Global leader in high-end vacuum valve technology · Global leader in high-end vacuum valve technology ... –Continued high demand for WFE fab equipment ... semiconductor industry,

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Global leader in high-end vacuum valve technology

VAT 2016 HALF-YEAR RESULTS

Heinz Kundert, CEO and Andreas Leutenegger, CFO

August 25, 2016

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Agenda

PASSION. PRECISION. PURITY.

VAT Group AG at a glance and half-year 2016 highlights Heinz Kundert, CEO 1

Half-year 2016 financial review Andreas Leutenegger, CFO 2

Strategic drivers and outlook for full-year 2016 Heinz Kundert, CEO 3

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Half-year 2016 highlights


– Net sales increase by 16.1%

– 31.4% adjusted EBITDA margin

– Strong free cash flow

– Mega trends like Big Data, Internet of Things, Industry 4.0 etc. fuel growth

– Technology advances such as 3D NAND and OLED

– Continued high demand for WFE fab equipment

– Large players such as Intel, Samsung or TSMC increase investments in H2 2016

– Net sales expected to grow between 12-15%

– Adjusted EBITDA margin to stay above 31%

– Dividend guidance increased to CHF 80 million

Markedly

improved

results

Outlook

2016

High

demand for

technology

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Enabling innovation in your daily life

and facilitating the digitalization of the world


Displays Industry & Research Solar Semiconductors

– Global leader in high-end vacuum valves; brand recognition for technology and innovation

– Mission-critical products enabling high vacuum process technology

– High vacuum at forefront of technological evolution affecting various end markets

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Pure play in high-end vacuum valve technology with

best-in-class profitability


1 All numbers for HY 2016 2 Segment net sales of business segments include intercompany sales 3 Adjustment on Group level only

Segment (% of total

net sales) 1

Segment

net sales 2 CHF 41m

Global Service (17%)

CHF 22m

Industry

(7%)

Valves

(76%)

CHF 196m CHF 236m

Adj. EBITDA 3

% margin CHF 18m / 43.5% CHF 5m / 21.0% CHF 63m / 32.0% CHF 74m / 31.4%

VAT Group AG

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Global footprint – flexible set-up close to customers


– Global presence ensuring

highest customer proximity

– 99% of production is

exported

– 70% of our products have

their final destination in

Asia

– Global key account

management

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VAT – a success story over 50 years


VAT

values

Passion

Purity Precision

– Pure play business model focused on mission-critical

high-end vacuum valves

– Technology leadership and long term, trust-based

partnerships

– Undisputed no. 1 market position and high barriers to

entry

– Multi-dimensional growth driven by accelerating

importance of vacuum as key enabler

– Focused strategy and highly skilled workforce

– Best-in-class financial profile and high profitability

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Agenda





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Half-year 2016 – Group key figures


Third party net sales

CHF 236 m

+16%

Adj. EBITDA

CHF 74 m

+17%

Adj. EBITDA margin

31.4%

+20pbs

Free cash flow

CHF 54m

-11%

Free cash flow margin

23%

Free cash flow

conversion

79%

Net debt/EBITDA

1.4x

Dividend 20161

of CHF 80m

1 increased dividend guidance to CHF 80 million, from the at least CHF 65 million given at the time of the IPO, out of reserves from capital contributions for the financial year ending December 31, 2016..

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Order intake steady increasing, backlog stable


233.1

256.9

92.7 91.7

January - June2015

January - June2016

Order intake Order Backlog

+10.2%

in CHF million

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Net sales by region

Half-Year 2016 net sales CHF 236 million


Net sales by market segment

76% Valves

17% Global Service

7% Industry

45% Asia

35% North America

20% EMEA

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Valves – 76% of Group Net Sales


– High demand for new technology in the

semiconductor industry, particularly from the high-

end wafer manufacturing

– New downstream pressure control and isolation

systems receive high market attraction

– Strong growth in displays related to investments

in OLED production

– Solar market has shown increasing demand for

vacuum valves mainly for PERC (passivated

emitter rear cell) technology

– Asia and US major growth drivers

in CHF millionJan - June

2016

Jan - June

2015

Change

Segment net sales 196.5 167.0 17.7%

EBITDA 62.9

EBITDA margin 32.0%

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Global Service – 17% of Group Net Sales


– Global Service includes a range of services

provided by specialized teams based in the US,

Japan, Korea, Taiwan, China, Singapore and

Switzerland

– Offering includes valve maintenance, spare

gates/parts, upgrades (i. e. retrofits) etc.

– Alignment with major Original Equipment

Manufacturers (OEM’s) allowing VAT to offer

global service contracts tailored to specific

customer needs

– Customer audits confirm the high quality of our

services


2016

Jan - June

2015

Change


EBITDA 17.8

EBITDA margin 43.5%

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Industry – 7% of Group Net Sales


– The segment Industry engages mostly in

innovative and technologically advanced edge-

welded bellows

– Important mid-term high volume follow-up contract

for damper systems for automotive applications

signed

– Automated production lines for edge-welded

bellows renewed to address customer demand

and further increase our product quality at

reduced cost.

