Slide 1: Results Briefings for Fiscal 2016 Ended March 2017
ESMEC Securities ID code:6859 ESPEC CORP. Results Briefings for Fiscal 2016 Ended March 2017 May 22, 2017 Wwww.espec.co.jp ESPEC CORP.
Slide 2: Table of Contents
Table of Contents Company Profile Financial Result for the Fiscal 2016 Ended March 31, 2017 Analysis per Segment for the Fiscal 2016 Ended March 31, 2017 Business Plan for the Fiscal Ending March 31, 2018 Action Items for the Fiscal Ending March 31, 2018 Reference ESPEC CORP. 1
Slide 3: Company Profile
Company Profile Industry-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 I
Slide 4: Global Network
Global Network Consolidated Subsidiaries 11 companies Global Network Business Facilities in Japan : 25 Domestic Agencies in Japan : 46 Globas 43 countries lobal 8 companies, . Domestic 3 companies) 33 companies europe © nal J AAESPEC EUROPE GmbH r ag! ie @ESPEC NORTH AMERICA, INC A AESPEC IKLIM KABI
Slide 5: Summary of ESPEC Business (Per Market / Use)
Summary of ESPEC Business (Per Market / Use) es ee +Electronic component and equipment market Temperature & humidity chamber Thermal shock chamber «Automobile market -ForR &D 9 -Bench-top type temperature & humidity chamber . -For credibility Environmental Test ING Genin + Semiconductor market alarm
Slide 6: TOPICS
TOPICS Cin January 2017) Nikkei Inc. Achieved 38th place in the Nikkei Environmental Management Survey FY Ranking 2016 38 2015 48 2014 113 (in February 2017) Environmental Communication Award Won the Excellence Award for 2 consecutive years PURSE RSP Sponsored by the Ministry of the Environment, and
Slide 7: TOPICS
TOPICS Promotion of diversity - Initiatives to promote women’s success p, OM 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: y-Fe, @ The Company
Slide 8: Financial Result for the Fiscal 2016 Ended March 31, 2017
Financial Result for the Fiscal 2016 Ended March 31, 2017 ESPEC CORP. 7
Slide 9: Review of the Fiscal 2016
Review of the Fiscal 2016 * Significant fluctuation in foreign Effectively started a “ONE ESPEC Structure” exchange during the fiscal year in the Chinese market (July 2015 Converted SHANGHAI ESPEC ENVIRONMENTAL EQUIPMENT CORP. into a wholly owned subsidiary) * Accelerated development of eco- friendl
Slide 10: Financial Highlights
Financial Highlights Year-on-year product mix changes resulted in higher sales but lower earnings. Both net sales and operating income increased against the revised plans. Year on Year Against the revised plan Increased due to the relaxation of Initial plan Net income* operating income operating inc
Slide 11: Summary of Profits and Losses
Summary of Profits and Losses (millions of yen) 3% 0% 39,903 39,000 40, 289 1. 0% > 39,035 38,000 39, 507 1.2% 25,461 24,847 26, 059 (65.2%) (65.4%) (66. 0%) 13,573 13,153 13,447 A0.9% 10,051 10,153 10, 204 1.5% 9% 2% 5% oon FF FO 3, 521 3,000 3,243] A7.9% 1% 3,570 2,850 3,171 A11.2% 11.3% 2,410 2,0
Slide 12: Performance by Segment
Performance by Segment fillons of er) _ FY 2016 Year on Against the Jam Orders- Received 32, 951 32, 060 33, 124 0. 5% Equipment Business 32, 030 30,910 32, 334 0. 9% 4. 6% 2, 986 2, 500 2,630 A11.9% 5.2% 5, 874 5,910 6, 096 3.8% 3.1% Service 5 : 5, 786 5, 950 6, 065 4. 8% 1.9% Business 516 500 594
Slide 13: Analysis of Operating Income
Analysis of Operating Income Increase and Decrease Factor (millions of yen) [] Equipment Business Service Business : Ye : | [yj Other Business - BS courte acs, | | (2 —_ o Oo (or) BRB A683 116 o SCS ap £82 © 3B 93 387) 3 3 8e 38%: g B = 8238) Ba °° “BS 22 = 23 Ss 3% $ 8 oo #8 3,521. ~ ee \ a \- 7 3,
Slide 14: Statement of Cash Flow
Statement of Cash Flow en) (millions of y . (oo) Increase in funds - 1,657 oS Effect of exchange rate change gq on cash and cash equivalents ‘© Total financial aq cash flow Cash dividends paid 3 [otal investment cash flow Other Purchase of property, plant and equipment and intangible assets © Net de
Slide 15: Analysis per Segment for the Fiscal 2016 Ended March 31, 2017
Analysis per Segment for the Fiscal 2016 Ended March 31, 2017 ESPEC CORP.
