Nordic Semiconductor Asa · OSL:NOD
Nordic Semiconductor Asa — Debt Investor Presentation (November 2023)
59 slides from Nordic Semiconductor Asa's debt investor presentation, November 2023
Slide 1: Nordic Semiconductor Credit Investor Presentation
Nordic Semiconductor Credit Investor Presentation November 2023
Slide 2: Disclaimer (1/3)
© Nordic Semiconductor Disclaimer (1/3) This presentation, together with its enclosures and appendices (collectively, the “Investor Presentation"), has been produced by Nordic Semiconductor ASA (the “Company” or the “Issuer”, and together with its subsidiaries, the “Group”), solely for use in connec
Slide 3: Disclaimer (2/3)
© Nordic Semiconductor Disclaimer (2/3) The contents of this Investor Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice. Each recipient should consult with its own professional advisors for any such matter and advice. An investment in th
Slide 4: Disclaimer (3/3)
© Nordic Semiconductor Disclaimer (3/3) FORWARD LOOKING STATEMENTS This Investor Presentation is current as of 14 November 2023. Nothing herein shall create any implication that there has been no change in the affairs of the Issuer or the Group. This Investor Presentation contains forward looking st
Slide 5: Summary of risk factors (1/2)
© Nordic Semiconductor Summary of risk factors (1/2) Investing in the bonds (the “Bonds”) issued by Nordic Semiconductor ASA (the “Company” or the “Issuer”, and together with its direct and indirect subsidiaries, the “Group”) involves inherent risks. Investors should consider, among other things, th
Slide 6: Summary of risk factors (2/2)
© Nordic Semiconductor Summary of risk factors (2/2) § The Group’s failure to adequately protect its technologies and know-how through patents and other intellectual property rights could negatively impact its competitiveness and harm its business and future prospects. § The Group relies on technolo
Slide 7: Abbreviations
© Nordic Semiconductor Abbreviations § Through out this presentation the following abbreviations are used: AI Artificial Intelligence Nordic Nordic Semiconductor ASA ASIC Application Specific Integrated Circuits nRF Nordic Radio-Frequency Bluetooth LE Bluetooth Low Energy PMIC Power Management IC CM
Slide 8: Main terms – senior unsecured bonds
© Nordic Semiconductor Main terms – senior unsecured bonds1 Issuer Nordic Semiconductor ASA Issuer Rating BBB (negative) from Nordic Credit Rating 3 year: NOK [●] million Initial Issue Amount 5 year: Minimum NOK 300 million Tenor 3 and/or 5 years 3 year: 3 months Nibor + [●]% per annum, quarterly in
Slide 9: Key credit highlights
© Nordic Semiconductor Key credit highlights § Nordic Semiconductor, listed on Oslo Børs with a market capitalization of ~USD 1.6 billion, is a Norwegian fabless semiconductor Leading market company specializing in wireless communication technology that powers the Internet of Things (IoT). The compa
Slide 10: Agenda
© Nordic Semiconductor Agenda 1. Company overview 2. Financials 3. Appendix 4. Risk factors
Slide 11: About Nordic Semiconductor
© Nordic Semiconductor About Nordic Semiconductor Our Story - Nordic Semiconductor
Slide 12: 40 years of wireless innovation
© Nordic Semiconductor 40 years of wireless innovation 12
Slide 13: A globally leading IoT enabler
© Nordic Semiconductor A globally leading IoT enabler Simplifying lives through all things connected § Leading ultra-low-power wireless connectivity solutions § Short-range: § Medium-range: § Long-range: § Broad products/solutions portfolio: Integrated circuits Embedded Development tools Cloud based
Slide 14: Strategy based on distinctive advantages
© Nordic Semiconductor Strategy based on distinctive advantages Ultra-low power and high performance Lead on at the right price connectivity Ease-of-use, value-add Clear strategic roadmap High Excite solutions and strong to generate long-term ambitions developers tech support profitable growth and v
Slide 15: Our tech solutions are recognized globally
© Nordic Semiconductor Our tech solutions are recognized globally 2023 Financial Times and 2023 U.K. Elektra Awards 2022 EE Awards Asia Statista ‘Internet of Things Product of Europe's Climate Leaders Best Development Tool categories the Year’ category Environmental performance Power Profiler Kit II
Slide 16: Nordic is on a long-lasting growth journey
