Slide 1: FY18/12 Q3 Presentation
FY18/12 Q3 PRESENTATION RENESAS ELECTRONICS CORPORATION OCTOBER 31, 2018 © 2018 Renesas Electronics Corporation. All rights reserved.
Slide 2: Financial Targets and Strategy
FINANCIAL TARGETS AND STRATEGY Long-Term Financial Targets*1 (Starting from CY16) Clear Path to Gross Margin Expansion Topline growth Topline Growth High Single-Digit CAGR Manufacturing Optimization Margin Improvement *4 Better Product Mix 44% Adj. GM *2 : *4 50% Adj. OM : 12% *3 Over 20% Intersil C
Slide 3: Steps to Improve Gross Margin
STEPS TO IMPROVE GROSS MARGIN Adjusted Gross Margin*1 (Illustrative) Intersil Better Consolidation 50% Manufacturing Product Mix Optimization Topline Growth Operating Leverage through Increased Scale 44% Organic Growth + Consolidation of Intersil CY16/12 Long-Term Target *1: Non-GAAP figure, Gross M
Slide 4: Custom Approaches for Focused Industries
Organic Inorganic CUSTOM APPROACHES FOR FOCUSED INDUSTRIES Automotive Industrial Broad-Based and others Inorganic + Organic MCUs Intensive R&D Approaches SoCs Strategic Partnerships and Alliances Analog & Mixed Strategic Investments including Further Acquisitions Intersil: Acquired for $ 3.2B in Feb
Slide 5: Non-GAAP Basis Information
NON-GAAP BASIS INFORMATION In this section, Renesas Electronics Group (hereinafter “the Group”) applies Non- GAAP financial measures (hereinafter “Non-GAAP basis”) used for management’s decision making. The Group defines the Non-GAAP consolidated financial results as financial accounting figures (he
Slide 6: Revised GAAP/Non-GAAP Reconciliation (FY17/12-)
REVISED GAAP/NON-GAAP RECONCILIATION (FY17/12-) ・Non-GAAP Basis: Results excluding non-recurring and certain other items. Following the completion of the purchase of Intersil in February 2017, Non-GAAP figures exclude amortization of goodwill, amortization of purchased intangible assets, costs relat
Slide 7: GAAP/Non-GAAP Reconciliation (FY17/12-)
GAAP/NON-GAAP*1 RECONCILIATION (FY17/12-) FY17/12 FY18/12 (B yen) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 (Forecast) Operating Profit (GAAP/After PPA) 22.1 9.4 25.0 21.9 20.6 23.0 13.1 2.5 PPA Effects*2（Net Sales/COGS*3） +3.1 +8.5 +0.3 +0.4 +0.3 +0.3 +0.3 +0.3 PPA Effects（R&D*4, SG＆A*5） Increase in depreciation of
Slide 8: GAAP/Non-GAAP Reconciliation (FY17/12-)
GAAP/NON-GAAP*1 RECONCILIATION (FY17/12-) FY17/12 FY18/12 (B yen) O4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 (Forecast) Net Profit Attributable to Shareholders of Parent 17.2 19.1 22.3 18.6 23.3 26.1 7.6 1.6 Company (GAAP/After PPA) Reconciliations in Operating +7.0 +19.6 +10.9 +12.2 +10.8 +10.9 +11.1 +10.9 Profit Lev
Slide 9: FY18/12 Q3 Financial Snapshot (Non-GAAP Basis)
Non-GAAP FY18/12 Q3 FINANCIAL SNAPSHOT (NON-GAAP BASIS*1) YoY and QoQ results as well as the changes from July 31 FCTs of the Net Sales and Semi Sales are rounded off to one decimal place. FY17 FY18 (FY18/12) (B yen) 9 Months Jul-Sep Jul-Sep 9 Months Jul-Sep Apr-Jun Change from Accumulative (Q3) (Q3
Slide 10: Q3 Semiconductor Sales (YoY)
Non-GAAP FY18/12 Q3 SEMICONDUCTOR SALES (NON-GAAP BASIS*1) YoY -16.7 B yen (-8.7%) (B yen) Currency impact -0.4 -16.3 -16.7 Sales decrease (excluding currency impact) 192.3 175.6 FY17/12 Q3 *1: Non-GAAP Basis: Results excluding non-recurring and certain other items. Following the completion of the p
Slide 11: Q3 Semiconductor Sales (QoQ)
Non-GAAP FY18/12 Q3 SEMICONDUCTOR SALES (NON-GAAP BASIS*1) QoQ -23.5 B yen (-11.8%) (B yen) +2.4 Currency impact -25.9 -23.5 Sales decrease (excluding currency impact) 199.1 175.6 *1: Non-GAAP Basis: Results excluding non-recurring and certain other items. Following the completion of the purchase of
Slide 12: Q3 Semiconductor Sales (vs Forecast)
