LISI S.A. — Interim / Quarterly Report 2022

Oct 20, 2022

FINANCIAL INFORMATION

Quaterly Consolidated Sales

In €m

EBIT* and net profit in €M

^** after the extension of depreciation periods (cf. Press release of 07/22/2021)

1 The change at constant scope and exchange rates is calculated:

• by converting the sales of the companies whose financial statements are denominated in foreign currencies at the average rate of the year N-1 or the month M-1; • by converting the sales invoiced in currencies other than the local currency at the average rate of the
• previous year or previous month M-1;
• by restating the entries into or exits from the scope to ensure comparability of data.

The LISI Group posted consolidated sales of €1,051 million for the first 9 months of 2022, up +22.1 % on 2021

• LISI AEROSPACE:
• o Sequential acceleration of the division's activity since the beginning of 2021 confirmed
• o Ramp-up of single-aisle aircraft mainly benefits the "European Fasteners" segment
• o Favorable effect linked to the US dollar soaring

LISI AUTOMOTIVE:

• o 4th consecutive quarter of business improvement driven by the ramp-up of new products for the electromobility market
• o Excellent momentum in new products order intake
• o Favorable effects linked to the soaring US dollar and the partial pass-through of inflation on sales prices

LISI MEDICAL:

o Further sales growth, driven by new products in a context of robust demand

In €m				Changes
	2022	2021	2022 / 2021	2022 / 2021 on a like-for-like basis1
Q1	342.4	309.4	+ 10.7 %	+ 5.5 %
Q2	352.8	284.3	+ 24.1 %	+ 14.9 %
Q3	355.8	267.1	+ 33.2 %	+ 24.4 %
3rd quarter ended September 30,	1,051.0	860.7	+ 22.1 %	+ 14.7 %

Consolidated sales for the first nine months of the year amounted to €1,051.0 million, up 22.1 % compared to the same period last year, taking the following factors into consideration:

• A scope effect of €11.7 M resulting from the following transactions in the LISI AEROSPACE division:
• Deconsolidation of LACE (France) on March 4, 2021, i.e. an impact of - €1.7 M (- 0.2 % of sales),
• Acquisition of B&E Manufacturing, a US company that had been consolidated since August 1, 2021, i.e. a contribution of + €13.4 M (1.3 % of sales);
• A favorable currency effect of + €52.4 M (i.e. + 5.0 % of sales), mainly tied to the rising average US dollar exchange rate against the euro;
• A price effect resulting from the pass-through to customers of the impact of inflation on manufacturing costs.

In line with the objective of a return to organic growth in 2022, sales growth on a like-for-like basis and restated for currency fluctuations stands at +14.7 %. The +24.4 % increase in Q3 marks the fourth consecutive quarter of improvement.

COMMENTS BY LINE OF BUSINESS

LISI AEROSPACE (49% of the consolidated total)

In €m				Changes
	2022	2021	2022 / 2021	2022 / 2021 on a like-for-like basis1
Q1	167.9	139.4	+ 20.5 %	+ 13.7 %
Q2	178.6	134.7	+ 32.5 %	+ 19.0 %
Q3	171.3	127.9	+ 34.0 %	+ 23.4 %
3rd quarter ended September 30,	517.8	402.0	+ 28.8 %	+ 18.6 %

• Business acceleration confirmed

The global aeronautical market for commercial flights confirms the gradual return to a certain normalization and is now at 86 % of its 2019 level. The increases in monthly single-aisle production rates announced by aircraft manufacturers will result in an increase to 58 Airbus A320 aircraft by mid-2023 compared to 50 currently and to 42 Boeing B737 MAX aircraft within the same time frame compared to 28 currently.

The LISI AEROSPACE division's sales amounted to €517.8 M during the first nine months of 2022, up 28.8 % compared to the same period of the 2021 financial year. Sequential improvement continues with an increase of 34.0 % in Q3.

• The ramp-up of single-aisle aircraft mainly benefits the "European Fasteners" segment

The "Fasteners" segment in Europe posted the strongest growth in Q3 (+39.6 %), driven by the ramp-up of the programs of its main customers. The "Fasteners" segment in the United States also grew by +38.2 % over the same period thanks, in particular, to a high level of sales to distributors and a very favorable currency effect.

The "Structural Components" segment benefited from the good momentum fueled by the anticipated needs for basic parts intended for long-cycle equipment (engines) aimed at meeting the rise in new aircraft and maintenance requirements. The segment's sales for Q3 were thus up +26.5 % compared to the same period in 2021.

On a like-for-like basis and restated for the currency effect, the sales of the LISI AEROSPACE division are up +23.4 % over the quarter and +18.6 % in the first nine months of the year.

