Slide 1: Results Briefing for the Second Quarter of Fiscal Ending March 2015
ESOEC Securities ID code:6859 ESPEC CORP. Results Briefing for The Second Quarter of Fiscal Ending March 2015 November 17, 2014 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, 2015 Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2015 Business Plan for the Fiscal Ending March 31, 2015 "Progressive Plan 2017” Medium-term Management Plan Reference ESPEC
Slide 3: Company Profile
Company Profile Industry-leading manufacturer of environmental test chambers: 67th year since company was founded in Osaka Name ESPEC CORP. *) Head Office 3-5-6, Tenjinbashi, Kita-ku, Osaka _ | Represented By Masaaki Ishida : Established July 25,1947 Incorporated January 13,1954 Paid-up Capital ¥6,8
Slide 4: Global Network
Global Network Global Network Consolidated Subsidiaries Business facilities in Japan:26 10 companies 4 3countries 3 3 companies Domestic agencies in Japan:48 “in aa = AESPEC EUROPE GmbH a. e @ESPEC NORTH AMERICA, INC. , Gam ast be Somme, yd ay fa a 2 @SHANGHAI ESPEC ENVIRONMENTAL wr, _ rao 6 EQUIPME
Slide 5: Topics: Global Niche Top Companies Selection 100
TOPICS Espec included in “Global Niche Top Companies Selection 100” of the Ministry of Economy, Trade and Industry (METI) Environmental Test Chambers Global market share 30% or more € SBR CRBArh x yee f BOO) Mipior seh el—ss © SHARE sroteskewm o> as ahr md Voted ERNEY dKE kh me " HS weeeee Sec Spear
Slide 6: Summary of ESPEC Business (Per Market / Use)
Summary of ESPEC Business (Per Market / Use) mS __Main Products| Market, =] Use Eo +Temperature & humidity chamber -Walk-in type temperature & “Electronic components *ForR &D a and equipment market — Environmental Test umidlty chamber Automobile market dcr SLY Chambers prterel chock char Semiconduct
Slide 7: Financial Result for the Second Quarter of Fiscal Ending March 31, 2015
Financial Result for the Second Quarter of Fiscal Ending March 31, 2015 ESPEC CORP. 6
Slide 8: Financial Highlights
Financial Highlights MOrders received increased year on year in all business segments. WiSales increased slightly year on year on the back of an increase in sales in overseas markets, despite a small decline in the Japanese market. +Japan Highly versatile standard products performed robustly. Custom
Slide 9: Summary of Profits and Losses
Summary of Profits and Losses (millions of yen) rae [owen] Sa ir period) 15,551 17, 418 16, 500 FEI —sit4.039 =~ 14, 196 15, 000 ©8383 eS cate ena Gross profit =| 4, 788 5, 215 8. 9% 5, 050 SG&A 4, 108 4, 377 6. 6% 4, 350 811 953 17. 5% 750 503 590 17. 2% 400 ESPEC CORP.
Slide 10: Analysis of Operating Income
Analysis of Operating Income Increase and Decrease Factor (millions of yen) [J Equipment Business {| Service Business wAS6_ 5 [ll Other Business-+Elimination ' "A 20" 740 gag Age 233 2 ‘A150: H as e2o0: ' H 4 < 52 WAS6I ! gs g 22 ' 1 @s B age ' ‘BS ® £5 i (ool a =e 1° ia) Xu vi wan i) YO : aa : ~4 6
Slide 11: Analysis of Assets and Liabilities
Analysis of Assets and Liabilities Increase and Decrease Factor (millions of yen) oO - _ a + > © Net assets = Ss s © Noncurrent liabilities 2 > 8 3 Other current liabilities = © Notes and accounts a 3 payable-trade a el - Ge) So oO + Ge) - es nN + Investment and other assets Intangible assets t+ 3 N
Slide 12: Statement of Cash Flow
Statement of Cash Flow ) (millions of yen Increase in funds Effect of exchange rate change on cash and cash equivalents wee Sync nnccnnccneccneeceeec rece $3 Total financial cash flow 4 Other Cash dividends paid A y Decrease in notes and accounts payable-trade Increase in inventories Other Purchase
Slide 13: Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2015
Analysis per Segment for the Second Quarter of Fiscal Ending March 31, 2015 ESPEC CORP.
