Asm International N.v. · EURONEXT:ASM
Asm International — Q2 2022 Earnings Presentation
35 slides from Asm International's earnings presentation, Jul 20, 2022
Slide 1: ASM Q2 2022 Results
Slide 2: 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
Slide 3: July 20, 2022 | ASMI proprietary information | 3
July 20, 2022 | ASMI proprietary information | 3
Slide 4: ASM to acquire LPE
On July 18, 2022 ASM announced (here) that it reached an agreement to acquire LPE, entering the high-growth silicon carbide epitaxy equipment business, driven by growth in electric vehicles Purchase price is a combination of cash and shares representing an enterprise value of €425m at the date of si
Slide 5: Investment Highlights
INVESTMENT HIGHLIGHTS ~
Slide 6: Investment highlights
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 to 2025) Selective growth in PECVD and Vertical Furnaces
Slide 7: Q2 2022 Results
Slide 8: Q2 2022 highlights
New record orders of €943m driven by robust new node spending in logic/foundry and by recent wins in memory, particularly for ALD gap-fill in 3D-NAND and continued adoption of HKMG in DRAM Revenue of €560m at the higher end of the guidance of €540-570m thanks to solid execution notwithstanding conti
Slide 9: Q2 2022 key figures
€ million, year-on-year comparisons +83% +36% €552m Orders: €943m Revenue: €560m Cash position (+73% at constant currencies) (+30% at constant currencies) 47.5% 26.4% €121m Gross margin Operating margin Free cash flow (48.1% in Q2 2021) (28.7% in Q2 2021) +39% +47% €122m Share in income of Normalize
Slide 10: New orders
€ million € million 1.7 1,408 1.4 1.3 943 1,000 706 516 446 Book-to-bill ratio • Q2 new orders increased 83% YoY as reported (73% at constant currencies to a new record-high of €943m) • Orders increased 34% QoQ with a book-to-bill ratio of 1.7 • Order intake led by foundry followed by memory and the
Slide 11: Revenue and gross margin
€ million € million 560 48.1% 47.8% 47.5% 517 92 412 89 266 247 77 198 428 467 335 Spares & services revenue Equipment revenue Gross profit margin • Q2 revenue increased 36% YoY (+30% at constant currencies). QoQ revenue increased 8% as reported and at constant currencies • Gross margin down YoY and
Slide 12: Research and development expenses
€ million 11.5% 11.6% 12.5% 8.2% 8.4% 9.1% € million 70 60 Gross R&D expenses 47.3 59.9 70.2 47 Capitalization development expenses (20.3) (23.7) (27.3) Amortization capitalized development exp. 5.7 7.2 8.0 44 51 34 Impairment capitalized development exp. 1.1 0.1 (0.1) Net R&D expenses 33.7 43.5 50.
Slide 13: SG&A and operating margin
€ million € million 28.7% 27.7% 12.1% 26.4% 11.7% 11.1% 143 148 118 68 61 46 SG&A as % of revenue Operating margin • SG&A increased 47% YoY, mainly explained by increased headcount (+37% YoY), employee compensation (incl. annual compensation adjustments • Q2 2022 operating margin was 26.4%, a decrea
Slide 14: Net earnings and associates income
€ million € million 164 146 3 3 111 3 27 24 19 3 160 3 142 3 108 20 24 16 Amortization intangible assets(1) Share in income of investments in associates Amortization intangible assets(1) Net earnings (reported) • Share in income of investments in associates(1) • Q1 2022 included a translation gain o
Slide 15: Free cash flow and cash position
€ million € million 550 552 492 121 69 61 • Cash position of €552m, driven by strong FCF of • Q2 2022 FCF up 76% YoY and 100% QoQ, €121m in Q2 2022 (including ASMPT dividend of supported by higher net earnings €32m), offset by €122m dividend payment (1) Defined as cash flows from operating activitie
Slide 16: Capex and working capital
€ million € million 58 57 62 386 27 316 330 16 13 Days of working capital • Capex in FY 2022 is expected to be at the high end • Working capital increased to €386m mainly due to of the €60-100m target higher inventories July 20, 2022 | ASMI proprietary information | 16
Slide 17: Q3 2022 outlook
As included in the Q2 2022 earnings press release published on July 20, 2022: “Supply chain conditions have improved at a slower pace than previously projected and, as a result, are expected to remain challenging in the third quarter. For Q3, at constant currencies, we expect revenue of €570-600 mil
Slide 18: Business Environment, Strategy, and Targets
Slide 19: WFE market outlook
US$ billion US$ billion 120 100 100 ≤7nm 80 80 10nm 60 14nm 60 22nm 40 40 32nm 45nm 20 20 >65nm - 0 Source: TechInsights, July 2022 Source: Gartner, July 2022 • Strongest growth in leading-edge nodes, spending • TechInsights expects WFE to increase by 21% in on 7nm and below expected to grow from ~2
