Kontron AG (formerly S&T AG)

Investor Presentation • Nov 3, 2022

Q3 EARNINGS CALL

3November 2022

HIGH- AND LOWLIGHTS Q3-2022

HIGHLIGHTS LOWLIGHTS

• › Q3-2022:
• › Plus 10.6% in Revenues vs. Q3-2021 (YTD +9.6%)
• › Plus 6.7% in adj. Net Income vs. Q3-2021 (YTD +14.5%)
• › 7 th quarter in a row of strong order entry
• › EUR 319m order entry in Q3-2022 vs EUR 262m shipments

• › SPA signed with Vinci to sell IT Services for appr. EUR 400m (est.)

• › Chip shortage impact:

• › EUR 124m of not delivered orders as of 30 September 2022
• › Operating CF burdened by EUR 74m increased inventory, but Operating CF in Q3 positive again (turning point)
• › North America increased in revenues still weak in margin
• › Impacts of Russia YTD 2023
• › EUR 24m (-43%) reduction in Revenues

KPI Q3-2022 GOOD OVERALL PERFORMANCE

Improvement in all parameters, op. cash flow in Q3 positive (turnaround)

*Adjusted EPS/share

KPI 1-9 2022 GOOD OVERALL PERFORMANCE

Double digit growth in revenues and profit – H1 cash flow burdened by chip crisis but Q3 positive

*Adjusted EPS/share

KONTRON GROUP BALANCE SHEET

Mio EUR	30 09 2022	31 12 2021		30 09 2022	31 12 2021
NON-CURRENT ASSETS	447 4 ,	519 0 ,	CAPITAL AND RESERVES	442 8 ,	423 3 ,
Fixed Assets	409 9 ,	478 8 ,	Equity	442 8 ,	423 3 ,
as of , plant and Property equipment	100 6 ,	132 5 ,	as of shares Treasury	0 0 ,	-46 8 ,
as of Goodwill	181 4 ,	208 3 ,	NON-CURRENT LIABILITIES	268 7 ,	348 2 ,
Other Assets	37 5 ,	40 2 ,	loans and borrowings Long-term	196 2 ,	238 4 ,
CURRENT ASSETS	851 7 ,	833 2 ,	Other Liabilities Non-Current	72 5 ,	109 8 ,
Inventories	242 7 ,	187 3 ,	CURRENT LIABILITIES	587 7 ,	580 7 ,
Trade receivables	164 5 ,	232 5 ,	Trade payables	196 2 ,	270 0 ,
from Contract Assets Customers	30 9 ,	32 8 ,	Liabilities from Contract Customers	67 2 ,	85 0 ,
Cash and cash equivalents	118 7 ,	296 5 ,	Short-term loans and borrowings	117 0 ,	72 3 ,
Other receivables and prepayments	75 4 ,	83 9 ,	Other Liabilities Current	97 6 ,	153 4 ,
classified held for sales assets as	219 5 ,	0 0 ,	liabilities classified held for sale as	109 7 ,
Total Assets	1 299 2 ,	1 352 1 ,	Total Liabilities & Equity	1 299 2 ,	1 352 1 ,

Mio EUR	30 09 2022	31 12 2021		30 09 2022	31 12 2021
NON-CURRENT ASSETS	447 4 ,	519 0 ,	CAPITAL AND RESERVES	442 8 ,	423 3 ,
Fixed Assets	409 9 ,	478 8 ,	Equity	442 8 ,	423 3 ,
as of , plant and Property equipment	100 6 ,	132 5 ,	as of shares Treasury	0 0 ,	-46 8 ,
as of Goodwill	181 4 ,	208 3 ,	NON-CURRENT LIABILITIES	268 7 ,	348 2 ,
Other Assets	37 5 ,	40 2 ,	loans and borrowings Long-term	196 2 ,	238 4 ,
CURRENT ASSETS	851 7 ,	833 2 ,	Other Liabilities Non-Current	72 5 ,	109 8 ,
Inventories	242 7 ,	187 3 ,	CURRENT LIABILITIES	587 7 ,	580 7 ,
Trade receivables	164 5 ,	232 5 ,	Trade payables	196 2 ,	270 0 ,
from Contract Assets Customers	30 9 ,	32 8 ,	Liabilities from Contract Customers	67 2 ,	85 0 ,
Cash and cash equivalents	118 7 ,	296 5 ,	Short-term loans and borrowings	117 0 ,	72 3 ,
Other receivables and prepayments	Other Liabilities 75 4 83 9 Current , ,		97 6 ,	153 4 ,
classified held for sales assets as	219 5 ,	0 0 ,	liabilities classified held for sale as	109 7 ,
Total Assets	1 299 2 ,	1 352 1 ,	Total Liabilities & Equity	1 299 2 ,	1 352 1 ,
			Equity Ratio	1% 34 ,	3% 31 ,
Total Cash (Cont Operations) Disc +	162 3 ,	296 5 ,	Cash/Net Total Debt* Net	-157 2 ,	-14 2 ,
			Working Capital excluding 15** IFRS	251 4 ,	149 9 ,

