IR Presentation Explore the Kontron Group - February 2023
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Explore the Kontron Group We are a fast-moving multinational technology leader. IR Presentation February 2023
Focused on the large, diverse and growing Industrial IoT market (IIoT)
Pure-Play Leader of
Smart Industrial IoT
Fully integrated technology platform addressing high-growth end markets
Solutions 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
Member
of SDAX® 1.2bn 4,343
HQ in Austria;
Driven by customers success, leading disruptive technologies, blue-chip customers
2022 Revenue 2022
listed in Germany (EUR) Employees
60m
>10% 60m
Net Profit
(EUR)
oranic 2022 Net result Leading provider of disruptive IoT connectivity technology
growth pa (EUR) Real time 5G/6G connectivity, susietec® Toolset, over 3,200 SW/HW engineers
2
Transformation update – 2022 summary
Highlights Lowlights
› Divestment of IT Services › Chip shortage: EUR 124M
completed of delayed but not lost orders
› EUR 350M+ of net cash › EUR 120M Cash drain until Q3 –
expected from transaction for disruptive supply chain
› Big leap in IoT focus and › Russian war: >50% of business
clean up of legal structure in region stopped
› Strong customer momentum -
backlog of EUR 1.4bn and book-
to-bill ratio of 1.3x for 6 quarters 2022
3
The New Kontron –
Before and after IT divestment
S&T AG 2021 New Kontron 2023 Comment
Company name S&T AG Kontron AG Changed at AGM May 2022 – S&T related to IT biz; Kontron to IoT products
25% of Revenue (22)
Divestment 392M divestment price equal 38% of current market cap (1040M)
28% of EBITDA (22)
Entities (as of operative) 88 (78) 42 (32) Much less complex structure with no relevant minorities
Not material anymore, East European activities within EU drastically
Exposure CIS region 7% CIS 3%
reduced
Peer group
Our 01 REFOCUS 02 REBRAND 03 IMPROVE NET PROFITS
targets Disruptive IoT Technologies Increase Net profit margins by 60%
5G – smart factory – AI 2021 (3.6%) – 2023 (5%) – 2025 (7%)
*Management estimates 4
The New Kontron –
Before and after IT divestment (cont’d)
* Comment
S&T AG 2021 New Kontron 2023
Reflects divestment of EUR 392M in IT service and EUR 40M in
Revenues (EUR M) 1,342 ~ 1,200
Russia
Order backlog 1,334 (Dec-21) 1,395 (Sep-22) IT divestment already replaced by new IoT orders
Design win pipeline 3,367 (Dec-21) 3,318 (Sep-22) Strong IoT design win pipeline
Gross margin (%) 36% > 40% Change in product mix, will further increase margin after 2023
Net profit (EUR M) 48.3 (3.6%) > 60 (5%) Will increase in 2023 despite divested IT services
Employees (#) 6,206 4,343 Decline driven by project “Focus” and departure from Russia
Revenue / FTE (EUR K) 216 276
Equity ratio 32% > 45%
Cash & cash equivalents Increased cash and less total assets, includes holdback
296 600
(EUR M)
*Management estimates 5
The IoT Market
Key Metrics
Focus
29 billion $ 148.6 billion industries Smart Factories
CONNECTED DEVICES BY 2022 INDUSTRIAL IOT REVENUE
with 64 billion IoT devices with a 11.4% CAGR from 2022
worldwide by 2025
31% growth 21% adoption
MACHINES CONNECTED OF 5G ACROSS MOBILE
Ports
to the Internet by 2025 INTERNET CONNECTIONS Transportation
SMART STORAGE & LOGISTICS Transportation
by 2025
75bn
20bn
4bn
2016 2020 2025
Smart Energy Mining
Medical
INDUSTRY
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 6
Kontron offers differentiated IIoT solutions
Our competitive landscape Our distinctive competitive advantages
Selected competitors in Industrial Revenue Region
IoT (in USD M) › Unmatched R&D scale
Mercury* 3,800 North America › 3,200 FTE, budget EUR 170M
Curtiss Wright* 2,500 North America › Cost efficient solutions
Advantech 1,900 Asia › (45k p.a.) in-house engineering resources in CEE
