Asm International N.v. · EURONEXT:ASM
Asm International — Q2 2023 Earnings Presentation
40 slides from Asm International's earnings presentation, Jul 25, 2023
Slide 1: ASM Q2 2023 results
ASM Q2 2023 results July 25, 2023
Slide 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-
Slide 3: Contents
Contents 1 Investment highlights 2 Q2 2023 results 3 Business environment, strategy, and targets 4 Annex: detailed financials July 25, 2023 | ASM proprietary information | 3
Slide 4: Investment highlights
Investment highlights July 25, 2023 | ASM proprietary information | 4
Slide 5: Investment highlights
Investment highlights Strong long-term prospects • ASM is focused on enabling deposition technologies, with key strengths in innovation • Leader in the ALD market, which is expected to grow by a CAGR of 16%-20% from 2020 to 2025 • Expanding our position in the Epi market (CAGR of 13%-18% from 2020 t
Slide 6: Q2 2023 results
Q2 2023 results July 25, 2023 | ASM proprietary information | 6
Slide 7: Financial highlights
Financial highlights €486m €669m 49.0% New orders Revenue Normalized gross margin(1) (-48% yoy at constant currencies) (+21% yoy at constant currencies) (47.5% in Q2 2022) 26.9% €9m €161m Normalized Income from investment Normalized operating margin(1) in associates(2) net earnings(3) (26.5% in Q2 2
Slide 8: Q2 2023 highlights
Q2 2023 highlights Orders and revenue • Q2 new orders came in at €486m, down 48% yoy at constant currencies, reflecting softening market conditions, and push-outs in logic/foundry as indicated in Q1 • Revenue up 21% at constant currencies to €669m, in line with previous guidance of €650-690m Margins
Slide 9: New orders –48% yoy at cc, backlog at €1.4b
New orders –48% yoy at cc, backlog at €1.4b Orders and backlog (€m) Q2 2023 new orders dropped to €486m, 1,800 1.7 1.8 down by 48% at constant currencies (cc) yoy, and 24% 1,600 1,584 1.6 at cc compared to the previous quarter. 1,408 1,400 1,400 1.4 Lower orders explained by: 1,200 1.2 • Softening d
Slide 10: Revenues +21% yoy at cc, gross margin at 49%
Revenues +21% yoy at cc, gross margin at 49% Revenue Normalized gross profit Revenue (€m) (€m) Q2 2023 revenue increased to €669 million, +21% yoy at cc (20% as reported) and decreased 5% qoq (-6% as reported). Revenue was led by foundry 900 900 followed by power/analog, and then logic and 60.0% 800
Slide 11: SG&A growth levelling off. Continued investments in R&D
SG&A growth levelling off. Continued investments in R&D Normalized SG&A Normalized R&D Normalized SG&A (€m) (€m) Normalized SG&A increased 9% yoy and 5% qoq, mainly explained by annual merit increase. 11.1% 140 13.0% 12.0% The impact of currency changes was a decrease of 12.1% 140 12.0% 10.1% 2% qoq
Slide 12: Operating result increased 23% yoy at cc
Operating result increased 23% yoy at cc Normalized operating result Normalized finance income (€m) (€m) 350 Normalized operating result 35.0% 31.2% 300 Normalized operating result improved yoy with the Q2 22 Q1 23 Q2 23 increase in revenue and gross margin partly offset by 30.0% 26.5% 26.9% 250 Nor
Slide 13: ASMPT impairment was completely reversed in Q1
ASMPT impairment was completely reversed in Q1 Income from investment Impairment of investment Income from investment in associates Amortization of intangible assets resulting from the in associates in associates sale of the 12% stake of ASMPT in 2013 are expected (€m) (€m) to amount to €4 million,
Slide 14: Normalized net earnings decreased 2% yoy
Normalized net earnings decreased 2% yoy Normalized net earnings (€m) Income taxes in Q2 2023 were €39m compared to €37m in Q1 2023. Q2 22 Q1 23 Q2 23 Net earnings 160.4 380.4 151.2 Normalized net earnings in Q2 23 decreased by €22m to €161m compared to previous quarter mainly due to Amortization in
Slide 15: Solid cash of €490m, robust FCF despite higher CapEx
Solid cash of €490m, robust FCF despite higher CapEx Cash Free cash flow (€m) (€m) Cash decreased to €490m at the end of June 2023, down from €573m at the end of March, as FCF was more than offset by cash used in financing activities for the payment of the dividend (€123m) and share repurchases (€50
