Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the ElringKlinger Group Q3 2022 Earnings Call. At our customer's request, this conference will be recorded. All participants will be in a listen-only mode. After a short presentation by Dr. Stefan Wolf, CEO, and Mr. Thomas Jessulat, CFO, there will be a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Dr. Stefan Wolf, CEO. Please go ahead. Yeah. Thank you very much, ladies and gentlemen. We warmly welcome you to our conference call on the results of the third quarter of 2022. As always, I will start with some headlines on the third quarter. After that, my colleague, Thomas Jessulat, the Group CFO, will discuss the financial figures on the third quarter of 2022, and I will then close with a few remarks on the current year and outlook. As usual, you will have the opportunity to ask questions at the end, and we are more than pleased to answer your questions. Let me start with the current market environment, which is affected by a number of factors. First of all, the war in Ukraine is still ongoing with a totally uncertain outcome. Distortions on the world markets have intensified. Energy has become a topic, a top topic on the agenda, especially for European governments and for European energy consumers. Continuing from the first half year, the war has contributed to the supply chain disruptions. Prices for raw materials, energy as well as transportation have tremendously increased. On the other hand, the semiconductor shortage has slowed down a little bit, but it still exists. While China adheres to its zero COVID policy, the aftermath of regional lockdowns were less pronounced between July and September than in the first half year. The automotive production in the Asia-Pacific region recovered strongly, as in the most countries globally. The global Light Vehicle production estimate for the year 2022 adds up to 81.8 million vehicles, which is 6% above fiscal year 2021 numbers, but still, of course, below the previous COVID crisis level. We have been at 95 million vehicles in 2019. Generally, the global economic conditions in the third quarter were subject to slower growth across major economies like the U.S. or the Eurozone. GDP growth slowed down in Q3, as it already did in previous quarters. The third quarter had to deal with an environment of many critical factors. Let me point those out. First, nevertheless, ElringKlinger was once again able to increase sales in Q3. Group sales rose by 15.9% compared to the third quarter of 2021. Organic sales were up by 11.5%. Second, earnings showed a positive trend after the weak second quarter. Stated EBIT stood at EUR 18.1 million. The EBIT margin took a positive line and was enhanced to 3.9% when comparing to the first and second quarter of this year. Please note that the margin of -0.4% in the second quarter of 2022 is on operating level. Third, net working capital was slightly up in the third quarter. As a result, net working capital in relation to group revenues came in slightly higher at around 29% of sales. Fourth, the group generated a negative operating free cash flow of -EUR 10.2 million. Fifth, net financial debt stood robust at a low level of EUR 411 million, after EUR 390 million at the end of June 2022, resulting in a net debt to EBITDA ratio increase of 2.7 as of September end. Sixth, finally, we confirm the outlook for fiscal year 2022, as it was also presented with our report on Q2 in August this year. After having provided some headlines of ElringKlinger's third quarter 2022, I will now hand over to our CFO, Mr. Thomas Jessulat. He will present the financials of the period under review. Mr. Jessulat, please go ahead. Yeah. Thank you, Dr. Wolf. Ladies and gentlemen, also, a warm welcome from my side. Over the next couple of minutes, I would like to comment on the financial result of Q3, starting with the sales and order situation on slide number four. In line with the direction taken by markets, as outlined also by Dr. Wolf, ElringKlinger expanded revenues by EUR 63.5 million or 15.9% to EUR 464.1 million, reaching a quarterly record level. Without exchange rate effects, revenue increased organically by EUR 45.9 million or 11.5%. After strong previous quarters, order intake was at EUR 377 million in Q3 2022, down by 23% compared to the third quarter of last year. The group's order backlog was at a high level again. Order backlog rose to EUR 1.47 billion as of September 30, 2022, which shows an increase of 12% or EUR 158 million compared to the end of the third quarter of 2021. On slide five, we see the revenue development of our different segments and business units. In the third quarter of 2022, the original equipment segment continued its strong sales performance. With now EUR 360 million, revenue of the OE segment increased by 15% compared to the third quarter of 2021. Revenue was also slightly up on the figures posted in the previous