Slide 16: Equipment Business
Equipment Business Environmental Test Chambers HEBoth orders-received and net sales increased year on year Increased due to export of customized products and QUALMARK CORPORATION’ s new consolidation HEBoth orders-received and net sales increased against revised plans Orders-received exceeded especi
Slide 17: Equipment Business
Equipment Business (millions of yen) FY 2016 Against the Revised Plan FY 2016 Year on Year paveedinlan Orders—Received 32, 951 32, 060 0. 5% 3.3% Net sales 32, 030 30, 910 0. 9% 4.6% Operating Income 2, 986 2, 500 A11. 9% 5.2% [Profit ratio (%) ] [9. 3%] (8. 1%] ESPEC CORP.
Slide 18: Service Business
Service Business (millions of yen) 5, 874 5,910 6, 096 3. 8% 3.1% 5, 786 5, 950 6, 065 4. 8% 1.9% 516 500 594 ; ; [8. 9%] [8. 4%] (9. 8% 15. 1% 18. 8% No significant increase or decrease year on year or against the revised plans Test consulting, especially for the automobile markets such as Battery
Slide 19: Other Business
Other Business (millions of yen) FY 2016 (Revised Plan) Against the FY 2015 FY 2016 Year on Year revised plan Orders-Received 1, 340 1, 230 1, 331 AO. 7% 8.2% 1,474 1,340 1,378 A6. 6% 2.8% Operating Income 19 0 18 _ 11. 3%] [-] 1. 3%] BE IE Profit ratio (% Environmental Engineering and Plant Factory
Slide 20: Breakdown of Sales by Market
Breakdown of Sales by Market Non-consolidated (Equipment business) 100% 80% 60% 40% 20% 0% 10 10 9 10 FY2012 FY2013 FY2014 FY2015 FY2016 Other markets CAutomobi le market OFlat panel display market GElectronic device and equipment market OSemiconductor market ESPEC CORP. 19
Slide 21: Sales by Region
Sales by Region FY 2015 FY 2016 Overseas sales ratio: 41. 2% Overseas sales ratio: 42. 2% 2. 8% 15. 2% @ Taiwan ™ China ™ Korea 4. 1% Stomernce| _ _FY2016 m Other 57. 8% 14. 4% Japan 4. 9% 0. 8% Total: 39, O35million yen Total: 39, 507million yen (Overseas sales: 16, O72 million yen) (Overseas sales
Slide 22: Management Plan for the Fiscal Ending March 31, 2018
Management Plan for the Fiscal Ending March 31, 2018 ESPEC CORP.
Slide 23: FY 2017 Awareness of the Environment
FY 2017 Awareness of the Environment sseulsng juewdinby sseuisng sseulsng © 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. Environmental Test Chambers Firm demand in
Slide 24: FY 2017 Assumed exchange rate
FY 2017 Assumed exchange rate WiAssumed exchange rate First half Results US$(yen) 121.11 111.74 108.81 Reference. FY 2017 Exchange rate sensitivity (for every appreciation of ¥1 against the U.S. dollar) Net Sales A decrease of ¥123 million Operating Income A decrease of ¥1,500 thousand ESPEC CORP.
Slide 25: Progress of Medium-Term Management Plan and Targets
Progress of Medium-Term Management Plan and Targets for the Fiscal Ending March 31, 2018 For FY2017, made downward revision of operating income from 4 billion yen to 3.7 billion yen | Net sales RAR _ Operating income Hundred millions Hundred millions of yen _ === Results. —Initial company plan of 50
Slide 26: Business Plan for the Fiscal Ending March 31, 2018
Business Plan for the Fiscal Ending March 31, 2018 (millions of yen) FY 2016 FY 2017 | First half | Second half | Full Year | Year on Year (%) Orders-received 40, 289 20,000 #20, 500 40, 500 0. 5% 39, 507 17, 500 22, 500 40, 000 1.2% Gross profit 13, 447 6, 200 7,950 14, 150 5.2% [Profit ratio (%) ]
Slide 27: Equipment Business
Equipment Business (millions of yen) FY 2016 FY 2017 16, 500 16, 800 33, 300 0. 5% 14,300 18,500 32,800 1.4% Operating income 1, 050 2, 000 3, 050 16. 0% [Profit ratio (%) ] [7.3%] [10.8%] [9. 3%] _ ESPEC CORP.
Slide 28: Service Business
Service Business (millions of yen) FY 2016 FY 2017 je Second half Full Year Year on Year (%) 6, 096 3, 000 3, 200 6, 200 . Net sales | 6, O65 2, 800 3, 400 6, 200 2.2% Operating income 594 200 450 650 [Profit ratio (%) ] [9. 8%] [7. 1%] [13. 2%] [10. 5%] ESPEC CORP.
