Paragon GmbH : Earnings Call – Q1 2024 / Presentation

paragon GmbH & Co. KGaA

Earnings Call Q1

Delbrück I May 14, 2024

"paragon enters the new year with

optimism"

"Significant increase in profitability

achieved in Q1/2024"

"Forecast for the current financial year

confirmed unchanged"

2

Executive Summary

Business Description

• paragon is a product pioneer for the automotive industry with long lasting relationships with a high number of blue-chip customers
• The company proactively develops proprietary products along the global megatrends to address issues the premium automotive OEMs may not even have considered yet
• paragon is headquartered in Delbrück (Germany) and listed on the regulated market (Prime Standard) of the Frankfurt Stock Exchange
• paragon has strong engineering and deep value creation capabilities that enable variable innovative solutions across car lines and customers
• Deep footprint in the automotive industry with an ability to adapt on moving market trends
• 2023 revenues at EUR 161.6m, EBITDA of EUR 25.2m

Broad Product Portfolio

Sensors		Interior		Kinematics		Power

Development and Production Footprint

6 Plants | > 775 employees | > 30 OEMs served

GermanyEurope

USAAsia

Revenue (by Business Unit)

Revenue (by Customer)

EUR 9m

29,7%	16,0%
EUR 41m	Other
Customers
	(w/o China)

EUR 56m

2023

EUR 53m

4,8%	2023	6,2%
( % total )	China

9,3% 12,6%

6,1% 15,1%

Sensors Interior Kinematics Power

	Hongqi
4%	8%
9%	24%
5%	China
	( % total )
11%	19%
	Others
	19%

paragon GmbH & Co. KGaA | May 2024

3

paragon in a Nutshell

>35yrs

Experience

founded 1988

8.7%

CAGR

(2013-2023)

13%

of 779 employees

in R&D

paragon benefits from

8 out of 12

Global Megatrends

Risk diversification

Broad Portfolio

>30 OEMs | > 220 Vehicles

> 300 Products

Substantial

Operational

Improvement Plan

No Dependency

of combustion engines

90%

Single-Source

share

Multi-focus

Growth Strategy

drives Cash-Flow

>150m

Air Quality

Sensors

sold

Market Leader

in most of

25

Product Groups

Every

7th

new vehicle is equipped with

paragon technology

Globally

paragon GmbH & Co. KGaA | May 2024

4

Megatrends are changing the world - Multi-focus Strategy addresses Growth Drivers

❑ Product portfolio supports 8 of current 12 megatrends

❑ Future usage of paragon's products in higher-volumemodels and by more OEMs in Europe and China

Megatrends

Source: zukunftsInstitut

					paragon's
Growth Drivers		Demands		Business Units
❑ Increased Pollution in larger Cities	drives	In-Cabin	addressed by					supports
	Sensors
❑ More Health Awareness	Air Quality
❑ Climate Change
drives	Energy	addressed by		Kinematics			supports
❑ CO2-Reduction	Efficiency
			Power
❑ More Time in the Car		Convenience	addressed by		Interior		supports
❑ Autonomous Driving	drives
	Kinematics

Safety

Mobility

New Work

Health

Sustainability

Connectivity

Customization

Urbanization

paragon GmbH & Co. KGaA | May 2024

5

The Products and Customers

Air Quality Sensor

• • Automatic control of the vehicle recirculation flap
  • Reduction of dangerous emissions inside the cabin
• Advanced technology for detection of toxic gases and unpleasant smell
• High-sophisticatedSW-algorithms for detection of special traffic situations
• Over 150 million pcs. produced

DUSTDETECT

• • Measurement of particulate matter outside and in-cabin
  • Exterior and interior installation
• Laser sensor with optical particle counting
• Size discrimination PM1, PM2.5 and PM10