© Nordic Semiconductor Nordic is on a long-lasting growth journey 800 75 0 Innovation unlocking 700 market waves 650 600 Widespread IoT adoption ® 550 500 Revenue, USDm 45 0 400 350 Emerging IoT markets ® 300 250 Wearables 200 15 0 PC peripherals ® 100 Game controllers 50 0 2000 2001 2002 2003 2004
Slide 17: Protecting our position in a cyclical downturn
© Nordic Semiconductor Protecting our position in a cyclical downturn § Maintaining a unique technology platform with Bluetooth, Wi-Fi and Cellular IoT § Leading ultra-low-power § Reallocating resources from longer-term projects to wireless technologies projects generating revenue and profits in the
Slide 18: Expanding the opportunity pipeline
© Nordic Semiconductor Expanding the opportunity pipeline New technologies + value chain migration + more applications ls ti ca V er Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Services Servi
Slide 19: Tier-1s revenue share continue to increase
© Nordic Semiconductor Tier-1s revenue share continue to increase Bluetooth revenue composition (USDm) 700 63% 60% 58% § Top-10 customers have 54% 600 continued to grow in absolute 50% 500 44% revenue and number of designs 400 38% 39% 38% 40% § Top-10 customers, consisting of 34% 300 multinational a
Slide 20: Steady and high certification market share
© Nordic Semiconductor Steady and high certification market share More than 5x as large as number 2 and 3 Bluetooth Low Energy end-product certifications, last 12 months Nordic 1500 end-product certifications 1200 Other Q3’23 Qualcomm 43% 45% 113 designs 900 41% 42% 42% Infineon 42% mkt share 38% 39
Slide 21: Nordic's value chain
© Nordic Semiconductor Nordic’s value chain1 NOD Third Party Suppliers Customers . Nordic Raw material: Testing, Production Revenue Wafer & Packaging Warehouse POS Revenue Ware- Facility Distributor house R&D Foundry End- Ware- Facility Distributor customers house R&D Foundry (6 000+) Facility Ware-
Slide 22: Key Suppliers
© Nordic Semiconductor Key Suppliers § TSMC is the world’s leading § GlobalFoundries is one of the world’s § SilTerra is a pure-play global semiconductor foundry. Most of their leading semiconductor foundries with semiconductor foundry based in production capacity is in Taiwan, with operations in Eu
Slide 23: Nordic raising the bar once again
© Nordic Semiconductor Nordic raising the bar once again nRF54 – maintaining our market leading performance nRF54H Series Revolutionary multiprotocol SoCs For new complex IoT products Requirements nRF54L Series Next-level multiprotocol SoCs Logical successor to the nRF52 23 SoC Series 23
Slide 24: Nordic acquires AI/ML tech IP and team
© Nordic Semiconductor Nordic acquires AI/ML tech IP and team Harnessing the power of AI to transform our position in the IOT market § Bolt-on acquisition of high strategic significance § Buying the IP portfolio and employing small core team in San Diego Always-on AI/ML accelerator – a key different
Slide 25: IoT supporting sustainability
IoT supporting sustainability
Slide 26: IoT is crucial to deliver on UN SDGs
© Nordic Semiconductor IoT is crucial to deliver on UN SDGs Nordic are making ‘things’ more capable and efficient by: § Lowering power consumption § Increasing computational capability § Enabling a large variety of sustainable applications § Precision farming § Climate smart cities and communities §
Slide 27: Enabling a large variety of sustainable solutions
© Nordic Semiconductor Enabling a large variety of sustainable solutions* *Select 2022 solutions contributing to the SDGs 27
Slide 28: Unique position to enhance sustainability
© Nordic Semiconductor Unique position to enhance sustainability Committed signatory to UN Global Compact and supporting UN Sustainable Development Goals (SDGs) www.nordicsemi.com/annualreport 28
Slide 29: 2022 ESG highlights
© Nordic Semiconductor 2022 ESG highlights 29
Slide 30: Agenda
© Nordic Semiconductor Agenda 1. Company overview 2. Financials 3. Appendix 4. Risk factors
Slide 31: Financial performance – rolling 12 months
© Nordic Semiconductor Financial performance – rolling 12 months Revenue, last 12 months USDm Gross margin, last 12 months, % EBITDA, last 12 months, % 800 100 % 50% 700 757 40% 36% 600 75% 626 566 57,7% 500 28% 52,5% 52,4% 30% 50,7% 51,7% 25% 26% 49,0% 400 50 % 28% 18% 361 20% 17% 300 19% 274 266 1
Slide 32: Revenue by markets Q3 2023