Slide 29: Other Business
Other Business (millions of yen) FY 2016 FY 2017 Second half Full Year Year on Year (%) Orders-received 700 1, 300 A2. 3% 1,378 500 800 1, 300 A5. 7% Operating income 18 A50 50 Oo _ [Profit ratio (%) ] 11.3%] [A10. 0%] [6. 3%] [—] ESPEC CORP.
Slide 30: 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 31: Action Items for the Fiscal Ending March 31, 2018
Action Items for the Fiscal Ending March 31, 2018 ESPEC CORP.
Slide 32: Priority Strategies for the Fiscal Ending March 31, 2018
Priority Strategies for the Fiscal Ending March 31, 2018 Priority Strategy 1 Priority Strategy 2 Implement Company-wide quality and process reforms focusing Apply synergies of the ESPEC Group to expand on design and production reforms Wincecaan ana for customized division products Priority Strategy
Slide 33: Design and production reforms for customized Division products
1 Design and production reforms for customized Division products Implement Reforms for All Processes «Marketing =: Strengthen quick response and promotion *Design : Improvement of estimation accuracy, unitization and modularization «Development : Advance development tailored to cutting-edge needs *P
Slide 34: Expansion of Shanghai Espec product sales
2-1 -Expansion of Shanghai Espec product sales «Enhance customized response capabilities Customers ESPEC ENVIRONMENTAL EQUIPMENT (SHANGHAI) Co., LTD. <Sales> SHANGHAI ESPEC ENVIRONMENTAL EQUIPMENT ESPEC TEST EQUIPMENT (GUANGDONG) Co., LTD <Manufacturing >, CORP. _ <Manufacturing> Increase sales in o
Slide 35: Expand business domains and create new business
3—1 Expand business domains and create new business Automobile market *Expansion of environmental test equipment sales (Standardized products and customized product) «Increase sales of commissioned testing services Battery Safety Certification Center Cin Utsunomiya Technocomplex ) ESPEC CORP.
Slide 36: Expand business domains and create new business
3—2 Expand business domains and create new business HALT/HASS Chamber *Domestic sales expansion (In January 2017, started selling test equipment as a Japanese import agency) Utilizing the sales network of the ESPEC Group _— —_— = i, Life science market ~ HALT/HASS Chamber Drug, Food and Material «In
Slide 37: Take the lead in the Japanese environmental testing market
4 Take the lead in the Japanese environmental testing market Our proprietary products and services «Expansion of sales by new products for automobile market «Promotion of replacement by "product 5 year warranty” «Expand after-sales service and engineering services such as maintenance inspections «Ex
Slide 38: Quality is more than a word
Quality is more than a word ESOEC ESPEC CORP.
Slide 39: 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 40: Reference
Reference ESPEC CORP.
Slide 41: 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 42: Business expansion timeline
1982 1986 1994 2011 Launching the FPD Launching the expansion Launching the Launching Business semiconductor Equipment business evaluation system equipment business business the energy device equipment business 41
Slide 43: Usage Case with Environmental Test Chambers
[Equipment Business] Usage Case with Environmental Test Chambers Car Navigation (GPS) i | ——oee| econdary Cell Vehicle Sensor LED : ECU Representative Examples ehicle for Environmental Testing ensor Device Process/Test Condition Our Products [Power Device] Thermal shocktest: 40°C | 125°C Thermal sho
Slide 44: Equipment Business Main New Products
[Equipment Business] Main New Products *Compatible with IEC standards and automobile-related standards High-Power Temperature & Humidity 2016/11 Chamber AR Series win . Ranliltemperstiretchanaeltyne Achieves rapid temperature change rate of up to 18° C/min F . . Evaluates the impact of high-pressure
Slide 45: Equipment Business TOPICS
[Equipment Business] TOPICS Bench-Top Type Temperature (& Humidity) Chamber receives an iF DESIGN AWARD 2016 international design award DESIGN ESPEC’ s Bench-Top Type Temperature (& Humidity AWARD Chamber received an iF DESIGN AWARD 2016, the most stil prestigious design award in the world, in the p
Slide 46: 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 Charge- discharge cycle
Slide 47: 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 Elimination of latent early failures Burn-in chamber Reliability Evaluation Used to evaluate basic failure
Slide 48: Service Business
[Service Business] After-sales Service and Engineering Preventive maintenance of products, maintenance service, and the upgrading/improvement and installation/relocation of products I Speedy response via one of the most extensive networks in Japan I Launching new services by utilizing the network fu
Slide 49: 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 50: Other 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. MiWaterfront biotope restoration Reconstruction of natural environmen
Slide 51: 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:x, Production and sales of vegetables high in minerals with the use of deep sea water. x Joint research with DHC Corporation and Kyoto University Interi
Slide 52: Other Business TOPICS
(Other Business] TOPICS In recognition of their forestation activities, ESPEC MIC CORP., along with Rinno-ji Temple (Sendai) , received the Award of the Chairman of the Organization for Landscape and Urban Green Infrastructure at the 36th Urban Green Awards. This project involved restoring a row of