Knaus Tabbert AG

XETRA:KTA

Earnings Call Transcript 2022-Q3

[Manuel Taverne, executive]

First of all, I hope you're all doing well and had a good start in a week so far and hopefully heard a lot of interesting earnings calls, et cetera. And I'm pretty sure that this will continue due to today's presentation regarding the current results, which is going to be held by the CEO, Mr. Wolfgang Speck; and the CFO, Mr. Marc Hundsdorf.

It's a pleasure to have you here. And before I hand over to you, I would like to use just a short minute on explaining the organizational framework, the process. As always, a Q&A session will follow the presentation and -- in which all of you have the opportunity to hand in your questions. [Operator Instructions] I guess, yes, enough the words about the process, and I'm curious and can't wait to hear what Mr. Speck has to say, and I assume you all feel the same. So yes, having said this, I would like to hand over to you. Stage is yours. Enjoy.

[Wolfgang Speck, executive]

Yes. Thank you. Thank you, first of all, for that nice introduction. Yes, good morning, and welcome to our Knaus Tabbert investors call on the occasion of the third quarter 2022 reporting.

How to start? I would say, yes, we are proud to be able to announce today that our decisions on the maintaining and securing our staffing levels and also to consistently implementing our multibrand strategy for motorized chassis has proven to be the right strategy. And in the third quarter of 2022, Knaus Tabbert further accelerated its growth and recorded significant growth rates in unit sales, revenue and total output. Even though the third quarter is regularly seen as the weaker quarter in the quarterly comparison due to the annual model change and factory summer break, we are particularly pleased that we see third quarter earnings above previous year's figure, however, still at an unsatisfactorily low level. 25% more total output leads to a visible slightly increase in EBITDA compared to the third quarter of the previous year.

Knaus Tabbert also benefited from continued strong demand for recreational vehicles in terms of order intake during the quarter. And in order to make the best possible use of existing capacities and available materials, Knaus Tabbert continued to increase production of caravans in the third quarter of 2022 by more than 40% in this period.

In the first 9 months of 2022, sales of caravans increased to 13,555 units compared to 10,426 units in the previous year. And this proves once again the flexibility and adaptability of our product portfolio and our factories in Germany and Hungary.

Overall, sales of recreational vehicles increased to 20,617 units. And as a result, group revenue improved by 9.4% to EUR 694 million in the same period.

As part of our multibrand strategy, Knaus Tabbert has now expanded its supplier base for chassis to 5 manufacturers in the course of the 2022 financial year. And this led to a significantly better availability of such chassis for the first time at the end of the third quarter 2022.

Yes, a more aggressive purchasing policy to safeguard production, difficult disposition of materials due to short-term changes in deliveries as well as an increase in deliveries of chassis at the end of the third quarter led to a significant increase in raw materials and supplies.

Yes, let's talk about the order backlog. As you can see on that slide, a stable and record-high order backlog forms a solid base for further growth in 2023, approximately 8,500 new orders pushed the order backlog up by more than 14% compared to the end of the first half of this year.

We saw a new record of EUR 1.6 billion, in other words, more or less than 38,000 units at the end of the third quarter. However, it is fair to add that the order backlog also includes any unfinished or finished vehicle that has not been invoiced to a dealer yet. We're talking about a volume of over roughly EUR 100 million in this context. Yes.

Let's talk about the Caravan Salon in Düsseldorf. On the next slide, our successful appearance at this year's Caravan Salon additionally underlines the high attractiveness of our existing and future model range and leads us also to expect a further increase in demand for our vehicles.

Knaus Tabbert consistently expanded multibrand strategy, met with great approval from interested parties and buyers. For example, the new KNAUS TOURER CUV based on the popular Volkswagen [ Bulli ] T6.1 provided the first glimpse into a completely new vehicle category. In 3 hauls, the 6 KNAUS brands, including rent and travel, offered 235,000 trade fair visitors, surprising variety of new products, models and, of course, also innovations.

Knaus Tabbert presented several groundbreaking steps into the future of caravaning through the caravans along 2022. And the expansion of Knaus Tabbert's range of basic vehicles was also met with great interest and approval. And as an essential addition to the previously dominant brands, Ford, MAN, Mercedes-Benz and Volkswagen Commercial Vehicles are already taking an important role in our portfolio. They enable new interesting offers significantly more choice as well as flexibility than before. And Knaus Tabbert has, once again, impressively succeeded in confirming its role as an innovation driver in the industry.

Yes, let's talk about this multibrand strategy, which leads us to the next slide. The multibrand strategy successfully implemented in the course of the 2022 financial year. For the supply of motorized chassis led for the first time at the end of the third quarter to the announced significantly improved availability of such chassis, especially from the new suppliers, Mercedes, Ford, MAN and Volkswagen Commercial Vehicles. And the inventory of chassis, end of September 2022, amounts to more than 3,000 units or approximately EUR 80 million and is plus more than twice as high as at the same time last year or at the beginning of this year.

