INVESTOR PRESENTATION November 2013

Transcription

1 INVESTOR PRESENTATION November 2013

2 Safe Harbor Statement This presentation contains statements about management's future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the press release, including, but not limited to, statements relating to expectations of orders, net sales, product shipments, backlog, expenses, timing of purchases of assembly equipment by customers, gross margins, operating results and capital expenditures. The use of words such as anticipate, estimate, expect, can, intend, believes, may, plan, predict, project, forecast, will, would, and similar expressions are intended to identify forward looking statements, although not all forward looking statements contain these identifying words. The financial guidance set forth under the heading Outlook constitutes forward looking statements. While these forward looking statements represent our judgments and expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from those contained in forward looking statements, including the discovery of weaknesses in our internal controls and procedures, our inability to maintain continued demand for our products; the impact on our business of potential disruptions to European economies from euro zone sovereign credit issues; failure of anticipated orders to materialize or postponement or cancellation of orders, generally without charges; the volatility in the demand for semiconductors and our products and services; failure to adequately decrease costs and expenses as revenues decline, loss of significant customers, lengthening of the sales cycle, incurring additional restructuring charges in the future, acts of terrorism and violence; inability to forecast demand and inventory levels for our products, the integrity of product pricing and protect our intellectual property in foreign jurisdictions; risks, such as changes in trade regulations, currency fluctuations, political instability and war, associated with substantial foreign customers, suppliers and foreign manufacturing operations; potential instability in foreign capital markets; the risk of failure to successfully manage our diverse operations; those additional risk factors set forth in Besi's annual report for the year ended December 31, 2012 and other key factors that could adversely affect our businesses and financial performance contained in our filings and reports, including our statutory consolidated statements. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements whether as a result of new information, future events or otherwise. November 2013 Page 2

3 Agenda I. Company Overview II. III. IV. Market Strategy Financial Review V. Outlook & Summary November 2013 Page 3

4 I. COMPANY OVERVIEW November 2013 Page 4

5 Company Overview Corporate Profile Leading assembly equipment supplier with #1 and #2 positions in key products. 25% addressable market share Broad portfolio: die attach, packaging, plating, wire bond Strategic positioning in wafer level and substrate packaging Global mfg. operations in 7 countries; 1,493 employees worldwide. HQ in Duiven, the Netherlands Financial Highlights 2012 revenue and net income of and 15.8 million Cash at 9/30/13: 78.5 million Total debt at 9/30/13: 22.5 million Investment Considerations Advanced packaging, smart phone/tablet growth and Asian production transfer offer significant upside potential Restructuring and production transfer have transformed company and earnings potential Stock market valuation at discount to peers November 2013 Page 5

6 Stock Price Information Market cap million: 37.2 million shares x 8.02 price (October 31) Shares listed on NYSE Euronext Amsterdam (BESI) and NASDAQ OTCQX International (BESIY) average daily volume of 108,000 shares Trading at discount to industry multiples: Besi Industry (a) Peers (b) TTM EV/S 1.1x 1.8x 1.3x TTM EV/EBITDA 12.6x 13.7x 16.4x 2014E EV/S 1.2x 1.5x 1.2x 2014E EV/EBITDA 5.4x 9.9x 7.5x Data source: Bloomberg (a) Industry: 36 companies selected from Bloomberg & Reuters Semiconductor Equipment categories (b) Peers: ASMPT, Disco Corp, Tokyo Seimitsu, Shinkawa, Süss MicroTec and K&S November 2013 Page 6

7 Besi Equipment Portfolio Die Attach Packaging & Plating Wire Bonding Die Sorting - DS 9000E - CS DS Die Bonding xp series HS sd PPP New New Molding -AMS series - AMS Foil - AMS LM 95 Trim & Form - Compact series - Power series - Compact Line XHD New New Smart Card 3200 Smart Card Multi Module Die Attach evo Flip Chip Quantum Chameo - "Smart Line" FC Singulation -FSL New Plating - Leadframe - Solar - Film & foil In Development TCB flip chip system Common die attach platform Common packaging platform November 2013 Page 7

