H1/2018 PRESENTATION PARAGON GMBH & CO. KGAA - AUGUST/SEPTEMBER 2018
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paragon GmbH & Co. KGaA
H1/2018 PRESENTATION
August/September 2018
Agenda _At a glance _Push automotive mega trends _Segments _Financials
At a glance
Highlights from first half 2018
Rev. in €m EBIT margin
_ Continued top line growth +42% 100 7,2% 6,7% 8%
6,1%
80 6%
_ Automotive sector sales up 28% 60
4%
40
2%
_ Main driver E-Mobility and Mechanics sales 20
0 0%
more than tripled 6M/2016 6M/2017 6M/2018
Electronics Mechanics E-Mobility EBIT margin
_ FY18 Revenue outlook raised from € 175m to
€ 180-185m, operational profitability CAPEX in €m CAPEX/Rev.
expectations confirmed 20
20% 20% 25%
15 16% 20%
_ Voltabox: 2018 add. expenses (€ 2m) from 10
15%
rearrangement of intralogistics partner 5
10%
5%
agreement 0 0%
6M/2016 6M/2017 6M/2018
_ New EBIT margin of approx. 8% considers this CAPEX CAPEX/Sales
special item
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 3
At a glance
paragon – 30 years of corporate development in automotive
_ Established in 1988 as an electronics manufacturer in Delbrück Selected Tier-1-partners:
_ Development into an automotive Tier-1-supplier of electronics
and electro-mechanics
_ IPO in 2000
_ Current market cap* of € 229m
_ Establishment of three operating segments (Electronics,
Mechanics, E-Mobility) and several value-adding acquisitions
_ Carve out of E-Mobility segment as Voltabox AG and IPO
in 2017 with current market cap* of € 323m
(60% stake held by paragon AG)
* As of June 30, 2018.
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 4
At a glance
The paragon principle – business strategy
_ Growth strategy: early entry into high margin/fast
growing market segments
Mission Statement
_ Key technologies for and geared to megatrends
_ Interdisciplinary team of experts (electronics, Early occupation
mechanics, chemistry, production technology) of high-margin niches
_ Pioneering and active product development in premium market
segments with
_ Excellence in mass production
(high degree of automation) enabling technology
for existing megatrends!
_ Unique product portfolio and market position
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 5
At a glance
Current portfolio positioning
Segments Electronics Mechanics E-Mobility
Business Units Sensors Cockpit Acoustics Body Kinematics
Speech control & hands- High performance
Analog luxury
AQS®, AQI®, free microphones, belt- Active mobile battery systems, battery
Key products DUSTDETECT
instruments,
mic®, ICC, aerodynamic systems modules,
MirrorPilot®
(3D+ In-car-audio) starter batteries
Triathlon Batterien,
Daimler, Audi, Porsche, Kiepe Electric,
Key customers Audi, BMW, VW Porsche, Daimler, VW Audi, VW
Rolls Royce Komatsu Mining,
BMW Motorcycles
Growth potential + + + + + + + + + + +
Competitive strength + + + + + + + + + + + + +
Patents & Quality & Know-how & Quality & Modularity &
Market entry barriers mass production OEM relations mass production OEM relations specialization
Public transportation
Main markets Automotive
Industrial
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 6
At a glance
From AG to KGaA: strengthening for future growth
_ Change of legal structure from a stock Limited partner
Frers family
shareholders
corporation into a partnership limited by
shares completed.
Brigitte
Dieter
Niklas
Klaus
_ Important prerequisite for growth to a € 500m
Company within few years Annual General GmbH
Meeting Shareholders
_ Free space for corporate financing
appoint
elect
_ Preservation of successful combination of family
orientated business and listing
Approval rights of Supervisory Board / Corporate Supervisory supervise Managing
Board Directors
Governance mostly like German AG
manage
Rules of Securities Acquisition and Takeover Act
(WpÜG) still valid paragon GmbH & Co. KGaA
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 7At a glance
Management
Klaus Dieter Frers
_ Chairman of the Board of paragon GmbH
_ Chairman Supervisory Board of Voltabox AG
_ Founder and major shareholder* of paragon GmbH & Co. KGaA
Dr.-Ing. Matthias Schöllmann
_ Managing director of paragon GmbH (as of Sep. 1, 2018)
_ Head of Automotive business
_ Previous function: Managing Director at Hella GmbH
Dr.-Ing. Stefan Schwehr
_ Managing director of paragon GmbH
_ Head of digital issues and corresponding collaborations
_ Previous function: Head of series development controls and displays at Daimler AG
* 50% plus one share; Incl. attribution acc. to section 22 securities trading act.