Slide 20: Customer capex and concentration
US$ billion IN % 200 160 120 80 40 0 Advanced logic & foundry Memory Other 3 largest customers From 4th to 10th customer Rest of customers Source: TechInsights, June 2022 • The 10 largest customers accounted for about 79% • Capex spending is expected to increase further in of revenue in FY 2021 2022
Slide 21: ALD and Epi market growth
US$ billion 3.1 - 3.7 US$ billion CAGR 16-20% 1.5 - 1.8 1.5 CAGR 0.8 13-18% • ALD and Epi expected to be the fastest growing segments in the deposition market driven by increasing device complexity, 3D structures, and new materials • Mid-term targets: maintain ALD market share (2025: >55% vs 2020:~5
Slide 22: Purpose, mission and strategic objectives
6 STRATEGIC OBJECTIVES 5 KEY STRATEGY ENABLERS Grow ALD business by maintaining leadership in Best people logic/foundry and expanding in memory Increase Epi market share Leading-edge innovation Selective growth in VF and PECVD niches Early customer engagements Grow spares & services business Flawles
Slide 23: Net Zero target
Our Net Zero target: 2021 achievements include: Reduce environmental footprint of our operations Transitioned most of our key sites to renewable energy in 2021 100% renewable electricity by 2024 CDP Climate and Water Security scores improved from C to B Aim to be net zero by 2035 (scope 1, 2 and 3 e
Slide 24: 2025 financial targets
FY 2020 FY 2021 FY 2025 Revenue €1.3 billion €1.7 billion €2.8 to €3.4 billion1 22% CAGR 16-21% CAGR Revenue growth 34% YOY1 (FY16-FY20) (FY20-FY25) 46-50% Gross margin % 47.0% 47.9% (FY21-FY25) High single digit SG&A % revenue 11.9% 11.0% (FY25) High single digit R&D (net) % revenue 10.5% 8.7% to l
Slide 25: Capital allocation priorities
Priority 1 Priority 2 Priority 3 Priority 4 Invest to support Maintain a strong Sustainable dividend Return of excess cash future growth balance sheet payments to shareholders through share • R&D • Increase targeted buybacks • Capex minimum cash position • M&A towards €600m in coming years July 20,
Slide 26: Annex: Detailed Financials
Slide 27: ASM's focus is on deposition
US$ billion Test Assembly Lithography Other wafer processes ASM’s focus is on deposition We are market leader in ALD (~55% share). ALD accounts for more than half of our total equipment Process diagnostics revenue Expanding our position in the Epi market Selective growth in PECVD and Vertical Furnac
Slide 28: Income statement
€ million New orders 516 625 645 706 943 Backlog 446 648 811 1,000 1,408 Book-to-bill ratio 1.3 1.4 1.3 1.4 1.7 Revenue 412 433 491 517 560 Cost of sales (214) (229) (260) (270) (294) Gross profit 198 204 231 247 266 Other income (expenses) (0.0) (0.5) 4 (0.1) 0.1 Selling, general and administrative
Slide 29: Balance sheet
€ million Cash and cash equivalents 465 525 492 550 552 Accounts receivable 324 371 447 502 483 Inventories 173 187 212 256 341 Other current assets 79 76 70 76 80 Right-of-use assets - net 23 22 27 28 27 Investments in associates 769 808 849 884 918 Property, plant and equipment 216 226 257 274 284
Slide 30: Cash flow statement
€ million Net earnings 108 129 135 142 160 Depreciation, amortization and impairments 25 24 27 25 27 Share in income of investments in associates (16) (25) (23) (20) (24) Evaluation tools (5) (4) 12 (7) (1) Other adjustments 11 8 (35) 21 13 Change in working capital (43) (12) (52) (11) (43) Net cash
Slide 31: Working capital
€ million Working capital 600 120 Quarterly sales Days of working capital (rhs) 500 100 400 80 300 60 200 40 100 20 0 (1) (1) 0 Numbers based on reported financials July 20, 2022 | ASMI proprietary information | 31 (1) Excluding the impact of patent litigation and arbitration settlements
Slide 32: Orders and backlog
€ million Orders 1,600 Backlog 1,400 1,200 1,000 800 600 400 200 0 (1) (1) Numbers based on reported financials July 20, 2022 | ASMI proprietary information | 32 (1) Excluding the impact of patent litigation and arbitration settlements
Slide 33: Revenue and operating result
€ million Revenue (lhs) 1,800 600 Operating result (rhs) 1,600 500 1,400 1,200 400 1,000 300 800 600 200 400 100 200 0 0 (1) (1) Excluding settlement gains of €159m July 20, 2022 | ASMI proprietary information | 33
Slide 34: Dividends and share buybacks
€ paid over € million 3.00 2.50 1.50 2.00 1.00 0.80 0.70 0.70 0.60 1.50 0.50 0.50 0.50 0.40 Regular dividend Extraordinary dividend Buyback convertibles Return of capital Dividends Share buybacks July 20, 2022 | ASMI proprietary information | 34
Slide 35: For more information visit asm.com