AT&S First choice for advanced applications - Company Presentation July 2019 www.ats.net
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AT&S
First choice for advanced applications
Company Presentation
July 2019
AT & S Austria Technologie & Systemtechnik Aktiengesellschaft | Fabriksgasse 13 | A-8700 Leoben
Tel +43 (0) 3842 200-0
www.ats.net
Table of Contents
AT&S at a glance
AT&S Financials
Market Update & Outlook
Annex
Company Presentation 1
What guides us
VISION
FIRST CHOICE FOR ADVANCED APPLICATIONS
MISSION
We set the highest quality standards in our industry
We industrialize leading-edge technology
We care about people
We reduce our ecological footprint
We create value
Company Presentation 2
AT&S – a world leading high-tech PCB & IC substrates company
Outperforming
High-end interconnect solutions
for market growth
Mobile Devices, Automotive, Industrial,
Medical Applications and Semiconductor
over the last
decade
#1
Industry high-end PCB producer
worldwide *
Among the top € 1bn
PCB producers revenue in
worldwide* FY 2018/19 Efficient global production
footprint with
6
~ 10,000 plants in Europe and Asia
Employees**
* For CY 2018
Source: Prismark
** For AT&S FY 2018/19
Company Presentation 3
Market Segments & Product Applications served by AT&S
Computer,
Communication, IC substrates Automotive Industrial Medical
Consumer
Smartphones, Tablets, High Performance Advanced Driver Machine-2-Machine Patient
Wearables, Ultrabooks, Computer, Microserver Assistance Systems, Communication, Monitoring, Hearing Aids,
Solid State Drives, Emergency-Call, X2X Robots, Industrial Pacemaker,
Microserver Communication Computer, Neurostimulation, Drug
X2X Communication Delivery, Prosthesis
Segment Mobile Devices & Substrates Segment Automotive, Industrial, Medical
Company Presentation 4
AT&S – Key Facts
1 Strong growth track record 2 Balanced portfolio/Global customer base
Revenue split by segment: FY 2018/19**
1028
992
+4%
815 +22% 33% (34%)
763
Mobile Devices & Substrates
667 +7%
+14% 67% (66%)
Automotive, Industrial,
Medical
226 250 Revenue split by customer: FY 2018/19**
168 168 (based on customer’s headquarters)
131* 90 117
90 77* 8% (6%)
7*
7% (10%)
2014/15 2015/16 2016/17 2017/18 2018/19
Americas
Revenue EBITDA EBIT Revenue growth 19% (21%)
7% Germany/Austria
66% (63%)
Asia
€ in millions
*Based on ramp-up effects for new plants in China Other European countries
5
** Figures in parentheses refer to same period last year
Company Presentation 5
Global footprint ensures proximity
to supply chain & cost efficiency
AT&S plant & sales office
AT&S sales office
AT&S Headquarters
974* 404* 1,241* 2,369* 4,461* 289*
Leoben, Headquarters Fehring Nanjangud Chongqing Shanghai Ansan
Austria Austria India China China Korea
*Staff, Average, FTE, FY 2018/19; 73 employees in other locations
Company Presentation 6
Strategic focus on high-end technologies
AT&S Revenue structure in FY 2018/19 – based on technologies
High-end technology share > 75%
HDI and any-layer PCBs,
Embedding, IC substrates
High-end
HDI PCBs and
IC substrates
~ 30%
Complementary technology
share: < 25%
SS, DS, ML,
Single-sided (SS), double-sided (DS), multilayer- (ML),
Flex, RF
flex and rigid-flex (RF) PCBs
~ 70%
Structure of general PCB market – based on technologies
Source: Prismark, AT&S
Company Presentation 7
Investment highlights
Leading provider of high-end technologies and applications
• Highly advanced position in miniaturisation and modularisation
• Technology advantage at mSAP due to timely extension of the IC substrates technology
Long-standing customer relationships with technology and market leaders
Market outperformance and high profitability
• AT&S has constantly outperformed the PCB and substrates market over the last years
• Above industry average EBITDA margin 20 – 25%
• Strong cash flow generation and therefore improved internal financing capabilities
Successful industrialisation of leading-edge technologies combined with highest quality
• Outstanding process know-how, productivity and efficiency
Solid balance sheet with strengthened equity ratio of 45.0% in 2018/19
• Attractive dividend policy
Company Presentation 8
Market players in the high-end segment
Market position HDI Technology (2018)
HDI
Rank Supplier Country/Region mSAP IC Substrates
(revenue in USD millions)
1 AT&S AUT 838
2 Unimicron TWN 799
3 Compeq TWN 779
4 TTM USA 681
5 Meiko JPN 472
6 Tripod TWN 443
7 Zhen Ding TWN 349
8 DAP KOR 276
9 CMK JPN 259
10 SEMCO KOR 245
Source: Prismark
Company Presentation 9From vision to strategy
Expansion of technology leadership
• Leading provider of new interconnect solutions
• Innovation revenue rate: > 20%
Medium-term profitable growth
• Medium-term revenue target of € 1.5 billion
“First choice • Medium-term EBITDA margin target of 20-25%
for advanced
applications” Creation of shareholder value
• Long-term ROCE ≥ 12%
Sustainable Management
• Fulfill and further develop standards in the areas environment, health & safety,
ethics, work conditions and quality
Company Presentation 10Future positioning
as leading high-end interconnect solutions provider
More than AT&S
Overview of the transformation from a high-end
Extended technology
PCB manufacturer to a high-end interconnect toolbox
solutions provider:
Additional customers
New technologies
Core business + and interconnect
solutions
Additional applications
Broader positioning in the
value chain
Company Presentation 11Driving the industry: miniaturization & modularization
2003/04 2013 2017 202X
?