Slide 16: FY23 CapEx guidance is €150-€200m
FY23 CapEx guidance is €150-€200m CapEx increased to €44 million. FY23 CapEx is still Capital expenditures Working capital expected to be between €150-200m, with the majority (€m) (€m) of it related to expanding and upgrading R&D infrastructure. 492 100 Net working capital increased to €492m (from €
Slide 17: Financial outlook
Financial outlook As included in the Q2 2023 press release published on July 25, 2023: On a currency-comparable level, we project revenue of €580-620 million for Q3. As already communicated with our Q1 results, we expect Q3 orders will also show a drop compared to the level in Q1, albeit not as pron
Slide 18: Business environment, strategy, and targets
Business environment, strategy, and targets July 25, 2023 | ASM proprietary information | 18
Slide 19: WFE spending
WFE spending WFE spending WFE by technology node WFE spending TechInsights expects WFE to decrease by 13% in (US$ b) (US$b) 2023, following an increase of 8% in 2022. 160 160 WFE by technology node Strongest growth in leading-edge nodes, spending on 140 140 7nm and below expected to grow from ~25% o
Slide 20: Semiconductor CapEx spending and customer concentration
Semiconductor CapEx spending and customer concentration ASM FY22 revenue by WFE sales by application WFE market by segment Logic & foundry is estimated to account for more than (US$b) customer concentration half of total WFE market in 2023. (in %) 120 ASM FY22 revenue by customer concentration 100 T
Slide 21: ASM is focused on deposition equipment
ASM is focused on deposition equipment WFE market segments 2022 (US$ b) ASM’s focus is on deposition We are market leader in ALD (~55% share). ALD accounts for more than half of our total equipment revenue. 27.3 27.1 We have an expanding position in the Epi market. Selective growth in PECVD and vert
Slide 22: Single-wafer ALD and epitaxy market outlook
Single-wafer ALD and epitaxy market outlook Single-wafer ALD market Epi market (US$b) (US$b) ALD and Epi expected to be the fastest growing segments in the deposition market driven by 3.1 - 3.7 increasing device complexity, 3D structures, and new materials CAGR Mid-term targets: maintain ALD market
Slide 23: Logic/foundry the largest segment for ASM
Logic/foundry the largest segment for ASM FY 2022 FY 2021 FY 2022 In 2022, our equipment revenue was led by foundry, followed by logic and then memory. The combination of logic/foundry accounted for more than half of our equipment sales and was driven by solid spending in the most advanced nodes. Me
Slide 24: Our strategy is growth through innovation
Our strategy is growth through innovation 6 strategic objectives Grow ALD business by maintaining leadership in 5 key strategy enablers logic/foundry and expanding in memory Best people Increase Epi market share Leading-edge innovation Selective growth in VF and PECVD niches Early customer engagemen
Slide 25: ASM sustainability focus areas
ASM sustainability focus areas Responsible supply People chain We focus on creating Planet Our suppliers are key Sustainability Innovation a home for talent in the ASM aims to be a Net partners in our efforts to governance We incorporate semiconductor industry. Zero GHG company operate responsibly a
Slide 26: Net Zero by 2035 update
Net Zero by 2035 update SBTi validation expected → Q3 2023 Climate Transition Plan → after SBTi validation ASM is originator, founding member, and chair of the Semiconductor Climate Consortium RE100 Member since May 2023, to further the adoption of renewable electricity 2021 Baseline Year* • 99% of
Slide 27: Financial targets towards FY 2025
Financial targets towards FY 2025 FY 2021 FY 2022(1) FY 2025 Revenue €1.7 billion €2.4 billion €2.8 to €3.4 billion(1) 16 - 21% CAGR Revenue growth 34% YOY(1) 33% yoy(2) (FY20-FY25) 46 - 50% Gross margin % 47.9% 47.5% (FY21-FY25) High single digit SG&A % revenue 11.0% 11.4% (FY25) High single digit
