Investor Presentation • Apr 23, 2020
Investor Presentation
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April 2020
Disclaimer
This presentation contains certain "forward-looking statements". These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance, financial condition or achievements to differ materially from anticipated results, performance, financial condition or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. We have no intention and are under no obligation to update or alter (and expressly disclaim any such intention or obligation to do so) our forward-looking statements whether as a result of new information, future events or otherwise, except to the extent required by law. The forward-looking statements in this presentation include statements addressing our future financial condition and operating results. Examples of factors that could cause actual results to differ materially from those described in the forward-looking statements include, among others, business, economic, competitive and regulatory risks, such as conditions affecting demand for products, particularly in the automotive industries; competition and pricing pressure; fluctuations in foreign currency exchange rates and commodity prices; natural disasters and political, economic and military instability in countries in which we operate; developments in the credit markets; future goodwill impairment; compliance with current and future environmental and other laws and regulations; and the possible effects on us of changes in tax laws, tax treaties and other legislation. More detailed information about these and other factors is set forth in the 2019 Kongsberg Automotive Annual Report and the Kongsberg Automotive Quarterly Reports.
The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ('relevant persons'). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Kongsberg Automotive Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.
Where we have used non-IFRS financial measures, reconciliations to the most comparable IFRS measure are provided, along with a disclosure on the usefulness of the non-IFRS measure, in the annual report.
President and Chief Executive Officer Kistefos AS Oslo, Norway 2011 - 2015
Chief Executive Officer
Chief Executive Officer, Chief Financial Officer and Chairman
Tyco Electronics / TE Connectivity Frankfurt, Germany and US 2001 – 2009 SVP, Divisional Head (Automotive), Chief Financial Officer (Electronic Components) and other executive positions Hochschule St. Gallen (Switzerland) General Motors / Delphi Automotive Systems Germany and US 1995 – 2001 RHI AG Vienna, Austria 2010 – 2011
Various management and executive positions
Doctoral Studies University of San Francisco (USA) BA & MBA
Key investment highlights
Management team
With KA since: November 2017 Head of Corporate Quality Planning, MAHLE Group, Stuttgart, Germany, 2013-2017 Quality Manager, MAHLE Powertrain Ltd, Northampton, UK, 2005-2013 Education: Politecnico di Torino, Italy, Master Engineering CFO-Hay Group/Musashi Automotive, Bad Sobernheim, CFO-Neumayer Tekfor Holding Int., Offenburg, SVP- Global Purchasing, Knorr-Bremse, Munich, Germany, 2014- 2019
With KA since: January 2017 Germany, 2013–2016 Germany, 2007–2013 Education: University of Bonn, Master of Economics
With KA since: May 2019 VP Purchasing Projects & Operations APAC and GM, Volvo Trucks, Shanghai, China, 2009-2014 Several leadership function within Volvo 1998-2009 Education: Business Administration Courses, IHM Business School Chief Legal Counsel, Aibel, Oslo, Norway, 2003-2008
With KA since: March 2008 Corporate Legal Counsel, ABB, 1992-2002
Sales & Marketing Director, Couplings, Raufoss, 2016-2017 Sales & Marketing Manager, Couplings, Raufoss, 2008-2016
innovation management
With KA since: May 2006,
Senior Project Engineer, Husqvarna Group, Georgia, US, 2002 Freed-Hardeman University, BA-Physical Sciences
With KA since: November 2017
Germany, 2014-2017
International Management
With KA since: 1993
April 2016
Education: Stockholm School of Economics, MBA
Market & Project Coordinator, Raufoss Technology AS, 2004– 2007 Education: Halmstad University, BA- Product development and With KA since: January 2016 VP Americas, P&C, Novi, Michigan, USA; 2016-2017 Automotive Consultant, Cary, NC, Aug. 2012–Jan. 2017 President Buehler Motor US, 2007-2012 Various positions Delphi Automotive Systems 1986-2007 Education: University of Evansville, BS-Electrical Engineering
Engineering Manager - Briggs & Stratton, Tennessee, US 2005- 2006 Category Manager, Murray, Incorporated, Tennessee, US, 2002- 2005 Education: Auburn University, BA Mechanical Engineering, SVP HR and Head of Corporate Academy, FLG Group, Haiger, Head of Corporate HRM, Kardex AG, Zurich, Switzerland, 2010- 2014 Director HR Carl Zeiss AG, Oberkochen, Germany, 1998-2010 Education: University of Mittweida, Germany, Master in Vice President Of Sales, FTS, Gothenburg, Sweden, March 2013- Sales Director - FTS, Gothenburg, Sweden, Apr. 2008-June 2013 With KA since: January 2008, Global Director Information Technology, Teleflex Automotive, Detroit MI, US, 2006-2008, Global Business Process Analyst at Teleflex Corp, Limerick Pennsylvania, US, 2004-2006, Business Logistics and Operations Manager at Teleflex Electronics, Sarasota Florida, US, 2002-2004, Business Logistics Manager at Morse Hynautic, Sarasota Florida, US, 2001-2002 Plant Manager at Morse Marine, Clearwater Florida, US, 2000-2001 Education: SBA Business Accounting, Kent State Education: Ludwig-Maximilians Universität, Munich,
With KA since: March 2018 Interim Management, 2015-2017 Member of the management board, Knorr-Bremse, Systems Rail Vehicles GmbH (SfS), Munich, Germany, 2009-2015
EVP, Division Electronics, Hella KGaA, Lippstadt, Germany, 2005-2009 Director Vehicle Engineering, Daimler Benz AG,
International USA, 1989-2005 Master Crystallography and Mineralogy
Henning Jensen, CEO & President, Zürich, Switzerland
Lawyer, Wikborg Rein, Oslo, Norway, 1989-1992 Education: University of Oslo, Norway, Law School Several leadership functions within KA & Teleflex Incorporated (Merger with KA) The Kongsberg Automotive (KA) management is an experienced team with on average more than 20 years of industry experience and around 7 years of KA tenure.