TYPE Mobile Phone Smartphone Smartphone All in One
PCB 125x55mm 85x20mm 80x20mm 25x25mm?
FORM FACTOR 1 0.25 0.23 0.06?
LINE/SPACE 100/100µm 40/40µm 30/30µm 10/10µm
TECHNOLOGY 1-n-1 Any-layer mSAP – Any-layer FO/SAP/mSAP
Company Presentation 12R&D as the key for technological leadership
7.4%
R&D Quota
(equivalent to € 75.7 million)
279
Patents
International International
R&D Partners R&D Partners
R&D 35.3%
Headquarters Innovation Revenue Rate *
Austria
Industrialization at the respective
production site
As of FY 2018/19
* Revenue generated with products with new, innovative technologies introduced to the market within the last three years
Company Presentation 13Table of Contents
AT&S at a glance
AT&S Financials
Market Update & Outlook
Annex
Company Presentation 14Revenue and EBITDA development
Revenue increase of 3.6% and EBITDA rise of 10.7%
Revenue split by segment: FY 2018/19
1028.0
991.8
33%
Mobile Devices & Substrates
67% Automotive, Industrial,
Medical
Revenue split by region*: FY 2018/19
8%
294.8 273.3
7%
225.9 222.1 237.9 226.0 250.1 Americas
19% Germany/Austria
86.3 82.2 66%
35.7 52.0 Asia
29.6
15.8% 23.4% 29.3% 30.1% 12.5% 22.8% 24.3% Other European countries
Q4 2017/18 Q1 2018/19 Q2 2018/19 Q3 2018/19 Q4 2018/19 FY 2017/18 FY 2018/19
€ in millions Revenue EBITDA and margin *based on customer’s headquarters 15
Company Presentation 15 15Business Development – Mobile Devices & Substrates
€ in millions (unless Declining demand for mobile devices
FY 2017/18 FY 2018/19 Change in %
otherwise indicated)
Segment benefited from higher sales volume
Revenue 738.9 776.0 5.0% and higher-value portfolio of IC substrates
Revenue with external
customers Earnings positively influenced by currency
648.0 683.9 5.5%
effects
EBITDA 179.0 193.5 8.1%
EBITDA margin 24.2% 24.9%
Successfully implemented measures to
improve efficiency and productivity
Revenue* and EBITDA
208.9
186.5
150.6
137.2 137.8
71.9 66.1
39.3
23.7 16.3
Q4 2017/18 Q1 2018/19 Q2 2018/19 Q3 2018/19 Q4 2018/19
Revenue EBITDA
€ in millions; * Revenue with external customers
Company Presentation 16Business Development – Automotive, Industrial, Medical
€ in millions (unless Medical & Healthcare records growth
FY 2017/18 FY 2018/19 Change in %
otherwise indicated)
Revenue Weaker market-related demand in
364.9 365.2 0.1%
Revenue with external
Automotive and Industrial
customers 339.3 338.9 -0.1% EBITDA positively influenced by product mix
EBITDA 46.8 52.6 12.5% and exchange rate effects
EBITDA margin 12.8% 14.4%
Revenue* and EBITDA
87.7 83.3 84.3 85.0 86.2
14.5 12.0 12.4 13.9 14.4
Q4 2017/18 Q1 2018/19 Q2 2018/19 Q3 2018/19 Q4 2018/19
Revenue EBITDA
€ in millions; * Revenue with external customers
Company Presentation 17Net CAPEX & Staff
Net CAPEX Staff*
Focus on maintenance investments and technology Clear increase in number of employees over the last
upgrades years
9,981 9,811
9,526
254.3 8,759
240.7
7,638
164.8
141.7
100.8
2014/15 2015/16 2016/17 2017/18 2018/19 2014/15 2015/16 2016/17 2017/18 2018/19
€ in millions * incl. contractors, FTE, average for the period
Company Presentation 18Table of Contents
AT&S at a glance
AT&S Financials
Market Update & Outlook
Annex
Company Presentation 19PCB & IC substrates market – Overview
Forecast for the total PCB & IC substrates market IC substrates
until 2021: CAGR of 3.7%
− Cloud computing drives data center expansions
68.9 − Despite reduction of inventories increase in server demand over the
3.7%
medium term. Networking and AI processors trigger additional demand for
61.7 9.0 high-value IC substrates
9.2%
6.9 2.9 Automotive
4.2%
2.6 4.4 − Despite a temporary slowdown, future AT&S PCB business is strongly
3.2%
4.1 IC substrates driven by autonomous driving (e.g. RADAR, LIDAR, cameras, …), vehicle-to-
5.5% 8.8