– New large orders delayed due to design-in

process


2016

Jan - June

2015

Change


EBITDA 4.6

EBITDA margin 21.0%

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Increase in sales, adj. EBITDA and profitability


in CHF million

202.8

235.5

63.2 73.9

January - June2015

January - June2016

Third party net sales Adj. EBITDA

31.4%

31.2% adj. EBITDA margin

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Substantial benefits below the EBIT line


– Reduced finance cost due to lower outstanding debt

– Conversion of CHF 405 million 8% coupon shareholder loan into VAT shares during IPO

– Further reduction of remaining 4.25% coupon senior secured credit facility

– Half-year effective tax rate of 26.2%; adjusted for IPO related one-offs the tax rate would

have been around 20%

in CHF million January - June 2016 January - June 2015 Variance

EBIT 52.7 45.2 16.7%

Finance net -19.9 -37.1 -46.2%

EBT 32.8 8.1 303.3%

Income tax expenses -8.6 -7.1 21.6%

Effective Tax Rate 26% 87%

Net income 24.2 1.1

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Free cash flow and conversion margin impacted by

growth in the topline


65.6 59.5

(5.3)

(5.8) 60.3

53.7

Free cash flow

Cash flow from operating activities Cash flow from investing activities

Free Cash Flow

2015 2016

100.2%

79.2%

Free cash flow conversion

2015 2016

– Decrease in free cash flow largely driven by growth in trade working capital (TWC) and negative net impact

from derivatives and foreign exchange

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Status on FX exposure initiatives FX

EUR

USD

– Ramp-up of manufacturing site in Malaysia (USD cost base)

– Ongoing initiative to increase global sourcing

– Nomination of debt in USD

– FX hedging of up to 100% of net cash flows by forward contracts on a 18-month rolling basis

JPY

– EUR exposure reduced due to sourcing and capex in EUR

– FX hedging of up to 100% of net cash flows by forward contracts on a 18-month rolling basis

1 Net cash flow after financing activity incl. capex and loan interest expense

Initiatives to mitigate the foreign exchange exposure


44 26 5 (5) (75)

USD JPY GBP EUR CHF

Net cash flow exposure to main currencies HY 20161

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Net debt1 reduction on track


224 183

December 31, 2015 June 30, 2016

Net Debt

1.8x

1.4x Net debt/EBITDA

– Conversion of shareholder loan into shares during IPO

– Ongoing reduction of senior secured credit facility

– Substantial reduction of interest costs partly offset by IPO

related one off costs

1Net debt is calculated excluding the shareholder loan of CHF 405 million as of December 31, 2015.

– Rapid reduction of net debt

– Net debt/EBITDA ratio decreased from 1.8 times at year-

end 2015 to 1.4 times (LTM) at the end of June 2016

304 263

405

December 31, 2015 June 30, 2016

Gross Debt

Senior Secured Credit Facility Shareholder Loan

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Agenda





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Market trends in the electronic market -

Entire supply chain is growing with CAGR >3% 2016-19


~USD 24b*

~USD 96b***

~USD 575b*

~USD 2.2t*

~USD 80t**

Market Size 2016E

Source: * VLSI research, August 2016 ** IC Insights, July 2016 *** various sources incl. IC Insight + VLSI, IHS and others 1 valves and related technologies

IC+FDP+HDD+LED+PV

Fab Capital Spending (IC+FDP+HDD+LED+PV)

Semi and related Fab

Vacuum Equipment (IC+FDP+HDD+LED+PV)

VAT1

Electronics Devices (includes devices with IC+FDP+HDD+LED+PV)

Worldwide GDP

5-6%

3-4%

4-5%

5-6%

2-3%

CAGR 15-20

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Market segments driving WFE demand (billion units)


0.08 0.10 0.14 0.17 0.19 0.21

2015 2016 2017 2018 2019 2020

0.23 0.23 0.23 0.24 0.25 0.26

2015 2016 2017 2018 2019 2020

0.16 0.15 0.15 0.15 0.15 0.15

2015 2016 2017 2018 2019 2020

Smartphones

Source: Strategy Analytics June 2016, IDC June 2016, ABI Research, December 2015

1.4 1.5 1.6 1.7 1.8 1.8

2015 2016 2017 2018 2019 2020

+5% CAGR

0.22 0.20 0.21 0.22 0.22 0.23

2015 2016 2017 2018 2019 2020

+0.1% CAGR Tablets

Laptops -1% CAGR

Flat TV

Wearables

Internet of Everything

1923

2731

35 36

2015 2016 2017 2018 2019 2020

+14% CAGR

+3% CAGR

+22% CAGR

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Undisputed no. 1 market position with high barriers

to entry


Vacuum valves market: top players by market share (2015) VAT market share evolution 2012 - 2015

Market share all industries1

41.0%

5.4% 4.4% 4.3% 4.0% 3.8% 3.7%

37% 41%

2012 2015

42%

47%

2012 2015

Market share semi & related2

Source: VLSI (2016) 1 Total market size for valves comprises high vacuum valves for general vacuum applications and for the semiconductors, displays, solar photovoltaics, LED and hard disk OEM device manufacturing equipment sector. 2 Semiconductors and related include: Integrated circuits, displays (from small mobile phone displays to large TVs), solar photovoltaics, LED, hard discs.