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 8Agenda _At a glance _Push automotive mega trends _Segments _Financials
Push automotive mega trends
Urbanization
Current developments & internal projects:
_ Geely Auto Group as first Chinese customer for
particle sensor DUSTDETECT (2.5 μm) (SOP:
H2/2020) - increasing market penetration in
China
_ Development of the particle filter DUSTPROTECT
completed, which is six times more effective
than regular modern HEPA air filters
_ Current development projects for robo-taxi of a
Silicon Valley startup company
Increasing air
pollution
Shared mobility
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 10Push automotive mega trends
Digitization
Current developments & internal projects:
_ Development of sensor technology for
contactless recording of drivers vital data for
autonomous cars of levels 3 and 4
_ Active-Road-Noise-Cancelling as additional
feature in the existing 3D+ sound system
_ Presentation of a 3D+ streaming service for
multi-channel music to OEMs
_ Pilot customer series release of the car sharing
Autonomous driving module based on the MirrorPilot completed
Connectivity
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 11Push automotive mega trends
Climate change / carbon reduction
Current developments & internal projects:
_ Li ion battery systems for several underground
mining vehicle types under development
_ Monobloc Li ion battery system solution incl.
onboard charger and charger cable
_ Unique approach towards customers: paragon
movasys is the only supplier worldwide that can
offer complete mobile aerodynamic systems
from a single source
Sustainable Mobility _ Ramping-up series production of the newest
generation of rear spoilers for several car
Range efficiency
models
of vehicles
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 12Push automotive mega trends
Comfort requirements of a digital lifestyle
Current developments & internal projects:
_ Integration of voice assistant into MirrorPilot©
_ Upgrading of Mirror Pilot© for handling the
radio tuner via a 3rd party app
_ Development of innovations aiming on
increasing convenience for drivers and co-
drivers
Convenient
interaction
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 13Agenda _At a glance _Push automotive mega trends _Segments _Financials
Segments
Electronics: lifecycle effects with increasing take rates
Sensors Business unit revenues in €m
• Air quality sensor AQS®
• Air improvement system AQI®/IONAIR CAGR 2 %
• A/C-purifier AQC© 50
• CO2 sensor
40
• Particle sensor DUSTDETECT©
30
20
Cockpit
10
• Display instrumentation
• Camera and monitor systems 0
• Charging trays / Cradles 6M/2016 6M/2017 6M/2018
• Connectivity solutions / Media interfaces
Sensors Cockpit Acoustics
• Controls and stepper motors
Acoustics
• Hands-free microphones
TOP customers
• Noise measurement microphones
• belt-mic® seat belt microphone
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 15Segments
Mechanics: world market leader in active aerodynamics
Movable body components 3rd party business unit revenues in €m
• Active aerodynamics
• Actuators for rear spoilers CAGR 110 %
20
15
10
Movable interior comfort 5
• Rear folding tables for Mercedes S-Class et al.