quarters, the first and the second quarter of 2022. In navy blue, you see the business units within the OE segment. Revenue of the Lightweighting Elastomer Technology business unit is up by EUR 24.8 million or 21%. With EUR 144 million or 31%, Lightweighting Elastomer Technology accounts for the largest share of group revenue. The Metal Sealing Systems & Drivetrain Components, as well as the Shielding Technology business units, grew by EUR 22.6 million and EUR 12.3 million respectively. The E-Mobility business unit's revenue development reflected the low revenue situation in the drivetrain subunit. In the third quarter of 2022, the E-Mobility business unit generated revenues of EUR 10.9 million. When looking at the sales split by region, sales revenue increased in all regions in the third quarter. The Rest of Europe, which is the region generating the highest revenue within the group, showed growth of 3.2%. Revenues in this region increased to EUR 130 million. The revenue in Germany grew to EUR 86.9 million, up by 3.3% compared to the same quarter of last year. North America accounted for about a quarter of group revenue in Q3, with revenue of EUR 121.4 million. Revenue in this region was up by 31%, which is well above the group's average growth rate of roughly 16%. The exchange rates development also, of course, contributed to this performance. The Asia- Pacific region revenue expanded by 29% compared to the prior year figure, totaling EUR 101.4 million in the third quarter. Here, the LV production recovery in China made a positive impact. The pie chart on this slide shows the regional sales mix in the third quarter of this year compared to the third quarter of 2021. Over the past decade, the share of non-domestic revenue increased from 69% to over 80%, and this underlines the strong internationalization of the group, resulting in a diversified or more balanced regional sales mix. Let us now have a look at the earnings on slide seven. EBITDA was at EUR 47 million in the third quarter, and this is EUR 20.3 million above the Q2 level and EUR 4.2 million higher than the Q1 results. The price developments of commodities still exerted pressure on earnings. At a higher price level anyway, raw material, transportation, and energy prices rose due to the war in Ukraine and supply chain bottlenecks continued over the first nine months of this year. In particular, the group was faced with continuously high costs for aluminum, steel, plastic granules, and energy as well. The high price level has been partly compensated by customer payments according to price escalation clauses or successful renegotiations. Further compensation payments are expected, in particular in Q4, and all in all, raw material price increases accounted for an impact of EUR 11 million as a net position in energy as well as logistics costs amounted to EUR 6 million. Furthermore, the group ramps up business at its new North America location in Texas and serial orders in the E-Mobility business unit. The group's EBIT in Q3 2022 came out at EUR 18.1 million, and even against the backdrop of our consistent cost discipline, the increase in revenue compared to Q3 2021 did not offset the increase in raw material costs. On slide eight, we can see a positive trend in earnings figures after the strong results of prior year's Q3 and a dip in the second quarter of 2022 due to impairments on goodwill and fixed assets. The net finance result in the quarter under review was at -EUR 0.4 million, which improved by EUR 2.8 million compared to -EUR 3.2 million in the third quarter of 2021. The net interest result was at EUR -3.4 million compared minus EUR 2.8 million in the third quarter of 2021, despite the significant rise in interest rates, illustrating the group's solid financial position. Taking net finance costs into account, earnings before taxes for the third quarter of 2022 amounted to EUR 17.7 million. After deducting tax expenses, which fell by EUR 0.6 million- EUR 13.8 million and taking into account non-controlling interests, the share of net income attributable to our shareholders added up to EUR 3.3 million. Therefore, earnings per share in the third quarter amounted to EUR 0.05. On slide nine, we take a look at CapEx, net working capital, and operating free cash flow. At EUR 18.1 million, capital expenditure and property, plant, and equipment was at a higher level than in the same quarter of the previous year. The investment ratio stood at 3.9% in the third quarter of 2022, marginally up from 3.8% in the third quarter of the previous year. Regarding net working capital, the higher inventory level reflects the challenging situation within the procurement markets and broad cost inflation. The approach to working capital management to ensure availability of production materials was continued in the third quarter of 2022 and resulted in slightly higher inventories on our balance sheet compared to the