Accelleron Industries Ag · SIX:ACLN
Accelleron Industries — Investor Day (August 2022)
112 slides from Accelleron Industries's investor day presentation, Aug 31, 2022
Slide 1: Capital Markets Day
Capital Markets Day August 31, 2022
Slide 2: Important notices
Important notices THIS PRESENTATION AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR figures that precede them. Certain financial information relating to the Company and judgments by both the researchers and the respondents, including judgments about what DISTRIBUTION, IN WHOLE OR IN PART, DIREC
Slide 3: Accelleron’s Board comes with extensive governance experience
Accelleron’s Board comes with extensive governance experience Oliver Riemenschneider Monika G. Krüsi Gabriele Sons Chairman Chair AC Chair NCC ABB Turbocharging, ex. President Burckhardt Compression, Chair NCC ElringKlinger, BoD Member V-ZUG, Chairman Repower, Chairwoman TK Elevator, ex. EC Member B
Slide 4: Experienced leadership team with fit for purpose organization
Experienced leadership team with fit for purpose organization Daniel Bischofberger Adrian Grossenbacher Christoph Rofka Herbert Müller Chief Executive Officer Chief Financial Officer Head of Medium & Low Speed Head of High Speed Products Products Roland Schwarz Dirk Bergmann Annika Parkkonen Head of
Slide 5: Agenda for the day
Agenda for the day Time (CET) Topic Presenter 1. Introduction to Accelleron 2. Leading position in attractive markets Daniel Bischofberger (CEO) 11:00 - 12:00 3. The energy transition in our markets 4. Our technology for the future Dirk Bergmann (CTO) 12:00 - 12:30 Break Christoph Rofka (Medium & Lo
Slide 6: Introduction to Accelleron
01 Introduction to Accelleron 6 Capital Markets Day
Slide 7: A global leader in high power turbochargers for mission-critical applications
A global leader in high power turbochargers for mission-critical applications #1 position across segments Industry leading technology offering Preferred partner to both OEMs1 and operators >180k turbocharger installed base >100 service stations globally ~75% recurring service-driven revenues Strong
Slide 8: We are organized into two reporting segments with three operating divisions
We are organized into two reporting segments with three operating divisions working hand in hand Medium & Low Speed reporting segment High Speed reporting segment 73% 27% Medium & Low Speed High Speed products products Services Integrated Service business Service business is intrinsically linked wit
Slide 9: World requires massive emission reduction and Accelleron provides solutions
World requires massive emission reduction and Accelleron provides solutions for hard-to-decarbonize sectors Accelleron revenues by core end-markets Other 4% Energy emissions reduction required by Marine emissions reduction required by 20501 20502 Energy Marine -50% 43% 53% 12 Gt 921 Mt Net CO2 emiss
Slide 10: Turbocharging technology helps end users achieve key decarbonization and financial KPIs
Turbocharging technology helps end users achieve key decarbonization and financial KPIs How does a turbocharger improve Adding a turbocharger to an engine engine performance? helps to… … increase power by up to 300% … lower fuel consumption and CO2 emissions by up to 10% … reduce NOx emissions by up
Slide 11: Accelleron has the most comprehensive range of products on the market
Accelleron has the most comprehensive range of products on the market Smallest product: TPX Largest product: A100 / 200- L Size Size Weight Weight 100 kg 10 tons Power Power 500kW 25,000kW Applications Applications Diversified end Marine end markets markets 11 Capital Markets Day Source: Company inf
Slide 12: Accelleron has focused applications with market leading positions
Accelleron has focused applications with market leading positions 73% 27% of revenues1 Competitive of revenues1 Competitive positioning positioning2 Medium & Low Speed High Speed Industry3 Marine Energy Rail Energy Off-highway Average useful life of a 20 – 30 years ~15 years TC Differentiation Highl
Slide 13: The overall lifecycle implies long timelines for development and yielding returns
The overall lifecycle implies long timelines for development and yielding returns It takes more than 10 years to build a sizeable installed base which yields returns Product development Product business Service business >3 years Timeline 10-15 years 30+ years Develop industry leading product with ke
Slide 14: Best-in-class technology enabling leading product and service offering
Best-in-class technology enabling leading product and service offering Best-in-class efficiency (up to 2% above peers) with up to 25% higher power density1 compared to closest peer Supporting our OEM customers with industry leading emission reduction competences Digital capabilities enabling predict