Non-GAAP FY18/12 Q3 SEMICONDUCTOR SALES (NON-GAAP BASIS*1) (B yen) vs FCT +3.0 B yen (+1.7%) Sales increase (excluding currency impact) Currency impact +0.6 +2.4 +3.0 175.6 172.6 *1: Non-GAAP Basis: Results excluding non-recurring and certain other items. Following the completion of the purchase of
Slide 13: Quarterly Semiconductor Sales Trends
Non-GAAP QUARTERLY SEMICONDUCTOR SALES TRENDS (NON-GAAP BASIS*1) (B yen) Actual basis Automotive Industrial Broad-based Other 206.4 194.3 192.3 2.2 199.1 200 1.0 QoQ: -11.8% 1.1 0.8 182.0 175.6 172.6 40.9 YoY: -8.7% 0.6 0.8 40.7 40.8 0.7 41.3 28.8 38.1 QoQ: -8.5% 150 37.3 YoY: -9.6% 54.2 51.5 48.5 4
Slide 14: Gross Margin, Operating Margin and Opex Trajectory
Non-GAAP GROSS MARGIN, OPERATING MARGIN AND OPEX TRAJECTORY (NON-GAAP BASIS*1) <R&D Ratio (%)> QoQ: +1.9pts <Gross Margin (%)> QoQ: -1.0pt YoY: +1.0pt YoY: -3.3pts 20 50 47.7 47.9 18 17.2 16.9 45 48.0 45.6 45.5 45.7 45.4 16 16.9 16.9 15.0 44.3 44.4 16.7 40 42.5 16.1 15.9 16.3 14 15.2 35 12 30 10 Q1
Slide 15: Q3 Operating Income (YoY)
Non-GAAP FY18/12 Q3 OPERATING INCOME (NON-GAAP BASIS*1) (B yen) YoY -11.8 B yen Sales decrease (excluding currency impact) Currency impact +4.9 -10.5 -0.2 Decreases in R&D,SG&A Accounting Impact (excluding amortization of (inventory revaluation, etc.) goodwill, etc.) 35.9 -7.5 +1.5 Impact from chang
Slide 16: Q3 Operating Income (QoQ)
Non-GAAP FY18/12 Q3 OPERATING INCOME (NON-GAAP BASIS*1) QoQ -9.8 B yen Sales decrease (B yen) (excluding currency impact) Currency Impact +2.4 Decreases in Impact from R&D,SG&A Accounting Impact changes in (excluding +0.9 (inventory -16.8 production amortization of revaluation, etc.) volume, etc. go
Slide 17: Q3 Operating Income (vs Forecast)
Non-GAAP FY18/12 Q3 OPERATING INCOME (NON-GAAP BASIS*1) vs FCT +8.7 B yen （B yen) Decreases in R&D,SG&A (excluding amortization of Sales increase goodwill, etc.) (excluding currency impact) Currency +1.2 impact +0.5 +4.5 +1.2 +1.2 Impact from changes in Accounting Impact production volume, etc. (inv
Slide 18: Q4 Financial Forecasts
Non-GAAP FY18/12 Q4 FINANCIAL FORECASTS (NON-GAAP BASIS*1) YoY and QoQ forecasts of the Net Sales and Semi Sales are rounded off to one decimal place. YoY and QoQ forecasts of the Net Sales and Semi Sales are rounded off to one decimal place. FY17(FY17/12) FY18 (FY18/12) 12 months (B yen) 12 months
Slide 19: Q4 Semiconductor Sales Forecast (YoY)
Non-GAAP FY18/12 Q4 SEMICONDUCTOR SALES FORECAST (NON-GAAP BASIS*1) (B yen) YoY -25.3 B yen (-12.3%) -1.8 -25.3 Currency -23.5 impact Sales decrease (excluding currency impact) 206.4 181.1 *1: Non-GAAP Basis: Results excluding non-recurring and certain other items. Following the completion of the pu
Slide 20: Q4 Semiconductor Sales Forecast (QoQ)
Non-GAAP FY18/12 Q4 SEMICONDUCTOR SALES FORECAST (NON-GAAP BASIS*1) QoQ +5.5 B yen (+3.1%) (B yen) Sales increase Currency (excluding currency impact) impact ＋4.8 +5.5 +0.7 181.1 175.6 FY18/12 Q3 *1: Non-GAAP Basis: Results excluding non-recurring and certain other items. Following the completion of
Slide 21: Q4 Operating Income Forecast (YoY)
Non-GAAP FY18/12 Q4 OPERATING INCOME FORECAST (NON-GAAP BASIS*1) (B yen) YoY -20.6 B yen Sales decrease (excluding currency impact) Currency impact +1.6 -1.0 Accounting Impact (inventory -15.3 revaluation, etc.) 34.1 Decreases in R&D,SG&A (excluding amortization of goodwill, etc.) -12.1 +6.2 13.5 Im
Slide 22: Q4 Operating Income Forecast (QoQ)
Non-GAAP FY18/12 Q4 OPERATING INCOME FORECAST (NON-GAAP BASIS*1) (B yen) QoQ -10.7 B yen Impact from changes in Currency Accounting production volume, etc. impact Impact (inventory +0.3 revaluation, etc.) -0.5 +3.1 -8.8 Sales increase (excluding currency impact) -4.7 24.1 Increases in R&D,SG&A (excl
