paragon AG Continues Growing in Third Quarter

paragon AG Continues Growing in Third Quarter

- Consolidated revenue up 9.4 percent to EUR 73.7 million (prior year: EUR 67.4 million)

- Electromobility continues as greatest driver of growth with a 9.3 percent share of revenue (prior year: 5.2 percent)

- EBITDA increases 11.5 percent to EUR 10.2 million (prior year: EUR 9.1 million)

- EBIT margin rises slightly to 6.9 percent (prior year: 6.8 percent)

- Investments decrease 34.3 percent to EUR 16.7 million (prior year: EUR 25.5 million)

- Revenue and earnings forecast for the current fiscal year confirmed

Delbrück, Germany, November 18, 2016 - paragon AG [ISIN DE0005558696] published its interim report for the first nine months through September 30, 2016, today and confirmed its forecast for the current fiscal year.

In the first nine months of this year, the company generated consolidated revenue of EUR 73.7 million (prior year: EUR 67.4 million). Growth in the third quarter was again primarily driven by the dynamic performance of the Electromobility division. The cost of material developed subproportionally, increasing 8.4 percent to EUR 40.8 million (prior year: EUR 37.6 million). The material input ratio amounted to 55.3 percent (prior year: 55.9 percent). Gross profit rose to EUR 43.2 million (prior year: EUR 40.2 million), which corresponds to a gross profit margin of 51.4 percent (prior year: 51.7 percent).

"Electromobility is clearly our current largest driver of growth," says Klaus Dieter Frers, founder and Chief Executive Officer of paragon AG. "With the ongoing developments and existing orders for new products in the automotive industry, we will see a significant atmosphere of growth in the other divisions starting in 2018."

With a revenue growth for the first nine months of 96.8 percent, totaling EUR 6.9 million (prior year: EUR 3.5 million), production at the Voltabox subsidiaries in Delbrück, Germany, and Austin, Texas, USA, largely focused on battery modules for forklift trucks. The gradual launch of a new highly automated production line in Delbrück at the end of the year was a key operational focus in the third quarter. The delivery of battery systems for trolleybuses in Lucerne, Switzerland, was also completed. At the same time, more orders for battery systems, also for use in hybrid buses, came in from Linz, Austria, and Dayton, Ohio, USA.

Revenue in the Sensors division rose to EUR 26.4 million (prior year: EUR 25.1 million), mainly due to growth in take-rates of paragon products in current vehicle models. Revenue in the Acoustics division increased to EUR 12.9 million (prior year: EUR 11.9 million). This was primarily due to the boost in output quantity for the current version of the premium hands-free microphone. In the Cockpit division, revenue grew to EUR 25.2 million (prior year: EUR 24.0 million) as serial production of a new generation of cockpit instruments was launched for a long-standing customer. With a decrease in revenue to EUR 2.3 million (prior year: EUR 2.9 million), the Body Kinematics division continued to be strongly influenced by a number of series production developments for the 2017 fiscal year that ran parallel to each other. Prominent among the development activities were freely adjustable rear spoilers for optimized aerodynamics, which will enter pre-serial production in the fourth quarter.

"Our technological innovations serve the increasing demand for modern solutions in the areas of health, connectivity, safety, comfort and electrification," says Dr. Stefan Schwehr, Chief Technology Officer. "Here, we are adapting to the constantly shrinking innovation cycles in the automotive sector with the intensification of our agile project management."

Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) increased 11.5 percent to EUR 10.2 million in the first nine months (prior year: EUR 9.1 million), despite a rise in personnel expenses resulting from the expansion of the business, which corresponds to an EBITDA margin of 13.8 percent (prior year: 13.5 percent).

With increased depreciation and amortization of EUR 5.0 million (prior year: EUR 4.5 million) and other operating expenses remaining on par with the prior year, consolidated EBIT (earnings before interest and taxes) amounted to EUR 5.1 million (prior year: EUR 4.6 million). This corresponds to an EBIT margin of 6.9 percent (prior year: 6.8 percent).

With net finance costs of EUR -2.4 million (prior year: EUR -1.7 million) and a higher income tax burden of EUR 1.9 million (prior year: EUR 1.0 million), consolidated net income dropped to EUR 0.8 million (prior year: EUR 1.8 million). This corresponds to earnings per share of EUR 0.20 (prior year: EUR 0.45).

Total assets increased to EUR 99.9 million (prior year: EUR 86.4 million) due to the prior year's substantial investments in property, plant and equipment and due to capitalized development costs.

Equity increased to EUR 19.1 million (prior year: EUR 17.9 million), which corresponds to an equity ratio of 19.1 percent as of the end of the reporting period, September 30, 2016 (prior year: 20.7 percent). Following the reporting period, there was a significant cash inflow of EUR 13.4 million, generated by an increase in the company's share capital from authorized capital, which resulted in an equity ratio of 28.8 percent after the capital transaction (as of October 5, 2016).

Cash flow from operating activities increased in the period under review to EUR 8.4 million (prior year: EUR 6.6 million), mainly due to a much smaller increase in inventories. Cash flow from investment activity decreased to EUR 16.5 million (prior year: EUR 25.3 million).

Cash and cash equivalents fell to EUR 4.2 million as of the end of the reporting period (prior year: EUR 6.6 million). Free liquidity decreased to EUR 8.1 million (prior year: EUR 10.0 million).

paragon's Managing Board now expects to see an investment volume of around EUR 20 million in the current year. The investment volume is being raised beyond what previous planning had allotted for (EUR 14 million) to make the most of current business opportunities, which can now be explored due to the successfully carried-out capital increase. New products will be ready for the market sooner, for example, the particle sensor that meets a strong customer demand. New technical ideas will reduce the costs of conversion for battery systems and microphones. Construction costs for the building on Artegastrasse, Delbrück, have risen due to environmental and security aspects, as well as an expansion of the surface area.

Based on the results for the first nine months, the Managing Board confirms its earlier revenue and earnings forecast for the current fiscal year. This states that consolidated revenue is expected to grow by around 8 percent in the current fiscal year and thus to exceed the EUR 100 million mark. This is expected to be accompanied by above-average earnings growth with an EBIT margin of around 9 percent. The main growth drivers in the current fiscal year are likely to be the Electromobility division (Voltabox), as well as the Sensors and Acoustics divisions in the medium term.

The interim report with the condensed interim consolidated financial statements as of September 30, 2016, can be downloaded from www.paragon.ag/en/investors.

Company Profile

Listed in the regulated market (Prime Standard) of Deutsche Börse AG in Frankfurt am Main, paragon AG (ISIN DE0005558696) develops, produces, and sells innovative automotive electronics solutions. The portfolio of this direct supplier to the automotive industry includes products in the business segments of Sensors, Acoustics, Cockpit, E-mobility and Body Kinematics. In addition to its headquarters in Delbrück (North Rhine-Westphalia), paragon AG and its subsidiaries have locations in Suhl (Thuringia), Nuremberg (Bavaria), St. Georgen (Baden-Wuerttemberg), and Bexbach (Saarland), as well as in Kunshan (China) and Austin (Texas, USA).

Financial Press Contact & Investor Relations

paragon AG

Dr. Kai Holtmann
Artegastrasse 1
33129 Delbrück, Germany
Phone: +49 (0) 52 50 - 97 62-140
Fax: +49 (0) 52 50 - 97 62-63
E-mail: kai.holtmann@paragon.ag