BE Semiconductor Industries N.V. · EURONEXT:BESI

BE Semiconductor Industries — Investor Presentation (June 2019)

56 slides from BE Semiconductor Industries's investor presentation, June 2019

  1. Slide 1: Investor Presentation June 2019

    INVESTOR PRESENTATION June 2019

  2. Slide 2: Safe Harbor Statement

    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 ex

  3. Slide 3: Agenda

    Agenda I. Company Overview II. Market III. Strategy IV. Financial Update and Summary V. Appendix June 2019 3

  4. Slide 4: I. Company Overview

    I. COMPANY OVERVIEW June 2019 4

  5. Slide 5: Besi Overview

    Besi Overview • Leading assembly equipment supplier with #1 and #2 positions in key markets. 32% addressable market share Corporate Profile • Broad portfolio: die attach, packaging and plating • Strategic positioning in substrate and wafer level packaging • Global operations in 6 countries; 1,695 em

  6. Slide 6: Company History and Strategic Plan Execution

    Company History Die Attach Acquisitions 65% 500 € 451.7 60% •2000 2002 2005 2009 55% Product Strategy 400 • Expanded advanced packaging leadership into die attach area 50% Revenue (€ millions) • Gained market share organically and via acquisitions 56.7% Gross Margin (%) • Gained mindshare with key i

  7. Slide 7: Best in Class Product Portfolio

    Best in Class Product Portfolio Die Attach Die Bonding Multi Module Attach Flip Chip Die Sorting Die Lid Attach • 2100 xP / hS plus • 2100 DS New • 2200 evo • 8800 CHAMEO advanced New • WTT New • DLA New • 2100 sD plus / PPP plus • 2100 SC • 2200 evo plus • 8800 TC advanced New • TTR New • 2100 sD a

  8. Slide 8: Customer Ecosystem

    Customer Ecosystem Customers OEMs End Products IDMs Subcontractors • Diversified, blue chip customer base, top 10 = 54% of 2018 revenue • Leading IDMs and subcontractors. 68%/32% split in 2018 • Also supply leading fabless companies: Qualcomm, Broadcom, MediaTek via subcontractors • Long term relati

  9. Slide 9: Product Positioning

    Product Positioning Semiconductor Manufacturing Equipment (2018: $67.2B)* Front end: $56.3B Assembly: $4.5B Test: $6.3B (84%) (7%) (9%) Semiconductor Assembly Process Dicing Die Attach Wire Bond Packaging** Plating Leadframe Assembly Substrate Wire Bond Assembly Substrate Flip Chip Assembly/TCB Wafe

  10. Slide 10: Operational Profile

    Operational Profile Duiven & Drunen, (The Netherlands) Steinhausen, Radfeld, (Austria) (Switzerland) Chandler Suzhou Chengdu Korea Shanghai Leshan Taiwan Shenzhen Sales Office Philippines Malaysia Production Site Singapore Sales, Production and R&D Site LTM March 31, 2019 Europe/NA Asia • Developmen

  11. Slide 11: Summary Financials

    Summary Financials Year Ended December 31, (€ millions, except share data) 2016 2017 2018 Step function revenue and gross margin development over four business cycles since 2006 Revenue 375.4 592.8 525.3 • Addressable market share has expanded as well % seq. change 8% 58% -11% Strong profit and marg

  12. Slide 12: Business Model Objectives

    Business Model Objectives Objectives Revenue € 800MM Addressable 40%+ Market Share Gross Margin 55-60% Net Margin 30-35% Headcount 80% Asia/20% Euro Split June 2019 12

  13. Slide 13: Capital Allocation Trends

    Capital Allocation Trends € millions 250 Dividends Share Repurchases 209.5 200 35.5 • Shareholder friendly capital allocation 143.8 policy 150 21.4 • € 622.4 million distributions since 2011: • € 143.8 million YTD 2019 100 88.8 174.0 • High dividend payout ratio 67.4 23.5 60.4 22.0 122.4 • Share rep