0
6M/2016 6M/2017 6M/2018
Body Kinematics
TOP customers
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 16Segments
E-Mobility: leading market positions in fast growing niches
Public transportation 3rd party business unit revenues in €m
• Trolley buses
CAGR 59 %
20
Intralogistics
15
• Forklifts & Automated Guided Vehicles (AGVs)
10
Underground mining 5
• Battery Hauler & Big Bertha 0
6M/2016 6M/2017 6M/2018
Agriculture & construction E-Mobility
• Schäffer front wheel loader
Starter batteries TOP customers
• BMW motorcycles (HP4)
Public sector
• Multitude of government agencies applications
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 17Segments
Shifting from component to system provider
_ Long-standing OEM relations and well filled product pipeline
Automotive
Electronics _ Business units “Cockpit” and “Acoustic” will merge into “Interior” Division
_ Next step: Formation of “Digital” Division
_ Full service provider for complete active mobile aerodynamic systems
Automotive
Mechanics _ High-class base of development resources for future innovations
_ Dominant world market position
_ Modular concept: short time to market at minimum development costs
_ Rearrangement of intralogistics partner agreement required for targeted market
E-Mobility
leadership
_ Business development: one-stop solution provider for full electrification
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 18Agenda _At a glance _Push automotive mega trends _Segments _Financials
Financials
Key figures I
_ Material usage ratio stable at 56.6% (H1/2017: 56.0%)
_ Personnel expenditure ratio regressive at 29.5%
(H1/2017: 30.3%)
_ EBITDA up 38.0% (margin now 14.0%; H1/2017: 14.5%)
_ EBIT up 29.4% (margin now 6.1%, H1/2017: 6.7%)
_ Ramp-up costs in Business Unit Mechanics, still
redundant positions
_ Upfront personnel expenses in E-Mobility Much higher profitability in
H2/2017 expected
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 20Financials
Key figures II
_ Equity ratio stable at 55.9% (H1/2017: 56.8%)
_ Cashflow reduced to € -27.6m (H1/2017: € 1.7m)
_ Sales financing support for main Voltabox partner (limited to 2018)
_ Higher inventory for ramping-up production
_ Financial budget position: € 100.1m (H1/2017: € 8.7m)
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 21Financials
Broadening portfolio and customer structure
6M/2017 Seat 6M/2017
E-Mobility
14% Bentley Skoda
Mechanics
Kiepe El. Rest
4% Audi
BMW
Triathlon
Daimler
Porsche
VW
Electronics
82%
6M/2018 6M/2018
E-Mobility
23% Rolls Royce
Rest Audi
Faurecia Daimler
Visteon
Electronics VW
Kiepe El.
57% Triathlon Porsche
Mechanics
20% BMW
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 22Financials
60-months order backlog
60-months order backlog
_ Approx. € 2bn total 60-month
(€ 2bn) as of H1/2018 by order backlog (H1/2017: € 1.6bn)
segments/units _ Estimated order backlog is
Sensors weighted according to the
60-months order backlog with expected lifetime and the
15%
100% weighting as of H1/2018 probability of occurrence
Cockpit
11%
[in €bn]
Electromobility
51%
_ Serves as base for planning
_ Evaluation system in place since
Electronics
0,4
IPO in FY 2000
Acoustics
E-Mobility
_ Thereof approx. € 1bn
11%
0,7 Mechanics
0,2
attributable to Voltabox
Body Kinematics
12%
(H1/2017: € 0.8bn)
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 23Financials
M&A strategy
Expansion of ecosystems in
autonomous driving and
smart mobility services
Expansion of technological
expertise on system level
Expansion of vertical
integration in production
Ongoing negotiations with several
selected companies – with focus on
Electronics and E-Mobility segments
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 24Financials
Latest M&A transactions
Mechanics: HS Genion GmbH (€ 15.2m) E-Mobility: Voltabox acquisitions of
_ Acquisition of approx. 100 employees and _ Concurrent Design (Austin, Tx.) (€2.6m)
€ 25m revenue w/ strong order backlog _ Addition of engineering services company
_ Revenue contribution since Dec. 2017 _ Additional development resources, i.e. for
_ Complimentary technologies complex underground mining systems
_ Rebranding as paragon movasys GmbH _ Revenue contribution since Apr. 2018
_ Profitability still burdened by redundant
_ Navitas Systems* (Illinois & Michigan) (€37m)
functions
_ US market leader for battery systems in
_ € 3 to 5m synergy effects until FY 2021
intralogistics w/ Fortune 500 customer base
_ Engagement in several industries w/ own
production facilities (incl. cell production)
* Closing and consolidation/revenue contribution expected throughout Q3/2018.
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 25Financials
Share performance in 2018
140%
120%
100%
80%
60%
40%
20%
0%
29-Dec-17 29-Jan-18 28-Feb-18 31-Mar-18 30-Apr-18 31-May-18 30-Jun-18 31-Jul-18
paragon TecDAX SDAX DAX SXAP Voltabox
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 26Financials
Forecast update
PGN Result 2017 Year-to-date/ Forecast 2018
12 Months H1/2018 As of Mar. 9, 2018 As of Aug. 21, 2018
Group revenue € 124.8m € 78.6m Approx. € 175m € 180 – 185m
EBIT margin (unadjusted) 6.1 % 6.1 % Approx. 9 % Approx. 8 %*
Investments € 37.7m € 15.9m Approx. € 35m Approx. € 35m
VBX Result 2017 Year-to-date/ Forecast 2018
12 Months H1/2018 As of Mar. 9, 2018 As of Aug. 21, 2018
Group revenue € 27.3m € 18.1m Approx. € 60m € 65 – 70m
EBIT margin 2.1 % 0.6 % Approx. 10 % Approx. 7 %*
Investments € 6.3m € 3.5m Approx. € 13.4m Approx. € 13.4m
* Considering € 2m add. expenses from rearrangement of intralogistics partner agreement.