second quarter. Totaling EUR 434 million at 30 September 2022, inventory was up by EUR 20 million compared to 30 June 2022. Irrespective of this, inventory levels are also expanded in view of the group's solid order books. In total, net working capital to sales increased to 29% in relation to group sales after 28% in the second quarter of 2022. Keeping in mind the higher working capital level outlined before, ElringKlinger recorded operating free cash flow of -EUR 10.2 million in the third quarter of 2022. Coming now to slide number 10. Net financial debt increased slightly by EUR 21 million- EUR 411 million compared to the previous quarter. It increased slightly over the reporting period as a result of the higher funding requirements for the group's operating business. The net debt to EBITDA ratio was at 2.7 as of the 30th of September 2022, up from 1.3 a year earlier. Let me now turn to slide number 11, showing the performance of our segments, which improved compared to the previous quarters. As mentioned above, the original equipment segment was able to expand its revenue by 15% compared to the third quarter of 2021. In terms of earnings, the segment was affected by more substantial material-related costs. EBIT improved compared to the first quarter of 2022 and also compared to the second quarter, which was affected by impairments. The aftermarket segment generated sales between July and September 2022 amounting to EUR 67 million, an increase of 21% compared to Q3 2021. Regarding earnings, this segment benefited from a consistent approach to cost efficiency. EBIT increased by 28% to EUR 14.1 million. The margin, the EBIT margin was at 21.1% compared to 19.9% in the same quarter last year and 19.2% in the previous quarter. The Engineered Plastics segment increased its revenue year-on-year considerably by 17% to EUR 36 million. Concerning earnings, higher costs for raw materials are reflected in the figures for the third quarter. Nevertheless, the EBIT margin was at 20.4% in the third quarter, up from 20% in the prior year Q3, and 14.9% in the second quarter of 2022. Having said this, I now turn back to Dr. Wolf for further comments. Yeah. Thank you very much, Mr. Jessulat. Ladies and gentlemen, as I mentioned before, the current environment remains difficult, complex, and very uncertain. First of all, the ongoing war between Russia and Ukraine has intensified over the last month and has no real foreseeable outcome. The economic consequences put strains on supply chains. The tense situation on procurement markets and energy markets as well, further exerts pressure on the commodity market and might reinforce the volatility. Moreover, several central banks continue to counteract inflation across countless goods and services. The Fed, Bank of England, and ECB have increased base rates in the third quarter. Given the level of core inflation at the moment, central banks might further raise the rates in the foreseeable future, as seen yesterday by the Fed. In this vein, global economic growth may slow down. We are sure that it's gonna slow down. In addition, the regional coronavirus lockdowns in China, as well as the potential emergence of new variants, have shown that the coronavirus pandemic is imponderable. The possible repercussions of the pandemic may have an impact on revenues and earnings, well, on the whole economy in the world. Coming to slide number 14. Given the challenging underlying conditions, markets continue to be exposed to high level of uncertainty. Key factors such as bottlenecks within the semiconductor industry, issues surrounding supply chains, and the ongoing war in Ukraine, as well as geopolitical tensions in other parts of the world, are placing constraints on the recovery anticipated. On the other hand, according to IHS data, despite price dynamics and general uncertainty among consumers, demand for new vehicles remains quite strong in the main regions. Concerning the finish of 2022, global automotive production is expected to increase by 2.2% in the fourth quarter compared to the same period in the previous year, or even 6% on a year-on-year basis. At aggregate level, Europe gives a mixed picture with around 0.3 million less units projected to be produced in the full year 2022, than in the previous year. However, Russia alone makes up a reduction of nearly 1 million vehicles, down by two-thirds compared to 2021. Without consideration of Russia, it is expected that in Europe, a strong finish is around the corner, with 11.8% more vehicles produced in this year's fourth quarter. Coming to slide number 15. This last slide summarizes the outlook of the key indicators for both the fiscal year 2022, and the midterm perspectives. We confirm the fiscal year 2022 outlook summarized here in this slide. It is still based on the assumption that there will be no disruptive impact on markets or macroeconomic environment, like for instance, further