  14. Slide 14: II. Market

    Besi nam Il. MARKET June 2019 14

  15. Slide 15: What Drives Besi's Business?

    What Drives Besi’s Business? Tech capabilities in IDM customer and Macro GDP trends 24/7 production supply chain environment choice Timing of customer Competitive cycle roadmaps and times and capital spending scalability programs June 2019 15

  16. Slide 16: Assembly Equipment Market Trends

    Assembly Equipment Market Trends Assembly Equipment Market Market Size YoY Growth Rate 6.0 30% 22.3% 4.8 5.0 4.4 4.5 20% 4.1 US$ billions 3.5 25.8% 3.7 18.3% 4.0 3.7 10% 3.1 3.0 12.7% 8.6% 3.0 0% 2.1% 2.0 -10% 1.0 -16.3% -20% -17.1% 0.0 -30% 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E Source: VL

  17. Slide 17: Assembly Equipment Market Composition

    Assembly Equipment Market Composition Assembly Equipment Market * Besi Addressable Market * (2018: $4.5 billion) (2018: $1.8 billion) Lead Trim & Form Plating 5.2% 1.7% Other Assembly (Inspection, Wire Bonding Dicing) 22.8% 28.1% Die Bonding Molds & 44.6% Presses 22.9% Die Attach 64% Plating 0.7% Si

  18. Slide 18: Besi Market Share Trends

    Besi Market Share Trends 2014 2015 2016 2017 2018 • VLSI recently updated 2018 Total Assembly Market ($MM) $3,725 $3,119 $3,515 $4,421 $4,516 assembly equipment market data Besi Market Share 13.5% 12.4% 11.9% 15.1% 13.3% • Market share trending upwards but can vary per annum based on customer road m

  19. Slide 19: New Era of Chip Growth and Applications Will Drive Greater Computing and Data Needs

    New Era of Chip Growth and Applications Will Drive Greater Computing and Data Needs Digital society Driven by new technologies - 5G - AI – big data - Robotics - Transportation - Environment - Health care Will need continuous new solutions - 1zb = 1,000,000,000 tb - 1zb= 1,000 data centres - 1zb = 18

  20. Slide 20: Requiring Increased Density, Higher Accuracy and Smaller Form Factors

    Requiring Increased Density, Higher Accuracy and Smaller Form Factors for Next Generation Devices Front End Today => Tomorrow Transistor scaling Lithography New structures 3D Back End Assembly More contacts Smaller pitches Thinner/denser more complex packages From simple Wire Bond to BGA/Flip Chip t

  21. Slide 21: Advanced Packaging Critical to Next Generation Applications

    Advanced Packaging Critical to Next Generation Applications Greater Mobile Revolution Miniaturization • Mobile Internet • Messaging • Social Media • Shared Economy Higher Greater • Gaming Accuracy Complexity • Geo-location • Audio/Video • Auto electronics Die Bond Packaging Digital Society Datacon 8

  22. Slide 22: Besi Portfolio Well Positioned by Node Size and Accuracy

    Besi Portfolio Well Positioned by Node Size and Accuracy Estimated % of 2018 Revenue Typical Application Besi Equipment Accuracy Size 100% Micron NM Die Attach 90% 10+ 28+ Automotive, SiP 25% Packaging Power 80% Plating 70% Die Attach 20% IOT 60% 10 28 Packaging General ICs Plating 50% 40% Computer,

  23. Slide 23: Advanced Packaging Unit Volume and Market Share Are Increasing

    Advanced Packaging Unit Volume and Market Share Are Increasing Advanced Packaging Silicon Demand Growth & Market Share 2011 - 2023 • Advanced packaging applications have 55 50% grown significantly since 2010 CAGR 2011-2023: 16.6% 41% 43% • Currently, estimated 37% of wafers use 45 40% 38% 39% 40% ad

