Vat Group Ag · SIX:VACN
Vat — Investor Day (December 2020)
84 slides from Vat's investor day presentation, December 2020
Slide 1: Capital Markets Day 2020
WAT PASSION. PRECISION. PURITY. PASSION.PRECISION.PURITY. VAT - Global leaders in Vacuum Valve Technology Capital Markets Day 2020 www.vatvalve.com
Slide 2: Forward looking statements
Capital Markets Day 2020 Forward looking statements Forward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Any statements contained herein that are not statements of historical fac
Slide 3: 10 minutes break
Capital Markets Day 2020 10 minutes break Mike Allison, CEO Urs Gantner, Head of SEMI Joe Haggerty, Head of Sales and Services Michael Zickar, Head of Core Technologies Thomas Berden, COO Stephan Bergamin, CFO Mike Allison, CEO
Slide 4: The VAT Advantage
WAT PASSION. PRECISION. PURITY. PASSION.PRECISION.PURITY. VAT - Global leaders in Vacuum Valve Technology Capital Markets Day 2020 www.vatvalve.com
Slide 5: Our three business segments are delivering superior performance
Capital Markets Day 2020 Our three business segments are delivering superior performance Our business segments Valves Global Service Industry Wiehe <A Delivering outstanding performance Midpoint sales guidance Guidance on full-year full-year 2020 (mM CHF) 2020 EBITDA margin Market share across all A
Slide 6: Semiconductor are our driving force
Capital Markets Day 2020 Semiconductor are our driving force Sales Breakdown by Market Segment 9M 2020 18% >) Noes 1% > 56% Semiconductor Display & Solar Advanced Industrials Industry Global Service Sales Breakdown 9M 2020 14% 54% 32% APAC Americas © EMEA
Slide 7: 60% 2015 2016 2017 2018 2019 50% 40% 30% 20% 10% 0%
60% 2015 2016 2017 2018 2019 50% 40% 30% 20% 10% 0%
Slide 8: We supply valves & systems to all leading wafer fab OEMs
We supply valves & systems to all leading wafer fab "NN OEMs Equipment manufacturers Device manufacturers Glarusg. ASML an” » ASM Ee Alan SEMES (intel) T E L @Pamecoa ict TOKYO ELECTRON t ULVAC KLA Owonik ips evatec d4icron Es) SK nix oun Hitachi HighTech ha NauRA @LG
Slide 9: Slide 9
Slide 10: VAT is the undisputed market leader in the strongly growing vacuum valves market
VAT is the undisputed market leader in the strongly growing & highly profitable vacuum valves market VAT benefits from VAT is the due to technology leadership, deep 123 ae an application expertise, global scale and customer intimacy pe, VAT's great performance is possible because of our and we are a
Slide 11: Key megatrends support strong long-term growth in semiconductors
1 larkets Day 2020 Key megatrends support strong long-term growth in semiconductors Strong semiconductor growth supported by growth across key digitalization levers: Al Big data & cloud loT 5G Lis Sales growth (CAGR '20-'25) +35% +8% +16% +64% Source: Omdia July 2020; UBS February 2020; Gartner July
Slide 12: Strong growth of semiconductors cascaded down to strongly increasing demand in valves
Strong growth of semiconductors is cascaded down to strongly increasing demand in valves expected in ..translating to ..with semiconductor end-markets... \ Strongest 4.5x increase Os _@ > cee u VAT’s <7nm 912 58 39 strong hold 643 v 451 g & 2020 2025 2020 2025 28nm 20nm 14nm 10nm 7nm Snm 3nm ral z S
Slide 13: We deliver outstanding customer value in vacuum solutions
13 Capital Markets Day 2020 We deliver outstanding customer value in vacuum solutions & are the partner of choice Deep Semi expertise Broad technology portfolio Deep application know-how Fast speed to market Global scale We have deep expertise in the semiconductor industry Our product portfolio comp
Slide 14: Our great people drive great performance
Our great people drive great performance Engagement Talent development We have We build our culture on a . Our in place long tradition of has gone developing the up for four years in a row with larkets Day 2020 and
