Kontron AG (formerly S&T AG)

Investor Presentation • Mar 29, 2023

Explore the Kontron Group

We are a fast-moving multinational technology leader.

Earnings Call FY 2022

March 29, 2023

High- and Lowlights FY 2022

Transformation update

Highlights

• › Divestment of IT Services
  • › IoT focus + clean legal structure
  • › EUR 232m net profit
• › EUR 438m of cash Dec 22 + EUR 138m of cash payable by Vinci
• › Strong backlog of ~EUR 1.45bn and 2022 book-to-bill ratio of 1.28

Lowlights

• › Chip shortage: EUR 96m of delayed but not lost orders – reduced from Q3 at EUR 124m
• › EUR 120m Cash drain until Q3 – disruptive supply chain but EUR 100m reversed in Q4
• › Russian war: 2022 business in region already reduced by

KPI's FY2022: Continued Operating Result Adjusted

Healthy start into new area with positive momentum in CO

KPI's FY2022: Reported

Includes extraordinary effects for "Focus" & "New Kontron"

4

Kontron Group Balance Sheet

Equity and liquidity very strong

Mio EUR	31 12 2022	31 12 2021		31 12 2022	31 12 2021
NON-CURRENT ASSETS	415 1 ,	519 0 ,	CAPITAL AND RESERVES	635 7 ,	423 3 ,
Fixed Assets	379 0 ,	478 8 ,	Equity	442 8 ,	423 3 ,
of , plant and equipment Property as	95 6 ,	132 5 ,	of shares Treasury as	0 0 ,	-46 8 ,
of Goodwill as	189 4 ,	208 3 ,	NON-CURRENT LIABILITIES	268 7 ,	348 2 ,
Other Assets	36 1 ,	40 2 ,	loans and borrowings Long-term	193 8 ,	238 4 ,
CURRENT ASSETS	1029 8 ,	833 2 ,	Other Liabilities Non-Current	74 9 ,	109 8 ,
Inventories	192 6 ,	187 3 ,	CURRENT LIABILITIES	587 7 ,	580 7 ,
Trade receivables	148 1 ,	214 1 ,	Trade payables	226 3 ,	270 0 ,
from Contract Assets Customers	54 2 ,	51 3 ,	Liabilities from Contract Customers	71 0 ,	85 0 ,
Cash and cash equivalents	437 8 ,	296 5 ,	Short-term loans and borrowings	125 7 ,	72 3 ,
Other receivables and prepayments	190 8 ,	83 9 ,	Other Liabilities Current	159 9 ,	153 4 ,
classified held for sales assets as	6 3 ,	0 0 ,	liabilities classified held for sale as	4 8 ,
Total Assets	1445 0 ,	1352 2 ,	Total Liabilities & Equity	1445 0 ,	1352 1 ,

Equity Ratio	0% 44 ,	31 3% ,
Cash/(Net Debt)* Total Net	118 3 ,	(14)
Working Capital excluding 15** IFRS	114 4 ,	149 9 ,

Very strong cash position: EUR 438m cash and EUR 138m purchasing price Vinci yet to be paid (~EUR 80m in Q1/2023)

Continued Operations inventory reduced in Q4/2022 by ~EUR 50m → Strong operating Cash Flow of EUR 109.3m in Q4/2022

Results FY 2022 Continued Operation

Details to adjustments

New Kontron		Reported Result	Extraordinary Effects		Adj. Operative Result		Comment
In EUR m	2021	2022	2021	2022	2021	2022	Extraordinary Effects
Revenues	1,003	1,096			1,003	1,096
Gross Margin	358	370		24	358	394	Obsolete inventory: in total EUR 20m dedicated to old business/Focus; EUR 4m dedicated to Russia
Other Income	36	43			36	43
Staff Costs	-238	-259			-238	-259
Other Costs	-67	-84		15	-67	-68	EUR 7m Russian penalties, A/R; EUR 7m Costs based on "New" Kontron; EUR 1m other side effects
EBITDA	90	70		40	90	110
D&A	-50	-72		26	-50	-46	EUR 26m intangibles dedicated to old business/Russia (noncash)
Financial Result	-8	-9		3	-8	-6	Divestment Belarus, Russia, Ukraine
Taxes	-2	-2		-1	-2	-3	Def. Taxes DTL on intangibles written-off (noncash)
Minorities	-1	1			-1	1
Discontinued Operations	19	245
Net Result	48	233		145	30	56

7

Additional Disclosures

FY 2022

In TEUR	OP. CASH FLOW ADJUSTMENTS
44,443	STATED OP. CASH FLOW
-4,903	Increase in A/R factored in 2022
39,540	ADJUSTED OP. CASH FLOW

ORGANIC GROWTH In TEUR	FY21	FY22
Stated revenues	1,002,935	1,096,095
Divestment (RUS/UA/BY/MD)		44,803
ORGANIC GROWTH		13.8%