  24. Slide 24: Fan Out WLP and TCB/TSV Are Emerging Advanced Packaging Process Technologies

    Fan Out WLP and TCB/TSV Are Emerging Advanced Packaging Process Technologies Fan Out WLP (Wafer Level) TCB/TSV (Substrate Based) Enabling technology for high end memory and optical Preferred process for high data applications transfer and optical devices in IoT, mobile and power Next step beyond Fli

  25. Slide 25: Besi End User Application Trends

    Besi End User Application Trends • Mobile Internet, Computing and 2018 % of Revenue Automotive are largest end markets 40% • Estimated 73% of revenue in 2018 35% 35% • Percentages vary p.a. based on customer roadmaps 30% 25% • Mobile is largest market whose % varies 21% based on timing and success o

  26. Slide 26: Mobile: 5G Is Coming

    Mobile: 5G Is Coming Will Drive Increased Mobile Data Traffic and New Applications Source: Ericsson Mobility Report Nov 2018 June 2019 26

  27. Slide 27: Mobile: Adoption of 5G Will Expand Applications and Features

    Mobile: Adoption of 5G Will Expand Applications and Features With Increased Performance Source: Qualcomm May 2017 ITF Conference June 2019 27

  28. Slide 28: Besi Addressable Market Share of Mobile Increasing

    Besi Addressable Market Share of Mobile Increasing Generation Generation Generation Generation Generation Generation Main Components 2017 2018 Manufacturer IDM/OSAT Besi system Utilized 2012 2014 2016 2017 iPhone8 iPhone X iPhone XS Processor X X X X X X Apple TSMC ->TSMC 8800CHM, MMS-LM Hynix/Micro

  29. Slide 29: Automotive: Long-Term Outlook Favorable

    Automotive: Long-Term Outlook Favorable As Electronic Content and Features Continue to Increase Source: Yole June 2019 29

  30. Slide 30: Automotive: Requiring a Variety of Package Formats

    Automotive: Requiring a Variety of Package Formats For Customers Source: Amkor investor presentation April 2019 June 2019 30

  31. Slide 31: Computing: Demand for Computing Power Growing Exponentially

    Computing: Demand for Computing Power Growing Exponentially Source: Intel May 2019 June 2019 31

  32. Slide 32: Computing: Assembly Process Becoming Even More Critical Step In CPU Value Chain

    Computing: Assembly Process Becoming Even More Critical Step In CPU Value Chain 3D STACKING AND MULTI CHIP ARCHITECTURE AS IMPORTANT OR EVEN MORE IMPORTANT THAN FRONT END PROCESSES !!!!!! Source: ASML Investor Day Nov 2018 June 2019 32

  33. Slide 33: III. Strategy

    Besi nam Il. STRATEGY June 2019 33

  34. Slide 34: Summary Operating Strategy

    Summary Operating Strategy • Leverage technology leadership • Expand capabilities for: • Introduce next generation products to win • eWLB, TCB, panel size, ultra thin die bonding business from competitors • Large area, ultra thin, wafer level molding • Increase mainstream penetration of global • Sol

  35. Slide 35: Revenue Opportunities

    Revenue Opportunities Roll out 3D imaging and other features to 4G and 5G mobile customers Expand share of Korean and Chinese Android mobile customers Favorable Drivers: Increase share of wallet in Memory/Logic space Digital Society Expand share of Japanese automotive supply chain Big Data • Capital

  36. Slide 36: Asian Production Transfer Has Helped Reduce Break Even Revenue Levels

    Asian Production Transfer Has Helped Reduce Break Even Revenue Levels and Improved Cash Generation Asian Production Has Significantly Leading to Lower Fixed European + NA And Reduced Break Even Revenue Improved Cash Generation Expanded Headcount Headcount Levels € millions Shipments 2,000 € millions

  37. Slide 37: Materials Cost Reduction Is Also a Key Priority

    Materials Cost Reduction Is Also a Key Priority Material costs are significant = ~35% of revenue Supply Chain Actions • 80% of material now purchased in Asia • Increased outsourcing of modules and high level systems • Vendor consolidation and volume discounts • Increased common parts • Increased Asi