8 Besi Product Positioning Back-end Semiconductor Assembly Process Dicing Die Attach Wire Bond Packaging Plating Die Sort Die Bond Wire Bond Molding Trim & Form Plating Leadframe Assembly Singulation Ball Grid Array Substrate Wire Bond Assembly Die Sort FC Die Bond Molding Singulation Ball Grid Array Substrate Flip Chip Assembly Die Sort FC Die Bond Molding Singulation Wafer Level Packaging Flip Chip Assembly Die Attach Packaging Ball Attach November 2013 Page 8

9 Global Operations Chandler Sales Office Production Site Sales & Production Site * R&D Site Salem* Duiven & Drunen, (The Netherlands) Cham, (Switzerland) Radfeld, (Austria) Suzhou Chengdu Leshan Shenzhen Malaysia Singapore* Korea Shanghai Taiwan Philippines Development activities in Europe and USA Increasing production and sales/service activities in Asia as of 30 September 2013 Europe/N.A. Asia Revenue (MMs) % % Headcount % % November 2013 Page 9

10 II. MARKET November 2013 Page 10

11 Assembly Equipment Market Trends Assembly Equipment Market Size YoY Growth Rate 6 160% % % % 60% % -6.8% -9.4% -3.4% 10% E 2014E -40% Source: VLSI October 2013, as revised Since 2010 rebound, assembly market has been trending lower However, 18%+ growth anticipated in 2014 November 2013 Page 11

12 2013 Industry Outlook Assembly Market Environment: Mixed Picture VLSI forecasts 3.4% decline. Initially assumed 6.1% downturn Mixed industry picture. Strength in low/mid range smart phones & tablets and automotive Reduced demand for high end smart phones & tablets. PC slowdown also a negative Customers more optimistic than prior years. However, limited visibility November 2013 Page 12

13 Assembly Equipment Market Composition Assembly Equipment Market * (2012: $4.0 billion) Besi Addressable Market * (2012: $1.7 billion) Lead Trim & Form Plating 2% Wire Bonding 22% Die Attach 29% 6% Die Bonding 44% Molds 14% Presses 10% Die Attach 61% Other Assembly (Inspection, Dicing) 28% Plating 1% Packaging 20% Singulation 8% Die Sorting 3% Flip Chip 14% Packaging 38% Plating 1% * Source: VLSI July % assembly market 2012 represented by die attach and wire bonding equipment Die attach increasing market share relative to wire bonding Besi focus: fastest growing die attach and packaging segments serving advanced applications November 2013 Page 13

14 Customer Ecosystem Customers OEMs End Products IDMs Subcontractors Blue chip customer base, top 10 customers represented 48% of 2012 revenue Leading Asian Subcontractors and IDMs. 57/43% split in 2012 Equipment utilized to produce chips for leading fabless companies: Qualcomm, Broadcom, MediaTek Long term relationships, some exceeding 45 years November 2013 Page 14

15 Estimated Share of Wallet Leading Customers Die Attach Packaging In USD FY2011 FY2012 YTD2013* FY2011 FY2012 YTD2013* Subcontractors ASE 76% 67% 72% 34% 36% 49% Amkor 36% 75% 90% 63% 45% 28% STATSChippac 100% 95% 100% 61% 28% - ** SPIL 63% 47% 100% 35% 37% 86% Unisem 100% 92% - ** 68% - ** - ** Cowell/Foxconn (Camera Modules) 0% 100% - ** IDMs *** Skyworks 78% 100% 100% 0% 13% 0% ST Micro 92% 91% 87% 51% 44% 100% Infineon 93% 81% 100% 37% - ** - ** Samsung**** 17% 5% - ** 37% - ** 100% % of Besi Die Attach and Packaging systems revenue 30% 47% 66% 67% 53% 78% Customers are largest producers. Most advanced packaging applications Strong customer market shares: % of die attach requirements 35 50% of packaging requirements Customer market shares/annum vary depending on capacity requirements and purchasing cycles Primary competition: Die Attach: ASM-PT, Shinkawa, Hitachi Packaging: Towa, Yamada, ASM-PT * YTD through May 31 ** No customer purchases indicated *** Fabless semiconductor companies such as Qualcomm, Broadcom and Mediatek have assembly production done by subcontractors **** In general, Samsung satisfies approximately 50% of its equipment needs internally November 2013 Page 15

