2020 second-quarter and half-year results August 6, 2020 1 - PowerPoint PPT Presentation

Second quarter and half-year results 2020 PASSION.PRECISION.PURITY. 2020 second-quarter and half-year results August 6, 2020 1

PASSION. PRECISION. PURITY. Agenda Second quarter and half-year results 2020 1 Highlights Mike Allison, CEO 2 Second-quarter and half-year 2020 financial review Stephan Bergamin, CFO 3 Conclusion, priorities and outlook for remainder of 2020 Mike Allison, CEO 2

PASSION. PRECISION. PURITY. Q2 and H1 growth driven by ongoing recovery in semiconductors; EBITDA margin near 30% as operational improvements continue Second quarter and half-year results 2020 COVID-19 pandemic Sequential quarterly successfully mitigated so sales up in all business H1 results reflect far: plans in place to segments except continued focus on cost secure business Industry; year on year up and technology continuity, VAT in Valves (Display, Semi) innovation employees fully engaged and Global Service Positive market EBITDA margin recovery Further market share expectations for continues; H1 20 margin gains, supported by high remainder of 2020; above H2 19 and 460 number of spec wins strength of recovery bps above H1 2019 depends on COVID-19 3

PASSION. PRECISION. PURITY. EBITDA margin recovery continues in H1 2020 Second quarter and half-year results 2020 Segment VAT Group AG Valves Global Service Industry (% of total (17%) (3%) (100%) (80%) net sales) H1 net CHF 319m CHF 256m CHF 55m CHF 7m sales H1 EBITDA 29.7% 31.2% 40.7% 15.3% margin 1 1 Margin based on segment net sales 4

PASSION. PRECISION. PURITY. Market trends remain mixed across our major business units in 2020 Semiconductors Second quarter and half-year results 2020  WFE investments continue to recover, driven by memory; foundry and advanced logic Technology advances continues; industry preparing for next nodes   H2 outlook remains positive with strength in foundry, NAND and China Display  Healthy demand for mobile and flexible OLED displays in H1, fading in H2 with overcapacity  Investment conditions challenging in LCD investment as cycle fades Solar  Downturn in 2020 as COVID-19 uncertainty and overcapacity delay investments Migration starting from PERC to Heterojunction in H2   Expect H2 to be stronger than H1 Industry & Research  R&D projects remained on track in H1 but industrial and automotive slower due to Covid19  Growth prospects in several industrial applications, including batteries, medical, etc.  Optimistic outlook for government research spending in 2020 5

PASSION. PRECISION. PURITY. Innovation, business continuity and customer focus – No. 1 market position further strengthened Market share All Industries 1 Market share Semi & Related 2 Market share Semi 3 Total vacuum valve market size Total vacuum valve market size Total vacuum valve market size Second quarter and half-year results 2020 2015: USD 804m 2015: USD 531m 2015: USD 350m 2016: USD 969m 2016: USD 688m 2016: USD 400m 2017: USD 1’179m 2017: USD 855m 2017: USD 539m 2018: USD 1’138m 2018: USD 807m 2018: USD 502m 2019: USD 874m 2019: USD 587 2019: USD 369m 6M 2020E: USD 472m 6M 2020E: USD 351m 6M 2020E: USD 238m 69% 65% 63% 62% 59% 57% 56% 55% 54% 53% 52% 49% 49% 47% 46% 45% 39% 41% 2015 2016 2017 2018 2019 6M 2020 2015 2016 2017 2018 2019 6M 2020 2015 2016 2017 2018 2019 6M 2020 Source: VLSI Research July 2020, based on 1Q20 actual plus 2Q20 estimated 1 All Industries includes semi & related, general vacuum. 2 Semi & related includes Semiconductors, Displays, Solar, LED Lighting, Hard Disk Drive. 6 3 Semi includes Semiconductors, LED and HDD

PASSION. PRECISION. PURITY. Agenda Second quarter and half-year results 2020 1 Highlights Mike Allison, CEO 2 Second-quarter and half-year 2020 financial review Stephan Bergamin, CFO 3 Remainder of 2020 priorities, conclusion and outlook Mike Allison, CEO 7

PASSION. PRECISION. PURITY. Half-year 2020 – Group key figures Second quarter and half-year results 2020 EBITDA margin Third party net sales EBITDA 29.7% (+4.6pp) CHF 319 m CHF 95 m EBIT margin +21% +44% 23.3% (+7.0pp) Free cash flow margin Free cash flow 12.5% (-4.7pp) LTM 1 Net debt/EBITDA CHF 40 m Free cash flow 1.3x -12% conversion 42% (-26.5pp) 1 LTM: Last Twelve Month 8

