Vat Group Ag · SIX:VACN

Vat — H1 2019 Earnings Presentation

31 slides from Vat's earnings presentation, Aug 8, 2019

  1. Slide 1: Second quarter and half-year results 2019

    Second quarter and half-year results 2019 PASSION.PRECISION.PURITY. Second-quarter and half-year results 2019 August 8, 2019 1

  2. Slide 2: Agenda

    PASSION. PRECISION. PURITY. Agenda Second quarter and half-year results 2019 1 Highlights Mike Allison, CEO 2 Second-quarter and half-year 2019 financial review Stephan Bergamin, CFO 3 2019 priorities, conclusion and outlook Mike Allison, CEO 2

  3. Slide 3: Sequential growth in Q2 vs Q1 indicates bottom of current market cycle reached

    PASSION. PRECISION. PURITY. Sequential growth in Q2 vs Q1 indicates bottom of current market cycle has been reached Second quarter and half-year results 2019 Quarterly net sales  Market share gains Focus on cost, sequentially up in Valves continue in H1, technology and and Global Service, down spec

  4. Slide 4: Low-cycle six-month results in line with expectations

    PASSION. PRECISION. PURITY. Low-cycle six-month results in line with expectations vs strong first half of 2018 Second quarter and half-year results 2019 Segment VAT Group AG Valves Global Service Industry (% of total (22%) (3%) net sales) (100%) (75%) Net sales CHF 263m CHF 198m CHF 56m CHF 9m EBITD

  5. Slide 5: Market trends remain mixed across all our major business segments

    PASSION. PRECISION. PURITY. Market trends remain mixed across all our major business segments Second quarter and half-year results 2019 Semiconductors  WFE investments substantially down, driven by memory; foundry and advanced logic strong  Technology advances continue, industry preparing for next

  6. Slide 6: Our three medium-term growth dimensions remain in place

    PASSION. PRECISION. PURITY. Our three medium-term growth dimensions remain in place Second quarter and half-year results 2019 1st dimension: End market growth  Medium-term digitalization growth trends such as IoT, AI, AR, etc. remain in place  Hyperscale applications, cloud storage growing, PC mar

  7. Slide 7: No 1 market position further strengthened

    PASSION. PRECISION. PURITY. No 1 market position further strengthened – specification wins remain on high level Market share All Industries 1 Market share Semi & Related 2 Market share Semi 3 Second quarter and half-year results 2019 Total vacuum valve market size Total vacuum valve market size Tota

  8. Slide 8: Agenda

    PASSION. PRECISION. PURITY. Agenda Second quarter and half-year results 2019 1 Highlights Mike Allison, CEO 2 Second quarter and half-year 2019 financial review Stephan Bergamin, CFO 3 2019 priorities, conclusion and outlook Mike Allison, CEO 8

  9. Slide 9: 6M 2019 – Group key figures

    PASSION. PRECISION. PURITY. 6M 2019 – Group key figures Second quarter and half-year results 2019 EBITDA margin Third party net sales EBITDA 25.1% (-5.5pp) CHF 263 m CHF 66 m EBIT margin 16.3% -32% -46% (-10.9pp) Free cash flow margin Free cash flow 17% (+5pp) Net debt/EBITDA CHF 45 m Free cash flow

  10. Slide 10: 6M order decline reflects moderation after record levels in 2018

    PASSION. PRECISION. PURITY. 6M 19 order decline reflects moderation after record levels in 2018, sequential development indicates bottoming out of down cycle in CHF million Second quarter and half-year results 2019 Half-year 2019 order intake 391 -31% Q2 2019 order intake -19% 262 Half-Year 2019 ord

  11. Slide 11: Volume reductions largest contributor to negative sales bridge

    PASSION. PRECISION. PURITY. Volume reductions largest contributor to negative sales bridge Second quarter and half-year results 2019 387 (149) 22 263 (1) 4 6M 2018 Volume Product mix Price FX 6M 2019  Volume declines in Semi and Display more than offset advances in Global Service and General Vacuum

  12. Slide 12: EBITDA margin above previous trough

    PASSION. PRECISION. PURITY. EBITDA margin above previous trough; demonstrates VAT’s flexible operating structure and strong cost management in CHF million 31.6% Second quarter and half-year results 2019 500 450 EBITDA margin* 387 400 350 Sales -32% 300 263 25.1% 250 189 200 150 122 135 100 66 50 0 6

  13. Slide 13: Sequential positive order and sales development; stable book-to-bill

    PASSION. PRECISION. PURITY. Sequential positive order and sales development; stable book-to-bill 250 in CHF million 1.20 Second quarter and half-year results 2019 1.00 200 0.80 150 0.60 100 0.40 50 0.20 0 0.00 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Order intake Net sales Book to bill  Cont

  14. Slide 14: Half-year 2019 net sales by segment and region

    PASSION. PRECISION. PURITY. Half-year 2019 net sales CHF 263 million Second quarter and half-year results 2019 Net sales by market segment Net sales by region 75% (79% 1 ) Valves 47% (52% 1 ) Asia 34% (31% 1 ) Americas 22% (15% 1 ) Global Service 3% (6% 1 ) Industry 19% (17% 1 ) EMEA 1 2018 numbers

  15. Slide 15: Valves: 75% of net sales

    PASSION. PRECISION. PURITY. Valves: 75% of net sales in CHF million Q2 2019 Q2 2018 Change Semiconductors & Modules Second quarter and half-year results 2019 Order intake 101.2 136.2 -25.7%  Reductions in investment expected to have reached Net Sales 101.4 159.5 -36.4% the bottom in H1 2019  VAT i

