Asm International N.v. · EURONEXT:ASM
Asm International — Q3 2023 Earnings Presentation
47 slides from Asm International's earnings presentation, Oct 24, 2023
Slide 1: ASM Q3 2023 results
ASM Q3 2023 results October 24, 2023 ASM proprietary information | 1
Slide 2: Cautionary note regarding forward-looking statements
Cautionary note regarding 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-
Slide 3: Contents
Contents 1 Investment highlights 2 Q3 2023 results 3 Investor day 2023 highlights 4 Annex: detailed financials October 24, 2023 ASM proprietary information | 3
Slide 4: Investment highlights
Investment highlights October 24, 2023 ASM proprietary information | 4
Slide 5: Investment highlights
Investment highlights Strong long-term prospects • 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 10%-14% from 2022 to 2027 • Expanding our position in the Si Epi market (CAGR of 10%-15% from 202
Slide 6: Q3 2023 results
Q3 2023 results October 24, 2023 ASM proprietary information | 6
Slide 7: Financial highlights
Financial highlights €627m €622m 48.9% New orders Revenue Normalized gross margin(1) (0% yoy at constant currencies) (+9% yoy at constant currencies) (48.1% in Q3 2022) 25.3% €0.4m €139m Normalized Income from investment Normalized operating margin(1) in associates(2) net earnings(3) (26.3% in Q3 20
Slide 8: Q3 2023 highlights (i)
Q3 2023 highlights (i) Orders and revenue • Q3 new orders came in at €627m about flat compared to last year (at constant currencies) and up compared to Q2 23, despite continued soft market conditions. • Revenue up 9% yoy at constant currencies to €622m, at the top end of our previous guidance of €58
Slide 9: Q3 2023 highlights (ii)
Q3 2023 highlights (ii) Investor Day 2023 held on September 26, 2023 • Revenue target for 2025 increased to €3.0-€3.6 billion, assuming recovery of the WFE market. • New guidance for 2027, including further revenue growth to €4.0-5.0 billion1, as we continue to execute our Growth through Innovation
Slide 10: New orders flat yoy & +31% qoq at cc, backlog €1.4b
New orders flat yoy & +31% qoq at cc, backlog €1.4b Orders and backlog (€m) Q3 2023 new orders came in at €627m, about flat yoy at constant currencies (cc), and up 31% 1,800 1.2 1.1 1,600 1,525 1.0 at cc compared to Q2, despite continued soft market 1,400 1,404 1.0 conditions. 1,400 1,200 0.7 0.8 De
Slide 11: Revenues +9% yoy at cc, gross margin at 48.9%
Revenues +9% yoy at cc, gross margin at 48.9% Revenue Normalized gross profit Revenue (€m) (€m) Q2 2023 revenue increased to €622 million, +9% yoy at cc (2% as reported) and decreased 6% qoq (-7% as reported). Revenue was led by foundry followed 900 900 by logic, then power/analog and memory. 60.0%
Slide 12: OpEx up due to higher staff costs & continued R&D focus
OpEx up due to higher staff costs & continued R&D focus Normalized SG&A Normalized R&D Normalized SG&A (€m) (€m) Normalized SG&A increased 6% yoy and 4% qoq, mainly explained by higher staff costs and some investments in the organization. 140 12.0% 140 11.3% 12.3% 13.0% 11.1% The impact of currency
Slide 13: Operating result at 25.3% due to lower revenue levels
Operating result at 25.3% due to lower revenue levels Normalized operating result Normalized finance income & (€m) investment in associates (€m) 350 Normalized operating result 35.0% 300 Normalized operating result of 25.3% was lower both Q3 22 Q2 23 Q3 23 yoy and qoq. Expected operating margin for
Slide 14: Earnings slightly down due to lower operating results
Earnings slightly down due to lower operating results Normalized net earnings (€m) Normalized income taxes in the third quarter 2023 amounted to an expense of €25 million, down from Q3 22 Q2 23 Q3 23 €31 million the same period 2022. Net earnings (150.5) 151.2 129.6 Normalized net earnings in the th
Slide 15: Solid cash of €547m, robust FCF despite higher CapEx
Solid cash of €547m, robust FCF despite higher CapEx Cash Free cash flow (€m) (€m) Cash increased to €547m at the end of September 2023, up from €490m at the end of June, as FCF was more than offset by cash used in financing activities for 670 the payment of the dividend (€123m) and share repurchase
Slide 16: FY23 CapEx guidance is €150-€200m
FY23 CapEx guidance is €150-€200m CapEx increased to €59 million. FY23 CapEx is still Capital expenditures Working capital expected to be between €150-200m, with the majority (€m) (€m) of it related to expanding and upgrading R&D infrastructure. 59 492 100 Net working capital decreased to €470m (fro
Slide 17: Financial outlook
Financial outlook As included in the Q3 2023 press release published on October 24, 2023: On a currency-comparable level, we project revenue of €600-640 million for Q4 2023. Our forecasts for the second half and the full year 2023 are largely unchanged. At constant currencies and taking into account
Slide 18: Investor day 2023 highlights