Slide 15: Our skills and competence is the basis for our success
Our skills and competence is the basis for our success • ~2,3001 people with clear goals • ~185 R&D employees • >500 service engineers • 80 training hours per annum per engineer • Investing in our local peoples’ training & development to meet exacting Swiss standards • ~7% R&D as % of revenues2 • 11
Slide 16: We serve global markets and operate on a global basis
We serve global markets and operate on a global basis Resilient supply chain Dual sourcing is in place for key components Efficient manufacturing & sourcing 4 global hubs ~10,000 turbochargers manufactured per year Central service center Baden 100,000 orderlines per year Global service network >100
Slide 17: Our value proposition: support customers through entire product lifecycle
Our value proposition: Co-design Application Expertise Manufacture support customers Partner to OEMs Holistic combustion expertise in State-of-the-art through entire product in engine development future-proof technologies and wide application of turbochargers manufacturing facilities Digitalization
Slide 18: Megatrends are forcing our markets to transition and creating opportunities
Megatrends are forcing our markets to transition and creating opportunities for Accelleron Now Future • Trends: synthetic fuels, fossil fuel decarbonization, 1% reduction in maritime bio fuels, blends, increased efficiency industry fuel use is equivalent to: If maritime industry was a Decarbonizatio
Slide 19: Sustainability is at the core of our strategy and operations
Sustainability is at the core of our strategy and operations We aim to improve the Environmental impact of… We take Social responsibility for… …our own operations: …our employees: Scope 1 & 2 CO2 emissions reduced by 50% since 2019. Further 60% reduction Global development opportunities for loca
Slide 20: We plan to strategically target key areas in order to achieve our goals
We plan to strategically target key areas in order to achieve our goals: Increase Expand our Grow long-term Increase digital percentage share business offering customer scope and in our marine and into adjacent engagement facilitate power core areas where we through lifetime customer energy markets
Slide 21: Attractive financial profile with resilient margins and strong cash flow
Attractive financial profile with resilient margins and strong cash flow 2021 revenues $756m 24.8% operational EBIT margin3,4 Mid-term Organic revenues growth2,3 Operational EBITA margin3 Free cash flow conversion3 targets1 2-4% CAGR 23-26% 90-100% 2022 organic revenues growth2,3 ~6% ~24% operationa
Slide 22: Leading Position in Attractive Markets
02 Leading Position in Attractive Markets 22 Capital Markets Day
Slide 23: We are positioned in critical applications and the sustaining segment of the turbocharger market
We are positioned in critical applications and the sustaining segment of the turbocharger market Use case Off-Highway On-Highway (lower volumes, bespoke design, high performance) (high volumes, serial production) category Marine Application Energy Traction (Rail, Mining, Agriculture, Other) Truck Pe
Slide 24: Product led growth is expected across our markets
Product led growth is expected across our markets Addressable Off-Highway Market: ~$2bn 1 in 2020 Product Overall market growth Service ~2% ~4% market growth1 Accelleron’s revenue-weighted ~1% market growth2 market growth1 ~2% ~$1,500m High ~$500m 75% $500m Speed Service 25% High $200m Speed Pro
Slide 25: Trends in core market segments support the growth trajectory
Trends in core market segments support the growth trajectory Energy Marine <5% Accelleron’s revenue by core Share of ICE1 market segments Other Share of ICE >90% 4% Energy transition Segment growth Marine increases turbocharger applications increases turbocharger applications Energy Grid balancing f
Slide 26: We benefit from new capacity across our core end markets
We benefit from new capacity across our core end markets Energy Marine Capacity gross additions1 across energy (GW) Market CAGR Capacity gross additions across marine (GW) Market CAGR 2020A-2026E 2020A-2026E 3% 45 6% 42 37 39 32 32 33 37 31 29 29 29 27 32 32 31 2019A 2020A 2021E 2022E 2023E 2024E 20
Slide 27: Strong share in key products and services, with High Speed providing growth opportunities
Strong share in key products and services, with High Speed providing growth opportunities Accelleron Overall addressable off-highway market size ~$2bn1 Industry peers High speed Medium & Low speed Diesel Gas 100% 80% 60% 40% Significant share growth opportunity 20% 0% Product Service Product Service
Slide 28: The energy transition in our markets
