SANDVIKTO ACQUIRE SOFTWARE COMPANY CGTECH
20 OCTOBER 2020

RECAP CMD 2019The SMS vision is to become the world
leading solutions provider to the wider
component manufacturing industry.

2THE MANUFACTURING VALUE CHAINCOMPONENT DESIGN PRODUCTION PREPARATIONOUR OWN SOLUTIONS
3I

MACHINING

ACQUISITIONSIVERIFICATIONPARTNERSHIPSMACHINE-SHOP WORKFLOW
MACHINING

PRODUCTION PREPARATIONVERIFICATION

4COMPONENT DESIGNPRODUCTION PREPARATION - KEY DECISION AREA
MACHININGPRODUCTION PREPARATIONVERIFICATION
Selectmanufacturingprocess sequence

5Computer AidedManufacturing“CAM” programming

Simulate, verify andoptimize postprocessed NC-code

COMPONENT DESIGNSIMULATION, VERIFICATION AND OPTIMIZATIONMACHINING

SIMULATION, VERIFICATION AND OPTIMIZATION- Simulation of the machining
process with a digital twin.
- Verification that the process has
been designed to specification.
- Optimization of machining strategy
improving time and cost.

MACHINE
PRODUCTIVITYPRODUCTION PREPARATIONVERIFICATION
Selectmanufacturing
process sequence

6

Computer Aided
Manufacturing“CAM” programming

Simulate, verify andoptimize postprocessed NC-code

COMPONENT DESIGNCGTECH

7CGTECH AT A GLANCECOMPANY PROFILE

MAIN CUSTOMER VERTICALS

Established:

1988• Aerospace & defense• Automotive and transportation

Offices:US (HQ), 11 additional countries• Machinery and tooling• Mold and dieCEOJon Prune

Revenue:

49MUSD 2019A

Employees:~180

Customers

Americas (44%), Europe (32%), Asia (23%)

WORLDWIDE PRESENCEOVERVIEW••

CGTech is an Irvine, California based provider of NC code simulation,verification, optimization and programming software.

FRA•

All industry segments are served including a large presence inAerospace.

•Modular pricing strategy with a maintenance recurring revenue
component accounting for 51% of sales.

RUSSKCNID
BRA

Products are CAM, machine tool, and cutting tool neutral and work
stand alone or in conjunction with all major CAM suppliers.

GER
ITAIN

Founded in 1988 by owner and CEO Jon Prun with ~180 employees
out of which 36 are in R&D.

•8UKUSAJPNCGTECH PRODUCT OVERVIEWSOFTWARE

VALUE PROPOSITION• Eliminates the process of manually proving-out NC programs.
• Reduces scrap loss and rework.
• Optimizes NC programs in order to both save time and produce higher quality results.

Since 1988 CGTech’s product VERICUT®, has
become the industry standard for simulating
CNC machining in order to detect errors,potential collisions, or areas of inefficiency.

9• Simulates all types of CNC machine tools, including those from leading manufacturers andruns standalone or integrated with all leading CAM systems.

Software• Vericut: CNC simulation, verification and optimization
software.
• Various modules designed for different manufacturing
processes (e.g., additive, drilling, etc.) and materials.
• Software is sold as perpetual license.

Services• Maintenance: provide existing customers with technical support,upgrades, etc.
• Training and other services (e.g., implementation, modelling,customization, etc.)• Services are sold as annual maintenance contract or one-off purchase.

CGTECH – A PERFECT STRATEGIC FIT

01
Leading player inclosely adjacentmarket to core02
Premium offering withstrong brand name andconsumer regard.

03
Platform to provide
machining strategies.

04
Healthy profitability andsource of reoccurring
revenue.

05
Opportunity for digital twin
leadership in diverse
applications.

CGTECH IS AN ADVANCE AND WELL-POSITIONED PLAYER IN THESTRATEGICALLY IMPORTANT PRODUCTION PREPARATION STEP WITHIN THE MANUFACTURING VALUE CHAIN

10TRANSACTION OVERVIEW& FINANCIAL IMPACT11

TRANSACTION OVERVIEW
TRANSACTIONCONSIDERATIONS• Enterprise value: not disclosed• Sellers: Jon Prune• Estimated closing: expect to close the transaction Q4 2020, subject tocustomary regulatory approvals

FINANCIALIMPACT• Financial profile: slightly margin dilutive to Sandvik Manufacturing andMachining Solutions• EPS impact: neutral to EPS including PPA amortization• Funding: Cash deal
• Group gearing today is 0.05 and net debt/EBITDA is not measurable. The
deal will have an impact on the debt KPI:s, but very limited and not impacting
credit rating KPI:s in a substantial way.

12

SUMMARY13

A STRATEGIC ACQUISITION IN THE IMPORTANT
PRODUCTION PREPERATION STEP

Strongstrategic fit

Another step
towards digitalmanufacturing

14

Healthy longterm growthprospects

QUESTIONS & ANSWERS

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