Be Semiconductor Industries N.v. · EURONEXT:BESI
Be Semiconductor Industries — Investor Presentation (May 2020)
57 slides from Be Semiconductor Industries's investor presentation, May 2020
Slide 1: Investor Presentation May 2020
INVESTOR PRESENTATION May 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements about management's future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the press release, including, but not limited to, statements relating to ex
Slide 3: Agenda
Agenda I. Company Overview II. Market III. Strategy IV. Financial Update and Summary V. Appendix May 2020 3
Slide 4: I. Company Overview
I. COMPANY OVERVIEW May 2020 4
Slide 5: Besi Overview
Besi Overview • Leading assembly equipment supplier with #1 and #2 positions in key markets. 32% addressable market share Corporate Profile • Broad portfolio: die attach, packaging and plating • Strategic positioning in substrate and wafer level packaging • Global operations in 6 countries; 1,621 em
Slide 6: Company History
Company History Die Attach Acquisitions 60.0% 56.0% 400 • 55.0% € 366.1 50.0% Product Strategy 300 • Expanded advanced packaging leadership into die attach area Revenue (€ millions) • Gained market share organically and via acquisitions 45.0% • Gained mindshare with key industry leaders • Growth in
Slide 7: Best in Class Product Portfolio
Best in Class Product Portfolio Die Attach Die Bonding Multi Module Attach Flip Chip Die Sorting Die Lid Attach • 2100 xP / hS plus • 2100 DS New • 2200 evo • 8800 CHAMEO advanced New • WTT New • DLA New • 2100 sD plus / PPP plus • 2100 SC • 2200 evo plus • 8800 TC advanced New • TTR New • 2100 sD a
Slide 8: Customer Ecosystem
Customer Ecosystem Customers OEMs End Products IDMs Subcontractors • Diversified, blue chip customer base, top 10 = 44% of 2019 revenue • Leading IDMs and subcontractors. 61%/39% split in 2019 • Also supply leading fabless companies: Qualcomm, Broadcom, MediaTek via subcontractors • Long term relati
Slide 9: Product Positioning
Product Positioning Semiconductor Manufacturing Equipment (2019: $61.7B)* Front end: $53.2B Assembly: $3.0B Test: $5.5B (86.2%) (4.8%) (8.9%) Semiconductor Assembly Process Dicing Die Attach Wire Bond Packaging** Plating Leadframe Assembly Substrate Wire Bond Assembly Substrate Flip Chip Assembly/TC
Slide 10: Operational Profile
Operational Profile Duiven & Drunen, (The Netherlands) Steinhausen, Radfeld, (Austria) (Switzerland) Chandler Suzhou Chengdu Korea Shanghai Leshan Taiwan Shenzhen Sales Office Thailand Philippines Malaysia Production Site Singapore Sales, Production and R&D Site LTM March 31, 2020 Europe/NA Asia • D
Slide 11: Summary Financials
Summary Financials Year Ended December 31, Long term, step function revenue growth in cyclical business (€ millions, except share data) 2017 2018 2019 Q1-19 Q1-20 • Last peak reached in 2017 at € 592.8 million Revenue 592.8 525.3 356.2 81.4 91.3 • Current performance affected by downturn starting in
Slide 12: Increased Profitability vs. Last Market Downturn
Increased Profitability vs. Last Market Downturn 2015 2019 € millions 140 +2.0% 350 356.2 349.2 120 25.8% 100 Operating Income 300 91.9 Revenue +58.7% 80 16.6% 60 57.9 250 40 20 200 0 Revenue Operating Income May 2020 12
Slide 13: Business Model Objectives
Business Model Objectives Objectives Revenue € 800MM Addressable 40%+ Market Share Gross Margin 55-60% Net Margin 30-35% Headcount 80% Asia/20% Euro Split May 2020 13
Slide 14: Capital Allocation Trends
Capital Allocation Trends € millions 209.5 200 35.5 Dividends 167.1 Share Repurchases 150 44.7 • € 730.5 million distributions since 2011: • Includes € 73.5 million 2019 dividend 100 88.8 • Current € 75 million share repurchase program: 174.0 77.6 67.4 23.5 4.1 • 3.2 million shares (€ 71.2 million)
Slide 15: II. Market
II. MARKET May 2020 15
Slide 16: What Drives Besi's Business?
