STRATEC SE

Earnings Release • Nov 3, 2022

QUARTERLY STATEMENT 9M|2022

January 1 to September 30, 2022

STRATEC REPORTS RESULTS FOR FIRST NINE MONTHS OF 2022

• Sales in 9M/2022 -7.9% to € 207.7 million (9M/2021: € 225.4 million); constant currency: -11.7%
• Adjusted EBIT of € 38.1 million in 9M/2022 (9M/2021: € 48.7 million)
• Adjusted EBIT margin of 18.3% (9M/2021: 21.6%) at upper end of target corridor communicated for full year
• Significant product launch for molecular diagnostics market leader in third quarter of 2022 and well-stocked development pipeline
• Recently adjusted 2022 guidance confirmed: STRATEC expects constant-currency sales to decrease by around 5% to 8% and adjusted EBIT margin at around 16.5% to 18.5%

Dear Shareholders, Dear Partners and Friends of STRATEC,

The challenges and uncertainties resulting from global developments, in particular the war in Ukraine, as well as the energy crisis and ongoing highly tense supply chains, showed no sign of diminishing in the third quarter of 2022. Like many manufacturers, the STRATEC Group has been particularly affected by significant supply problems for electronics components. This means that, contrary to our original expectations, the third quarter witnessed a further increase in the delivery backlogs already reported for the first half of 2022. We also no longer expect to see any notable recovery in the procurement situation in the remaining months of the 2022 financial year. Taken together with the previous year's high pandemic-related basis of comparison, this led sales to decrease by 7.9% in the first nine months of 2022. Moreover, the difficult procurement situation recently obliged us to adjust our full-year sales guidance for 2022. Given our pleasing third-quarter performance, however, we were able to fully confirm our 2022 guidance for the adjusted EBIT margin.

In view of our young product portfolio, the fact that underlying demand mechanisms are not reliant on macroeconomic factors, and our strong development pipeline, we believe we are well positioned to meet future challenges as well. We recently further underlined our long-term growth prospects with new market launches. In the third quarter of 2022, we transferred a molecular diagnostics system, including highly complex consumables, to serial production on behalf of one of the largest players in our industry. The market launch by this partner is progressing very positively. This makes us confident that we will generate the expected sales contributions in the years ahead.

Alongside our already well-stocked development pipeline, we are holding numerous further promising negotiations concerning new development projects with existing and new partners. We see this as offering further confirmation that the trend within our industry towards automation solutions being outsourced to specialist companies such as STRATEC is continuing to develop very dynamically.

We are also pleased to have welcomed numerous new employees to STRATEC's team once again in the current year, and that despite the observable significant shortage of specialists. Overall, the STRATEC Group now has a total workforce of 1,449 employees (including employees from temporary employment agencies and trainees).

We are aware of the responsibility we bear towards our employees, customers, suppliers, and other stakeholders and will maintain our clear focus on a sustainable corporate strategy.

We would like to thank you, our shareholders, for the trust you have placed in us.

On behalf of the Board of Management STRATEC SE

Marcus Wolfinger Chief Executive Officer

Key figures1

€ 000s	9M 2022	9M 2021	Change	Q3 2022	Q3 2021	Change
Sales	207,654	225,420	-7.9%	70,461	69,655	+1.2%
EBITDA	48,095	57,665	-16.6%	20,254	17,391	+16.5%
EBITDA margin (%)	23.2	25.6	-240 bps	28.7	25.0	+370 bps
Adjusted EBIT	38,067	48,690	-21.8%	16,889	14,233	+18.7%
Adjusted EBIT margin (%)	18.3	21.6	-330 bps	24.0	20.4	+360 bps
Adjusted consolidated net income	29,549	40,563	-27.2%	12,870	12,016	+7.1%
Adjusted earnings per share (€)	2.44	3.35	-27.2%	1.06	0.99	+7.1%
Earnings per share (€)	2.04	3.00	-32.0%	1.00	0.92	+8.7%

bps = basis points

¹ To facilitate comparison, the figures have been adjusted to exclude amortization from acquisition-related purchase price allocations and a tax provision recognized for expected tax back payments (including interest payments). In the previous year, the figures were also adjusted to exclude an impairment recognized on a proprietary development project in the Diatron segment.