16 Advanced Packaging Growth Favors Besi Greater Miniaturization High Growth End User Areas: Mobile internet devices, Digital set top boxes, Autos, MEMS Higher Accuracy Lower Power Consumption Die Attach Die Sorting: DS 9000 Die Bonding: ES 2009, 2100 Flip Chip: DC 8800 FC Multi Module: DC evo 2200 Packaging Molding: AMS-LM 95 Singulation: FSL Greater Complexity Increased Density Higher Performance High growth applications require ever smaller, denser and more complex chips with increased performance, all at lower power usage <40 nanometer geometry will be the standard chip design over the next 3-5 years System on Chip or System in Package via substrate and wafer level packaging process is the only answer Besi has full range of AP systems. 2012E revenue: 70% substrate/wafer level vs. 30% leadframe November 2013 Page 16

17 Mobile Internet Device Market Trends 1,600 Smart Phone Units 21.3% 16.7% 11.1% Units (millions) Units (millions) 1, Units ,088 1,270 1, % 45.1% Tablet Units 40.9% 30.8% 54.2% 79.1% 8.8% Rapid unit growth in smart phones and tablets forecast over next 5 years Estimated unit growth rates: Smart phones: 2013: 27% 2016: 2.9x Tablets: 2013: 54% 2016: 5.5x Significant potential revenue growth driver Units Source: Gartner November 2013 Page 17

18 Smart Phone Illustration Main Components Manufacturer Country Besi Systems Utilized Processor Samsung South Korea 8800FCQ, AMS W, Singulation DRAM Memory Samsung South Korea 2100sD, AMS W, Singulation Flash Memory Chip Samsung South Korea 2100sD, AMS W, Singulation Battery Samsung South Korea N/A Power Management Dialog Germany 2100sD, 2009 Compass AKM Japan N/A Accelerator/Gyroscope ST Micro Italy/France 2100sD Communications Video/Audio Radio Frequency Memory Intel USA 8800FCQ, Singulation Wi Fi/Bluetooth/GPS Broadcom USA 2200 evo, AMS W, Singulation Receiver/Transceiver Infineon Germany 8800FCQ, AMS I, Singulation PA Module Skyworks, Triquint USA 2200 evo, AMS W, Singulation, 8800 Chameo Touch Screen Control TI USA 2100sD, AMS W, Singulation Audio Codec Cirrus Logic USA 2100sD, AMS W, Singulation LCD Display LG South Korea N/A Touch Screen Wintek USA N/A Camera 5/8 megapixel/vga LG, Foxconn, Cowell South Korea, China 2200 evo Besi systems can assemble components representing up to 50% of smart phone content. November 2013 Page 18

19 Besi s Product Shift to Advanced Packaging End User Applications 2012 Auto 13% Industrial 10% Mobile Internet Devices 22% 2008 Service 2% LED 3% Computer, PCs 50% LED 5% Industrial 10% Auto 17% Service 12% Computer, PCs 21% Mobile Internet Devices 35% Mobile internet devices now equal 35% of Besi s end user revenue Automotive has also increased significantly in recent years Service/spare parts have grown to 12%. Less cyclical revenue stream Source: 2012 Company Estimates November 2013 Page 19

20 Flip Chip/Wire Bond Opportunity Wire Bonding Flip Chip Bonding E Reduces board area by up to 95%. Requires far less height Flip Chip Advantages Offers higher speed electrical performance Flip Chip $309 25% Wire Bonding $937 75% CAGR Flip Chip 6.7% Wire Bond 1.1% Flip Chip $428 30% Wire Bonding $991 70% Greater I/O connection flexibility More durable interconnection method Move to <40 nanometer can only be accomplished by use of flip chip die bonding vs. wire bonding process Flip chip revenue represents only 20% currently of total potential market of $1.2 billion Lower cost for high volume production, with costs below $0.01 per connection Expected to gain share rapidly over next 5 years vs. wire bonding (5.6% CAGR delta) as per VLSI Growth rates could accelerate depending on adoption rates of key IDMs/subcons * Source: VLSI October 2013 November 2013 Page 20

