FiREapps Q2 2018...FiREapps Q2 2018 Currency Impact Report | 6 of 17 $9 $18 $27 $36 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 …

FiREapps Q2 2018

Each quarter, FiREapps analyzes the earnings calls of 1,200 publicly traded North American and European

companies as part of a continued effort to provide insight into how currency impacts organizations. The

companies included in this data set are large multinational firms doing business in more than one currency

with at least 15 percent of their revenue coming from overseas.

A Survey of North American & European Corporate Earnings

CURRENCY IMPACT REPORT™

The data included in this report refers only to companies that reported FX impacts in earnings calls.

FiREapps Q2 2018 Currency Impact Report | 2 of 17

Overview

Copyright © 2018 Rim Tec Inc. All rights reserved. 101018

FiREapps Q2 2018 CURRENCY IMPACT REPORT™

Quantified Negative Currency Impact (Billions)

Number of Companies Reporting Negative Currency Impact

European Companies North American Companies

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

0 10 20 30 40

$14.42

$22.89

$6.79

$4.27

$0.73

$0.23

$2.53

$3.86

$3.36

$7.94

$6.47

$6.71

$10.26

$10.47

$6.70

$7.44

$5.28

$7.83

$22.93

$15.44

$6.90

$6.81 $10.67

0

84

168

252

336

420

Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018

123

85115122

251228

296

263

296

45184068

220213245

218225

51

75

FiREapps Q2 2018 Currency Impact Report | 3 of 17 Copyright © 2018 Rim Tec Inc. All rights reserved.

67

62

7145

1531

5478

Following a quarter of the highest reported negative currency impacts seen in years, European companies continue to experience large losses due to FX in Q2 2018. Of the European companies that quantified their negative impacts, there was a reported $14.42 billion in losses - nearly 20 times more than the reported negative currency impact in Q2 2017 - and there was an additional increase in the number of European companies reporting overall.

Q1 2018 also showed some of the lowest quantified negative currency impacts for North America, but Q2 2018 brought renewed impacts and an increase in the number of North American companies reporting, the highest seen since Q2 2017.

Europe Continues to Report Large Headwinds

CNY EUR JPY GBP INR

CNY EUR JPY GBP KRW

CNY EUR JPY BRL GBP

EUR CNY JPY CAD GBP

ARS IDR KRW TRY SAR

KRW IDR ARS CNY BRL

TRY IDR BRL ZAR SAR

CAD IDR RUB TRY ARS

1 2 3 4 5

Top 5 Volatile G20 Currencies1 2 3 4 5

Q4 2017

Q2 2018

Q1 2018

Q3 2017

Top 5 Volatile Currencies as Weighted by GDP Percentage


Q4 2017

Q2 2018

Q1 2018

Q3 2017

Copyright © 2018 Rim Tec Inc. All rights reserved.


Currency Impact on North American Corporate Earnings




$9

$18

$27

$36

Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018

4.10 4.185.83

3.261.21

4.00

18.66

28.94

16.9519.29

33.94

16.88

6.90 6.817.94

6.47 6.71

1.01 1.040.04

1.02

Negative Currency Impact to North American Companies (Billions)

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

$0.00 $0.03 $0.06 $0.09 $0.12

$0.04

$0.03

$0.03

$0.03

$0.04

$0.03

$0.04

$0.04

$0.05

$0.06

$0.07

$0.12

$0.03

Average EPS Impact Reported by North American Companies

Industry Standard MBO of Less than $0.01 EPS Impact

Currency Impact on North American Corporate Earnings


North American companies reported a $1.02 billion loss in Q2 2018, a 2,657 percent increase from the previous quarter.1

Additionally, in breaking a three-quarter streak, North American companies reported a $0.04 EPS impact during Q2 2018 - four times that of the industry standard MBO of less than $0.01 EPS impacts.

1Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.

