Fourth quarter and full-year results 2019 PASSION.PRECISION.PURITY. Fourth-quarter and full-year results 2019 March 3, 2020 1
PASSION. PRECISION. PURITY. Agenda Fourth quarter and full-year results 2019 1 Highlights Mike Allison, CEO 2 Fourth-quarter and full-year 2019 financial review Stephan Bergamin, CFO 3 2020 priorities, conclusion and outlook Mike Allison, CEO 2
PASSION. PRECISION. PURITY. Improving market conditions in Q4 as bottom of market down-cycle has been passed Fourth quarter and full-year results 2019 Sequential quarterly Continued focus on cost, Market share gains sales up in Semi and technology and continue in 2019; record Display; flat in General innovation; 4% increase spec wins bode well for Vacuum and Industry; in R&D employees in future success slightly down in service 2019 Strong EBITDA margin Market expectations for Focus on Global Service recovery in H2 2019 2020 turning optimistic yields in above-market demonstrates cyclical with some short-term service performance resilience of business challenges around the despite semi cycle model coronavirus 3
PASSION. PRECISION. PURITY. Low-cycle full-year EBITDA margin well above previous troughs Fourth quarter and full-year results 2019 Segment VAT Group AG Valves Global Service Industry (% of total (20%) (3%) (100%) (77%) net sales) CHF 570m CHF 441m CHF 112m CHF 18m Net sales EBITDA 27.0% 27.7% 41.5% 11% margin 1 1 Margin based on segment net sales 4
PASSION. PRECISION. PURITY. Market trends remained mixed across all our major business segments in 2019 Fourth quarter and full-year results 2019 Semiconductors WFE investments down 10%, driven by memory; foundry and advanced logic strong Technology advances continue, industry preparing for next upcycle Display Overall investments in display equipment down as LCD investment cycle fades OLED projects for mobile stronger in H2 and this trend should continue in 2020 Solar PERC remains major technology, heterojunction Technology still challenging Market demand for new PV manufacturing equipment declined versus 2018 Industry & Research Growth prospects continue in several industrial applications, including batteries, medical etc. Research spending by governments slightly down but optimistic for 2020 5
PASSION. PRECISION. PURITY. No 1 market position further strengthened – specification wins remain on high level Market share All Industries 1 Market share Semi & Related 2 Market share Semi 3 Fourth quarter and full-year results 2019 Total vacuum valve market size Total vacuum valve market size Total vacuum valve market size 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 868m 2019: USD 581 2019: USD 369m 65% 63% 62% 57% 56% 55% 54% 53% 50% 49% 47% 46% 45% 41% 39% 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Source: VLSI Research February 2020, 2019 full-year date preliminary 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 Fourth quarter and full-year results 2019 1 Highlights Mike Allison, CEO 2 Fourth-quarter and full-year 2019 financial review Stephan Bergamin, CFO 3 2020 priorities, conclusion and outlook Mike Allison, CEO 7
PASSION. PRECISION. PURITY. Full-year 2019 – Group key figures Fourth quarter and full-year results 2019 EBITDA margin Third party net sales EBITDA 27.0% (-3.8pp) CHF 570 m CHF 154 m EBIT margin -18% -28% 18.9% (-6.8pp) Free cash flow margin Free cash flow 24.5% (+6.8pp) Net debt/EBITDA CHF 140 m Free cash flow 0.9x +13% conversion 91% (+33.3pp) 8
PASSION. PRECISION. PURITY. Q4 19 order intake 31% above Q4 18, confirms business improvement during 2019; full-year orders down as expected Full-year in CHF million Fourth quarter and full-year results 2019 2019 order intake -10% 648 585 Q4 2019 order intake +31%% 1 Full-Year 2019 order backlog -5% 1 176 134 121 115 2018 2019 Q4 order intake Full-year order intake Order backlog 9 1 Order backlog as of September 30, 2019 and December 31, 2019; year-end 2019 backlog negatively impacted by cancellation of a sizeable order from China
PASSION. PRECISION. PURITY. Product mix partly offsets lower volumes Fourth quarter and full-year results 2019 (192) 698 63 (2) 3 570 2018 Volume Product mix Price FX 2019 Volume declines driven mainly by Semi and Display and to a smaller extent General Vacuum, offsetting improvements in Global Service Product mix improvements confirm innovation capabilities, stable pricing and very limited FX impact 10
PASSION. PRECISION. PURITY. Gradual recovery following the sharp decline in business activities after two years of record sales in 2016/17 250 1.15 Fourth quarter and full-year results 2019 1.10 200 1.05 1.00 150 0.95 100 0.90 0.85 50 0.80 0 0.75 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Order intake Net sales Book to bill Order and sales passed down cycle in Q1 2019, consecutive improvements over the rest of 2019 Q4 2019 book-to-bill ratio at or above 1x for the fourth consecutive quarter 11
PASSION. PRECISION. PURITY. VAT’s business model generates consistently high economic profit on invested capital 400 60% Fourth quarter and full-year results 2019 350 50% 300 40% 250 200 30% 150 20% 100 10% 50 0 0% 2015 2016 2017 2018 2019 Invested Capital NOPAT Free Cash Flow ROIC CROIC WACC1 The return on invested capital (ROIC) and the cash return on invested capital (CROIC) are both substantially above the Group’s weighted average cost of capital (WACC, 10.4% as used in the 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 12 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 above previous trough; demonstrates VAT’s flexible operating structure and strong cost management in CHF million Fourth quarter and full-year results 2019 698 Sales -18% 570 30.8% EBITDA margin* 27.0 % 215 170 149 154 2018 2019 Q4 net sales Full-year net sales Full-year EBITDA Lower topline results reflected in lower-full year EBITDA and EBITDA margin EBITDA margin stays well above previous trough levels, due to VAT’s flexible operating structure and strong cost management 13
PASSION. PRECISION. PURITY. Cyclical business decline turned corner in H2 2019, EBITDA margin well above previous trough levels 450 in CHF million 35% Fourth quarter and full-year results 2019 400 31.6% 350 29.9% 300 30% 28.7% 250 200 25.1% 150 25% 100 50 0 20% H1 2018 H2 2018 H1 2019 H2 2019 Net Sales EBITDA EBITDA-Margin Down-cycle in Semi and Display that started in the second half of 2018 bottomed out in the first half of 2019 and started to recover in the second half The EBITDA margin improved significantly during the second half of 2019 14
PASSION. PRECISION. PURITY. Full-year 2019 net sales CHF 570 million Fourth quarter and full-year results 2019 Net sales by segment Net sales by region 49% (50% 1 ) Asia 77% (74% 1 ) Valves 34% (33% 1 ) Americas 20% (15% 1 ) Global Service 3% (6% 1 ) Industry 17% (17% 1 ) EMEA 1 2018 15
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