03 The energy transition in our markets 28 Capital Markets Day
Slide 29: The energy transition provides us with multiple opportunities
The energy transition provides us with multiple opportunities 1 ICE upgrades / retrofits We reduce emissions across our end markets and expect to do so for many years to come 2 Transition fuels We are a leader in transition fuels and enable gradual decarbonization of installed products through blend
Slide 30: Regulation started the decarbonization trend across our markets
Regulation started the decarbonization trend across our markets with customers now highly focused on their CO2 footprint Regulation Technology Customer Patterns International Maritime Organisation Alternative, green fuels emerging Ship-owners / operators demands aims to reduce CO2 emissions by
Slide 31: There is a strong use case for ICEs run with green fuels
There is a strong use case for ICEs run with green fuels Optimal energy storage methods High power output 1GW Liquid or gaseous Large energy and power green fuels density supports long-distance travel and prevents power Available power outages 1MW Batteries A battery is 40x heavier and 17x large
Slide 32: The use of traditional fuels will become more expensive
The use of traditional fuels will become more expensive Fuel usage cost Today’s Alternative zero illustrative cost carbon fuels of alternative are 3x more expensive to use fuels than traditional fuels today. In the long-term cost will decrease due to economy of scale Traditional fossil fuels will be
Slide 33: Our technology for the future
04 Our technology for the future 33 Capital Markets Day
Slide 34: As an industry leader we shape the energy transition
As an industry leader we shape the energy transition across Accelleron’s markets and segments Holistic engine performance A track record of innovation expertise Partner of choice for OEMs to Future-proof technology with collaborate on most efficient future applications beyond 2040 system design 34 C
Slide 35: Accelleron has industry leading R&D innovation capabilities with a strong track record
Accelleron has industry leading R&D innovation capabilities with a strong track record 1905 1924 1985 Alfred Buechi invents the The world’s first two New industry standard world’s first turbocharger industrially manufactured with smaller and lighter and registers patent in turbochargers turbocharger
Slide 36: Accelleron invests in highest turbocharger performance – today and tomorrow
Accelleron invests in highest turbocharger performance – today and tomorrow 2021 R&D spending: 7% of revenue R&D Spend by Category R&D staff: Technology 20% 13% Product Improvement ~185 FTEs loyal, with diverse • Investments in new base • Product care technologies1 • Product cost optimization experi
Slide 37: Accelleron’s 119 patent families demonstrate its strong innovation capabilities
Accelleron’s 119 patent families demonstrate its strong innovation capabilities across the broader turbocharging field Patent Families by Type Product Patent Overview Methods 9% e.g. 3D Printing Compressor side Turbine side components components Advanced Technologies 13% e.g. Fuel Cell Products 78%
Slide 38: Optimizing core component designs through integrated workflow
Optimizing core component designs through integrated workflow Product Reliability & Product Development Safety Machine learning for design Turbochargers designed for up to optimization 100,000 operating hours Simulation of customer’s (depending on load & application) performance Service and
Slide 39: Continuous optimization loop driven by Digital Twin and computer-aided engineering
Continuous optimization loop will be driven by Accelleron’s Digital Twin and computer-aided engineering abilities Real time analysis of turbocharger measurements (in field and/or test bench) Continuous Software simulation Optimization Data driven of engine & Turbochargers on of turbocharger processe
Slide 40: Accelleron’s products achieve cost savings through increased turbocharger efficiency
Accelleron’s products achieve cost savings through increased turbocharger efficiency What makes our turbochargers more Superior technology Application support Service efficient than competition? Higher Efficiency Fuel Savings Cost Savings ~2% 2x payback from fuel cost more ~100 of upfront cost
Slide 41: Collaboration with Wärtsilä: a showcase of partnership with engine OEMs
Collaboration with Wärtsilä: a showcase of partnership development with engine OEMs in the decarbonization megatrend Cooperation with Wärtsilä World’s most efficient Serves offshore, power, Operates on a range of over 5 years led to 4-stroke diesel engine1 cruise & ferries and other fuels, with on a
Slide 42: Accelleron are at the forefront of key industry developments with strategic partners