impact by the Russian-Ukrainian war or by the increasing tensions in the Far East and Middle East. Concerning sales, given our favorable order situation as well as the forecast regarding global demand for light vehicles, we expect sales to grow in fiscal year 2022. As just shown on the previous slide, IHS expects global production markets to grow by 6%. Against this background, the group expects to exceed this level of expansion with organic sales growth slightly above this market level. Earnings continue to be influenced by wide range of factors. The associated risks remain significant, and the degree of uncertainty is still considerable. Based on these conditions, the group anticipates an operating EBIT margin of around 2%-3% in relation to sales for 2022, excluding the exceptional effects of impairments. The outlook for the remaining key indicators is also confirmed, as well as for the medium-term targets of the ElringKlinger Group. Ladies and gentlemen, thank you very much for your attention. Mr. Jessulat and myself are now more than happy to take your questions. Please go ahead. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. The first question is from the line of Akshat Kacker with J.P. Morgan. Your question please. Good afternoon, Dr. Wolf and Mr. Jessulat. Akshat from J.P. Morgan. Three questions from my side, please. The first one on cost recovery with OEM specifically. I think this is an important part of the OE business, as you are still making negative margins in the third quarter. Can you please comment on the recovery rate that you achieved in Q3 versus the 30% in the first half? And what are your expectations for Q4, please? I noticed in your prepared remarks that you expect this to go higher. That's the first one. I'll follow up with the other two later. You know, when I look at the year, then the first quarter and the second quarter, of course, was front-loaded with the additional costs, you know, and those, you know, inflationary factors. When I look at Q3, I see within the quarter a trend, a rising trend towards more compensation. Nevertheless, if we look at this quarter, we see that still we have a net negative from material, which shows that we are not yet fully compensated and we are not compensated, you know, for the quarters, you know, the earlier quarters of the year. My expectation is that we'll see, you know, some more significant compensation amounts in Q4. I have to say there is also an uncertainty in terms of whether the agreements that we will achieve are really gonna be effective from an accounting perspective in Q4, you know, and number one. Second, you know, to the extent, whether they represent liquidity in Q4. Yeah? Again, expectation is Q4, a more significant compensation. Expectation is that we will not see a net negative in Q4 from a material cost impact, and therefore also are compensating for parts of the other quarters. Yeah? This is in principle, you know, my outlook and my expectation for Q4 and the development here in terms of what's been achieved in terms of compensation. Maybe I can add two or three sentences. I tell you one thing, it is really not easy to get those compensations or get those price increases from the customers, from OE customers. Those are fights that are really complicated. I think we have so far done pretty well. You have to see that, of course, they are confronted with those, you know, price increases and also with those payments for increased materials from all their suppliers. Yeah. Of course, this is not easy to get, but we have really achieved a good result. Of course, we have to do the same thing again with energy costs next year. That is an ongoing issue with our OE customers, that we have to fight for price increases. Understood. A follow-up on the discussion of recovery. In terms of what you have negotiated with OEM, is this now structurally built into your contracts or is it one-off payments that you're receiving now for 2022? We have to differentiate between three categories. There is a limited amount, I would say, in terms of one-off payments, and our intention is not to achieve one-off payments because, you know, our expectation is that the markets won't relax in 2023. We have then changes to the contracts in terms of price flexibility clauses, if you wanna say. Part of that is applicable retrospectively. It goes back within the year to different points in time. We have also, of course, the effect that it's having an impact, of course, going forward. Now, all of that, of course, except for the smaller amounts of one-time payments, will of course have a lasting impact if the situation on the raw material prices doesn't change, a lasting impact on the top line and in particular on the development from 2022- 2023 of the top line of the group. Yeah. Understood. Very clear. The second question on the E-Mobility business unit. Slightly surprised to see the top-line