EUR 74m Inventory (thereof 16.5m prepayments) built up to cover chip shortage | Equity Ratio improved

* Definition Net Cash: Cash and cash equivalents less non-current and current financing liabilities (excl. liabilities from leasing according to IFRS 16)

** Definition Working Capital: Inventories plus trade receivables less trade payables (excl. IFRS 15 contract assets and liabilities)

STATUS FOCUS: DIVESTMENT OF IT SERVICES

10August 2022 Kontron signed SPA to sell most of its IT service businesses

• › Buyer Vinci, a listed French construction/energy group (revenues: EUR 43.2bn with 218,000 employees)
• › IT Services sold: DE, CH, PL, HR, CZ, SK, RS, MD, MK, ALB, CG
• › Kontron will keep IT Services in AT, HU, RO

Purchase price of ~ EUR 400m expected upon Closing of transaction

› Thereof, EUR 260m at Closing (Dec), EUR 80m after audit (Mar/Apr 23), EUR 60m in escrow (EUR 40m/20m until Dec 23/Jun 24)

Closing is on track and conditions precedent almost completed

• › Closing expected for end of Dec 2022
• › Cash payment in 2022 -> already on 2022 balance sheet, no more discontinued operations in 2023
• › Competition authority approvals process on track (RS, MK done; EU, MN, ALB in progress)
• › All other closing conditions completed (except for 1 internal share transfer by Kontron)

No showstoppers for Closing – payment/cash expected end of December 2022

KPI – BEFORE AND AFTER FOCUS

in EUR m	S&T AG 2021	The new Kontron 2023*	Comment
Company name	S&T AG	Kontron AG	Changed at AGM May 2022, S&T related to IT biz, Kontron to IoT products
Revenues	1,342	> 1,200	2023 after divesting EUR 395m IT service, 40m Russia
GM in %	36%	> 40%	Change in product mix, will further increase margin after 2023
Net profit	48.3 (3.6%)	> 60 (5%)	Will increase 2023 vs 2021 despite divested IT services
Employees	6,206 (Dec. 21)	4,343	Minus 1,640 "Focus", minus 380 Russia, before M&A
Revenue / FTE	216 TEUR	276 TEUR
Equity ratio	32%	> 45%	Increased cash and less total assets
Entities (as of operative)	80	58 (32)	Less complex structure
Exposure CIS region	7% CIS	< 3%	Not material anymore, East European activities within EU drastically reduced

ADDITIONAL DISCLOSURE IN Q3

IN TEUR	EBIT ADJUSTMENTS

8,474	STATED EBIT
-2374	Side cost divestment IT services
-155	FX losses

-782		PPVs paid due to chip crisis and not recovered
------	--	------------------------------------------------	--

• -1,544 Losses leaving Russia
• -4,855 ONE TIME PROFIT EFFECTS Adjusted EBIT 13,329

CONTINUED and DISCONTINUED OPERATION
REVENUES	IN TEUR	CASH	IN TEUR	INVENTORY	IN TEUR
Q2 Total	331,012	Jun Total	167,608	Jun Total	246,162
Q3 Cont.	262,382	Sep Cont.	118,717	Sep Cont.	242,724
Q3 Discon.	97,604	Sep Discon.	43,581	Sep Discon.	18,141
Q3 Total	359,986	Sep Total	162,298	Sep Total	260,865
				Jun prepaid	13,923
				Sep prepaid	16,479

IN TEUR	OP. CASH FLOW ADJUSTMENTS
6,144	STATED OP. CASH FLOW
7,543	Increase in A/R factored from 30.6.2022 to 30.09.2022
-601	ADJUSTED OP. CASH FLOW