GEOGRAPHICAL SPLIT FY22 (In %)	Revenue	EBITDA
Europe	77.1%	95.4%
North America	11.8%	4.4%
Asia	6.7%	8.1%
RUS/UA/BY/MD	4.5%	-7.9%

Before and after IT divestment

	S&T AG 2021	New Kontron 2023	Comment
Revenues (EUR m)	1,342	~1,200	Reflects divestment of EUR 387m in IT service and EUR 40m in Russia
Order backlog	1,334 (1160 CO)	1,460 (Dec-22)	IT divestment already replaced by new IoT orders
Design win pipeline	3,367 (Dec-21)	3,407 (Dec-22)	Strong IoT design win pipeline
Gross margin (%)	36%	> 40%	Change in product mix, will increase margins starting 2023
Net profit (EUR m)	48.3 (3.6%)	> 66 (5,5%)	Will increase in 2023 despite divested IT services
Employees (#)	6,206	4,475	Decline driven by project "Focus" and departure from Russia
Entities (as of operative)	78 (78)	48 (32)	Much less complex structure with no relevant minorities
Exposure CIS region	7% CIS	3%	Not material anymore, further reduction in 2023
Equity ratio	32%	44%
Cash & cash equivalents (EUR m)	296	438 + 138 (Dec-22)	Important in current interest rate increases
Peer group
Strategy	The new Kontron is focused on global IoT technology leadership, higher margins (7% net), but not IT and East Europe

7 divisions in 3 segments

Industrial Telecom Services North America Asia Software Transport Europe Global Software + Solutions Revenue* FC 23 € 810m Revenue* FC 23 € 260m Revenue* FC 23 € 230m Targets EBITDA** 11% GM 40% Growth p.a.: 12% Targets EBITDA** 8% GM 30% Growth p.a.: 12% Targets EBITDA** 15% GM 60% Growth p.a.: 12%

Bigger acquisitions planned

M&A is a core competence of Kontron M&A Volume

• › Half of growth by M&A (10% /year), half organic
• › Target: Restructuring situations at no profit = low prices
• › High synergies with Kontron = achieve >10% EBITDA within 2 years

Kontron M&A pipeline

• › EUR 700m liquidity → go for major acquisitions
• › Pipeline of 4 gamechangers > EUR 1,100m rev. and several others
• › First transaction in H1/2023 likely

M&A targets

› SW/solutions segment and go global (USA, China)

Divestments 2022

› Russia, Belarus, Ukraine, IT Services/Focus

(in EUR m)

First transaction H1/2023, Kontron intends to acquire min. EUR 250m in 2023 and another EUR 250m in 2024 (chance > 50%)

Backlog and Design wins Continued Operations

(in EUR bn)		Backlog	Design wins			Top 10 Customers 2022	Country	Volume EUR
4						Czech railway provider	CZ	24.7 Mio.
3,5					3,41	Multinational telecom provider	UK	16.5 Mio.
			2,97			Medical respiratory machines	GER	16.5 Mio.
3						UK railway provider	UK	13.1 Mio.
2,5	2,35					Global leader in medical equipment	USA	11.8 Mio.
2						Chemical glass company	USA	10.2 Mio.
1,5				1,46		French railway provider	FR	10.1 Mio.
		1,16				Automation manufacturer	GER	8.0 Mio.
1 0,80						Machine manufacturer	GER	8.0 Mio.
0,5						Medical manufacturer	GER	7.1 Mio.

Top 10 customers account for 12% of revenues > 3,000 customers in total

Cash Usage

Status liquidity Dec. 2022 › EUR 437.8m cash on hand › EUR 138m ST receivables from Vinci (80m in Q1) › EUR 120m available lines › EUR 125.7m ST debt Liquidity amounts to EUR 700m					Cash usage for acquisitions and operations › Reduce factoring ST/debt by min. EUR 50m › Saves EUR 2m interest p.a. › Spend min. EUR 300m in acquisitions
Cash generation					Shareholder participation
Operat. CF	2022	2022	2021	2021	› EUR 63m: Propose dividend of 1EUR/share in May
EUR m	Total	Cont. Op.	Total	Cont. Op.	› Rule: Spend 50% of net earnings in Dividend or SBB
Total	44.4	58.8	95.3	64.5	› 2023: SBB EUR 10m started, increase depending on share price
		We expect operat. CF of min. EUR 70m in 2023			2023 spend min. EUR 75m, 2024 est. min. EUR 35m

Strategies

Short-term 2023

• › Rebrand & Reposition: "Kontron" as an IoT leader
• › 10-10-10 company: 10% growth, 10% EBIT, 10% op CF
• › More efficiency
  • › Organization: low overhead, slim HQ, less companies
  • › Focus on high margin biz further reduce noncore biz
• › Profit improvement measures
  • › Reduce offices + travelling (home office, virtual meetings)
  • › CRP (complete 100m cash recovery 60m done)
  • › Profit and tax optimization of new structure
• › ESG & sustainable "green technologies"