And due to the current and expected continued good supply, Knaus Tabbert can now focus on the production of high-margin motorized vehicles and reorganize its processes accordingly.

The delivery situation for motorized chassis improved significantly at the end of the third quarter, thanks to our rapidly expanded multibrand strategy. This gives us a high confidence for a strong years-end final, and we therefore remain confident that we will achieve our targets for the year 2022.

Yes, thank you very much for your attention from my side. Now I would now like to pass the floor to my colleague and CFO of the Knaus Tabbert Group, Marc Hundsdorf. Marc, please?

[Marc Hundsdorf, executive]

Thank you, Wolfgang. Dear ladies and gentlemen, also -- okay. I go ahead? Ladies and gentlemen, again, a warm welcome from my side as well to our investor call to present the Q3 2022 figures. So allow me to start by quoting some data from the German Federal Statistical Office.

Gross domestic product grew by 0.3% in Q3 2022 compared to the previous quarter Q2 2022, adjusted for price seasonal and calendar effects. The German economy has continued to defy difficult global economic conditions with the ongoing corona pandemic, disrupted supply chains and rising prices.

Year-on-year, GDP in Q3 2022 was 1.1 percentage higher than in Q3 2021 after price adjustments and 1.2% higher after price and calendar adjustments. Due to the ongoing corona crisis and the consequences of the war in Ukraine, these results are subject to greater uncertainty than usual. So much for the statistical figures, which at least allow for a little optimism from our point of view.

This applies all the more Knaus Tabbert, which it's still very positive prospects in the market, proven by the current order income and order backlog. In the third quarter, which is strongly influenced by the summer months and the vacation season, Knaus Tabbert can also report an improvement compared to the same quarter of the previous year in terms of sales and earnings, even though the times are still characterized by great uncertainty, and reliable forecasts are very difficult to make, planning is still associated with risks, but there are many indications that the coming development will now be more positive. This, of course, includes the fact that the balance sheet ratios, the third quarter suffered from the inventory situation and will remain strained until the end of the year.

In this respect, we see sales of EUR 247 million, with adjusted earnings of EUR 5.6 million and an unchanged attractive order book as an entry point to a further significant improvement in sales and earnings figures in the last quarter of the year, which I will come to later when explaining the forecast.

Knaus Tabbert generated sales of EUR 693.9 million in the first 9 months of fiscal 2022, up from EUR 634.4 million in the corresponding period of the previous year. This corresponds to an increase of 9.4%. Despite an increase in total units sold, the increased share of caravans with a significantly lower average price, around about 80,000, compared to motor homes and camber bands, and average 50,000 to compensate for missing chassis resulted in lower sales momentum in the premium segment than would have been possible based on the high order backlog.

The effect of price increases in the first half of the year was relatively small as the price increases as of the first of this year were only effective for new orders for model year 2022. Please note, model years include the period August to July.

For the third quarter, the price increases for model year 2023 are now increasingly taking effect and will have a more significant impact in the fourth quarter, driving sales and margins. Sales of EUR 246.6 million, and the previous year, EUR 192.9 million, are a new record for a third quarter per historical standards. EUR 603.1 million of group sales in the reporting period were attributable to the premium segment and EUR 90.8 million are belonged to the luxury segment.

Earnings before interest, tax and depreciation and amortization in the first 9 months of 2022 were again impacted by the challenges in the supply of chassis and, consequently, lower productivity; the change product mix with more caravans; and the measures to expand capacity, including the provision and qualification of personnel resources.

Adjusted for special charges of EUR 0.4 million, EBITDA in the reporting period amounted to EUR 31.1 million. The previous year was EUR 46.5 million, a decrease of 33%. As a result, the EBITDA margin of 4.5% was 2.8 percentage points below the previous year's figure of 7.3%. Special charges mainly related to extraordinary consulting costs of $300,000 and protective measures in connection with the corona pandemic amounting to around about 100,000 [indiscernible].

When evaluating the results, however, the operating performance should not be disregarded. For the reporting period, total operating output amounts to EUR 727 million. The previous year, it was just EUR 675 million. For Q3, the total operating output is just under EUR 265 million, which is more than EUR 50 million higher than in Q3 2021. This significant year-on-year increase confirms that Knaus Tabbert is now starting to overcome the obstacles of the past months.

The supply chain problems alone prevented the sales and earnings increase from being much more significant, and a relatively high proportion of production had to be booked to inventories, as just mentioned, as unfinished vehicles.

