AT&S Austria Technologie & Systemtechnik AG

Quarterly Report • Feb 2, 2021

INTERIM REPORT THIRD QUARTER 2020/21

FIRST CHOICE FOR ADVANCED APPLICATIONS

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HIGHLIGHTS Q1-3 2020/21

AT&S records robust growth and significant increase in revenue and EBITDA

• Demand for ABF substrates continues unabated
• Successful ramp-up in Chongqing I contributes significantly to revenue and earnings growth
• Demand for module printed circuit boards supports positive business development
• Nine-month revenue with € 883.8 million on record level, EBITDA margin improves from 20.8% to 21.1%
• Outlook 2020/21 increased: Revenue increase of 17 to 19%, EBITDA margin in the range from 20% to 22%

KEY FIGURES

	Unit	Q1-3 2019/20	Q1-3 2020/21	Change in %
Revenue	€ in millions	753.2	883.8	17.3%
EBITDA	€ in millions	156.4	186.7	19.4%
EBITDA margin	%	20.8%	21.1%	–
EBIT	€ in millions	47.7	65.8	38.0%
EBIT margin	%	6.3%	7.4%	–
Profit/(loss) for the period	€ in millions	25.2	37.3	47.8%
ROCE	%	4.0%	7.0%	–
Net CAPEX	€ in millions	145.5	304.0	>100%
Cash flow from operating activities	€ in millions	176.7	176.5	(0.1%)
Operating free cash flow	€ in millions	31.2	(127.5)	–
Earnings per share	€	0.49	0.80	63.8%
Employees1)	–	10,223	11,167	9.2%
BALANCE SHEET DATA		31 Mar 2020	31 Dec 2020
Total assets	€ in millions	1,853.5	2,004.1	8.1%
Total equity	€ in millions	760.3	736.8	(3.1%)
Equity ratio	%	41.0%	36.8%	–
Net debt	€ in millions	246.7	401.6	62.8%

1) incl. contract staff, average

ECONOMIC REPORT

BUSINESS DEVELOPMENTS AND SITUATION

AT&S defied the current crisis and achieved its highest ever quarterly revenue in the third quarter. This development was accelerated by the pandemic-related acceleration of digitalisation, which increases the demand for high-end interconnection solutions. The diversified business model, is further strengthened by the capacity expansion of IC substrates and the demand for module PCBs.

Revenue amounted to € 883.8 million, thus exceeding the prioryear figure of € 753.2 million by 17.3%. The successful start-up of the increased production capacity in Chongqing I, which serves the growing demand for ABF substrates, made a significant contribution to revenue growth. The broadened customer and application portfolio for mobile devices and the demand for module PCBs also had a positive effect. In the AIM business unit, the Medical segment achieved revenue at the previous year's level and the Industrial segment slightly higher revenue. After a weak first half of the financial year, the Automotive segment was able to achieve revenue at the previous year's level again in the third quarter, so that the AIM business unit was able to exceed the previous year's revenue in the third quarter.

Exchange rate effects, especially due to the weaker US dollar, had a negative impact of € 18.8 million or 2.1% on the development of revenue.

EBITDA rose from € 156.4 million to € 186.7 million. While the increase in revenue had a positive impact on earnings, other operating income, at € -6.2 million, was € 16.7 million below the prior-year figure of € 10.5 million. The primary reason for the change were foreign currency effects of € -12.4 million (previous year: € +3.8 million).

In preparation for future technology generations and to pursue the modularisation strategy, AT&S invested € 71.4 million in research and development (previous year: € 62.5 million). These expenditures make the company future-proof and significantly expand the earnings potential in the medium term. The EBITDA margin amounted to 21.1% thus exceeding the prior year level of 20.8%. EBIT improved from € 47.7 million to € 65.8 million. The EBIT margin was 7.4% (previous year: 6.3%).

Finance costs – net declined from € -3.3 million to € -19.3 million which resulted primarily from currency translation differences of € -9.7 million (previous year: € +3.0 million) and a lower interest result compared with the previous year (change: €-3.5 million).

Profit for the period rose from € 25.2 million by € 12.1 million to € 37.3 million mainly due to the significantly higher operating result.

BUSINESS DEVELOPMENT BY SEGMENTS

The AT&S Group breaks its operating activities down into three segments: Mobile Devices & Substrates, Automotive, Industrial, Medical, and Others. For further information on the segments and segment reporting please refer to the Annual Report 2019/20.

Mobile Devices & Substrates segment

The segment's revenue increased by 24.3% from € 590.4 million to € 733.7 million. The successful start-up of the increased production capacity in Chongqing, which serves the growing demand for ABF substrates, made a significant contribution to revenue growth. The broader customer and application portfolio in the Mobile Devices segment and the demand for module PCBs also had a positive effect.

