global leader in high-end vacuum valve technology · global leader in high-end vacuum valve...
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Global leader in high-end vacuum valve technology
VAT 2016 HALF-YEAR RESULTS
Heinz Kundert, CEO and Andreas Leutenegger, CFO
August 25, 2016
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Agenda
PASSION. PRECISION. PURITY.
VAT Group AG at a glance and half-year 2016 highlights Heinz Kundert, CEO 1
Half-year 2016 financial review Andreas Leutenegger, CFO 2
Strategic drivers and outlook for full-year 2016 Heinz Kundert, CEO 3
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Half-year 2016 highlights
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– Net sales increase by 16.1%
– 31.4% adjusted EBITDA margin
– Strong free cash flow
– Mega trends like Big Data, Internet of Things, Industry 4.0 etc. fuel growth
– Technology advances such as 3D NAND and OLED
– Continued high demand for WFE fab equipment
– Large players such as Intel, Samsung or TSMC increase investments in H2 2016
– Net sales expected to grow between 12-15%
– Adjusted EBITDA margin to stay above 31%
– Dividend guidance increased to CHF 80 million
Markedly
improved
results
Outlook
2016
High
demand for
technology
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Enabling innovation in your daily life
and facilitating the digitalization of the world
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Displays Industry & Research Solar Semiconductors
– Global leader in high-end vacuum valves; brand recognition for technology and innovation
– Mission-critical products enabling high vacuum process technology
– High vacuum at forefront of technological evolution affecting various end markets
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Pure play in high-end vacuum valve technology with
best-in-class profitability
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1 All numbers for HY 2016 2 Segment net sales of business segments include intercompany sales 3 Adjustment on Group level only
Segment (% of total
net sales) 1
Segment
net sales 2 CHF 41m
Global Service (17%)
CHF 22m
Industry
(7%)
Valves
(76%)
CHF 196m CHF 236m
Adj. EBITDA 3
% margin CHF 18m / 43.5% CHF 5m / 21.0% CHF 63m / 32.0% CHF 74m / 31.4%
VAT Group AG
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Global footprint – flexible set-up close to customers
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– Global presence ensuring
highest customer proximity
– 99% of production is
exported
– 70% of our products have
their final destination in
Asia
– Global key account
management
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VAT – a success story over 50 years
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VAT
values
Passion
Purity Precision
– Pure play business model focused on mission-critical
high-end vacuum valves
– Technology leadership and long term, trust-based
partnerships
– Undisputed no. 1 market position and high barriers to
entry
– Multi-dimensional growth driven by accelerating
importance of vacuum as key enabler
– Focused strategy and highly skilled workforce
– Best-in-class financial profile and high profitability
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Agenda
PASSION. PRECISION. PURITY.
VAT Group AG at a glance and half-year 2016 highlights Heinz Kundert, CEO 1
Half-year 2016 financial review Andreas Leutenegger, CFO 2
Strategic drivers and outlook for full-year 2016 Heinz Kundert, CEO 3
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Half-year 2016 – Group key figures
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Third party net sales
CHF 236 m
+16%
Adj. EBITDA
CHF 74 m
+17%
Adj. EBITDA margin
31.4%
+20pbs
Free cash flow
CHF 54m
-11%
Free cash flow margin
23%
Free cash flow
conversion
79%
Net debt/EBITDA
1.4x
Dividend 20161
of CHF 80m
1 increased dividend guidance to CHF 80 million, from the at least CHF 65 million given at the time of the IPO, out of reserves from capital contributions for the financial year ending December 31, 2016..
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Order intake steady increasing, backlog stable
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233.1
256.9
92.7 91.7
January - June2015
January - June2016
Order intake Order Backlog
+10.2%
in CHF million
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Net sales by region
Half-Year 2016 net sales CHF 236 million
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Net sales by market segment
76% Valves
17% Global Service
7% Industry
45% Asia
35% North America
20% EMEA
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Valves – 76% of Group Net Sales
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– High demand for new technology in the
semiconductor industry, particularly from the high-
end wafer manufacturing
– New downstream pressure control and isolation
systems receive high market attraction
– Strong growth in displays related to investments
in OLED production
– Solar market has shown increasing demand for
vacuum valves mainly for PERC (passivated
emitter rear cell) technology
– Asia and US major growth drivers
in CHF millionJan - June
2016
Jan - June
2015
Change
Segment net sales 196.5 167.0 17.7%
EBITDA 62.9
EBITDA margin 32.0%
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Global Service – 17% of Group Net Sales
PASSION. PRECISION. PURITY.
– Global Service includes a range of services
provided by specialized teams based in the US,
Japan, Korea, Taiwan, China, Singapore and
Switzerland
– Offering includes valve maintenance, spare
gates/parts, upgrades (i. e. retrofits) etc.
– Alignment with major Original Equipment
Manufacturers (OEM’s) allowing VAT to offer
global service contracts tailored to specific
customer needs
– Customer audits confirm the high quality of our
services
in CHF millionJan - June
2016
Jan - June
2015
Change
Segment net sales 40.9 36.8 11.1%
EBITDA 17.8
EBITDA margin 43.5%
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Industry – 7% of Group Net Sales
PASSION. PRECISION. PURITY.