So let's take a closer look at the sales development. As mentioned earlier, KNAUS generated revenues of EUR 693 million in the first 9 months of this year, up from EUR 634 million and EUR 573 million in the corresponding periods of the previous year. This represents, again, an increase of 9.4% and 11%, respectively.

The luxury segment with the MORELO brand recorded only a slight increase in sales compared to the previous year. This is due to the fact that MORELO reported an inventory of unfinished vehicles of more than 88 high-value vehicles at the reporting date, corresponding to an inventory buildup of more than EUR 8 million in this year. The inventory value of unfinished vehicles as of the reporting date was just under EUR 20 million, and shows the currently unrealized sales and growth potential.

As already mentioned on several occasions, the reasons for this are manyfold and are due to the lack of the ability of a wide range of supplier parts. The same statement, therefore, applies to the luxury segment as to the premium segment. Significant growth in sales and earnings is currently being prevented by the supplier situation alone, however, with the certainty that the vehicles will be invoiced immediately after completion.

In order to make the best possible use of existing capacities, Knaus Tabbert increased production and sales of caravans within the vehicle categories in the third quarter of 2022 as we did in previous quarters. As a result, sales of caravans increased by 30% to 13,555 units in the first 9 months of '22. The previous year, just a bit more than 10,000 units while sales of motor homes and camper vans decreased by almost 19% to 7,000 units. In the previous year, we had roundabout 8,700 units due to a lower supply of chassis than in the previous year.

The increase in nonmotorized vehicles always leads to a disproportionately low rise in sales and earnings. In the third quarter, in particular, this significantly slowed down the positive development as over 1,200 more units of caravans were sold compared with the prior year quarter, while the number of motorized vehicles sold was only slightly higher than in the same quarter of the previous year. Nevertheless, the high flexibility of Knaus Tabbert and the high order backlogs in all vehicle segments, also for caravans, contributed to the fact that Knaus Tabbert was able to increase sales in Q3 compared to Q3 of the last year and increased the utilization of its capacities.

Knaus Tabbert generated negative operating cash flow of EUR 35.2 million from operating activities in the first 9 months of 2022 compared to minus EUR 4.9 million in the corresponding prior year period. The significant decline in cash flow from operating activities resulted mainly from the reduced net profit for the period and a temporary significant increase in inventories.

One of the reasons for this development was a higher level of finished and unfinished vehicles. In total, the inventory of finished and unfinished vehicles amounted to more than EUR 100 million as of September 13, 2022. It was EUR 75 million in the previous year at December 31 and corresponds to approximately 3,000 units.

Reasons for that, a safety-orientated purchasing policy to safeguard production, increases in the range of various materials due to short-term changes in the production program, and a significant increase in deliveries of chassis at the end of the third quarter also led to the significant increase in raw materials and supplies to EUR 147.8 million. End of December last year, it was just EUR 69 million.

Of this amount, EUR 80 million relates to the higher inventory of chassis compared to December 31. The inventory of chassis as of the 13th of September amounted also to approximately 3,000 units. Cash flow from investing activities increased to EUR 52.2 million in the first 9 months of 2022 compared to EUR 28 million in the same period of the previous year. Major cash outflows continue to relate to investments in increasing production capacities at the Jandelsbrunn headquarter, Schlüsselfeld, and Nagyoroszi sites.

Particularly worthy of mention in this context is the construction of the new state-of-the-art superstructure production facility in Jandelsbrunn, which will form the backbone of the group's future growth and is scheduled for completion and commissioning in May 2023.

The slight decrease in equity from EUR 128.3 million to EUR 123.9 million in the reporting period is mainly due to the weak earnings performance in the fiscal year-to-date and the distribution of the dividend of EUR 550.6 million.

Overall, the equity ratio decreased compared to the balance sheet date of 13th December '21 also due to the significant increase in total assets from EUR 387 million to EUR 535 million. Our banking partners with whom we have enjoyed a longstanding and very trusting relationship have, by the way, already approved the development of the equity ratio and debt equity ratio.

Please let us emphasize one thing clearly here. This current development of the key figures is expressly only a snapshot for us and is primarily due to the supply chain problems through all its effects. We expressly regard the current ranges in inventories as temporary and due to the special circumstances. It is our clear goal to return to the usual attractive equity and debt ratios in the foreseeable future.

Ladies and gentlemen, please let us now move on to forecast. The current crux of any planning and forecasting based on it at this time is the number of ability of motorized chassis and the ability to complete them in production to the final product. This assumes that, in addition to chassis, a variety of other material is available on the production line at the right time and to the right specification. Unfortunately, this was the exception rather than the rule during the year, reflecting the continuing high level of uncertainty and unreliability along the supply chains.

