Kontron AG (formerly S&T AG)

Investor Presentation • May 4, 2023

Explore the Kontron Group

We are a fast-moving multinational technology leader.

Earnings Call Q1 2023

May 4th, 2023

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

KPI's Q1 2023

Healthy start for the New Kontron

Kontron Group Balance Sheet as of 31.03.2023

NON-CURRENT ASSETS	413,2	412,1	EQUITY	645,8	635,7
Fixed Assets	382,3	379,1	accumulated results	446,2	449,6
as of Property, plant and equipment	97,8	95,5	as of Treasury shares	-5,4	0,0
as of Goodwill	188,4	189,4	NON-CURRENT LIABILITIES	258,5	268,7
Other Assets	30,9	33,1	Long-term loans and borrowings	191,8	193,8
CURRENT ASSETS	953,4	1028,8	Other Non-Current Liabilities	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
Contract Assets from Customers	47,0	54,2	Contract Liabilities from 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 Current Liabilities	116,4	117,3
assets classified as held for sales	6,0	6,3	liabilities classified as held for sale		4,8
Total Assets	1366,6	1440,9	Total Liabilities & Equity	1366,6	1440,9

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
			as of Treasury shares	-5,4	0,0
as of Property, plant and equipment	97,8	95,5
as of Goodwill	188,4	189,4	NON-CURRENT LIABILITIES	258,5	268,7
Other Assets	30,9	33,1	Long-term loans and borrowings	191,8	193,8
CURRENT ASSETS	953,4	1028,8	Other Non-Current Liabilities	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
Contract Assets from Customers	47,0	54,2	Contract Liabilities from Customers	79,6	78,5
	438,4	437,8	Short-term loans and borrowings	61,6	125,7
	104,6	189,8	Other Current Liabilities	116,4	117,3
Cash and cash equivalents Other receivables and prepayments assets classified as held for sales	6,0	6,3	liabilities classified as held for sale		4,8
Total Assets	1366,6	1440,9	Total Liabilities & Equity	1366,6	1440,9
			Equity Ratio Total Net Cash/(Net Debt)*	47,3% 185,0	44,0% 118,3

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

	(in EUR bn)	Backlog	Design wins			Top 10 Customers 2022	Country	Volume EUR
4						Czech railway provider	CZ	24.7m
3,5				3.41	3.37	Multinational telecom provider	UK	16.5m
		2.97				Medical respiratory machines	GER	16.5m
3						UK railway provider	UK	13.1m
2,5	2.35					Global leader in medical equipment	USA	11.8m
2						Chemical glass company	USA	10.2m
1,5			1.46		1.57	French railway provider	FR	10.1m
		1.16				Automation manufacturer	GER	8.0m
1	0.80					Machine manufacturer	GER	8.0m
0,5						Medical manufacturer	GER	7.1m

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

Additional Disclosures Q1 2023

Op. cash flow adjustments In TEUR
5,224 STATED OP. CASH FLOW
16,905 Decrease in A/R factored in Q1-23
22,129 ADJUSTED OP. CASH FLOW
Organic growth
In TEUR	Q1-22	Q1-23
Stated revenues	247,019	277,671
Divestments (RUS/UA/BY/CZ+)		+7,372
Acquisitions (Lucom/Arce)		-4,470
Organic growth		14.0%
Geographical split Q1-23
(In %)	Revenue	EBITDA
Europe	79.6%	86.4%
North America	12.8%	8.5%
Asia	7.7%	5.1%

Europe

(In EUR m)

Target is to increase EBITDA in 2025 to 12%

Global

(In EUR m)

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

Software + Solutions

(In EUR m)

Bigger acquisitions planned

• › 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)

M&A is a core competence of Kontron M&A Volume 100 150 200 250 300 350 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Divestment IT (in EUR m) Kontron M&A Game Changer Acquisitions

0

50

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

Cash Usage 2023

Liquidity on hand March 2022		Cash usage for acquisitions and operations
› EUR 438.4m cash on hand		› Q1 factoring reduced by 16.9m, ST debt by EUR 66.1m
› EUR 59m ST receivables from Vinci		› Target Q2-Q4/23: reduce further EUR 20m debt
› EUR 180m non utilized lines › EUR 61.6 ST debt		› Spend min. EUR 300m in acquisitions
Liquidity amounts to EUR 700m
Cash generation (op. CF)		Shareholder participation
		› EUR 63m: Propose dividend of 1EUR/share in May
150 20	5	› Rule: Spend 50% of net earnings in Dividend or SBB
100 0 100 65 -20	Q1-21 Q1-22 Q1-23	› 2023: SBB EUR 10m started, increase depending
59 50 -40	-24	on share price
-60 0		2023 spend min. EUR 75m (up to EUR 150m)
2021 2022 2023E -80	-60	2024 min. EUR 35m

* Incl. M&A

Summary

- › 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) Achievements Q1-23

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

Explore the Kontron Group

We are a fast-moving multinational technology leader.

May 4th, 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.