AUD 2.6%

JPY 2.6%

CAD 5.1%

CNY 12.8%

GBP 17.9%

EUR 59.0%

MXN 6.5%

CAD 8.7%

GBP 13.0%

CNY 17.4%

EUR 54.3%


Top Currencies Referenced by North American Companies as Impactful

BRL 4.3%

AUD 8.5%

CAD 14.9%

GBP 23.4%

EUR 48.9%

Q4 2017Q1 2018 Q3 2017


TRY4%

CAD 5.9%

BRL 9.8%

GBP 9.8%

ARS 13.7% CNY

13.7%

EUR 43.1%

Q2 2018

For the sixth consecutive quarter, the euro (EUR) was mentioned as the most impactful currency by North American companies, with 43.1 percent of companies mentioning it during Q2 2018 earnings calls.

The Chinese renminbi (CNY) and Argentine peso (ARS) tied for the next most referenced currency in North American earnings calls, followed by a tie for third of the British pound (GBP) and Brazilian real. (BRL) The Canadian dollar (CAD) and Turkish lira (TNY) were the fourth and fifth most mentioned currencies.

EUR 43.1%

MXN 6.6%

CAD 5.1%

AUD 2.6%

45

1840

68

220213

245218225

338357353

170

0

75

150

225

300

375

Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 2018

161325

42

9287105

109115

166201239

74

2951526

128126140

109110

172156

11496


Average Negative Impact to North American Companies (Millions)

$0

$50

$100

$150

$200

$250

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

$35

$8

$69

$39$52$51$57$62$63

$98

$218

$169$177$164

Number of North American Companies Reporting Negative Currency Impacts

Number of Companies Quantifying Size of Impact

Number of Companies Not Quantifying, but Reporting Impact

35.6% Did Not Quantify

45N.A. Negative

Impacts

64.4% Did Quantify

Percentage of North American Companies Quantifying Impacts


1316

Biotechnology & Drugs


Most Impacted North American Industries

21 43 5

Q3 2017

Q2 2018

Q4 2017

Electronic Instruments & Controls


Auto & Truck Parts

Business Services

Medical Equipment & Supplies


Scientific & Technical Instruments

SemiconductorsChemical Manufacturing

Q1 2018

Business Services

Personal & Household Products

Scientific & Technical Instruments

Auto & Truck Parts

Oil Well Services & Equipment

Medical Equipment & Supplies

Business Services


0%

25%

50%

75%

100%

2012 Q4 2013 Q3 2014 Q2 2015 Q1 2016 Q1 2016 Q4 2017 Q3 2018 Q2

21%22%23%

14%

25%

16%18%22%

31%

43%49%50%

64%63%

46%

23%

41%47%

25%26%26%19%

Percentage of North American Companies Reporting Impacts That Fielded Analyst Questions


Auto & Truck Parts

Chemical Manufacturing

The number of North American companies reporting FX impacts that fielded analyst questions decreased slightly from Q1 2018, with 21 percent of companies receiving FX-related questions when reporting quarterly earnings.


Currency Impact on European Corporate Earnings




$0

$4

$8

$12

$16

$20

$24

Q2 2015 Q1 2016 Q4 2016 Q3 2017 Q2 2018

2.54

4.73

2.91 3.14 3.36 3.862.53

0.23 0.73

4.27

6.79

22.89

14.42

Negative Currency Impact to European Companies (Billions)

Currency Impact on European Corporate Earnings


Although down from Q1 2018, European companies continue to see negative currency impacts higher than what they had sustained in previous years, with companies reporting a collective $14.42 billion in losses due to FX.2

Of the 350 Europe-based multinationals analyzed, 78 reported headwinds in Q2 2018. Of those, 41 quantified their negative impacts (page 13).

2 Impacts are likely to be underestimates as most companies with currency headwinds generally do not report them.

CNY 3.7%

JPY 5.6%

GBP 11.1%

EUR 33.3%

USD 46.3%

BRL 9.7%

GBP 11.3%

CNY 16.1%

USD 22.6%

EUR 40.3%


Top Currencies Referenced by European Companies as Impactful

JPY 6.4%BRL

6.4%

CNY 10.6%

GBP 12.8%

USD 19.1%

EUR 44.7%

Q4 2017Q1 2018 Q3 2017


TRY 5%

GBP 5.7%

RUB 8.0%

CNY 8.0%

BRL 11.5% USD

31.0%

EUR31.0%

Q2 2018

The euro (EUR) and US dollars (USD) were most mentioned as impactful by European companies, followed by the Brazilian real (BRL), a tie between the Chinese renminbi (CNY) and the Russian Ruble (RUB), with the British pound (GBP) and Turkish lira (TRY) being the fourth and fifth most mentioned.