21 III. STRATEGY November 2013 Page 21

22 Corporate Transformation 350 Revenue Gross Margin 60% 300 Die Attach Acquisitions 55% 50% Revenue ( million) Restructuring Asian Production Transfer Dragon I complete: 6 million cost savings Dragon II complete: 15 million cost savings Dutch tooling & Hungarian die bonding transferred to Asia Standard packaging and certain die bonding systems transferred to Malaysia Malaysian system and Chinese tooling capacity expansion Cost savings plan initiated Epoxy DB transferred to Malaysia 13% Headcount reduction; Plating unit rationalized Soft solder DB transfer to Malaysia initiated 45% 40% 35% 30% 25% 20% Gross Margin 0 Asian headcount increased from 34% in 06 to 54% in % Asia capacity expansion November 2013 Page 22

23 Key Strategic Objectives Operational Objectives Soft Solder DB production transferred to Malaysia 50% Malaysia/100% China capacity expansion European Die attach integration activities Expansion of Asian supply chain. System module outsourcing Development Objectives Common platform/parts activities TCB flip chip die bonding development November 2013 Page 23

24 Successful Asian Production Transfer Shipments Total Asian Shipments Direct Asian Shipments % Direct 100.0% % 84.0% 80.0% 68.0% % % % 42.9% % 30.0% % 10.0% 0.0% % Direct Shipments November 2013 Page 24

25 Has Led to Lower European and Aggregate Headcount Europe/NA Fixed HC Asia Fixed HC 1,800 Headcount trends continue to favorably influence break even revenue levels Headcount 1,600 1,400 1,200 1, , % 1, % % 1,479 1,464 1,458 1, % % % Fixed European headcount gradually reducing as shift to Asia manufacturing progresses: Down by 0.5% sequentially in Q3-13 Down by 11.6% year over year Declined from 56% of total in 2009 to 43% at end of Q3-13 Aggregate of 1,493 headcount at Q3-13 quarter end (including temps): Down 1.7% vs. Q2-13 Down 7.6% vs. Q % % % % % % Q Q Q November 2013 Page 25

26 Acquisition Strategy Packaging & Plating Die Attach Packaging Plating Leadframes Flip Chip Chip Sorting Flip Chip/ Multi Chip Die Bonding million packaging company has become 274 million assembly equipment supplier Consolidating leading edge assembly technologies 4 acquisitions since 2000 totaling 80 million, net created Die Attach leader Seeking technology led companies which increase advanced packaging presence and can be incorporated into One Besi platform November 2013 Page 26

27 IV. FINANCIAL REVIEW November 2013 Page 27

28 Summary Financial Highlights Year Ended December 31, ( millions, except share data) Revenue Orders Gross margin 39% 40% 40% EBITDA Pretax income Net income EPS (diluted) Net margin 13% 8% 6% Adj. net income (loss) Adj. EPS (diluted) Transformation since 2008 Scale and market presence changed with 2009 Esec acquisition Strategic positioning in advanced packaging has yielded benefits: Enhanced top line development Increased gross margins Restructuring has helped support gross margins and profits despite declining market since 2010 peak: Product line restructurings Asian production transfer Reduction of European based costs Increased tax efficiency Scalability of business model enhanced Net Cash Solid liquidity base. Expanding net cash November 2013 Page 28

29 Quarterly Revenue/Gross Margin Trends (euro in millions) % 41.2% 40.0% Revenue Gross Margin % % % % % Orders Gross Margin ex Restructuring % % % % 50.0% 48.0% 46.0% 44.0% 42.0% 40.0% 38.0% 36.0% 34.0% 32.0% Quarterly revenue/order patterns show cyclicality of semiconductor business: Three cycles past 3 years Global macro uncertainty = customer caution + short term purchasing Q3-13 recent trough? Product mix shift to higher margin advanced packaging systems: Multi module + flip chip die attach Ultra thin molding systems Drivers: mobile internet and intelligent automotive components Exit from lower margin plating, wire bonding and packaging systems Gross margins have held up despite cyclicality: Increased scalability of production model Shift to higher margin systems Lower unit costs due to: Asian production transfer Reduction in European personnel 0 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q % November 2013 Page 29

