INVESTOR PRESENTATION Q3 2016 RESULTS · Normalized net earnings* of EUR 40m in Q3 2016, down from...
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ASM proprietary information © 2016 ASM INVESTOR PRESENTATION October 26, 2016 Q3 2016 RESULTS
Transcript of INVESTOR PRESENTATION Q3 2016 RESULTS · Normalized net earnings* of EUR 40m in Q3 2016, down from...
October 26, 2016
ASM proprietary information © 2016 ASM
INVESTOR PRESENTATION October 26, 2016
Q3 2016 RESULTS
October 26, 2016 | ASM proprietary information | 2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Cautionary note regarding forward-looking statements: All matters discussed in this
presentation, except for any historical data, are forward-looking statements. Forward
looking statements involve risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. These include, but are not limited
to, economic conditions and trends in the semiconductor industry generally and the timing
of the industry cycles specifically, currency fluctuations, corporate transactions, financing
and liquidity matters, the success of restructurings, the timing of (significant) orders,
market acceptance of new products, competitive factors, litigation involving intellectual
property, shareholders and/or other issues, commercial and economic disruption due to
natural disasters, terrorist activity, armed conflict or political instability, epidemics and
other risks indicated in the company’s reports and financial statements. The company
assumes no obligation nor intends to update or revise any forward-looking statements to
reflect future developments or circumstances.
October 26, 2016 | ASM proprietary information | 3
INVESTMENT HIGHLIGHTS
› ALD is a key growth market z ALD market expected to double in the next three to four years
z ASMI has leadership position in ALD
› Strong revenue performance z Revenue increased by a CAGR of 18% since 2010, clearly outperforming the overall
equipment market
› Structurally improved profitability z Gross margin steady at 44% in the first nine months of 2016
› Solid balance sheet z Strong cash position, no debt
z Announcement of new share buyback program for an amount of up to EUR 50m, as part
of continued commitment to use excess cash for the benefit of shareholders
z 17% higher dividend of EUR 0.70 per share paid in 2016
October 26, 2016 | ASM proprietary information | 4
Q3 2016 KEY RESULTS - IFRS
Q3 2015
Q2 2016
Q3 2016
New orders
148.1
159.1
122.6
Net sales
162.0
138.7
144.2
Gross profit margin % 43.4% 43.8% 44.2% Operating results
30.6
16.7
16.8
Result from investments 8.6 16.4 26.7
Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (6.7) (6.7) (6.7)
Net earnings 42.8 35.6 33.1
Normalized net earnings (excl. amortization intangible assets resulting from the sale of the 12% stake of ASMPT)
49.5 42.3 39.8
Note that as from 2016 ASMI reports its results based on IFRS instead of US GAAP
October 26, 2016 | ASM proprietary information | 5
SEMICONDUCTOR EQUIPMENT MARKET
› ASM focuses on deposition
equipment
› ASM is a market leader in ALD
› Positions in Epitaxy, PECVD
and Vertical Furnaces
Lithography 8.1bn
Etch and Clean 8.1bn
Deposition 8.0bn
Process Diagnostics
3.9bn
Other Wafer Processes
2.2bn
Test 3.6bn
Assembly 3.3bn
VLSI Research, April 2016
Equipment market segments (US$)
ASM’s focus is on deposition equipment
October 26, 2016 | ASM proprietary information | 6
0
5
10
15
20
25
30
35
40
45
2013 2014 2015 2016 2017 2018 2019
EQUIPMENT MARKET OUTLOOK
› Gartner forecasts WFE
spending to increase by 7%
in 2016, followed by 6%
increase in 2017
› Investment in leading edge
equipment remains the key
driver
Gartner expects a mid single digit increase in Wafer Fab Equipment market in 2016
+16.3% -1.3% +6.6% +6.4% +2.1% +8.2%
-7.7%
Wafer Fab Equipment Spending
Gartner, October 2016
US$bn
October 26, 2016 | ASM proprietary information | 7
SEMICONDUCTOR SALES BY KEY APPLICATION
0