Slide 14: Performance by Segment
Performance by Segment 0 Plan (Beginning of the FY 2013 FY 2014 14, 004 10.4% 13, 500 Equipment 11, 320 11, 166 A1.4% 12, 150 Business [}------------ 575 698 21.5% 550 2, 493 2, 860 14.7% 2, 600 Service 2, 306 2,594 12.5% 2, 450 Business }------=----. 177 186 5.0% 200 Orders— Received 464 678 46.0%
Slide 15: Equipment Business
Equipment Business Environmental Test Chambers Hin the Japanese market, sales decreased. Sales and orders of highly versatile standard products both increased from the same period of the previous year. -Customized products saw brisk orders, but sales did not match the robust sales seen in the same p
Slide 16: Equipment Business
Equipment Business (millions of yen) FY 2013 aan 20 (Beginning of the Rate of Change period) Orders- Received 12, 682 12, 150 Operating Income 575 550 [Profit ratio (%) ] [5. 1%] [4. 5%] ESPEC CORP.
Slide 17: Service Business
Service Business FY 2013 2Q Orders- Received 2, 493 2, 860 2, 306 2, 594 Operating Income 177 186 [Profit ratio (%) ] [7. 7%] [7. 2%] (millions of yen) Plan (Beginning of the Rate of Change period) 14.7% 2, 600 12.5% 2,450 200 Sethe [8. 2%] and sales increased from the previous year. Customers relax
Slide 18: Other Business
Other Business (millions of yen) Plan (Beginning of the Rate of Change period) 500 500 A72 A50 [Profit ratio (%) ] [A14. 6%] [A10. 0%] Environmental Engineering and Plant Factory HE In environmental engineering, the reforestation (tree planting) and plant factory businesses performed favorably. HE O
Slide 19: Sales by market
Semiconductor market Other markets Automobile market Flat panel display market Electronic device and equipment market FY2010 2Q FY2011 2Q FY2012 2Q FY2013 2Q FY2014 2Q 18
Slide 20: Sales by Region
Sales by Region FY 2013 2Q FY 2014 2Q Overseas sales ratio:39. 7% Overseas sales ratio:-43. 3% 2.2% 14.8% 14% 13.7% @ Taiwan China 4.2% Korea 4.2% FY2013 sown tact hea 20 13.8% | "otter 17.2% 60.2% “enn 56.7% 3.4% 4.0% 1.4% 2.8% Total: 14, O39million yen Total: 14, 196million yen (Overseas sales:5,
Slide 21: Business Plan for the Fiscal Ending March 31, 2015
Business Plan for the Fiscal Ending March 31, 2015 ESPEC CORP.
Slide 22: Business Plan for the Fiscal Ending March 31, 2015
Business Plan for the Fiscal Ending March 31, 2015 (millions of yen) FY 20 FY 2014 (Revised Plan) Fiscal 2Q Second half Fiscal Year on Year [its . (Beginning of (Results) (Results) (Plan) (Plan) (%) the period) 31,760 | 17,418 17, 582 35, 000 10. 2% 34, 000 32, 099 14,196 18, 804 33, 000 2.8% 33, 00
Slide 23: Equipment Business
Equipment Business (millions of yen) FY 2014 (Revised Plan) Fiscal 20 Sec | Fiscal | Year on Year eter oe (Results) (Results) (Pl (Plan) (%) the period) 14, 004 14, 396 28, 400 12.4% 27, 400 11, 166 15, 434 26, 600 3.0% 26, 600 Operating income 698 1,102 1, 800 10. 8% 1, 800 [Profit ratio (%) ] [6.