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 27Financials
Summary
Much faster growth than automotive sector
_ Increasing disengagement of sector constraints
_ No additional risks seen coming from e.g. US politics, Diesel scandal, WLTP bottlenecks
Robust order backlog
Significant growth in E-Mobility and Mechanics
with economies of scale driving profitability
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 28Financials – Appendix
Key figures revenues and earnings
Revenues in €m Earnings in €m
90 6
80
+ 42 % + 29 %
5
70 18,1
4,8
60 4
+ 35 %
8,0 15,4 + 51 % 3,7
50
2,1 3
3,2
40 11,4 9,2
13,1
30 2 2,4
18,2 5,5 7,9
17,2 1,3
20 5,8 3,9
10,5 1
8,9
10 16,5 17,6
8,0 9,0
0 0
6M/17 6M/18 Q2/17 Q2/18 6M/17 6M/18 Q2/17 Q2/18
Sensors Cockpit Acoustics Body Kinematics E-Mobility EBIT
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 29Financials – Appendix
Key figures profitability and expense ratios
70% 70% 70% 70%
61,0% 61,4%
60% 57,6% 60% 57,4% 60% 56,6% 60%
55,1%
Material
53,7%
Gross profit Gross profit 51,6%
margin margin input Material
50% 50% 50% 50% input
40% 40% 40% 40%
30,3% 29,5% 29,3% 29,5%
30% 30% 30% 30%
Personnel Personnel
expenses expenses
20% 20% 20% 20%
15,8%
14,5% 14,0% 14,1% 13,6% 13,0%
11,5%
EBITDA EBITDA 10,2%
10%
margin
10% 8,0% 7,2%
margin
10% 10%
6,7% 6,1% Development
Development
expenses*
EBIT EBIT expenses*
margin margin
0% 0% 0% 0%
6M/17 6M/18 Q2/17 Q2/18 6M/17 6M/18 Q2/17 Q2/18
* IAS 38.
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 30Financials – Appendix
Key developments of Group assets
_ Increase in noncurrent assets by € 15m Assets in €m
_ Intangible assets + € 7.0m – own work capitalized 350
_ Goodwill + € 2.7m – acquisition of Concurrent
Design, Inc. by Voltabox 300
60,0 67,0
_ Decrease in current assets by € 10.3m 250
Intangibles
_ Inventories + € 9.1m – further business growth 36,4 41,2
PP&E
15,5
_ Trade receivables + € 17.9m – mainly because of 200 18,6
17,3 Other noncurrent
26,4
Voltabox sales supporting activities in intralogistics 32,7 Inventories
150
_ Other assets + € 8.5m – capitalization of the one- 50,6 Trade receivables
time investment subsidy for capacity expansion 100
Liquid funds
granted by Voltabox due to the revised 145,8
Other current
cooperation agreement with partner Triathlon 50
100,1
_ Cash and cash equivalents - € 45.7m – mainly due
to expenses for operating activities in connection 0
with the organic growth of the new units Dec. 31, 2017 Jun. 30, 2018
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 31Financials – Appendix
Key developments of equity & liabilities
_ Slight increase of noncurrent provisions and Equity and liabilities in €m
liabilities by € 2.1m 350
_ higher deferred tax liabilities and increase in
noncurrent bonds 300 15,2 15,2
subscribed capital
_ Slight increase of current provisions and liabilities 57,9 57,7
capital reserve
250
by € 2.8m minority interests
_ Increase in trade payables of € 0.7m and 200 Other equity
99,5 99,5
Noncurrent borrowings
_ Increase in other provisions of € 1.0m while
150 Other noncurrent
_ Short-term loans decreased by € 0.8m Current loans
_ Equity remained virtually unchanged at € 177.0m 100 67,3 67,6 Trade payables
Current bonds
_ Equity ratio slightly down to 55.9% (December 31, 21,1 22,9
50 Other current
2017: 56.8%) as a result of the somewhat higher 5,7
17,5
4,9
18,2
balance sheet total 13,4 13,9
0
Dec. 31, 2017 Jun. 30, 2018
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 32Financials – Appendix
Key cash flow developments in H1/2018
Operating cash flow bridge [in €m]
10
1,9 1,4 -3,3
5 -1,0 -21,1
0 1,7
-5
-10
-27,6
-15
-6,5
-20
2,4 -1,3
-1,0
-25 -0,1
-30
H1/2017 EBT D&A Financial Other non- Increase in Increase in Increase in Interest paid Income Other H1/2018
result cash trade inventories trade taxes
expenses receivables payables &
& other other
assets liabilities
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 33Financials – Appendix
Investments 2018
CAPEX Own work capitalized FY 2018e [in €m]