Key Customer

Comments

• Key Driver Urbanization

1. Global urban population has grown by a factor of 6 since 1950; by 2050 68% of the global population will live in cities

o Due to globally high levels of air pollution in

heavily frequented, urbanized areas politically

induced strategies to reduce the health impacts

of air pollution are gaining international

importance

▪ Key Driver "Well-being" inside the vehicle

o Growing number of OEMs reacting to changing

DUSTPROTECT

• • High-voltageplasma filter cleans air inside vehicle's cabin by filtering particles and viruses
• Much better than state of the art filtration systems
• Saving space, energy, waste and costs in comparison to HEPA
• Constant efficiency over lifetime

Air Quality Improver

• • Fresh air effect by artificial ionization
  • Enhancing of well- being of vehicle passengers
• Fine dusts, gases and smells are bound by negative ions
• Reduction of germs and bacteria in vehicle interior through physical air treatment

Competitors

customers requirements by integrating health

and wellness enhancing features into vehicles

▪ Today, paragon is the widely recognized world

market leader in automotive interior air quality

management systems (AQS market share ca. 85%)

▪ All sensor products (including the gas-sensor

elements) are developed and produced in house

▪ Going forward, paragon will further benefit from

potentially higher take-rates for air quality solutions

in passenger cars, particularly with the DUSTPROTECT

virus filter system (e.g. Chinese OEMs as new

customers for the filter system)

paragon GmbH & Co. KGaA | May 2024	6

The Products and Customers

Loudspeakers

• • Broad product spectrum incl. sound systems and signal processing
  • Tweeters, midranges, subwoofers, headrest & ultimate speakers
• Special solutions like exciters, air motion transformers, high-temp. exhaust speakers, external speakers
• Small to high volumes, entry to award-winninghigh-end levels
• White label branding possible (e.g. B&O, Bespoke Audio, ETON)

Instruments

• • Market leader with very well-known chrono-
  • meters, analogue clocks, compasses and control applications
• The choice for premium & luxury cars
• Many more analogue and hybrid instruments for any use case
• Own design team to meet any customer requirement
• Inhouse stepper motor and plastic parts development and mass production

Microphones

• Multiple use cases such as voice assistance, vehicle noise control, handsfree and in-car

communication, road and wind noise cancellation, external microphones for autonomous driving

• Clever combination of acoustical mechanics & adaptive electronic filter
• Very low wind sensitivity
• Analogue and digital interfaces
• Cutting edge tech and efficient manufacturing

Wireless Charging

• • High efficiency wireless charger based on Qi- standard
• Patented active cooling system
• Self diagnostic
• Member of Wireless Power Consortium (WPC) since 2013

Key Customer

Competitors

Comments

• Key Driver Adoption of smartphones

• 1. Popularity of smartphones driving the demand for integrated in car infotainment systems to perform tasks hands-free
• Key Driver Cloud technology
• 1. Cloud technologies enable live media streaming features and enhance end user convenience, while using infotainment systems
• Key Driver Regulation
• 1. From July 2019, an "Acoustic Vehicle Alerting System" (AVAS) is mandatory in the EU for hybrid electric and pure electric vehicles
• paragon is well renowned for superior acoustics, customizable design and best-in-class sound systems
• paragon's analogue instruments and displays are characterized by their exceptional design, and high-quality materials
• Easy aftermarket upgrades paired with over 30 years of loudspeaker experience
• The Interior division is an exciting business unit with wide portfolio and a lot of opportunities

paragon GmbH & Co. KGaA | May 2024

7

The Products and Customers

Spoilers

• • Electro-mechanicalsystems for high variety of vehicles
  • Application in sportscars, hatch, station cars, SUVs, e-vehicles & trucks
• High innovation and realization competence
• Range extension for e-vehicle by reduction of air resistance

Folding Tables

• • Special folding system to minimize space
  • Various electronic interfaces (wireless charging, USB-C, displays and keyboards
• Lightweight through use of magnesium and aluminum
• Resists head impact
• Meets various crash requirements

