Kontron AG (formerly S&T AG) — Investor Presentation 2023

Nov 6, 2023

Explore the Kontron Group

We are a fast-moving multinational technology leader.

Investor Presentation

November 2023

Who we are Pure-Play Leader of Smart Industrial IoT Solutions

4,740 Employees 1.2bn

Revenue (EUR)*

72m Net Result (EUR)* >10% Organic growth p.a.*

Member of SDAX® Member of TecDAX®

HQ in Austria; listed in Germany

*Management estimates for 2023 and organic growth mid-term guidance.

• › Focused on the large, diverse and growing Industrial IoT market (IIoT)
• › Fully integrated technology platform Integrated (SW+HW) solutions for smart factories, transportation, data connectivity, medical and smart energy

› Driven by customers success, blue-chip customers

Highly diversified customer base, top 10 customers account for approx. 12% of revenues, >3,000 customers in total

› Leading provider of disruptive IoT connectivity technology

Real time 5G/6G connectivity, susietec® toolset, over 3,200 engineers

The IoT Market

64 billion

connected IoT devices by 2025 worldwide (from 29 billion in 2022)

31% growth

machines connected to the Internet by 2025

4bn 20bn

2016 2020 2025

\$ 148.6 billion

Industrial IoT revenue with a 11.4% CAGR from 2022

21% adoption

of 5G across mobile internet

connections by 2025

Key Metrics Focus Industries

High entry barriers: single source customization – real time software – expensive customer products with low volume

Sources: Mgmt. estimates, Techjury, Ericsson, Enterra Solutions, Markets and Markets, Market Data Forecast, McKinsey Global Institute, Statista

75bn

3

The New Kontron

7 divisions in 3 segments in 2023

Europe			Global		Software & Solutions
Industrial	Telecom	OT Services	North America	Asia	Software	Transport
Industrial, Medical and Defense	Adding 5G connectivity to IoT products	IT converted to Service contracts for IoT	Sales channel for Europe products; Avionics	Sales channel for Europe products	susietec® & customized IoT software	Data for high speed trains in Europe & China
Revenue* FC 2023 € 810m		Revenue* FC 2023 € 260m		Revenue* FC 2023 € 230m
Targets EBITDA** 12% GM 40% Growth p.a.: 10%			Targets EBITDA** 8% GM 30% Growth p.a.: 12%		Targets EBITDA** 15% GM 60% Growth p.a.: 16%

Kontron: Results & Company Highlights

Results Highlights

• › Strong improvement in profitability YTD 2023 vs 2022 EBITDA +40%; Net Income* +118%
• › Solid revenue growth of 14% Organic growth of 12.4% YTD
• › Strong order intake in Q3 Stable book-to-bill ratio of 1.19 Backlog of EUR 1.7bn
• › EUR 292m of liquidity +EUR 59m payable by Vinci

Company Highlights

› Net income guidance raised to EUR >72m (Jan: EUR >60m)

› 5 M&A acquisitions YTD

Recently Hartmann + Altimate + Bsquare to strengthen "Software + Solutions" segment (closing expected for all acquisitions by YE)

› 80m EUR Share Buyback programs in 2023

SBB 1 done: EUR 10m (540 k shares) SBB 2 ongoing: EUR 70m (4m shares) EUR 10.5m (550k shares done)

KPIs 1-9M 2023

Kontron Group Balance Sheet

Equity and liquidity very strong

in m EUR	9/30/2023	12/31/2022
NON-CURRENT ASSETS	447.5	412.1
Fixed Assets	415.9	379.0
as of Property, plant and equipment	104.0	95.5
as of Goodwill	199.8	189.4
Other Assets	31.5	33.1
CURRENT ASSETS	3:39.2	1,028.8
Inventories	250.0	192.6
Trade receivables	167.3	148.1
Contract Assets from Customers	57.7	54.2
Cash and cash equivalents	292.3	437.8
Other receivables and prepayments	121.7	189.7
assets classified as held for sales	0.0	6.3
Total Assets	1,336.6	1,440.9