In this respect, the fact that chassis are now finally available is a significant and decisive improvement on the current situation. Here, the available chassis from Mercedes, Ford, MAN and Volkswagen [Foreign Language] will bring us a big step forward. This enables Knaus Tabbert to finally push the production of motor homes and vans. Up to and including the third quarter, the share of motorized vehicles is just under 35% in terms of units. We now expect this to virtually turn around in Q4 compared to caravans with motorized units accounting for close to 60%.

As a result, we expect sales to accelerate significantly and margins to improve in Q4. This will be supplemented by intensified reworking of unfinished vehicles and, consequently, a corresponding reduction in inventories. Added to this are expense-reducing measures at the end of the year and various savings across all divisions.

The Executive Board of Knaus Tabbert is, therefore, confident that it will still be able to achieve its sales and earnings targets in 2022. However, we also emphasize that this is a challenge and assumes that no more unexpected problems arise with supply chains by the end of the year.

The Management Board, therefore, confirms its forecast, according to which a significant increase in sales, including price increase effects, to over EUR 1 billion is still expected for the group. Although the effect of price increases is not mentioned in the current outlook formulation [indiscernible] we still expect this effect to reach 8%. The removal of the value is purely for reasons of understanding.

And finally, the Board of Management continues to expect adjusted EBITDA for the full year to be higher than in the previous year. The adjusted EBITDA margin will be above 6%. Thank you very much for your attention.

[Manuel Taverne, executive]

Mr. Hundsdorf, Mr. Speck, thanks a lot for your detailed presentation, and I would like move on to our Q&A session. [Operator Instructions]

First of all, from my side, congratulations on how impressively you solve the chassis supply situation. I think this is substantial for the upcoming future growth and which gives you a solid basis for it. However, I was wondering, you may mention the supply bottlenecks. Let's put the chassis situation aside, which material suffer from supply bottlenecks as well. Could you give us information on that maybe?

[Wolfgang Speck, executive]

Marc, will you go ahead, or should I answer that?

[Marc Hundsdorf, executive]

Yes, I can do that, Wolfgang, then. I think it's a variety of different materials. And this is exactly the point. Yes, there is not one specific which is the problem to be solved, and then there are no problems anymore. It's -- there are a lot of parts. And just to give you some examples. So for example, I think windows is something we are struggling with since the whole year, yes. So this is a special thing. We are also working, by the way, here for alternative suppliers. And I know we are on a good way of that. But they are still not finished, those negotiations.

Another issue for example, are right now washing basins. Yes, it's only a small part worth a couple of euros, but for sure, it prevents that the vehicle gets invoiced. And yes, many, many more parts. So I think -- and this is a difficult situation that you just not have one part, which could be solved and then the problem is not anymore there.

[Manuel Taverne, executive]

Okay, I see. Thanks. We have many hands raised right now. Tim Kruse, stage is yours.

[Tim Kruse, analyst]

Yes, looking at the Q4, I mean, you said yourself that it's -- you're confirming your guidance, but it still remains a challenge. I mean, we're at 10th of November, so we've always booked half of the quarter. So maybe could you give us a bit of outlook on current trading?

And then, Marc, it would be great if you maybe could guide us in terms of what we could expect in terms of gross profit margin, OpEx levels in Q4 sort of looking at Q3.

And then finally, I know it's early on, and you have to finish this year first but maybe just sort of a rough guidance in terms of what we can expect for 2023. Your order backlog, as you mentioned, is at record levels, but maybe also your focus going into next year, what you are looking on in growing market share or growing profitability, that would be great.

[Marc Hundsdorf, executive]

Wolfgang, maybe I just start.

[Wolfgang Speck, executive]

Yes, please.

[Marc Hundsdorf, executive]

Yes, you're completely right. It's as I said, it's a challenge, yes, to receive the targets. But the challenge is mainly that there are no unforeseeable happenings on the market, especially with the supply chains as it was in the rest of the year. But I also have to say, looking on our current rating, October and also November, that we are, I can say, on track, so to say, to achieve this by all the management activities I just mentioned. But also, I want to point out that the most important thing is what will have the most -- the highest impact is that we are -- our intention is to produce much more motorized vehicle than we did before.

And this will make a big -- really a big difference, yes. So in terms of caravans, this means we're planning to produce the rest of the year a bit more than 3,000 caravans, but we are planning to produce more than 1,500 vans, yes. And in the first 9 months, we produced 2,500. So this means relatively much more vans and the same for motor homes. So our intention is to produce 2,900. And in the rest of the year, the first 9 months, we produced 4,800. So maybe this gives you, yes, slightly -- a feeling and the flavor of that.

