Atlas Copco : Quarterly Report Q4 2022

Press release from Atlas Copco AB

January 26, 2023

Atlas Copco

Interim report on Q4 and full-year summary 2022

Mixed demand, record revenues and solid cash flow

The comparison figures presented in this report refer to previous year unless otherwise stated.

Fourth quarter

• Orders received increased 8% to MSEK 36 148 (33 525), organic decline of 7%
• Revenues increased 36% to MSEK 40 054 (29 533), organic growth of 16%
• Operating profit was MSEK 7 810 (6 248), corresponding to a margin of 19.5% (21.2)
• • Adjusted operating profit, excluding items affecting comparability, reached MSEK 8 029 (6 462), corresponding to a margin of 20.0% (21.9)
• Profit before tax amounted to MSEK 7 620 (6 250)
• Basic earnings per share were SEK 1.24 (1.00, adjusted for share split)
• Operating cash flow at MSEK 5 930 (6 650)
• Return on capital employed was 29% (27)
• The Board of Directors proposes:
• • Ordinary dividend for 2022 of SEK 2.30 (1.90, adjusted for share split) per share, to be paid in two installments

	October - December			January - December
MSEK	2022	2021			2022	2021
Orders received	36 148	33 525		8%	158 092	129 545	22%
Revenues	40 054	29 533		36%	141 325	110 912	27%
EBITA1)	8 306	6 615		26%	31 956	25 015	28%
- as a percentage of revenues	20.7	22.4			22.6	22.6
Operating profit	7 810	6 248		25%	30 216	23 559	28%
- as a percentage of revenues	19.5	21.2			21.4	21.2
Profit before tax	7 620	6 250		22%	30 044	23 410	28%
- as a percentage of revenues	19.0	21.2			21.3	21.1
Profit for the period	6 055	4 889		24%	23 482	18 134	29%
Basic earnings per share, SEK	1.24	1.00	2)		4.82	3.72	2)
Diluted earnings per share, SEK	1.24	1.00	2)		4.81	3.71	2)
Return on capital employed, %	29	27

1. Operating profit excluding amortization of intangibles related to acquisitions.
2. Adjusted for share split.

Near-term demand outlook

Atlas Copco expects that the customers' activity level will remain at the current level.

Previous near-term demand outlook (published October 19, 2022):

Atlas Copco expects that the customers' activity level will weaken somewhat compared to the high level in the third quarter.

Quarterly and annual financial data in Excel format can be found at: https://www.atlascopcogroup.com/en/investor-relations/financial-reports-presentations/latest-results

Atlas Copco Group Center
Atlas Copco AB	Visitors address:	Telephone: [phone]	A Public Company (publ)
SE-105 23 Stockholm	Sickla Industriväg 19	www.atlascopcogroup.com	Reg. No: 556014-2720
Sweden	Nacka		Reg. Office Nacka

Atlas Copco - Q4 2022

Summary of full-year 2022

Orders and revenues

Orders received in 2022 increased 22% to record MSEK 158 092 (129 545), corresponding to an organic growth of 8%. Revenues also reached a record and increased 27% to MSEK 141 325 (110 912), corresponding to a 12% organic increase.

Sales bridge

	January - December
	Orders
MSEK	received	Revenues
2021	129 545	110 912
Structural change, %	+3	+3
Currency, %	+11	+12
Organic*, %	+8	+12
Total, %	+22	+27
2022	158 092	141 325
*Volume, price and mix.

Orders, revenues and operating profit margin

160 000															40%
140 000															35%
120 000															30%
100 000															25%
80 000															20%
60 000															15%
40 000															10%
20 000															5%
0															0%
2013*	2014*	2015*	2016*	2017	2018	2019	2020	2021	2022
					Orders received, MSEK				Revenues, MSEK
					Operating margin, %				Adjusted operating margin, %

• 2013-2016figures are best estimated numbers, as the effects of the split of the Group and restatements for IFRS 15 are not fully reconciled.

2 (20)

Results and cash flow

Operating profit increased 28% to record MSEK 30 216 (23 559), corresponding to a margin of 21.4% (21.2).

