Slide 1: Results Briefing for the Second Quarter of Fiscal Ending March 2018
ESMEC Securities ID code:6859 ESPEC CORP. Results Briefing for The Second Quarter of Fiscal Ending March 2018 November 20, 2017 WwwW.eSspec.co.jp ESPEC CORP.
Slide 2: Table of Contents
Table of Contents Company Profile Financial Result for the Second Quarter of Fiscal Ending March 31, 2018 Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2018 Business Plan for the Fiscal Ending March 31, 2018 Reference ESPEC CORP. 1
Slide 3: Company Profile
Company Profile World-leading manufacturer of environmental test chambers: 70th year since company was founded Name ESPEC CORP. Head Office 3-5-6, Tenjinbashi, Kita-ku, Osaka Represented By Masaaki Ishida Established July 25,1947 Incorporated January 13,1954 Paid-up Capital ¥6,895Million Shares Issu
Slide 4: Global Network
Global Network Consolidated Subsidiaries Global Network 11 companies 43 countries Business Facilities in Japan : 25 (Global 8 companies, : Domestic Agencies in Japan : 46 Domestic 3 companies) 33 companies Os Waa. “EUROPE. | ae - J AAESPEC EUROPE GmbH ke @ESPEC NORTH AMERICA, INC A AESPEC IKLIM KABI
Slide 5: Summary of ESPEC Business (Per Market / Use)
Summary of ESPEC Business (Per Market / Use) | __ Main Products | Market =| Use fer canmnny +Electronic component and equipment market +Temperature & humidity chamber + Thermal shock chamber *ForR &D -Bench-top type temperature & humidity chamber pao DD Gee +For credibility Semiconductor market HAST
Slide 6: TOPICS
TOPICS Cin July 2017) ESPEC launches TSA series of thermal shock chambers, the first chambers in Japan to be compliant with European F-gas Regulation* «Environmental test chambers will be regulated from 2020 Similar regulations will start in Japan from 2025 «Global Warming Potential, which is far mo
Slide 7: TOPICS
TOPICS Cin August 2017) ESPEC Foundation for Global Environment Research and Technology (Charitable Trust) * Holds the 20th awards ceremony *Held a 20th awards ceremony for commemoration «Increased the award amount as the number of s mon IANyIRRERAR- RASS RST entries increased [At initial establishm
Slide 8: TOPICS
TOPICS Cin January 2017) Cin February 2017) Environmental Communication Award Won the Excellence Award for 2 consecutive years Achieved 38th place in the Nikkei Environmental Management Survey FY Ranking 2016 38 2015 48 2014 113 FURR S MSPS * Sponsored by the Ministry of the Environment, and the Glo
Slide 9: TOPICS
TOPICS Promotion of diversity - Initiatives to promote women’s success p, & & February 2016 - From the Ministry of Health, Labor and Welfare: © The Company received the "Kurumin” certification, which is granted to companies that support child-rearing March 2016 —- From Osaka City: @ The Company rece
Slide 10: Financial Result for the Second Quarter of Fiscal Ending March 31, 2018
Financial Result for the Second Quarter of Fiscal Ending March 31, 2018 ESPEC CORP. 9
Slide 11: Review of the First Half of Fiscal 2017
Review of the First Half of Fiscal 2017 External Environment +Foreign exchange (U.S. dollar/yen) is at $1 to ¥108°114 «Acceleration of EV conversion in line with strengthening of environmental regulations China: NEV regulations introduce in 2019 U.S.: Strengthen ZEV regulations from 2018 (10 states)
Slide 12: Financial Highlights
Financial Highlights Sales and profit both increased year on year in the first half of fiscal 2017 ESPEC announced upward revision of forecast in October because the results also exceeded initial plan Year on Year Initial plan MOrders~ | _ The Eaipment Business increased oyna plan, exceeding expecta
Slide 13: Summary of Profits and Losses