With regard to OpEx and other things, I think knowing the figures for the first 9 months is a very simple calculation, ending up with a bit more than 6%. And it's also clear that we have some savings there. But nevertheless, the biggest effect is coming for sure from the gross margin. And the gross margin in the last 9 months will be better due to the fact that we are producing more motor homes and that we are also especially producing high-margin motor homes. You know that we presented the new basis based on Mercedes, also MAN and Volkswagen Nutzfahrzeuge. And these new vehicles are now right in production with good margins, and this will also drive the profits to -- at the end, to achieve our guidance.

And to give you an outlook for '23. So for sure, we don't want to give you any precise number here, but I can clearly say we are planning a significant improvement compared to the last year's. I think this is absolutely self-understanding. And for sure, we also will have a deep focus in improving the balance sheet ratios, especially equity ratio and net debt ratio, which also includes that we adjust for sure our spendings, also investment spendings to come back to the level we are used to.

[Tim Kruse, analyst]

Maybe just one quick follow-up on the balance sheet. You mentioned that you're in good discussions with your banks. Just presuming, I mean, we're expecting a good Q4, but I guess these balance sheet issues will last into Q1 and Q2 a bit. Can you tell me in terms of covenants what your waivers are currently for which quarters and if you've already secured things for Q1 and Q2?

[Marc Hundsdorf, executive]

So we -- as I mentioned, we -- they agreed, so to say, on our key ratios really shoot for end of September. And we slightly reached them. Yes, in September, but it has already been waiver-ed, yes, due to the very good relationship we have with them.

For the end of December, we have a clear agreement with our banks that we are sitting together beginning of December, showing them our figures or the latest forecast, and then we will decide if we have to adjust them or if we don't have to adjust them. But there is a clear commitment from the banks to -- if it is necessary to adjust the covenants or to waive them again in December, they will do it. But to give you a precise answer, what does this mean? So for the equity ratio at the end of December, we have to show 27%. And for the debt ratio, 3.25. Yes?

So this should be the target. And if this target will not be achieved, and I think we know this very exactly at the beginning of December, we sit together, and then we will find a solution with them. This means the covenants will be adjusted. And the same, for sure, applies for the next year. But I also have to say that I'm very confident and optimistic that we come very fast back to the old key ratios we are used to.

[Manuel Taverne, executive]

Thank you so much for questions, Tim, and thanks for answering. Let's move over to the questions of [ Ellie ]. You now should have -- should unmute yourself and can't be...

[Unknown Analyst]

Yes. Can you hear me now? Can you guys all hear me?

[Unknown Executive]

Yes, we can hear you, Ellie.

[Unknown Analyst]

Thanks for the detailed presentations before. Just a couple things to follow up on. I wanted to ask about the covenants, but we just covered that very well. So just to be hundred percent clear here, from today's perspective, you feel like you have your supply chain well under control to at least deliver on a Q4 as you've been talking about? Because looking at that, it's going to imply pretty much a record quarter in terms of a number of the KPIs.

And then a second question, if I may. If you would possibly be able to break down the number of motor homes sold in Q3 between the luxury and the premium segments. And I think that's it for now.

[Wolfgang Speck, executive]

Let me step in now at that point, Ellie. Yes, again, I can confirm, and that is what also my colleague, Marc, said and that is also the opinion of the whole management team that, yes, the supply chain issues are under control, taking into consideration that we struggled during the last 9 months mainly due to poor chassis supplies. And this problem is definitely solved. As you remember, during our presentation, we have now a stock of roughly 3,000 chassis in our factories. So -- and this is, I would say, we have everything we need to meet that target. We announced we have the technical capacities. We have the staff in place. We have, besides some smaller issues also material in place, we have still -- and this is something we also have to value that we have a really strong order book. So the demand is still there. So again, we have everything we need to meet the targets what we announced for end of 2022.

[Unknown Executive]

Okay. I was speaking more [indiscernible] term for you missing window or a sink as you mentioned because I know it only takes one small component to hold things up. So thanks for being clear on that.

[Wolfgang Speck, executive]

Yes. I mean, that's a good point. But just to give an example, I mean, last week -- I mean, it's daily business. You have to manage the daily business. Last week, we received an announcement from one big supplier supplying heating system, climatic systems delivered by China. They are missing 1 sea container. So I mean, what we did is then to use a second source also involved in our business. And therefore, we had been able to substitute and to help and to get the assembly lines, the work that continue. So again, we are pretty sure that we are able to handle those problems.

[Marc Hundsdorf, executive]

Maybe I think you also had a question on the number of motor homes which has been sold by the luxury department. This has been 370, yes. So out of the total number of motorized vehicles, 370 are from MORELO. And as I said, this is a solid number. The 88 are on stock, and for sure, will also be sold as soon as possible.

[Manuel Taverne, executive]

I would like to now move over to the questions of [ Alessandro ]. Just a second. Your line should be open now. Alessandro, can you hear us?

[Unknown Analyst]

Yes. Can you?