© Nordic Semiconductor Revenue by markets Q3 2023 Group Consumer Industrial Healthcare Others USDm USDm USDm USDm USDm 135.0 81.0 23.7 26.5 3.3 -33% -12% -36% -4% -54% -21% +84% -23% -63% -11% y-o-y q-o-q y-o-y q-o-q y-o-y q-o-q y-o-y q-o-q y-o-y q-o-q 150 126 Others 2% 125 109 100 Healthcare 84 81
Slide 33: Balancing investments and cost awareness
© Nordic Semiconductor Balancing investments and cost awareness Cash OPEX* (USDm) Flat salary cash costs y-o-y and q-o-q § Employees increased by 11% y-o-y to 1,530, 45 42 38 38 flat development q-o-q 38 § Reduced variable pay accruals in Q3 2023 Continuing work to adjust cost base to protect margin
Slide 34: Capex intensity remains low
© Nordic Semiconductor Capex intensity remains low Capex (USDm) 10 8 § Postponed some investments to Q4, 6 and maintaining focus on spending 4,4 % 3,6 % 3,8 % reduction 4 3,1 % § Overall capex intensity 3.3 % LTM 2 1,5% 0 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Capex Capex/Revenue 34
Slide 35: Investing in innovation
© Nordic Semiconductor Investing in innovation Innovation is a core driver of revenue and long-term margins R&D expenses* by technology, USDm R&D coverage multiple, Cash/R&D spending last 12 months 180 25,5 % 26,1 % 3,0x 160 23,3 % 23,3 % 23,6 % 22,8 % 22,0 % 2,5x 140 20,7 % 120 17,4 % 18,0 % 2,0x 1
Slide 36: Continued disciplined cash strategy
© Nordic Semiconductor Continued disciplined cash strategy Cash position and Cash Flow Q3 2023 (USDm) 252 7 -17 -1 229 -2 -2 -8 § Strategic inventory increase of USD 10m in the quarter § NWC/Revenue LTM of 37% § Other items mainly impacted by decreased other short-term liabilities B * P le ex ts r O
Slide 37: Prudent capital management
© Nordic Semiconductor Prudent capital management Equity and Equity Ratio NIBD and NIBD/EBITDA Net Working Capital USDm, % USDm, x USDm, % of LTM revenue 90% 0 0, 0x 250 50% 600 -50 45% 85% 37% -0 ,5x 200 40% 500 -10 0 78% 77% 77% 35 % 77% 77% 76% 80% 28% 29% 400 76% -150 -1, 0x 75% 15 0 30% 74% 22%
Slide 38: Capital allocation priorities
© Nordic Semiconductor Capital allocation priorities Balancing growth, solidity and shareholder distribution Reinvestment in Targets ~1.0x R&D R&D coverage with long-term perspective multiple1 Strong balance sheet required to ensure Targets minimum Flexibility and Resilience 50% and full commitment
Slide 39: Target operating model at higher volumes
© Nordic Semiconductor Target operating model at higher volumes Target operating model Gross margin >50% <10% SG&A § Gross margin depending on technology and customer mix § Lower gross margin expected in cellular IoT Module business Gross margin § Higher gross margin opportunities 15-20% R&D in othe
Slide 40: Continued challenging market
© Nordic Semiconductor Continued challenging market Q4 2023 guidance Revenue (USDm) 777 Revenue Gross margin 626 USDm 611 110-130m ~50% -43% to -32% -19% to -4% y-o-y q-o-q 405 288 § Sequential revenue decline and flat gross margin expected from Q3 to Q4 § Continued low visibility in the current cyc
Slide 41: Agenda
© Nordic Semiconductor Agenda 1. Company overview 2. Financials 3. Appendix 4. Risk factors
Slide 42: Income statement
© Nordic Semiconductor Income statement USD million Q3 2023 Q3 2022 Q3 2023 YTD Q3 2022 YTD FY 2022 FY 2021 Total revenue 135.0 202.1 434.7 585.4 776.7 610.5 Cost of materials -66.9 -86.3 -207.2 -249.5 -339.9 -283.4 Direct project costs 0.0 0.0 0.0 0.0 0.0 -0.5 Gross profit 68.2 115.7 227.5 335.9 43
Slide 43: Balance sheet
© Nordic Semiconductor Balance sheet USD million Q3 2023 Q3 2022 FY 2022 FY 2021 USD million Q3 2023 Q3 2022 FY 2022 FY 2021 ASSETS EQUITY AND LIABILITIES Goodwill 10.3 2.3 2.3 2.4 Capitalized development expenses 34.5 28.2 26.6 31.5 Total equity 611.9 548.4 583.5 458.2 Software and other intangible
Slide 44: Cash flow statement
© Nordic Semiconductor Cash flow statement Q3 Q3 Q3 Q3 Q3 FY Q3 Q3 Q3 2022 FY FY USD million 2023 2022 FY 2021 USD million 2023 2023 2022 2022 2023 2022 YTD 2022 2021 YTD YTD YTD Cash flows from operating Cash flows used in financing activities activities Profit before tax 1.7 51.3 29.6 142.4 167.2
Slide 45: Board of directors
© Nordic Semiconductor Board of directors [pictur [pictur [pictur [pictur [pictur e] e] e] e] e] Birger Steen Inger Berg Ørstavik Anita Huun Snorre Kjesbu Annastiina Hintsa Chairman Board member Board member Board member Board member Board Chair since 2018 and Board member since 2017 Board member si
Slide 46: Executive management