Investor day 2023 highlights October 24, 2023 ASM proprietary information | 18
Slide 19: Investor Day 2023 key takeaways
Investor Day 2023 key takeaways Semiconductor growth continues despite a downturn in 2023; long-term secular trends remain solid and 1 in the case of AI and electrification of vehicles, even accelerating. ASM’s Growth through Innovation strategy showing results. Revenue increased with a CAGR of 35%
Slide 20: Digital transformation drives structural growth
Digital transformation drives structural growth Megatrends driving the semiconductor market Semiconductor revenue (US$ billion) Doubling to US$1 trillion by 2030 Source: TechInsights July 2023 20
Slide 21: WFE spending expected to grow in 2024-2027
WFE spending expected to grow in 2024-2027 WFE market forecast (US$ billion) WFE growth driven by secular trends 140 of AI, 5G, EV, edge computing etc. • Multi-year investments announced across all 120 market segments 100 • Further scaling, 3D transitions and GAA driving investments in advanced CMOS
Slide 22: The growth of AI will drive increased capacity requirements for the semiconductor industry
The growth of AI will drive increased capacity requirements for the semiconductor industry AI semiconductor sales outlook What it means for ASM: (US$ billion) • Increased capacity 120 • More datacenters with higher content servers – GPU, ASIC, communications, 100 HB DRAM 80 • More silicon content ed
Slide 23: Growth through Innovation - strategy unchanged
Growth through Innovation - strategy unchanged Our purpose is to improve people’s lives through advancing technologies that unlock new potential Drive continued strong financial Maintain leading ALD share in performance logic/foundry, expand in memory Accelerating progress in Strategic Increase Si E
Slide 24: ALD market outlook: US$3.1-3.7 billion by 2025 & US$4.2-5.0 billion by 2027
ALD market outlook: US$3.1-3.7 billion by 20251 & US$4.2-5.0 billion by 20272 Single-wafer ALD market outlook (US$ billion) Logic/foundry >55% • GAA transition share • High-k gate & Vt tuning >55% • Sacrificial layers, HM, ESL 5 share US$5.0bn • Metals >55% US$4.2bn 4 share • Selective ALD US$3.7bn
Slide 25: Si epitaxy market outlook: US$1.9-2.3 billion by 2025 & US$2.3-2.9 billion by 2027
Si epitaxy market outlook: US$1.9-2.3 billion by 20251 & US$2.3-2.9 billion by 20272 Si epitaxy market outlook Leading-edge (US$ billion) • Continued growth in leading-edge driven by GAA and high-performance DRAM >30% share >30% target Non-leading-edge share 3 16% target • Wafer, power, analog share
Slide 26: Increased ALD and Epi SAM with move from FinFET to GAA
Increased ALD and Epi SAM with move from FinFET to GAA Increases served available market for ASM by ~ US$400 million per 100k wafer starts per month (WSPM) Single-wafer ALD • High-k gate & Vt tuning • Sacrificial layers, HM, ESL • Metals • Selective ALD • High aspect ratio TSV Epitaxy • GAA nanoshee
Slide 27: Logic GAA creates new ALD/Epi opportunities
Logic GAA creates new ALD/Epi opportunities New interconnect metals: MIM • Molybdenum replacing CVD Tungsten and PVD Copper Selective deposition processes for performance and Yield: Channel Epi Source/Drain Epi • DoD and MoD M1 Increasing embedded M0 functionality: a) additional memory with Epi Si M
Slide 28: LPE and Reno: value-creating bolt-on acquisitions
LPE and Reno: value-creating bolt-on acquisitions LPE acquisition closed on October 3, 2022, Reno Sub-Systems acquisition closed on with purchase price of €471m and earn-out March 12, 2022, with purchase price of of up to €100m approximately €42m Strategic rationale: Strategic rationale: • Address t
Slide 29: ASM investing in manufacturing capacity ahead of needs
ASM investing in manufacturing capacity ahead of needs Normalized manufacturing capacity 400 370 330 330 2023 300 demand 2020 200 demand 170 180 100 100 0 2020 2021 2022 2023 2024 2025 Singapore second floor (L3) expansion provided capacity for targeted growth in 2023 through 2027 Korea expansion wi
Slide 30: Updated financial targets FY25 and introducing FY27
Updated financial targets FY25 and introducing FY27 FY2022(1) FY2025 FY2027 Old: €2.8 - €3.4 billion Revenue €2.4 billion €4.0 - €5.0 billion New: €3.0 - €3.6 billion Revenue growth 33% yoy(2) 16 - 21% CAGR (FY20-FY25) 11 - 16% CAGR (FY22-FY27) Gross margin % 47.5% 46 - 50% (FY21-FY25) 46 - 50% (FY2
Slide 31: Capital allocation strategy
Capital allocation strategy Priority 1 Priority 2 Priority 3 Priority 4 Invest to support Maintain a strong Sustainable Return of future growth balance sheet dividend payments excess cash • R&D to shareholders Increase targeted through share • Capex minimum cash position buybacks • M&A towards €600m
Slide 32: Target Net Zero by 2035