50
100
150
200
250
2014 2015 2016 2017 2018 2019 2020
Industrial Trans, Automation, Security
Automotive
Solid State Drives
Smartphone Premium
Smartphone Basic
Tablet
PC / Tablet Hybrid
PC Ultramobile Clamshell
PC Desktop & Notebook
US$bn
+12%
+6%
SEMICONDUCTOR GROWTH DRIVERS
› Semiconductor drivers are mobile devices, but long term growth rate is slowing › New semi growth drivers are solid state drives, servers, automotive and IoT
Source: Gartner, April 2016
CAGR ‘15-20
+1%
+7%
+26%
+12%
-6%
+15%
-2%
Presenter
This slide shows semiconductor sales broken down by key end-product segments and forecasted to 2020. It is clear that traditional PCs and tablets declined in 2015. The key driver for growth is mobility, represented by smartphones, and ultrabooks, in particular in emerging markets where basic smartphones are major drivers. While volume growth is moderating the semiconductor content per smartphone is still on the rise. The growth of users of mobile devices will also serve to drive the growth of the communication, cloud and server infrastructure. Another significant growth application is Solid State Drives which drives Flash memory growth. SSD was up 12% in 2015 and long term CAGR 2015 to 2020 is 15%. Some traditional categories are now key growth drivers such as automotive, industrial transportation, automation and security. Another emerging major category for semiconductor devices is the Internet of Things (IoT). Gartner estimates that, by 2020, the IoT will encompass between 25 and 30 billion devices [up from 5 billion in 2015]. An exploding number of connected devices will also create a massive increase in data which will need a support infrastructure to process and store it. These end market trends are likely to create a growing demand for more advanced semiconductor devices. Manufacturing of these advanced devices is expected to require leading edge processing tools, including ALD, which bodes well for our company. [The IoT is the cumulative network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment. With a network of such objects (the things), a business can collect data and then act on it for some benefit, such as cost reduction, efficiency improvement, safety monitoring, etc.]
October 26, 2016 | ASM proprietary information | 8
0
5
10
15
20
25
30
35
40
45
2014 2015 2016 2017 2018 2019
7nm and below
10nm
14nm
22nm
32nm
45nm
65nm and above
WAFER FAB EQUIPMENT SPENDING BY NODE
Advanced nodes: market segments with high expected growth
Gartner, October 2016
Share of 14nm, 10nm and 7nm of total Equipment spending increasing in 2016-2018
US$bn
October 26, 2016 | ASM proprietary information | 9
ALD IS AN ENABLING TECHNOLOGY
› ALD technology is a key enabler of Moore’s Law z Strengths of Atomic Layer Deposition: high-precision deposition of smooth and
conformal ultra-thin films, ability to deposit new materials
z Device scaling, new materials and 3D architectures drive increased demand for ALD
› ASMI has leading positions in ALD z Leadership positions in ALD for high-k metal gate applications as well as for spacer
defined multiple patterning and for new applications
z ALD business accounted for clearly more than half of ASM’s equipment revenue in
2015
› Strong market outlook ALD z Drivers are further deployment of ALD in volume manufacturing, new applications and
process steps
z The CAGR ‘15-’19 of the ALD segment is highest within the deposition equipment
market
October 26, 2016 | ASM proprietary information | 10
ESTIMATED ALD MARKET GROWTH
› Long term growth 2015-2019 • Single wafer ALD market ~$750m in 2015
• Expected to double to approximately ~$1.5bn
in the next 3-4 years
› Key market growth drivers • In Logic/Foundry a strong rise in the number
of ALD steps going from 16/14nm to 10/7nm:
new patterning steps, next generation
high-k/metal gates and new applications for
advanced FinFET devices
• In Memory new films for 3D NAND devices
