Vat Group Ag · SIX:VACN

Vat — Debt Investor Presentation (May 2018)

49 slides from Vat's debt investor presentation, May 7, 2018

  1. Slide 1: Bond investor presentation

    PASSION. PRECISION. PURITY. Bond inves tor pr es entation PASSION. PRECISION. PURITY. No. 1 global market position in high-end vacuum valve technology Bond investor presentation May 7 & 8, 2018 1

  2. Slide 2: Today's presenters

    PASSION. PRECISION. PURITY. Today’s presenters Michael Allison, Chief Executive Officer Bond inves tor pr es entation  CEO of VAT since 2018, previously served in various leadership roles at Edwards/Atlas Copco, most recently as President of the Semiconductor Division, as well as at KLA-Tencor Corp

  3. Slide 3: Agenda

    PASSION. PRECISION. PURITY. Agenda Bond inves tor pr es entation 1 VAT overview 2 Key credit highlights 3 Financial performance 4 Bond offering 3

  4. Slide 4: VAT – enabling innovation in your daily life and facilitating digitalization

    PASSION. PRECISION. PURITY. VAT – enabling innovation in your daily life and facilitating the digitalization of the world Without VAT we wouldn’t have any of these… Bond inves tor pr es entation  We are the global leader in high-end vacuum valves with a strong brand reflecting our reputation for te

  5. Slide 5: VAT at a glance (FY 2017)

    PASSION. PRECISION. PURITY. VAT at a glance (FY 2017) – The global leader in high-end vacuum valve technology Bond inves tor pr es entation VAT Group AG Valves Global Service Industry (80%) (14%) (6%) Segment (% of total net sales) 16% EMEA 51% Asia 33% North America Net sales CHF 692m / +36% CHF 55

  6. Slide 6: VAT offers valves, modules and services for three key markets

    PASSION. PRECISION. PURITY. VAT offers valves, modules and services for three key markets Bond inves tor pr es entation Semiconductors Display & Solar Bellows General Vacuum Modules Services 6

  7. Slide 7: VAT has an unparalleled portfolio of high-end vacuum valves

    PASSION. PRECISION. PURITY. VAT has an unparalleled portfolio of high-end vacuum valves Bond inves tor pr es entation Isolation  VAT’s product portfolio valves encompasses more than 150 valve series All-metal Large gate with more than 8,000 Angle valves Gate valves Pendulum valves valves valves cus

  8. Slide 8: Vacuum valves are mission-critical components in high-tech production processes

    PASSION. PRECISION. PURITY. Vacuum valves are mission-critical components in high-tech production processes  VAT high-end vacuum valves, standing for close to zero Bond inves tor pr es entation particles, highest purity and reliability, control and regulate flows and pressures in advanced productio

  9. Slide 9: VAT is attractively positioned in the value chain

    PASSION. PRECISION. PURITY. VAT is attractively positioned in the value chain of the vacuum / process industry Vacuum system Equipment Bond inves tor pr es entation Material suppliers component manufacturers Device manufacturers manufacturers (OEMs) Valves 9

  10. Slide 10: Agenda

    PASSION. PRECISION. PURITY. Agenda Bond inves tor pr es entation 1 VAT overview 2 Key credit highlights 3 Financial performance 4 Bond offering 10

  11. Slide 11: VAT – Key credit highlights

    PASSION. PRECISION. PURITY. VAT – Key credit highlights Bond inves tor pr es entation 1 Pure play business model as the technology leader in mission-critical vacuum valves 2 Long-term strategic partner for a diversified blue-chip customer base 3 Digitalization of the world drives growth and stabilit

  12. Slide 12: Pure play business model as the technology leader in mission-critical vacuum valves

    PASSION. PRECISION. PURITY. 1 Pure play business model as the technology leader in mission-critical vacuum valves Bond inves tor pr es entation Pure play on mission-critical vacuum valves Technology leadership  Low operational complexity and high  Over a three year cycle 2/3rd of the flexibility r

  13. Slide 13: Leveraging our core competencies to exceed industry requirements

    PASSION. PRECISION. PURITY. 1 Leveraging our core competencies to exceed industry requirements VAT Relevance to Bond inves tor pr es entation core competencies industry segments Semi Display Solar R&D Technology enablers Sealing technology     Contamination management (zero defects)  