7.5 Military/Aerospace X communication modules and power module PCBs for electrification of
vehicles
4.1% 9.4 Industrial/Medical
8.4 Consumer
Automotive
− Market trend towards wireless connectivity of smart devices enabling IoT
Consumer
18.0 drives the need for high-end PCBs and substrates for module applications
17.1 1.6%
Communication Communication
Computing − Despite a flat development in 2019 smartphone unit sales, high-end PCB
2.4% demand for mainboards and modules will grow due to additional
15.2 16.4 functionalities like 5G, AI and sensors
− AI processors (e.g. voice and imaging data analysis) and enhanced wireless
connectivity and sensors are expected to increase demand for PCBs and
2018 2021 substrates
€ in billions
Source: Prismark, Yole
Company Presentation 20 20More than AT&S – Growth and diversification strategy
Modules – an additional addressable market
PCB/substrate Package
Module integration services (Assembly &Test)
03 Complementary capabilities needed $ 47 bn*
Midterm
Components
PCB / substrates for modules
02 SLP – Substrate-like-PCB
Market segment with growth potential
$ 8 bn*
AT&S today
PCB / substrates business
01 Focus on high-end
Application based strategy
$ 68 bn*
PCB/substrates/module integration services market by 2024; $ in billions; Source: Prismark
Company Presentation 21Growth opportunities in all segments
Focus on high-end applications
Communication Consumer / Computer Automotive Industrial / Medical
Increased digital New applications Autonomous driving Automation
networking (IoT) (smartwatch, speakers, RADAR, LiDAR, camera Machine-to-machine
Additional functionality robots, VR, …) 5G communication (5G)
Edge & cloud computing Artificial Intelligence
5G Artificial Intelligence
Networking Electrification of the drive
Artificial Intelligence Mobile therapy and
Increasing electronics share
Big data / data server per vehicle diagnostic devices
High end market growth ~10% CAGR (until 2024)
Company Presentation 22 22Supply chain in the electronics industry
New business opportunities through entry into the module market
Module Design Chip Chip Assembly PCB Substrate Product/ Product
Manufacturing & Test Manufacturing Manufacturing Module Ownership
(Front-end) (Back-end) Assembly
Design
03 Module Integration Service Provider
houses
02
OEMs
Module Board Manufacturer (SLP)
Fab-less
01 01
OSATs ODM/EMS/
Wafer Foundries OEMs
IC Players OSATs
PCB Substrate
Company Presentation 23 23More than AT&S
On the way to becoming an interconnect solution provider
Trends in the electronics industry enable further profitable growth in the high-end
printed circuit board and substrate business
− Autonomous driving, artificial intelligence, 5G
Miniaturization and functional integration reinforce modularization
Supply chain in the electronics industry is changing fundamentally
New business opportunities by entering the modules market
− Production of PCBs for modules (approx. 3% of module value)
− Module integration: increase in added value through additional design, assembly and test
services (approx. 20% of module values)
AT&S toolbox supports module integration
Building further capabilities in design, simulation and function testing under review
− Organic and non-organic measures under review
Company Presentation 24Outlook for 2019/20 Volatile and currently weaker market environment for mobile devices, in the Automotive and Industrial segment causes low visibility, in particular for the first half of the year On an annual basis the Management Board initially expects revenue to remain stable and an EBITDA margin in the range of 20 to 25% in accordance with the medium-term guidance Investment activity in the current financial year − Investments in IC substrates initiated in the previous year will lead to Capex of approx. € 80 million in 2019/20 − Maintenance investments and technology upgrades in the amount of € 80 to 100 million − Depending on the market development, an additional € 100 million for capacity and technology expansions Company Presentation 25