Slide 15: We have a strong track-record of delivering outstanding financial performance
We have a strong track-record of delivering outstanding financial performance Sales EBITDA FCF conversion ROIC Strong double-digit High profitability High FCF conversion g s & a Strong Return on growth, outperforming throughout the through controlled Invested Capital at competition business cycle CA
Slide 16: VAT with shareholder value creation >350% since IPO
<> 16 Capital Markets Day 2020 VAT with shareholder value creation >350% since IPO VAT TSR in comparison to key indices 200 150 - apes 50 —_—— (0) Jan 2017 Jan 2018 Jan 2019 Jan 2020 VAT — NASDAQ Swiss Performance Index Note: NASDAQ in dollars VAT including dividends'17~20; Values as of November 27,
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Slide 18: Four priorities going forward to accelerate our future growth
Four priorities going forward to accelerate our future growth & further improve our profitability Gain market share in Grow our service Move to adjacencies Improve operational valves business & connected VAT footprint Capital Markets Day 2020
Slide 19: We will continue to gain market share in valves
Capital Markets Day 2020 We will continue to gain market share in valves Market share in valves to ..based on our >+10 ppt Focused efforts and investments in R&D yielded in constantly large numbers of specification wins VAT particularly successful in leading edge applications specifications, such as
Slide 20: We will win in valves across all our end-markets
We will win in valves across all our end-markets : expected, in particular for our transfer & control valves Semiconductors — . Majority of share gains to come from Continuation of in display and solar Displays & Solar investments by 2023/24; 5x higher valve content per GW in heterojunction process
Slide 21: We will continue to grow our unique service business
We will continue to grow our unique service business Capital Markets Day 2020 Our service business is based on a Rapidly expanding installed base of over (10% CAGR of installed base since 2000) (8 service centers worldwide) (20 new upgrades launched since 2018) ..and will continue to deliver from 20
Slide 22: We will move into profitable adjacencies
Capital Markets Day 2020 We will move into profitable adjacencies Our strategic priorities Attractiveness High Medium Low 4 y Prio | Upstream Motion WARES components 60-80m 120-150m Advanced modules a Low Medium High Ability to win @ Early development stage Market introduction stage Market growth st
Slide 23: We will move into sensors & analytics: Connected VAT
w” We will move into sensors & analytics to build our next ° growth platform: Connected VAT Level 3: Connecting VAT Expanding into adjacent products within the chamber to products to enable Saeng increase share-of-wallet with customer data & controls solutions + across offering Level 2: Make VAT’s p
Slide 24: We will diversify our operational footprint to get closer to our customers
W We will diversify our operational footprint to get closer ° to our customers + Growth in Best Cost Country content improves our cost position fl. Factory As-is 500 5100 Best Cost Country output >50% content in (CHF M) To-be 500 >500 Best Cost As-is 3% 60% Best Cost Country Countries >50% content i
Slide 25: Strong organic growth across all sectors as we benefit from megatrends
Strong organic growth across all sectors as we benefit from megatrends, gain market share and develop new businesses Capital Markets Day 2020 Revenue growth by 2025 (M CHF) Cycle EBITDA band . 27%-31% SEMI ~680 Other 2020 Valve market growth Service and share gains Note: Based on a USD/CHF exchange
Slide 26: The world of SEMI.