ORGANIC GROWTH in TEUR	Q3/21	Q3/22
Stated revenues	237,351	262,382
Divestment (Russia, MD)		11,212
FX adjustment		-10,027
ORGANIC GROWTH		11.1%

GEOGRAPHICAL SPLIT Q3/22
(in %)	Revenue	EBITDA
Europe	76.5%	89.5%
North America	13.3%	4.2%
Asia	7.0%	10.4%
RUS/BY/MD	3.2%	-4.1%

NEW BUSINESS MODEL (2023) – 8 DIVISIONS IN 3 SEGMENTS

EUROPE (NEW SEGMENT STARTS 2023)

" Europe" growth driven by industrial Division and strong order intake, 5G connectivity in early phase

• 3 rd Party revenue
• ** EBITDA before charged management fees from Kontron AG
• *** HQ-fee adjusted EBITDA in % of external revenue

GLOBAL (NEW SEGMENT STARTS 2023)

Push regional expansion to USA + CN to utilize R&D

• * 3 rd Party revenue
• ** EBITDA before charged management fees from Kontron AG
• *** HQ-fee adjusted EBITDA in % of external revenue

SOFTWARE AND SOLUTIONS (NEW SEGMENT STARTS 2023)

Hi speed trains booming, Software licenses pull even more revenues from Industrial IOT Division

• * 3 rd Party revenue
• ** EBITDA before charged management fees from Kontron AG
• *** HQ-fee adjusted EBITDA in % of external revenue

M&A PIPELINE

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

• › Based on est. EUR 400m Focus proceeds game changer acquisitions
• › Pipeline of 4 companies > EUR 1,000m revenues
• › First transaction in H1/2023
• › Regional focus: Go global (USA, China) and European union

Divestments 2022

› Russia, Belarus, Focus

First transaction H1/2023, Kontron intends to acquire min. EUR 250m in 2023 and 500m in 2023/2024

FORECAST "THE NEW KONTRON"

GUIDANCE 2022	continued	disc. operations
Revenue	EUR 1,100m	EUR 395m
EBITDA	EUR 111m	EUR 39m
Net profit	EUR 56m

AGENDA 2025	S&T 2021act	New Kontron 2022fc	New Kontron 2025p
Revenue	EUR 1,342m	EUR 1,100m	EUR 2,000m
EBITDA	EUR 126.3m	EUR 110m*	EUR 260m
Net Profit	EUR 48.3m	EUR 56m*	EUR 120m
* operative, no divestment profits incl.

Vision 2030 – transformation to IoT aaS/SLAs will boost EBITDA above 15%

CHALLENGES IN 2022

• › Chip shortage impact:
• › EUR 124m of not delivered delayed but not lost orders
• › Business Impact: Industrial EUR 67m, America EUR 40m, ODM EUR 12m
• › We increased inventory by EUR 74m in 2022 for
• › EUR 16.5m prepayments on allocated chips
• › emergency stock and not shippable semi-finished products
• › Price increases cover most related costs = low profit impact
• › Outlook: we will tackle these problems in H1/2023, Inventory will be back to normal end of 2023

2020	We decided to stop investments in Russia and CIS countries
Q2/2022	We divested entities in Russia
Q3/2022	We will divest Belarus and Moldova
FY 2022	14 CIS companies reduced to 2 Russian Engineers transferred to Europe or replaced in Europe
CIS Impacts	⁻ Russian Revenues reduced by EUR 40m (est.) – Q3 11m ⁻ Russian profit reduced by EUR 6m (est.) – Q3 1.5m loss

SUMMARY

ACHIEVEMENTS

• › Organic Revenue total growth of 11.1% in 2022
• › Strong order intake EUR 991m vs 755 shipped (book-bill 1.22)
• › Strong Improvement Net Income (+14.3%)
• › Signing Divestment of IT Services

TARGETS

• › Guidance 2022:
• › Revenue > EUR 1,100m
• › Net income EUR 56m
• › EUR 2,000m IIoT Revenues at > 13% EBITDA in 2025
• › Reduce overdue shipments of EUR 124m

RISKS

• › Chip shortage
• › War in Ukraine (limited risk for Kontron)
• › Address right technology trends

OPPORTUNITIES

• › Sufficient cash for "game changer" acquisitions
• › Technology leader to grow in America + China
• › 5G connectivity for machines

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.

Kontron AG

Industriezeile 35

A-4020 Linz

www.kontron.ag

IR Contact:

ir@kontron.com

+43 (1) 80191 - 1196