Kitron — Earnings Release 2020

Feb 11, 2021

Full year and Q4 results 2020

1

Peter Nilsson, CEO Cathrin Nylander, CFO 2021-02-11

Strong finish to an exceptional year

NOK Million	Q4 2020 vs Q4 2019
Revenue 991.6		11.6 %
EBIT 75.7		39.6 %
Order Backlog 2 005.5		6.5 %
Operating cash flow 132.2		36.0 %
Net working capital 1 063.1		12.9 %

NOK Million		2020 vs 2019
Revenue 3 963.9		20.1 %
EBIT 312.6		55.1 %
Order Backlog 2 005.5		6.5 %
Operating cash flow 237.0		21.4 %
Net working capital 1 063.1		12.9 %

Highlights and important events

• Revenue growth 12 % in Q4: Strong growth in Industry. Medical devices volumes normalized.
• EBIT margin 7.6% (6.1%): Strong over all performance in Q4
• EPS NOK 0.26 (0.19) +36% Full year 2020 EPS: 1.19 (0.74) +61%
• Order backlog growth 6%: strong growth in Industry and Energy/Telecoms
• Working capital: improved capital efficiency
• Proposed dividend NOK 0.70 per share, to be paid in equal tranches in May and October
• Capital Markets Day 17 March ( webcast)

Important agreements in the fourth quarter Major new orders:

KONGSBERG awarded orders to Kitron

• In November, Kitron received order from 20 million from Kongsberg Defence & Aerospace AS with a value of over MNOK 20.
• Production of RL542A, a core component in the new Flexible High Capacity Radio Link (FHCL), supplied by Kongsberg for the Norwegian Armed Forces.
• Deliveries will start in 2021 and continue into 2022.
• Production will take place at Kitron's plant in Arendal, Norway

Nortrop Grumman awarded development contract to Kitron

• In November, Kitron was awarded awarded a development contract to update a F-35 test program set (TPS) and provide a repair capability for Kitron and a United States Government (USG) Depot.
• The contract is for a three-year development program, with a total value of NOK 20 million.
• The development will be done at Kitron's plant in Norway.

Financials

Industry sector shows strong growth

	Q4 2020 vs Q4 2019	Share of total revenue
Industry 488.5	 52.9 %	49.3 %
Defence/Aerospace 234.0	 -7.0 %	23.6 %
Medical devices 172.8	 -4.3 %	17.4 %
Energy/Telecoms	 -8.5 %	7.8 %
77.6 Offshore/Marine	 -64.2 %	1.9 %
18.8

Before group entities and eliminations

Outstanding full year results

• Q4 EBIT strong improvement compared to last year
• EBIT driven by over all strong performance,
• Economies of scale and exceptional utilization of overhead Q2/Q3

Q4 EBIT by country: Improved profits and profitability

• Norway and Sweden at strong margin levels and with improved profits
• CEE (Lithuania and Poland) ended at solid profitability levels
• Others (China and US) in total below strategic levels doe to weak 4Q.

Norway	Sweden	CEE	Others
7.5 %	6.9 %	9.8 %	6.3 %
5.4 %	6.3 %	4.2 %	9.9 %

Balance sheet: Working capital efficiency improvement

• Working capital ratios
• o NOWC* 26.3% (26.3%)
• o Cash conversion cycle* 98 (102)
• o ROOC* 18.9% (14.8%)
  • exclusive IFRS16 ROOC% 21.3%

▪ Cash flow

• o Q4 Cash flow from operations MNOK 132 (97)
• o YTD Cash flow from operations MNOK 237 (195)
• Financial gearing
• o NIBD/EBITDA 1.8 (2.8)
  • exclusive IFRS16 NIBD/EBITDA 1.6

Net working capital

Operating cash flow

Market development

Strong order backlog

• Particularly strong growth in Industry and Energy/Telecom

	Q4 2020 vs Q4 2019	Share of total revenue
Industry 629.1	 28.5 %	31.4 %
Defence/Aerospace
768.8	 -9.4 %	38.3 %
Medical devices	11.1 %	11.7 %
234.5	
Energy/Telecoms	42.2 %	15.6 %
311.9	
Offshore/Marine
61.1	 -47.1 %	3.0 %

Outlook

Outlook

• For 2021, Kitron expects revenue between NOK 3 900 and 4 200 million. EBIT margin is expected to be between 6.8 and 7.4 per cent.
• The outlook for 2021 implies that Kitron is back on its long term trajectory for revenue and profitability after exceptional growth in 2020, largely driven by Corona-related demand within the Medical devices sector.
• Growth is driven by Defence/Aerospace, Electrification and Connectivity within Energy/Telecom and Industry Sectors. Medical devices are expected to be normalised and in line with previous years.
• The board emphasizes that every assessment of future conditions necessarily involves an element of uncertainty

Key takeaways

Summary Q4 2020

• Outstanding full-year results
• Kitron is back on its long term trajectory for revenue and profitability
• Proposed dividend of NOK 0.70 per share
• Capital Markets Day 17 March ( webcast)

Thank You!