  14. Slide 14: Long-term strategic partner for a diversified blue-chip customer base

    PASSION. PRECISION. PURITY. 2 Long-term strategic partner for a diversified blue-chip customer base Semiconductors Display & Solar Bond inves tor pr es entation Ever increasing technological requirements resulted in consolidation and symbiotic partnerships Lintott Engineering Plating Implant PV SEZ

  15. Slide 15: Digitalization of the world drives growth and stability for VAT

    PASSION. PRECISION. PURITY. 3 Digitalization of the world drives growth and stability for VAT … fosters future growth while reducing the cyclicality of the Bond inves tor pr es entation Ubiquitous presence of electronic devices … industry 1'600 Cellular 1'400 Handsets Other1 1'200 16% IC unit shipme

  16. Slide 16: Undisputed no. 1 market position protected by high entry barriers

    PASSION. PRECISION. PURITY. 4 Undisputed no. 1 market position protected by high entry barriers Bond inves tor pr es entation Undisputed market leadership High barriers to entry Market share all industries1 High-end vacuum valves are Large variety of proprietary mission-critical and require leading

  17. Slide 17: Attractive financial profile with strong resilience supported by flexible cost structure

    PASSION. PRECISION. PURITY. 5 Attractive financial profile with strong resilience supported by flexible cost structure 692 Bond inves tor pr es entation 508 411 389 367 364 332 333 335 300 313 264 41% 43% 38% 202 35% 32% 31% 31% 31% 31% 31% 28% 23% 23% 24% 26% 26% 25% 21% 20% 17% 18% 12% 12% 16% 200

  18. Slide 18: Comparison of key financials with Swiss best-in-class and other industrial companies

    PASSION. PRECISION. PURITY. 5 Comparison of key financials with Swiss best-in-class and other industrial companies Swiss best-in- Other Swiss Bond inves tor pr es entation class industrials2 industrials3 Adj. EBITDA A Best-in-class profitability margin 2017 31.1% 20.2% 11.8% FCF conversion B Strong

  19. Slide 19: Rating considerations

    PASSION. PRECISION. PURITY. 5 Rating considerations Sale to Capvis and Initial Public Partners Group Offering Bond inves tor pr es entation Standard B+ BB- stable +1 stable & Poor’s 2014 2016 2018 B1 Ba3 Moody’s +1 stable stable Key factors underlying historical rating Mitigants • Limited size • VAT

  20. Slide 20: Agenda

    PASSION. PRECISION. PURITY. Agenda Bond inves tor pr es entation 1 VAT overview 2 Key credit highlights 3 Financial performance 4 Bond offering 20

  21. Slide 21: Full-year 2017 – Group key figures

    PASSION. PRECISION. PURITY. Full-year 2017 – Group key figures Bond inves tor pr es entation Adj. EBITDA margin Third party net sales Adj. EBITDA 31.1% (unchanged) CHF 692 m CHF 215 m +36% +36% EBIT margin 25.8% (+2.5pp) Free cash flow Net debt/EBITDA Free cash flow margin 16% 0.7x CHF 109m -15% FCF

  22. Slide 22: Net sales bridge

    PASSION. PRECISION. PURITY. Net sales bridge in CHF million Bond inves tor pr es entation 100 692 (12) (1) 97 508 2016 Volume Product mix Price FX 2017  Volume and product mix increases both drive top line growth  Negative price impact only due to volume rebates to large customers 22

  23. Slide 23: Substantially reduced finance cost negatively impacted by non-cash cost

    PASSION. PRECISION. PURITY. Substantially reduced finance cost negatively impacted by non-cash cost of unwinding finance structure in CHF million 2017 2016 Change Bond inves tor pr es entation EBIT 178.7 118.3 51.1% Finance net -44.1 -30.4 45.0% EBT 134.7 87.9 53.2% Income tax expenses -19.0 -20.7 -

  24. Slide 24: Investments in growth impacted free cash flow

    PASSION. PRECISION. PURITY. Investments in growth impacted free cash flow Free cash flow Free cash flow conversion Bond inves tor pr es entation 88% 86% 156 (47) +6% +158% 146 (18) 128 109 -15% 51% 2016 2017 2015 2016 2017 Cash flow from operating activities Cash flow from investing activities Free