Accelleron are at the forefront of key industry developments with strategic partners Large Engine Technology & Fuel Flexibility 3D Printing Institutional Knowledge Strong Cooperation Network with Universities and Institutes: Innio engine Industry Associations: Large Engine Competence Center, Gra
Slide 43: Market leading 3D-printing technology enhances operational efficiency
Market leading 3D-printing technology enhances operational efficiency Existing Customer Inventory Management Positioning for the Future Production time for spare parts Nostorage inventory required for Customer requires spare parts parts not Need to keep Customer requires spare parts frequently use
Slide 44: Accelleron's core segments will transition to various alternative fuels
Accelleron's core segments will transition to various alternative fuels Customer and industry focus on 2030 2050 moving to a cleaner future Pumped hydro storage Fossil liquid fuels and natural Flywheel energy Liquified natural gas Green liquid fuel gas transition to green fuel Marine storage + Green
Slide 45: Expanding turbocharger applications to fuel cells will be a market shaping innovation
Expanding turbocharger applications to fuel cells will be a market shaping innovation High temperature fuel cell vs. 1 Various Fuels ICE efficiency Possible ICE Fuel cell1 Natural Gas Hydrogen Standalone TC Standalone TC Methanol >10% pts Ammonia 2 Fuel Tank Pressurized air increases fuel ~10% effic
Slide 46: Accelleron’s continuous R&D efforts support our strong market position
Accelleron’s continuous R&D efforts support our strong market position R&D yields clear benefits across our offering Superior Product Reliability Decarbonization and Digital Offerings Performance and Uptime Fuel Flexibility Enhancing Products and Operations 46 Capital Markets Day Source: Company inf
Slide 47: Business strategy
05 Business strategy 47 Capital Markets Day
Slide 48: Medium & Low Speed
05.01 Medium & Low Speed 48 Capital Markets Day
Slide 49: The industries we serve with our Medium & Low Speed products
The industries we serve with our Medium & Low Speed products Merchant Marine Cruise & Ferries Offshore Power Generation 49 Capital Markets Day Source: Company information
Slide 50: Division Medium & Low Speed: customer overview, competitive position and market segments
Division Medium & Low Speed Customer overview, competitive position and market segments Customers Competitive position Market segments 100% ~1.5 2%4 Competitors (2020)2 ~1.3 Customer revenues 80% Segment size ($ in billions) 60% breakdown 1%4 $551m1 40% 20% 4%4 0% Product Service 2020 2026 1 Top-5 O
Slide 51: A comprehensive and well-balanced portfolio of products to cover all heavy-duty applications
A comprehensive and well-balanced portfolio of products to cover all heavy-duty applications Year of Selected turbochargers inception1 # units sold2 Applications Speed Broadest power range in the industry Low A100/200-L 3,000kW – 28,000kW 2008 >4,000 M Tailored for specific applications to achieve m
Slide 52: Latest product release: MXP, an optimized solution for auxiliary power
Latest product release: MXP, an optimized solution for auxiliary power Need Solution Digital angle Benefit Small bore medium-speed Simple, robust and + Integration of digital solutions, Optimized load response marine auxiliary diesel engine cost-efficient design including self-service app, beh
Slide 53: Upcoming product release: CRRMS, tailored solution for local Chinese shipping market
Upcoming product release: CRRMS, tailored solution for local Chinese shipping market Opportunity Product solution Value proposition elements China coast and river Emission Control Areas CRRMS Robust and cost-efficient design (ECAs) (release scheduled for 2022) Local logistic and supply chain con
Slide 54: Upcoming product release: Next generation axial turbochargers
Upcoming product release: Next generation axial turbochargers, platform-based solution for (Net)-Zero Carbon Fuel applications Opportunity Product solution Value proposition elements Growth in future (Net-) Zero Carbon fuel Next generation axial Platform-based design architecture solutions turboch
Slide 55: Tekomar XPERT provides a strong digital service solution
Tekomar XPERT provides a strong digital service solution to enhance customer offering Engine optimization, A leading engine advisory 100% subscription emission prediction and Clear visualisations software tool model compliance c.2% fuel savings & OEM agnostic emission reductions Expanding advisory b
Slide 56: Turbo Insights: the key bridge to lifetime digitalization around the Turbocharger