and advanced patterning layers & non-
patterning films for DRAM
0
200
400
600
800
1,000
1,200
1,400
1,600
2015 2019
US$bn
Source: ASMI, Gartner, VLSI, April 2016
ALD MARKET SINGLE WAFER / MINIBATCH
October 26, 2016 | ASM proprietary information | 11
COMPETITIVE ADVANTAGES
› Focused player, differentiated technologies
› Track record of innovation
› Global network, streamlined operations
› Leadership in ALD z Developing ALD technology since 1999
z Leading market share in ALD
› Close cooperation with the leading IC manufacturers
› Strong IP portfolio
October 26, 2016 | ASM proprietary information | 12
CUSTOMER CONCENTRATION
› Engaged with all of the top-10
semiconductor capital
equipment spenders
› Diversification of customer
base from Logic to Memory
and Foundries
› Strong momentum with
customers beyond the
traditional top-3
ASMI revenue
Growing share of wallet with top clients
0%
25%
50%
75%
100%
2010 2011 2012 2013 2014 2015
Top 3 Nr 4-10 Rest
October 26, 2016 | ASM proprietary information | 13
HIGHLIGHTS
› ALD market outlook z Strong Logic/Foundry demand in 2016 is not expected to offset lower Memory
demand, leading to a double digit decrease in the single wafer ALD market
z For 2017, a clear improvement in the single wafer ALD market is expected; long
term outlook remains solid
› Shareholder remuneration z 2015/2016 EUR 100m share buyback 97% completed on October 21, 2016
z Announcement of new EUR 50m share buyback on October 26, 2016
z Returned EUR 130m to shareholders in 2016 year-to-date (FY 2015: EUR 116m)
z 17% higher dividend of EUR 0.70 per share paid in 2016
› Intel’s Preferred Quality Supplier award z On March 10, 2016, ASMI was awarded as one of 26 companies with Intel’s
Preferred Quality Supplier (PQS) award for performance in 2015
October 26, 2016 | ASM proprietary information | 14
ASMPT RESULTS
› As of 15 March 2013, our share of approximately 39% of ASMPT’s net earnings is
included in ‘result from investments’
› Amortization intangible assets resulting from the sale of the 12% stake in ASMPT
is expected to remain stable in 2016, on a currency comparable basis
Q3 2015
Q2 2016
Q3 2016
Sales ASMPT (HK$m) 3,241 3,669
4,197
Net profit ASMPT excluding one-offs (EURm, 100% based) 20
51
68
Result from investments (including ASMI’s 39% share of ASMPT net profit) 8.6 16.4
26.7
Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (6.6) (6.7) (6.7)
Result from investments 2.0 9.7 20.0
October 26, 2016 | ASM proprietary information | 15
FINANCIAL OVERVIEW
October 26, 2016 | ASM proprietary information | 16
Q3 2016 HIGHLIGHTS
› Revenues up 4% q-o-q and down 11% y-o-y
› Bookings down 23% q-o-q and down 17% y-o-y. Book-to-bill ratio of 0.9
› Q2 backlog of EUR 154m, down from EUR 175m at the end of Q2
› EBIT margin of 11.7% compared to 12.0% in Q2 and 18.9% in Q3 2015
› Free cash flow of positive EUR 19m in Q3 2016
› Normalized net earnings* of EUR 40m in Q3 2016, down from EUR 42m in
Q2 and EUR 50m in Q3 2015
› Normalized net earnings were impacted by translation differences in
financial results (negative EUR 3m in Q3 2016 compared to positive EUR
8m in Q2 2016 and positive EUR 3m in Q3 2015) and one-off tax benefit of
EUR 9m in Q3 2015
* excl. amortization intangible assets resulting from the sale of the 12% stake of ASMPT
October 26, 2016 | ASM proprietary information | 17
FINANCIAL OUTLOOK
Based upon the current backlog and our current visibility:
After its strong growth in the previous years, and as also communicated with
our Q2-results in July, the single wafer ALD market is expected to show a
double-digit decline in 2016, caused by a significant decrease in Memory which
will not be offset by a strong increase in Logic/Foundry. We expect the single
wafer ALD market to clearly improve again in 2017.
For Q4 we expect sales between €150-170 million, while we expect an order
intake of €130-160 million, both on a currency comparable level.