University
| Overview | Selected KPIs | ||
|---|---|---|---|
| | Listed on Oslo Stock Exchange, parent company in Norway. | Revenue (2016A/2017A / 2018A / 2019A) |
Adjusted EBIT (2016A/2017A / 2018A / 2019A) |
| | 3 segments: Interior, Powertrain & Chassis, Specialty Products Interior: interior comfort systems and light duty cables |
€986m / €1,057m / €1,123m / €1,161m | €28 m / €50 m / €75 m / €71 m |
| | Powertrain & Chassis: gearshift systems and vehicle dynamics applications Specialty Products: air couplings, FTS and off-highway applications We estimate that approximately one out of five LD or HD vehicles contain our |
Revenue growth / Adj. EBIT growth (2016-2017A, 2017A-2018A & 2018A-2019A) |
Booked business / Revenue (avg. 2017A, 2018A, 2019A) |
| | products globally Diverse customer and end-market exposure with strong market positions |
7% / 78%, 6% / 49% & 3% / -5% | 1.4x |
| 2019A revenue breakdown | |||
|---|---|---|---|
| By geography | By customer | By end-market | By channel |
| South Other America 1% Asia 2% 13% Europe 46% North America 38% |
11% Other 8% 43% 6% 6% 6% 5% 3% 4% 4% 4% |
Heavy Equipment Other 3% 7% Power Sports 7% LDV 54% HDV 29% |
Heavy Equipment Other 3% 8% Power Sports 7% OE LDV Aftermarket 52% 5% Total OE OE HDV 77% 25% |
| Total revenue 2019A: €1,161 m |
| Interior | Powertrain & Chassis Products | Specialty Products | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Light Duty Cables | Interior Comfort Systems |
Transmission Control |
Vehicle Dynamics | Air Couplings | FTS | Off Highway | |||
| Revenue % 2019A |
5% | 21% | 36% | 4% | 9% | 11% | 14% | ||
| Market position |
Fragmented market with no dominant player |
#1 / #2 in integrated comfort systems |
Strong position in actuation systems | #1 / #2 (Europe) |
#1 in PTFE hoses |
Top 3 in pedals and electronic controls |
|||
| % LDV/HDV/ Non-Auto/ Aftermarket |
98% / 2% / 0% / 0% | 55% / 34% / 1% / 10% | 15% / 34% / 48% / 3% | ||||||
| Key customers |
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| Key competitors |
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| Kongsberg Automotive Value Proposition |
Broadest capabilities in the market Strong underlying addressable market growth driven by trend towards volume segments Strong customer relationships One-stop shop for systems |
premiumisation, comfort and convenience Trickling down from premium segment into Sophisticated cable design and high quality |
market moving from mechanical to modules, adaptable to OEM preferences Complete shifter systems |
Strong product development capabilities in a electronically controlled automated actuation Well positioned on truck and LV actuators High design flexibility through standardized Significant business booked in US and China Long design and manufacturing expertise |
customers |
Strong growth driven by innovative products and capturing market share: couplings (HDV, aftermarket), FTS (LDV, HDV, industrial), off highway (power sports, construction, agriculture) Growth potential in North America and Asia OEM advancement through better TCO Market leader in niche markets |
Deep vertical integration and full capability in-house, hereunder strong electronic engineering capabilities Bringing automotive scale and efficiency to industrial |
The growth in top-line and profitability is a result of the changes initiated in 2016
Revenues including HRAR *Excluding IFRS 16 effects
New business wins per quarter (Lifetime revenues)
New business wins LTM (Lifetime revenues)
High number of new business wins over the last 2 years ensure long term growth relative to the market
*Lifetime revenue assumptions are based on IHS and LMC production estimates at the time of the booking.