Turbo Insights: the key bridge to lifetime digitalization around the Turbocharger Standard on all new low speed turbochargers Easily upgraded to Tekomar XPERT for engine advice and optimization Utilizing LOREKA customer portal for clear data visualization Enables Turbo MarineCare post warran
Slide 57: Pressure is rising to decarbonize Accelleron’s core segments…
Pressure is rising to decarbonize Accelleron’s core segments… Corporations are committing to net zero carbon Accelleron is the partner of choice… … for the world’s first carbon neutral liner vessel coming into operation by 2023 and running on green Methanol … on 1st major container vessel series run
Slide 58: …and we are the partner of choice for low carbon fuels
… and we are the partner of choice for low carbon fuels to enable this decarbonization Energy Diesel Gas Marine Diesel LNG 100% 100% 75% 75% transition fuels1 50% 50% Share of 25% 25% 0% 0% 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 2022E2 Transition fuels Conventional fuels 1.6 1.8
Slide 59: Vision for Medium & Low Speed: significant growth opportunity
Vision for Medium & Low Speed: Changing industry landscape leading to significant growth opportunity $ 551m + China Coastal and River introduction + Next-Gen Axial Turbo introduction + Tekomar XPERT ramp-up + Segment share gain in e-fuels + MXP ramp-up + Market uplift (e.g. in Merchant Marine newbui
Slide 60: High Speed
05.02 High Speed 60 Capital Markets Day
Slide 61: The industries we serve with our High Speed products
The industries we serve with our High Speed products Energy Marine Off-Highway Gas fuelled applications Diesel fuelled applications 61 Capital Markets Day Source: Company information
Slide 62: Favorable market drivers
Favorable market drivers Market growth drivers Accelleron is well positioned to deliver solutions for the future • Increasing electricity demand High pressure ratio to increase power • Power density increase density • Efficiency increase → Reduction of CAPEX / kW • Energy transition to CO2 neutral
Slide 63: Division High Speed: customer overview, competitive position and market segments
Division High Speed Customer overview, competitive position and market segments Customers Competitive position Market segments Gas Diesel Gas Diesel 100% Competitors (2020)2 Customer revenues ~0.47 1%4 ~0.44 80% ~0.28 3%4 Segment size ($ in billions) breakdown 60% ~0.24 $206m1 40% 1%4 0%4 20% 6%4 3%
Slide 64: A comprehensive portfolio of products to cover all heavy-duty applications
A comprehensive portfolio of products to cover all heavy-duty applications Selected turbochargers Latest upgrade # units sold1 Applications TPS 500kW – 2,000kW 2017 51,600 M E O Broadest and newest gas portfolio in High Speed – largest installed base Tailored for specific applications Gas A100-H
Slide 65: Overview of product pipeline
Overview of product pipeline Product Description / Application Value Proposition Elements TPX TPX peak pressure ratio ~30% higher than current Current product: TPX similar turbochargers 20% increased engine power density – 16% lower Mainly used for EPG1 stand-by space requirement and 30% lower w
Slide 66: High Speed Engines running today on future fuels
High Speed Engines running today on future fuels Selected applications High Hydrogen (H2) Blend 100% Natural Gas - 100% H2 Biogas 10 years of experience First 1 MW engine capable to run Several thousand engines with on 100% H2 Accelleron turbochargers in 9 engines with 18 turbochargers opera
Slide 67: Opportunity to grow our market position in High Speed diesel
Opportunity to grow our market position in High Speed diesel with Accelleron share in High Speed diesel a dedicated product portfolio segment The rising total cost of fuel is driving need for Accelleron deliveries(1) efficiency Segment share: 8.0% Next level turbocharger performance required to
Slide 68: Vision for High Speed: outsized growth through our initiatives
Vision for High Speed: We expect to excel in the market with outsized growth through our initiatives $ 206m + Leverage gas market growth + Leverage gas market growth + Grow in diesel applications + Grow in diesel applications + Service growing installed base 2021A Medium-term Long-term Long-term rev
Slide 69: Service
05.03 Service 69 Capital Markets Day
Slide 70: Market leading global service business with highly attractive customer value proposition
Market leading global service business with highly attractive customer value proposition High customer Steadily Exclusive loyalty with growing “full cover” frequent installed base service model engagement Recurring revenues demonstrating resilience & predictability 70 Capital Markets Day
Slide 71: Accelleron provides the best lifecycle support to its customers
