STS Group AG — Investor Presentation 2018

Sep 7, 2018

1. ZKK – Zürcher Kapitalmarkt Konferenz Andreas Becker, CEO Stephan Vrublovsky, CFO

Agenda

• 1. Intro STS at a Glance
• 1. Overview of STS Group
• 1. Key Investment Highlights
• 1. Financials
• 1. News

Disclaimer This presentation may contain forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. Forward-looking statements may include, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. STS Group AG has based these forward-looking statements on its current views and expectations and on certain assumptions of which many are beyond STS Group AG's control. Actual financial performance could differ materially from that projected in forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forwardlooking statements. The information contained in this presentation is subject to change without notice and STS Group AG does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.

This presentation includes references to non-IFRS financial measures, including, but not limited to: FCF, EBITDA, EBITA, EBIT, EBITA margin, capital expenditure as percentage of revenue, other operating income, net financial debt, and net working capital. We have provided these measures and other information in this presentation because we believe they provide investors with additional information to assess our performance. Our use of these supplemental financial measures may vary from others in our industry and should not be considered in isolation or as an alternative to our results as reported under IFRS.

Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

STS Group

€ 425m Pro-Forma Revenue 2017

Key Facts Key Figures

One of the leading global supplier of soft and hard trim

Agenda

• 1. Intro STS at a Glance
• 1. Overview of STS Group
• 1. Key Investment Highlights
• 1. Financials
• 1. News

STS Group Identity

The STS identity is based on the personalities and skills that we can contribute. At the same time, it draws an image of the future and gives us orientation and motivation for our daily work.

History

Long history to become one of the leading global Tier 1 truck suppliers for soft and hard trim.

Till 2013 part of Autoneum (former Rieter Group) as Truck Division and Italian Business Unit.

STS Group Board

Executive Board

STS Board Member since 2013 22 Years Industry Experience

Stephan Vrublovsky

STS Board Member since 2013 13 Years Industry Experience

STS Board Member since 2013 19 Years Industry Experience

Supervisory Board

Robin Laik

STS Board Member since 2018 20 Years Industry Experience

Dr. Kristian Schleede

STS Board Member since 2014 30 Years Industry Experience

Bernd Maierhofer

STS Board Member since 2018 29 Years Industry Experience

Product Portfolio MHCV, LCV

STS offers a complete set of product solutions for interior trim, exterior trim and acoustics.

Personal & third party confidential

Agenda

• 1. Intro STS at a Glance
• 1. Overview of STS Group
• 1. Key Investment Highlights
• 1. Financials
• 1. News

Market Position

Excellent position with global footprint and growing CV markets. STS customer portfolio includes all relevant OEM´s.

Long lifecycle of commercial vehicles supports high order backlog.

Strong position in a sustainably growing market

Personal & third party confidential

High Visibility on Future Revenues

STS benefits from high visibility on future revenues due to an order backlog of € 1.9bn.

The high order backlog is an important indicator of demand.

Outstanding visibility: Order Backlog1)

Commercial vehicles business vs. passenger car business

	Commercial Vehicles	Passenger Cars
Usual lifecycle of model	7-12 years	5-7 years
Production batch size	Small- to medium sized	High-sized
Efficiency criterion	Flexibility	Standardization
Key end customer type	B2B	B2C
Customer criterion	Total cost of ownership (TCO)	Design, purchase price
Sales risk	Depending on investment cycle (timewise), overall success of model secure	Depending on success of car model, independent from investment cycle

1) STS estimation

Cross-Selling High Potential

STS supplies to all relevant CV OEMs, for many so far only one technology.

There is a high potential for cross-selling.

Sales mix by top clients (standardized to 100% sales per client) ¹)

Acoustics Plastics Materials

Growth Potential

Significant growth opportunities in China from further market penetration, optional in the US.

SOP of third plant in China in Q1 2019.

North America first order for truck component received.

Battery box cover, first order received.

379 Units in '000 Production2017 MHCV market NAFTA1)

Hybrid product solutions and regional market testing of product innovations

Insulation panels integration Modular and customizable arrangement module (IKEA) Hybrid roof module

Vertical Integration

STS runs globally production lines for

• semi-finished products felt and SMC
• Conversion
• Painting
• Assembly

Vertically integrated supplier along value chain
	Acoustics	Plastics (SMC)
	Fabric	Glass fibres
material suppliers w Ra	Resins	Resins
Insulator suppliers mpound and	Felt production	SMC production
Co	Felt mats	SMC mats & storage
	Thermo forming	Thermo compression
Tier 1 suppliers	Cutting, lamination	Painting
	& assembly	Assembly
Ms OE

Benefits from Vertical Integration

• Material know-how
• Intellectual Property (Recipies)
• Control Process from Semi Finish to final Product
• Innovation through Material
• Security of Supplies
• Higher Contribution
• Customized products

Entry Barriors

Big products require proximity to OEM.

STS plants are well located on three continents.

Full service from first idea to final product makes STS preferred partner for OEM.