What Drives Besi’s Business? Tech capabilities in IDM customer and Macro GDP trends 24/7 production supply chain environment choice Timing of customer Competitive cycle roadmaps and times and capital spending scalability programs May 2020 16
Slide 17: Assembly Equipment Market Trends
Assembly Equipment Market Trends Assembly Equipment Market Market Size YoY Growth Rate 5.0 4.4 4.3 50% 3.7 3.9 4.0 3.5 3.6 30% US$ billions 3.1 3.0 2.8 27.3% 3.0 25.8% 10% 22.9% 12.5% 9.2% 2.0 -2.5% -10% -8.3% 1.0 -16.5% -30% -29.3% 0.0 -50% 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E Source: VL
Slide 18: Semi Equipment Recovery Changed Markedly at End of Q1-20
Semi Equipment Recovery Changed Markedly at End of Q1-20 Source: VLSI April 2020 May 2020 18
Slide 19: Assembly Equipment Market Composition
Assembly Equipment Market Composition Assembly Equipment Market * Besi Addressable Market * (2018: $4.3 billion) (2018: $1.8 billion) Plating Lead Trim & Form 1.7% Other 5.2% Assembly (Inspection, Wire Bonding Dicing) 22.8% 28.1% Molds & Presses 22.9% Die Bonding 44.6% Die Attach 64% Plating 0.7% Si
Slide 20: Besi Market Share Trends
Besi Market Share Trends 2014 2015 2016 2017 2018 • Market share trending upwards Total Assembly Market ($MM) $3,725 $3,119 $3,515 $4,421 $4,313 • Can vary p.a. based on customer Besi Market Share 13.5% 12.4% 11.9% 15.1% 13.9% roadmaps and advanced packaging needs Addressable Market ($MM) $1,622 $1,
Slide 21: Move to Digital Society Helps Drive Advanced Packaging Growth
Move to Digital Society Helps Drive Advanced Packaging Growth May 2020 21
Slide 22: Requiring Increased Density, Higher Accuracy and Smaller Form Factors
Requiring Increased Density, Higher Accuracy and Smaller Form Factors for Next Generation Devices Front End Today => Tomorrow Transistor scaling Lithography New structures 3D Back End Assembly More contacts Smaller pitches Thinner/denser more complex packages From simple Wire Bond to BGA/Flip Chip t
Slide 23: Advanced Packaging Critical to Next Generation Applications
Advanced Packaging Critical to Next Generation Applications Greater Mobile Revolution Miniaturization • Mobile internet • Messaging • Social media • Shared economy Higher Greater • Gaming Accuracy Complexity • Geo-location • Audio/video • Auto electronics Die Bond Packaging Datacon 8800 TC Fico AMS-
Slide 24: Advanced Packaging Unit Volume and Market Share Are Increasing
Advanced Packaging Unit Volume and Market Share Are Increasing Advanced Packaging Silicon Demand Growth & Market Share 2011 - 2023 55 50% 41% 43% • Advanced packaging applications have 45 40% 38% 39% 40% grown significantly since 2010 37% 34% 36% • Currently, estimated 38% of wafers use M wafers, 30
Slide 25: Besi Portfolio Well Positioned by Node Size and Accuracy
Besi Portfolio Well Positioned by Node Size and Accuracy Estimated % of 2019 Revenue Typical Application Besi Equipment Accuracy Size 100% Micron NM Die Attach 90% 10+ 28+ Automotive, SiP 25% Packaging Power 80% Plating 70% Die Attach 20% IOT 60% 10 28 Packaging General ICs Plating 50% 40% Computer,
Slide 26: Fan Out WLP and TCB/TSV Are Emerging Advanced Packaging Process Technologies
Fan Out WLP and TCB/TSV Are Emerging Advanced Packaging Process Technologies Fan Out WLP (Wafer Level) TCB/TSV (Substrate Based) Enabling technology for high end memory and optical Preferred process for high data applications transfer and optical devices in IoT, mobile and power Next step beyond Fli