October 26, 2016 | ASM proprietary information | 18
NET EARNINGS Q3
EUR million Q3 2015
Q2 2016
Q3 2016
Q3 2016 vs Q2 2016
Q3 2016 vs Q3 2015
New orders 148.1 159.1 122.6 (23)% (17)% Backlog 134.9 175.4 154.4 (12)% 14% Book-to-bill 0.9 1.1 0.9 Net sales 162.0 138.7 144.2 4% (11)%
Gross profit 70.3 60.8 63.7 5% (9)%
Gross profit margin % 43.4% 43.8% 44.2%
Selling, general and administrative expenses (24.1) (21.0) (21.4) 2% (11)% Research and development expenses (15.4) (22.1) (24.2) 10% 58%
Restructuring expenses (0.3) (1.0) (1.3) n/a n/a
Operating result 30.6 16.7 16.8 0.1 (13.7)
Operating margin % 18.9% 12.0% 11.7%
Financing costs 2.4 10.0 (3.1) (13.0) (5.5)
Income tax 7.9 (0.8) (0.7) 0.1 (8.5)
Result from investments 8.6 16.4 26.7 10.2 18.0 Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (6.7) (6.7) (6.7) - -
Net earnings 42.8 35.6 33.1 (2.5) (9.8)
Normalized net earnings (excl. amortization intangible assets resulting from the sale of the 12% stake of ASMPT) 49.5 42.3 39.8 (2.5) (9.7)
Normalized net earnings per share, diluted €0.78 €0.68 €0.65 €(0.03) €(0.13)
October 26, 2016 | ASM proprietary information | 19
R&D EXPENDITURE
EUR million
Q3 2015 Q2 2016
Q3 2016
R&D expenditure (23.2) (24.5) (26.7)
Capitalized development expenditure 11.8 6.6 6.8
Amortization capitalized development expenditure (4.0) (4.2) (4.3)
R&D expenses (15.4) (22.1) (24.2)
October 26, 2016 | ASM proprietary information | 20
CASH FLOW
EUR million
Q3 2015 Q2 2016
Q3 2016
Normalized net earnings 49.5 42.3 39.8
Depreciation and amortization 10.9 12.1 12.8
Result from investments (8.6) (16.4) (26.7)
Other adjustments (3.2) (7.2) 2.9
Change in working capital 26.3 (18.4) 2.4
Net cash from operating activities 74.9 12.3 31.2
Capital expenditure (5.6) (8.4) (12.2)
Capitalized development expenditure (11.8) (6.7) (6.8)
Dividend received from investments 18.4 7.2 14.8
Other (0.4) (2.5) (1.9)
Net cash from investing activities 0.6 (10.4) (6.0)
Dividend paid and capital repaid to ASMI shareholders (4.7) (37.2) (5.5)
Share buyback - (24.9) (26.9)
Other 0.2 2.7 1.0 Net cash from financing activities (4.5) (59.4) (31.4)
October 26, 2016 | ASM proprietary information | 21
BALANCE SHEET
EUR million Dec 31, 2015 Sep 30, 2016
Cash and cash equivalents 447 363
Accounts receivable 90 107
Inventories 114 116
Other current assets 19 17
Investments and associates 1,181 1,168
Property, plant and equipment 92 103
Capitalized development costs 73 87
Other non-current assets 60 74
Total Assets 2,076 2,035
Accounts payable 54 58
Short-term debt - -
Other current liabilities 61 54
Long-term debt - -
Other non-current liabilities 13 14
Equity 1,948 1,909
Total Liabilities and Equity 2,076 2,035
October 26, 2016 | ASM proprietary information | 22
WORKING CAPITAL
EUR million Days
40
60
80
100
120
140
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
12 13 14 15 16
Days of working capital
0
50
100
150
200
250
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
12 13 14 15 16
Working capital Quarterly sales
October 26, 2016 | ASM proprietary information | 23
HISTORICAL DEVELOPMENT
EUR million EUR million
-40
-30
-20
-10
0
10
20
30
40
50
0
50
100
150
200
250
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
10 11 12 13 14 15 16
Net Sales (lhs) EBIT (rhs)
0
20
40
60
80
100
120
140
160
180
200
Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3
10 11 12 13 14 15 16
Bookings Backlog
October 26, 2016 | ASM proprietary information | 24
COMPARABLE RESULTS US GAAP
EUR million Q3 2015
Q2 2016
Q3 2016
Q3 2016 vs Q2 2016
Q3 2016 vs Q3 2015
Net sales 162.0 138.7 144.2 4% (11)%
Gross profit 70.7 60.8 63.7 5% (10)%
Gross profit margin % 43.7% 43.8% 44.1%
Selling, general and administrative expenses (24.0) (21.0) (21.4) 2% (11)% Research and development expenses (23.2) (24.5) (26.7) 9% 15%
Restructuring expenses (0.3) (1.0) (1.3) n/a n/a
Operating result 23.2 14.3 14.3 - (8.9)
Operating margin % 14.3% 10.3% 9.9%
Financing costs 2.4 9.9 (3.2) (13.1) 5.6
Income tax 8.7 (0.8) (0.3) 0.5 (9.0)
Result from investments 8.1 16.4 26.7 10.3 18.6 Amortization intangible assets resulting from the sale of the 12% stake of ASMPT (6.7) (6.7) (6.7) - -
Net earnings 35.7 33.1 30.8 (2.3) (4.9)
Normalized net earnings (excl. amortization intangible assets resulting from the sale of the 12% stake of ASMPT) 42.4 39.8 37.5 (2.3) (4.9)
Normalized net earnings per share, diluted €0.67 €0.64 €0.61 €(0.03) €(0.06)
October 26, 2016 | ASM proprietary information | 25