Accelleron provides the best lifecycle support to its customers There are many opportunities to generate revenues New service business models enabled by digitalization streams with a Turbocharger, from inception, provide further opportunities to entrench Accelleron to routine maintenance and upgrade
Slide 72: Continuously growing installed base securing service business
Continuously growing installed base securing service business with further potential for growth Development of Accelleron charged power (GW) 500 • Assumed lifetime1: High Speed 450 – Medium & Low Speed: ~25 years 400 – High Speed: ~15 years 350 300 Medium & Low Speed 250 • Continuous growth of charg
Slide 73: Our proprietary global service network is continually optimized
Our proprietary global service network is continually optimized to changing market demands 45 countries 53 countries 2000 2022 75 locations 109 locations We regularly assess suitability of sites based on: Customer proximity >500 highly trained service Business engineers opportunities >200 dedica
Slide 74: Our service excellence is enhanced by Accelleron Service Center Baden
Our service excellence is enhanced by Accelleron Service Center Baden 98% on-time delivery Within 48 hours at every airport Continuous innovation Shipping statistics yearly: Warehouse & logistics: Investments: 23,000 shipments 15,000 components on stock Automated small parts warehouse 100,00
Slide 75: Service evolution to an “availability as a service” model
Accelleron’s service evolution from a classic spare parts business to a smartly enabled, “availability as a service” model Availability as a service “Smartly Enabled Services” Turbo SmartCare Committing service Turbo MarineCare agreements • Individual optimization of turbocharger maintenance, “Keep
Slide 76: Turbo MarineCare provides digitally enhanced service for merchant marine
Turbo MarineCare provides digitally enhanced service for merchant marine Benefits for customers Relative lifetime cost of turbocharger ownership with… … traditional business model Financial Peace predictability of mind Overtime Worn parts Damaged Eroded parts components Ease of doing Real time equip
Slide 77: Smartly-enabled Engine, Advisory, and Turbocharging Services
Smartly-enabled Engine, Advisory, and Turbocharging Services Smartly-enabled services Operating data Individually optimized maintenance, performance → → and customer experience Tekomar product Accelleron knowledge Automated advisory on and expertise engine optimization1 Source: Company information 7
Slide 78: Developing the upgrade business to support decarbonization
Developing the upgrade business to support decarbonization Key upgrade benefits Regulatory impact • Regulatory and social pressure towards decarbonization in Reduce engine and TC1 component wear shipping industry (CII3, EEXI4) is continuously increasing • The need for upgrades in the marine industry
Slide 79: Further initiatives to propel Accelleron’s highly profitable service business
Further initiatives to propel Accelleron’s highly profitable service business The opportunity: The benefits: Strategy: non-Accelleron turbochargers servicing of Service of non-Accelleron Single point of service for a Focus on loyal customers with Increase turbochargers thanks to our turbocharger
Slide 80: Operational efficiency through implementation of a global ERP system
Operational efficiency through implementation of a global ERP system Characteristics Benefits for customers Old model 23 Local ERPs Global single source of data Process standardization and automation Improved global New model 2 Global ERPs collaboration Enhanced inventory ATURB Productivity an
Slide 81: Vision for Service: Steady growth through best-in-class service offering
Vision for Service: Steady growth through continually optimized best- in-class service offering + Service agreements + Further grow market penetration + Turbo SmartCare & Turbo MarineCare of own and non-Accelleron + Upgrade business turbochargers + Servicing of non-Accelleron turbochargers + Fleet m
Slide 82: Financials
06 Financials 82 Capital Markets Day
Slide 83: Compelling investment proposition translating into attractive financial profile
Compelling investment proposition translating into attractive financial profile Market leading position Technological Sustainable & digital leadership revenue growth Enabler of Attractive margins decarbonization Recurring service Strong cash generation contribution Comprehensive product offering 83
Slide 84: Resilient revenues performance with solid acceleration in H2 2021
Resilient revenues performance FY historical financials Current trading Outlook with solid acceleration in H2 2021 Revenues and growth Highlights $m 2020 • Revenues mainly impacted by pandemic- % YoY growth (9%) 6% driven weakness in consumer-facing businesses (e.g. cruise) • Low point middle of the
