Advantech — Interim / Quarterly Report 2018

Sep 4, 2018

Y2018 1H Financial Results

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By Eric Chen President, General Management Aug, 2018

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

Y18 1H Financial Results

Consolidated

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* Effective tax rate Increased by 3% mainly due to Taiwan CIT increased from 17% to 20% since Y2017

Y18 1H Performance by Region

Local Sales: US 809.3M, +16.3%

USD$M	Y17 1H	Y18 1H	GR%	%
North America	181.8	217.4	+19.6%	27%
**Europe **	121.0	152.2	+25.8%	19%
Greater China	224.8	265.1	+17.9%	33%
Asia & Intercon	102.2	109.4	+7.0%	13%
DMS/E2E	33.6	27.1	-19.5%	3%
Affiliates	32.8	38.3	+16.8%	5%
Total	696.2	809.3	+16.3%	100%

North America

Affiliates DMS/E2E 5% ANA: 202.1M GR%: +22.7% 3% North B+B: 15.3M GR%: -10.5% America Asia & Intercon 27% Europe 13% AEU: 128.0M GR%: +21.5% ADLoG: 24.2M GR%: +54.7% Greater China China: 206.9M GR%: +18.7% Taiwan: 58.2M GR%: +15.4% Greater China 33% Europe DMS/E2E 19% DMS(NC): 20.8M GR%: -25.0% DMS(AC): 4.4M GR%: +6.5%

Asia & Intercon

Japan: 19.6M GR%: +8.5% Korea: 32.4M GR%: +6.0% AAU/NZ: 5.7M GR%: +15.0% ASEAN: 15.0M GR%: +6.4% India 6.5M GR%: +32.9% Russia 6.9M GR%: -31.1% ME&A 15.5M GR%: +36.0% LATAM 7.5M GR%: -2.2%

Affiliates

Advanixs: 8.4M GR%: +6.1% ALNC: 11.6M GR%: +32.9% A-Cermate: 6.6M GR%: +31.9% A-Kostec: 2.0M GR%: -4.8%

Y18 H1 Performance by SBG

Local Sales: US 809.3M, +16.3%

US 343.2M, 42%, +9.3%

Embedded-IoT + Allied DMS (Design-in)

Networks & Communications

Embedded Core & IoT Modules

Applied Computing

• Telecom & Mission Critical Systems

• Enterprise Network Platforms

• Network & Embedded Switches

• • Video Broadcasting Solutions US 74.0M 9%, -2.7%

• Industrial Mobile Computing

• •

• Computing on Modules Industrial Flash Storage (SQFlash)

• • • Single Board Computers US 217.7M Embedded Wireless Modules (M2.COM)

• •• Industrial Motherboards 27%, +16.8% •• WISE-PaaS & Cloud Software Embedded Box Computers ARM-based Computing

• • • M2I/Connected Appliances Modular Board Design Services

   - **Applied Computing DMS**
  

  • Allied-DMS/China

  • US 51.4M • Allied-DMS+DTOS/Europe

  • 6%, +0.05%

• Gaming Solutions

• Industrial Display Solutions

% of Sales, YoY Growth

Industrial-IoT

APS & AGS

US 106.2M 13%,+22.2%

Service-IoT

+24%, 112%

+21%, 106% Industrial Automation

Intelligent Systems

• Industrial Computers

• Industrial I/O & Controllers

• Industrial Servers & Storage

• Automation Computing & HMI

• Motion Controls & Machine Vision • Intelligent Video Solutions

• • US 287.0M • Remote IoT Devices (WISE) Transportation Solutions

• • WebAccess+ Software 35%, +21.4% • iFactory (Industry 4.0) Solutions iConnectivity

• Network Edge Solutions

• Machine Automation Solutions

• Industrial Switches +11%, 99%

• Energy & Environment Solutions

• Industrial Wireless Devices

• Industrial Cellular Routers

Intelligent Healthcare

• Medical Computing

• Intelligent Hospital Solutions

Intelligent Retail

• iRetail Platforms US 73.0M

• • Intelligent Retail Solutions • 9%, +23.8% Digital Signage Solutions

• Intelligent Logistics

• In-Vehicle Computing

• iLogistics & Fleet Management Solutions

• AIM Series Industrial Mobile Computers

Y18H1 Performance By SBG

1H18 US$ mn	1H18 US$ mn	Revenues YoY	Gross Margin **Range **	Operating Profit OP Margin
Industrial IOT		287 21%	45~50%	65 22.7%
Embedded	IOT	218 17%	33~38%	35 16.3%
Allied DMS	ACG	51 0%	30~35%	7 13.6%
	NCG	74 -3%	35~40%	11 14.6%
Service IOT		73 24%	35~40%	5 6.2%
AGS & APS		106 22%	15~20%	12 11.3%
Other unallocated expenses				-14
Total		809 16%		121 14.9%

• IIoT grew 21%, GP range to be between 45~50%, EIoT grew 17%, low to the medium GP product line had a higher growth rate

• NCG/ACG gross margin declined due to biz competition and key component cost up

• AGS/APS product line include CPU, Memory, Flash, mainly sell out through Advantech system product

Y18 1H Working Capital

Consolidated

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• Inventory DOH slightly higher than last year mainly due to aggressive purchasing actions to cover material shortage & long lead time