Fourth quarter and full-year 2017 results F OURTH Q UARTER AND F ULL -Y EAR 2017 R ESULTS No. 1 global market position in high-end vacuum valve technology March 12, 2018 1
PASSION. PRECISION. PURITY. Agenda Fourth quarter and full-year 2017 results 1 Heinz Kundert, CEO 1 Highlights 2 Fourth quarter and full-year 2017 financial results Andreas Leutenegger, CFO 3 Mike Allison, CEO 2 Strategic drivers and outlook for 2018 1 until March 12, 2018 2 effective March 13, 2018 2
PASSION. PRECISION. PURITY. Record 2017 results on growing demand and expanding no. 1 global market position Fourth quarter and full-year 2017 results § Record performance Seven consecutive Expansion of leadership quarters of growth on a position in vacuum valves driven by strong year-on-year basis since through substantial growth, new products listing in April 2016 market share gains and cost reductions Global production Vacuum content in capacity increased by advanced manufacturing Market prospects for over 80% to CHF 850 processes continued to 2018 remain very positive million in 2017 increase in 2017 3
PASSION. PRECISION. PURITY. Strong performance supported by all market segments Fourth quarter and full-year 2017 results Valves VAT Group AG Global Service Industry (14%) (6%) (80%) Segment (% of total net sales) CHF 692m / +36% CHF 554m / +40% CHF 99 / +21% CHF 40m / +26% Net sales Adj. EBITDA 1 CHF 215m / 31.1% CHF 189m / 31.7% CHF 48m / 48.2% CHF 13m / 21.5% / margin 2 1 Adjustment on Group level only 2 Segment margin based on segment net sales 4
PASSION. PRECISION. PURITY. Key growth trends for VAT continued to drive business development Semiconductors Displays Solar Industry & Research Fourth quarter and full-year 2017 results Picture Picture Picture End-market growth trend 2017 vs. 2016 § Investments in § Transition to OLED § Investments in solar § Growth driven by memory for 3D NAND continued power generation bellows and and DRAM continued accelerated components for semi, § Gen 10.5 investments automotive, medical, § Technology inflections for large LCD displays § Increasing demand for aerospace etc. in logic / foundry new PV technologies § China growth (PERC or CIGS 1 ) Government contracts § Highest level of valve § for particle physics performance required § New wave in HB-LED (CERN, ITER) 1 Copper, indium, gallium and selenide 5
PASSION. PRECISION. PURITY. VAT’s three growth dimensions delivered results Fourth quarter and full-year 2017 results 1 st Dimension 2 nd Dimension 3 rd Dimension End market Equipment Vacuum valve growth growth growth § Volume § Shift into vacuum § End markets growing at unprecedented speed § Technology inflections § Lithography - EUV § 3D NAND, DRAM, Logic and § Secular market drivers - § Thin film coatings for industrial Foundry digitalization everywhere (Big § <10 nm features and multi applications (tribology) layers Data, IoT, AI, VR etc.) § Medical applications, § ALD/ALE/EUV § Lower cyclicality - ubiquitous aerospace and automotive § China applications and functionalities (engine parts, batteries etc.) 6
PASSION. PRECISION. PURITY. No. 1 market position further expanded Market share all industries 1 Market share semi & related 2 Market share semi 3 Fourth quarter and full-year 2017 results 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 977m 2016: USD 695m 2016: USD 393m 2017: USD 1’200m 2017: USD 875m 2017: USD 518m 64% 57% 54% 53% 51% 47% 45% 45% 44% 41% 39% 39% 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Source: VLSI Research March 2018, 2017 full year preliminary data 1 All Industries includes semi & related, General Vacuum. 2 Semi & related includes Semiconductors, Displays, Solar, LED Lighting, Hard Disk Drive. 3 Semi includes Semiconductors, LED and HDD 7
PASSION. PRECISION. PURITY. VAT Market share all industries 1 Market share all industries 1 Fourth quarter and full-year 2017 results Total Vacuum Valves market size 45% 2014: USD 767m 2015: USD 804m 2016: USD 977m 2017: USD 1’200m 2014 2015 2016 2017 25% 6% 5% 5% 4% 4% 3% 3% other Source: VLSI Research March 2018, 2017 full year preliminary data 1 All Industries includes Semi & related, General Vacuum 8
PASSION. PRECISION. PURITY. Agenda Fourth quarter and full-year 2017 results 1 Heinz Kundert, CEO 1 Highlights 2 Fourth quarter and full-year 2017 results Andreas Leutenegger, CFO 3 Mike Allison, CEO 2 Strategic drivers and outlook for 2018 1 until March 12, 2018 2 effective March 13, 2018 9
