STS Group AG

Investor Presentation • Aug 7, 2019

EARNINGS CALL H1 2019 Results August 7, 2019

Dr. Ulrich Hauck (CFO) will present STS Group AG Financial Figures for H1 2019

Dr. Ulrich Hauck CFO

Ulrich Hauck took over the CFO role at STS Group April 1, 2019. His areas of responsibility comprise in particular controlling, accounting, treasury, taxes and IT.

Prior to joining STS Group, Ulrich Hauck held the positions of Group CFO at Schaeffler, Corporate Senior Vice President at Bayer AG, heading global accounting and controlling of Bayer and Vice President at Rheinmetall. He started his career as CPA and tax consultant at Deloitte.

• 1. Market Development
• 1. Business Highlights H1 2019
• 1. Financial Highlights Q2 2019
• 1. Capital Market
• 1. Outlook

1. Market Development

• 1. Business Highlights H1 2019
• 1. Financial Highlights Q2 2019
• 1. Capital Market
• 1. Outlook

4) Including passenger cars and all commercial vehicles

Weak automotive markets in Europe and China in H1

(values based on 1.000 production output, source: IHS Markit Data and Management estimates)

1. Market Development

2. Business Highlights H1 2019

• 1. Financial Highlights Q2 2019
• 1. Capital Market
• 1. Outlook

Achievement of several milestones in line with STS Group strategy

February	New business for BU Acoustics passenger car business awarded
April	Third Chinese plant opened in Shiyan with successful SOP
May	First general assembly after IPO
May	Major order for innovative long-nose trucks in China
June	License agreement for innovative lightweight solutions
July	Two orders received for electric vehicles battery covers from Chinese OEMs

Decline in revenues and profitability due to weak markets

Comments:

• Revenues decreased by 11.2% in H1 2019
  • − Weak passenger car market in Europe, especially in Italy
  • − Planned end of a major order within BU Plastics
  • − Significant decline in Chinese automotive market
• Adj. EBITDA impacted by:
  • − Significantly lower volumes
  • − Overall improved efficiency in plants
  • − Profitability of Polish plant improved, however still negative
  • − Ramp up costs at the new production location in Shiyan

• 1. Market Development
• 1. Business Highlights H1 2019

3. Financial Highlights Q2 2019

• 1. Capital Market
• 1. Outlook

Key Financials

in mEUR / %		Q2 2018	Q2 2019	in % var	H1 2018	H1 2019	in % var
1	Revenues	109.3	98.3	-10 1	218.2	193.8	-11 2
2	EBITDA	3.5	5.8	+65 7	6.9	10.1	+46 4
	EBITDA Margin	3.2%	5.9%	+2 7 pts	3.2%	5.2%	+2 0 pts
	Adj. EBITDA	8.4	5.8	-31 0	16.5	10.1	-38 8
	Adj. EBITDA Margin	7.7%	5.9%	-1 8 pts	7.6%	5.2%	-2 4 pts
	EBIT	0.2	1.1	+450 0	0.2	0.9	+350 0
	EBIT Margin	0.2%	1.1%	+0 9 pts	0.1%	0.5%	+0 4 pts
3 4 5	NET Income	-1.1	-1.0	+9 1	-2.8	-2.3	+17 9
	EPS (in €)	-0.55	-0.16	+70 9	-1.42	-0.38	+73 2
	CAPEX	3.0	3.2	+6 7	5.9	6.3	+6 8
	FOCF1)	-6.6	+0.9	+113 6	-11.4	-4.0	+64 9
	Cash				30.9 (as of 30.06.)	28.7 (as of 30.06.)	-7 1
	NFD2)				33.1 (as of 30.06)	33.4 (as of 30.06.)	+0 6

1) FOCF (= Free Operating Cash Flow) = Op CF - CAPEX - Leasing Cash Out

2) NFD (=Net Financial Debt) = Bank Loans + Third Party Loans + Recourse Factoring - Cash

%-change

Revenue decline versus 2018 due to overall weak automotive markets 1

Comments:

• Market driven revenue decline across all Business Units (BU)
• Quarter-on-quarter revenue growth of +2.9%
• Planned phase-out of significant project at BU Plastics in Q2 2018 with negative topline impact (-4.2 mEUR)
• Positive FX effect of 0.6 mEUR mainly from Mexico (BU Plastics)

Adjusted EBITDA Q2 2019 below prior year, however improved versus Q1 2019 2

Adj. EBITDA margin (in %)

	Q2 18	Q2 19	H1 18	H1 19
Acoustics	0.9	2.6	1.5	1.2
Plastics	13.2	9.6	10.4	8.0
China	16.3	16.7	17.2	13.1
Materials	3.6	4.8	6.1	4.3
STS Group	7.7	5.9	7.6	5.2

Comments:

• EBITDA in Q2 2019 improved over prior year quarter
• Adj. EBITDA in Q2 2019 below prior year quarter, however up on a quarter-on-quarter basis
• Positive IFRS 16 impact of ard. 1.3 mEUR in Q2 2019 (H1 2019: 2.3 mEUR), thereof 0.4 mEUR each for BU Acoustics, Plastics and China

Net income -2.3 mEUR in H1 2019, improved versus prior year 3

Adj. EBITDA / Net Result Bridge H1 2019 (in mEUR) Net Income (in mEUR)

Comments:

5.000.000 until May 7, 2018; 6.000.000 from May 8, 2018 on.