EBITDA improved from € 129.2 million to € 169.5 million as a result of higher sales volume and a more favourable product mix. Overall, this resulted in an EBITDA margin of 23.1%, which exceeded the prior-year figure of 21.9%. EBIT amounted to € 70.0 million, up € 30.1 million on the prior-year figure of € 39.9 million. The EBIT margin was 9.5% (previous year: 6.8%).

Automotive, Industrial, Medical segment

The segment's revenue, at € 244.4 million was -5.7% lower than in the previous year (€ 259.3 million). Increases in revenue were recorded above all in the Industrial segment in the first nine months. The Automotive segment was confronted with lower demand in the first half of the financial year due to a decline in car sales, but was able to reach the previous year's level again in the third quarter. Due to strong demand, revenue in the Medical & Healthcare segment slightly was at the level of the prior-year reporting period despite a less favourable product mix.

The segment's EBITDA, at € 16.6 million, was € 7.5 million below the prior-year level of € 24.1 million. Due to these effects, the EBITDA margin declined by 2.5 percentage points from 9.3% to 6.8%. EBIT decreased from € 6.9 million to € -2.4 million.

FINANCIAL POSITION

Total assets increased by 8.1% from € 1,853.5 million to € 2,004.1 million in the first nine months. Additions to assets and technology upgrades amounting to € 364.5 million were offset by depreciation and amortisation totalling € 120.9 million. Additions to assets led to cash CAPEX of € 304.5 million. In addition, exchange rate effects reduced fixed assets by € 29.8 million. Cash and cash equivalents totalled € 393.9 million (31 March 2020: € 418.0 million). In addition to cash and cash equivalents, AT&S had financial assets of € 38.7 million and unused credit lines of € 421.6 million to finance the future investment programme and short-term repayments.

Equity decreased by -3.1% from € 760.3 million to € 736.8 million. Profit for the period of € 37.3 million was largely offset by negative currency effects of € 39.2 million (from the translation of net asset positions of subsidiaries) and the dividend payout of € 9.7 million as well as the interest expense for the hybrid bond of € 8.3 million. In addition, the remeasurements of post-employment obligations (€ -2.9 million) had a negative impact on equity.

Based on the decline in equity and the increase in total assets, the equity ratio, at 36.8%, was 4.2 percentage points lower than at 31 March 2020. Net debt increased by € 154.9 million or 62.8% from € 246.7 million to € 401.6 million.

Cash flow from operating activities amounted to € 176.5 million in the first nine months of the current financial year (previous year: € 176.7 million). Cash inflows were offset by cash outflows for net investments of € 304.0 million (previous year: € 145.5 million), resulting in Operating free cash flow of € -127.5 million (previous year: € 31.2 million).

OUTLOOK

AT&S adheres to its growth plans. Even in a highly challenging environment, the investment programme, which aims at capacity expansion and technological progress, will be continued and advanced further.

The current expectations for the coming months of the financial year are as follows:

• Based on current forecasts, demand for ABF substrates will continue to be strong.
• The usual seasonality is expected for mobile devices in the fourth quarter.
• The positive trend in the Automotive segment should continue. In the fourth quarter of the financial year, a flat development is expected in comparison with the previous year.
• Slight growth is expected in the Industrial and Medical segments for the full year.

Based on the strong results of the first nine months, improved visibility and the successful ramp-up of the new capacity at Chongqing I, the Management Board is increasing the guidance for the financial year 2020/21 and now expects revenue growth of 17 to 19% (previously about 15%) and an EBITDA margin in the range of 20% to 22%.

Investment activities in the financial year 2020/21

Operationally, AT&S will continue to build up new capacities, in particular for ABF substrates and module printed circuit boards. In line with spending discipline, a reduced budget of up to € 80 million is planned for basic investments (maintenance and technology upgrades) depending on the market development. As part of the strategic projects, the management plans investments totalling up to € 410 million for the financial year 2020/21 – depending on the progress of projects – plus € 30 million due to period shifts between the financial years.