40
Sensors
5,7 3,4
35 Cockpit
3,5
30 Acoustics
3,1 2,5
18,2
Body Kinematics
25
E-Mobility
20
15 Intangible assets H1/2018 [in €m]
17,1
9,2 1,7
10 Electronics*
16,8
15,5 20,7
5 7,8 Mechanics*
6,7
4,7 E-Mobility*
0 0,9 17,5 11,6
H1/2017 H1/2018 FY 2017 FY 2018e PPA**
Advance payments
PP&E Intangible assets
* IAS 39
** Licenses, patents, software/customer lists.
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 34Financial Calendar* 2018
_ Jan. 11/12, Oddo Forum, Lyon
_ Feb. 1, Bankhaus Lampe German Corporate Conference, London
_ Feb. 21/22, 12. Oddo-BHF German Corporate Conference, Frankfurt am Main
_ Mar. 13, Annual report 2017
_ Apr. 18-20, Bankhaus Lampe Deutschlandkonferenz, Baden-Baden
_ May 8, Interim release as of March 31 – 3 months
_ May 8, Annual general meeting paragon AG, Delbrück
_ May 9, Annual general meeting Voltabox AG, Delbrück
_ May 14-15, Equity Forum Frühjahrskonferenz, Frankfurt am Main
_ May 16, Berenberg Investor Forum at The Battery Show, Hannover
_ Jun. 7, quirin Champions 2018, Frankfurt am Main
_ Jun. 21/22 Berenberg Pan-European Discovery Conference, Provence Côte d’Azur
_ Aug. 21, Interim release as of June 30 – 6 months
_ Sep. 3/4, Equity Forum Herbstkonferenz, Frankfurt am Main
_ Oct. 25 Berenberg Discovery USA Conference, New York
_ Nov. 13, Interim release as of September 30 – 9 months
_ Nov. 26-28, Deutsches Eigenkapitalforum 2018, Frankfurt am Main
* Expected dates for paragon GmbH & Co. KGaA and Voltabox AG.
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 36Disclaimer
_ This presentation is given to you in strict confidence. By attending the presentation, you agree that no part of this presentation or disclaimer may be disclosed,
distributed or reproduced to any third party without the consent of paragon GmbH & Co. KGaA (“paragon”).
_ This presentation is being provided for the sole purpose of providing the recipients with background information about paragon‘s business. This presentation,
including the information contained in this disclaimer, does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and
neither the presentation, disclaimer nor anything contained in them forms the basis of any contract or commitment. This presentation does not purport to
summarize all information that an investor should consider when making an investment decision. It should be read in conjunction with paragon’s other
continuous disclosure announcements. Before making an investment decision you should consider whether it is suitable for you in light of your own investment
profile and objectives and financial circumstances and the merits and risk involved.
_ No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information, opinions and conclusions contained in
this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future
matters contained in the presentation (“forward-looking statements”). Such forward-looking statements are by their nature subject to significant uncertainties
and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of paragon
and its Directors) which may cause the actual results or performance of paragon to be materially different from any future results or performance expressed or
implied by such forward-looking statements. Forward looking statements are provided as a general guide only and should not be relied upon as an indication
or guarantee of future performance.
_ To the maximum extent permitted by law, neither paragon nor its related corporations, directors, employees or agents, nor any other person, accepts any
liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of this presentation or its contents or
otherwise arising in connection with it.
_ You represent and confirm by attending and/or retaining this presentation, that you accept the above conditions.
paragon GmbH & Co. KGaA Investor/Analyst Presentation H1/2018 I Aug. 21, 2018 37paragon GmbH & Co. KGaA
Investor Relations
Dr. Kai Holtmann
Artegastraße 1
33129 Delbrück
Tel.: +49 (0) 5250 9762 - 140
E-Mail: investor@paragon.ag
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