development there in Q3, especially when I link it to the high volume order on Cell Contacting System that was supposed to start in the second half. Can you give us an update on that contract with a major battery manufacturer, please? The Cell Contacting System is in the process of ramp-up, but SOP is being pushed out into next year. When we see those slight variations here in terms of top-line, then it was tooling payments involved here as well for existing business. When we look again in terms of the Cell Contacting System, SOP is gonna be pushed out into 2023. Understood. The last question on energy and logistics costs. Is it possible to split out the impact that you have showed in the last two quarters? I think the EUR 13 million impact that you have shown on the P&L. Is it possible to talk about the energy impact alone? What is your current assumption in terms of energy costs going into 2023 versus 2022, please? Yes, if I take both together, then I would say we are, you know, approximately talking 2%-3% EBIT margin impact that would need to be compensated. Yeah. There has been, of course, a rising impact within the year 2022. Yeah. There is, you know, compensation that would be expected in 2023 as part of course, our further activity here to pass on, you know, the higher environmental costs, so to say, you know, the higher input costs for us to the customers. Just to clarify, you meant 2%-3% EBIT margin gross impact next year? The overall change by those two cost types is roughly, you know, 2%-3% of say- The impact versus 2022. The impact. The impact over, you know, and I would say a two-year period. Understood. Very clear. Okay? This is something, of course, that would need to be compensated as well. Yeah. That is to some extent, not part of current compensation when we look at, in particular, Q4. That's very clear. I'll call back in the queue. Thank you. Yeah, thank you. Next question is from the line of Marc-René Tonn with Warburg Research. Your question. Yes, good afternoon, and thank you for taking my question. The first question would be coming back on inflation and particularly I think we have not talked about raw materials, energy, logistics. I think labor is probably the next big thing, which might come on the agenda. Perhaps you could give us some indication there on how much more of a drag you would expect from that side next year and how you see the opportunity to pass that on to your customers or whether this is already part of today's negotiations. Second question would be around the order intake, which was, let's say, down 23% in the third quarter alone. Is it some kind of, let's say, one-time effect and we shouldn't read too much into that, or is it just a reflection of very strong previous quarters which we've seen there? Any specifics on that would be clearly helpful, I think. The third question would be regarding the working capital ratio. I think you said you expect it to be slightly up year-on-year. Do you think there's a such a risk that you fall short of that target, let's say, working capital ending up higher than what you would like have expected? Or is the visibility rather strong that you see this normalizing towards the end of this year? Thank you. Well, let me start with, you know, labor costs. As you might know, we are in negotiations right now, not we as ElringKlinger, but we as, you know, the Gesamtmetall and the other sections of the employers, metal employers. We are in negotiations right now with the IG Metall, and I'm pretty sure that we're gonna find a solution. Yeah. We always found a solution since, you know, the Germany exists. This is under discussion and under negotiations. You know, we have this EUR 3,000 payment that we can use that is, you know, tax-free and Social Security free. So that is something that we offered. And of course, an increase over hopefully a long period for the next contract. That is still open. Of course, there will be an impact. Labor costs are going to be increased, that's for sure. The question is always, how can you pass that on? Most of the time it's difficult to pass that on. We have to see, normally that has to be compensated by an increase of productivity. Okay, on your second question, order intake. What we typically see, of course, we see an underlying trend on the one side, and we see fluctuation coming from the order behavior from customers. I think here what we see is both. We see some, you know, customers, you know, as part of fluctuation, took out some orders. We also see a little bit more on a broader side, a little bit of weaker development here in terms of the order intake. No? It's an overlay, so I'm not 100% sure how to take it apart, but I would interpret that also a little bit as a development to the weaker side of demand. On the working capital, working capital has seen an upswing, in particular, of course, on the accounts receivable side by very strong months and