  38. Slide 38: Development of Flexible Asian Workforce Has Enhanced Scalability

    Development of Flexible Asian Workforce Has Significantly Enhanced Scalability Fixed Headcount 2,000 1,724 1,692 85% 1,626 1,800 1,489 1,549 • Asia now represents 72% of total fixed 1,600 1,489 75% 1,400 67% 71% 73% 72% headcount, up from 60% in 2013 65% Headcount 64% 1,200 60% 1,000 55% • European

  39. Slide 39: Strategic Execution Has Helped Maintain Margins in Market Cycles

    Strategic Execution Has Helped Maintain Margins At Attractive Levels in Market Cycles Revenue Gross Margin 180.0 170 100.0% 159 161 160.0 153 155 90.0% 140.0 80.0% 120.0 117 109 110 € millions Gross Margin % 100.0 93 93 70.0% 94 81 86 80.0 79 58.7% 58.0% 55.7% 57.3% 56.3% 56.5% 56.5% 56.4% 55.9% 56.

  40. Slide 40: Opex Levels Reflect Structural Cost Reduction Initiatives

    Opex Levels Reflect Structural Cost Reduction Initiatives Operating Expenses (€ millions) Q1-16 Q1-17 Q1-18 Q1-19 High Low Average Baseline 23.5 25.6 31.7 25.3 31.7 23.5 26.5 Other* 5.7 4.9 7.4 5.4 7.4 4.9 5.8 Total 29.2 30.5 39.1 30.7 39.1 29.2 32.4 • Baseline Opex has stayed within narrow band ove

  41. Slide 41: Besi Strategic CSR Objectives

    Besi Strategic CSR Objectives Safeguard safe and healthy CSR Activities 2018 working conditions Maintain best Responsible practices tax practices environmental in all and ethical jurisdictions behavior Improvement in KPI metrics for supply chain activities Reduce Reduce packaging, waste, CSR environ

  42. Slide 42: IV. Financial Update and Summary

    IV. FINANCIAL UPDATE AND SUMMARY June 2019 42

  43. Slide 43: Solid Q1-19 Performance in Challenging Market

    Solid Q1-19 Performance in Challenging Market Attractive Gross Margin Maintained FY-17/FY-18 Q1-18/Q1-19 Revenue Net Margin Revenue Net margin 600 € 592.8 100% 160 € 154.9 100% -11.4% 560 € 525.3 90% 90% 520 140 - 47.4% 480 80% 80% Gross Margin 120 Gross Margin € 81.4 440 57.1% -0.3 points 56.8% 56.

  44. Slide 44: Liquidity Trends

    Liquidity Trends Cash and Deposits Net Cash 600 527.8 507.5 500 475.5 Strong liquidity position: • Total cash of € 507.5 million and net cash of 400 € 229.7 million as of Q1-19 • After paying € 209.5 million of dividends and share € millions 304.8 repurchases in 2018 300 247.6 Attractive funding obt

  45. Slide 45: Guidance Q2-19

    Guidance Q2-19 Revenue Gross Margin Operating Expenses € 81.4 +5% 55.9% 55%-57% € 30.7 -5% Q1-19 Q2-19 Q1-19 Q2-19 Q1-19 Q2-19 -15% June 2019 45

  46. Slide 46: Summary

    Summary Long term Assembly market Market presence secular trends Disciplined ever more critical has grown via drive continued strategic focus step in key IDM advanced has created an semiconductor customers and packaging industry leader value chain supply chains growth Successful Asian Tech leadershi

  47. Slide 47: V. Appendix

    Besi nam V. APPENDIX June 2019 47

  48. Slide 48: Revenue and Gross Margin Cycles Since 2006

    Revenue and Gross Margin Cycles Since 2006 € millions 700 60.0% 56.8% Revenue Gross Margin 600 51.1% -11.4% 50.0% 525 500 39.5% 40.0% 424 400 34.1% -7.8% -6.9% 593 30.0% 4 year averages 300 302 -12.9% 379 20.0% 200 351 164 10.0% 100 191 0 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2