Slide 27: Besi End User Application Trends
Besi End User Application Trends • Mobile Internet, Computing and 2019 % of Revenue Automotive are largest end markets • Estimated 71% of revenue in 2019 • Percentages vary p.a. based on Industrial / customer roadmaps LED 9% • Mobile is largest market Mobile Internet • % varies based on timing and s
Slide 28: Expansion of Cloud Infrastructure and Connected Devices Aids Growth
Expansion of Cloud Infrastructure and Connected Devices Aids Growth May 2020 28
Slide 29: 5G Rollout Creates New Opportunities in Besi End User Markets
5G Rollout Creates New Opportunities in Besi End User Markets Source: KPMG January 2020 May 2020 29
Slide 30: Besi Addressable Market Share of Mobile Increasing
Besi Addressable Market Share of Mobile Increasing Besi technology can support virtually all device platforms utilized in latest mobile devices. May 2020 30
Slide 31: Computing: Assembly Process Ever More Critical Step In CPU Value Chain
Computing: Assembly Process Ever More Critical Step In CPU Value Chain 3D STACKING AND MULTI CHIP ARCHITECTURE AS IMPORTANT OR EVEN MORE IMPORTANT THAN FRONT END PROCESSES !!!!!! Source: ASML Investor Day Nov 2018 May 2020 31
Slide 32: III. Strategy
III. STRATEGY May 2020 32
Slide 33: Summary Strategy
Summary Strategy Maintain best in class technology leadership Reward Increase market shareholders via presence in capital allocation addressable policy markets Strategic Objectives Acquire Enhance companies with scalability of complementary manufacturing technologies and model. Reduce products struc
Slide 34: Strategic Plan Update
Strategic Plan Update Revenue Initiatives Cost Initiatives Customer: Supply Chain: • Expand partnership with next-gen leaders to • Increased production/supply chain flexibility: gain share MY, CHN, SGP • Exploit opportunities for hybrid bonding, micro • Vendor consolidation and volume discounts LED,
Slide 35: COVID-19 Update
COVID-19 Update Besi operating with varying restrictions • Headcount: nearly 70% located in Asia • Malaysia: Deemed essential business. Permitted to resume full operations recently • Fully operational China • Singapore: Deemed essential business. Open but most staff working remotely • Adjusting Asia
Slide 36: Current Technology Roadmap
Current Technology Roadmap • IDMs investing in next Customers generation devices 5G Applications Artificial Intelligence Cloud Infrastructure Advanced Logic Apps • Increasing R&D activities Besi • Highly focused per customer roadmaps May 2020 36
Slide 37: Asian Production Transfer Has Reduced Break Even Revenue Levels
Asian Production Transfer Has Reduced Break Even Revenue Levels and Improved Cash Generation Asian Production Has Significantly Leading to Lower Fixed European And Reduced Break Even Improved Cash Generation Expanded + NA Headcount Revenue Levels Shipments Headcount € millions € millions 2,000 150 3
Slide 38: Flexible Production Model Has Generated Consistent Gross Margins
Flexible Production Model Has Generated Consistent Gross Margins in Market Cycles Revenue Gross Margin 180 170 100% 159 161 Downturn COVID 160 153 155 19 90% 140 80% 120 117 110 € millions 105 Gross Margin % 100 93 93 92 70% 90 91 81 80 58.7% 58.0% 55.7% 57.3% 56.3% 56.5% 56.5% 56.4% 55.9% 56.0% 56.
