Elmos Semiconductor SE

Earnings Release • Nov 8, 2018

Innovation Matters

Quarterly statement Q3 2018

July 1 to September 30, 2018

Elmos increases sales and profi tability in Q3 2018

"We are satisfied with the year to date. Demand for both existing and new products from customers has been very pleasing, but also challenging. We will intensify the measures taken in recent months to further strengthen the organization and its capabilities. This will prepare the company for the next steps in its further development," says Dr. Anton Mindl, CEO of Elmos Semiconductor AG.

Key figures

in million Euro unless otherwise indicated	Q3 2018	Q3 2017	Change	9M 2018	9M 2017	Change
Sales	69.4	61.6	12.6%	202.0	181.9	11.1%
Gross profit	32.6	27.5	18.5%	88.2	77.3	14.2%
in % of sales	47.0%	44.7%		43.7%	42.5%
Research and development expenses	9.2	7.5	23.3%	25.6	26.0	–1.7%
in % of sales	13.3%	12.1%		12.7%	14.3%
Operating income	13.7	10.3	32.5%	32.4	21.6	49.9%
in % of sales	19.7%	16.8%		16.1%	11.9%
EBIT	14.0	10.3	36.2%	34.1	21.2	61.2%
in % of sales	20.2%	16.7%		16.9%	11.6%
Consolidated net income after non
controlling interests	9.8	7.1	37.8%	23.3	14.3	62.2%
in % of sales	14.2%	11.6%		11.5%	7.9%
Earnings per share (basic) in Euro	0.50	0.36	37.0%	1.18	0.73	62.3%
		9/30/2018 6/30/2018		Change 9/30/2018 12/31/2017		Change
Total assets	344.7	329.1	4.7%	344.7	336.9	2.3%
Shareholders' equity	255.0	245.0	4.1%	255.0	240.1	6.2%
in % of total assets	74.0%	74.4%		74.0%	71.3%
Financial liabilities	40.7	40.6	0.1%	40.7	51.2	–20.5%
Liquid assets and securities	66.1	57.2	15.5%	66.1	84.4	–21.7%
Net cash	25.4	16.6	53.2%	25.4	33.2	–23.5%
	Q3 2018	Q3 2017	Change	9M 2018	9M 2017	Change
Operating cash flow	21.5	12.1	78.0%	39.5	25.7	53.4%
Capital expenditures	9.3	8.7	6.8%	29.7	22.2	33.9%
in % of sales	13.5%	14.2%		14.7%	12.2%
Adjusted free cash flow	9.1	0.9	>100.0%	0.9	–0.7	n/a

Definition of selected financial indicators

• Capital expenditures: Capital expenditures for intangible assets and property, plant and equipment less capitalized development expenses - Adjusted free cash flow: Cash flow from operating activities less capital expenditures for/plus disposal of intangible assets and property, plant and equipment

Profit, financial positions as well as assets and liabilities

• -> Significant increase in sales and the quality of earnings in Q3. Earnings per share for the year to date approximately 60% higher than in the prior year.
• -> The Semiconductor segment's ratio of orders received to sales, known as the book-to-bill ratio, was above one at the end of the reporting period.
• -> The expansion of operational resources was lower than sales growth.
• -> Further expansion of development capacities is planned.
• -> The effect of capitalization of development costs was almost constant in each quarter over the course of the year.
• -> The investments primarily relate to the expansion of testing capacities.
• -> Increased inventories serve the purpose of further business development.
• -> Adjusted free cash flow amounted to 9 million Euro despite the high level of investment.

Sales by region Segment reporting

in thousand Euro	Semiconductor			Micromechanics		Consolidation	Group
				Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017
Third-party sales	62,337	57,134	7,053	4,501	0	0	69,389	61,635
Inter-segment sales	14	108	336	491	–350	–599	0	0
Total sales	62,351	57,242	7,389	4,992	–350	–599	69,389	61,635
Segment earnings (EBIT)	12,544	10,063	1,496	248	0	0	14,041	10,311
Earnings attributable to associates							0	–88
Finance income							158	248
Finance expense							–465	–741
Earnings before taxes							13,735	9,730
Income tax	–3,838	–2,712	–125	53	0	0	–3,963	–2,659
Consolidated net income							9,772	7,071

-> Both segments contributed to the positive development in the reporting period.