30 Quarterly Net Income Trends 12 Net Income Quarterly net income trends reflect industry and seasonal volatility 8 (euro in millions) YTD-13 results reflect improved operating efficiency Significant leverage in operating model Quarterly opex have ranged between million over past 8 quarters Declined to 20.1 million in Q Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q November 2013 Page 30

31 Operational Progress Yields Increased Efficiency Revenue Net Income Margin % % OPEX 65.3 MM -4.8% 62.1 MM millions ,615 Headcount -7.6% 1,493 Effective Tax Rate 34.2% -13.8% 20.4% 11.0% 9.0% Net Margin % 7.3% % 7.0% YTD 2013 YTD 5.0% November 2013 Page 31

32 Break Even Revenue Levels (13.0%) ( millions) (10.0% %) E November 2013 Page 32

33 Liquidity Trends Cash Debt Solid liquidity position 78.5 million cash at 9/30/ per share vs price (euro in millions) Net cash has grown to 56.0 million from 19.6 million at year end reflects 6.1 million of higher cash dividends vs Also reflects one time taxes for operational reorganization at YE 2012 Shareholder value enhanced 38 million spent on share repurchases and cash dividends million share buyback initiated in October k shares purchased 0 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Strong balance sheet supports future organic growth and acquisition strategy Net Cash November 2013 Page 33

34 Dividend Trends Dividend ( ) Base Dividend Special Dividend Base Dividend Yield (a) Total Dividend Yield (a) 5.2% 4.0% 4.3% 3.8% a) Based on year end stock price 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Dividend yield Dividend policy: Can pay out up to 50% of annual net income, depending on business prospects and cash needs Will consider special dividend if circumstances permit November 2013 Page 34

35 V. OUTLOOK & SUMMARY November 2013 Page 35

36 IC Pricing and Assembly Market Trends Assembly Capacity Utilization & IC Pricing Book to Bill Ratio % Capacity Utilization 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 2010 JAN MAY SEP 2011 JAN MAY SEP 2012 JAN Assembly Utilization MAY SEP 2013 JAN IC ASP MAY SEP Month Avg Pricing ($) Semiconductor Equipment Book to Bill Trends (3 month moving average) Assembly Equipment Total Semi Equipment Jan 10 Mar 10 May 10 Jul 10 Sept 10 Nov 10 Jan 11 Mar 11 May 11 Jul 11 Sept 11 Nov 11 Jan 12 Mar 12 May 12 Jul 12 Sept 12 Nov 12 Jan 13 Mar 13 May 13 Jul 13 Sept 13 Source: VLSI Oct 2013 Source: Semi Oct 2013 Relatively short seasonal cycles over past three years driven by: Smart phone and tablet purchasing patterns Macro economic conditions Assembly book/bill and capacity utilization have increased since Q4-12 industry trough November 2013 Page 36

37 Q Guidance as per October 31, 2013 Revenue Gross Margin Operating Expenses* Capex % Down 20% 40% - 38% Flat to Down 5% million Q3 Q4 Q3 Q4 Q3 Q4 Q3 Q4 * Excluding restructuring Sequential revenue down approximately 20% Gross margins between 38% - 40% Opex flat to down approximately 5% Anticipate a profitable quarter Capex of approximately 2 million Positive outlook for Q4 sequential order development November 2013 Page 37

38 Summary Leading semi assembly equipment supplier with #1 or #2 positions in fastest growing advanced packaging segments Scalability and profitability of business model greatly enhanced for cyclical industry Q3-13 could be most recent industry order trough. Favorable industry outlook for 2014 Solid liquidity position. Committed to enhancing shareholder value Significant upside potential. Advanced packaging, mobile internet devices, ongoing cost reduction and Asian production transfer Attractive stock market valuation and dividend yield relative to peers November 2013 Page 38

39 Financial Calendar 20/22-Nov-13 Morgan Stanley: TMT Conference, Barcelona, Spain 21-Nov Dec-13 7-Mar-14 ABN AMRO Benelux Equities Conference, New York, USA ESN: European Conference, London, United Kingdom Rabobank: Telecom, Media and Technology Investor Conference, Amsterdam, the Netherlands November 2013 Page 39