment• Pharma sub-segment showed good growth in the US, driven by Covid-19• Mist Elimination and Data Centers declined• Services grew overall – now 21% of AirTech net sales

2000

YTD Order backlog
MSEK+5%+40%

3000
2500

4000

Order intake, Q3: +33%, FX-adjusted +36%
• Strong growth mainly driven by large Battery and Data Center project wins
• Also good development for OEM sales• Good growth for Services in all regions driven by the growing installed baseand increased demand for upgrades

17YTD Order intake and Net sales

3,928

4,781

3,614

3,800

2000
1500

1000

1000

0500

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

2,025

2,837

YTD 2020

YTD 20210

Order intake, YTD: +22%, FX-adjusted +31%, Book-to-bill 1.3• Strong development in Battery and Data Centers throughout the year
• Impacting business mix - more larger projects• Services grew – the larger projects increase potential aftermarket sales
Net Sales, YTD: +5%, FX-adjusted +13%
• Sales mainly driven by larger Battery projects• Pandemic effects impacted Pharma sales positively• Services now 20% of AirTech net sales

Order backlog, YTD: +40%, FX-adjusted +43%
• Exceptional increase due to high order intake, extended
lead times and customers’ requests to delay deliveries

1Net sales growth

FoodTech: Impacted by weak swine market in China
Q3 Order intake

Q3 Net sales
MSEK

MSEK

-13%

700

600

500

500

400

400

300

575502

300

200

200

100

100

00

Q3 2020MSEK700

600

Q3 2021-5%5271000-5%600
500

1,746

1,657

1,595

1,519500Q3 2021

Net sales, Q3: -8%, FX-adjusted -8%• Sales declined due to the weak swine market in China• Chinese swine market challenged by overcapacity and outbreaks of ASF• Comparison with previous year impacted by the strong Chinese swine
market in 2020
• Americas showed strong development in all sub-segments• EMEA below 2020 mainly due to the weaker Chinese sales, excluding thiseffect EMEA was in line with previous year

400
300

640

687

YTD 2020

YTD 2021

2001000Q3 2020

+7%

700

1500572YTD Order backlog
MSEK2000-8%Order intake, Q3: -13%, FX-adjusted -13%
• Demand in APAC negatively impacted by weak swine market in China• Americas grew in the Dairy, Greenhouse and Swine sub-segments• EMEA positively impacted by good growth for controllers to the US

18

YTD Order intake and Net sales

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

0

Order Intake, YTD: -5%, FX-adjusted +1%, Book-to-bill 1.1• APAC order intake weak, negatively impacted by the Chinese swine market• Americas grew in all segments, mainly driven by the Broiler, Layer andDairy sub-segments in the US• EMEA grew driven mainly by increased orders for controllers
Net Sales, YTD: -5%, FX-adjusted +1%• Good growth from all segments in Americas both in the digital andequipment businesses, offset by the decline in China
Order backlog, YTD: +7%, FX-adjusted +8%

2 Adjusted EBITA-margin

Decreased EBITA-margin in Q3 and stable YTD
MSEK+2%

800
700
600

14.8%

11.6%

500
400

-21%

300

12.8%
661

12.7%
672

200
100271215

0Q3 2020

Q3 2021

YTD 2020

20%
18%
16%14%
12%
10%
8%
6%
4%
2%0%

YTD 2021

Adjusted EBITA, Q3: margin impacted by supply chain challenges• Negative impact from supply chain constraints, higher raw material prices,
freight costs and changed business mix• Additional price increases implemented in Q3 – which mostly will comeinto effect in 2022
Adjusted EBITA, YTD: stable margin as year started strong• Strong start offset by supply chain challenges impact particularly in Q3• Negative impact from supply chain challenges started in Q2• Consecutive price increases made during the year mainly coming intoeffect in 2022
• High utilization rates in AirTech• FoodTech margins negatively impacted by soft swine segment in China
19FoodTech