Slide 85: Gross margin recovered to pre-pandemic level already in 2021
Gross margin recovered FY historical financials Current trading Outlook to pre-pandemic level already in 2021 Gross profit and margin Highlights $m 2020 • Decline driven by lower volume, under % margin 47.5% 42.8% 47.0% absorption of fixed costs and adverse product mix 2021 372 • Operating leverage,
Slide 86: Operational EBIT margin significantly expanded across both segments in 2021
Operational EBIT margin significantly FY historical financials Current trading Outlook expanded across both segments in 2021 Operational EBIT and margin1 Highlights $m 2020 Group • Volume decline could only be partially 25.9% 20.5% 24.8% margin offset by swift implementation of cost measures High Sp
Slide 87: Strong free cash flow conversion over net income in past 3 years
Strong free cash flow conversion over FY historical financials Current trading Outlook net income in past 3 years Free cash flow and conversion over net income Highlights $m 2019 2020 2021 2020 • Increase in capital expenditure mainly Net income 159 112 144 resulting from real estate investments2 De
Slide 88: Strong market momentum resulting in positive revenues development in H1 2022
Strong market momentum resulting in positive FY historical financials Current trading Outlook revenues development in H1 2022 Revenues and growth Highlights $m • In H1 2022, revenues grew strongly as a result of increased customer demand % YoY growth 4% and further recovery from the pandemic (+4% in
Slide 89: Continuous operational EBIT margin improvement in H1 2022
Continuous operational EBIT margin FY historical financials Current trading Outlook improvement in H1 2022 Operational EBIT and margin1 Highlights $m • The operational EBIT margin1 improved by ~130bps in H1 2022, mainly as a result Group 23.9% 25.3% of operating leverage margin High • Medium & Low S
Slide 90: Free cash flow conversion in H1 2022 affected by supply chain challenges
Free cash flow conversion in H1 2022 FY historical financials Current trading Outlook affected by supply chain challenges Free cash flow1,2 and conversion over net income Highlights $m H1 2021 H1 2022 • Inventory build up mainly driven by overall longer conversion cycles due to Net income 67 67 unpl
Slide 91: Solid capital structure providing financial flexibility for future growth
Solid capital structure providing financial FY historical financials Current trading Outlook flexibility for future growth Target leverage at spin-off (x LTM operational EBITDA1 as of 30 June 2022) Highlights $m • Target net leverage at spin-off intended to provide Accelleron with a solid capital ~1
Slide 92: Coherent financial framework to deliver attractive total shareholder return
Coherent financial framework to deliver FY historical financials Current trading Outlook attractive total shareholder return • Clear R&D focus on efficiency Organic • Selective and disciplined approach improvements and decarbonization growth • Strategic fit, complementarity to current • Maintain cap
Slide 93: Overview of expected one-off separation and build-up costs and investments
Overview of expected one-off separation FY historical financials Current trading Outlook and build-up costs and investments One-off separation & build-up costs One-off capital expenditure Highlights • Total amount of ~$100 - 105m, ~60% of the one-off costs and ~100% of the one- off investments are e
Slide 94: Financial outlook
Financial outlook FY historical financials Current trading Outlook 2022 Mid-term1 Organic revenues ~6% 2-4% growth2 Operational EBITA ~24% 23-26% margin3 Operational net ~$150m income3,4 Free cash flow 60-70% 90-100% conversion3 Net leverage3 ~0.7x5 0.5-1.5x • If net leverage3 ≥ 1.0x: 50-70% of repo
Slide 95: Transaction overview and concluding remarks
07 Transaction overview and concluding remarks 95 Capital Markets Day
Slide 96: Key benefits and spin-off transaction structure
Key benefits and spin-off transaction structure Benefits of the spin-off Spin-off transaction structure Unlock unrealized value by allowing Accelleron to • 100% spin-off transaction in the form of dividend reach full potential as a standalone business by in kind taking advantage of its leading marke
Slide 97: Indicative transaction timeline
Indicative transaction timeline July 20, 2022 August 31, 2022 September 7, 2022 September 23, 2022 October 3, 2022 Spin-off Capital Markets Day Extraordinary Listing prospectus Planned spin-off and announcement General Meeting publication first trading day of Accelleron at SIX 97 Capital Markets Day
Slide 98: Relationship between ABB and Accelleron post spin-off