PASSION. PRECISION. PURITY. Full-year 2017 – Group key figures Fourth quarter and full-year 2017 results Adj. EBITDA margin Third party net sales Adj. EBITDA 31.1% (unchanged) CHF 692 m CHF 215 m EBIT margin +36% +36% 25.8% (+2.5pp) Free cash flow Net debt/EBITDA Free cash flow margin 16% 0.7x CHF 109m FCF conversion Dividend 2017 of -15% CHF 4.00 per share 1 51% 1 for the financial year 2017; proposal of the VAT Board of Directors to its shareholders at the AGM on May 17, 2018 10
PASSION. PRECISION. PURITY. Full year order intake in line with sales increase; Q4 order development not indicative of fundamentals in CHF million Fourth quarter and full-year 2017 results 736 Full-year 2017 +31% 562 Q4 2017 186 +11% 166 168 122 2016 2017 Q4 order intake Full-year order intake Year-end order backlog 11
PASSION. PRECISION. PURITY. Strong full-year net sales increase; adj. EBITDA margin flat despite significant investments in future growth in CHF million Fourth quarter and full-year 2017 results 31.1% 31.1% adj. EBITDA margin 692 +36% 508 215 199 158 143 2016 2017 Q4 net sales Full-year net sales Full-year adj. EBITDA 12
PASSION. PRECISION. PURITY. Net sales bridge Fourth quarter and full-year 2017 results 692 100 (12) (1) 97 508 2016 Volume Product mix Price FX 2017 § Volume and product mix increases both drive top line growth § Negative price impact only due to volume rebates to large customers 13
PASSION. PRECISION. PURITY. Full-year 2017 net sales CHF 692 million Fourth quarter and full-year 2017 results Net sales by segment Net sales by region 51% Asia 80% Valves 33% North America 14% Global Service 6% Industry 16% EMEA 14
PASSION. PRECISION. PURITY. Valves – 80% of net sales in CHF million Q4 2017 Q4 2016 Change Semiconductors Fourth quarter and full-year 2017 results § Record results driven by demand for etch and Order intake 152.7 139.7 9.3% deposition wafer fabrication equipment Net Sales 159.7 116.4 37.2% § Memory and logic chip demand remains at a in CHF million 2017 2016 Change very high level Order intake 590.6 443.3 33.2% Display & Solar Net sales 554.2 394.6 40.4% § Investments in OLED continues; investments in Inter-segment sales 41.1 32.2 27.6% G10.5 fabrication equipment for LCD screens Segment net sales 595.3 426.8 39.5% Modules Segment EBITDA 188.6 129.3 45.9% § Strong growth as OEMs value the tailor made EBITDA margin 31.7% 30.3% multi valve solutions that offer lowest possible process contamination General Vacuum § Growth in existing businesses; qualification for additional market segments 15
PASSION. PRECISION. PURITY. Global Service – 14% of net sales in CHF million Q4 2017 Q4 2016 Change Growing installed base spurs Fourth quarter and full-year 2017 results substantial growth Order intake 21.5 20.9 2.9% § Ongoing investments in manufacturing capacity Net Sales 28.6 20.4 40.2% for semiconductors and displays yield in fast in CHF million 2017 2016 Change expanding installed base Order intake 103.6 85.0 21.9% § Demand for spare parts and specialty Net sales 98.7 81.9 20.5% consumables such as spare gates growing Inter-segment sales - - - § Proximity to customers is a key success factor; Segment net sales 98.7 81.9 20.5% expansion of service network in 2017 especially in Segment EBITDA 47.6 40.5 17.7% Korea and China § Retrofit and upgrade business opportunities at the EBITDA margin 48.2% 49.4% heart of the Global Service strategy § Investment in dedicated service infrastructure on the premises of key customers 16
PASSION. PRECISION. PURITY. Industry – 6% of net sales in CHF million Q4 2017 Q4 2016 Change Investments in future growth Fourth quarter and full-year 2017 results Order intake 11.6 7.5 54.7% § Accelerated growth in net sales to third parties, combined with rising internal demand for bellows Net Sales 10.8 5.9 83.1% § Introduction of new line of bellows with more in CHF million 2017 2016 Change corrosion-resistant materials Order intake 42.0 33.6 25.0% § Fuel injection dampers with moderate growth in Net sales 39.5 31.4 25.7% 2017, investment in additional production capacity Inter-segment sales 22.6 15.4 46.8% to accommodate expected future growth Segment net sales 62.1 46.8 32.8% § Slightly lower EBITDA margin as a result of Segment EBITDA 13.4 10.3 29.2% strong growth in intersegment sales EBITDA margin 21.5% 22.1% 17
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