The automotive industry is in general considered by most large industrial nations as "too big to fail" and will receive significant support from governments. Such efforts, though, will mostly focus on the OEMs, not on the suppliers.
In Q1, 2020, Kongsberg Automotive (KA) saw revenues decline of more than 15% YoY to €262 million. This was driven by a combination of declines in China following the Chinese new year shutdown extension and the almost complete shutdown of Western OEMs in the last 10 days of March.
| As mentioned, we have modeled three scenarios: | |||
|---|---|---|---|
| Revenues | High case | Medium Case | Low case |
| 2019 (for reference) | €1,161 million | €1,161 million | €1,161 million |
| 2020 | € 914.6 million This assumes shutdowns as we currently experience through April with a quick ramp up in the first two weeks of May. |
€877.9 million This assumes shutdowns as we currently experience through April with a slow ramp up in May and the first week of June. |
€818.2 million This assumes shutdowns as we currently experience through May with a slow ramp up in June and the first week of July. |
| 2021 | €1,091 million This assumes 2021 revenue levels of around 6% less than in 2019. |
€1,068 million This assumes 2021 revenue levels of around 8% less than in 2019. |
€1,043 million This assumes 2021 revenue levels of around 10% less than in 2019. |
The below table illustrates the China & South Korea revenue developments during Q1:
| China & South Korea | ||
|---|---|---|
| Q1 | ||
| 24,796 | ||
| 23,579 | ||
| -5% |
| The below table illustrates the China & South Korea revenue developments during Q1: | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| China & South Korea | Q1 -5% |
24,796 23,579 |
|||||||||||||
| than what one might have expected. | |||||||||||||||
| The below table gives an overview of the assumed % declines in 2020 vs. 2019 under the "medium" and "low" scenarios grouped | |||||||||||||||
| by end markets we have assumed have unique behaviors: | |||||||||||||||
| Assumptions used for the Medium Scenario | |||||||||||||||
| 2020 vs 2019 revenue levels by month, quarter and FY | |||||||||||||||
| (Euro 000) China |
Apr -10% |
May -10% |
Jun -10% |
Jul -10% |
Aug -10% |
Sep -10% |
Oct -10% |
Nov -10% |
Dec -10% |
Q1 -5% |
Q2 -10% |
Q3 -10% |
Q4 -10% |
FY -9% |
|
| Off Highway* | -60% | -50% | -30% | -10% | -10% | -10% | -5% | -5% | -5% | -7% | -48% | -10% | -5% | -18% | |
| Industrial & Aftermarket* | -2% | -2% | -2% | 0% | 0% | 0% | 0% | 0% | 0% | -2% | -2% | 0% | 0% | -1% | |
| OEM AUT* | -88% | -80% | -48% | -19% | -17% | -12% | -10% | -10% | -10% | -18% | -72% | -16% | -10% | -30% | |
| -73% | -66% | -40% | -16% | -14% | -11% | -9% | -9% | -9% | -17% | -60% | -13% | -9% | -24% | ||
| KA Total | OEM Automotive accounts for approximately 77% of our business | ||||||||||||||
| * excludes China and South Korea revenues | |||||||||||||||
| Assumptions used for the Low Scenario | |||||||||||||||
| 2020 vs 2019 revenue levels by month, quarter and FY | |||||||||||||||
| (Euro 000) | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | Q1 | Q2 | Q3 | Q4 | FY | |
| China | -10% | -10% | -10% | -10% | -10% | -10% | -10% | -10% | -10% | -5% | -10% | -10% | -10% | -9% | |
| Off Highway* | -60% | -60% | -50% | -30% | -10% | -10% | -10% | -10% | -10% | -7% | -57% | -16% | -10% | -23% | |
| Industrial & Aftermarket* | -2% | -2% | -2% | -2% | 0% | 0% | 0% | 0% | 0% | -2% | -2% | -1% | 0% | -1% | |
| OEM AUT* KA Total |
-88% -73% |
-88% -74% |
-80% -65% |
-48% -39% |
-19% -16% |
-17% -15% |
-12% -11% |
-10% -9% |
-10% -9% |
-18% -17% |
-85% -71% |
-27% -22% |
-11% -10% |
-36% -30% |
|
| * excludes China and South Korea revenues | OEM Automotive accounts for approximately 77% of our business | ||||||||||||||
| The recovery speed for the non China and South Korea markets are assumed to be significantly slower than China and South Korea. We have assumed that the Chinese market will decline somewhat from what we assume was a catch-up effect in March |
| Corona Impact | |||||||
|---|---|---|---|---|---|---|---|
| Three Scenarios – | KPI impact for Kongsberg Automotive | ||||||
| The below table provides the expected liquidity needs from the various scenario models: | |||||||