The world of SEMI. Urs Gantner
Slide 27: Key megatrends support strong long-term growth in semiconductors
27 larkets Day 2020 Key megatrends support strong long-term growth in semiconductors Strong semiconductor growth supported by growth across key digitalization levers: Al Big data & cloud loT 5G Lis Sales growth (CAGR '20-'25) +35% +8% +16% +64% Source: Omdia July 2020; UBS February 2020; Gartner Jul
Slide 28: SEMI is VAT's largest business & we are the undisputed leader
Capital Markets Day 2020 WAT SEMI is VAT's largest business & we are the LLL undisputed leader in the market VAT is the undisputed market leader across applications & technology: #1 #1 #1 #1 #1 #1 Deposition Etching EUV Lithography Memory Foundry Logic Delivering outstanding performance in 2020 Sale
Slide 29: Our vacuum valves are mission critical across the whole wafer production process
Our vacuum valves are mission critical across the whole wafer production process With our , VAT is present across conditions and as a result our valve products are used Therefore, in the production process given the persisting vacuum requirement
Slide 30: Our technical capabilities & superior customer knowledge allow us to increase specification wins
Capital Markets Day 2020 Our technical capabilities & superior customer knowledge allow us to increase our specification wins VAT has strong competences in launching high-performance products that address key customer requirements: OEM customer need VAT competence r~ for complex new Strong key accou
Slide 31: Specification wins will increase our market share further
Capital Markets Day 2020 Specification wins will increase our market share further along valves product types Given our unique capabilities, we see a strong increase in specification wins... >50% 1 Specification wins 2016 — Specification wins 2020 for future WFE platforms that are in development ...
Slide 32: We will leverage our strong market position to extend our leadership into adjacent products
Capital Markets Day 2020 We will leverage our strong market position to extend our leadership into adjacent products Our strategic priorities Attractiveness High Medium Low 4 y Prio | Upstream Motion WARES components 60-80m 120-150m Advanced modules a Low Medium High Ability to win @ Early developme
Slide 33: Recent specification wins pave the way to become market leader in motion components
Capital Markets Day 2020 Recent specification wins pave the way to become market leader in motion components by 2023 iy Motion components are an + st - OEMs design own lifters & shutters opportunity to add predictive maintenance and advanced performance features High customization expected resulting
Slide 34: Expansion in upstream valve technology to generate CHF 20m of organic growth
Expansion in upstream valve technology to generate CHF 20m of organic growth by 2025 Upstream valves represent an We are well-positioned for in upstream valves Upstream valves allow VAT to address key VAT in upstream customer requirements as valves by 2025... CHF 20M represents a strong growth oppor
Slide 35: We have a clear strategy on how to win in motion components & upstream valves
We have a clear strategy on how to win in motion components & upstream valves Build differentiated (“non-commodity”) products with smart features Establish standard sub-component platform while allowing for high customization to customer needs Ensure high content of automation in the production Dedi
Slide 36: VAT SEMI will grow by 10% CAGR until 2025
VAT SEMI will grow by 10% CAGR until 2025 Market VAT is the across growth)& technologies and applications 5 6% CAGR gaining oO ae: VAT has 20226 share to address the requirements of our customer Capital Markets Day 2020
Slide 37: VAT SEMI will grow by 10% CAGR until 2025
Capital Markets Day 2020 VAT SEMI will grow by 10% CAGR until 2025 Market growth & gaining market share Adjacent products VAT is the technologies and applications VAT has across to address the requirements of our customer VAT will , such as motion components VAT has a in new adjacent products & alre
Slide 38: VAT SEMI will grow by 10% CAGR until 2025
VAT SEMI will grow by 10% CAGR until 2025 Market VAT is the across growth & A Reanh gaining technologies and applications . 6% CAGR market VAT has ao share to address the requirements of our customer m VAT will Adjacent , such as motion components 5 4%CAGR > products VAT has a in new adjacent produc
Slide 39: VAT Global Service
ah -_ VATS Vices Joe Haggerty
Slide 40: VAT has a strong position in services and is well-positioned for further growth