in EUR m	9/30/2023	12/31/2022	in EUR m	9/30/2023	12/31/2022
NON-CURRENT ASSETS	447 5	412 1	EQUITY	617 6	635 7
Fixed Assets	415 9	379 0	accumulated results	439 7	449 6
of , plant and Property equipment as	104 0	95 5	of shares Treasury as	-9 6	0 0
of Goodwill as	199 8	189 4	NON-CURRENT LIABILITIES	138 6	252 6
Other Assets	31 5	33 1	loans borrowings and Long-term	64 1	193 8
CURRENT ASSETS	889 2	1 028 8 ,	Other Liabilities Non-Current	74 5	58 9
Inventories	250 0	192 6	CURRENT LIABILITIES	580 4	552 6
Trade receivables	167 3	148 1	Trade payables	228 2	226 3
from Contract Assets Customers	57 7	54 2	from Liabilities Contract Customers	73 9	78 5
Cash and cash equivalents	292 3	437 8	Short-term loans and borrowings	155 6	125 7
Other receivables and prepayments	121 7	189 7	Other Liabilities Current	122 7	117 3
classified held for sales assets as	0 0	6 3	liabilities classified held for sale as	0 0	4 8
Total Assets	336 6 1 ,	440 9 1 ,	Total Liabilities & Equity	336 6 1 ,	440 9 1 ,
			Equity Ratio	46 2%	1% 44
			Cash/(Net Debt)* Total Net	72 7	118 3
			Working Capital excluding 15** IFRS	189 1	114 4
			Working Capital excluding IFRS 15** (31.9.2022):	211.0

Strong cash position: EUR 292m cash + EUR 59m open payment from Vinci (despite EUR 73m dividend + SBB and EUR 108m debt paid)

* 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) 7

Europe: Biggest segment

Target is to increase EBITDA margin in 2025 to 12%

• * EBITDA before Intercompany HQ fees (part of Europe Segment)
• ** EBITDA before HQ fee in % of external revenue

Global: Back to normal profitability

Today 20% of revenues in North America + Asia; target 30% midterm driven by superior technology

• * EBITDA before Intercompany HQ fees (part of Europe Segment)
• ** EBITDA before HQ fee in % of external revenue

Software & Solutions: Fast growing

Will be the biggest segment by 2025

• * EBITDA before Intercompany HQ fees (part of Europe Segment)
• ** EBITDA before HQ fee in % of external revenue

Macro trends driving IoT business in the mid-term

5G	• Lower investment & lifecycle costs • Intelligent modules offer security • Shift from GSM-R/4G/Wi-Fi to 5G • 5G private networks for factories	• Nearshoring/factories coming back Smart • Robots increase automation budget Factories • Connected IoT production machines
Auto nomous Driving	• Unmanned trains, construction machines, harvesters save cost • Increase security of traffic	• Recovery of travel Aerospace • Technological shift to orbit and • NATO goal: 2% GDP defense budget defense • Perception shift in Europe
Medical	• Aging population • Pressure on healthcare systems • Ambitious projects (e.g., US "Moonshot" for curing cancer)	• EU "Green deal": expand high-speed High tracks from 11,000 to 33,000km speed • Technological shift from GSM-R to FRMC trains and from FRMC to 5G
Global ization	• China and USA show higher growth than Europe but compete with each other • Kontron may serve both markets with leading technology	• High computational requirements of running complex AI models Artificial • Taking over human tasks like defect Intelligence detection

Strongest brainpower in the industry

susietec® IoT software framework

• › Extending susietec® portfolio by Bsquare SquareOne
• › Release of KontronOS (highest security standard)
• › EUR 100m pure software revenues

Mission-critical control systems for high-speed trains

• › European Train Control System Level 3 Approval
• › New standard FRMCS will accelerate migration and requires 5G

Artificial Intelligence

• › HAILO chips for customized scalable applications
• › NVIDIA full stack standard solutions
• › Full stack industrial applications: video surveillance, defect detection, response time edge cloud, robotics
• › EUR 29m in design wins

Margin improvement strategy (MIS): Focus on "Software + Solutions" segment

Most M&A activities in "Software + Solutions", up the value chain for existing markets

Europe Global Software + Solutions

Our competition

Our distinctive competitive advantages

Selected competitors in Industrial IoT	Revenue (in USD m)	Region
Curtiss Wright*	2,600	North America
Advantech	2,200	Asia
Beckhoff	1,600	Europe
Kontron	1,200	Europe
ABB B&R	1,100	Europe
Mercury*	1,000	North America
Adlink	380	Asia
Seco	215	Europe
Eurotech	100	Europe
% as of total market (USD 148bn)	7%