© Nordic Semiconductor Executive management [pictur [pictur [pictur [pictur [pictur e] e] e] e] e] Svenn-Tore Larsen Pål Elstad Katarina Finneng Kjetil Holstad Linda Pettersson CEO/President CFO/EVP Finance EVP People & Communication EVP Strategy and Product SVP Legal & Compliance Management Mrs. Pe
Slide 47: Executive management (continued)
© Nordic Semiconductor Executive management (continued) [pictur [pictur [pictur [pictur [pictur e] e] e] e] e] Geir Langeland Ole-Fredrik Morken Svein-Egil Nielsen Ola Boström Ståle “Steel” Ytterdal EVP Sales & Marketing EVP Supply Chain CTO/EVP R&D SVP Quality SVP IR Mr. Langeland has a Bachelor of
Slide 48: Share information
© Nordic Semiconductor Share information 20 largest shareholders as of July 2023 Share price performance as of 13 November 2023 NOK per share Rank Shareholder Holdings 350 1 Accelerator Limited 17.472.950 2 DNB Asset Management 17.408.968 3 Capital Research and Management Company 15.888.742 300 4 Fo
Slide 49: Group Legal structure
© Nordic Semiconductor Group Legal structure NOD ASA Nordic Semiconductor ASA Norway 100% NOD KK NOD GmbH NOD Inc NOD Sp. z.o.o. NOD OY NOD AS Nordic Semiconductor Nordic Semiconductor Nordic Semiconductor Nordic Semiconductor Nordic Semiconductor Nordic Semiconductor Japan KK Germany GmbH Inc Polan
Slide 50: Agenda
© Nordic Semiconductor Agenda 1. Company overview 2. Financials 3. Appendix 4. Risk factors
Slide 51: Risk factors (1/9)
© Nordic Semiconductor Risk factors (1/9) Investing in the bonds (the “Bonds”) issued by Nordic Semiconductor ASA (the “Company” or the “Issuer”, and together with its direct and indirect subsidiaries, the “Group”) involves inherent risks. Investors should consider, among other things, this Investor
Slide 52: Risk factors (2/9)
© Nordic Semiconductor Risk factors (2/9) In addition, there are also uncertainties in the global economy due to geopolitical risks related to the recent instability in the Ukraine region, including supply chain disruptions and delays, increases in energy prices globally, increased inflation and con
Slide 53: Risk factors (3/9)
© Nordic Semiconductor Risk factors (3/9) 1.5 The Group faces intense competition in the semiconductor industry that may cause it to lose market share and harm its financial performance. The semiconductor industry is extremely competitive. Competition is based on product performance, structure, pric
Slide 54: Risk factors (4/9)
© Nordic Semiconductor Risk factors (4/9) 1.8 If the Group is unable to respond effectively to developments in technology or address the evolving needs of its customers and third-party component manufacturers, demand for the Group’s products could decrease. The Group engages in continuous research a
Slide 55: Risk factors (5/9)
© Nordic Semiconductor Risk factors (5/9) 1.10 The Group’s failure to adequately protect its technologies and know-how through patents and other intellectual property rights could negatively impact its competitiveness and harm its business and future prospects. The Group’s ability to compete in the
Slide 56: Risk factors (6/9)
© Nordic Semiconductor Risk factors (6/9) 1.12 The Group’s products may be subject to product liability and warranty claims, which could be expensive and could divert management’s attention. The Group makes highly complex electronic components and, accordingly, there is a risk that defects may occur
Slide 57: Risk factors (7/9)
© Nordic Semiconductor Risk factors (7/9) 1.15 The Group’s failure or alleged failure to comply with regulatory requirements, including competition laws and regulations and anti-corruption laws, could result in the imposition of penalties or sanctions and the incurrence of significant legal costs. T
Slide 58: Risk factors (8/9)
© Nordic Semiconductor Risk factors (8/9) 2. FINANCIAL RISKS 2.1 Covenants under the Group's existing borrowing arrangements may lead to inability to finance operations, capital needs and to pursue business opportunities, and the breach of any such covenants could have a material adverse effect on t
Slide 59: Risk factors (9/9)
© Nordic Semiconductor Risk factors (9/9) 3.3 Risks related to put options, mandatory prepayment and early redemptions. According to the terms for the Bonds, the Bonds will be subject to prepayment at the option of each Bondholder at 101% of the initial nominal amount upon a change of control event
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