Summary of Profits and Losses (millions of yen) FY 2016 FY 2017 2Q FY 2017 Year on Year Initial plan 2Q (Initial plan) 2Q ratio 19,914 20,000 22,850| 14.7%] 14. (EI) «S17. 250 17,500 18,396/ 6.6%] 5.1% Cost of Net Sales 11,360 11,300 11,770 Gea sbs ei), (65.9%) (64.6%) (64.0%) (es eo Car 5,889 6,200
Slide 14: Performance by Segment
Performance by Segment Segment FY 2016 FY 2017 2Q : 2Q (Initial plan) Orders-Received Equipment Business ------ sen----- Service Business ------ <==----- Other Business ------ =aa=---- Operating Income 16, 508 14, 188 901 2, 908 2, 666 152 621 502 45 —124 —108 1 19, 914 17, 250 1, 009 16, 500 14, 30
Slide 15: Analysis of Operating Income
Analysis of Operating Income Increase and Decrease Factor [J Equipment Business Service Business (millions of yen) ! '-96 mone Business E 105 I 83 | gag g¢ gas a 3 2 & ga8 3 gbs 2s go 3S gs 2 S FS 3 : : Sa S : : 1,625 \ u Wa NS \ 1,009 391 344 —119 : Increase and Increase and Increase of decrease of
Slide 16: Statement of Assets and Liabilities
Statement of Assets and Liabilities (millions of yen) Liabilities and equity Assets | 1992 ge 157599498140 996 74 n_ N r=) r ro) oO t © 5 I 49,477 Net assets Noncurrent liabilities Other current liabilities Electronically recorded monetary claims - operating Notes and accounts payable-trade 49,477 4
Slide 17: Statement of Cash Flow
Statement of Cash Flow en) (millions of y Increase in funds ‘Effect of exchangeratechange 2 sts—S on cash and cash equivalents Total financial cash flow & Total investment cash flow and intangible assets | Other Purchase of property, plant and equipment Total operating cash flow Other Decrease in no
Slide 18: Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2018
Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2018 ESPEC CORP.
Slide 19: Equipment Business
Equipment Business Environmental Test Chambers MiBoth orders-received and net sales increased year on year Orders-received exceeded the previous year, including at overseas subsidiaries, especially because of increases of standardized products both in Japan and for exports Net sales exceeded the pre
Slide 20: Equipment Business
Equipment Business (millions of yen) FY 2016 FY 2017 2Q FY 2017 Initial plan 2Q (Initial plan) 2Q OTC ratio Orders-Received 16, 508 16, 500 16.5% 14, 188 14, 300 8.2% 7.4% 1, 050 [7. 3%] Operating Income 901 [Profit ratio (%) ] [6. 4%] 79.9% 54, 4% ESPEC CORP.
Slide 21: Service Business
Service Business (millions of yen) FY 2016 FY 2017 2Q FY 2017 Year on Year Initial plan 2Q (Initial plan) 2Q ratio Orders—Received 2, 908 Operating Income 152 [Profit ratio (%) ] [5. 7%] After-sales Service and Engineering MNNo significant increase or decrease year on year or against the revised pla
Slide 22: Other Business
Other Business (millions of yen) FY 2016 FY 2017 2Q FY 2017 Year on Year Initial plan 2Q (Initial plan) ratio 8.6% 12.3% Operating Income -45 [Profit ratio (%) ] [-9.1%] -12.6 —12.2% Environmental Engineering and Plant Factory Firm demand for the plant factory business and the reforestation (tree pl
Slide 23: Breakdown of Sales by Market
Breakdown of Sales by Market Non-consolidated (Equipment business) BOther markets 100% OAutomobile market OFlat panel display market 80% | GElectronic device and equipment market 60% | OSemiconductor market 40% F 20% + 10 10 9 10 10 0% ; ; : ; FY2013 FY2014 FY2015 FY2016 FY2017 2Q 2Q 2Q 2Q 2Q ESPEC
Slide 24: Sales by Region
Sales by Region FY 2016 2Q FY 2017 2Q Overseas sales ratio:-42, 5% Overseas sales ratio: 46. 2% 2.8% 3. 7% 14.3% 13. 3% M Taiwan 4.0% China 5. 2% FY2016 = Korea 20 WM Europe&America 1 5.9% M South East Asia 53. 8% { 7 5% 57.5% ™ Other . < 4.8% — 5 bx 0.8% 0.8% — Total: 17, 250million yen Total: 18,
Slide 25: Business Plan for the Fiscal Ending March 31, 2018
Business Plan for the Fiscal Ending March 31, 2018 ESPEC CORP.