Kontron* 1,342 Europe
Beckhoff 1,200 Europe
› Differentiated technology platform
› Purpose-built solutions for high-value low-volume use cases
ABB B&R 705 Europe
Adlink 350 Asia › Deep and established relationships in the
Seco 116 Europe ecosystem
Eurotech 63 Europe › Intel, ARM, FoxConn, Microsoft, Siemens, GE
% as of total market (USD 148bn) 9%
* Also not Industrial IoT revenues
Source: JC Market Research, management estimates 7
Technology:
We own disruptive technologies
In EUR m
Real-time IoT Software enabling Edge AI
58 2021
susietec® IoT software framework:
› Improve software product portfolio: Embedded SW, Soft PLC, TSN (real-time networks)
› EUR 100M software revenues planned by 2023, triggering add of 250M IoT products 100 2023
In EUR m
5G IoT WAN Networks 2021
122
5G enables WAN networks for machines at high data bandwidth
› Iskratel is specialist for 5G, many synergies with susietec®
› Build up networks with IoT SW and our edge devices 200 2023
In EUR m
Train Control Systems 144 2021
Mission critical control systems for highspeed trains
› New standard FRMCS will accelerate migrations and require 4G/5G
160 2023
› Partnership with Siemens Mobility to deploy a 2,000km high-speed rail network in Egypt
Source: JC Market Research, management estimates
EUROPE GLOBAL SOFTWARE & SOLUTIONS
New Go-to-Market (2023)
7 Divisions In 3 Segments
Europe Global Software + Solutions
01 02 03
MORE INFORMATION MORE INFORMATION MORE INFORMATION
ON NEXT PAGE ON NEXT PAGES ON NEXT PAGES
Industrial Telecom Services North America Asia Transport Software
Revenue* FC 2022: EUR 810M Revenue* FC 2022: EUR 260M Revenue* FC 2022: EUR 230M
Targets › EBIT** 10% Targets › EBIT** 8% Targets › EBIT** 14%
› GM 40% › GM 30% › GM 60%
› Growth p.a.: 12% › Growth p.a.: 12% › Growth p.a.: 12%
* incl. I/C revenues ; ** before HQ-fee distribution 9Backlog and design wins excl. project “Focus”
(in EUR bn) Backlog Design wins
4,5
› Accelerated growth in Software &
4 3,82
Solutions division
3,5 3,37 › Design wins increase: 2 to 21% 2018 - 2022
3
› Backlog increase: 4 to 20% 2018 -2022
2,70
2,5
› Diversified customer base
2,16 › Largest customer accounts for less than 3%
2 of revenues
1,63 1,57
1,5 1,33 › Focus industries are growing rapidly
1 0,84
0,93 › Largest customers are smart factories, rail
0,61
& avionics, healthcare, smart energy
0,5
0
2018 2019 2020 2021 Sep-22 YTD
10Drivers to our growth strategy
Market structure Software & Proven M&A
and growth Solutions division track record
11M&A
Pipeline
M&A is a core competence of Kontron M&A Volume
(in EUR m)
› Half of growth by M&A (10% /year), half organic
› Target: restructuring situations at no profit = low prices Kontron
M&A
› High synergies with Kontron > achieve >10% EBITDA within 2 years 300
Game Changer
Acquisitions
Kontron M&A pipeline 250
› Based on est. EUR 400M Focus proceeds game changer acquisitions
200
› Pipeline of 4 companies > EUR 1,000M revenues
› First transaction in H1/2023 likely 150
› Regional focus: Go global (USA, China) and European union
100
Divestments 2022 50
› Russia, Belarus, Focus
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
› First transaction H1/2023, Kontron intends to acquire min. EUR 250M in 2023 and 500M in 2023/2024
12Guidance and Outlook
Guidance 2022 Operating Operating Focus sale and strategic
continued discontinued realignment
Revenue EUR 1,100M EUR 390M
EBITDA EUR 110M EUR 39M
Net Profit EUR 56M* EUR 12M Min EUR 160M
* 2022 net result includes discontinued operations, Revenues and EBITDA not
Guidance 2023 / Outlook Agenda 2025 2023E 2025E
Vision 2030 Revenue EUR 1,200M EUR 2,000M
EBITDA 11% 13%
Transformation to IoTaaS / SLAs will boost Net
Earnings close to 10% Net Profit >60M 140M
