Be Semiconductor Industries N.v. · EURONEXT:BESI
Be Semiconductor Industries — Q4 2017 Earnings Presentation
48 slides from Be Semiconductor Industries's earnings presentation, February 2018
Slide 1: Investor Presentation February 2018
INVESTOR PRESENTATION February 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements about management's future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the press release, including, but not limited to, statements relating to ex
Slide 3: Agenda
Agenda I. Company Overview II. Market III. Strategy IV. Financial Review V. Outlook & Summary February 2018 3
Slide 4: I. Company Overview
I. COMPANY OVERVIEW February 2018 4
Slide 5: Besi Overview
Besi Overview • Leading assembly equipment supplier with #1 and #2 positions in key markets. 35% addressable market share • Broad portfolio: die attach, packaging and plating Corporate Profile • Strategic positioning in substrate and wafer level packaging • Global mfg. operations in 6 countries; 2,0
Slide 6: Company History
Company History 65% Die Attach Acquisitions € 592.8 600 60% •2000 2002 2005 2009 500 55% Products •Expanded advanced packaging leadership position and market share 50% Revenue (€ millions) organically and via acquisitions 57.1% Gross Margin (%) 400 •Gained mindshare with key industry leaders •Growth
Slide 7: Best in Class Product Portfolio
Best in Class Product Portfolio Die Attach Die Bonding Multi Module Attach Flip Chip Die Sorting Die Lid Attach • 2100 xP plus / hS • 2009 SSI • 2200 evo • 8800 CHAMEO advanced New • WTT New • DLA New • 2100 sD plus / PPP plus • 2100 DS New • 2200 evo plus • 8800 TCB advanced New • TTR New • 2200 ev
Slide 8: Product Positioning
Product Positioning Semiconductor Manufacturing Equipment (2017: $56.5B)* Front end: $47.3B Assembly: $4.4B Test: $4.7B (84%) (8%) (8%) Semiconductor Assembly Process Dicing Die Attach Wire Bond Packaging Plating Die Bond Molding/ Wire Bond Plating Trim & Form** Leadframe Assembly Substrate Wire Bon
Slide 9: Customer Ecosystem
Customer Ecosystem Customers OEMs End Products IDMs Subcontractors • Diversified, blue chip customer base, top 10 = 62% of 2017 revenue • Leading IDMs and subcontractors. 65/35% split in 2017 • Assemble chips for leading fabless companies: Qualcomm, Broadcom, MediaTek • Long term relationships, some
Slide 10: Current Operational Profile
Current Operational Profile Duiven & Drunen, (The Netherlands) Cham, Radfeld, (Austria) (Switzerland) Chandler Suzhou Chengdu Korea Shanghai Leshan Sales Office Taiwan Shenzhen Production Site Philippines Sales, Production & R&D Site Malaysia Singapore YTD December 31, 2017 Europe/NA Asia • Developm
Slide 11: Summary Historical Financials
Summary Historical Financials • Revenue and orders grew by 58% and 82% in 2017: Year Ended December 31, • Industry upturn accelerated from H2-16 start (€ millions, except share data) 2015 2016 2017 • New capacity by IDMs for leading edge <20 nano applications Revenue 349.2 375.4 592.8 • Focus on new
Slide 12: Step Function Growth in Revenue and Gross Margin Since 2006
Step Function Growth in Revenue and Gross Margin Since 2006 € millions 700 60.0% 600 51.1% 50.0% 500 39.5% 40.0% 424 400 34.1% 30.0% 300 4 year 302 averages 20.0% 200 164 10.0% 100 0 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Revenue Gross Margin February 2018 12