Actuators		Key Customer

• • Drive systems for active spoilers and seat adjustment
  • Integrated electronics and sensors for advanced vehicle architecture
• Multi-stagegear reduction with powerful DC-motors
• Fast operation of heavy loads

Special Kinematics

• Tailor-madesolutions with cost- effective development

▪ Electrical lowering	Competitors
mechanism of hood
ornament

• Anti-theftand pedestrian crash protection
• Wind deflectors for convertible cars and motorcycles
• Easy operation with 3D-movement

paragon GmbH & Co. KGaA | May 2024

Comments

• Key Driver Efficiency

• 1. Aerodynamic drag or wind resistance is considered a primary concern in vehicle design
• Key Driver Better mileage
• 1. As weight saving is more complicated in electric vehicles, aerodynamic drag plays an essential role in determining an electric vehicle's range
• Key Driver Vehicle stability
• 1. With faster and sophisticated vehicles, rear spoilers play a major role regarding safety concerns from vehicle aerodynamics
• paragon is the world's leading company in the fields of active mobile aerodynamics
• China is identified as growing market for aerodynamic solutions; paragon received various orders from Chinese OEMs and leads this market as well
• With innovative technical solutions, paragon increases the efficiency and the comfort of cars' moving parts, both interior and exterior

8

The Products and Customers

Battery Management Systems		Traction Batteries
▪	Huge background	▪	Lightweight concepts
	with ECU projects	▪	Use of Flow-Shape-
▪	Predictive algorithms		Design technology
▪	Intelligent balancing	▪	Embedded battery
▪ SW-based safety concept incl. top-		safety
edge SOC/SOH-calculation	▪ "Lord of the cells" battery
▪ New quiescent current concept	management
(deep-sleep and transport modes
for extended shelf life)

Today

Key Customer

Comments

• Key Driver Electromobility

o Ongoing demand of customers for battery

solutions which are new in this field and not

the big players yet

▪ Key Driver Lightweight

o OEMs searching for technologies to save

weight and costs

▪ paragon develops, produces and supplies high-

sophisticated lithium-ion battery systems

▪ The product portfolio has strong advantages because

Flow-Shape-Design

• • Expanded foam as case for battery systems and modules
  • Substitution of conventional metal housing
• Less weight/space/costs
• Absorption of shocks/vibration/ shocks/temperature
• Licenses available

Consulting

• Technology transfer in regards of Flow-Shape-Design
• Projecting and realization of production lines
• In-houseproduction of test equipment
• Turn-keyprojects

Competitors

of lithium-ion and FSD-technology, paired with BMS

incl. predictive algorithms

▪ The portfolio contains of:

• 1. Cutting-edgebattery management systems (BMS)
  2. Traction batteries characterized by lightweight design and excellent system safety
• There are major potential order intakes over the coming years that would result in a beyond market growth curve and which is not yet considered within the forecasted figures

paragon GmbH & Co. KGaA | May 2024

9

paragon´s Premium Automotive Customers 2023

% of total Revenues 2023
15,1%
	29,7%
12,5%
2023
9,3%	6,2%
		China
6,1%
4,8%	16,1%	24%
		19%
	Other Customers	11%
	9%
	(w/o China)	8%
			Other
		29%	Customers

Tenure in Years

> 28

> 25

> 23

> 21

> 20

> 20

Single Source Quota

90%

Comments

• paragon is a trusted partner and supplier of choice for global blue-chipcustomers
• Top 10 customers account for approx. 83% of the company's total revenue and have an average tenure of 17 years
• For the vast majority of customers (approx. 90%) paragon is the single source, demonstrating high satisfaction and loyalty
• As a midsize automotive Tier 1-supplier, paragon was able to successfully position itself in interesting growth segments
• Through the blue-chip customers, paragon has a broad network at the core of the automotive industry

paragon GmbH & Co. KGaA | May 2024

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