Kontron AG (formerly S&T AG)

Investor Presentation • Jul 17, 2023

Explore the Kontron Group

We are a fast-moving multinational technology leader.

IR Presentation

July 2023

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

4,475 Employees (2022) 1.2bn 2023E Revenue (EUR)*

66m

10%

2023E Net result (EUR)*

Organic growth p.a.*

Member of SDAX® Member of TecDAX®

HQ in Austria; listed in Germany

• › Focused on the large, diverse and growing Industrial IoT market (IIoT)
• › Fully integrated technology platform addressing high-growth end markets Integrated (SW+HW) solutions for smart factories, transportation, data connectivity, medical and smart energy
• › Custom-built solutions for high-growth Industrial IoT end markets Industrial, Communications, Medical, Smart Energy and Transportation
• › Driven by customers success, leading disruptive technologies, blue-chip customers
• › Leading provider of disruptive IoT connectivity technology Real time 5G/6G connectivity, susietec® toolset, over 3,200 SW/HW engineers

7 divisions in 3 segments

Industrial Telecom OT Services North America Asia Software Transport Europe Global Software & Solutions Revenue* FC 2023 € 810m Revenue* FC 2023 € 260m Revenue* FC 2023 € 230m Targets EBITDA** 11% GM 40% Growth p.a.: 10% Targets EBITDA** 8% GM 30% Growth p.a.: 12% Targets EBITDA** 15% GM 60% Growth p.a.: 16%

The IoT Market

29 billion

\$ 148.6 billion

connected devices by 2022 with 64 billion IoT devices worldwide by 2025

31% growth

machines connected to the Internet by 2025

4bn 20bn

2016 2020 2025

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

4

New Kontron: High- and Lowlights Q1 2023

Highlights

• › Increase in net profitability EUR 16.6m (6% margin)
• › Positive operat. cash flow EUR 5.2m (Q1-23) vs. EUR -60m (Q1-22)
• › EUR 438m of liquidity +EUR 59m payable by Vinci; EUR 83m debt reduced in Q1-23

› EUR 1.57bn backlog

Q1 book-to-bill ratio of 1.41

Lowlights

• › Chip shortage: EUR 88m of overdue orders (down EUR 39m from peak)
• › Inventory/cash drain back to normal: EUR -57m op. cash flow 1-9/2022; Oct2022 - Mar2023 strong recovery of +EUR 106m
• › Share price did not follow

Healthy start into 2023 for the New Kontron

Kontron Group Balance Sheet as of 31.03.2023

Equity and liquidity very strong

Mio EUR	31 03 2023	31 12 2022		31 03 2023	31 12 2022
NON-CURRENT ASSETS	413 2 ,	412 1 ,	EQUITY	645 8 ,	635 7 ,
Fixed Assets	382 3 ,	379 1 ,	accumulated results	446 2 ,	449 6 ,
of , plant and Property equipment as	97 8 ,	95 5 ,	of shares Treasury as	-5 4 ,	0 0 ,
of Goodwill as	188 4 ,	189 4 ,	NON-CURRENT LIABILITIES	258 5 ,	268 7 ,
Other Assets	30 9 ,	33 1 ,	loans and borrowings Long-term	191 8 ,	193 8 ,
CURRENT ASSETS	953 4 ,	1028 8 ,	Other Liabilities Non-Current	66 7 ,	74 9 ,
Inventories	213 4 ,	192 6 ,	CURRENT LIABILITIES	462 3 ,	552 6 ,
Trade receivables	144 0 ,	148 1 ,	Trade payables	204 7 ,	226 3 ,
from Contract Assets Customers	47 0 ,	54 2 ,	Liabilities from Contract Customers	79 6 ,	78 5 ,
Cash and cash equivalents	438 4 ,	437 8 ,	Short-term loans and borrowings	61 6 ,	125 7 ,
Other receivables and prepayments	104 6 ,	189 8 ,	Other Liabilities Current	116 4 ,	3 117 ,
classified held for sales assets as	6 0 ,	6 3 ,	liabilities classified held for sale as		4 8 ,
Total Assets	1366 6 ,	1440 9 ,	Total Liabilities & Equity	1366 6 ,	1440 9 ,