[Manuel Taverne, executive]

Yes.

[Unknown Analyst]

So just a quick information on MORELOs you need sold in Q3, if you can maybe provide the figures as it is not disclosed.

I was also wondering what was -- what production capacity levels you're expecting for a full year -- for this full year and the next one? Because I know you have CapEx program on that. And if we can maybe have an update on the input cost prices because we know that metals are going down or even wood. So probably, we should expect a positive effect next year. I don't know if you have any visibility on that.

[Wolfgang Speck, executive]

Maybe, Marc, I will start with, again, the question on production capacity and also the outlook on 2023. I mean, what we see is that we will end up this year somewhere between 28,000, 29,000 units. Let me say that way. And Marc, you can do that a little bit more precise. So again, the capacities, I mean, when you talk about capacities, you have to evaluate the technical capacity you have and then also the capacity in labor force. And on both items, we can say that the capacity we today have, the installed capacity today is a capacity which is above 30,000 units. Why? Because we invested in several factories in Hungary and in Jandelsbrunn during this year. And when we look now, November, December, January, we see January, we see that this technical capacity then realized based on those CapEx that we did last year that this is a technical capacity here.

We are still in the Phase 2 to also to increase the staff to be prepared also for the next growth step in the year 2023. I mean, based on that order book of EUR 1.6 billion, it's clear that we have to increase also the staff to fulfill all the existing orders. And by the way, most of the orders are already sold to end customers and not only to our dealers, which is also important, or to rental fleets. So this is also important to mention.

And again, looking to 2023, I mean, what we can say without giving now a specific guidance that, in units, you can expect a double-digit growth in sales. You can expect double-digit growth. We will move to more -- much more motorized vehicles since we are now based on the chassis strategy ready to push the motorized vehicle segment. So we will slightly decrease the segment of caravans and use the capacities. Then, we have really to push the output on motorized vehicles. And also, having said this, we strongly believe that also we can show next year a significant improve also in profitability in terms of EBITDA absolutely and, of course, also EBITDA in margin. And also, just to add the word on inventories and work in process and covenants, I mean, up to the end of the year, it's a clear goal to decrease the level of inventories also significantly so, not only unfinished goods but also some of the finished goods, which are still located in Hungary and have to be transported then to Jandelsbrunn.

So -- and looking forward to 2023. There's also a clear target which we will follow in our business strategy and business plan for 2023 to keep net debt ratio really to push them really low and lower than what we -- at least lower based on the existing contracts with the banks. Just to give a little bit flavor, though, on what you can expect for 2033 without being too precise, but we are not going [indiscernible]. Marc, there was another question on [indiscernible] MORELO?

[Marc Hundsdorf, executive]

Yes. Maybe I'll start with the MORELO question. So the sales of MORELOs for the first month have been EUR 90 million. and the EBITDA has been EUR 11 million. I think this was your question. And respectively, in the quarter, it was EUR 30 million in the third quarter, and the EBITDA was EUR 3.2 million. So this is about MORELO.

And I think your last question was about the price increase or the general price increase for incoming materials, and this is roundabout 7%. So for sure, spread over a lot of materials with the different numbers. But in general, you can calculate with roundabout 7%.

[Unknown Analyst]

Okay. And just on the MORELO part, I was also asking about the number of units sold of MORELO vehicles in Q3 [indiscernible] number.

[Marc Hundsdorf, executive]

370.

[Unknown Analyst]

370.

[Marc Hundsdorf, executive]

3-7-0, yes.

[Unknown Analyst]

For the 9 month, for Q3?

[Marc Hundsdorf, executive]

For the first 9 months, right, yes.

[Unknown Analyst]

For the 9 months, okay.

[Marc Hundsdorf, executive]

Yes. And as I said, it could have been much more if you don't have the struggles with the materials.

[Manuel Taverne, executive]

Thanks, Alessandro. We will now move over to Mr. Maidi.

[Rizk Maidi, analyst]

Yes, Wolfgang and Marc. I have a few. I'll take them one at a time, if you don't mind. Can you perhaps start with the duration of that EUR 1.6 billion backlog, maybe just the schedule of delivery? Is it mostly 2023? Is there anything in 2024 there? And then perhaps on how you set up those backlogs in terms of penalties, should you see a cancellation or a delay in delivery, please, outside there?

[Wolfgang Speck, executive]

Okay. First of all, to give you answer on the question on duration of that order backlog, EUR 1.6 billion. I mean, this will, for sure, cover the whole year 2023, and this will also cover some months of the year 2024 already. We have -- we see a really strong and stable order book. So we see nearly 0 cancellation in that order book. This is also because we see that most of the dealers have still a really low stock level and to secure their sales also for the coming year, for the season, for the spring season, summer season. So from the dealer side, we've seen no cancellation.

