Advantech — Earnings Release 2021

Nov 3, 2021

Advantech 3Q21 Result Earnings Conference

Nov. 3[rd] , 2021

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.

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3Q21 & YT3Q21 Financial Results

NT$ mn 1Q19	NT$ mn 1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21 2Q21	3Q21	YT3Q 21 YoY
Net Sales	12,301 13,976 14,382 13,486				11,272 **14,018 13,050 12,779 **				13,161 14,210	15,507	42,878 12%
QoQ%	-1% 14% 3% -6%				-16% 24% -7% -2%				3% 8%	9%
YoY%	8% 11% 16% 9%				-8% 0% -9% -5%				17% 1%	19%
Gross Profit	4,724 5,410 5,697 5,268				4,395 5,766 5,192 5,043				5,209 5,217	5,706	16,132 5%
Gross Margins%	38.4% 38.7% 39.6% 39.1%				39.0% 41.1% 39.8% 39.5%				39.6% 36.7%	36.8%	37.6%
OperatingExpense	2,872 3,079 3,070 2,845				2,742 2,925 2,928 2,765				2,922 3,020	3,098	9,040 5%
Operating Profit	1,852 2,331 2,627 2,423				1,654 2,841 2,264 2,278				2,287 2,197	2,608	7,092 5%
Operating Margin%	15.1% 16.7% 18.3% 17.9%				14.7% 20.3% 17.4% 17.8%				17.4% 15.5%	16.8%	16.5%
No-operatingIncome	196 89 86 -297				-33 118 202 -195				130 80	275	485 69%
Pretax Profit	2,048 2,420 2,713 2,126				1,621 2,959 2,466 2,083				2,417 2,277	2,883	7,577 8%
Tax Expenses	432 513 561 409				340 621 511 353				488 462	596	1,546 5%
Effective Tax Rate	21.1% 21.2% 20.7% 19.4%				21.0% 21.0% 20.7% 16.9%				20.2% 20.3%	20.7%	20.4%
Net Income	1,613 1,892 2,136 1,700				1,295 2,308 1,941 1,704				1,913 1,790	2,274	5,977 8%
YoY%	18% 19% 25% 4%				-20% 22% -9% 0%				48% -22%	17%	8%
EPS(NT$)	2.10 2.46 2.78 2.21				1.68 2.99 2.52 2.21				2.48 2.31	2.95	7.74 8%

 3Q21 Op. Profit +19% QoQ due to 1) GM rate slightly recovered and 2) Operating leverage advantage

 YT3Q21 Non-op. Income +69% YoY due to:

1) Disposal gains of fixed assets NT$85mn ; 2) Gain from Financial assets NT$44mn

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YT3 2021 Sales B Re ion Q y g

USD$mn	YT3Q 21	YT3Q 20	YoY %	Rev %
North America	396	375	6%	26%
Europe	248	211	17%	16%
China	415	304	37%	27%
North Asia	144	132	9%	10%
Taiwan	96	79	21%	6%
Asia & InterCon	148	107	38%	10%
Others	78	69	13%	5%
Total	1,525	1,277	19%	100%
Asia & InterCon AAU/NZ $13.3M GR%: +4% ASEAN $36.0M GR%: +27% India $11.3M GR%: +36% Russia $10.4M GR%: -11% LATAM $11.7M GR%: -12% ME&A $63.9M GR%: +103% ROW $ 1.3M GR%: +3.6% North Asia AJP: $31.9M GR%: +14% ATJ: $48.8M GR%: -6% AKR : $63.8M GR%: +22% North America 26% Europe 16% China 27% North Asia 10% Taiwan 6% Asia & Intercon 10% Others 5% YT3Q21 USD$mn USD$mn

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YT3Q 2021 Performance By SBG

YT3Q 2021 US$ mn	YT3Q 2021 US$ mn	YT3Q 2021 US$ mn	Revenue	YoY	Rev. %	**Gross Margin **	Operating Profit	OP Margin
	Industrial IOT		533	+35%	35%	45~50%	161	30.1%
	Embedded IOT		358	+15%	24%	30~35%	63	17.6%
	**Allied DMS **	Applied Computing	157	-7%	10%	25~30%	18	11.4%
		Cloud IOT	156	+9%	10%	35~40%	26	16.7%
	Service IOT		136	+27%	9%	40~45%	12	9.1%
	Advantech Service Plus (AS+)		185	+28%	12%	25~30%	26	14.2%
Other unallocated expenses							-54
Total			1,525	+19%	100%		252	16.5%

• IIoT YoY+35% contributed by new infrastructure demand from China and semiconductor IEM smart equipment upgrades

• SIoT YoY+27% driven by Medical industrial project

• ACG YoY -7% mainly due to major projects ended and ATJ underperformed

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Working Capital and Balance Sheet

NT$ mn	NT$ mn	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21	3Q21
Cash Cycle
Inventory		8,446 8,089 7,783			9,093 9,695		8,523	7,814	8,846	10,713	12,590
Account receivable		9,209 9,526 8,832			8,012 9,617		8,734	8,781	8,978	10,157	10,427
Accountpayable		6,519 4,981 4,886			4,799 5,455		3,737	4,326	5,731	7,782	7,234
	IN turnover	87 86 87			110 102		104	95	94	98	107
	AR turnover	58 59 61			67 57		63	62	61	61	60
	AP turnover	64 60 54			63 66		53	47	57	68	69
	CCC	80 85 94			114 93		115	110	98	91	98
BS
Cash & Cash Equivalents		11,446 7,103 9,960			9,023 12,161		9,792	13,132	14,508	14,774	9,390
Cash		6,641 5,559 6,004			4,966 6,064		6,380	7,497	7,786	7,772	7,036
Marketable Sec. & S/T Investment		4,805 1,544 3,956			4,057 6,096		3,412	5,635	6,722	7,002	2,354
Total asset		49,654 45,391 47,216			49,007 52,444		47,775	50,199	53,576	57,314	53,986
ST debt		524 502 458			493 484		514	405	429	402	488
LT debt		387 334 278			290 198		143	88	241	166	108
Totalequity		28,994 30,971 32,731			28,640 30,904		33,036	35,046	31,896	33,556	35,679
Capex		(214) (229) (329)			(213) (346)		(231)	170	(236)	(192)	(252)
D&A		255 289 163			265 206		254	206	252	274	298
Total Investment CF		(176) (342) (475)			(730) 250		(885)	556	(396)	(349)	(230)

 Inventory turnover days still higher than historical average, due to aggressive inventory build for order shipment

4Q21 Guidance

Based on the exchange rate assumption of US$1 to NT$27.9 , managements expect the 4Q21 guidance as below

Items 4Q21 Estimation Consolidated Revenue US$ 530M ~ 550M Gross Margin 36.5% ~ 38.5% Operating Margin 16.0% ~ 18.0%

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Q & A

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