– The segment Industry engages mostly in
innovative and technologically advanced edge-
welded bellows
– Important mid-term high volume follow-up contract
for damper systems for automotive applications
signed
– Automated production lines for edge-welded
bellows renewed to address customer demand
and further increase our product quality at
reduced cost.
– New large orders delayed due to design-in
process
in CHF millionJan - June
2016
Jan - June
2015
Change
Segment net sales 21.8 21.5 1.2%
EBITDA 4.6
EBITDA margin 21.0%
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Increase in sales, adj. EBITDA and profitability
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in CHF million
202.8
235.5
63.2 73.9
January - June2015
January - June2016
Third party net sales Adj. EBITDA
31.4%
31.2% adj. EBITDA margin
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Substantial benefits below the EBIT line
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– Reduced finance cost due to lower outstanding debt
– Conversion of CHF 405 million 8% coupon shareholder loan into VAT shares during IPO
– Further reduction of remaining 4.25% coupon senior secured credit facility
– Half-year effective tax rate of 26.2%; adjusted for IPO related one-offs the tax rate would
have been around 20%
in CHF million January - June 2016 January - June 2015 Variance
EBIT 52.7 45.2 16.7%
Finance net -19.9 -37.1 -46.2%
EBT 32.8 8.1 303.3%
Income tax expenses -8.6 -7.1 21.6%
Effective Tax Rate 26% 87%
Net income 24.2 1.1
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Free cash flow and conversion margin impacted by
growth in the topline
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65.6 59.5
(5.3)
(5.8) 60.3
53.7
Free cash flow
Cash flow from operating activities Cash flow from investing activities
Free Cash Flow
2015 2016
100.2%
79.2%
Free cash flow conversion
2015 2016
– Decrease in free cash flow largely driven by growth in trade working capital (TWC) and negative net impact
from derivatives and foreign exchange
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Status on FX exposure initiatives FX
EUR
USD
– Ramp-up of manufacturing site in Malaysia (USD cost base)
– Ongoing initiative to increase global sourcing
– Nomination of debt in USD
– FX hedging of up to 100% of net cash flows by forward contracts on a 18-month rolling basis
JPY
– EUR exposure reduced due to sourcing and capex in EUR
– FX hedging of up to 100% of net cash flows by forward contracts on a 18-month rolling basis
1 Net cash flow after financing activity incl. capex and loan interest expense
Initiatives to mitigate the foreign exchange exposure
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44 26 5 (5) (75)
USD JPY GBP EUR CHF
Net cash flow exposure to main currencies HY 20161
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Net debt1 reduction on track
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224 183
December 31, 2015 June 30, 2016
Net Debt
1.8x
1.4x Net debt/EBITDA
– Conversion of shareholder loan into shares during IPO
– Ongoing reduction of senior secured credit facility
– Substantial reduction of interest costs partly offset by IPO
related one off costs
1Net debt is calculated excluding the shareholder loan of CHF 405 million as of December 31, 2015.
– Rapid reduction of net debt
– Net debt/EBITDA ratio decreased from 1.8 times at year-
end 2015 to 1.4 times (LTM) at the end of June 2016
304 263
405
December 31, 2015 June 30, 2016
Gross Debt
Senior Secured Credit Facility Shareholder Loan
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Agenda
PASSION. PRECISION. PURITY.
VAT Group AG at a glance and half-year 2016 highlights Heinz Kundert, CEO 1
Half-year 2016 financial review Andreas Leutenegger, CFO 2
Strategic drivers and outlook for full-year 2016 Heinz Kundert, CEO 3
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Market trends in the electronic market -
Entire supply chain is growing with CAGR >3% 2016-19
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~USD 24b*
~USD 96b***
~USD 575b*
~USD 2.2t*
~USD 80t**
Market Size 2016E
Source: * VLSI research, August 2016 ** IC Insights, July 2016 *** various sources incl. IC Insight + VLSI, IHS and others 1 valves and related technologies
IC+FDP+HDD+LED+PV
Fab Capital Spending (IC+FDP+HDD+LED+PV)
Semi and related Fab
Vacuum Equipment (IC+FDP+HDD+LED+PV)
VAT1
Electronics Devices (includes devices with IC+FDP+HDD+LED+PV)
Worldwide GDP
5-6%
3-4%
4-5%
5-6%
2-3%
CAGR 15-20
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Market segments driving WFE demand (billion units)
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0.08 0.10 0.14 0.17 0.19 0.21
2015 2016 2017 2018 2019 2020
0.23 0.23 0.23 0.24 0.25 0.26
2015 2016 2017 2018 2019 2020
0.16 0.15 0.15 0.15 0.15 0.15
2015 2016 2017 2018 2019 2020
Smartphones
Source: Strategy Analytics June 2016, IDC June 2016, ABI Research, December 2015
1.4 1.5 1.6 1.7 1.8 1.8
2015 2016 2017 2018 2019 2020
+5% CAGR
0.22 0.20 0.21 0.22 0.22 0.23
2015 2016 2017 2018 2019 2020
+0.1% CAGR Tablets
Laptops -1% CAGR
Flat TV
Wearables
Internet of Everything
1923
2731
35 36
2015 2016 2017 2018 2019 2020
+14% CAGR
+3% CAGR
+22% CAGR
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Undisputed no. 1 market position with high barriers
to entry
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Vacuum valves market: top players by market share (2015) VAT market share evolution 2012 - 2015
Market share all industries1
41.0%
5.4% 4.4% 4.3% 4.0% 3.8% 3.7%
37% 41%
2012 2015
42%
47%
2012 2015
Market share semi & related2
Source: VLSI (2016) 1 Total market size for valves comprises high vacuum valves for general vacuum applications and for the semiconductors, displays, solar photovoltaics, LED and hard disk OEM device manufacturing equipment sector. 2 Semiconductors and related include: Integrated circuits, displays (from small mobile phone displays to large TVs), solar photovoltaics, LED, hard discs.