Slide 26: FY 2017 Second half Awareness of the Environment
FY 2017 Second half Awareness of the Environment Strong investment sentiment in the automobile market, both in Japan and overseas based on ongoing computerization, use of electronic components and development of automated driving. © Investments continued to be made in the smartphone market in Japan
Slide 27: FY 2017 Assumed exchange rate
FY 2017 Assumed exchange rate HiAssumed exchange rate = FY 2015 FY 2016 FY 2017 First half First half Results Results Fusscren 121.11 111.74 108.81 “11294 11000 Reference. FY 2017 Exchange rate sensitivity (for every appreciation of ¥1 against the U.S. dollar) Net Sales A decrease of ¥123 million Op
Slide 28: Targets for the Fiscal Ending March 31, 2018 and Progress of Medium-Term Management Plan
Targets for the Fiscal Ending March 31, 2018 and Progress of Medium-Term Management Plan Outlook for achieving the medium-term management plan (Net sales of over ¥40,000 million, operating income of ¥4,000 million or more, and an operating income ratio of at least 10%) P Net sales ee Hundred million
Slide 29: Business Plan for the Fiscal Ending March 31, 2018
Business Plan for the Fiscal Ending March 31, 2018 millions of yen, FY 2016 | es First halt Revised Fai Full Year (Results) a. Full Year You ) (Initial plan) Orders-received 40, 289 22,850 21,150 44, 000 9.2% 40, 500 39,507 18,396 25,604 44,000 11.4% 40, 000 Gross profit 13, 447 6,625 8,878 15,503 4
Slide 30: Equipment Business
Equipment Business (millions of yen) FY 2016 FY 2017 First half Full Year (Results) Yearon | (Initial plan) Second half Full Year Year (%) orders-received [J EEN 19, 230 17,570 36,800 11.1% 33, 300 II 22.534 15, 355 21,445 36,800 13.8% 32, 800 Operating income 1,621 2,179 3, 800 [Profit ratio (%) ]
Slide 31: Service Business
Service Business (millions of LE og | Fy 2016 | 2016 Pot 2017 First half at Full Year (Results) (Initial plan) 6, 096 3, 061 3, 139 6, 200 1.7% 6, 200 6, 065 2, 702 3, 498 6, 200 2.2% 6, 200 650 [10. 5%] Operating income 594 87 513 600 [Profit ratio (%) ] (9. 8%] [3.2%] [14.7%] [9. 7%] 1.0% ESPEC CO
Slide 32: Other Business
Other Business (millions of yen) FY 2016 FY 2017 First half (Results) Second half} Full Year Year on Year (%) Orders-received 1, 331 1, 300 —-2.4% 1,378 439 861 1, 300 —-5.7% Operating income 18 -82 82 (0) _ [Profit ratio (%) ] [1. 3%] [-18. 7%] [9. 5%] i=] ESPEC CORP.
Slide 33: Dividends
Dividends Dividend policy Recognizing that passing on profits to our shareholders is a key priority and that raising corporate value on a lasting basis is fundamental to raising shareholder value, dividends are decided taking into account sustainability and the dividend payout ratio. Dividend per sh
Slide 34: Quality is more than a word
Quality is more than a word ESOEC
Slide 35: Forward-looking statements and inquiries
These materials contain forward-looking statements, including the Company’ s present plans and forecasts of performance, that reflect the Company’ s plans and forecasts based on the information presently available. These forward-looking statements are not guarantees of future performance, and plans,
Slide 36: Reference
Reference ESPEC CORP.