Table of Contents
AT&S at a glance
AT&S Financials
Market Update & Outlook
Annex
Company Presentation 26AT&S – Stock Profile
Listing: Vienna Stock Exchange, # of shares outstanding 38.85m
Prime Standard Dividend yield: 1.6 %
Indices: ATX, ATX Prime, Vönix, WBI
Thomson Reuters (A): ATSV.VI
Bloomberg (A): ATS:AV
Shareholder structure
Company Presentation 27AT&S Product Portfolio – I
ECP®: IC substrates Substrate-like printed circuit boards
Embedded Component Packaging mSAP
Embedded Component Packaging allows to embed IC substrates serve as interconnection platform with Substrate-like PCBs (mSAP technology) are the next
active/passive components (e.g. wafer level dies) within higher density (Line/Space < 15 micron) between evolution of high-end HDI PCBs with higher density:
the layers of a PCB – contributes to miniaturization. semiconductors (Chips) & PCBs . Line/Space < 30 micron.
Production site
Leoben, Shanghai Chongqing Chongqing, Shanghai
Applications
Devices such as smartphones, tablets, digital High-end processors for Mobile applications like smartphones
cameras and hearing aids Computer, Communication, Automotive, Industrial
Company Presentation 28AT&S Product Portfolio – II
HDI HDI microvia printed Multilayer printed circuit Double-sided printed IMS printed circuit boards
any-layer printed circuit circuit boards – high boards circuit boards – insulated metal
boards density interconnect substrate
Further technological HDI: high density interconnect, Found in almost every area of Used in all areas of electronics. IMS: insulated metal substrate.
enhancement to HDI microvia: meaning industrial electronics. AT&S AT&S focuses on double-sided Primary function: heat
All electrical connections in HDI laser-drilled connections produces printed circuit boards printed circuit boards with dissipation for use mainly with
any-layer boards consist of laser- (microvias). HDI is first step with 4 to 28 layers, in quantities thicknesses in the range of 0.1- LEDs and power components.
drilled microvias. Advantage: towards miniaturization. from individual prototypes to 3.2mm.
further miniaturization, and AT&S can produce 4-layer small batches and mass
higher performance and laser PCBs up to 6-n-6 production.
reliability. AT&S produces HDI HDI multi layer PCBs.
any-layer in 4 to 12 layers.
Production site
Shanghai Shanghai, Leoben Leoben, Nanjangud, Fehring Fehring, Nanjangud Fehring
Applications
Smartphones, Tablets, Mobile phones and nearly all Used in all electronic Primarily industrial and Lighting industry
Notebooks electronic applications including applications including touch automotive applications
automotive (navigation, panels, and in products ranging
infotainment and driver from aircraft to motorcycles,
assistance systems) from storage power plants to
solar arrays
Company Presentation 29AT&S Product Portfolio – III
Flexible printed Semi-flexible printed Rigid-flex printed Flexible printed circuit
circuit boards circuit boards circuit boards boards on aluminum
Used to replace wiring and More limited bend radius than Combine the Used when installing LEDs
connectors, allowing for flexible printed circuit advantages of flexible in car headlights, for
connections and geometries that boards. The use of a and rigid printed circuit example, where the
are not possible with rigid standard thin laminate boards, yielding benefits printed circuit board is
printed circuit boards. makes them a cost-effective for signal transmission, bonded to an aluminum
alternative. size and stability. heat sink to which the
LEDs are then attached.
