Advantech — Interim / Quarterly Report 2021

May 24, 2021

Advantech 1Q21 Result Earnings Call

May 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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1Q21 Financial Result

1Q21 Financial Result	1Q21 Financial Result	1Q21 Financial Result	1Q21 Financial Result	1Q21 Financial Result
										1Q21 13,161 3% 17% 5,209 39.6% 2,922 2,287 17.4% 130 2,417 488 20.2% 1,913 48% 2.48
NT$ mn	1Q19	2Q19	3Q19	4Q19	1Q20		2Q20	3Q20	4Q20
Net Sales	12,301 13,976 14,382 13,486				11,272		14,018 13,050 12,779
QoQ%	-1% 14% 3% -6%				-16%		24% -7% -2%
YoY%	8% 11% 16% 9%				-8%		0% -9% -5%
Gross Profit	4,724 5,410 5,697 5,268				4,395		5,766 5,192 5,043
Gross Margins%	38.4% 38.7% 39.6% 39.1%				39.0%		41.1% 39.8% 39.5%
OperatingExpense	2,872 3,079 3,070 2,845				2,742		2,925 2,928 2,765
Operating Profit	1,852 2,331 2,627 2,423				1,654		2,841 2,264 2,278
Operating Margin%	15.1% 16.7% 18.3% 17.9%				14.7%		20.3% 17.4% 17.8%
No-operatingIncome	196 89 86 -297				-33		118 202 -195
Pretax Profit	2,048 2,420 2,713 2,126				1,621		2,959 2,466 2,083
Tax Expenses	432 513 561 409				340		621 511 353
Effective Tax Rate	21.1% 21.2% 20.7% 19.4%				21.0%		21.0% 20.7% 16.9%
Net Income	1,613 1,892 2,136 1,700				1,295		2,308 1,941 1,704
YoY%	18% 19% 25% 4%				-20%		22% -9% 0%
EPS(NT$)	2.10 2.46 2.78 2.21				1.68		2.99 2.52 2.21

 Effective Tax rate was 20.2% in 1Q21

 In non-operating side, Advantech booked NT$72mn fixed asset disposal gain in 1Q21 (one-time gain).

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1Q21 Sales By Region

USD$mn	1Q21	1Q20	YoY %	Rev %
North America	126	113	11%	27%
Europe	75	70	8%	16%
China	119	68	76%	26%
North Asia	47	42	13%	10%
Taiwan	29	30	-2%	6%
Asia & InterCon	44	32	36%	9%
Others	24	20	19%	6%
Total	464	374	24%	100%
USD$mn Asia & InterCon AAU/NZ 3.8 GR%: +17.2% ASEAN 10.6 GR%: +22.3% India 4.2 GR%: +24.7% Russia 3.1 GR%: +21.2% LATAM 3.5 GR%: +22.2% ME&A 18.4 GR%: +62.0% USD$mn North Asia AJP 9.7 GR%: +16.5% ATJ 15.9 GR%: -12.0% AKR 21.5 GR%: +39.7% North America 27% Europe 16% China 26% North Asia 10% Taiwan 6% Asia & Intercon 9% Others 6% 1Q21

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1Q21 Performance By SBG

US$ mn	US$ mn	US$ mn	Revenue	YoY	Rev. %	**Gross Margin **	Operating Profit	OP Margin
	Industrial IOT		171	54%	37%	45~50%	53	31.3%
	Embedded IOT		106	7%	23%	35~40%	22	20.6%
	**Allied DMS **	Applied Computing	44	-14%	10%	30~35%	0	0.5%
		Cloud IOT	48	37%	10%	35~40%	5	10.1%
	Service IOT		38	18%	8%	40~45%	3	8.5%
	AGS & APS		57	37%	12%	35~40%	8	13.8%
Other unallocated expenses							-10
Total			464	24%	100%		81	17.4%

• 1Q21 Operating Margin increased driven by 1) Economic scale (Rev. +17% YoY); 2) Product-mix improvement

 IIoT YoY + 53% mainly contributed by new infrastructure demand and semiconductor IEM smart equipment upgrades

 ACG YoY -14% mainly due to major projects ended and ATJ underperformed

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Working Capital and Balance Sheet

											1Q21 8,846 8,978 5,731 94 61 57 98 14,508 7,786 6,722 53,576 429 241 31,896 (236) 252 (396)
NT$ mn		1Q19	2Q19	3Q19	4Q19	1Q20		2Q20	3Q20	4Q20
Cash Cycle
Inventory		8,179 8,446 8,089 7,783				9,093	9,695 8,523			7,814
Account receivable		8,683 9,209 9,526 8,832				8,012	9,617 8,734			8,781
Account payable		5,756 6,519 4,981 4,799				5,291	5,455 3,737			4,326
	IN turnover	93 87 86 87				110	102 104			95
	AR turnover	62 58 59 61				67	57 63			62
	AP turnover	69 64 60 54				66	59 53			47
	CCC	87 80 85 95				112	100 115			110
BS
Cash & Cash Equivalents		9,304 11,446 7,103 10,061				11,013	12,161 9,792			13,132
Cash		7,076 6,641 5,559 6,004				4,966	6,064 6,380			7,497
Marketable Sec. & S/T Investment		2,229 4,805 1,544 4,057				6,047	6,096 3,412			5,635
Total asset		46,864 49,654 45,391 47,216				49,007	52,444 47,775			50,199
ST debt		633 524 502 458				493	484 514			405
LT debt		439 387 334 278				290	198 143			88
Total equity		31,642 28,994 30,971 32,731				28,640	30,904 33,036			35,046
Capex		(189) (214) (229) (329)				(213)	(346) (231)			170
D&A		275 255 289 167				265	219 254			231
Total Investment CF		(814) (176) (342) (475)				(730)	250 (885)			556

• Advantech generating $7.8bn NTD in 1Q21 for Cash level, which set a new company record, indicating sufficient working capital

• The Cash-Conversion Cycle (CCC) back to normal level (<100 days) in 1Q21

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2Q21 Guidance

Based on the exchange rate assumption of US$1 to NT$28.3 , managements expect the 2Q21 guidance as below

Items 2Q21 Estimation Consolidated Revenue US$ 480M ~ 500M Gross Margin 37.0% ~ 39.0% Operating Margin 16.5% ~ 18.5%

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