And when we're listening very carefully also to the dealers, we also do not see major cancellation effects coming from the end customers. Also, the rental business is really stable, which is also important to us since we are selling 20% to 30%, depending on the season also to the rental business. Also, the rental business is something which is really strong.

And also talking a little bit about the overall development of the economy and the question, how does that correlate also to vehicle sales and registrations. And when we look backwards and we had a lot of statistics, will we be checked, what we clearly can see is that we have a low dependence between vehicle sales and registrations, low dependence on fuel prices, development of fuel prices in the past and also a low dependence on inflation or deviation in consumer prices. That is what we see when we look to next -- last 10, 15 years backwards and compare registration charts in Europe and Germany to development of economic KPIs.

Where we see a higher dependence is when we look on specifically on the unemployment rates when we look backwards. And this is a main topic we should focus on also in the future. But at the same time, specifically when you look to the unemployment rate development in Germany, we have a strong employment market. We have a low employment, unemployment rate. We saw when you look to the figures that, again, this unemployment rate was reduced during the course of September/October. And that is also what we see when we are looking for qualified workers and in Knaus Tabbert in all locations, in Hungary, in Jandelsbrunn, in Nagyoroszi, and Schlüsselfeld.

It's really still really difficult to find people to increase all the workforce, what we try to do. So with other words, the current situation on inflation on interest rates, this is fuel price increases, nothing which really is influencing our strong market situation. It's just the unemployment rate, and that's just the way around. We have this strong situation. So people, they feel they trust in the future because they have a job. This is really important.

[Rizk Maidi, analyst]

Since you touched on this, Wolfgang, I mean, we see it now in the U.S. where all of a sudden in a matter of 3 months, we've been from a situation where we talk about inventories of dealers being too low. So actually now seeing a 20% to 25% decline on registrations, and that happened [indiscernible]. Just perhaps the correlation to not only the employment rate but just the consumer recession because, if anything, it's ultimately a discretionary spend and a high-ticket one.

[Wolfgang Speck, executive]

Yes, look, when you compare the U.S. market, specifically the leisure vehicle markets to the development situation, there are different -- that's a different mechanism. In U.S., we also -- we always see when you look backwards, they really press very hard the braking pedal, and then after the recession, they accelerate really tough. So that is what we see in the U.S.

When you compare that to Europe and Germany, I mean, this is much smoother, the ups and downs, we saw in the past. And also to give a little bit of flavor on what we expect overall in registrations this year in Europe and Germany. For sure, I mean, compared to the strong years 2021, this is something -- and that was because also driven due to the COVID situation that, in 2022, I would say, when we look to Europe, we can expect, roughly, I don't know, 220,000 units in registration. That means we are still higher than 2019, the last pre-COVID year.

And the same for Germany. In 2022, I would say we can expect roughly 95,000 units, which is less compared to last year, but still, I would say, 10% higher what we saw pre-COVID. And also, the outlook for the coming years, we are quite sure that, specifically, Germany, and I mentioned that several times during our last meeting that Germany is and will be the driving engine in the European registration charts in our business.

So what we believe is that we will -- now let's have a look to the next 5 years period, which will end up in 2027. I would say that we can expect, I would say, at least 30% growth within the next -- not on average, of course. But from today to '27, another 30%. So I mean 120,000 units, why not? Just in Germany?

And also in Europe, I would say, this is also something not as strong as in Germany, but I would say we can also expect at least 20% growth between what we will end up this year and 2027. And based on that and based on the innovation power we have at Knaus Tabbert in the multibrand strategy, the new model, specifically also the Volkswagen T6, which is selling like cutted bread, is really selling like cutted bread, this model, we believe that we can -- we have still ability to grow with our company ahead of the overall market development. This is what we feel also for the coming 5 years.

[Manuel Taverne, executive]

We still have 1 minute left. Mr. Speck, do you mind if we take one more question or...

[Wolfgang Speck, executive]

I'm happy to take one more. Yes.

[Manuel Taverne, executive]

Okay, perfect, because I think in the chat, the questions were asked there are already been answered. If not, please -- just send me another reminder. And then we would like to have the last questions by the phone number ending with the 8-6. You should now be able to hear us and to speak.

[Eric Wilmer, analyst]

Can you hear me?

[Wolfgang Speck, executive]

Yes, we can hear you.

[Eric Wilmer, analyst]

This is Eric Wilmer from ABN AMRO. I had a few remaining questions just very quickly. First question, you stated to focus -- that the focus is on high-margin motorized vehicles, where I believe that at the IPO, we learned that both motor homes and caravans have roughly similar margins aside from MORELO. So are you talking about certain segments such as camper vans, which may carry a higher margin? Or is this solely driven by more Mercedes and MAN vehicles? That's my first question.