Slide 23: GAAP Basis Information
GAAP BASIS INFORMATION The figures in this section are mainly based on GAAP (Generally Accepted Accounting Principles) stated on a financial reporting basis and are provided as additional information. © 2018 Renesas Electronics Corporation. All rights reserved. Page 23 BIG IDEAS FOR EVERY SPACE
Slide 24: Former GAAP/Non-GAAP Reconciliation (Until FY16/12)
FORMER GAAP/NON-GAAP RECONCILIATION (UNTIL FY16/12) FY15/3 FY16/3 FY16/12 (B Yen) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Semiconductor Sales (GAAP) ① 201.2 199.6 177.4 175.1 174.5 177.0 160.9 163.2 147.5 148.3 161.4 Renesas SP Drivers*1② -17.6 -21.0 - - - - - - - - - Semiconductor Sales (Non-GAAP*2) ①+② 1
Slide 25: FY18/12 Q3 Financial Snapshot (GAAP)
GAAP FY18/12 Q3 FINANCIAL SNAPSHOT YoY and QoQ results as well as the changes from July 31 FCTs of the Net Sales and Semi Sales are rounded off to one decimal place. FY17/12 FY18/12 (B yen) 9 Months Q3 Q3 9 Months Q3 Q2 Change from Accumulative Accumulative (Apr-Jun) (Jul-Sep) (Jul-Sep) YoY QoQ YoY
Slide 26: Balance Sheets
GAAP BALANCE SHEETS*1 As of Sep. 30, As of Dec. 31, As of Mar. 31, As of Jun. 30, As of Sep. (B yen) 2017 2017 2018 2018 30, 2018 Total Assets 1,023.7 1,062.7 1,016.2 1,044.3 1,042.9 Cash and Cash Equivalents *2 124.4 139.5 124.3 160.3 184.5 Inventories 120.6 126.6 138.8 138.5 141.5 Liabilities 544.
Slide 27: EBITDA and Cash Flows
GAAP EBITDA*1 AND CASH FLOWS Insurance income receivable: +10.5 <EBITDA (B yen)> <Cash Flows (B yen)> Acquisition-related payments: -16.0 Cash flows from operating 59.5 60 60 activities 54.1 54.8 Cash flows from investing 51.0 55 52.6 52.3 activities 47.2 Free cash flows*3 44.0 50 41.6 45.0 40 35.8
Slide 28: FY18/12 Q4 Financial Forecasts (GAAP)
GAAP FY18/12 Q4 FINANCIAL FORECASTS YoY and QoQ forecasts of the Net Sales and Semi Sales are rounded off to one decimal place. *1 FY17/12 FY18/12 (B yen) Q4 12 months Q3 Q4 Forecast 12 months Accumulative YoY QoQ (Jan-Dec) YoY （Oct-Dec） (Jul-Sep) (Oct-Dec) （Jan-Dec） Forecast Net Sales 210.2 780.3 1
Slide 29: Other Information
OTHER INFORMATION This section is mainly based on non-financial information categorized as “other information”. © 2018 Renesas Electronics Corporation. All rights reserved. Page 29 BIG IDEAS FOR EVERY SPACE
Slide 30: Inventory
INVENTORY（B YEN） <Sales Channel Inventory*2 (by application) > <Inventory Change 100 (Work in Process + Finished Goods)> Automotive 50 150 *1 Non- Automotive 0 17/3 17/6 17/9 17/12 18/3 18/6 18/9 100 In-House <Sales Channel Inventory (by product) > 100 50 MCU 50 Foundry SoC Analog & 0 0 Power etc. 1
Slide 31: Monthly Changes in Front-End Wafer Input and Foundry Purchase Volume
MONTHLY CHANGES IN FRONT-END WAFER INPUT QUANTITY AND PURCHASE VOLUME FROM FOUNDRIES (8-INCH EQUIVALENT） <1,000 wafers / month> 350 300 250 200 Purchase Volume from Foundries 150 100 Front End Wafer Input 50 Quantity 0 17/1 17/2 17/3 17/4 17/5 17/6 17/7 17/8 17/9 17/10 17/11 17/12 18/1 18/2 18/3 18/
Slide 32: Quarterly Trends in Front-End Utilization Rate
QUARTERLY TRENDS IN FRONT-END UTILIZATION RATE (WAFER INPUT BASIS) 100% 80% 60% 40% Total 20% 6-inch line 8-inch line 12-inch line 0% FY17/Q1 FY17/Q2 FY17/Q3 FY17/Q4 FY18/Q1 FY18/Q2 FY18/Q3 © 2018 Renesas Electronics Corporation. All rights reserved. Page 32 BIG IDEAS FOR EVERY SPACE
Slide 33: Forward-Looking Statements
BIG IDEAS FOR EVERY SPACE (FORWARD-LOOKING STATEMENTS) The statements in this presentation with respect to the plans, strategies and forecasts of Renesas Electronics and its consolidated subsidiaries (collectively “we”) are forward-looking statements involving risks and uncertainties. Such forward-l