Slide 37: History of Environmental Test
History of Environmental Test What is Environmental Test Test to analyze and evaluate effects of environmental factors such as temperature, humidity, pressure, and light on various industrial products like electronic components in order to ensure product quality. <1950s> <1970s-1990s> <Today> The en
Slide 38: Transition in Business
Transition in Business Expanding business based on the “environmental creation technology” refined during the course of developing environmental test chambers : large scale , ' integration H i : Automated drivin Integrated : circuit \ Eco cars such as EVs, HVs, and PHVs surface pal mount package PLD
Slide 39: [Equipment Business] Usage Case with Environmental Test Chambers
[Equipment Business] Usage Case with Environmental Test Chambers Car Navigation (GPS) Compact Size Motor econdary Cell Secondary Batteries = LED Representative Examples ehicle for Environmental Testing ensor In-vehicle Sensor Device Process/Test Condition Our Products [Power Device] WThermal shock t
Slide 40: [Equipment Business] Main New Products
[Equipment Business] Main New Products «the first chambers in Japan to be compliant with European F-gas Regulation Jul.2017 Thermal Shock Chamber TSA series -Compatible with IEC standards and automobile-related High-Power Temperature & Humidity standards Nov.2016 Chamber AR Series shehi . Rapid temp
Slide 41: [Equipment Business] TOPICS
[Equipment Business] TOPICS Expansion of product lineup for European automobile market Cin November 2016) Cin July 2017) HHigh-Power Temperature & Humidity MiThermal Shock Chamber TSA series AR Series Rapid temperature change type +Can be tested for compliance with automobile-related +ESPEC first co
Slide 42: [Equipment Business] TOPICS: Examples of Products Delivered
[Equipment Business] TOPICS:Examples of Products Delivered (Delivered in March 2016) WiSmart System Research Facility, HiNational Laboratory for advanced energy storage Fukushima Renewable Energy Institute, AIST technologies (NLAB) , National Institute of Technology (Koriyama city, Fukushima) and Ev
Slide 43: [Equipment Business] TOPICS: Examples of Products Delivered
[Equipment Business] TOPICS:Examples of Products Delivered (Delivered in February 2016) WSangenjaya Campus, College of Sports Sciences, Nihon University (Newly established in April 2016) Products delivered: Hypoxic training room, Hypoxic swimming pool chamber Uses: Improve cardiovascular and respira
Slide 44: [Equipment Business] Usage Case with Energy Device Equipment
[Equipment Business] Usage Case with Energy Device Equipment Charge-discharge Cycle Evaluation Equipment Equipment for ensuring the reliability and safety of lithium-ion secondary batteries for next-generation vehicles (e.g., hybrid and electric vehicles) Secondary Batteries PR & a - ¢ “s discharge
Slide 45: [Equipment Business] Usage Case with Semiconductor Equipment
[Equipment Business] Usage Case with Semiconductor Equipment Eliminate defective products to maintain initial-period quality at the final inspection stage of semiconductor device manufacturing Used to evaluate basic failure patterns to ensure reliability in the development of new technologies OTe, E
Slide 46: [Service Business]
[Service Business] After-sales Service and Engineering Preventive maintenance of products, maintenance service, and the upgrading/improvement and installation/relocation of products li Speedy response via one of the most extensive networks in Japan HB Launching new services by utilizing the network
Slide 47: [Service Business] TOPICS
[Service Business] TOPICS ESPEC provides commissioned tests and certification application services compliant with United Nations regulations at the world’ s first Battery Safety Certification Center Providing a one-stop service to support the implementation of 9 safety tests and applications for cer
Slide 48: [Other Business] Environmental Engineering Business
[Other Business] Environmental Engineering Business Environmental Engineering Business Reforestation (Tree planting) Recovery of local forest by selecting species and planting out seedlings using potential natural vegetation data. WWaterfront biotope restoration Reconstruction of natural environment
Slide 49: [Other Business] TOPICS: Examples of Products Delivered
[Other Business] TOPICS: Examples of Products Delivered MlArid Land Research Center, Tottori University (Delivered in March 2016) Products delivered: Experimental System for Analyzing Responses of Dryland plants to Climate Changes (2 units) (Simulates the climates of arid lands, including high tempe
Slide 50: [Other Business] TOPICS
[Other Business] TOPICS Produced a high value-added vegetables using deep-seawater Established in March 2016 near Haneda Airport at a plant factory, Production and sales of vegetables high in minerals with the use of deep sea water. ‘ —t research with DHC Corporation and Kyoto University WI Interior
Slide 51: [Other Business] TOPICS
[Other Business] TOPICS ESPEC MIC CORP. received the Award of the Chairman of the Organization for Landscape and Urban Green Infrastructure at the 36th Urban Green Awards* and the 13th Eco Product Special Jury Award MUrban Green Awards (in October 2016) MlEco-Products Awards (in November 2016) Share
Slide 52: Initiatives tackling environmental problems
Initiatives tackling environmental problems ESPEC positions environmental activities as one of its highest corporate management priorities, and is sincerely making efforts to protect, preserve and enhance the environment @ ESPEC Foundation for Global Environment Research and Technology (Charitable T
Slide 53: Promotion of diversity - Initiatives to promote women's success
Promotion of diversity - Initiatives to promote women’s success ESPEC is promoting the creation of organizations in which women with motivation and ability can succeed, including by fostering female employees and enhancing systems for enabling women to continue work 2 * £ February 2016 - From the Mi