WAT VAT has a strong position in services and is well- *assron nsession Capital Markets Day 2020 positioned for further growth Our business segments Delivering outstanding performance in 2020 Spare parts & Gates Expected net sales growth _—_— Win-rate in retrofits vs. Installed base of Repair (M CHF
Slide 41: Service centers worldwide to fully support our global customers
8 service centers worldwide to fully support our global customers Largest valve service repair network in the industry Repair & refurbishment of valves with copy-exactly components (x) Both field service and in-house repair personnel in all 8 centers > a Capital Markets Day 2020
Slide 42: Service to contribute 5x the value of initial price within 20 years
W Service to contribute 5x the value of initial price within ° 20 years Service element Value proposition Total revenue potential (vs. valve sales price) VAT offers consumable parts, including , to allow end users to x2.0 VAT supports end-users in x12 VAT upgrades and retrofits cover them for new te
Slide 43: Service growth drivers to ensure service market share growth to ~50% by 2025
Service growth drivers to ensure service market share growth to ~50% by 2025 . Strong Strong is driving installed to replace 3rd in base party valves with VAT upgrades and retrofits products Capital Markets Day 2020
Slide 44: Given above market growth in valve sales, our installed base is growing above market
Given above market growth in valve sales, our installed base is growing above market VAT serviceable installed base growing at na ~10% CAGR over past 20 years 1'200'000 11000'000 800'000 +10% 600'000 Strong build-up of VAT installed base provides an 400'000 ; and 200000 allows VAT to g s & a (0) 199
Slide 45: Retrofit wins also grow VAT's installed base
Retrofit wins also grow VAT's installed base VAT is increasingly replacing old ..and therefore accelerating the control valves from competitors... installed base growth Retrofits represent currently at 1.5x the price of new installations Furthermore, Retrofits & increase future service revenue poten
Slide 46: New products launched across all primary OEMs in the last two years
WAT Over 20 new products launched across all primary OEMs in the last two years Upgrades and Retrofits are a High CHF 0.5bn margin market potential in potential above upgrades & retrofits average VAT service portfolio ..and we are to win in this market New New launched to for all primary be launched
Slide 47: We will grow our unique service business by 9% CAGR until 2025
VAT We will grow our unique service business by 9% CAGR until 2025 Our service business is based on a ..and will continue to deliver Rapidly expanding installed base of over from 2020 to 2025 (10% CAGR of installed base since 2000) LA in service to Sah va 50% by 2025 by expanding our offering we" (8
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Slide 49: R&D @ VAT
R&D @ Var Michael Zickar
Slide 50: R&D drives our performance in our core markets
R&D drives our performance in our core markets Capital Markets Day 2020 Our industry leading R&D unit Our strong R&D investment translates to and Allows VAT to keep winning in our core markets: Active patents and New specification wins in Budget focused on applications in 2020 2019 disruptive techno
Slide 51: VAT is extending its patent leadership across vacuum valves and adjacencies
VAT is extending its patent leadership across vacuum valves and adjacencies VAT is leading the industry in number of patents We are further extending our patent leadershi 450 va P p 413% Patents across ean _ +6% >400 vacuum valves and adjacencies today 0 Growth rate (CAGR) x2 __ in number of patents
Slide 52: We focus on unlocking the next level of growth
We focus on unlocking the next level of growth Securing the core Creating Digital transformation through through Capital Markets Day 2020
Slide 53: Securing our core through technology leadership
Capital Markets Day 2020 Securing our core through technology leadership Move towards sub 5nm era High purity and zero particle Increase in yield & throughput Fast growth in super dynamic applications We partner with industry leaders to provide (e.g. low vibration, low outgassing) We are the & relat
Slide 54: We accelerate our growth with adjacent advanced vacuum components
We accelerate our growth with adjacent advanced vacuum components We leverage our core capabilities to develop adjacent products that VAT core capability Adjacent products Our advanced vacuum components allow customers to i Material science & ° coatings Advanced machining and ‘he Superior vacuum des
