Slide 1: Results Briefing for the Second Quarter of Fiscal Ending March 2017
ESMEC Securities ID code:6859 ESPEC CORP. Results Briefing for The Second Quarter of Fiscal Ending March 2017 November 17, 2016 WWW.eSpec.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, 2017 Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2017 Business Plan for the Fiscal Ending March 31, 2017 Reference ESPEC CORP. 1
Slide 3: Company Profile
Company Profile Industry-leading manufacturer of environmental test chambers: 69th year since company was founded in Osaka a Name ESPEC CORP. Head Office 3-5-6, Tenjinbashi, Kita-ku, Osaka 7, Represented By Masaaki Ishida Established July 25,1947 Incorporated January 13,1954 Paid-up Capital ¥6,895Mi
Slide 4: Global Network
Global Network Global Network 4 3countries Consolidated Subsidiaries 13 companies Business facilities in Japan:26 Domestic agencies in Japan:46 3 4 companies € onl i Ale erm 4 - AESPEC EUROPE GmbH ry @ESPEC NORTH AMERICA, INC , © AESPEC IKLIM KABINLERI ‘5° @QUALMARK CORPORATION £> SATIS VE MUHENDISL
Slide 5: Summary of ESPEC Business (Per Market / Use)
Summary of ESPEC Business (Per Market / Use) P| atain Products| Market | Use itvaoreaa) +Electronic component and equipment market Temperature & humidity chamber Thermal shock chamber «Automobile market -ForR &D Environmentalbliest +Bench-top type temperature & humidity chamber Crater ae -For credib
Slide 6: Examples of Products Delivered (Equipment Business)
<TOPICS) Examples of Products Delivered (Equipment Business) (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
Slide 7: Examples of Products Delivered (Equipment Business)
<TOPICS) Examples of Products Delivered (Equipment Business) (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 respi
Slide 8: Examples of Products Delivered (Other Business)
<TOPICS) Examples of Products Delivered (Other Business) (Delivered in March 2016) WArid Land Research Center, Tottori University 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 9: Award Received for Forestation Activities at the Urban Green Awards
<TOPICS) Award Received for Forestation Activities at the Urban Green Awards 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 Gr
Slide 10: Financial Result for the Second Quarter of Fiscal Ending March 31, 2017
Financial Result for the Second Quarter of Fiscal Ending March 31, 2017 ESPEC CORP. 9
Slide 11: Review of the First Half of Fiscal 2016
Review of the First Half of Fiscal 2016 External Environment Further appreciation of the yen * Accelerated development of eco- friendly cars such as electric vehicles and fuel-cell vehicles following stricter environmental regulations Entry into force of ECE R100-2. Part Il, the United Nations stand
Slide 12: Financial Highlights
Financial Highlights ESPEC announced the downward revision of financial forecasts for the first half and full year of fiscal 2016, along with reducing its dividend forecast, as business performance saw higher sales but lower earnings year on year in the first half, and also fell sharply below initia
Slide 13: FY 2015 2Q / Plan for FY 2016 2Q
Plan for FY 2015 FY 2016 2Q FY 2016 2Q 2Q 12
Slide 14: FY 2015 2Q / Plan for FY 2016 2Q
Plan for FY 2015 FY 2016 2Q FY 2016 2Q 2Q 13
Slide 15: Analysis of Operating Income
Analysis of Operating Income Increase and Decrease Factor pActy (millions of yen) ; ; [] Equipment Business Ad {| Service Business 3 ' ' [ij Other Business or an : \@Be : $28 & A118 oS ae oO exo! (OF eo £28) 1 cwcaT 7 S&S $28 132 gS 838 / Sp 2 3 = 8 2 = ze e o = 2 1, 133 o oa —~ — | a — gl 393 Ra !
Slide 16: Analysis of Assets and Liabilities
ities Analysis of Assets and Liab Increase and Decrease Factor (millions of yen) Liabilities and equity oc Oo ™ Net assets 43,953 Noncurrent liabilities 3 Other current liabilities Electronically recorded > monetary claims - operating Notes and accounts payable-trade ive) 48,04 A4,092 953 oD Investm
Slide 17: Statement of Cash Flow
Statement of Cash Flow (millions of yen) ‘Effect of exchange rate change on cash and cash equivalents rs SO nn a nnn = Total financial <q cash flow Other Cash dividends paid oo ee = We > Total investment cash flow te 2 Other Purchase of property, plant and equipment and intangible assets Proceeds fr
Slide 18: Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2017
Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2017 ESPEC CORP.