LISI AUTOMOTIVE (40% of the consolidated total)

In €m		Changes
	2022	2021	2022 / 2021	2022 / 2021 on a like-for-like basis1
Q1	141.1	140.3	+ 0.6 %	- 1.9 %
Q2	135.8	119.7	+ 13.4 %	+ 9.2 %
Q3	146.1	111.0	+ 31.6 %	+ 25.8 %
3rd quarter ended September 30,	423.0	371.0	+ 14.0 %	+ 10.0 %

% Sales Variation per division / N-1

• Improved business thanks to the ramp-up of new products for the electromobility market

The global automotive market bounced back in Q3 with registrations up +13 % compared to the same period in 2021. This move results from a favorable comparison base effect and also reflects the reduced disruptions linked to the electronic component supply issues that affect all manufacturers worldwide.

China is driving the growth (+38.4 % over the quarter); the NAFTA (Canada-United States-Mexico) and Europe zones have confirmed signs of recovery since the start of the year but are still slightly negative (-0.5 %).

The LISI AUTOMOTIVE division's sales amounted to €423.0 M during the first nine months of 2022, up +14.0 % compared to the same period of the 2021 financial year. The partial pass-through of inflation on selling prices and a very favorable currency effect enabled the division to post an increase of +31.6 % in Q3 2022, thus confirming the sequential improvement observed since Q4 2021.

On a like-for-like basis and restated for the currency effect, the LISI AUTOMOTIVE division's sales are up +25.8 % over the quarter and +10.0 % in the first nine months of the year. The division continues to gain market share in a context of +4.8 % growth in the worldwide production of its customers over the same period.

• Excellent momentum in new products order intake

Order intake for new products over the first nine months of the year amounted to €58 M (14.1 % of sales) and already exceeded the level reached for the whole of the previous financial year. Orders are particularly well oriented in the "Threaded Fasteners" segment which benefits from the development of solutions for the assembly of battery packs and in the clipped solutions of TERMAX in the United States.

LISI MEDICAL (11% of the consolidated total)

In €m			Changes
	2022	2021	2022 / 2021	2022 / 2021 on a like-for-like basis1
Q1	33.4	29.8	+ 12.0 %	+ 7.6 %
Q2	38.6	29.9	+ 29.0 %	+ 19.5 %
Q3	38.6	28.4	+ 35.7 %	+ 23.0 %
3rd quarter ended September 30,	110.6	88.2	+ 25.4 %	+ 16.6 %

The global implant market has regained good visibility since H2 2021 due to the resumption of surgical procedures, particularly in the United States with a return to normal activity in hospitals. Demand remained strong overall and far exceeds the supply available in the market for implants and instruments for minimally invasive surgery.

• Further sales growth driven by new products

The LISI MEDICAL division's sales amounted to €110.6 M during the first nine months of 2022, up +25.4 % compared to the same period of fiscal year 2021. Q3 2022 posted an increase of +35.7 %. Such sales performance reflects the success of the new products launched by the division and the increased needs expressed by its leading customers in the orthopedic reconstruction and minimally invasive surgery segments. On a like-for-like basis and restated for the currency effect, the LISI MEDICAL division's sales are up +23.0 % over the quarter and +16.6 % over the first nine months of the year.

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OUTLOOK AND COMMENTS ON THE FINANCIAL IMPACT OF BUSINESS .

LISI AEROSPACE

The ramp-up of single-aisle aircraft announced by the division's main customers is confirmed despite a very uncertain global environment. The other market segments (helicopters, military, business jets) are also well oriented.

The order book remains quite full, despite supply difficulties in the aeronautics sector. In order to be able to meet demand, LISI AEROSPACE has built up strategic inventories of raw materials. Points of attention will relate to the increase in production levels and the recruitments necessary to deal with them, as well as to actions aimed at offsetting the additional costs generated by record inflation levels, particularly in Europe.

LISI AUTOMOTIVE

The LISI AUTOMOTIVE division will continue to adjust its production capacities to the very short-term fluctuations in demand from its customers caused by difficulties in the supply of semiconductors. It will strengthen the actions undertaken to neutralize the effects of inflation on its manufacturing costs. At the same time, the division will continue its development programs and the industrialization of new high added value products intended for the growing needs of the market in terms of electromobility. Absorbing the rise in electricity costs also remains a major challenge for the division.

LISI MEDICAL

The minimally invasive surgery market, like that of orthopedic reconstruction, remains well oriented. Priority will be given to the continued development of new products and the ramp-up of production volumes, in particular those related to the contract won with a major player in the field of minimally invasive surgery and valued at more than \$170 M over four years.

LISI Consolidated

The Group remains focused on facing the challenges of a global economic environment that remains complicated due to volatility in the automotive industry, all-time-high inflation levels of manufacturing costs, and tensions on the job market.

In 2023, the main concern will be the increase in energy costs in France, Germany and the United Kingdom ; the related impact on the income statement will depend on the Group's ability to negotiate increases in sales prices with its customers.

The levels of order intake for new products across the three divisions position the Group favorably in its various markets for the future.

In the short term, the Group confirms its objectives for 2022 as disclosed on July 22nd: return to positive organic growth, improvement of the main financial indicators and maintenance of a positive operating Free Cash Flow*.

* Free Cash Flow: net operating cash flow minus net CAPEX and changes in working capital requirements