Renesas Electronics Corporation · TSE:6723

Renesas Electronics — Investor Day (February 2020)

21 slides from Renesas Electronics's investor day presentation, Feb 17, 2020

  1. Slide 1: Finance

    ＜表紙サンプル＞ 産業制御システム向け FINANCE RZ/G セキュリティソリューションの紹介 IEC 62443-4-2認証取得に向けて FEBRUARY 17, 2020 SHUHEI SHINKAI SVP AND CFO RENESAS ELECTRONICS CORPORATION © 2020 Renesas Electronics Corporation. All rights reserved.

  2. Slide 2: 2016 Mid-Term Growth Strategy Review

    2016 MID-TERM GROWTH STRATEGY REVIEW © 2020 Renesas Electronics Corporation. All rights reserved.

  3. Slide 3: 2016 Mid-Term Growth Strategy Review

    Non-GAAP 2016 MID-TERM GROWTH STRATEGY REVIEW Mid-term target 2019 Actual Growth 2x Market growth* Renesas (Focus area; 2016-19) 7% (Focus area) vs Market 6% Gross margin 50% 44% R&D**(% of Revenue) 16-18% 17% SG&A*** (% of Revenue) 12-14% 14% Operating margin >20% 13% * Market growth indicates grow

  4. Slide 4: Performance Review

    Non-GAAP PERFORMANCE REVIEW 2016 Mid-term growth strategy Initiatives Contribution Gross margin 50% Intersil consolidation: Completed in February 2017 Product mix improvement: Elimination of “low GM products” on track Planned Manufacturing optimization: Production innovation plan including 6inch fab

  5. Slide 5: Achievements in 2016-2019

    ACHIEVEMENTS IN 2016-2019 Fixed cost* Inventory* Capex** • Integration synergies • Forecast accuracy • KPI • Early retirement program • Shorter decision-making chain • Financial validation • Procurement flexibility (oku-yen) (oku-yen) (oku-yen) 5,000 2,000 Days of inventory ％ of Revenue ex-Intersil

  6. Slide 6: Free Cash Flow Generation

    Non-GAAP FREE CASH FLOW GENERATION (oku-yen) 26% 26% 27% EBITDA margin 22% Free cash flow margin 12% 20% 2,000 9% 6% 1,000 EBITDA FCF 0 2016 * 2017 ** 2018 2019 ** J-GAAP IFRS * Calendar year basis ** FCF excluding cash outlay for acquisition of Intersil and IDT © 2020 Renesas Electronics Corporatio

  7. Slide 7: Target Financial Model

    TARGET FINANCIAL MODEL © 2020 Renesas Electronics Corporation. All rights reserved.

  8. Slide 8: Target Financial Model

    Non-GAAP TARGET FINANCIAL MODEL Long-term target* 2019 2019 Actual Adjusted* Industrial, Automotive Corporate Infra and IoT 7,182 6,204 Grow Grow Grow Revenue oku-yen oku-yen @SAM @SAM+ @SAM+ Gross margin 44% 43%** 40-45% 55-60% 50% Operating margin 13% 12% 10-15% 25-30% 20%+ * FX 1USD=100yen, 1EUR=

  9. Slide 9: Growth Plan

    GROWTH PLAN Long-term Long-term Renesas Market (SAM) CAGR CAGR Revenue (oku-yen) Long-term target Renesas 7% * Automotiv e Automotive 8％** 2019 Actual control Automotive control 4％ 7,182 2019 Adjusted EoL Information Information 4％ FX 6,204 ADAS Corporate xEV ADAS 17％ Automotive others others xEV 18

  10. Slide 10: Portfolio Transformation

    PORTFOLIO TRANSFORMATION By segment By product Automotive Power Automotive Power 50% 10% 52% 9% MCU Long- MCU Analog Long- 2019* Analog 2019* 40% term 49% 30% term 30% Industrial, Infra and IoT Industrial, Infra and IoT SoC 48% SoC 50% 12% 20% * Renesas management accounting, pro-forma basis © 2020

  11. Slide 11: Roadmap to Gross Margin Target

    Non-GAAP ROADMAP TO GROSS MARGIN TARGET Volume Product mix and others 50% Structural reform Depreciation scale down IDT Inventory consolidation adjustment 45% (3 months) 43% 2019 Adjusted Current run rate Long-term target © 2020 Renesas Electronics Corporation. All rights reserved. 11

  12. Slide 12: Front End Production Mix

    FRONT END PRODUCTION MIX (K wafers/month) ％ of Outsourcing (RHS) Number of wafers 40% (8-inch equivalent) 200 Foundries 20% In-house 0 0% 2019 Actual Long-term © 2020 Renesas Electronics Corporation. All rights reserved. 12

  13. Slide 13: SG&A Reduction Initiatives in Place

    Non-GAAP SG&A REDUCTION INITIATIVES IN PLACE (% of Revenue) 14% 2019 Actual Logistics cost 12% 2019 Adjusted* Improve IT spend 10% Maintain G&A outsourcing spend 8% Revenue 6,204 Long-term (oku-yen) target * After reclassification (part of SG&A reclassified to CoGs and R&D) © 2020 Renesas Electronic

  14. Slide 14: Shareholder Value Creation

    SHAREHOLDER VALUE CREATION © 2020 Renesas Electronics Corporation. All rights reserved.

  15. Slide 15: Equity Value Increments

    EQUITY VALUE INCREMENTS (Current market cap = 1.0) 2.0 1.0 Market cap “Sum of the Current intrinsic Deleveraging Revenue growth Future intrinsic parts” Equity value + margin Equity value expansion © 2020 Renesas Electronics Corporation. All rights reserved. 15

  16. Slide 16: Solid Deleveraging

    Non-GAAP SOLID DELEVERAGING Free cash flow (oku-yen) Net debt 7,000 5,000 3,000 1,000 Mar. 2019 Dec. 2019 Dec. 2020 Dec. 2022 Actual Net debt /EBITDA * 3.6x 3.2x 2.5x <1.0x * Mar. 2019 and Dec. 2019 EBITDA: LTM (last twelve months) and proforma basis © 2020 Renesas Electronics Corporation. All right

  17. Slide 17: Sum of the Parts

    SUM OF THE PARTS Enterprise value Industry multiple EV/EBITDA 20x Analog semi Automotive semi 10x 14x 10x Weighted average Industrial, Infra Consolidated Automotive and IoT EBITDA © 2020 Renesas Electronics Corporation. All rights reserved. 17

  18. Slide 18: Key Initiatives to Deliver Shareholder Return

    KEY INITIATIVES TO DELIVER SHAREHOLDER RETURN Commitment to results Focus on cash generation Achievable financial targets Optimizing leverage Investing for growth Shareholder return Sustained R&D Priority on buyback Disciplined Capex and M&A Dividends © 2020 Renesas Electronics Corporation. All righ

  19. Slide 19: Appendix

    APPENDIX © 2020 Renesas Electronics Corporation. All rights reserved.

  20. Slide 20: SAM Definition for Industrial, Infra and IoT

    SAM DEFINITION FOR INDUSTRIAL, INFRA AND IOT Source: Gartner Semiconductor Forecast Database, Worldwide, 4Q19 Update SAM: semiconductor “TAM” excluding “microprocessor compute”, “multimedia processor”, “baseband processor”, “DRAM”, “Flash” and “Non-optical sensors” Industrial: “Industrial Electronic

  21. Slide 21: Renesas.com

    Renesas.com © 2020 Renesas Electronics Corporation. All rights reserved.

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