  16. Slide 16: Global Service: 22% of net sales

    PASSION. PRECISION. PURITY. Global Service: 22% of net sales in CHF million Q2 2019 Q2 2018 Change Portfolio expansion yields first results Second quarter and half-year results 2019 Order intake 28.0 25.8 8.5%  Sales growth driven by repair services and spare Net Sales 29.5 24.0 22.9% parts in CHF

  17. Slide 17: Industry: 3% of net sales

    PASSION. PRECISION. PURITY. Industry: 3% of net sales in CHF million Q2 2019 Q2 2018 Change Business model adjustments continue Second quarter and half-year results 2019 Order intake 4.5 3.6 25.0%  New scope of Industry segment since Net Sales 4.4 5.3 -17.0% January 1, 2019 in CHF million 6M 2019 6

  18. Slide 18: Lower operational results, higher depreciation and timing of tax recognition

    PASSION. PRECISION. PURITY. Lower operational results, higher depreciation and timing of tax recognition feed through bottom line in CHF million 6M 2019 6M 2018 Change Second quarter and half-year results 2019 EBIT 43.0 105.0 -59.1% Finance net -4.6 -5.2 -11.6% EBT 38.4 99.8 -61.6% Income tax expens

  19. Slide 19: Healthy free cash flow generation despite lower operational results

    PASSION. PRECISION. PURITY. Healthy free cash flow generation despite lower operational results; cash flow conversion recovers Free cash flow Free cash flow conversion Second quarter and half-year results 2019 100% 81 (34) 52 (7) 79% -36% 45 47 -80% (-4%) 69% 57% 39% 6M 2018 6M 2019 Cash flow from o

  20. Slide 20: Seasonally higher leverage ratio

    PASSION. PRECISION. PURITY. Seasonally higher leverage ratio, year-end net debt expected to fall below 1x EBITDA Net debt development 2.0 Second quarter and half-year results 2019 1.9 (94) 1.8 330 326 -10% 1.6 (105) +1% 1.5 1.4 1.4 1.1 237 1.2 1.0 222 +7% 1.0 0.9 0.8 Target level of 0.7 0.7 0.6 1.0x

  21. Slide 21: Summary of 6M 2019 financial results

    PASSION. PRECISION. PURITY. Summary of 6M 2019 financial results Achievements 6M 2019 Second quarter and half-year results 2019  Expected reduction in operating results compared to record first half in 2018  EBITDA margin as expected about 200bps above previous trough levels on a combination of lo

  22. Slide 22: Agenda

    PASSION. PRECISION. PURITY. Agenda Second quarter and half-year results 2019 1 Highlights Mike Allison, CEO 2 Fourth quarter and full-year 2018 financial review Stephan Bergamin, CFO 3 2019 priorities, conclusion and outlook Mike Allison, CEO 22

  23. Slide 23: External market factors remain volatile but bottom of down-cycle seems reached

    PASSION. PRECISION. PURITY. External market factors remain volatile but bottom of down-cycle seems reached Second quarter and half-year results 2019 Semiconductor  Order activity continues to be substantially below the record levels of 2017/2018  General caution dominates at all levels, investment

  24. Slide 24: New applications in OLED may offset decline in LCD activity

    PASSION. PRECISION. PURITY. New applications in OLED may offset decline in LCD activity Display Second quarter and half-year results 2019  Smartphone sales still moderating; introduction of new technologies (foldable smartphones) starting; OLED displays more widely introduced; 5G installations ongo

  25. Slide 25: VAT's focus remains on its three key levers

    PASSION. PRECISION. PURITY. VAT’s focus remains on its three key levers to strengthen competitive position Second quarter and half-year results 2019 Growth 1 Innovation & market share 2 Internal 3 priorities Cost manage- Working ment capital Free Cash Profitability Flow 25

  26. Slide 26: Conclusion

    PASSION. PRECISION. PURITY. Conclusion Second quarter and half-year results 2019  VAT’s medium-term growth drivers such as the Internet of Things, cloud computing and storage, artificial intelligence and many other global digitalization trends are expected to fuel further demand for semiconductors

  27. Slide 27: Qualitative outlook for full-year 2019; guidance for Q3 2019

    PASSION. PRECISION. PURITY. Qualitative outlook for full-year 2019; top line guidance for Q3 2019  Second quarter and half-year results 2019 VAT expects 2019 net sales1 to be lower compared with 2018  VAT also expects EBITDA and EBITDA margin to be lower than 2018  VAT maintains its mid-term EBIT

  28. Slide 28: Q&A Session

    Second quarter and half-year results 2019 Q&A Session PASSION.PRECISION.PURITY. 28

  29. Slide 29: Initiatives to mitigate foreign exchange exposure

    PASSION. PRECISION. PURITY. Initiatives to mitigate foreign exchange exposure FX Status on FX exposure initiatives Second quarter and half-year results 2019  Ongoing initiative to increase global sourcing (mainly Asia and Eastern Europe) USD  Denomination of debt in USD  FX hedging on up to 100%

  30. Slide 30: Information

    PASSION. PRECISION. PURITY. Information Second quarter and half-year results 2019 Investor information Contact information Listing: SIX Swiss Exchange Michel Gerber Currency: CHF Head of Communications & Investor Relations Ticker symbol: VACN Phone: +41 81 772 42 55 ISIN: CH 031 186490 1 E-mail: m.g

  31. Slide 31: Forward looking statements

    PASSION. PRECISION. PURITY. Forward looking statements Second quarter and half-year results 2019 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 her

VAT Group — H1 2019 Earnings Presentation on 6ix