Slide 39: Flexible Asian Workforce Has Significantly Enhanced Scalability
Flexible Asian Workforce Has Significantly Enhanced Scalability Fixed Headcount 2,000 100% 1,724 1,692 1,626 1,800 1,605 90% 1,546 1,534 1,529 1,600 80% 1,400 • Headcount adjusted in downturn: Headcount 71% 73% 72% 72% 1,200 71% 70% 70% 70% 1,000 60% • 25.3% reduction from Q1-18 peak to Q4-19 800 50
Slide 40: Overhead Alignment With Market Cycles
Overhead Alignment With Market Cycles € millions 140 45% Baseline Opex Trends 2015-2019 40% Baseline Operating Expense 120 113.7 35% 100 94.8 96.9 30% Opex/Revenues 27.1% 27.2% 80 25% 60 19.2% 20% 15% 40 10% 20 5% 0 0% 2015 2017 2019 Baseline Opex Baseline Opex/Revenues • Overhead aligned with order
Slide 41: Besi Strategic CSR Objectives
Besi Strategic CSR Objectives Safeguard safe and healthy CSR Objectives 2020 working conditions Maintain best Responsible practices tax practices environmental in all and ethical jurisdictions behavior Review sustainability strategy Reduce Reduce packaging, waste, CSR environmental impact of transpo
Slide 42: Progress on CSR Agenda
Progress on CSR Agenda CSR Highlights 2019 Waste Usage Water Usage Energy Usage 18 200 35 Reduced packaging, energy, waste, and 17.7 water usage 32.6 Installed solar panels at Malaysia facility 183 (15.8%) (13.1)% (16.3%) Environmental Developed system to better assess 16 175 30 Footprint sust
Slide 43: IV. Financial Update and Summary
IV. FINANCIAL UPDATE AND SUMMARY May 2020 43
Slide 44: Q1-20 Profit Metrics Better Than Anticipated
Q1-20 Profit Metrics Better Than Anticipated Q1-19/Q1-20 Q4-19/Q1-20 Revenue Net Margin Revenue Net Margin 100 100% 100 - 1.2% € 92.4 € 91.3 € 91.3 + 12.2% 90% € 81.4 100% 80% 80 80 Gross Margin Gross Margin 55.9% + 0.8 points 56.7% 70% 56.3% + 0.4 points 56.7% OPEX OPEX 75% Revenue (€ millions) 60%
Slide 45: Strong Liquidity Position to Help Navigate COVID-19 Challenge
Strong Liquidity Position to Help Navigate COVID-19 Challenge Cash and Deposits Net Cash 600 527.8 Solid Liquidity Base 507.5 € 122.4 MM • Total cash/deposits grew to €427.6 million Q1-20 Dividend 500 475.5 2018 • Net cash increased by € 18.0 million (+13.8%) to 427.6 € 148.3 million 408.4 • Untappe
Slide 46: Guidance Q2-20
Guidance Q2-20 € in millions Revenue Gross Margin Operating Expenses -10% € 91.3 +5% - 56.7% 56%-58% € 33.0 - -15% +25% Q1-20 Q2-20 Q1-20 Q2-20 Q1-20 Q2-20 -15% -15% May 2020 46
Slide 47: Summary
Summary Assembly market Long term secular Disciplined Market presence ever more critical trends drive strategic focus has grown via key in semiconductor advanced has created an IDM customers value chain packaging growth industry leader and supply chains Tech leadership Asian production and scalable
Slide 48: V. Appendix
V. APPENDIX May 2020 48
Slide 49: Revenue and Gross Margin Cycles Since 2006