*Best available estimation at beginning of 2023 before consolidation has been finalized. 13Challenges
in 2022 solved for 2023
Overdue Shipments Russia
(in EUR m)
2020 We decided to stop investments in Russia and CIS countries
150 127 124
108
100 79 90
77
Q2/2022 We divested several entities in Russia, Ukraine, Belarus
50 38
10
0 H1/2023 We will divest Moldova
Q1/21 Q2/21 Q3/21 Q4/21 Q1/22 Q2/22 Q3/22 Q4/22
FY 2022 14 CIS companies reduced to 2
› Chip shortage impact: Russian Engineers transferred to Europe or replaced in Europe
› Q3: EUR 124m of not delivered/delayed but not lost orders
CIS Impacts › Russian Revenues 2022 were 50% (40M) below 2021
› Significantly reduced in in Q4/2022
› 6M losses in 2022
› We increased inventory by EUR 74M until Q3 2022 -> reduced in Q4
2023 › Finalize contracts and leave Russia afterwards
Overdue shipments 2023 › Optimize impacts
› Price increases will cover Inflation -> low profit impact
› Chips allocation will end 2023
› Deliver overdue shipments
› Inventory back to normal recovers cash
14Investor Relations
Development 2017 2018 2019 2020 2021 2022e
Revenues in EUR m 882.0 990.9 1,122.9 1,254.8 1,342.0 ~1,100 + ~395
EBITDA Margin 7.7% 9.1% 9.9% 10.4% 9.4% ~10%
EPS in EUR 0.43 0.70 0.75 0.86 0.75 ~0.90**
XETRA Closing price in EUR 17.99 15.81 21.28 19.30 14.66 15.36
PER 41.83 22.58 28.37 22.44 19.55 17.86
2000 30,00
25,00
1500
20,00
1000 15,00
10,00
500
5,00
0 0,00
01/01/2016 01/01/2017 01/01/2018 01/01/2019 01/01/2020 01/01/2021 01/01/2022
Kontron AG TecDAX Index SDAX Kontron AG EUR
Share price moving sidewards – unsatisfactory development
* Incl. discontinued operations from FOCUS companies.
15
** Guidance of normalized earnings per share excluding effect of Focus saleAppendix
The Kontron Share - SDAX® member
Shareholder Structure Coverage
Ennoconn 27.64% AlsterResearch Buy: EUR 30.00
Kontron Management - 7.02% Hauck & Aufhäuser Buy: EUR 28.00
Amiral Gestion - 5.44%
Jefferies Buy: EUR 24.00
Naneva B.V (PPF Holdings B.V.) - 5.29%
Kepler Buy: EUR 24.00
Freefloat 54,6% includes as follows
BNP Paribas Asset Management - 4.22% Pareto Securities Buy: EUR 28.00
Ninety One SA (Pty) Ltd - 4.15% Stifel Buy: EUR 25.50
Allianz Global Investors GmbH - 4.10%
Warburg Research Buy: EUR 24.00
Ameriprise Financial, Inc. - 3.87%
Median Target Share Price EUR 25.50
Target: Increase strategic shareholder base 2 additional analysts will take on coverage of Kontron
16Update on ESG
Achievements 2021 Outlook & Targets
› MSCI Rating increased › Increasing interest of sustainable investors to be met
› Customers and Investors – CO2 disclosure requests more often
› UN Global Compact joined and 9 SDG’s identified we support
Making our data easily accessible and transparent to our diverse stakeholder
groups will become increasingly important
› Education
Kontron Leadership Academy (focus on female employees)
Data Security Training Focus › Carbon Disclosure Project experience ✓
› Employee Survey – conducted among approx. 5,000 employees › 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 Evaluation ESG-Goals Implementation finalized
Reporting expansion (incl. EU Taxonomy) ✓ Implementation stage launched Continuous improvement process
ESG-Goal extension ✓ Enhanced reporting
ESG-Risk assessment ✓ according to EU Taxonomy
Update material analysis ✓ and ESG standards
Continuous stakeholder dialogue ✓
2021 2022 2023
17Kontron
Group Balance Sheet
Mio. EUR 30/09/2022 31/12/2021 30/09/2022 31/12/2021
NON-CURRENT ASSETS 447,4 519,0 CAPITAL AND RESERVES 442,8 423,3
Fixed Assets 409,9 478,8 Equity 442,8 423,3
as of Property, plant and equipment 100,6 132,5 as of Treasury shares 0,0 -46,8
as of Goodwill 181,4 208,3 NON-CURRENT LIABILITIES 268,7 348,2
Other Assets 37,5 40,2 Long-term loans and borrowings 196,2 238,4