-> The Micromechanics segment is subject to greater volatility compared to the Semiconductor segment due to the smaller absolute size of the business.

• -> Asia grew disproportionately again.
• -> Other changes to the regional distribution of sales were primarily due to changes in delivery addresses.

Guidance update report Financial calendar

Fiscal year 2018	As of 10/16/2018	As of 2/15/2018
Sales growth in 2018 (vs. 2017)	8% to 12%	8% to 12%
EBIT margin	17% to 19%	13% to 17%
Capital expenditures (in % of sales)1	<15%	<15%
Adjusted free cash flow2	Negative	Negative
Assumed exchange rate	1.20 USD/EUR	1.20 USD/EUR

1 Capital expenditures for intangible assets and property, plant and equipment less capitalized development expenses 2 Cash flow from operating activities less capital expenditures for/plus disposal of intangible assets and property, plant and equipment

Fiscal year 2018
Quarterly results Q3/20181	11/7/2018
Equity Forum in Frankfurt 11/26/2018-11/27/2018
Fiscal year 2019
Preliminary results 20181	2/14/2019
Final results 20181	3/14/2019
Quarterly results Q1/20191	5/8/2019
Annual General Meeting in Dortmund	5/15/2019
Quarterly results Q2/20191	8/1/2019
Quarterly results Q3/20191	11/6/2019

¹ The German Securities Trading Act ("Wertpapierhandelsgesetz") and the Market Abuse Regulation (EU) oblige issuers to announce immediately any information which may have a substantial price impact, irrespective of the communicated schedules. It is therefore possible that we will announce key figures of quarterly and annual results ahead of the dates mentioned above. As we can never rule out changes of dates, we recommend checking them in advance on the website (www.elmos.com).

• -> The EBIT margin guidance for 2018 was increased when the preliminary financial figures were released on October 16, 2018: EBIT of between 17% and 19% of sales is expected (previously: between 13% and 17%).
• -> That is due to the positive development of business, particularly in Q3 2018, and current expectations for the rest of the year.
• -> All other guidance indicators were confirmed.

Condensed consolidated statement of financial position

Assets in thousand Euro	9/30/2018	12/31/2017
Intangible assets	29,323	23,366
Property, plant and equipment	115,079	100,142
Investments in associates	0	787
Securities	21,518	40,122
Investments	20	20
Other financial assets	4,104	6,354
Deferred tax assets	1,710	2,111
Non-current assets	171,755	172,902
Inventories	70,950	65,052
Trade receivables	42,644	44,391
Securities	15,205	11,868
Other financial assets	4,152	2,019
Other receivables	9,633	7,881
Income tax assets	1,046	450
Cash and cash equivalents	29,341	32,367
Current assets	172,971	164,028
Total assets	344,726	336,930

Liabilities in thousand Euro	9/30/2018	12/31/2017
Share capital	20,104	20,104
Treasury shares	–325	–414
Additional paid-in capital	85,331	85,093
Surplus reserve	102	102
Other equity components	–122	–1,529
Retained earnings	149,466	136,177
Equity attributable to owners of the parent	254,556	239,532
Non-controlling interests	460	588
Shareholders' equity	255,016	240,120
Provisions for pensions	0	412
Financial liabilities	40,000	40,765
Deferred tax liabilities	5,392	3,246
Non-current liabilities	45,392	44,424
Provisions	15,446	12,875
Income tax liabilities	7,611	4,088
Financial liabilities	674	10,398
Trade payables	17,098	22,803
Other liabilities	3,491	2,223
Current liabilities	44,319	52,386
Liabilities	89,710	96,810
Total assets	344,726	336,930

