Advantech — Call Transcript 2022

Jun 7, 2022

Advantech 1Q22 Result Earnings Conference

May 2022

Agenda

Advantech Investor Conference | 16:00pm on May 4th 2022

Topic

1. 1Q 2022 Financial Results

2. Business Update and 2Q22 Guidance

3. Q & A Session

Speaker

Grace Liao | IR Manager

Eric Chen | CFO & President of General Management

Linda Tsai | President of Industrial IoT Eric Chen | CFO & President of General Management

2

Safe Harbor Notice

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 This presentation contains forward-looking statements and is subject to risks and uncertainties. Actual results may differ materially from those contained in the forwardlooking statements.

 The projections should not be interpreted as legally binding commitments, but rather as flexible information subject to change occasionally.

3

1Q22 Financial Results

NT$ mn	1Q 2022		4Q 2021		QOQ	1Q 2021		YoY
Net Sales	16,120	100.0%	15,744	100.0%	2%	13,161	100.0%	22%
Gross Profit	6,157	38.2%	6,000	38.1%	3%	5,209	39.6%	18%
Operating Expense	3,143	19.5%	3,291	20.9%		2,922	22.2%
Operating Profit	3,015	18.7%	2,707	17.2%	11%	2,287	17.4%	32%
No-operating Items	155	1.0%	-30	-0.2%		130	1.0%
Pretax Profit	3,170	19.7%	2,677	17.0%	18%	2,417	18.4%	31%
Tax Expenses	602	3.7%	402	2.6%		488	3.7%
Net Income to Parent	2,572	16.0%	2,273	14.4%	13%	1,913	14.5%	34%
EPS (NT$)	3.32		2.93			2.48	0.0%

 Both Revenue & Profit for 1Q22 set Company’s new records

 Effective Tax rate was 18.99% in 1Q22

 For non-operating items, Advantech booked NT$129 mn FX gain in 1Q22.

1Q22 Sales B Re ion y g

	US$mn	US$mn				1Q22	1Q22		1Q21	YoY %			Rev %
	North	America					166		126	+32%			29%
	Europe						99		75	+31%			17%
	China						135		119	+14%			24%
	North	Asia					52		47	+11%			9%
	Taiwan						35		29	+19%			6%
	Asia & InterCon						66		44	+50%			11%
	Others						25		23	+ 6%			4%
	Total						578		463	+25%			100%
	10% 5%	Others AInterCon	11% 4%			US$mn	North	Asia		Asia US$mn	&	InterCon
	10% 6%	North Asia Taiwan	9% 6%			AJP :	$28.0M	GR%:	+8%	AAU/NZ	$3.6		GR%:	-4%
						AKR:	$23.8M	GR%:	+16%	ASEAN	$12.1		GR%:	+14%
	25%	China	24%							India	$7.3		GR%:	+74%
	16%	Europe	17%							Russia	$3.1		GR%:	-2%
	27%	North America	29%							LATAM ME&A	$4.7 $34.8		GR%: GR%:	+33% +89%
	1 Q1 2021		2 Q1 2022

1Q22 Performance By SBG

1Q22 US$ mn	1Q22 US$ mn	1Q22 US$ mn	Revenue	YoY	Rev. %	Gross Margin	Operating Profit	OP Margin
	Industrial IOT		179	+7%	31%	45~50%	55	30.5%
	Embedded IOT		135	+27%	23%	30~35%	27	20.3%
	Allied DMS	Applied Computing	81	+86%	14%	40~45%	11	13.1%
		Cloud IOT	54	+6%	9%	35~40%	8	14.3%
	Service IOT		64	+66%	11%	30~40%	9	13.7%
	Advantech Service Plus (AS+)		65	+14%	11%	15~20%	6	9.6%
Other unallocated expenses							(8)
Total			578	+25%	100%		108	18.7%

 IIoT YoY +7%： Rev. growth lower than average due to high base last year.

 EIoT YoY +27%： driven by strong demand in Medical projects and Gaming sector back to growth.

 ACG YoY +86% ：Mainly due the contribution of Medical projects and the low base last year.

 SIoT YoY +66% ：driven by major breakthrough in iHealthcare, iCity and iMobile solutions.

Balance Sheet & Ke Indices y

	1Q22		4Q21	4Q21		1Q21
NT$mn	Amount	%	Amount		%	Amount	%
Cash & Cash Equivalents	11,974	20%	12,988		22%	14,508	27%
Account receivable	10,892	18%	10,292		18%	8,978	17%
Inventory	15,366	25%	12,517		22%	8,846	17%
Total Assets	61,186	100%	57,793		100%	53,576	100%
Accountpayable	7,404	12%	7,487		13%	5,731	11%
STdebt	603	1%	506		1%	429	1%
LTdebt	315	1%	67		0%	241	0%
Total Liabilities	25,467	42%	19,430		34%	21,680	40%
Total Equity	35,719	58%	38,363		66%	31,896	60%
Key Inices
Inventory turnoverdays	128			102		94
AR turnover days	60			60		61
APturnoverdays	68			59		57
CCC	120			103		98

 Debt Ratio reached 42% due to Dividend Payable increased in Current Liabilities.

 Inventory level set new company record due to component shortage, however HRI remained low.

2Q22 Guidance

Based on the exchange rate assumption of US$1 to NT$28.9 , managements expect the 2Q22 guidance as below

Items 2Q22 Estimation Consolidated Revenue US$ 530M ~ 550M Gross Margin 36.5% ~ 38.5% Operating Margin 16.0% ~ 18.0%

8

Q & A

Co-Creating the Future of the IoT World