  25. Slide 25: Year-end leverage further reduced

    PASSION. PRECISION. PURITY. Year-end leverage further reduced Net debt development Year-end leverage development Bond inves tor pr es entation 2161 (72) 1.8x2 +10% +15% 1971 (63) 144 134 +7% 0.9x 0.7x 2016 2017 December 31, 2015 December 31, 2016 December 31, 2017 Gross debt Cash and cash equivalent

  26. Slide 26: Q1 2018 trading update – full-year 2018 guidance confirmed

    PASSION. PRECISION. PURITY. Q1 2018 trading update – full-year 2018 guidance confirmed Bond inves tor pr es entation Eight consecutive quarters of growth on a Group order intake up  Order backlog up 11% year-on-year basis since 18% to CHF 215 million versus year-end 2017 listing in April 2016 Group

  27. Slide 27: Conclusion & Outlook 2018

    PASSION. PRECISION. PURITY. Conclusion & Outlook 2018 Bond inves tor pr es entation  The era of Big Data, augmented by rapid advances in artificial intelligence (AI), is gaining momentum, leading the company into a new phase of sustainable growth  Leading market position in vacuum-valves enables V

  28. Slide 28: VAT's financial mid-term guidance

    PASSION. PRECISION. PURITY. VAT’s financial mid-term guidance Mid-term guidance (amended versus former guidance at time of IPO) Bond inves tor pr es entation  Net sales growth: high single digit over the cycle at constant FX rates  EBITDA margin target: 33% of sales by 2020  Effective tax rate: 1

  29. Slide 29: Agenda

    PASSION. PRECISION. PURITY. Agenda Bond inves tor pr es entation 1 VAT overview 2 Key credit highlights 3 Financial performance 4 Bond offering 29

  30. Slide 30: Overview of Bond Terms

    PASSION. PRECISION. PURITY. Overview of Bond Terms Issuer VAT Group AG Bond inves tor pr es entation Type Senior unsecured Bond Currency CHF Denomination CHF 5,000 Issuer Rating Moody’s: Ba3; S&P: BB- Change of control clause, pari passu clause, negative pledge clause and cross default Assurance cla

  31. Slide 31: Q&A Session

    PASSION. PRECISION. PURITY. Bond inves tor pr es entation B OND I NVESTOR P RESENTATION Q&A Session 31

  32. Slide 32: Appendix

    PASSION. PRECISION. PURITY. Bond inves tor pr es entation B OND I NVESTOR P RESENTATION Appendix 32

  33. Slide 33: Proven leadership with a strong track record

    PASSION. PRECISION. PURITY. Proven leadership with a strong track record supported by highly skilled workforce Group Executive Bond inves tor pr es entation Group Management Board Highly skilled workforce Committee  Over 2,000 dedicated employees world-wide  Approx. 180 top qualified development e

  34. Slide 34: VAT benefits from multi-dimensional growth dynamics

    PASSION. PRECISION. PURITY. VAT benefits from multi-dimensional growth dynamics Bond inves tor pr es entation 1st Dimension 2nd Dimension 3rd Dimension End market growth Process manufacturing equipment growth Vacuum valve growth Advanced technologies require VAT is exposed to a broad range of well .

  35. Slide 35: VAT's three growth dimensions delivered results

    PASSION. PRECISION. PURITY. VAT’s three growth dimensions delivered results Bond inves tor pr es entation 1st Dimension 2nd Dimension 3rd Dimension End market Equipment Vacuum valve growth growth growth  End markets growing at  Volume  Shift into vacuum unprecedented speed  Technology inflection

  36. Slide 36: VAT's success story over years

    PASSION. PRECISION. PURITY. VAT’s success story over 50 years Bond inves tor pr es entation VAT founded Gate manufacturing Ramp-up of in Flawil (CH) est. in Taiwan manufacturing Entry into the center in Malaysia semiconductor Acquisition of IPO at SIX industry vacuum valves Swiss product line Exchan

  37. Slide 37: No. 1 market position further expanded

    PASSION. PRECISION. PURITY. No. 1 market position further expanded Market share all industries 1 Market share semi & related 2 Market share semi 3 Bond inves tor pr es entation Total vacuum valve market size Total vacuum valve market size Total vacuum valve market size 2015: USD 804m 2015: USD 531m