Target Net Zero by 2035 SBTi verified ASM Net Zero 2035 target in July 2023 • SBTi verified Net Zero target Target 100% renewable electricity (RE) by 2024 • Already 100% RE at 5 key sites Scope 3 use of our products is the majority of our GHG footprint • Product sustainability fully incorporated in
Slide 33: Emission segmentation at ASM
Emission segmentation at ASM Scope 1 Zooming in on Scope 3 emissions (tCO2e) Direct emissions from <0.1% company-owned facilities 59% Scope 2 Indirect emissions from 0.5% offsite utility-purchases 33% Scope 3 Indirect emissions from upstream/downstream >99% peripheral activities 2% 1% Use of Purchas
Slide 34: Sustainability fully integrated into product development
Sustainability fully integrated into product development Our vision is to develop differentiated & eco-efficient tools & processes, while maximizing energy saving through product innovation. Our aim is to lower energy/precursor usage, emissions and cost per wafer Investor Day 2023 | 34
Slide 35: People are at the heart of our success
People are at the heart of our success Headcount growth Retention 5,000 4,423 4,258 All employees 4,000 3,000 2,583 3,312 2020 89.3% High performers 97% 2021 87.5% 2,000 1,453 550 1,000 515 1,146 Headcount New hires 2022 2023 H1 88.1% >90% Talents 94% 0 2020 2021 2022 2023 H1 Culture Diversity 2023
Slide 36: Annex: detailed financials
Annex: detailed financials October 24, 2023 ASM proprietary information | 36
Slide 37: (Estimated) amortization and earn-out expenses
(Estimated) amortization and earn-out expenses € million Q3 2022 Q2 2023 Q3 2023 FY 2023 FY 2024 FY 2025 Actual Actual Actual Estimate Estimate Estimate Cost of sales – (4.7) (5.2) (27.0) – – Net research and development expenses (0.4) (3.5) (3.5) (14.0) (14.0) (14.0) Selling, general and administra
Slide 38: Normalized and reported P&L reconciliation
Normalized and reported P&L reconciliation € million Q2 2023 Q2 2023 Q3 2023 Q3 2023 Δ Δ normalized reported Normalized reported Revenue 669 669 622 622 Gross profit 328 (5) 323 305 (5) 299 Gross margin 49.0% 48.3% 48.9% 48.1% SG&A (74) (1) (75) (77) (1) (78) SG&A as a % of revenue 11.0% 11.2% 12.3%
Slide 39: Income statement (reported)
Income statement (reported) € million Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 New orders 676 829 647 486 627 Backlog 1,525 1,669 1,584 1,400 1,404 Book-to-bill ratio 1.1 1.1 0.9 0.7 1.0 Revenue 610 725 710 669 622 Cost of sales (316) (388) (359) (346) (323) Gross profit 293 337 351 323 299 Other inc
Slide 40: Balance sheet
Balance sheet € million Sep. 22 Dec. 22 Mar. 23 Jun. 23 Sep. 23 Right-of-use assets 30 32 34 34 36 Property, plant and equipment 297 312 315 338 384 Evaluation tools at customers 79 69 73 71 71 Goodwill 39 318 318 320 321 Other intangible assets 376 646 647 664 696 Investments in associates 637 686
Slide 41: Cash flow statement
Cash flow statement € million Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Net earnings from operations (150) 237 380 151 130 Adjustments to reconcile net earnings to net cash from operating 330 (73) (188) 23 27 activities Depreciation, amortization and impairments 32 38 42 44 44 Income tax paid (25) (23
Slide 42: Gross and net R&D expenses (reported)
Gross and net R&D expenses (reported) € million Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Gross R&D expenses 78 93 94 104 102 Capitalization of development expenses (27) (25) (29) (37) (39) Amortization of capitalized development expenses 9 11 11 11 11 Impairment capitalized development expenses - - -
Slide 43: Working capital: historical development
Working capital: historical development € million 800 120 700 100 600 80 500 400 60 300 40 200 20 100 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2018 2019 2020 2021 2022 2023 Working capital (lhs) Quarterly sales (lhs) Days of working capital (rhs) Numb
Slide 44: Orders and backlog: historical development
Orders and backlog: historical development € million 1,800 1,600 1,400 1,200 1,000 800 600 400 200 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2017 2018 2019 2020 2021 2022 2023 Backlog Orders Numbers based on reported financials Q1 and Q4 2019 exclude the impa
Slide 45: Revenue and operating result: historical development
Revenue and operating result: historical development € million 3,000 700 600 2,500 500 2,000 400 1,500 300 1,000 200 500 100 - - 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenue (lhs) Operating result (rhs) 2019 numbers exclude settlement gains of €159m 2022 operating margin exclu
Slide 46: Cash returned to shareholders
Cash returned to shareholders Dividend per share Cumulative cash returned to market (€ paid over) (€m) 2,500 2,000 1,500 3.00 2.50 2.50 1,000 1.50 2.00 1.00 500 0.70 0.70 0.80 0.50 0.50 0.50 0.60 0.40 1.50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 2013 2014 2015 2016 20
Slide 47: For more information visit asm.com
For more information visit asm.com October 24, 2023 ASM proprietary information | 47