BUSINESS PERFORMANCE

The STRATEC Group generated consolidated sales of € 207.7 million in the first nine months of 2022 (9M/2021: € 225.4 million). This corresponds to a year-on-year reduction in sales by 7.9% (constant currency: -11.7%). In keeping with expectations, this decrease was chiefly due to the previous year's high pandemic-related basis of comparison (high additional demand for molecular diagnostics solutions). Furthermore, delivery backlogs again rose further in the third quarter of 2022 due to the ongoing highly tense situation in supply chains (especially for electronics components). Given these factors, the first nine months of 2022 witnessed a significant reduction in sales in the Systems business and, to a lesser extent, in sales with Service Parts and Consumables. By contrast, sales with Development and Services reached a new record level thanks to the high volume of development services recognized.

Adjusted EBIT amounted to € 38.1 million in the first nine months of 2022, as against € 48.7 million in the previous year. The adjusted EBIT margin stood at 18.3% (9M/2021: 21.6%). The margin thus fell 330 basis points short of the previous year's level but was nevertheless at the upper end of the target corridor communicated for the full year (16.5% to 18.5%). The lower level of profitability compared with the previous year, which is consistent with expectations, was due among other aspects to negative benefits of scale, a normalization in the product mix, and higher input costs. These factors were countered by a high volume of earnings contributions from development services recognized in the third quarter of 2022.

Given the lower level of operating earnings, adjusted consolidated net income for the first nine months of 2022 also decreased, in this case from € 40.6 million to € 29.5 million. Adjusted earnings per share (basic) amount to € 2.44 (9M/2021: € 3.35).

To facilitate comparison, the key earnings figures for the first nine months of 2022 have been adjusted to exclude amortization resulting from acquisition-related purchase price allocations and a provision recognized for expected tax back payments (including interest payments) for the period from 2014 to 2021 (tax expenses: € 2.4 million; interest expenses: € 0.2 million). A reconciliation of the adjusted figures with the figures reported in the consolidated income statement is provided below.

€ 000s	9M/2022	9M/2021
Adjusted EBIT	38,067	48,690
Adjustments • PPA amortization • Impairment	-2,627 0	-3,907 -1,049
EBIT	35,440	43,734

€ 000s	9M/2022	9M/2021
Adjusted consolidated net income	29,549	40,563
Adjusted earnings per share in € (basic)	2.44	3.35
Adjustments • PPA amortization • Impairment	-2,627 0	-3,907 -1,049
• Taxes on income • Interest expenses	-2,020 -183	741 0
Consolidated net income	24,719	36,348
Earnings per share in € (basic)	2.04	3.00

FINANCIAL GUIDANCE

With regard to the delivery backlogs that have arisen during the financial year, the ongoing highly tense situation in supply chains means that STRATEC no longer expects to be able to make up for these by the end of the year to the extent originally planned. On October 18, 2022, STRATEC's Board of Management therefore adjusted its full-year sales guidance for 2022 and published an ad-hoc announcement to this effect. Accordingly, STRATEC expects its constant-currency sales to decrease by around 5.0% to 8.0% in the 2022 financial year (nominal sales reduction of 1.0% to 4.0%). The adjusted EBIT margin is still forecast at an unchanged range of around 16.5% to 18.5%.

For 2022, STRATEC still expects total investments in property, plant and equipment and in intangible assets to correspond to 6.0% to 8.0% of sales (2021: 7.0%).

DEVELOPMENT IN PERSONNEL

Including personnel hired from temporary employment agencies and trainees, the STRATEC Group had a total of 1,449 employees as of September 30, 2022 (previous year: 1,406). STRATEC's team has thus continued to grow in the past twelve months (3.1% on previous year's reporting date). Given its well-stocked development pipeline and the associated high volume of development activity, STRATEC expects to have a growing need for additional highly qualified staff in future as well.

Number of employees

PROJECTS AND OTHER DEVELOPMENTS

Together with its partners, STRATEC reached significant milestones in numerous development projects and launched new products onto the market in the first nine months of 2022. One partner (a market leader in the field of in-vitro diagnostics) launched a latest-generation molecular diagnostics system solution onto the market in the third quarter of 2022. STRATEC developed both the instrumentation and the highly complex polymer-based consumables needed to perform tests for this partner and transferred these to serial production.