Slide 55: Our future growth platform - Connected VAT
Our future growth platform - Connected VAT Increasing demand for in next generation smart semiconductor fabs for connected vacuum components, e.g. predictive maintenance these needs with Connected VAT — our future growth platform that will transform our business > 50% of our new products will have d
Slide 56: With Connected VAT we will move into sensors & analytics
With Connected VAT we will move into sensors & analytics to unlock the big data analytics opportunity Level 3: Connecting VAT Expanding into adjacent products within the chamber to products to enable Saeng increase share-of-wallet with customer data & controls solutions + across offering Level 2: Ma
Slide 57: Features
Capital Markets Day 2020 Features Customer benefit y/\N “wy VAT benefit Level 1 Predictive maintenance Actuator wear out monitoring Motor condition monitoring Bellows leakage indicator Pin synchronization error Connection error Cycle counter Continuous condition monitoring Warnings about failure Imp
Slide 58: Connected VAT fuels the transition to digital future
Capital Markets Day 2020 Connected VAT fuels the transition to digital future Features Customer benefit y/\N “wy VAT benefit Level 1 Predictive maintenance Actuator wear out monitoring Motor condition monitoring Bellows leakage indicator Pin synchronization error Connection error Cycle counter Conti
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Slide 60: Summary
Summary We are well prepared to LL era and beyond Our enable our business units to drive share gains We successfully our to develop organic adjacencies We have launched our to provide unique, extended component performance, = to drive and as well as options for Capital Markets Day 2020
Slide 61: VAT Operations
VAT Operations Thomas Berden
Slide 62: Our flexible global footprint drives our performance
Our flexible global footprint drives our performance Capital Markets Day 2020 Our global operations We drive Drive our outstanding performance Production sites Employees in operations globally Valves produced per year Ramp commitment to key customers (per quarter) Higher purchasing volume from BCC i
Slide 63: Key imperatives shaping our future: global supply chain
3 key imperatives shaping our future and contributing ° to sustainable value creation Deep dive ‘@) Global supply chain Target Key levers 1 and supply chain 2 by developing supply chain in Best Cost Countries (BCC) 3 in manufacturing capacity and capabilities
Slide 64: Key imperatives shaping our future: integrated VAT
3 key imperatives shaping our future and contributing to sustainable value creation Deep dive ‘@) Global supply chain 37) Integrated VAT Target Key levers 1 4) Ensure seamless and supply chain 2 by 2> Maintain our core market values of developing supply chain in Best and Cost Countries (BCC) 3 in 3
Slide 65: Key imperatives shaping our future: future VAT
™” 3 key imperatives shaping our future and contributing to sustainable value creation Deep dive ‘@) Global supply chain 37) Integrated VAT 2) Future VAT Target Key levers 1 7) Ensure seamless 1) Manage and supply chain relying on lean processes & build- up of 2 by 2> Maintain our core market values
Slide 66: Our optimized footprint for global flexibility and efficiency
Our optimized footprint for global flexibility and efficiency close to our customers Our production footprint aims for flexibility and efficiency : + Drives technology Arad leadership through Internal component supply High mix & high automation Internal component supplier acting as a . Penang § High
Slide 67: Snapshot of our two largest production sites
Snapshot of our two largest production sites Capital Markets Day 2020
Slide 68: Growing and moving volume to BCC locations will improve our cost position
Growing and moving volume to BCC locations and BCC suppliers will improve our cost position + Factory output (CHF M) To-be As-is Best Cost As-is Countries purchase To-be volume 500 500 3% 30% Growth in Best Cost Country content improves our cost position Best Cost Country >50% content in >500 60% Be
Slide 69: Building capacities in BCC and managing ramp
Building capacities in BCC and managing ramp Accelerating global footprint towards true flexible and agile production network Global supplier strategy implemented with Over proportional growth of factory output in BCC focus on Asia with share > 50% of total sales volume Launch of VAT Operational Exc
Slide 70: Financial performance
Financial performa Stephan Bergamin