Proximity to customer

Material laboratory

▪ Testing devices ▪ Full range of products and materials

Prototype workshop

• Modeling, presses, water jet

• Fast and flexible

• 3D-CAD, simulation

• Mathematical models
• On test bench ▪ On road

Manufacturing

• 77% ▪ High vertical integration
• Quality system, automation

Personal & third party confidential

Source: Company estimates based on publicly available market data

Why invest in STS Group?

Excellent market position	One of the leading global system suppliers for interior and exterior trim parts with focus on commercial vehicles
Outstanding Visibility	Solid order book with approx. € 1.9 bn of revenue already contracted until 2022, plus additional pipeline
Cross-Selling	Trusted Tier 1 partner for leading European and Chinese truck OEMs with significant cross-selling potential through combination of technologies
Strong Growth Prospects	Expansion in China to benefit from strong truck market and direct entry into the US with own production
Vertical Integration	Vertically integrated along the value chain and technological expertise resulting in full process control and securing competitive advantage
Solid Entry Barriers	Material and process know-how as significant and customer-relevant entry barriers, matching industry trends emission and weight reduction

Agenda

• 1. Intro STS at a Glance
• 1. Overview of STS Group
• 1. Key Investment Highlights
• 1. Financials
• 1. News

Income Statement

€m	Q1 2018 1)	FY 2017 Pro Forma	FY 2017	FY 2016	FY 2015
Revenues	108.9	425.2	310.0	136.2	134.5
Increase or decrease of finished goods and work in progress		3.5	2.5	(1.3)	(1.5)
Other operating income		60.8	55.7	5.6	1.7
Material expenses		(252.5)	(190.6)	(85.2)	(84.3)
Gross profit		237.0	177.6	55.3	50.5
Personnel expenses		(106.2)	(75.6)	(33.3)	(32.6)
Other operating expenses		(65.0)	(47.0)	(10.6)	(11.3)
EBITDA		65.8	55.0	11.4	6.6
Depreciation and amortization expenses		(12.3)	(8.2)	(2.5)	(2.9)
EBIT		53.5	46.9	8.8	3.6
Interest and similar income		0.1	0.1	0.0	0.1
Interest and similar expenses		(3.5)	(3.1)	(0.9)	(1.3)
Income tax expense		2.5	3.1	(0.5)	(0.4)
Net income		52.6	47.0	7.5	2.0
Adjusted EBITDA	8.1	23,8	14,2	7.3	6.9

www.sts.group STS Group © 2018 Slide / 20

Adjusted EBITDA and CAPEX

Positive Operational Cash Flow

€m	FY 2017 Pro Forma	FY 2017
Income after income tax expense	52.6	47.0
Interest and similar income	(0.1)	(0.1)
Net interest expense	3.5	3.0
Income tax expense	(2.5)	(3.1)
EBIT	53.5	46.9
Depreciation and amortization	12.3	8.2
EBITDA	65.8	55.0
Adjustments EBITDA	(42.1)	(40.9)
Bargain purchase gain	(47.0)	(47.0)
Net effect tax indemnification	(2.8)	(2.8)
Legal and consulting feeds	5.5 1)	6.7
Severance costs	1.6	1.6
TSA costs	0.7	0.7
Adjusted EBITDA	23.8	14.2
Operating Investments	(11.5) 2)	(11.5)
Indicative Operating Cashflow	12.4	2.7

Balance Sheet (FY 2015-2017)

Equity has been strengthened in 2018 by cash based equity increase. Total €m 27.95, €m 24 coming from IPO.

€m	31 December 2017	31 December 2016	31 December 2015
ASSETS
Non-current assets	114.8	35.6	18.5
Current assets	160.2	52.9	45.8
Total assets	275.0	88.5	64.3
EQUITY AND LIABILITIES
Total equity	60.7	16.3	7.3
Non-current liabilities	45.9	29.5	15.9
Current liabilities	168.4	42.8	41.1
Total equity and liabilities	275.0	88.5	64.3

Net Debt

Net debt ratio to EBITDA is 1.0 x

€m	31 December 2017
Net Debt
Cash	15.8
Blocked cash	5.0
Liabilities to banks & third parties	(24.5)
Provision for pensions	(20.0)
Net debt	(23.6)

Adjusted EBITDA	23.8
Net debt / Adjusted EBITDA	1.0 x

STS Share Key Facts

First Day of Trading:

Initial Price: € 24.00

1 June 2018.

Market Capitalization €m 134.49 as of 30 August 2018 Shareholder Mutares AG, 63,8% Main First SICAV, 8% Xetra SF3 Designated Sponsor: Hauck & Aufhäuser Standard/ Requirements Reporting according to IFRS, quarterly, half-year and yearly reporting Quarterly result: 26 September 2018 Listing Regulated market of the Frankfurt Stock Exchange (Prime Standard) Lock-Up 12 months for STS 12 months for selling shareholder (Mutares AG) Research Hauck & Aufhäuser MAINFIRST

Share Price € 22.415 as of 30 August 2018

Agenda

• 1. Intro STS at a Glance
• 1. Overview of STS Group
• 1. Key Investment Highlights
• 1. Financials
• 1. News

News

Thank you for your attention

Contact Us

Susan Hoffmeister Investor Relations ir@sts.group