Items affecting comparability includes a change in provision for share-relatedlong-term incentive programs, reported in Common Group Items of MSEK 151 (-687). Adjusted operating profit increased 24% to MSEK 30 065 (24 246) corresponding to a margin of 21.3% (21.9). Changes in exchange rates compared with the previous year had a positive effect of MSEK 4 500 on the operating profit and positively affected the operating margin by approximately 1 percentage point. On the other hand, increased costs related to constraints in the supply chain and COVID-19 affected the margin negatively. Acquisitions had a small negative effect on the operating margin.

Profit before tax amounted to MSEK 30 044 (23 410), corresponding to a margin of 21.3% (21.1). Income tax expense amounted to MSEK 6 562 (5 276), corresponding to an effective tax rate of 21.8% (22.5).

Profit for the period was MSEK 23 482 (18 134). Basic and diluted earnings per share were SEK 4.82 (3.72 adjusted for share split) and SEK 4.81 (3.71 adjusted for share split), respectively.

Operating cash flow (important internal KPI, but not an IFRS measurement, and hence reconciled on page 15) before acquisitions, divestments and dividends reached MSEK 17 099 (19 378).

Dividend

The Board of Directors proposes to the Annual General Meeting an ordinary dividend of SEK 2.30 (1.90, adjusted for share split) per share for the 2022 fiscal year. Excluding shares currently held by the company, the proposed dividend corresponds to a total of MSEK 11 197 (9 250). In order to facilitate a more efficient cash management, the ordinary annual dividend is proposed to be paid in two installments, the first with record date May 2, 2023, and the second with record date October 20, 2023.

Personnel stock option program

The Board of Directors will propose to the Annual General Meeting a similar performance-basedlong-term incentive program as in the previous years. For Group Management, participation in the plan will require own investment in Atlas Copco shares. It is proposed that the plan is covered as before through the repurchase of the company's own shares. The details of the proposal will be communicated in connection with the Notice of the Annual General Meeting.

Atlas Copco - Q4 2022

Review of the fourth quarter

Market development

The overall demand for Atlas Copco's products and services remained high even if the activity level in several end markets weakened in the quarter.

Order volumes for industrial compressors remained essentially unchanged, and the order intake for portable compressors decreased compared to the previous year. Order volumes for gas and process compressors, on the other hand, increased significantly. The demand for vacuum equipment from the semiconductor industry weakened and the order intake decreased markedly. Orders for vacuum equipment to industrial and scientific customers, however, increased. Order volumes for industrial assembly and vision solutions increased, driven by customers' investments in the transition to electric vehicles.

The service business continued to grow with increased order intake in all business areas.

Overall, order volumes increased in Europe, South

America, and Africa/Middle East, remained unchanged in North America but decreased in Asia compared to the previous year.

Geographic distribution of orders received

		Atlas Copco Group
October - December 2022	Orders received, %	Change*, %
North America	26	+0
South America	4	+3
Europe	30	+3
Africa/Middle East	5	+18
Asia/Oceania	35	-10
Atlas Copco Group	100	-2

*Change in orders received compared to the previous year in local currency.

3 (20)

Sales bridge

	October - December
	Orders
MSEK	received	Revenues
2021	33 525	29 533
Structural change, %	+5	+6
Currency, %	+10	+14
Organic*, %	-7	+16
Total, %	+8	+36
2022	36 148	40 054
*Volume, price and mix.

Orders, revenues, and operating profit margin

45 000															45%
40 000															40%
35 000															35%
30 000															30%
25 000															25%
20 000															20%
15 000															15%
10 000															10%
5 000															5%
0															0%
Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
	2019			2020			2021			2022
		Orders received, MSEK					Revenues, MSEK

Operating margin, %

Adjusted operating margin, %

Geographic distribution of orders received and revenues

October - December 2022	Compressor Technique, %	Vacuum Technique, %	Industrial Technique, %	Power Technique, %	Atlas Copco, %
	Orders received	Revenues	Orders	Revenues	Orders	Revenues	Orders	Revenues	Orders	Revenues
			received		received		received		received
North America	25	23	23	25	34	31	23	27	26	26
South America	6	6	1	0	2	3	6	7	4	4
Europe	32	31	17	16	34	33	44	39	30	28
Africa/Middle East	6	7	1	1	1	1	10	8	5	5
Asia/Oceania	31	33	58	58	29	32	17	19	35	37
	100	100	100	100	100	100	100	100	100	100

Atlas Copco - Q4 2022

Revenues, profits and returns

Revenues increased 36% to record MSEK 40 054 (29 533), corresponding to an organic growth of 16%. Currency had a positive effect of 14%, and acquisitions added 6%.