PASSION. PRECISION. PURITY. H1 2020 order intake up 37% as market recovery and share gains continue Half-year in CHF million Second quarter and half-year results 2020 2020 order intake +37% 358 Half-year Q2 2020 262 2020 order order intake backlog +32% +38% 177 154 134 112 2019 2020 Q2 order intake Half-year order intake Order backlog 9 1 Order backlog as of June 30, 2019 and June 30, 2020

PASSION. PRECISION. PURITY. Recovery continues with strong order and sales development 250 1.40 Second quarter and half-year results 2020 1.20 200 1.00 150 0.80 0.60 100 0.40 50 0.20 0 0.00 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Order intake Net sales Book to bill  Orders at high level following recovery that began in H2 2019  Book-to-bill ratio at or above 1x for sixth consecutive quarter 10

PASSION. PRECISION. PURITY. VAT’s business model generates consistently high economic profit on invested capital 400 60.0% Second quarter and half-year results 2020 350 50.0% 300 40.0% 250 200 30.0% 150 20.0% 100 10.0% 50 0 0.0% 2015 2016 2017 2018 2019 6M 2020 Invested Capital LTM NOPAT LTM Free Cash Flow ROIC CROIC WACC1  Return on invested capital (ROIC) and cash return on invested capital (CROIC) both substantially above VAT’s 10.4% weighted average cost of capital (WACC) (from 2019 impairment test)  Sustainable generation of economic profit over the cycle benefits all VAT stakeholders • ROIC calculated as NOPAT over invested capital • CROIC calculated as Free cash flow over invested capital • Net operating profit less adjusted taxes (NOPAT) is calculated as EBITDA minus depreciation and amortization (excluding amortization of acquired technology and customer relationships) plus finance income (including net 11 foreign exchange gains/losses from financing activity and excluding other finance income) less taxes at the average Group rate of 15.8% (previous year 17.6%).

PASSION. PRECISION. PURITY. EBITDA margin growth from higher volumes and continued operational improvements in CHF million 319 Second quarter and half-year results 2020 Sales +21% 263 173 135 29.7 % EBITDA margin* 25.1% 95 66 2019 2020 Q2 net sales Half-year net sales Half-year EBITDA  Higher topline results positively affect half-year EBITDA and EBITDA margin  Focus on cost, production efficiency is key to VAT’s flexible operating model 12

PASSION. PRECISION. PURITY. Margin recovery continues despite COVID-19 pandemic in CHF million 450 35% Second quarter and half-year results 2020 400 31.6% 350 29.7% 29.9% 28.7% 300 30% 250 200 150 25% 25.1% 100 50 0 20% H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 Net Sales EBITDA EBITDA-Margin  Semiconductor recovery that started in H2 2019 continues  EBITDA margin continues to improve sequentially and year-on-year 13

PASSION. PRECISION. PURITY. Net income increases on higher EBITDA, lower depreciation and reduced taxes Change in CHF million 6M 2020 6M 2019 Second quarter and half-year results 2020 EBITDA 94.8 65.9 43.8% Depreciaton and amortization -20.4 -23.0 -11.3% EBIT 74.4 43.0 73.2% Finance net -9.9 -4.6 116.8% EBT 64.5 38.4 68.0% Income tax expenses -8.8 -13.5 Effective tax rate -13.6% -35.2% Net income 55.7 24.9 124.0%  Lower depreciation as a result of lower capital expenditure in 2019  Lower tax charge in 2020 the result of tax reform-related costs in 2019 and some recognized loss carryforwards outside Switzerland in 2020 15

PASSION. PRECISION. PURITY. Growth-driven NWC requirements impacted free cash flow generation in H1 2020 Free cash flow Free cash flow conversion Second quarter and half-year results 2020 100% 91% (7) 52 (12) 52 88% 86% 45 40 69% 79% 57% 51% 58% 42% 39% 6M 2019 6M 2020 6M 2015 6M 2016 6M 2017 6M 2018 6M 2019 6M Cash flow from operating activities Cash flow from investing activities 2015 2016 2017 2018 2019 2020 Free Cash Flow  Trade working capital at 27% of sales, substantially above medium-term target of 20%  Capital expenditures above very low 2019 levels 16

PASSION. PRECISION. PURITY. Net debt largely unchanged vs 2019; seasonally higher due to May dividend payment Net debt development Second quarter and half-year results 2020 1.9 1.5 1.4 (104) (94) 1.3 334 330 1.1 1.0 0.9 0.9 236 230 0.7 0.7 Target level of 1.0x Net Debt/EBITDA Dec June Dec June Dec June Dec June Dec June 31, 30, 31, 30, 31, 30, 31, 30, 31, 30, 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 6M 2019 6M 2020 Gross debt Cash and cash equivalents Net debt  Mid-year leverage of 1.3x seasonally above 1.0x target but  Stable debt situation, liquidity at comfortable level lower than in 2019  Gross debt on June 30, 2020 comprises CHF 200  Full-year leverage expected to fall below 1.0x level in line million bond and partial use of CHF 300 million RCF with previous years 17