Relationship between ABB and Accelleron post spin-off • Accelleron brand announced on February 15 and in use ABB brand • Limited use of the ABB brand during the transition period – Inventory, legacy products, etc. • Accelleron has already been operating on a broadly standalone basis, including its S
Slide 99: In summary: Why to invest in Accelleron
In summary: Why to invest in Accelleron Accelleron’s competitive strength Future-proof positioning Our growth strategy • Market leader • Resilient end markets • Increase segment share in our core markets • Global service footprint • Core enabler of decarbonization • Expand business offering into • C
Slide 100: Appendix
Appendix 100 Capital Markets Day
Slide 101: Accelleron’s key markets are marine, energy and rail
Accelleron’s key markets are marine, energy and rail Marine Energy Rail Exemplary Engines used for vessel propulsion and on- Engines used for continuous, standby and Engines used for motorization of railways applications board electric power supply backup power sources, as well as well drilling, ser
Slide 102: Marine applications for turbochargers
Marine applications for turbochargers Marine Short-sea/ Merchant Auxiliary Passenger Specialised River Offshore Offshore Small fishery & coastal comm. Navy Superyachts marine power vessels vessels vessels O&G support vessels leisure vessels Type Propulsion Propulsion and auxiliary power supply Coast
Slide 103: Electrical power generation (EPG) applications for turbochargers
Electrical power generation (EPG) applications for turbochargers EPG Distributed baseload power Grid stability/ flexibility Backup power Type Prime/ continuous power source Standby (peak) power source Emergency power source Application Power plants running on internal combustion engines (gas/ diesel
Slide 104: Other application areas for turbochargers
Other application areas for turbochargers Rail Off-highway vehicles Long-haul trains Light-weight trains Mining & earth moving Construction Agriculture Type Internal combustion locomotive ICE powered drive and auxiliary systems Application Internal combustion engine within a Internal combustion engi
Slide 105: Basis of preparation of historical financials
Basis of preparation of historical financials • Financial year ending December 31 • Prepared in accordance with U.S. GAAP General → • Reporting currency is US Dollar • The presentation contains forward looking statements, subject to change based on known or unknown risks and various other factors •
Slide 106: Basis of preparation of historical financials (cont’d)
Basis of preparation of historical financials (cont’d) • Non-U.S. GAAP financial measures and alternative performance measures are presented as they are used by management in monitoring its business • Organic revenues growth defined as revenue growth at constant currency and adjusted for M&A • Opera
Slide 107: Operational EBIT adjustments
Operational EBIT adjustments Reconciliation between operational EBIT1 and income from operations Highlights • Restructuring costs mainly related to: – The Footprint 2020 program: only affecting 2019, resulting in closing of 2019 2020 2021 Klingnau facility and the transfer of its assets and employee
Slide 108: Income statement
Income statement $m 2019 2020 2021 Revenues 783 711 756 Cost of revenues (411) (406) (401) Gross profit 372 305 356 Selling, general and administrative expenses (126) (119) (121) Non-order related research and development (46) (48) (52) expenses Other income (expense), net 1 (1) 3 Income from operat
Slide 109: Balance sheet – Assets
Balance sheet – Assets $m 2019 2020 2021 Cash and cash equivalents 3 4 73 Receivables, net 157 156 183 Contract assets 11 15 14 Inventories 172 164 155 Other current assets 8 10 12 Total current assets 350 350 437 Property, plant and equipment, net 133 146 146 Operating lease right-of-use assets, ne
Slide 110: Balance sheet – Liabilities and equity
Balance sheet – Liabilities and equity $m 2019 2020 2021 Accounts payable, trade 62 63 77 Contract liabilities 16 22 23 Current operating lease liabilities 6 7 11 Short-term borrowings and current maturities of long-term debt - - 92 Provisions for warranties 24 27 29 Other provisions 5 12 8 Accrued
Slide 111: Statement of cash flows
Statement of cash flows $m 2019 2020 2021 Net income 159 112 144 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21 24 24 Deferred taxes 1 (15) (0) Other (1) 1 (1) Changes in operating assets and liabilities: Receivables, net 15 (2) (26
Slide 112: Statement of cash flows (cont’d)
Statement of cash flows (cont’d) $m 2019 2020 2021 Financing activities: Changes in financing receivables (5) (3) (0) Net transfers to Parent (158) (119) (154) Increase in short-term borrowings and current - - 92 maturities of long-term debt Dividends paid to non-controlling interests (1) (2) (4) Ot