[Wolfgang Speck, executive]

Yes, you are right. We mentioned that during the IPO. They had to be more or less on the DB1 as we say, taking [ vital 1 ] level, more or less the same margins. But at the end, absolutely, of course, the motor home and the vans are delivering absolutely values much higher margins. That's the first point.

And the second point, yes. We mentioned that, for example, the Weinsberg Pepper, which is, by the way, one of the most -- well, the most selling motor home overall Europe, which is now based on a Mercedes, also this, and we are happy with the margins we can create, plus also the new models based on the Volkswagen Bulli T6.1. Also, these products we'll deliver then, and we are now in the ramp-up phase, will deliver next year also on a high contribution to the margin. Marc, would you like to add something? Okay, Eric, go ahead.

[Eric Wilmer, analyst]

Yes. Just in your -- I mean, that's very helpful. And I thought maybe just jump on to the next question taking into account time. And the question is just listening to your Q3 EBITDA figure, it seems that you've been working really hard on the premium segment to get an EBITDA, which is actually below MORELO's EBITDA, if I'm not mistaken.

So you also mentioned that you have 88 MORELO vehicles in inventory, and given these margin differences and the discussions you have with your banks, including the waivers, hasn't it been tempting to focus more on MORELO actually during Q3, perhaps at the expense of premium vehicles.

[Wolfgang Speck, executive]

I mean, of course, we -- Marc, please.

[Marc Hundsdorf, executive]

I think we are already very successful with MORELO, and we have a market share of around about 50% in the market, yes. So I think we are really driving this segment, and we are very successful with that. But nevertheless, MORELO is less harmed by all these problems we have than the premium segment. I think this is simply a fact. And for that reason, for sure, the premium profits are significantly lower right now than the MORELO profits.

[Eric Wilmer, analyst]

And then maybe just -- I've got a couple of more questions, but I'll ask them later. But just last question. Is there a risk that some dealers are placing double orders just as they expect to receive half of what they play?

[Wolfgang Speck, executive]

Definitely not, no. Definitely not. The answer to your question -- that's a clear, clean answer to your question. Definitely not -- we are very close. It's not -- I mean, we are not only collecting papers. We are in a really close relationship and also where we, how to say, a relationship which is lasting since the last 20, 30 years. So we know each dealer also on a private base. And so that is the reason why I can say definitely not. So we are playing fair in both directions.

[Manuel Taverne, executive]

Eric, do you have another question or not?

[Eric Wilmer, analyst]

Yes, I do. But I mean, I remember that you mentioned the timing is -- can I squeeze in another one or...

[Wolfgang Speck, executive]

I'm fine with that. I've...

[Manuel Taverne, executive]

Please feel free to...

[Eric Wilmer, analyst]

Then another question I have is basically on the availability of electronic components and chips, and this is something of where some competitors are stating that it's becoming -- the situation is becoming somewhat better. Is this also helping you provide additional comfort into Q4? Or is this not really a theme for Knaus?

[Wolfgang Speck, executive]

It's for the Q4, it's not a theme. I mean, mainly, again, which was the main topic to be solved was the chassis issue. And again, we have roughly 3,000 chassis on stock, and this covers our production plans, at least until end of this year. So chassis-wise, we're on the safe side. And in the past, we had problems with the Ducatos. And they had problems with ZF with the steering system, and ZF had problems because they run out of semiconductors delivered out of Taiwan. And I mean -- but this is so far not the case. So I can say today, this is nothing which is really impacting our business today. And also, we see that also not fall for the year 2023 as a main topic.

[Eric Wilmer, analyst]

Okay. And then really last question just -- and sorry to push on this, but it was already asked, but I think the answer that was given was on the first 9 months. But I was wondering still, how many MORELO units did you sell in Q3 specifically? I think you said 370 in the first 9 months and it sounds like maybe 120, something like that in Q3, but I just wanted to get confirmation if you can, please.

[Wolfgang Speck, executive]

Marc?

[Marc Hundsdorf, executive]

Yes, just give me a second. 108. More than 100, 108.

[Manuel Taverne, executive]

Perfect. Then thanks to all of the participants and all the questions and especially a big thank you to you for going the extra mile, even though we ran out of time, it was a pleasure to have you here. And for the final words, I would like to hand over the last time to you, Mr. Speck.

[Wolfgang Speck, executive]

Again, thank you very much for your support, talking to all analysts now involved and supporting our business and delivering also a lot of trust in the team, the management team in our business. So thank you very much, for sure. You can expect that what we promised. Thank you very much.

[Marc Hundsdorf, executive]

Thank you. Bye.

[Manuel Taverne, executive]

Thanks. Have a good week. Bye-bye.

[Wolfgang Speck, executive]

Thank you.