  49. Slide 49: Baseline Operating Expense Trends

    Baseline Operating Expense Trends Base Opex Other Opex 45 39.1 40 34.1 34.2 35 7.4 31.6 30.4 30.7 4.4 3.0 0.9 29.1 30 3.3 25.9 2.8 5.4 25 0.2 20 15 29.7 31.2 31.7 30.7 27.1 26.3 25.7 25.3 10 5 0 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Baseline Opex 29.7 27.1 31.2 31.7 30.7 26.3 25.7 25.3 As

  50. Slide 50: Net Income Trends

    Net Income Trends Net Income Variable Compensation (a) Net Margin 60 57.1 56.6 60% 4.7 3.7 51.0 50 47.9 47.1 50% 3.8 4.3 10.0 40 52.4 52.9 40% € millions 33.2% 43.6 29.3 30 30.8% 30% 28.4% 29.3% 26.2 37.1 3.1 25.1% 3.5 24.0% 47.2 20 24.5% 20% 15.9 26.2 6.4 22.7 10 10% 11.6% 9.5 0 0% Q2-17 Q3-17 Q4-1

  51. Slide 51: Currency Exposure Trends

    Currency Exposure Trends Revenue Expenses 2018 ∆ 2018 ∆ 2016 Currency Exposure 2017 (2015) 2018 2016 2017 2018 vs. €* Forex Financial Impact vs. €* Euro 25% 18% 33% 26% 21% 29% US dollar 74% 82% 67% 5% 9% 9% Swiss franc - - - 21% 19% 12% Malaysian ringgit - - - 30% 31% 31% Chinese renminbi - - - 11%

  52. Slide 52: Cash Generation Trends

    Cash Generation Trends € millions % of Revenue 200 Total Cash Flow from Operations As % of Revenue 184.1 180 168.2 160 140 120 35.0% 98.7 100 86.5 28.4% 26.3% 80 73.3 24.8% 19.3% 60 40 20 0 2014 2015 2016 2017 2018 June 2019 52

  53. Slide 53: Share Repurchase Activity Has Increased

    Share Repurchase Activity Has Increased 40 30.0 Share Repurchases Average Cost per Share 35.5 35 25.0 € 23.74 30 € 22.51 € 21.86 Avg Cost per Share 20.0 25 22.8 22.4 € millions 21.4 20 15.0 € 12.44 15 10.0 € 8.93 10 5.0 5 4.0 0 0.0 2015 2016 2017 2018 YTD* *Through May 31, 2019 • € 21.4 million purc

  54. Slide 54: Dividend Trends

    Dividend Trends Dividend (€) Dividend Yield(a) 3.00 12% Cumulative dividends: € 6.70/per share since 2011 2.50 2.32 10% 9.0% 2.00 8.1% 8% 6.6% 1.67 6.5% 1.50 6% 5.5% 1.00 0.87 4% 0.75 0.60 0.50 2% Payout Ratio (b): 77% 79% 93% 100% 91% 0.00 0% 2014 2015 (c) 2016 (c) 2017 2018 Dividend Total Dividend

  55. Slide 55: Dividend Yield vs. Peers

    Dividend Yield vs. Peers* 9.0% 8.3% 8.0% 7.0% 6.0% 5.0% 4.2% 4.0% 3.8% 3.0% 3.0% 2.5% 2.1% 1.9% 2.0% 1.7% 1.2% 1.1% 1.0% 0.0% * Current quarterly dividend (annualized)/current stock price. As of May 31, 2019 Source: Morningstar June 2019 55

  56. Slide 56: Besi Shareholder Information

    Besi Shareholder Information Symbol/ • BESI Avg. Daily Volume & Liquidity Index • Euronext Midcap AMX Avg Vol * Avg Price (€ thousands) 1000 25,000 Volume (thousands) Market Market • € 1.5 billion 800 20,000 ($1.6 billion) 600 15,000 Profile Cap* 400 10,000 Dividend • Pay out 40-100% of 200 5,000 Po

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