| 2021 High | 2020 Medium | ||||||
| (Euro 000) | 2020 High | 2021 Medium | 2020 Low | 2021 Low | |||
| Revenues | 914,616 | 1,091,390 | 877,662 | 1,068,169 | 818,231 | 1,043,000 | |
| EBITDA | 15,774 | 90,098 | -3,072 | 81,721 | -26,812 | 72,642 | |
| EBITDA% | 1.7% | 8.3% | -0.4% | 7.7% | -3.3% | 7.0% | |
| Adj. EBIT | -36,613 | 34,476 | -55,459 | 26,099 | -79,198 | 17,020 | |
| Adj EBIT % | -4.0% | 3.2% | -6.3% | 2.4% | -9.7% | 1.6% | |
| Net Income | -76,845 | 9,629 | -95,691 | -421 | -119,430 | -9,501 | |
| EBITDA | 15,774 | 90,098 | -3,072 | 81,721 | -26,812 | 72,642 | |
| Δ Net Working Capital | 1,000 | 22,000 | 10,000 | 16,000 | 8,000 | 22,000 | |
| Capex | -63,000 | -58,000 | -63,000 | -58,000 | -61,000 | -55,000 | |
| Taxes & Interest | -25,000 | -25,000 | -25,000 | -25,000 | -25,000 | -25,000 | |
| Other non CF EBITDA items incl IFRS 16 | -28,000 | -20,000 | -28,000 | -20,000 | -28,000 | -20,000 | |
| Cash Flow (all in) | -99,226 | 9,098 | -109,072 | -5,279 | -132,812 | -5,358 | |
| -91,000 | -105,000 | -100,000 | -116,000 | -126,000 | -136,000 | ||
| Highest cumulative liquidity need in period | |||||||
| The liquidity need is calculated on the basis of | |||||||
| The RCF increase of €20 million in April 2020 and the RCF reduction of €20 million (due in October 2021) have been considered in the model above. |
not utilizing the RCF more than 40% thus not triggering covenant testing. |
| Corona Impact | |||
|---|---|---|---|
| Sources of funding | |||
| Potentially likely sources of Funds in € 000: | |||
| Capital raise | Gross amount: 110,000-120,000* | 108,000 | expenses deducted |
| Government loan Program (CH + smaller amounts from others) | 450 | potential for more | |
| Loan backed with Guarantor Assets | 17,250 | under negotiation | |
| Supply Chain financing net | 7,900 | under negotiation | |
| Factoring NA | 29,200 | under negotiation | |
| Factoring EMEA | 19,400 | following NA | |
| Total "likely" Funding sources | 182,200 | ||
| | Sources of funding does not include any proceeds from potential divestitures |
* Teleios, the 23% owner of Kongsberg Automotive, has decided to participate in the capital raise with a subscription of € 28m if the capital raise is €120 m.
We commit to operate in an economically, socially & environmentally responsible manner
We aim to develop our employees in an inclusive culture that respects diversity and exemplifies our values.
We advance initiatives which respect human rights and fair labor practices within our organization and throughout our supply chain. Supply-chain Management
We commit to minimizing the use of natural resources and hazardous materials in the development and manufacture of our products.
We require all employees to comply with applicable laws and observe the highest standards of business and personal ethics in the conduct of duties and responsibilities.
We implement practices that consider and support responsible and sustainable sourcing.
We contribute our time and financial support to the communities where we work and live.
For Kongsberg Automotive, Corporate Responsibility means to manage our operations so that we achieve an overall positive impact on society
Highlights and Key Figures
| Corona Impact Additional Sources of funding |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Additional sources of Funds (in Euro millions): | |||||||||
| Subsidies/loans from governments | 4.5-10.0 | (CH/NO/DE/US) | |||||||
| Loan backed with Guarantor Assets | 10.0-20.0 | ||||||||
| RCF increase | 0.0-10.0 | ||||||||
| Norwegian "Statens Obligasjonsfond" bonds |
50.0-70.0 | Expensive debt | |||||||
| Divestitures (1 or 2 non-core business units) | 30.0-120.0 | ||||||||
| Total additional funding sources | 94.5 – 230.0 |
Leadership team
| Glossary | ||
|---|---|---|
| Term AMT |
Meaning Automated Manual Transmission |
|
| EV | Electric Vehicle | |
| FTS | Fluid Transfer System | |
| HDV | Heavy Duty Vehicle | |
| HMI | Human Machine Interface | |
| HR / AR | Headrest / Armrest | |
| ICE | Internal Combustion Engine | |
| LDC | Light Duty Cable | |
| LDV | Light Duty Vehicle | |
| OE | Original Equipment | |
| OEM | Original Equipment Manufacturer | |
| PRND | Park Reverse Neutral Drive | |
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