Based on a well-stocked development pipeline, STRATEC expects numerous new product launches for new and existing partners in the coming months and years as well. The pipeline is also benefiting from dynamic developments in terms of reaching agreements for additional development cooperations. This is indicative of the trend observable within the industry towards instrumentation solutions being outsourced to specialist partners such as STRATEC.

CONSOLIDATED BALANCE SHEET as of September 30, 2022

Assets

€ 000s	09.30.2022	12.31.2021
Non-current assets
Goodwill	36,238	37,996
Other intangible assets	50,927	51,370
Right-of-use assets	12,573	8,720
Property, plant and equipment	59,127	58,738
Non-current financial assets	3,525	3,574
Non-current contract assets	17,335	18,208
Deferred taxes	2,327	1,902
	182,052	180,508
Current assets
Inventories	114,036	88,768
Trade receivables	42,802	37,184
Current financial assets	6,701	1,539
Current other receivables and assets	9,900	9,077
Current contract assets	5,746	4,053
Income tax receivables	2,903	212
Cash	34,400	47,184
	216,488	188,017
Total assets	398,540	368,525

Shareholders' equity and debt

€ 000s	09.30.2022	12.31.2021
Shareholders' equity
Share capital	12,131	12,128
Capital reserve	33,378	32,217
Revenue reserves	178,321	165,121
Treasury stock	-35	-35
Other equity	-9,223	-3,672
	214,572	205,759
Non-current debt
Non-current financial liabilities	83,237	83,774
Non-current other liabilities	1,000	0
Non-current contract liabilities	21,798	19,164
Provisions for pensions	5,881	5,373
Deferred taxes	9,788	8,788
	121,704	117,099
Current debt
Current financial liabilities	20,955	15,853
Trade payables	14,746	11,401
Current other liabilities	7,300	6,332
Current contract liabilities	8,425	7,040
Provisions	1,695	1,637
Income tax liabilities	9,143	3,404
	62,264	45,667
Total shareholders' equity and debt	398,540	368,525

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period from January 1 to September 30, 2022

€ 000s	01.01. –09.30.2022	01.01.–09.30.2021
Sales	207,654	225,420
Cost of sales	-144,290	-154,414
Gross profit	63,364	71,006
Research and development expenses	-4,817	-5,701
Sales-related expenses	-8,424	-7,564
General administrative expenses	-13,340	-12,106
Other operating income and expenses	-1,343	-1,901
Earnings before interest and taxes (EBIT)	35,440	43,734
Net financial expenses	-1,566	-853
Earnings before taxes (EBT)	33,874	42,881
Taxes on income	-9,155	-6,533
Consolidated net income	24,719	36,348
Items that may be subsequently reclassified to profit or loss:
Currency translation differences from translation of foreign operations	-5,551	249
Other comprehensive income (OCI)	-5,551	249
Comprehensive income	19,168	36,597
Basic earnings per share in €	2.04	3.00
No. of shares used as basis (basic)	12,127,694	12,105,674
Diluted earnings per share in €	2.03	2.98
No. of shares used as basis (diluted)	12,174,458	12,180,897

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the period from July 1 to September 30, 2022

€ 000s	07.01.– 09.30.2022	07.01.– 09.30.2021
Sales	70,461	69,655
Cost of sales	-44,934	-47,776
Gross profit	25,527	21,879
Research and development expenses	-850	-1,709
Sales-related expenses	-3,383	-3,003
General administrative expenses	-4,413	-3,750
Other operating income and expenses	-775	-182
Earnings before interest and taxes (EBIT)	16,106	13,235
Net financial expenses	-325	-140
Earnings before taxes (EBT)	15,781	13,095
Taxes on income	-3,664	-1,908
Consolidated net income	12,117	11,187
Items that may be subsequently reclassified to profit or loss:
Currency translation differences from translation of foreign operations	-2,265	-974
Other comprehensive income (OCI)	-2,265	-974
Comprehensive income	9,852	10,213
Basic earnings per share in €	1.00	0.92
No. of shares used as basis (basic)	12,129,596	12,113,922
Diluted earnings per share in €	1.00	0.92
No. of shares used as basis (diluted)	12,163,971	12,186,949