Slide 24: Service Business plan
FY 2013 FY 2014 (Unrevised) Fiscal 2Q Second half Fiscal Year on Year ) (Results) (Results) (Plan) (Plan) (%) Orders-received Net sales Operating income [Profit ratio (%)] 23
Slide 25: Other Business plan
FY 2013 FY 2014 (Unrevised) Fiscal 2Q Second half Fiscal Year on Year (Results) (Results) (Plan) (Plan) (%) Orders-received Net sales Operating income [Profit ratio (%)] 24
Slide 26: Dividends
*Consolidated dividend payout ratio in parentheses. 25
Slide 27: Progressive Plan 2017 Medium-term Management Plan
"Progressive Plan 2017” Medium-term Management Plan from fiscal 2014 to fiscal 2017 ESPEC CORP.
Slide 28: Business vision ESPEC VISION 2025
Business vision “ESPEC VISION 2025 Stage lI PROGRESSIVE Stagel Stagell i Fiscal 2014-2017 errr, ooo jedium-term Management Plan id Targets for Consolidated Medium-term = || Medium-term Revenues and Earnings \, Management Plan ;' Management Pian Fiscal 2017 x , over 40, ’ “ ¢ . e over 4. yer ratio ov
Slide 29: The Company's Operating Environment
The Company’ s Operating Environment Japanese market Overseas markets *Hollowing out of the manufacturing industry has slowed, but domestic recovery cannot be depended upon. «Active investment will continue in the field of state-of-the-art technological development, such as for eco cars. Growth mark
Slide 30: Progressive Plan 2017 Targets
Progressive Plan 2017 tiscali 2014 to fiscal 2017) Targets for Consolidated Revenues and Earnings Net sales 40 9 32-338 Fiscal 2017 Net sales over 40.0 billion yen Fiscal 2013 Fiscal 2014 Fiscal 2017 (Result) (Plan) (Target) Operating income 4 Fiscal 2017 Operating income over 4.0 billion yen Operat
Slide 31: Three Directions for Growth
Three Directions for Growth 1. Overseas markets Strengthen Group alliances to increase sales in growing countries and regions 2. Expand business domains Expand business domains targeting growing and strategic markets 3. Japanese market Take the lead in the domestic environmental testing business ESP
Slide 32: 1. Expand sales in overseas markets
1. Expand sales in overseas markets ASEAN countries and India A: 4 iat, = _ wBolster after-sales service bases ne é 4 y xNewly establish commissioned test 5 centers \ A ESPEC CORP. ¢€ " ‘ . A ft eo) . xNewly establish sales bases . ° 4 . \ ESPEC SOUTH E T ASIACSales). / a ESPEC CORP.
Slide 33: 1. Expand sales in overseas markets
1. Expand sales in overseas markets y . eo *Strengthen production capacity and ESPEC ENVIRONMENTAL EQUPVENT eo expand sales of ESPEC TEST SHANGHAI ESPEC ENVIRONMENTAL® sot secc CORP. EQUIPMENT (GUANGDONG) CO., LTD EQUIPMENT CORP. Manufacturtna re . ESPEC TEST EQUIPMENT (GUANGDONG) CO.LTD (Manufactti
Slide 34: 2. Expand business domains
2. Expand business domains Space and Aerospace <Existing Business> Mainly electronics or automotive Biomedicine (training rooms etc. ) ABo|oUYyda} UOI}eeJ9 JeyUOWUOJIAUZ ESPEC CORP.