Equity Ratio	3% 47 ,	0% 44 ,
Cash/(Net Total Debt)* Net	185 0 ,	118 3 ,
Working Capital excluding 15** IFRS	122 7 ,	114 4 ,

Very strong cash position: EUR 438m cash + EUR 59m open purchasing price from Vinci

In Q1 EUR 66.1m of financial debt and EUR 16.9m of factoring repaid

Backlog and Design wins

Top 10 Customers 2022	Country	Volume EUR
Czech railway provider	CZ	24.7m
Multinational telecom provider	UK	16.5m
Medical respiratory machines	GER	16.5m
UK railway provider	UK	13.1m
Global leader in medical equipment	USA	11.8m
Chemical glass company	USA	10.2m
French railway provider	FR	10.1m
Automation manufacturer	GER	8.0m
Machine manufacturer	GER	8.0m
Medical manufacturer	GER	7.1m

Top 10 customers account for 12% of revenues > 3,000 customers in total

Europe

Segment overview Q1 2023

(In EUR m)

Target is to increase EBITDA in 2025 to 12%

Global

Segment overview Q1 2023

(In EUR m)

Today 20% of revenues in USA + China; target 30%

Software + Solutions

Segment overview Q1 2023

⁽In EUR m)

Will be biggest segment by 2026

Strategies

Short-term 2023

• › Rebrand & Reposition: "Kontron" as an IoT leader
• › 10-10-10 company: 10% growth, 10% EBIT, 10% op CF
• › More efficiency
  • › Organization: low overhead, slim HQ, less companies
  • › Focus on high margin biz further reduce noncore biz
• › Profit improvement measures
  • › Reduce offices + travelling (home office, virtual meetings)
  • › CRP (complete 100m cash recovery 60m done)
  • › Profit and tax optimization of new structure
• › ESG & sustainable "green technologies"

Mid-term "Agenda 2025"

• › Segment "Global"
  • › Sales channel for Europe products with strong local engineering
  • › 30% revenues outside Europe in CN/USA
• › Segment "Software & Solutions"
  • › 20% Organic and acquisitional growth
  • › Benefit from strong engineering backbone in Europe
  • › Main segment by 2026
• › Segment "Europe"
  • › Basic technology for SW/Solutions
• › IoT as a service
  • › Lease solutions rather than sell products = higher margins

Products and Technologies

Basic technologies

› 5G

• › Connectivity is key for IoT → 5G will be main media
• › TSN: real time for 5G
  • → key know how of Kontron
• › Communication systems
• › susietec®
  • › Programming language to connect devices
  • › Strong in industrial → expand
• › Ecosystem
  • › Cooperating with Intel, Microsoft, FoxConn, Mediatek (5G)
• › Build up OT services to offer SLAs (run IoT grids)

Vertical technologies

• › Smart factories
• › Smart transportation
• › Intelligent traffic control
• › Smart energy
• › Set and participate in standards
  • › ETCS, IATA, ITAR, Med, PICMG

Bigger acquisitions planned

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

• › Currently 7 offers/LOIs running (av. size > EUR 100m revenue)
• › As of 5 for Software + Solutions, 1 for Europe, 1 for Global
• › As of 4 of them we have been working on > 1 year
• › As of 5 of them we expect a go/no go decision in the next 3 months
• › Only 1 target in structured process
• › Target is to close 2 in 2023 (min. EUR 250m and up to EUR 700m in revenues)

We are negotiating hard to get the best price for Kontron, this takes time, but we are almost there

2021 2022 2023E

-80

Cash Usage 2023

Liquidity on hand March 2022 › EUR 438.4m cash on hand › EUR 59m ST receivables from Vinci › EUR 180m non utilized lines › EUR 61.6 ST debt Liquidity amounts to EUR 700m		Cash usage for acquisitions and operations › Q1 factoring reduced by 16.9m, ST debt by EUR 66.1m › Target Q2-Q4/23: reduce further EUR 20m debt › Spend min. EUR 300m in acquisitions
Cash generation (op. CF)		Shareholder participation
150 100 100 65 59 50	20 5 0 Q1-21 Q1-22 Q1-23 -20 -24	› EUR 63m: Propose dividend of 1EUR/share in May › Rule: Spend 50% of net earnings in Dividend or SBB › 2023: SBB EUR 10m started, increase depending on share price
0	-40 -60 -60	2023 spend min. EUR 75m (up to EUR 150m) 2024 min. EUR 35m