Slide 13: Capital Allocation Trends
Capital Allocation Trends € millions 200 Cumulative Distributions: € 449.9 MM Since 2011* 175.8 180 2.8 160 140 120 100 88.1 173.0 80 22.8 67.8 60.9 60 4.0 22.4 40 65.3 56.9 20 14.0 12.4 45.4 2.7 11.3 12.4 0 2013 2014 2015 2016 2017 2018* Dividends Share Repurchases * Assumes proposed 2017 dividend
Slide 14: Besi Market Information
Besi Market Information Symbol/ •BESI Avg. Daily Volume & Liquidity Index •Euronext Midcap AMX Avg Vol * Avg Price (€ thousands) 350 12,000 300 10,000 Volume (thousands) Market •€ 2,894 MM ($3,575 MM) 250 8,000 Market Profile Cap* 200 6,000 150 4,000 100 Dividend •Pay out range 40-100% of 50 2,000 P
Slide 15: II. Market
II. MARKET February 2018 15
Slide 16: Assembly Equipment Market Trends
Assembly Equipment Market Trends Assembly Equipment Market Market Size YoY Growth Rate 6.0 30% 4.4 5.2 5.0 3.9 20% (US$ billions) 26.8% 3.6 21.4% 4.0 18.1% 10% 3.0 3.2 13.5% 3.0 0% 2.0 -10% 1.0 -20% -22.0% -17.5% 0.0 -30% 2013 2014 2015 2016 2017E 2018E Source: VLSI January 2018 Besi Revenue Revenue
Slide 17: Assembly Equipment Market Composition
Assembly Equipment Market Composition Assembly Equipment Market * Besi Addressable Market * (2016: $3.6 billion) (2016: $1.4 billion) Lead Trim & Plating Other Form 2.0% Assembly 6.6% Wire Bonding Molds (Inspection, 21.8% 9.8% Dicing) 29.7% Die Attach 41.0% Presses 16.8% Die Attach Plating 55% 0.8%
Slide 18: New Era of Chip Growth and Applications
New Era of Chip Growth and Applications Digital Society, A.I. & Big Data Era Mobile & Social 5G Media Era PC + Internet Era 2000 2010 2017 2020 Avg. $25B $32B $45B Semi Eq. Avg. $3B $4B $5B Assembly Eq. Source: Applied Materials Analyst Day 2017 Presentation, pp. 27, Company estimates February 2018
Slide 19: Will Require Changes in Process/Equipment
Will Require Changes in Process/Equipment Front End Today => Tomorrow Transistor scaling Lithography New structures 3D Back End Assembly More contacts Smaller pitches Thinner/denser more complex packages From simple Wire Bond to BGA/Flip Chip to complex 3D structures with TSVs, Stacked structures 3D
Slide 20: Advanced Packaging Critical to Next Generation Applications
Advanced Packaging Critical to Next Generation Applications Greater Mobile Revolution Miniaturization • Mobile Internet • Messaging • Social Media • Shared Economy Higher Greater • Gaming Accuracy Complexity • Geo-location • Audio/Video • Auto electronics Die Bond Packaging Datacon 8800 TC Fico AMS-
Slide 21: Advanced Packaging Unit Volume and Market Share Are Increasing
Advanced Packaging Unit Volume and Market Share Are Increasing Advanced Packaging Silicon Demand Growth & Market Share 2011 - 2021 45 45% 40% 39% 40 40% 37% 38% • 36% of wafers use advanced packaging 36% 34% interconnects currently 35 32% 35% 31% • Leading growth segment of assembly equipment M wafe
Slide 22: Besi End User Application Trends
And Is Reflected in Besi End User Application Trends 2017 % of Revenue 40% 35% 35% • Mobile internet devices, computing and automotive are Besi’s three 30% 25% largest and most rapidly growing end 25% user markets 20% 17% • New device introductions in 2017 15% 11% boost mobile internet share to 35%.