Slide 19: Equipment Business
Equipment Business ll Orders-received decreased both year on year and against the initial plan In terms of year-on-year comparisons, the drop in exports centered on Southeast Asia and Europe had a large impact. In terms of comparisons with initial plans, subsidiaries in North America, China and Sout
Slide 20: FY 2015 2Q / Plan for FY 2016 2Q
Plan for FY 2015 FY 2016 2Q FY 2016 2Q 2Q 19
Slide 21: FY 2015 2Q / Plan for FY 2016 2Q
Plan for FY 2015 FY 2016 2Q FY 2016 2Q 2Q 20
Slide 22: FY 2015 2Q / Plan for FY 2016 2Q
Plan for FY 2015 FY 2016 2Q FY 2016 2Q 2Q 21
Slide 23: Breakdown of Sales by Market
Breakdown of Sales by Market Non-consolidated (Equipment business) Other markets Automobile market 100% 4 OFlat panel display market 80% + " GElectronic device and equipment , market 60% GSemi conductor market 40% + 20% | if 10 10 9 10 0% fi f f FY2012 2Q FY2013 2Q FY2014 2Q FY2015 20 FY2016 20 ESPE
Slide 24: Sales by Region
Sales by Region FY 2015 2Q Overseas sales ratio:-44. 2% 2.9% 15.8% 4.9% FY2015 2Q 55.8% 14.7% 1.0% 4.9% Total: 16, 136million yen (Overseas sales:7, 125million yen) FY 2016 2Q Overseas sales ratio:42. 5% @ Taiwan @ China ™ Korea M@ Europe&America @ South East Asia ™ Other Japan 2.8% FY2016 57.5% 2Q
Slide 25: Business Plan for the Fiscal Ending March 31, 2017
Business Plan for the Fiscal Ending March 31, 2017 ESPEC CORP.
Slide 26: FY 2016 Assumed exchange rate
FY 2016 Assumed exchange rate Wi Assumed exchange rate FY 2015 FY 2016 | Results First half Fiscal Fiscal Results Results 10 | Fst na Assumed US$(yen) 120.31 121.11 115.33 111.74 105 BBFY 2016 Exchange rate sensitivity (for every appreciation of ¥1 against the U.S. dollar) Net Sales A decrease of ¥1
Slide 27: FY 2016 Awareness of the Environment in the Second Half
FY 2016 Awareness of the Environment in the Second Half 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. Firm demand in Japan and overseas in the smartphone market, su
Slide 28: Business Plan for the Fiscal Ending March 31, 2017
Business Plan for the Fiscal Ending March 31, 2017 (millions of yen) Capital expenditures Depreciation expenses R&D expenditures Profit Per Share (yen) 39, 903 39, 035 13, 573 (34. 8%) 3, 521 (9. 0%) 3,570 (9.1%) 2,410 (6. 2%) 1, 162 757 956 104. 75 19, 914 17, 250 5, 889 (34. 1%) 1, 009 (5. 9%) 833
Slide 29: Equipment Business
Equipment Business (millions of yen) es 2016 Fiscal | Revie in = fiscal (Results) Rann the period) lorders-received |) ea) 16, 508 15, 552 32,060 A2.7% 33, 000 — 14, 188 16, 722 30,910 A3.5% 32, 000 Operating eo 901 1,599 2, 500 A16. 3% 3, 000 [Profit ratio ( 6. 4%] [9. 6%] [8. 1%] ate [9. 4%] ESPEC
Slide 30: Service Business
Service Business (millions of yen) FY 2015 FY 2016 Revised Plan ‘| 2Q ~~ (Results) (Results) Second half Fiscal Year on Year tena (Plan) (Plan) (%) ss Orders-received 5, 874 2, 908 3, 002 5,910 0. 6% 6, OOO 5, 786 2, 666 3, 284 5, 950 2. 8% 6, OOO Operating income 516 152 348 500 A3. 1% 600 [Profit
Slide 31: Other Business
Other Business (millions of yen) FY 2015 FY 2016 (Results) (Results) Second half Fiscal Year on Year eae (Plan) (Plan) (%) j Orders-received 1, 340 621 609 1, 230 A8. 2% 1, 200 1,474 502 838 1, 340 AY. 1% 1, 200 Operating income 19 A45 45 [Profit ratio (%) ] [1. 3%] [A9. 1%] [5. 4%] ESPEC CORP.
Slide 32: 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 33: Quality is more than a word
Quality is more than a word ESOEC ESPEC CORP.
Slide 34: 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 35: Reference
Reference ESPEC CORP.
Slide 36: 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 37: 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 36
Slide 38: 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 39: 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 40: Bench-Top Temperature Chamber receives iF Design Award 2016
[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 41: Service Business: 5-year Product Guarantee
[Service Business] TOPICS Start the industry-first "5-year Product Guarantee” In January 2015, ESPEC started the industry’ s first free 5-year product guarantee service for its three core products. With its high product quality and thorough after-sales service network, ESPEC is well 1 positioned to
Slide 42: 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 43: 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 44: After-sales Service and Engineering
[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 45: Opened the World's First Battery Safety Certification Center
[Service Business] TOPICS Opened the world’ s first Battery Safety Certification Center The facility was opened within the Utsunomiya Technocomplex in September 2015. Providing a one-stop service to support the implementation of 9 safety tests and applications for certification by certification agen
Slide 46: 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. MiWaterfront biotope restoration Reconstruction of natural environmen
Slide 47: Establishment of a plant factory near Haneda Airport
[Service Business] TOPICS Establishment of a plant factory near Haneda Airport Established a test production facility in March 2016 for high value-added vegetables produced using deep-seawater Interior of the plant factory and Factory-produced vegetables mineraleaf ESPEC CORP.