Revenue and Gross Margin Cycles Since 2006 € millions Revenue Gross Margin Gross Margin 700 60% 56.8% 55.8% 600 51.1% 50% 593 500 39.5% 40% 424 400 34.1% 379 30% 356 4 year 300 302 averages 351 20% 200 164 191 10% 100 0 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 May 202
Slide 50: IDM/Subcontractor Order Trends
IDM/Subcontractor Order Trends € millions 800 700 680.9 600 35% 483.1 500 Orders 400 373.8 32% 384.0 348.3 348.7 300 47% 49% 39% 49% 65% 200 68% 100 51% 51% 61% 53% - 2015 2016 2017 2018 2019 LTM IDMs Subcontractors May 2020 50
Slide 51: Baseline Operating Expense Trends
Baseline Operating Expense Trends 40 Baseline Opex Other Opex* 33.0 31.8 Operating Expenses (€ millions) 30.7 1.0 30 29.1 7.1 2.8 5.4 26.8 25.9 25.2 0.2 2.1 24.2 1.5 0.9 20 30.7 26.3 25.7 25.3 25.9 24.7 23.7 23.3 10 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 * Other Opex includes both short ter
Slide 52: Net Income Trends
Net Income Trends Net Income Variable Compensation (a) Net Margin 60% 51.0 50 3.8 50% 40 37.5 40% 3.8 36.5% € millions 29.3 30 3.1 26.2 29.3% 30% 3.5 22.4 22.3 21.9 47.2 25.1% 24.5% 3.5 3.1 20 15.9 20.4% 21.4% 8.0 20% 33.7 26.2 6.4 15.2% 22.7 10 11.7% 19.2 18.9 10% 13.9 9.5 0 0% Q2-18 Q3-18 Q4-18 Q1
Slide 53: Currency Exposure Trends
Currency Exposure Trends Revenue Expenses 2019 ∆ 2019 ∆ 2017 Currency Exposure 2018 (2015) 2019 2017 2018 2019 vs. €* Forex Financial Impact vs. €* Euro 18% 33% 32% 21% 29% 33% US dollar 82% 67% 68% 9% 9% 9% Malaysian ringgit - - - 31% 31% 25% Chinese renminbi - - - 13% 10% 11% Swiss franc - - - 19%
Slide 54: Cash Generation Trends
Cash Generation Trends € millions % of Revenue 200 184.1 180 168.2 160 140 120.1 120 98.7 35.0% 98.9 100 33.7% 86.5 28.4% 80 26.3% 27.0% 24.8% 60 40 20 0 2015 2016 2017 2018 2019 LTM Total Cash Flow from Operations As % of Revenue May 2020 54
Slide 55: Share Repurchase Activity
Share Repurchase Activity 50 40.0 44.7 45 35.0 40 € 32.57 35.5 30.0 35 Avg Cost per Share € 24.31 25.0 30 € 23.74 € millions € 21.79 25 22.4 22.8 20.0 20 15.0 15 € 12.44 10.0 € 8.93 10 4.0 4.1 5.0 5 0 0.0 2015 2016 2017 2018 2019 YTD 2020* Share Repurchases Average Cost per Share • 3.2 million share
Slide 56: Dividend Trends
Dividend Trends Dividend (€) Dividend Yield 3.00 Cumulative dividends of € 578.3M since 2011, or € 7.74 per share* 120% 115% 2.50 2.32 110% 2.00 107% 105% 1.67 1.50 100% 100% 1.01 95% 1.00 93% 0.87 91% 0.60 90% 90% 0.50 85% 0.00 80% 2015 2016 2017 2018 2019 Dividend Dividend Payout Ratio* * Calculat
Slide 57: Shareholder Base Expanded
Shareholder Base Expanded Symbol/ • BESI Avg. Daily Volume & Liquidity Index • Euronext Midcap AMX Avg Vol * Avg Price (€ thousands) 1000 25,000 Volume (thousands) 800 20,000 Market Market • € 2.7 billion 600 15,000 Cap* ($ 2.9 billion) Profile 400 10,000 200 5,000 Dividend • Pay out 40-100% of net
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