CURRENT ASSETS 851,7 833,2 Other Non-Current Liabilities 72,5 109,8
Inventories 242,7 187,3 CURRENT LIABILITIES 587,7 580,7
Trade receivables 164,5 232,5 Trade payables 196,2 270,0
Contract Assets from Customers 30,9 32,8 Contract Liabilities from Customers 67,2 85,0
Cash and cash equivalents 118,7 296,5 Short-term loans and borrowings 117,0 72,3
Other receivables and prepayments 75,4 83,9 Other Current Liabilities 97,6 153,4
assets classified as held for sales 219,5 0,0 liabilities classified as held for sale 109,7
Total Assets 1.299,2 1.352,1 Total Liabilities & Equity 1.299,2 1.352,1
Equity Ratio 34,1% 31,3%
Total Cash (Cont.+ Disc. Operations) 162,3 296,5 Total Net Cash/Net Debt* -157,2 -14,2
Working Capital excluding IFRS 15** 251,4 149,9
› EUR 74M Inventory (thereof 16.5M prepayments) built up to cover chip shortage | Equity Ratio improved
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) 18Disclaimer
This document includes 'forward-looking statements'. Forward-looking statements are all directors, employees, advisors, representatives or agents shall be liable whatsoever for any
statements, which do not describe facts of the past, but containing the words "believe", loss however arising, directly or indirectly, from any use of this document its content or
"estimate", "expect", "anticipate", "assume", "plan", "intend", "could", and words of similar otherwise arising in connection with this document.
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 This document or any of the information contained herein do not constitute, form part of or
Kontron AG, which might not occur at all or occur not as assumed. They therefore do not shall be construed as an offer or invitation to purchase, subscribe, sale or exchange, nor a
constitute a guarantee for the occurrence of future results or performances of Kontron AG. request for an offer of purchase, subscription, sale or exchange of shares / securities of
The actual financial position and the actual results of Kontron AG, as well as the overall Kontron AG, or any advice or recommendation with respect to such shares / securities. This
economic development and the regulatory environment may differ materially from the document or a part of it shall not form the basis of or relied upon in connection with any
expectations, which are assumed explicitly or implicitly in the forward-looking statements and contract or commitment whatsoever.
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 This document does not constitute an offer to purchase securities in the United States,
AG are cautioned not to place undue reliance on those forward-looking statements, which Canada, Australia, South Africa and Japan. Securities, including the bond of Kontron AG may
speak only as of the date of this document. Past performance cannot be relied upon as a guide not be sold or offered for sale within the United States or to or for the account of / in favor of
to future performance. 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
Except as required by applicable law, Kontron AG undertakes no obligation to revise these Act or unless they are subject to an exemption from registration. Neither Kontron AG nor any
forward-looking statements to reflect events and circumstances after the date of this other person intend to register the offer or a part thereof in the United States or to make a
presentation, including, without limitation, changes in Kontron’s business or strategy or to public offer of the securities in the United States.
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,
19Kontron AG
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A-4020 Linz
www.kontron.com
IR Contact:
ir@kontron.com
+43 (1) 80191 - 1196
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