Mid-term "Agenda 2025"

• › Segment "Global"
  • › Sales channel for Europe products with strong local engineering
  • › 30% revenues outside Europe in CN/USA
• › Segment "Software & Solutions"
  • › 20% Organic and acquisitional growth
  • › Benefit from strong engineering backbone in Europe
  • › Main segment by 2026
• › Segment "Europe"
  • › Basic technology for SW/Solutions
• › IoT as a service
  • › Lease solutions rather than sell products = higher margins

Products and Technologies

Basic technologies

› 5G

• › Connectivity is key for IoT → 5G will be main media
• › TSN: real time for 5G
  • → key know how of Kontron
• › Communication systems
• › susietec®
  • › Programming language to connect devices
  • › Strong in industrial → expand
• › Ecosystem
  • › Cooperating with Intel, Microsoft, FoxConn, Mediatek (5G)
• › Build up OT services to offer SLAs (run IoT grids)

Vertical technologies

• › Smart factories
• › Smart trains and airplanes
• › Intelligent traffic control
• › Smart energy
• › Set and participate in standards
  • › ETCS, IATA, ITAR, Med, PICMG

Guidance 2023 increased by 10% to EUR 66m

Guidance 2023 & Outlook 2025
	2023E	2025E
Revenue	EUR 1,200m	EUR 2,000m
EBITDA	11%	13%
Net Profit	66m	140m

Vision 2030: Transformation to IoTaaS / SLAs will boost Net Earnings close to 10%

Summary

Achievements 2022

• › Divestment of IT Services = Focus on IIoT solutions
• › Strong order intake EUR 1,396m (book-bill 1.28)
• › EUR 109m of operat. CF in Q4
• › EUR 55m of net income vs. EUR 48m (2021- incl. sold biz)

Targets

› Guidance 2023:

• › Revenue ~EUR 1,200m
• › Increased guidance net income EUR 66m
• › EUR 2,000m IIoT revenues at > 13% EBITDA in 2025
• › Reduce overdue shipments of EUR 96m in 2023
• › Dividend of EUR 1/share to be paid out in 2023

Risks

• › Chip shortage (improvement on the way)
• › War in Ukraine (measures taken)
• › Address right technology trends

Opportunities

• › Sufficient cash for "game changer" acquisitions
• › Technology leader to grow in America + China
• › One of only a handful of European Technology players
• › 5G connectivity for machines

Explore the Kontron Group

We are a fast-moving multinational technology leader.

Q&A Session - FY 2022 Earnings Call

March 29, 2023

Disclaimer

This document includes 'forward-looking statements'. Forward-looking statements are all statements, which do not describe facts of the past, but containing the words "believe", "estimate", "expect", "anticipate", "assume", "plan", "intend", "could", and words of similar meaning. These forward-looking statements are subject to inherent risks and uncertainties since they relate to future events and are based on current assumptions and estimates of Kontron AG, which might not occur at all or occur not as assumed. They therefore do not constitute a guarantee for the occurrence of future results or performances of Kontron AG. The actual financial position and the actual results of Kontron AG, as well as the overall economic development and the regulatory environment may differ materially from the expectations, which are assumed explicitly or implicitly in the forward-looking statements and do not comply to them. Analysts and investors, and any other person or entity that may need to take decisions or prepare or release opinions about the shares / securities issued by Kontron AG are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date of this document. Past performance cannot be relied upon as a guide to future performance.

Except as required by applicable law, Kontron AG undertakes no obligation to revise these forward-looking statements to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Kontron's business or strategy or to reflect the occurrence of unanticipated events. The financial information and opinions contained in this document are unaudited and are subject to change without notice. This document contains summarized information or information that has not been audited. In this sense, this information is subject to, and must be read in conjunction with, all other publicly available information, including if it is necessary, any fuller disclosure document published by Kontron AG. None of the Company, its subsidiaries or affiliates or by any of its officers, directors, employees, advisors, representatives or agents shall be liable whatsoever for any loss however arising, directly or indirectly, from any use of this document its content or otherwise arising in connection with this document.

This document or any of the information contained herein do not constitute, form part of or shall be construed as an offer or invitation to purchase, subscribe, sale or exchange, nor a request for an offer of purchase, subscription, sale or exchange of shares / securities of Kontron AG, or any advice or recommendation with respect to such shares / securities. This document or a part of it shall not form the basis of or relied upon in connection with any contract or commitment whatsoever.

This document does not constitute an offer to purchase securities in the United States, Canada, Australia, South Africa and Japan. Securities, including the bond of Kontron AG may not be sold or offered for sale within the United States or to or for the account of / in favor of US citizens (as defined in Regulation S under the U.S. Securities Act of 1933 in the current version (the "Securities Act") unless they are registered under the regulations of the Securities Act or unless they are subject to an exemption from registration. Neither Kontron AG nor any other person intend to register the offer or a part thereof in the United States or to make a public offer of the securities in the United States.