CONSOLIDATED STATEMENT OF CASH FLOWS for the period from January 1 to September 30, 2022

€ 000s	01.01.– 09.30.2022	01.01.– 09.30.2021
I. Operations
Consolidated net income (after taxes)	24,719	36,348
Depreciation and amortization	12,655	13,931
Current income tax expenses	8,581	5,847
Income taxes paid less income taxes received	-5,560	-3,796
Financial income	-218	-107
Financial expenses	1,441	1,042
Interest paid	-1,105	-977
Interest received	17	49
Other non-cash expenses	6,749	3,367
Other non-cash income	-3,239	-1,112
Change in net pension provisions through profit or loss	209	250
Change in deferred taxes through profit or loss	574	686
Profit (-) / loss (+) on disposals of non-current assets	1	2
Increase (-) / decrease (+) in inventories, trade receivables and other assets	-33,691	-26,798
Increase (+) / decrease (-) in trade payables and other liabilities	11,152	21,791
Cash flow from operating activities	22,285	50,523
II. Investments
Incoming payments from disposals of non-current assets • Property, plant and equipment • Financial assets	17 25	37 25
Outgoing payments for investments in non-current assets • Intangible assets • Property, plant and equipment • Financial assets	-6,436 -5,709 -4,818	-7,492 -7,913 0
Cash flow from investing activities	-16,921	-15,343
III. Financing
Incoming funds from taking up of financial liabilities	44,845	10,000
Outgoing payments for repayment of financial liabilities	-50,513	-26,884
Incoming payments from issue of shares for employee stock option programs	249	820
Dividend payments	-11,519	-10,888
Cash flow from financing activities	-16,938	-26,952
IV. Cash-effective change in cash (net balance I – III)	-11,574	8,228
Cash at start of period	47,184	37,561
Impact of exchange rate movements	-1,210	-151
Cash at end of period	34,400	45,638

FINANCIAL CALENDAR

Subject to amendment.

Quarterly statements and half-year financial reports are neither audited nor subject to an audit review by the group auditor Ebner Stolz GmbH & Co. KG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Stuttgart.

ABOUT STRATEC

STRATEC SE (www.stratec.com) designs and manufactures fully automated analyzer systems for its partners in the fields of clinical diagnostics and life siences. Furthermore, the company offers complex consumables for diagnostic and medical applications. For its analyzer systems and consumables, STRATEC covers the entire value chain – from development to design and production through to quality assurance.

The partners market the systems, software and consumables, in general together with their own reagents, as system solutions to laboratories, blood banks and research institutes around the world. STRATEC develops its products on the basis of patented technologies.

Shares in the company (ISIN: DE000STRA555) are traded in the Prime Standard segment of the Frankfurt Stock Exchange and are listed in the SDAX select index of the German Stock Exchange.

IMPRINT AND CONTACT

Published by

STRATEC SE Gewerbestr. 37 75217 Birkenfeld Germany Phone: +49 7082 7916-0 info@stratec.com www.stratec.com

Head of Investor Relations, Sustainability & Corporate Communications Jan Keppeler Phone: +49 7082 7916-6515 j.keppeler@stratec.com

Notice

Forward-looking statements involve risks: This quarterly statement contains various statements concerning the future performance of STRATEC. These statements are based on both assumptions and estimates. Although we are convinced that these forward-looking statements are realistic, we can provide no guarantee of this. This is because our assumptions involve risks and uncertainties which could result in a substantial divergence between actual results and those expected. It is not planned to update these forward-looking statements.

This quarterly statement contains various disclosures that from an economic point of view are not required by the relevant accounting standards. These disclosures should be regarded as a supplement, rather than a substitute for the IFRS disclosures. Apparent discrepancies may arise throughout this quarterly statement on account of mathematical rounding up or down in the course of addition.

In order to improve readability, all references are to the masculine form. This formulation explicitly includes all gender identities.

This quarterly statement is available in both German and English. Both versions can be downloaded from the company's website at www.stratec.com. In the event of any discrepancies between the two, the German report is the defi nitive version.