in thousand Euro	Q3 2018	Q3 2017	9M 2018	9M 2017
Sales	69,389	61,635	202,009	181,902
Cost of sales	–36,760	–34,105	–113,772	–104,626
Gross profit	32,629	27,530	88,237	77,276
Research and development expenses	–9,217	–7,473	–25,590	–26,022
Distribution expenses	–4,893	–5,035	–15,083	–15,322
Administrative expenses	–4,815	–4,676	–15,132	–14,300
Operating income before other operating expenses (–)/income	13,704	10,346	32,432	21,632
Exchange rate gains/losses (–)	–101	–400	151	–1,427
Other operating income	616	723	2,595	1,821
Other operating expenses	–178	–358	–1,063	–861
Earnings before interest and taxes (EBIT)	14,041	10,311	34,114	21,166
Earnings attributable to associates	0	–88	–787	–270
Finance income	158	248	673	860
Finance expense	–465	–741	–1,339	–2,516
Earnings before taxes	13,735	9,730	32,660	19,240
Income tax	–3,963	–2,659	–9,519	–5,124
thereof current income tax	–3,162	–1,955	–7,283	–4,267
thereof deferred tax	–801	–704	–2,236	–857
Consolidated net income	9,772	7,071	23,142	14,116
thereof attributable to owners of the parent	9,819	7,123	23,257	14,337
thereof attributable to non-controlling interests	–47	–52	–116	–221
Earnings per share	Euro	Euro	Euro	Euro
Basic earnings per share	0.50	0.36	1.18	0.73
Fully diluted earnings per share	0.49	0.36	1.17	0.72

Condensed consolidated income statement Condensed consolidated statement of cash flows

in thousand Euro	Q3 2018	Q3 2017	9M 2018	9M 2017
Consolidated net income	9,771	7,071	23,141	14,116
Depreciation and amortization	6,730	6,090	19,482	18,046
Financial result	456	400	1,173	1,076
Other non-cash expense/income (–)	801	704	1,563	857
Changes in net working capital	924	–3,205	–8,873	–6,429
Taxes	2,870	902	2,927	–1,989
Other changes	–11	140	88	69
Cash flow from operating activities	21,541	12,102	39,501	25,746
Capital expenditures for intangible assets	–3,479	–2,823	–11,226	–5,467
Capital expenditures for property, plant and equipment	–9,105	–8,398	–27,665	–21,288
Disposal of non-current assets	174	48	325	260
Disposal of/Payments for (–) securities	5,755	2,500	14,812	–2,099
Payments for (–)/from other non-current financial assets	–110	–100	–332	158
Disposal of non-current assets held for sale	0	0	0	23
Cash flow from investing activities	–6,765	–8,773	–24,086	–28,413
Repayment (–)/borrowing of liabilities	–109	–15,110	–10,328	24,693
Share-based payment/issue of treasury shares	–134	48	–1,278	1,723
Repurchase of treasury shares	0	0	0	–9,672
Dividend distribution	0	0	–7,906	–6,912
Other changes	1	–26	279	–48
Cash flow from financing activities	–241	–15,088	–19,232	9,784
Increase/decrease (–) in cash and cash equivalents	14,536	–11,759	–3,816	7,117
Effects of exchange rate changes on cash and cash equivalents	188	–437	790	–1,427
Cash and cash equivalents at beginning of reporting period	14,618	60,997	32,367	43,110
Cash and cash equivalents at end of reporting period	29,341	48,801	29,341	48,801

Contact

Thalea Blunk | Investor Relations

Phone: + 49 (0) 231-75 49-273 Fax: + 49 (0) 231-75 49-111 invest@elmos.com

Elmos Semiconductor AG

Heinrich-Hertz-Straße 1 44227 Dortmund | Germany Phone: + 49 (0) 231-75 49-0 Fax: + 49 (0) 231-75 49-149 info@elmos.com | www.elmos.com

Notice

This document is a quarterly statement under Section 51a of the exchange rules for the Frankfurt Stock Exchange. Due to calculation processes, tables and references may produce rounding differences from the mathematically exact values (monetary units, percentage statements, etc.).

Forward-looking statements

This report contains statements directed to the future that are based on assumptions and estimates made by the management of Elmos. Even though we assume the underlying expectations of our statements to be realistic, we cannot guarantee these expectations will prove right. The assumptions may carry risks and uncertainties, and as a result actual events may differ materially from the current statements made with respect to the future. Among the factors that could cause material differences are changes in general economic and business conditions, changes in exchange and interest rates, the introduction of competing products, lack of acceptance of new products, and changes in business strategy. Elmos neither intends nor assumes any obligation to update its statements with respect to future events.

This English translation is for convenience purposes only.