Total vacuum valve market size 20151:

USD 789m


USD 527m


USD 789m

– VAT has a share of 41% of the vacuum valves market

– Over 60% market share in selected high-end applications

– VAT’s leading market position has expanded over time

http://www.mksinst.com/index.aspx

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Multi-dimensional growth - vacuum as key enabler

of proliferating technologies


2nd Dimension

Manufacturing equipment growth

3rd Dimension

Vacuum valve growth

1st Dimension

End market growth

Manufacturing processes under vacuum

(deposition, etch and clean, ion-implantation)

– VAT is exposed to a broad range of well

established structural growth themes

– Multi-pronged growth opportunity driven

by expanding end markets

– Advanced and complex production

technology in nano-scale

– Miniaturization, increasing computing

capability at lower power consumption

drives advanced manufacturing build-up

– Fundamental shifts of manufacturing

processes towards more high vacuum,

for which VAT is a key enabler

– Vacuum valve growth driven by

favourable secular technology evolution

https://www.google.ch/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwilm8m09qfKAhXDXRoKHfKXB6QQjRwIBw&url=https://www.cloudyn.com/blog/10-facts-didnt-know-server-farms/&psig=AFQjCNGHV2PwwM_td68eNeJ646cJBmedbg&ust=1452813518480367

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VATmotion – focus on agility, cost, quality and cash

optimization


Growth

(incl. operational

implications)

Product

Management/

Engineering

Production Supply Chain

Management Procurement Cross-functional

Value

Engineering

Manufacturing

Cost Reduction Global Sourcing Material

Planning

Capacity

Planning

Asia Growth

Modules

Global Service

Bellows

Key Account

Process

Ramp up

Malaysia

Working Capital

Process Quality

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Group Executive Committee Group Management Board

Proven management team and a highly skilled

workforce

– 1’278 dedicated employees

– Over 130 top qualified

development engineers,

product designers and

corporate R&D staff

– 20 quality managers

ensuring VAT’s certified

quality standards worldwide

– Customized in-house

training programs

– Average employee tenure

with VAT in Haag: 10 years

Highly skilled workforce


Heinz Kundert

CEO

Andreas

Leutenegger

CFO

Kurt Trippacher

COO

Ronald

Pschenitschnigg

Global Service

Arno Zindel

General

Vacuum &

Bellows

‘COMVAT’

Urs Gantner

Semiconductors

Gebhard Lutz

Modules &

Motion

Components

Jürgen Zoller

Display & Solar

Benjamin Loh

Head of Global

Sales &

Marketing

Egon

Hämmerle

Head of

Production

Michael Zickar

Head of R&D

Aitor Galdos

Head of

Corporate

Development

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Continued profitable growth expected


– Key growth drivers: Attractive growth markets for semiconductors, displays and related mainly

in the US, Japan, South Korea and China

– Technology advances such as 3D NAND and OLED displays require substantial investments

in new manufacturing capacity

– VAT well positioned to capture growth opportunities due to technological leadership and

strong customer relationship

– Demand outlook: Remains positive – growth drivers in place for mega trends such as big data,

internet of things, industrialization 4.0, cloud computing and e-mobility

– VATmotion: capture full growth potential, increase efficiency and ensure highest resilience

trough the cycle

– Net sales expected to grow between 12-15%

– Adjusted EBITDA margin to stay above 31%

– Dividend guidance increased to CHF 80 million

Underlying

assumptions

and market

conditions

Outlook

2016

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Q&A Session

VAT 2016 HALF-YEAR RESULTS

Heinz Kundert, CEO and Andreas Leutenegger, CFO

August 25, 2016

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Information


Investor information Contact information

Listing: SIX Swiss Exchange Michel Gerber

Currency: CHF Head of Investor Relations &

Ticker symbol: VACN Corporate Communications

ISIN: CH 031 186490 1 Phone: +41 81 772 42 55

Listing date: April 14, 2016 E-mail: [email protected]

Event calendar

October 31, 2016 Q3 2016 Trading update

mailto:[email protected]

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Forward looking statements


Forward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Any statements contained herein that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should be considered to be forward-looking statements. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and may cause the actual results, performance or achievements of the company to be materially different from those expressed or implied by such forward looking statements. Many of these risks and uncertainties relate to factors that are beyond the company’s ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants, the performance, security and reliability of the company’s information technology systems, political, economic and regulatory changes in the countries in which the company operates or in economic or technological trends or conditions. As a result, investors are cautioned not to place undue reliance on such forward-looking statements. Except as otherwise required by law, VAT disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after this presentation was made.

Documents

Global leader in high-end vacuum valve technology · Global leader in high-end vacuum valve technology ... –Continued high demand for WFE fab equipment ... semiconductor industry,