annual general meeting may 1, 2017 - besimay 2017 assembly equipment market trends • vlsi...
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ANNUAL GENERAL MEETING
May 1, 2017
1
May 2017
Safe Harbor Statement
This presentation contains statements about management's future expectations, plans and prospects of ourbusiness that constitute forward-looking statements, which are found in various places throughout the pressrelease, 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 resultsand 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 identifyforward looking statements, although not all forward looking statements contain these identifying words. Thefinancial guidance set forth under the heading “Outlook” contains such forward looking statements. While theseforward looking statements represent our judgments and expectations concerning the development of ourbusiness, a number of risks, uncertainties and other important factors could cause actual developments andresults to differ materially from those contained in forward looking statements, including any inability to maintaincontinued demand for our products; failure of anticipated orders to materialize or postponement or cancellation oforders, 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 significantcustomers; lengthening of the sales cycle; acts of terrorism and violence; inability to forecast demand andinventory levels for our products; the integrity of product pricing and protection of our intellectual property inforeign 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 instabilityin foreign capital markets; the risk of failure to successfully manage our diverse operations; those additional riskfactors set forth in Besi's annual report for the year ended December 31, 2016; any inability to attract and retainskilled personnel; and other key factors that could adversely affect our businesses and financial performancecontained in our filings and reports, including our statutory consolidated statements. We expressly disclaimany obligation to update or alter our forward-looking statements whether as a result of new information, futureevents or otherwise.
2
May 2017
Agenda
I. Company Overview
II. Market
III. Strategy
IV. Financial Review
V. Outlook & Summary
3
May 2017
I. COMPANY OVERVIEW
4
May 2017
Year Ended December 31, (€ millions, except share data) 2014 2015 2016
Revenue 378.8 349.2 375.4
Orders 407.6 348.3 373.8
Gross margin 44% 49% 51%
EBITDA 82.1 73.0 89.8
Pretax income 71.3 57.1 73.6
Net income 71.1 49.0 65.3
EPS (diluted) 1.87 1.27 1.70
Net margin 19% 14% 17%
Net cash 118.0 136.5 168.1
Summary Historical Financials
• 2016 Results:• Renewed revenue growth (+7.5%):
• Asian capacity build• New advanced packaging capacity• More investment in smart phone
features and sensors• Continued growth of automotive• Industry conditions turned + in H2
• Strong profit development (+33.3%):• Market position and efficiencies drive
gross margin to 51%• Operating initiatives keep expense
growth in check
• Net cash +€ 31.6 million (23.2%)• Supports shareholder friendly capital
allocation policy• € 125 million Convertible Notes helps
fund future growth
5
May 2017
Which Have Helped Drive Growth in Shareholder Returns
6
13.1%
42.0%
125.4%
0.2%
70.5%
4.3%
5.2%
4.0%
8.1%
6.5%
17.4%
47.2%
129.4%
8.3%
76.9%
0%
20%
40%
60%
80%
100%
120%
140%
2012 2013 2014 2015 2016
Besi Shareholder Total Return
Price Dividend659.1%
170.4%
0%
100%
200%
300%
400%
500%
600%
700%
Besi PHLX Semiconductor(SOX)
Total Cumulative ReturnBesi vs. SOX Index
• €186.0 million of dividends and share repurchases paid since 2011• Substantial share price outperformance vs. benchmark index
May 2017
And Resulted In A Higher Stock Market Valuation
7
May 2017