Kontron offers differentiated IIoT solutions

Selected competitors in Industrial IoT	Revenue (in USD m)	Region
Mercury*	3,800	North America
Curtiss Wright*	2,500	North America
Advantech	1,900	Asia
Kontron*	1,342	Europe
Beckhoff	1,200	Europe
ABB B&R	705	Europe
Adlink	350	Asia
Seco	116	Europe
Eurotech	63	Europe
% as of total market (USD 148bn)	9%

* Also not Industrial IoT revenues

Our competitive landscape Our distinctive competitive advantages

• › Unmatched R&D scale
  • › 3,200 FTEs, budget 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

Update on ESG

Achievements

› MSCI Rating increased

› UN Global Compact joined and 9 SDG's 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 groups will 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

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

Guidance 2023 increased by 10% to EUR 66m – we expect no extraordinary effects

^* Incl. M&A

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

Summary

Achievements Q1-23

• › Strong order intake of EUR 391m (book-to-bill 1.41)
• › Refocus on IIoT completed "the new Kontron"
• › Significant improved net income of EUR 16.6m (Q1-23) vs 10.0m (Q1-22)

Targets

› Guidance 2023:

• › Revenue ~EUR 1,200m
• › Net income EUR 66m
• › EUR 2,000m IIoT revenues at > 13% EBITDA in 2025
• › Complete major acquisitions in 2023

Risks

• › Chip shortage (improvement on the way)
• › Economical climate
• › Address right technology trends

Opportunities

• › Sufficient cash for "game changer" acquisitions
• › One of only a handful of European Technology players
• › 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.

Explore the Kontron Group

We are a fast-moving multinational technology leader.

The Kontron Share -

SDAX® & TecDAX® member

Shareholder Structure

Ennoconn 27.64%

• Kontron Management 7.02%
• Naneva B.V (PPF Holdings B.V.) 5.29%

Freefloat 60,05% includes as follows

• Amiral Gestion 4.95%
• BNP Paribas Asset Management 4.22%
• Ninety One SA (Pty) Ltd 4.15%
• Allianz Global Investors GmbH 4.10%
• Ameriprise Financial, Inc. 3.87%

Coverage

AlsterResearch	Buy: EUR 32.00
Erste	Buy: EUR 24.50
Hauck & Aufhäuser	Buy: EUR 30.00
Jefferies	Buy: EUR 27.00
Kepler	Buy: EUR 25.00
Pareto Securities	Buy: EUR 28.00
Stifel	Buy: EUR 25.50
Warburg Research	Buy: EUR 26.00
Median Target Share Price	EUR 26.50

Target: Increase strategic shareholder base

1 additional analyst will take on coverage of Kontron

Before and after IT divestment

	S&T AG 2021	New Kontron 2023	Comment
Revenues (EUR m)	1,342	~1,200	Reflects divestment of EUR 387m in IT service and EUR 40m in Russia
Order backlog	1,334 (1160 CO)	1,460 (Dec-22)	IT divestment already replaced by new IoT orders
Design win pipeline	3,367 (Dec-21)	3,407 (Dec-22)	Strong IoT design win pipeline
Gross margin (%)	36%	> 40%	Change in product mix, will increase margins starting 2023
Net profit (EUR m)	48.3 (3.6%)	66 (5,5%)	Will increase in 2023 despite divested IT services
Employees (#)	6,206	4,475	Decline driven by project "Focus" and departure from Russia
Entities (as of operative)	78 (78)	48 (32)	Much less complex structure with no relevant minorities
Exposure CIS region	7% CIS	3%	Not material anymore, further reduction in 2023
Equity ratio	32%	44%
Cash & cash equivalents (EUR m)	296	438 + 138 (Dec-22)	Important in current interest rate increases
Peer group
Strategy			The new Kontron is focused on global IoT technology leadership, higher margins (7% net), but not IT and East Europe