  38. Slide 38: Investing into the future - Switzerland

    PASSION. PRECISION. PURITY. Investing into the future - Switzerland Bond inves tor pr es entation – Optimizing the existing production footprint – Outsourcing to external partners – 7 additional milling machines installed in 2017 – 3 shift model across entire plant by end of 2017 – 272 new employees

  39. Slide 39: Investing into the future - Malaysia

    PASSION. PRECISION. PURITY. Investing into the future - Malaysia Bond inves tor pr es entation – Target production output of CHF 400m – Addition of around 17’000 m2 production floor – Full value chain incl. machining, assembly, clean room – Development of qualified supplier base in Asia – 112 new em

  40. Slide 40: Balance sheet structure

    PASSION. PRECISION. PURITY. Balance sheet structure in CHF million Bond inves tor pr es entation Assets Liabilities and Equity Payables 93  Almost all goodwill and other intangible assets Cash 72 resulted from the acquisition of VAT by Capvis Receivables 123 Inventories 111 Other liabilities 124 an

  41. Slide 41: Initiatives to mitigate the foreign exchange exposure

    PASSION. PRECISION. PURITY. Initiatives to mitigate the foreign exchange exposure FX Status on FX exposure initiatives Bond inves tor pr es entation  Ongoing initiative to increase global sourcing (mainly Asia and Eastern Europe) USD  Nomination of debt in USD  FX hedging of up to 100% of net cas

  42. Slide 42: Lean and flexible cost structure and supplier base

    PASSION. PRECISION. PURITY. Lean and flexible cost structure and supplier base Bond inves tor pr es entation Flexible supply chain setup Lean and flexible cost structure  Ability to quickly adapt production capacities (both, ramp- 2017 cost structure, in CHF million up and ramp-down capability)  Q

  43. Slide 43: Valves – 80% of net sales

    PASSION. PRECISION. PURITY. Valves – 80% of net sales in CHF million Q4 2017 Q4 2016 Change Semiconductors Bond inves tor pr es entation Order intake 152.7 139.7 9.3%  Record results driven by demand for etch and Net Sales 159.7 116.4 37.2% deposition wafer fabrication equipment in CHF million 2017

  44. Slide 44: Global Service – 14% of net sales

    PASSION. PRECISION. PURITY. Global Service – 14% of net sales in CHF million Q4 2017 Q4 2016 Change Growing installed base spurs Bond inves tor pr es entation Order intake 21.5 20.9 2.9% substantial growth Net Sales 28.6 20.4 40.2%  Ongoing investments in manufacturing capacity for semiconductors a

  45. Slide 45: Industry – 6% of net sales

    PASSION. PRECISION. PURITY. Industry – 6% of net sales in CHF million Q4 2017 Q4 2016 Change Investments in future growth Bond inves tor pr es entation Order intake 11.6 7.5 54.7%  Accelerated growth in net sales to third parties, Net Sales 10.8 5.9 83.1% combined with rising internal demand for be

  46. Slide 46: Q1 2018 – Trading update

    PASSION. PRECISION. PURITY. Q1 2018 – Trading update Strong order dynamics Net sales growth Bond inves tor pr es entation in CHF million in CHF million +18% 215.3 +20% 197.8 181.8 165.6 183.5 164.5 +11% 2017 2018 2017 2018 Q1 order intake Mar 31 order backlog Q1 net sales  Significant increase in o

  47. Slide 47: Q1 2018 – Trading update by segment

    PASSION. PRECISION. PURITY. Q1 2018 – Trading update by segment Strong performance across segments Bond inves tor pr es entation in CHF million Q1 2018 Q1 2017 Change VALVES  In the Valves segment, all business units Order intake 175.2 144.3 21.4% reported higher net sales, driven by both Net sales

  48. Slide 48: Information

    PASSION. PRECISION. PURITY. Information Bond inves tor pr es entation Investor information Contact information Listing: SIX Swiss Exchange Michel Gerber Currency: CHF Head of Corporate Communications & Ticker symbol: VACN Investor Relations ISIN: CH 031 186490 1 Phone: +41 81 772 42 55 Legal Entity

  49. Slide 49: Forward looking statements

    PASSION. PRECISION. PURITY. Forward looking statements Bond inves tor pr es entation 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

VAT Group — Debt Investor Presentation (May 2018) on 6ix