Besi’s Performance Has Also Translated Into Higher Dividends For Shareholders
0.22 0.33
1.50
0.73
0.42 0.43
1.89
1.29
1.74
4.3%
5.2%
4.0%
8.1%
6.5%
5.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
2011 2012 (b) 2013 2014 2015 (b) 2016 (b)*
Div
iden
d Y
ield
Div
iden
d (€
)
Dividend EPS (basic) Total Dividend Yield (a)
1.20
1.74
0.30
a) Based on year end stock price. b) Includes special dividend of € 0.08, € 0.20 and € 0.35 in 2012, 2015 and 2016, respectively
* Includes € 1.74 proposed for approval at May 1, 2017 AGM
71% 77% 79% 93%Payout Ratio: 100%
Since 2011, € 5.29/Share Paid in Dividends*
30%
8
May 2017
4.3%
2.1%1.9%
1.8% 1.7%
1.4% 1.3%
0.6%
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Dividend Yield as of April 20, 2017
And The Highest Dividend Yield Amongst Peers
Source: Reuters April 20, 2017
9
May 2017
Besi’s Market Cap Has Grown to €1.7 Billion Currently. Shareholder Base Has Diversified
Market Profile
Share Ownership
0
100
200
300
400
2013 2014 2015 2016
Average Daily Volume(Shares 000s)
60%
42%
0%
20%
40%
60%
80%
2011 2016
Top 10 Shareholders(% of shares outstanding)
• BESI• Euronext Midcap AMX
Symbol/ Index
• € 1,659 MM ($1,777 MM)
Market Cap*
• Pay out 40-80% of net income per annum
Dividend Policy
• As of April 20, 2017• Source: Besi estimates
NL30%
US20%
UK14%
Europe ex. NL
17%
Other19%
By Geography
10
May 2017
II. MARKET
11
May 2017
Assembly Equipment Market Trends
• VLSI forecasts that current market upturn will continue through 2018• Underlying semiconductor production trends favorable
3.1
3.9
3.33.7
4.1 4.2
-21.9%
27.8%
-16.3%
12.5%9.3%
3.5%
-30%
-20%
-10%
0%
10%
20%
30%
40%
0.0
1.0
2.0
3.0
4.0
5.0
2013 2014 2015 2016E 2017E 2018E
(US
$ bi
llion
s)Assembly Equipment Market
Market Size YoY Growth Rate
Source: VLSI January 2017
254.9
378.8 349.2
375.4
79.0 110.2-6.9%
48.6%
-7.8%7.5%
39.5%
-50%
0%
50%
100%
150%
0
100
200
300
400
2013 2014 2015 2016 Q1-16 Q1-17
(€ m
illio
ns)
Besi RevenueRevenue YoY Growth Rate
12
May 2017
Internet of Tomorrow Drives New Innovation Cycle
SoC
Connectivity
5G
Internet of Tomorrow
Will Drive Innovation in Many
End User Applications
Requiring Increased
Functionality and Leading Edge
Advanced Packaging Solutions
Mobile Revolution Digital Society
13
May 2017
Growth in Internet Connected Devices Requires Changes in Process/Equipment
Today => TomorrowFront End
Transistor scaling
Lithography
New structures 3D
Back End Assembly
More contacts
Smaller pitches
Thinner/densermore complex packages
Stacked structures 3D
WLP/FOWLP packages
From simple Wire Bond to BGA/Flip Chip to complex 3D structures with TSVs,microbumps and thin dies
to WLP/FOWLP packageswithout substrate interposer
14
May 2017
And Is Reflected in Besi End User Application Trends
Source: Company Estimates
• Mobile internet devices are 30% of revenue
• Automotive has grown to 18%
• Computer/PCs holding up due to high end server market
• Service/spare parts has increased to 15%
30%
24%
18%
10%
3%
15%
0%
5%
10%
15%
20%
25%
30%
35%
2016
15
May 2017
Besi Revenue Growth Drivers
Revenue Growth Drivers
World tooling up
for new tech cycle <20
nanoIncreased
smart phone functionality
Emerging process
deployment WLP and
TCB
New device applications
IoT, AI, wearables, driverless
carsWire bond/flip
chip conversion
Solar cell plating
transition from silver to copper
Increased % of Chinese market and
Asian supply chains
Higher % of mainstream assembly equipment
applications
16
May 2017
III. STRATEGY
17
May 2017
Strategic Planning Review 2017- 2021
• TCB, ultra thin die, eWLB die bonding • Large area, ultra thin, wafer level molding• Solar and battery plating
Maintain best in class tech leadership. Expand capabilities for:
• Increase mainstream penetration with high quality mid-range products• Increase % of global semiconductor supply chains• Expand presence in China and share of wallet• Expand software and process support in Asia to better support installed base
Increase market presence and share in addressable markets
• Continue West-East personnel transfer. Target 75% Asian headcount• Continue to reduce euro based costs• Target more local production. Shorten cycle times• Accelerate common platform/parts development• Optimize Asian supply chain
Achieve a more scalable, flexible and lower cost manufacturing model
• Emphasis on wafer level processing
Acquire companies with complementary technologies and products
18
May 2017
TCB/TSV and Fan Out WLP Are Emerging Process Technologies
Enabling technology for high end memory and optical applications
Next step beyond Flip Chip
TCB/TSV (Substrate Based) Fan Out WLP (Wafer Level)
Fan Out Advantages :• Wafer scale. Eliminates expensive substrate• No wire bonding • More cost effective than TSV in many applications by
factor of 2x
Leading market position :• Installed base of 60 systems in production• Estimated 75% market share• Principal Competition: Shibaura and Shinkawa
32 Stacked Die Capability
Besi TCB Advantage• 32 die stack at <5 micron accuracy
(current market: 4-8 die stack)• High accuracy over large area placement• Highly stable• Industry leading throughput• Compact form factor
Leading market position• Installed base of 40 systems in production• Estimated 50% market share of active systems • Highest penetration of memory and GPU markets• Principal competition: Toray, ASM PT, Shinkawa
Preferred process for high data transfer and optical devices in IoT, mobile and power
19
May 2017
Asian Production Transfer Has Helped Reduce Break Even Revenue Levels
Asian Production Has Significantly Expanded
Leading to Lower Fixed European + NA Headcount
And Reduced Break Even Revenue Levels
-139
396
708 396
847
43%
98%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
-
100
200
300
400
500
600
700
800
900
2010
2016
Shi
pmen
ts
China Other Asian % Direct
741 508
802 1,041
1,543 1,549
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2011
2016
Hea
dcou
nt
Europe/NA Fixed HC Asia Fixed HC
270
194
-
50
100
150
200
250
300
2011
2016
(€ m
illio
ns)
20
May 2017
Expansion of Besi Chinese Operations
33
139
0
30
60
90
120
150
2015 2016
Uni
ts
Unit Shipments Besi China
+321%
2016
2015
China30%
Other Besi70%
China Customer Revenue as % of Total Revenue
China23%
Other Besi77%
21
May 2017
Workforce Has Become More Asia Centric, Scalable and Flexible
1,543 1,475
1,404 1,489 1,489
1,549
52%54%
57%60%
64%
67%
48%46%
43%40%
36%
33%30%
40%
50%
60%
70%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2011 2012 2013 2014 2015 2016
Hea
dcou
nt
Europe/NA Fixed HC Asia Fixed HC Asia % Europe/NA %
Fixed Headcount
Total Headcount
• Asia now represents 67% of total fixed headcount
• Revenue scalability via Asian temp workers
• European and NA fixed headcount continues to decline:• -31.4% since 2011• -5.9% vs. 2015
676 603 591 540 508
799 801 898 949 1,041
65 55
143 50 120
1,5391,458
1,6321,539
1,670
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2012 2013 2014 2015 2016T
emp
% o
f Tot
al
Hea
dcou
nt
Europe/NA Fixed HC Asia Fixed HC Temporary HC Temp % of Total
22
May 2017
China and Singapore Operations Have Expanded Significantly in Past Two Years
81 82 87 81 77
676 603 591 540 508
6866 72 121 163
234236 294 314 371
416417
445 433430
1,4751,404
1,489 1,4891,549
0
400
800
1,200
1,600
2,000
2012 2013 2014 2015 2016
Total Fixed Headcount by Country
Other Europe/NA Singapore China Malaysia
23
May 2017
IV. FINANCIAL REVIEW
24
May 2017
Revenue Growth and Operational Progress in 2016 Yield Increased Profits
2525
2016/2015
€ 349.2 € 375.4
14.0%17.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0 €
50 €
100 €