CNY 3.7%


20

40

60

80

100

Q1 2016 Q4 2016 Q3 2017 Q2 2018

371340

28

2710

4326

5442

4154

3526

458191720

78

6775

54

31

15

5145

7162

47.4% Did Not Quantify

78EU Negative

Impacts

52.6% Did Quantify

$0

$100

$200

$300

$400

$500

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018

$351.78

$423.89

$194.10$164.10$182.20

$45.60

$316.00

$203.00

Average Negative Impact to European Companies (Millions)

Number of European Companies Reporting Negative Currency Impact

Percentage of European Companies Quantifying Impacts

Number of Companies Quantifying Size of Impact

Number of Companies Not Quantifying, but Reporting Impact



Most Impacted European Industries

21 43 5

Q3 2017

Q2 2018

Q4 2017


Clothing & Apparel

Q1 2018



0%

19%

38%

56%

75%

Q1 2016 Q4 2016 Q3 2017 Q2 2018

22%

42%38%

30%

40%

14%

23%25%

33%

53%

Auto & Truck Parts

Construction & Agriculture Machinery

Misc. Capital Goods


Percentage of European Companies Reporting Impacts That Fielded Analyst Questions




Misc. Capital Goods



Misc. Capital Goods

Auto & Truck Parts




Auto & Truck Parts


In Q2 2018 earnings calls, 22 percent of European companies that quantified impacts fielded analyst questions, as compared to 42 percent in Q1 2018. This is the lowest percentage of reporting companies fielding analysts questions since Q1 2017.


Comparison of Q2 2018 Currency Impact to North American

& European Companies



78 European


Average Quantified Negative Currency Impact in Q2 2018 (Millions)

North America Europe

Mill

ions

(USD

)

0

100

200

300

400

500

$352

$35

$15.44 Billion Total Negative Q2 Impact

123Q2 North American &

European Negative Impacts

45 North American

Number of Companies Reporting Negative Currency Impacts in Q2 2018

0%

20%

40%

60%

80%

100%

22%21%


Summary: FiREapps Q2 2018 Currency Impact Report™

Percentage of Companies Reporting Impacts That Fielded Analyst Questions in Q2 2018

Billi

ons

(USD

)

0

4

8

12

16

20

24

$14.42

$1.02



› The total quantified negative impact in Q2 2018 was 33 percent lower than Q1 2018, totaling $15.44 billion, with $14.42 billion of that impact having been reported by European companies.

› 123 North American and European companies reported currency headwinds in Q2 2018. Of those companies, 70 quantified FX impacts.

› There was a 150 percent increase in the number of North American companies reporting negative currency impacts in Q2 2018.

› As negative impacts to European companies remain higher than previous years, the number of companies reporting impacts increased, but he number of companies quantifying negative impacts has decreased.

Size of Quantified Negative Currency Impact in Q2 2018 (Billions)


FiREapps is the leading provider of cloud-based enterprise currency management (ECM) solutions for currency exposure management and enterprise currency analytics. Established in 2005, FiREapps developed the first solution to automate foreign exchange exposure management for multinational companies. Today, the company provides automated solutions to support the analysis and management of currency exposure, as well as the assessment and reporting of how currencies can impact corporate financial performance. FiREapps is headquartered in Scottsdale, Arizona, with offices in Portland, London and Frankfurt.

Copyright © 2018 Rim Tec Inc. All rights reserved. 101018

Documents

FiREapps Q2 2018...FiREapps Q2 2018 Currency Impact Report | 6 of 17 $9 $18 $27 $36 Q2 2013 Q4 2013 Q2 2014 Q4 2014 Q2 2015 Q4 2015 Q2 2016 Q4 2016 Q2 2017 Q4 2017 Q2 …