Slide 35: 2. Expand business domains
2. Expand business domains Energy Device Equipment Market: secondary batteries, power semiconductors, fuel cells, Solar battery + Expand the lineup of secondary battery evaluation equipment + Enhance commissioned test services «Start verification services Advanced battery tester _LIB safety evaluati
Slide 36: Business alliance with TUV SUD Japan
Business alliance with TUV SUD Japan Secondary batteries for eco cars at ESPEC’ s Energy Device Environmental Test Center One-stop provision of testing and verification services compliant with UN-agreed regulations Contract date: October 10, 2014 Service start: April 2015 (scheduled) Signing ceremon
Slide 37: 2. Expand business domains
2. Expand business domains Food and Drug markets Market: Pharmaceuticals, Cosmetics, Foods, medical equipment * Enhance products and services for the pharmaceutical market + Advance into the cosmetics and food fields in products for the pharmaceutical market *Enter the medical equipment testing fiel
Slide 38: 3. Win to survive in the domestic environmental testing business
3. Win to survive in the domestic environmental testing business Enhance customer value Strengthen capability in the environmental for responding to testing business customization needs Strengthen competitiveness through Expand the scope of customized products original products and services + Promot
Slide 39: Strengthen returns to shareholders
Strengthen returns to shareholders Dividend payout ratio target 40% 40% 29. 6% —” Fiscal 2013 Fiscal 2017 (Result) (Target) ESPEC CORP.
Slide 40: Quality is more than a word
Quality is more than a word ESOEC
Slide 41: 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 42: Reference
Reference ESPEC CORP.
Slide 43: 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 44: Business expansion history
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 43
Slide 45: Usage Case with Environmental Test Chambers
[Equipment Business] Usage Case with Environmental Test Chambers Secondary Batteries = LED Representat for En xamples ronmental Testing Car Navigation (GPS) ehicle ensor Compact Size Motor a econdary Cell Device Process/Test Condition Our Products [Power Device) MiThermal shock test: — 40°C + 125°C
Slide 46: Introduction of New Products
[Equipment Business] Introduction of New Products MI Release Date__ | Name of product [Features CUS 2014/7 Constant Climate Cabinet +100 V/15 A usable 2014/7 Compact Ultra Low Temperature + Precise control from -85°C to 1807 Chamber 2014/5 Stability Test Chamber + Total lineup of 9 models Walk-in St
Slide 47: Bench-top Chamber wins 2014 Good Design Award
[Equipment Business] TOPICS Bench-top Type Temperature (and Humidity) Chamber wins 2014 Good Design Award The Bench-top Type Temperature (and Humidity) GOOD DESIGN Chamber has followed on from the Platinous J AWARD 2014 series of temperature and humidity chambers and won a Good Design Award. Design
Slide 48: 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 PS ed Saano Charge- disc
Slide 49: 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 Used to evaluate basic failure patterns to ensure reliability in the development of new technologies Conduc
Slide 50: Usage Case with FPD Equipment
iness] ipment Bus Usage Case with FPD Equipment [Equ _ an an ao o i=) = a a Oo ur Lam! an n ® o °o 2 a = ® = ic = s oO Oo aed i= 2] = 3 = = a a Orientation film baking process i 2 2 a = [} oO Drying/Anneal Transparent electrode formation process zc | Protection film formation process Pre bake /Post
Slide 51: Service Business
[Service Business] Preventive maintenance of products, maintenance service, and the upgrading/improvement and installation/relocation of products ll Speedy response via one of the most extensive networks in Japan HB Launching new services by utilizing the network function mounted in the equipment Ex
Slide 52: ESPEC ONLINE SUPPORT
[Service Business] TOPICS The first service of this kind in the world! ESPEC ONLINE SUPPORT started in November 2013. After-sales service calls: from customers to the manufacturer t+ breaking conventional wisdom from the manufacturer to customers Customers ESPEC ESPEC CORP.
Slide 53: Energy Device Environmental Test Center
[Service Business] TOPICS The Energy Device Environmental Test Center was established with the latest “first-in-the-world” equipment developed in-house. In November 2013, the test center was established at the Utsunomiya Test Center. This commissioned test center specializes in reliability and safet
Slide 54: Other Business: 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. MWaterfront biotope restoration Reconstruction of natural environment
Slide 55: Other Business Topics: Kawauchi Plant Growth Facility
[Other Business] TOPICS Toward the reconstruction of areas affected by the earthquake, Kawauchi Highlands Agricultural Plant Growth Facility started operation in Kawauchi Village, Fukushima Prefecture. The plant growth facility (100% artificial lighting type) was delivered by ESPEC MIC CORP. in coll