Slide 71: VAT will deliver excellent results in 2020
VAT will deliver excellent results in 2020 Our business segments Deliver outstanding performance in 2020 Valves a 2 Order intake 9M 2020 Net sales 9M 2020 Market share across all (M CHF) (M CHF) industries Global Service &| Industry WT taal F & ae | Midpoint sales guidance Guidance on full-year Guid
Slide 72: We have delivered great results despite downturn & created substantial shareholder value
We have delivered great results despite downturn & created substantial shareholder value since our IPO We have delivered great results ..and created substantial shareholder value above despite the downturn... the industry since our IPO VAT TSR in comparison to key indices High 27-31% even through a
Slide 73: VAT continues to be a convincing investment story
VAT continues to be a convincing investment story Our sustainable value creation is based on 3 key pillars: © Growth () Profitability @ Capital allocation conversion rate 1) WFE spend 1 Operational excellence 1 Leading edge innovation 2) Market share gains 2) Cycle management with 2) Production capa
Slide 74: Unique combination of profitable growth and cash returns to shareholder
WAT Unique combination of profitable growth and cash returns to shareholder J High single digit over the cycle JV 4-5% of sales JV JV NA 20% of sales 1x Net Debt/EBITDA Up to 100% of FCFE to shareholders Note: Guidance assumes constant FX and unchanged scope of consolidation JV comnmes
Slide 75: Unique combination of profitable growth and cash returns to shareholder
Unique combination of profitable growth and cash returns to shareholder y, - + High single digit over the 30-35% of sales >40% over the cycle cycle (33% at CHF 800M in sales) y = + 4-5% of sales 5-6% of sales 60-65% of EBITDA JV JV NA & 20% of sales 1x Net Debt/EBITDA Up to 100% of FCFE to : shareho
Slide 76: Future EBITDA margin expected between 30-35% over the cycle
Capital Markets Day 2020 Future EBITDA margin expected between 30-35% over the cycle 700 650 600 550 500 450 400 350 300 250 200 150 100 50 2015 2016 2017 Net sales EBITDA margin 2018 2019 2020 2021 2022 2023 2024 2025 New lower end of EBITDA margin range over cycle New upper end of EBITDA margin ra
Slide 77: Our growth aspirations are largely covered by existing capacity
Our growth aspirations are largely covered by existing capacity With our asset light strategy, we expect to 17 and 2018 include around n CAPEX for D continue to spend 70 i over the cycle 60 6 To reach “0 5 (vs. CHF 700M today), 40 in our production 4 A = locations, e.g. 20 y + Further factory automa
Slide 78: We will generate returns on invested capital above 40% in 20-2025
We will generate returns on invested capital above 40% in 2020-2025 We will generate returns on invested @ capital above 40% in 2020-2025 400 60 on Our asset light capital model allows us ou >40% to 300 40 250 500 30 co Our asset light strategy involves E and 150 10); 20 100 10 Therefore, our 50 in
Slide 79: Our balanced capital allocation will continue in 2020-2025
Our balanced capital allocation will continue in 2020- 2025 Our past capital allocation principles... ..Will continue to guide our use of cash in 2020-2025 Allocation of capital enabled by = CHF 176M and a strong 4-5% Of sales in CAPEX =a= balance sheet Organic value creation based on CHF discipline
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Slide 81: VAT will deliver sustainable value creation and is a convincing investment opportunity
VAT will deliver sustainable value creation and is a convincing investment opportunity With its VAT operates in the Core growth most exciting growth industries and has already secured many of the future growth potential Additional growth through and move into to build larkets Day 2020 5 ang Our will
Slide 82: Robust outlook pointing to 5-10% market growth in 2021
Robust outlook pointing to 5-10% market growth in 2021 O © : Continued strength with WFE expected Semiconductor Q i r@ Service Continued strength across all sub-segments a Advanced Recovering from COVID pandemic-driven declines, Industrials Continued weakness in 2 markets expected to larkets Day 202
Slide 83: Strong organic growth across all sectors as we benefit from megatrends
Capital Markets Day 2020 Strong organic growth across all sectors as we benefit from megatrends, gain market share and develop new businesses Revenue growth by 2025 (M CHF) Cycle EBITDA band a 27%-31% SEMI ~680 Other 2020 Valve market growth Service and share gains Note: Based on a USD/CHF exchange
Slide 84: Q&A