Net income and EPS still negative in Q2 2019, however slightly improved versus Q2 2018 and Q1 2019

Free Operating Cash Flow improved versus Q2 2019 4

Comments:

• CAPEX in Q2 with 3.2 mEUR or 3.2% of revenues above prior year (previous year quarter 3.0 mEUR, 2.7%)
• Free Operating Cash Flow in Q2 2019 (+0.9 mEUR) significantly improved versus prior year (-6.6 mEUR) mainly due to positive working capital development in Q2 2019

Leverage ratio of 2.2 as per end of Q2 2019 on a very solid level 5

Net financial debt and leverage (in mEUR / multiple)

Financial Debt (in mEUR)

	2018					2019
	31.3.	30.6.	30.9.	31.12.	31.3.	30.6.
Bank loans	16.4	15.4	14.9	13.9	16.7	15.5
Third party loans	7.9	7.4	7.5	9.0	8.8	8.5
Recourse factoring	37.2	41.2	36.0	36.2	36.1	38.1
Financial Debt	61.5	64.0	58.4	59.1	61.6	62.1
Cash&Cash equiv.	8.6	30.9	28.9	31.2	28.3	28.7
Net Debt	52.9	33.1	29.5	27.9	33.3	33.4
LTM EBITDA last 12 months/lease adj.	19.6	25.4	27.0	23.7	18.8	14.9

Comments:

Net Financial Debt as of June 30, 2019 33.4 mEUR

2) last 4 quarters

• Excluding recourse factoring liabilities of 38.1 mEUR STS has positive net liquidity position of ard. 4.7 mEUR
• Leverage ratio as per June 30, 2019 of 2.2 is still very solid

• 1. Market Development
• 1. Business Highlights H1 2019
• 1. Financial Highlights Q2 2019

4. Capital Market

1. Outlook

General automotive market development puts pressure on share price

Price development since IPO Analyst Recomendations

Date	Publ.	Target	Rec.
12/07/2019	H&A	7.00 €	Hold
12/06/2019	Kepler Cheuvreux	8.00 €	Hold
21/05/2019	SMC Research	14.10 €	Speculative Buy
01/05/2019	MainFirst	12.00 €	Outperform

Shareholder Structure

Information

ISIN	DE000A1TNU68
Number of Shares	6,000,000
Market Cap (05/08/19)	39 mEUR

• 1. Market Development
• 1. Business Highlights H1 2019
• 1. Financial Highlights Q2 2019
• 1. Capital Market

5. Outlook

Guidance for 2019 adjusted due to weaker than expected automotive markets

Market environment in the automotive industry will continue to be challenging

2019 new

Reduced expectations for automotive markets in H2 2019

≈ 400 mEUR (2018: 401 mEUR) Reduction between 4.5 - 9.5 % compared to previous year (2018: 401 mEUR)

Adj. EBITDA: ≈ 23.7 mEUR (2018: 23.7 mEUR) No adjustments planned EBITDA: ≈ 23.7 mEUR (2018: 11.9 mEUR)

Adj. EBITDA margin between 4.6 – 5.3 % (2018: 5.9 %)

Upcoming conferences and relevant publications in 2019.

2/3 September 2019	Autumn Conference, Frankfurt/Main
11 September 2019	ZKK Zurich Capital Market Conference, Zurich
22 October 2019	Capital Markets Day, Frankfurt/Main
6 November 2019	Publication Quarterly Statement (call-date Q3)
25-27 November 2019	German Equity Forum 2019, Frankfurt/Main

Q&A session

Disclaimer

This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. STS Group AG has based these forward-looking statements on its current views and expectations and on certain assumptions of which many are beyond STS Group AG's control. Actual financial performance could differ materially from that projected in forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. The information contained in this presentation is subject to change without notice and STS Group AG does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.

This presentation includes references to non-IFRS financial measures, including, but not limited to: FOCF, EBITDA, Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, EBIT, EBIT margin, capital expenditure as percentage of revenue, other operating income, net financial debt, and net working capital. We have provided these measures and other information in this presentation because we believe they provide investors with additional information to assess our performance. Our use of these supplemental financial measures may vary from others in our industry and should not be considered in isolation or as an alternative to our results as reported under IFRS.

Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

Thank you for your attention!

Stefan Hummel

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ir@sts.group

Head of Investor

+49 811 12449412