Total vacuum valve market size 20151:
USD 789m
Total vacuum valve market size 2015:
USD 527m
Total vacuum valve market size 20151:
USD 789m
– VAT has a share of 41% of the vacuum valves market
– Over 60% market share in selected high-end applications
– VAT’s leading market position has expanded over time
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Multi-dimensional growth - vacuum as key enabler
of proliferating technologies
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2nd Dimension
Manufacturing equipment growth
3rd Dimension
Vacuum valve growth
1st Dimension
End market growth
Manufacturing processes under vacuum
(deposition, etch and clean, ion-implantation)
– VAT is exposed to a broad range of well
established structural growth themes
– Multi-pronged growth opportunity driven
by expanding end markets
– Advanced and complex production
technology in nano-scale
– Miniaturization, increasing computing
capability at lower power consumption
drives advanced manufacturing build-up
– Fundamental shifts of manufacturing
processes towards more high vacuum,
for which VAT is a key enabler
– Vacuum valve growth driven by
favourable secular technology evolution
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VATmotion – focus on agility, cost, quality and cash
optimization
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Growth
(incl. operational
implications)
Product
Management/
Engineering
Production Supply Chain
Management Procurement Cross-functional
Value
Engineering
Manufacturing
Cost Reduction Global Sourcing Material
Planning
Capacity
Planning
Asia Growth
Modules
Global Service
Bellows
Key Account
Process
Ramp up
Malaysia
Working Capital
Process Quality
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Group Executive Committee Group Management Board
Proven management team and a highly skilled
workforce
– 1’278 dedicated employees
– Over 130 top qualified
development engineers,
product designers and
corporate R&D staff
– 20 quality managers
ensuring VAT’s certified
quality standards worldwide
– Customized in-house
training programs
– Average employee tenure
with VAT in Haag: 10 years
Highly skilled workforce
PASSION. PRECISION. PURITY.
Heinz Kundert
CEO
Andreas
Leutenegger
CFO
Kurt Trippacher
COO
Ronald
Pschenitschnigg
Global Service
Arno Zindel
General
Vacuum &
Bellows
‘COMVAT’
Urs Gantner
Semiconductors
Gebhard Lutz
Modules &
Motion
Components
Jürgen Zoller
Display & Solar
Benjamin Loh
Head of Global
Sales &
Marketing
Egon
Hämmerle
Head of
Production
Michael Zickar
Head of R&D
Aitor Galdos
Head of
Corporate
Development
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Continued profitable growth expected
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– Key growth drivers: Attractive growth markets for semiconductors, displays and related mainly
in the US, Japan, South Korea and China
– Technology advances such as 3D NAND and OLED displays require substantial investments
in new manufacturing capacity
– VAT well positioned to capture growth opportunities due to technological leadership and
strong customer relationship
– Demand outlook: Remains positive – growth drivers in place for mega trends such as big data,
internet of things, industrialization 4.0, cloud computing and e-mobility
– VATmotion: capture full growth potential, increase efficiency and ensure highest resilience
trough the cycle
– Net sales expected to grow between 12-15%
– Adjusted EBITDA margin to stay above 31%
– Dividend guidance increased to CHF 80 million
Underlying
assumptions
and market
conditions
Outlook
2016
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Q&A Session
VAT 2016 HALF-YEAR RESULTS
Heinz Kundert, CEO and Andreas Leutenegger, CFO
August 25, 2016
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Information
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Investor information Contact information
Listing: SIX Swiss Exchange Michel Gerber
Currency: CHF Head of Investor Relations &
Ticker symbol: VACN Corporate Communications
ISIN: CH 031 186490 1 Phone: +41 81 772 42 55
Listing date: April 14, 2016 E-mail: [email protected]
Event calendar
October 31, 2016 Q3 2016 Trading update
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Forward looking statements
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Forward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Any statements contained herein that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should be considered to be forward-looking statements. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the company to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the company’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the performance, security and reliability of the company’s information technology systems, political, economic and regulatory changes in the countries in which the company operates or in economic or technological trends or conditions. As a result, investors are cautioned not to place undue reliance on such forward-looking statements. Except as otherwise required by law, VAT disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after this presentation was made.