Slide 23: New Smart Phone Designs Increase Addressable Market Potential
New Smart Phone Designs Increase Besi’s Addressable Market Potential Generation Generation Main Components Manufacturer IDM/OSAT Besi system Utilized 2012 2016 Processor X X Apple TSMC ->TSMC 8800CHM, MMS-LM Hynix/Micron/Sams DRAM Memory X X Hynix/Micron/Hanamicro 2100sD, FSL ung NAND Flash X X Hyni
Slide 24: Flip Chip/Wire Bond Process Shift Is Another Revenue Opportunity
Flip Chip/Wire Bond Process Shift Is Another Revenue Opportunity 2017 2022 Wire Bonding Flip Chip Bonding Flip Chip Flip Chip $283 $370 22% 23% Wire Bonding Wire $1,018 Bonding 78% Flip Chip Advantages $1,226 77% Reduces board area Offers higher speed CAGR 2017 - 2022 by up to 95%. electrical Flip C
Slide 25: TCB/TSV and Fan Out WLP Are Emerging Process Technologies
TCB/TSV and Fan Out WLP Are Emerging Process Technologies TCB/TSV (Substrate Based) Fan Out WLP (Wafer Level) Enabling technology for high end memory and optical Preferred process for high data applications transfer and optical devices in IoT, mobile and power Next step beyond Flip Chip 32 Stacked D
Slide 26: Besi Has Gained Share In Its Addressable Markets
Besi Has Gained Share In Its Addressable Markets Source: VLSI Jan 2018 and Besi estimates~ 2012 2013 2014 2015 2016 2017E* Besi Addressable Market 21.7% 26.4% 30.5% 31.3% 29.8% ~38% Total Die Attach 27.5% 31.9% 37.1% 37.5% 37.2% Die Bonding 29.7% 39.1% 40.3% 38.9% 37.5% Flip Chip 22.2% 24.1% 33.2% 3
Slide 27: And Has a Large Share of Wallet at Key Customers
And Has a Large Share of Wallet at Key Customers Share of Wallet Die Attach Packaging 2017 Sep 2017 Sep 2014 2015 2016 YTD* 2014 2015 2016 YTD* • Customers are largest semi mfrs. Subcons Subcons ASE 70% 80% 70% 60% ASE 35% 25% 15% 35% engaged in most advanced Amkor 90% 95% 95% 75% Amkor 20% 25% 10%
Slide 28: III. Strategy
III. STRATEGY February 2018 28
Slide 29: Summary Strategy
Summary Strategy Maintain best in class tech leadership. Expand capabilities for: • eWLB, TCB, ultra thin die bonding • Large area, ultra thin, wafer level molding • Solar and lithium ion battery plating Increase market presence and share in addressable markets • Leverage technology leadership to gr
Slide 30: Strategic Priorities 2018
Strategic Priorities 2018 Increase share of electronics supply chains Further Continue reduce investment in European WLP overhead Strategic agenda 2018 Packaging Common production in platform China development Chinese capacity expansion February 2018 30
Slide 31: Besi Revenue Opportunities
Besi Revenue Opportunities World tooling up for new tech cycle <20 Higher % of nano mainstream Increased assembly smart phone equipment functionality applications Increased % of Chinese Emerging market and Revenue process Asian deployment supply Growth Drivers WLP and chains TCB Next gen Solar cell
Slide 32: Asian Production Transfer Has Helped Reduce Break Even Revenue Levels
Asian Production Transfer Has Helped Reduce Break Even Revenue Levels Asian Production Has Leading to Lower Fixed And Reduced Break Even Significantly Expanded European + NA Headcount Revenue Levels Shipments Headcount € millions 2,000 300 1,800 1,724 270 1,590 1,800 (22.6%) 1,600 1,543 99% 1,600 25
Slide 33: Workforce Has Become More Asia Centric, Scalable and Flexible
Workforce Has Become More Asia Centric, Scalable and Flexible Fixed Headcount 2,000 1,724 75% 1,800 1,549 71% 1,543 1,489 1,489 67% 1,600 1,475 65% 1,404 64% 1,400 60% Headcount 57% 1,200 54% 55% 52% 1,000 48% 800 46% 45% 43% 600 40% 400 36% 33% 35% • Asia now represents 71% of total fixed headcount
Slide 34: Besi's Asian Expansion Supports Future Growth
Besi’s Asian Expansion Supports Future Growth Units Shipped Gross Margin Asian Production Trends Fixed Headcount by Country 1800 2,000 59% 1600 1,724 57.1% 57% 1,600 1400 1,434 452 1200 55% +6.9% 1,200 423 1000 1,301 53% 470 +99.2% 800 236 51.0% 51% 800 68 +207% 600 209 675 49% 48.8% 400 633 400 625
Slide 35: Materials Cost Reduction Is Also a Key Priority