AirTechGroup+17%

MSEK

600
500

15.4%

400
300

-12%

200
100

13.0% 13.2%

198

478

14.7%

560

174

0Q3
2020

Q3
2021

YTD
2020

MSEK

20%
18%
16%
14%
12%10%8%6%
4%
2%0%

300
250

-26%

16.5%

15.3%

150

-35%

100
50
0

YTD
2021

11.8%

11.6%

200

95

61

Q3
2020

Q3
2021

244

180

YTD
2020

YTD
2021

20%
18%
16%
14%
12%
10%
8%
6%
4%2%0%AirTech: margin decreased Q3, margin improved YTD• Q3: margin decreased due to supply chain challenges, increased raw materialprices, freight costs and changed business mix with more large projects• YTD: margin improved because of increased net sales, high utilization rates andefficiency improvements, partly offset by the challenges in Q3• Most of price increases will
come into effect in 2022
199
176

FoodTech: weakened margin Q3 and YTD• Margin decreased Q3 and YTD due to supply chain constraints, increased rawmaterial prices and freight costs, and lower volumes in China• Most of the price increases will come into effect in 2022

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 USmanufacturing in Texas• In the Netherlands, operations
to be consolidated• In addition, several othermeasures to be taken toensure execution of thestrategy

202021• Full year
program savingsof MSEK 70
once measuresrealized• Total cost:est. MSEK 180••

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 Q3 2021AirTech• Full year positive
impact on EBITAof approx. MSEK70 in 2023
• Total cost:est. MSEK 140• Full implementation end
2022/early 2023
• Approx. 70% of savings
realizedFoodTech• Strategy implementation
progressing according
to plan3

Capital structure

Cash flow impacted by supply chain challenges
Cash flow development, LTM*
Cash flow from operating activities

MSEK

1200
1000
800
600
400
2000-200-400-600

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

Cash flow for the period

100%
80%
60%
40%
20%
0%
Oct-Sep2019

Jan-Dec2019

Apr-Mar2020

Jul-Jun
2020

Oct-Sep
2020

Jan-Dec2020

Apr-Mar
2021

Jul-Jun
2021

Oct-Sep
2021• Cash flow from operations negatively impacted by increased
working capital caused by good demand, supply chain challenges
and business mix• Increase in working capital Q3 of MSEK -308 (6) mainly relates toless advances from customers, increased inventory and lower
accounts payables• Increase in working capital YTD of MSEK -407 (22) mainly relates
to increased inventory and receivables as well as lower advancesfrom customers
21120%

Oct-Sep Jan-Dec Apr-Mar201920192020

Jul-Jun2020

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

Jul-Jun2021

Oct-Sep
2021• Cash conversion negatively impacted by increased working capital*LTM = Last Twelve Months
Cash flow development includes discontinued operations**Operating cash flow

3

Capital structure

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

43,5
3

2,52
1,510,50

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

* Loan Market Association22• The leverage ratio end of September was 2.2x - an increase from
1.9x end of June 2021 and year end 2020. The increase wasmainly due to as earlier described increased working capital andto a lesser extent FX impact on gross debt
• Net debt at the end of September amounted to MSEK 2,536
compared to MSEK 2,209 at the end of June 2021

AgendaHighlights Q3 2021

Implementation of strategy
Q3 2021 financial highlights
Summary23

Continued strong demand in Q3 in prioritized areas
Strong demand

Supply chain challenges to continueStrategy execution• Increase mainly driven by strong growth inAirTech within mainly Battery and DataCenters• The supply chain constraints, higher raw
material prices and freight cost increases
seen throughout Q2 continued to impact
our business during Q3• We now expect supply chain challenges tocontinue throughout the first half of 2022

Execution of long-term strategy continued:• AirTech: Larger Battery and Data Center
project wins further strengthen ourmarket and technology position, andincrease our potential aftermarket
services sales• FoodTech: Focus on climate and digitalsolutions• The margin decreased due to supply chain
constraints, higher raw material prices andfreight costs as well as changed businessmix

24Questions & Answers