Production site
Ansan, Fehring Fehring Ansan Ansan
Applications
Nearly all areas of Automotive applications Industrial electronics, Lighting, automotive,
electronics, including such as production building lighting
measuring devices and machines and industrial
medical applications robots
Company Presentation 30Management
Andreas Gerstenmayer, CEO Monika Stoisser-Göhring, CFO Heinz Moitzi, COO
Joined AT&S as CEO in 2010 CFO since 2017 COO since 2005;
Previous positions include: Previous positions include: With AT&S since 19811)
− 18 years of work experience at Siemens, − Since 2011 with AT&S in senior Previous positions include:
including Managing Director with positions in Finance and Human − Various management positions
Siemens Transportation Systems GmbH Resources within AT&S
Austria and CEO of the Drive Technology − Various positions at international − Measurement engineer with Leoben
business unit in Graz from 2003 to 2008 accounting and tax consulting University of Mining and Metallurgy
− Partner at FOCUSON Business companies Education:
Consulting GmbH after leaving Siemens Education: − Degree from Higher Technical
Education: − Certified Tax Consultant College of Electrical Engineering
− Degree in Production Engineering from − Degree in Business Administration
Rosenheim University of Applied from Karl-Franzens University Graz
Sciences
1)He was already with the founding company of AT&S
Company Presentation 31Milestones in the Group’s history
1987 1994 1999 2002
Founding of the Group, emerging Privatization and Initial public offering on Frankfurt Stock Exchange Start of production at new Shanghai
from several companies owned by acquisition by Messrs („Neuer Markt“). Acquisition of Indal Electronics facility – one of the leading HDI
the Austrian State Owned Androsch, Dörflinger, Zoidl Ltd., largest Indian printed circuit board plant production sites in the world
Industries (Nanjangud) – today, AT&S India Private Limited
2010 2009 2008
Start of production New production direction: Austrian AT&S change
at plant II in India plants produce for high-value niches to Vienna Stock
in the automotive and industrial
segment; Shanghai focuses on the
Exchange 2006
high-end mobile devices segment Acquisition of Korean
flexible printed circuit
board manufacturer,
2011 2013 Tofic Co. Ltd. – today,
Construction starts on new AT&S enters the IC substrate AT&S Korea Co., Ltd.
plant in Chongqing, China market in cooperation with a
Capacity increase in leading manufacturer of
Shanghai by 30% semiconductors
2018 2019
Start of the second AT&S is the global
2015 2016 2017 expansion phase at number one for high-
AT&S again achieves record high sales and AT&S starts serial production Successful introduction and plant 1 in Chongqing end printed circuit
earnings for financial year 2014/15 and of IC substrates at the plant optimisation of the mSAP technology boards
decides to increase the investment program in in Chongqing in Shanghai and Chongqing
Chongqing from € 350 million to € 480 million
Company Presentation 32A sustainability benchmark in the industry
“Highest resource “Highest standards at all “Highest
efficiency“ locations worldwide“ transparency“
YoY change in % Sustainability reporting since 2012/13
Revenue +3.6% Environment: ISO 14001 Gold recognition from the Responsible
Safety: OHSAS 18001 Business Alliance
Intensities
Energy: ISO 50001 Public conflict minerals reporting (in-line
CO2 footprint -5.0% Quality: ISO 9001, IATF 16949 with Responsible Minerals Initiative)
Water withdrawal -6.5% AS/EN 9100, DS/EN 13485 Public CDP reporting on climate change
Waste -15.8%
(C score) and water (B- score)
Company Presentation 33Disclaimer This presentation is provided by AT & S Austria Technologie & Systemtechnik Aktiengesellschaft, having its headquarter at Fabriksgasse 13, 8700 Leoben, Austria (“AT&S”), and the contents are proprietary to AT&S and for information only. AT&S does not provide any representations or warranties with regard to this presentation or for the correctness and completeness of the statements contained therein, and no reliance may be placed for any purpose whatsoever on the information contained in this presentation, which has not been independently verified. You are expressly cautioned not to place undue reliance on this information. This presentation may contain forward-looking statements which were made on the basis of the information available at the time of preparation and on management‘s expectations and assumptions. However, such statements are by their very nature subject to known and unknown risks and uncertainties. As a result, actual developments, results, performance or events may vary significantly from the statements contained explicitly or implicitly herein. Neither AT&S, nor any affiliated company, or any of their directors, officers, employees, advisors or agents accept any responsibility or liability (for negligence or otherwise) for any loss whatsoever out of the use of or otherwise in connection with this presentation. AT&S undertakes no obligation to update or revise any forward-looking statements, whether as a result of changed assumptions or expectations, new information or future events. This presentation does not constitute a recommendation, an offer or invitation, or solicitation of an offer, to subscribe for or purchase any securities, and neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. This presentation does not constitute any financial analysis or financial research and may not be construed to be or form part of a prospectus. This presentation is not directed at, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. Company Presentation 34
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