Materials Cost Reduction Is Also a Key Priority Material costs = 40% of revenue. Largest single cost Supply Chain Actions • 75% of material now purchased in Asia • Reduced personnel, transport, logistics and inventory • Enhanced cycle time/revenue ramping capability • Will consolidate # of vendors 5
Slide 36: Besi Strategic CSR Objectives
Besi Strategic CSR Objectives Safeguard safe and CSR Achievements 2017 healthy working conditions Maintain best ✔ Improvement in KPI metrics for supply chain activities Responsible tax practices in all practices environmental and ethical jurisdictions behavior ✔ Conducted surveys: ✔Company wide
Slide 37: IV. Financial Review
IV. FINANCIAL REVIEW February 2018 37
Slide 38: New Benchmark Levels of Financial Performance in 2017
New Benchmark Levels of Financial Performance in 2017 Q4-16/Q4-17 2016/2017 Revenue Net Income Revenue Net Income 160 100% € 592.8 600 100% € 153.2 +64.6% 90% 550 140 90% +57.9% 500 80% 80% 120 € 93.1 Gross Margin € 375.4 450 Gross Margin 53.2% +3.1 points 56.3% 70% 70% 51.0% +6.1 points 57.1% OPEX
Slide 39: Quarterly Book to Bill Ratio 2016 - 2017
Quarterly Book to Bill Ratio 2016 - 2017 Book to Bill Ratio Backlog (€ millions) 2.5 250 2.3 2.2 200 2.0 1.8 150 1.5 1.3 100 1.3 1.0 1.0 1.0 1.0 0.9 50 0.8 0.8 0.8 0.5 0 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Dec 17 Besi Backlog Besi Book to Bill February 2018 39
Slide 40: Quarterly Revenue/Order/Gross Margin Trends
Quarterly Revenue/Order/Gross Margin Trends Revenue Orders Gross Margin • Cyclical quarterly revenue/order patterns: • Influenced by global GDP trends, customer 300.0 70.0% roadmaps, new device introductions and seasonal factors 65.0% 250.0 240 • Revenue and orders grew by 57.9% and 82.2% 60.0% in 2
Slide 41: Currency Exposure Trends
Currency Exposure Trends Revenue Expenses 2017 ∆ 2017 ∆ 2015 2016 2017 2015* 2016 2017 vs. €** vs. €** Currency Exposure (2015) Forex Financial Impact Euro 29% 25% 18% 30% 26% 21% US dollar 70% 74% 82% 5% 5% 9% Swiss franc - - - 23% 21% 19% Malaysian ringgit - - - 28% 30% 31% Chinese renminbi - - -
Slide 42: Base Line Operating Expense Trends
Base Line Operating Expense Trends Base Opex Other Opex 40 34.1 34.2 35 29.8 30.5 30.4 3.0 29.2 29.1 28.2 4.4 30 3.3 4.9 4.3 4.1 5.5 25 5.7 20 15 29.7 31.2 25.6 27.1 23.5 24.8 24.1 24.3 10 5 0 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Baseline Opex 23.5 24.8 24.1 24.3 25.6 29.7 27.1 31.2 As %
Slide 43: Net Income Trends
Net Income Trends Net Income Net Margin 55 € 52.4 € 52.9 40% • Through cycle net margins now range between 50 approximately 10%-33% • Net margin reached 29.2% in 2017 45 33.2% € 43.6 • Operating initiatives have increased efficiency 30.8% 30% • Gross margin range has steadily improved despite 40 28.
Slide 44: Cash Generation Trends
Cash Generation Trends € millions Cash Conversion Cycle Days 180 168.2 160 208 140 120 169 149 98.7 100 86.5 127 80 73.3 107 60 40 18.1 20 0 2013 2014 2015 2016 2017 Total Cash Flow from Operations Cash Conversion Cycle* * Cash Conversion Cycle = Avg. Days Inventory Outstanding + Avg. Days Sales Out
Slide 45: Liquidity Trends
Liquidity Trends Cash and Deposits Net Cash 600 527.8 500 Besi has significantly increased cash flow generation over past five years • Net cash reached € 247.6 million at year end • Reflects € 243.3 million of dividends and share 400 repurchases • Increased profits, faster cycle times, improved euro
Slide 46: V. Outlook & Summary
V. OUTLOOK & SUMMARY February 2018 46
Slide 47: Q1-18 Guidance
Q1-18 Guidance Revenue Gross Margin € 153.2 56.3% +5% 55% to - -5% 57% Q4-17 Q1-18 Q4-17 Q1-18 Operating Expenses € 34.2 10% to 15% Q4-17 Q1-18 February 2018 47
Slide 48: Summary
Summary Leading assembly equipment supplier Best in class Gaining market with #1 or #2 advanced packaging share positions in fastest portfolio growing segments Upside potential Scalability and from next gen and profitability greatly Attractive capital <20 nano enhanced in cyclical allocation program
Be Semiconductor Industries N.V. (Besi) — Q4 2017 Earnings Presentation on 6ix