quarters. This has not been fully compensated by the increase in accounts payable. Now, this is one factor. I think this is gonna be reversing towards the end of the year. When I look at inventory is still very difficult to handle. We are here, of course, very active in terms of managing this position, and my expectation would be that we will be able to decrease inventory levels towards the end of the year to some extent. It's gonna be, you know, as one of the main drivers to achieve free cash flow, positive free cash flow for the year. It is in fact a challenge for the business, but we are working hard on that right now. Thank you. The next question is from the line of Frank Biller with LBBW. Your question please. Yes. Hello. Good afternoon. Thanks for taking my question. It's about margin development, when talking about Aftermarket business and Engineered Plastics, very good margins here. My question here is, has there been any one-off items in the third quarter, especially in Engineered Plastics? What is your expectation for the fourth quarter and, for the next year here? No, there's not a significant one-off here involved. It's part of the businesses that have a shorter, let's say, translation cycle in terms of the passing on of additional costs, and that is certainly one factor. In particular, Aftermarket, we have also here success in terms of the internationalization. There is more growth, in particular here in Aftermarket, but also in Kunststofftechnik, and that gives us some operating leverage. That helps right now, you know, together with the cost discipline that we have employed. Maybe two words to the Aftermarket. We have started about three years ago to develop the Chinese market and the North American market, and that really works out fine. We have good increases there, so that we are confident that also in the years to come, we're gonna see a good growth in the aftermarket business. Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star followed by one on your telephone. The next question is from the line of Akshat with J.P. Morgan. A follow-up question. Your question please. Thank you for taking my questions again. Two left from my side. The first one on CapEx. You have previously talked about the need to pick up CapEx spend, especially on lightweighting and E-Mobility projects. Is this a material step up as you think about next year, or do you expect to stay in the 4% of sales in that range? The second question is on net interest and finance costs. Could you just remind us the share of floating versus fixed debt? What impact do exchange rates have on your overall interest payments, and how do you expect these costs to go higher in 2023? Thank you. Yeah, we have next year expectation is that we have a step up, in fact, in regard to CapEx. There's gonna be more CapEx coming for further projects that we have acquired. I would expect overall, you know, an upward trend in 2023 relative to 2022. On the exchange rate point, there is, you know, an exposure, different exposures that we have. We have an exposure that is the most significant one, is a euro-dollar exposure, which is pretty much covered. There is also an exposure, euro-Swiss francs, which is also covered. There is some remaining exposure, you know, to different currencies. Overall, I would see us pretty much hedged against developments here, which is also what you see when you look at the financial results that we do not have a big net position to that end. In terms of finance, there is a portion of fixed coming from the Schuldschein that we have done a couple of years ago. I would say very roughly speaking, there is on the fixed side probably around 50-50 to variable. Understood. Thank you. Ladies and gentlemen, as a last reminder, if you would like to ask a question, please press star followed by one at this time. We wait some seconds for next questioners. As there are no further questions, I hand back to Dr. Stefan Wolf for closing comments. Yeah. Thank you very much. Thank you for joining us today for this conference call. Looking forward talking to you again then in the new year about the full year of 2022. You know, things remain difficult, we talked about that. We never lose confidence that we are going to manage those things. We are working hard on that, and I think the results you have seen in Q3 are a part of that we are working hard on those things. I think things are developing quite good in this real tough environment. So thank you for joining us today. As I said, looking forward talking to you then in the first quarter in 2023. All the best to you and bye-bye. Hope to see you maybe on the one or the other conference in person again next year. Just to remind you, we have this Capital Markets Day. You're probably aware of that, on November 18th. Some of you are coming to see us here, and we're looking forward to your visit. Thank you very much. Bye-bye. All the best.