150 €
200 €
250 €
300 €
350 €
400 €
2015 2016
Net
mar
gin
%
€ m
illio
nsRevenue Net Income
Gross Margin
OPEX
Headcount
Effective Tax Rate
14.3%
1,539
€ 112.5 MM
48.8%
+130
-3.1 points
+3.4%
+2.2 points
+7.5%
+3.4 points
€ 65.3€ 49.0
11.2%
1,669
€ 116.3 MM
51.0%
May 2017
Revenue & Gross Margin
Baseline Opex Net Income
Key Financial Metrics 2014 - 2016
26
379
349
375
43.8%
48.8%
51.0%
30%
36%
42%
48%
54%
60%
66%
330
335
340
345
350
355
360
365
370
375
380
385
2014 2015 2016
Revenue Gross Margin
86.8 93.5 96.7
7.1
19.0 19.6
93.9
112.5 116.3
0
20
40
60
80
100
120
140
2014 2015 2016
Base Opex Other Operating Expenses
64.5
46.9
65.2
€ 6.6
€ 2.1
€ 0.1
71.1
49.0
65.3
18.8%
14.0%
17.4%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
(3)
7
17
27
37
47
57
67
77
2014 2015 2016AdjustmentsAdjusted Net IncomeNet Margin
* Adjusted to exclude: Upward revaluation of tax loss carry forwards, restructuring charges and net restructuring benefit
Gro
ss M
argi
n
€ in
mill
ions
€ in
mill
ions
€ in
mill
ions
May 2017
Liquidity Trends
Besi has significantly increased cash flow generation over past 5 years• Increased profits, faster cycle times, Asian
supply chain transfer
2016 vs. 2015• Cash flow from ops of € 98.7 million, up
14.1% vs. 2015• € 67.8 million utilized for dividends and
share repurchases in 2016, +11.3% vs. 2015• New 1 million buyback program initiated in
October 2016• 293,076 shares repurchased through
March 31, 2017 at € 33.42 per share
161.6
113.7
132.8
157.8 169.8
132.1
153.3
304.8
28.5 22.3 23.8 21.4 21.4 21.4 21.4
136.7133.1
91.4
109.0
136.5 148.4
110.7
131.9
168.1
0
50
100
150
200
250
300
350
Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
(eur
o in
mill
ions
)
Cash and Deposits Debt Net Cash
€ 56.9 MMDividend
2014
€ 45.4 MMDividend
2015
27
May 2017
41% 39% 38% 33% 28% 25% 19% 16% 14% 13% 13% 12% 11% 10% 6% 2% 2% 1%0%
40%
80%
Net
Cas
h / M
arke
t Cap
Year End Net Cash/Market Cap
593 549
378 326
252 210 168 160 122 97 85 67 49 31 -
100 200 300 400 500 600 700
Net
Cas
h (€
mill
ions
)Year End Net Cash (€)
Net Cash Position vs. Peers
28
Source: Bloomberg, Capital IQ (April 20, 2017)
May 2017
Key Financial Highlights Q1-2017
Besi Reports Significant Q1-17 Revenue and Net Inco me GrowthOrders Increase by 162.4% vs. Q4-16
Strong H1-17 Business Outlook
• € 110.2 million :• +18.4% vs. Q4-16• +39.5% vs. Q1-16
Revenue
• € 239.8 million :• +162.4% vs. Q4-16• +130.9% vs. Q1-16
Orders
• € 24.3 million:• +45.5% vs. Q4-16• +203.8% vs. Q1-16
Net Income
• Net cash of € 175.7 million• +€ 27.3 million (+18.4%) vs. Q1-16
Liquidity
29
May 2017
Besi Has Achieved Best in Class Profit Metrics
ASM Pacific Suss K&S Besi
26.3%13.6%13.3%-3.1%
19.4%7.7% 17.2%4.2%
23.9%14.4% 17.1%8.7%
Worst Peer
7.5%
33.0%
8.7%
2.8%
4.2%
-3.1%
1.7
17.4%10.2% 10.3%
2.8%
7.5% 24.3%9.8% 19.6%
BESI
Inventory Turn
CF from Ops/ Revenue
Return on Equity
Net Margin
EBITDA Margin
Gross Margin
Revenue Growth
BestPeer
24.3%
51.0%
23.9%
17.4%
19.4%
26.3%
4.3
ASM Pacific Suss K&S Besi
3.4 4.3 2.3 1.7
Trailing Twelve Months ended December 31, 2016Data Source: Bloomberg
30
51.0%45.6%37.6%33.0%
May 2017
V. OUTLOOK & SUMMARY
31
May 2017
Q2-17 Guidance
Revenue Gross Margin
Operating Expenses
Q1-17 Q2-17 Q1-17 Q2-17
Q1-17 Q2-17
€ 110.2 55.7%
€ 30.5
54%-
56%
40%to
50%
10%to
15%
32
May 2017
Summary
Leading semi assembly equipment supplier with #1
or #2 positions in fastest growing segments
Technology leader. Best in class product portfolio
Gaining market share in advanced packaging
Scalability and profitability of business model greatly
enhanced in cyclical industry
Significant upside potential.New technology cycle,
expanded use of advanced packaging, execution of
operating initiatives
Committed to enhancing shareholder value.
Attractive capital allocation program
33