Slide 28: Capital allocation strategy
Capital allocation strategy Priority 1 Priority 2 Priority 3 Priority 4 Invest to support Maintain a strong Sustainable Return of future growth balance sheet dividend payments excess cash • R&D to shareholders Increase targeted through share • Capex minimum cash position buybacks • M&A towards €600m
Slide 29: Annex: detailed financials
Annex: detailed financials July 25, 2023 | ASM proprietary information | 29
Slide 30: (Estimated) amortization and earn-out expenses
(Estimated) amortization and earn-out expenses € million Q2 2022 Q1 2023 Q2 2023 FY 2023 FY 2024 FY 2025 Actual Actual Actual Estimate Estimate Estimate Cost of sales – (12.3) (4.7) (27.0) – – Net research and development expenses (0.4) (3.5) (3.5) (14.0) (14.0) (14.0) Selling, general and administr
Slide 31: Normalized and reported P&L reconciliation
Normalized and reported P&L reconciliation € million Q1 2023 Q1 2023 Q2 2023 Q2 2023 Δ Δ normalized reported Normalized reported Revenue 710 710 669 669 Gross profit 363 (12) 351 328 (5) 323 Gross margin 51.1% 49.4% 49.0% 48.3% SG&A (70) (1) (71) (74) (1) (75) SG&A as a % of revenue 9.9% 10.0% 11.0%
Slide 32: Income statement (reported)
Income statement (reported) € million Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 New orders 943 676 829 647 486 Backlog 1,408 1,525 1,669 1,584 1,400 Book-to-bill ratio 1.7 1.1 1.1 0.9 0.7 Revenue 559 610 725 710 669 Cost of sales (294) (316) (388) (359) (346) Gross profit 266 293 337 351 323 Other inc
Slide 33: Balance sheet
Balance sheet € million Jun. 22 Sep. 22 Dec. 22 Mar. 23 Jun. 23 Right-of-use assets 27 30 32 34 34 Property, plant and equipment 284 297 312 315 338 Evaluation tools at customers 66 79 69 73 71 Goodwill 33 39 318 318 320 Other intangible assets 345 376 646 647 664 Investments in associates 918 637 6
Slide 34: Cash flow statement
Cash flow statement € million Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Net earnings from operations 160 (150) 237 380 151 Adjustments to reconcile net earnings to net cash from operating 17 330 (73) (188) 23 activities Depreciation, amortization and impairments 27 32 38 42 44 Income tax paid (29) (25
Slide 35: Gross and net R&D expenses (reported)
Gross and net R&D expenses (reported) € million Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Gross R&D expenses 70 78 93 94 104 Capitalization of development expenses (27) (27) (25) (29) (37) Amortization of capitalized development expenses 8 9 11 11 11 Impairment capitalized development expenses (0) - -
Slide 36: Working capital: historical development
Working capital: historical development € million 800 120 700 100 600 80 500 400 60 300 40 200 20 100 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 2020 2021 2022 2023 Working capital (lhs) Quarterly sales (lhs) Days of working capital (rhs) Numbers
Slide 37: Orders and backlog: historical development
Orders and backlog: historical development € million 1,800 1,600 1,400 1,200 1,000 800 600 400 200 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2017 2018 2019 2020 2021 2022 2023 Backlog Orders Numbers based on reported financials Q1 and Q4 2019 exclude the impact
Slide 38: Revenue and operating result: historical development
Revenue and operating result: historical development € million 3,000 700 600 2,500 500 2,000 400 1,500 300 1,000 200 500 100 - - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenue (lhs) Operating result (rhs) 2019 numbers exclude settlement gains of €159m 2022 operating margin exclu
Slide 39: Cash returned to shareholders
Cash returned to shareholders Dividend per share Cumulative cash returned to market (€ paid over) (€m) 2,500 2,000 1,500 3.00 2.50 2.50 1,000 1.50 2.00 1.00 500 0.70 0.70 0.80 0.50 0.50 0.50 0.60 0.40 1.50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 2013 2014 2015 2016 20
Slide 40: For more information visit asm.com
For more information visit asm.com July 25, 2023 | ASM proprietary information | 40