* Also not Industrial IoT revenues

› Unmatched R&D scale

› 3,200 FTEs, annual budget of EUR 170m

› Cost efficient solutions

› (EUR 45k p.a.) in-house engineering resources in CEE

› Differentiated technology platform

› Purpose-built solutions for high-value low-volume use cases

› Deep and established relationships in the ecosystem

› Intel, ARM, FoxConn, Microsoft, Siemens, GE

M&A strategy

Replace sold IT segment by strategic IoT acquisitions

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

• › Replace EUR 387m of sold IT business with IoT acquisitions
• › Target: High synergies with Kontron → 12% EBITDA within 2 years
• › Complementary IoT technologies to improve portfolio
• › Finance by existing cash and cash flow not shares

5 relevant IoT technology acquisitions signed in 2023

• › Carve out Telit (DE): 5G modules for data connection of IOT
• › Comlab (CH): Data repeaters and communication for trains
• › Hartmann (CH): VPX systems for the Defense market
• › Altimate (RO): Public transport solutions
• › Bsquare (USA): Software for IOT connections

Kontron M&A pipeline for 2024

› Currently 3 acquisition projects

We will replace our sold IT services by high growth IoT technology

The New Kontron

Backlog and Design wins

(in EUR bn) Backlog Design wins

1.16

0.80

2.35 2.97 3.41 3.61 Top Design Wins in 9M 2023 Country Volume EUR

1.46

2020 2021 2022 Q3 2023

1.66

Avionics	US	90m
Medical	DE	60m
Railway/Security	FR	60m
Telecommunication	AT	50m
Medical	DE	50m
Defense	US	42m
Railway	SK	40m
Industrial	US	35m
Defense	US	34m

Railway FR 150m

The New Kontron

Net profit guidance increased to EUR >72m (before: EUR >66m)

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

Why invest in Kontron?

Profitable long-term growth

• › Excellent position to profit from the megatrends digitalization, AI and sustainability via IoT products
• › Expand high-margin high-growth software business
• › Utilize European technology worldwide
• › Highly diversified, global and long-term customer base in a niche market with high entry barriers
• › Track record of value-accretive M&A

Strong financial position

• › Cash conversion rate target of 75%
• › Solid tax shield in Austria for the next 2 years
• › Favorable low debt profile in high interest environment
• › High cash position after sale of majority of IT Services business for EUR 392m in December 2023
• › Active partner and minority shareholder Ennoconn

Engineering excellence

› Unmatched R&D power of 3,200 engineers and annual investment of approx. 14% of revenues

• › Cost efficient in-house engineering resources in CEE (average salary: 45k p.a.) as an attractive Western employer
• › Increasing share of software in portfolio: proprietary IoT toolset susietec®
• › Customized IoT solutions for Industrial, Medical, Defense, 5G Connectivity, Avionics, Transportation, Electricity sectors

Attractive shareholder return

• › Strong cash generating business
• › 50% of net income distributed as a dividend and/or to use for share buybacks
• › Record dividend of EUR 1 per share paid out in 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.

Explore the Kontron Group

We are a fast-moving multinational technology leader.

The Kontron Share

SDAX® & TecDAX® member

Alster Research	Buy: EUR 32.00
Erste Group	Buy: EUR 25.00
Hauck & Aufhäuser	Buy: EUR 30.00
Jefferies	Buy: EUR 29.00
Kepler Cheuvreux	Buy: EUR 25.00
Pareto Securities	Buy: EUR 28.00
Stifel	Buy: EUR 27.00
Warburg Research	Buy: EUR 26.00
Median Target Share Price	EUR 27.50

Target: Increase strategic shareholder base

1 additional analyst will take on coverage of Kontron

Update on ESG

Achievements

• › MSCI: BBB (stable since 2021)
• › EcoVadis: rated above industry average
• › Sustainalytics: 20.2 (medium* risk)
• › UN Global Compact joined and 9 SDGs identified we support

› Education

Kontron Leadership Academy (focus on female employees) Data Security Training Focus

✓

› Employee Survey – conducted among approx. 5,000 employees

Outlook & Targets

• › Increasing interest of sustainable investors to be met
• › Customers and Investors CO² disclosure requests more often

Making our data easily accessible and transparent to our diverse stakeholder groupswill become increasingly important

• › Carbon Disclosure Project experience ✓
• › EU Taxonomy requirements expected to be extended
• › Implementation of scope I and II to be achieved until 2023
• › Kontron's Green Products communicating our products better

Preparation scope I and II Reporting expansion (incl. EU Taxonomy) ✓ ESG-Goal extension ✓ ESG-Risk assessment ✓ Update material analysis ✓	Evaluation ESG-Goals Implementation stage launched Enhanced reporting according to EU Taxonomy and ESG standards	Implementation finalized Continuous improvement process
2021	Continuous stakeholder dialogue ✓ 2022	2023