Advantech — Investor Presentation 2021

Aug 4, 2021

Advantech 2Q 2021 Results Analyst Meeting

4[th] August, 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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2Q21 & 1H21 Financial Results

2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results	2Q21 & 1H21 Financial Results
NT$ mn	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21	1H21 YoY
Net Sales	12,301 13,976 14,382 13,486				11,272 14,018 13,050 12,779				13,161	14,210	27,371 8%
QoQ%	-1% 14% 3% -6%				-16% 24% -7% -2%				3%	8%
YoY%	8% 11% 16% 9%				-8% 0% -9% -5%				17%	1%
Gross Profit	4,724 5,410 5,697 5,268				4,395 5,766 5,192 5,043				5,209	5,217	10,426 3%
Gross Margins%	38.4% 38.7% 39.6% 39.1%				39.0% 41.1% 39.8% 39.5%				39.6%	36.7%	38.1%
OperatingExpense	2,872 3,079 3,070 2,845				2,742 2,925 2,928 2,765				2,922	3,020	5,942 5%
Operating Profit	1,852 2,331 2,627 2,423				1,654 2,841 2,264 2,278				2,287	2,197	4,484 0%
Operating Margin%	15.1% 16.7% 18.3% 17.9%				14.7% 20.3% 17.4% 17.8%				17.4%	15.5%	16.4%
No-operatingIncome	196 89 86 -297				-33 118 202 -195				130	80	210 147%
Pretax Profit	2,048 2,420 2,713 2,126				1,621 2,959 2,466 2,083				2,417	2,277	4,694 2%
Tax Expenses	432 513 561 409				340 621 511 353				488	462	950 -1%
Effective Tax Rate	21.1% 21.2% 20.7% 19.4%				21.0% 21.0% 20.7% 16.9%				20.2%	20.3%	20.2%
Net Income	1,613 1,892 2,136 1,700				1,295 2,308 1,941 1,704				1,913	1,790	3,703 3%
YoY%	18% 19% 25% 4%				-20% 22% -9% 0%				48%	-22%
EPS(NT$)	2.10 2.46 2.78 2.21				1.68 2.99 2.52 2.21				2.48	2.31	4.79 2%

 Gross profit was eroded due to 1) Component cost-up impact ; 2) Time gap between cost inflation and ASP hike

 Effective Tax rate was 20.2% in 1H21

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1H21 Sales By Region

USD$mn	1H21	1H20	YoY %	Rev %
North America	250	242	4%	26%
Europe	154	141	9%	16%
China	265	194	37%	27%
North Asia	94	89	6%	10%
Taiwan	63	58	9%	7%
Asia & InterCon	90	67	35%	9%
Others	53	48	9%	5%
Total	970	839	16%	100%
Asia & InterCon AAU/NZ $8.5M GR%: +9% ASEAN $22.8M GR%: +19% India $7.0M GR%: +39% Russia $6.5M GR%: +2% LATAM $7.4M GR%: -22% ME&A $37.3M GR%: +106% North Asia AJP: $20.1M GR%: +8% ATJ: $31.5M GR%: -11% AKR : $42.3M GR%: +21% North America 26% Europe 16% China 27% North Asia 10% Taiwan 7% Asia & Intercon 9% Others 5% 1H21 USD$mn USD$mn

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1H21 Performance By SBG

1H 2021 US$ mn	1H 2021 US$ mn	1H 2021 US$ mn	Revenue	YoY	Rev. %	**Gross Margin **	Operating Profit	OP Margin
	Industrial IOT		351	34%	36%	45~50%	112	32.1%
	Embedded IOT		226	7%	23%	35~40%	22	18.2%
	**Allied DMS **	Applied Computing	97	-11%	10%	25~30%	10	10.2%
		Cloud IOT	93	-2%	10%	35~40%	8	8.9%
	Service IOT		81	23%	8%	40~45%	5	6.2%
	AGS & APS		122	26%	13%	25~30%	17	14.0%
Other unallocated expenses							-34
Total			970	16%	100%		159	16.4%

 IIoT YoY+34% contributed by new infrastructure demand from China and semiconductor IEM smart equipment upgrades

 SIoT YoY+23% driven by iHealthcare projects contribution and iCity’s progress in NA/Greater China market

 ACG YoY -11% mainly due to major projects ended and ATJ underperformed

 CIoT included VSMD (Video Solution Division) YoY -2%

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Workin Ca ital and Balance Sheet g p

NT$ mn	NT$ mn	1Q19	2Q19	3Q19	4Q19	1Q20	2Q20	3Q20	4Q20	1Q21	2Q21
Cash Cycle
Inventory		8,179	8,446	8,089	7,783	9,093	9,695	8,523	7,814	8,846	10,713
Account receivable		8,683	9,209	9,526	8,832	8,012	9,617	8,734	8,781	8,978	10,157
Accountpayable		5,756	6,519	4,981	4,799	5,291	5,455	3,737	4,326	5,731	7,782
	IN turnover	93	87	86	87	110	102	104	95	94	98
	AR turnover	62	58	59	61	67	57	63	62	61	61
	AP turnover	69	64	60	54	66	59	53	47	57	68
	CCC	87	80	85	95	112	100	115	110	98	91
BS
Cash & Cash Equivalents		9,304	11,446	7,103	10,061	11,013	12,161	9,792	13,132	14,508	14,851
Cash		7,076	6,641	5,559	6,004	4,966	6,064	6,380	7,497	7,786	7,772
Marketable Sec. & S/T Investment		2,229	4,805	1,544	4,057	6,047	6,096	3,412	5,635	6,722	7,079
Total asset		46,864 633	49,654 524	45,391 502	47,216 458	49,007 493	52,444 484	47,775 514	50,199 405	53,576 429	57,314 402
ST debt
LT debt		439	387	334	278	290	198	143	88	241	166
Totalequity		31,642	28,994	30,971	32,731	28,640	30,904	33,036	35,046	31,896	33,556
Capex		(189)	(214)	(229)	(329)	(213)	(346)	(231)	170	(236)	(192)
D&A		275	255	289	167	265	219	254	231	252	251
Total Investment CF		(814)	(176)	(342)	(475)	(730)	250	(885)	556	(396)	(349)

 Advantech generating $7.8bn NTD in 2Q21 for Cash level, indicating sufficient working capital

 The Cash-Conversion Cycle (CCC) maintained healthy level (<100 days) in 2Q21

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3Q21 Guidance

Based on the exchange rate assumption of US$1 to NT$28 , managements expect the 3Q21 guidance as below

Items 3Q21 Estimation Consolidated Revenue US$ 510M ~ 530M Gross Margin 36.5% ~ 38.5% Operating Margin 16.0% ~ 18.0%

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Co-Creating the Future of the IoT World