The operating profit increased 25% to MSEK 7 810

(6 248) and includes a change in provision for share related long-term incentive programs, reported in Common Group Items of MSEK -219(-214).

Adjusted operating profit increased 24% to MSEK 8 029 (6 462), corresponding to a margin of 20.0% (21.9). The margin was negatively affected by higher costs related to continued supply chain constraints, higher costs for purchased material, and dilutions from recent acquisitions. Currency had a small positive effect on the margin for the Group.

Net financial items amounted to MSEK -190 (2) whereof interest net at MSEK -69(-57). Other financial items, including financial exchange differences were MSEK -121 (59). Profit before tax amounted to MSEK 7 620 (6 250), corresponding to a margin of 19.0% (21.2). Corporate income tax amounted to MSEK -1 565 (-1 361), corresponding to an effective tax rate of 20.5% (21.8).

Profit for the period was MSEK 6 055 (4 889). Basic and diluted earnings per share were SEK 1.24 (1.00, adjusted for share split) and SEK 1.24 (1.00, adjusted for share split), respectively.

The return on capital employed during the last 12 months was 29% (27). Return on equity was 32% (30). The Group uses a weighted average cost of capital (WACC) of 8.0% as an investment and overall performance benchmark.

Revenues and operating profit - bridge

4 (20)

Operating cash flow and investments

Operating cash surplus increased to MSEK 10 251 (7 626). Net financial items and taxes paid amounted to MSEK -1 711 (123). Working capital increased by MSEK 1 370 (decrease of 524), mainly due to increased trade receivables resulting from the high invoicing.

Net investments in rental equipment were MSEK -247(-119). Net investments in property, plant, and equipment, mostly related to extension of production capacity, were MSEK -988(-628).

Operating cash flow (important internal KPI, but not an IFRS measurement, and hence defined on page 15) reached MSEK 5 930 (6 650).

Net indebtedness

The Group's net indebtedness amounted to MSEK 26 570 (8 151), of which MSEK 2 380 (3 114) was attributable to post-employment benefits. The Group's interest-bearing liabilities have an average maturity of 4.0 years. The net debt/EBITDA ratio was 0.7 (0.3) and the net debt/equity ratio was 33% (12).

Acquisition and divestment of own shares

During the quarter, 1 883 790 series A shares, net, were sold for a net value of MSEK 239. These transactions are in accordance with mandates granted by the Annual General Meeting and relate to the Group's long-term incentive programs. See page 19.

Employees

On December 31, 2022, the number of employees was 48 951 (42 862). The number of consultants/external workforce was 3 834 (3 762). For comparable units, the total workforce increased by 3 394 from December 31, 2021.

		Volume, price,			Items affecting	Share-based
MSEK	Q4 2022	mix and other	Currency	Acquisitions	comparability	LTI* programs	Q4 2021
Atlas Copco Group
Revenues	40 054	4 691	4 005	1 825	-	-	29 533
Operating profit	7 810	482	965	120	0	-5	6 248
	19.5%						21.2%

*LTI= Long term incentive

Atlas Copco - Q4 2022

Atlas Copco acquires LEWA

On August 1, 2022, Atlas Copco completed the acquisition of LEWA GmbH and subsidiaries for a total consideration of MSEK 6 468.

LEWA is a leading manufacturer of diaphragm metering pumps, process pumps and complete metering systems. LEWA was founded in 1952 and is based in Germany. The company has around 1 200 employees and had revenues of BSEK 2.4 (MEUR 233) in 2021. LEWA offers industry-specifichigh-quality pump solutions for a wide range of industries.

The acquired businesses have their base in the Power and Flow division within the Power Technique business area.

From the date of control, revenues were MSEK 1 259 and operating profit MSEK 127, corresponding to an operating margin of 10.1%, including negative purchase price allocation effects of MSEK 60.

5 (20)

A preliminary purchase price allocation is outlined below.

MSEK

Intangible assets	1 223
Property, plant and equipment	665
Other assets	1 301
Cash and cash equivalents	921
Interest-bearing liabilities and borrowings	-130
Other liabilities and provisions	-1 196
Net identifiable assets	2 784
Non-controlling interests	-44
Goodwill	3 728
Total consideration	6 468

SEK / EUR 10.40 at date of acquisition.