Leoben-Hinterberg, 2 February 2021

The Management Board

Andreas Gerstenmayer m.p. Simone Faath m.p. Ingolf Schröder m.p. Heinz Moitzi m.p.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

€ in thousands	1 Oct - 31 Dec 2020	1 Oct - 31 Dec 2019	1 Apr - 31 Dec 2020	1 Apr - 31 Dec 2019
Revenue	346,027	262,917	883,785	753,234
Cost of sales	(282,228)	(227,752)	(751,513)	(662,857)
Gross profit	63,799	35,165	132,272	90,377
Distribution costs	(9,125)	(7,539)	(25,561)	(22,768)
General and administrative costs	(13,616)	(11,749)	(34,743)	(30,406)
Other operating income	2,040	4,276	12,481	13,426
Other operating costs	(10,135)	(1,830)	(18,650)	(2,937)
Other operating result	(8,095)	2,446	(6,169)	10,489
Operating result	32,963	18,323	65,799	47,692
Finance income	813	1,650	2,890	8,918
Finance costs	(7,058)	(7,767)	(22,168)	(12,216)
Finance costs – net	(6,245)	(6,117)	(19,278)	(3,298)
Profit before tax	26,718	12,206	46,521	44,394
Income taxes	(4,117)	(6,537)	(9,261)	(19,192)
Profit for the period	22,601	5,669	37,260	25,202
Attributable to owners of hybrid capital	2,072	2,095	6,240	6,263
Attributable to owners of the parent company	20,529	3,574	31,020	18,939
Earnings per share attributable to equity holders of the parent company (in € per share):
– basic	0.53	0.09	0.80	0.49
– diluted	0.53	0.09	0.80	0.49
Weighted average number of shares outstanding – basic (in thousands)	38,850	38,850	38,850	38,850
Weighted average number of shares outstanding – diluted (in thousands)	38,850	38,850	38,850	38,850

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

€ in thousands	1 Oct - 31 Dec 2020	1 Oct - 31 Dec 2019	1 Apr - 31 Dec 2020	1 Apr - 31 Dec 2019
Profit for the period	22,601	5,669	37,260	25,202
Items to be reclassified:
Currency translation differences, net of tax	(8,029)	(15,637)	(39,234)	(39,261)
(Losses) from the fair value measurement of financial assets, net of tax	–	–	(56)	–
Gains/(losses) from the fair value measurement of hedging instruments for cash flow hedges, net of tax	165	2,526	(422)	(1,030)
Items not to be reclassified:	0	0	-2949	-4109
Remeasurement of post-employment obligations, net of tax	–	–	(2,949)	(4,109)
Other comprehensive income for the period	(7,864)	(13,111)	(42,661)	(44,400)
Total comprehensive income for the period	14,737	(7,442)	(5,401)	(19,198)
Attributable to owners of hybrid capital	2,072	2,095	6,240	6,263
Attributable to owners of the parent company	12,665	(9,537)	(11,641)	(25,461)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

€ in thousands	31 Dec 2020	31 Mar 2020
ASSETS
Property, plant and equipment	1,118,512	903,509
Intangible assets	42,100	45,075
Financial assets	117	193
Deferred tax assets	29,344	25,984
Other non-current assets	13,292	21,258
Non-current assets	1,203,365	996,019
Inventories	139,126	108,373
Trade and other receivables and contract assets	228,225	192,433
Financial assets	38,576	136,242
Current income tax receivables	894	2,493
Cash and cash equivalents	393,914	417,950
Current assets	800,736	857,491
Total assets	2,004,101	1,853,510
EQUITY
Share capital	141,846	141,846
Other reserves	(33,242)	9,419
Hybrid capital	172,887	172,887
Retained earnings	455,342	436,107
Equity attributable to owners of the parent company	736,833	760,259
Total equity	736,833	760,259
LIABILITIES
Financial liabilities	731,305	695,834
Provisions for employee benefits	56,839	51,244
Deferred tax liabilities	3,747	3,166
Other liabilities	40,539	13,596
Non-current liabilities	832,430	763,840
Trade and other payables	317,854	214,017
Financial liabilities	102,931	105,299
Current income tax payables	7,418	4,858
Other provisions	6,635	5,237
Current liabilities	434,838	329,411
Total liabilities	1,267,268	1,093,251
Total equity and liabilities	2,004,101	1,853,510

CONSOLIDATED STATEMENT OF CASH FLOWS

€ in thousands	1 Apr - 31 Dec 2020	1 Apr - 31 Dec 2019
Operating result	65,799	47,692
Depreciation, amortisation and impairment of property, plant and equipment and intangible assets	120,932	108,699
Gains/losses from the sale of fixed assets	191	735
Changes in non-current provisions	5,790	6,647
Non-cash expense/(income), net	13,297	(12,108)
Interest paid	(11,413)	(8,721)
Interest received	2,665	5,216
Income taxes paid	(7,007)	(12,074)
Cash flow from operating activities before changes in working capital	190,254	136,086
Inventories	(36,017)	(26,450)
Trade and other receivables and contract assets	(36,058)	32,362
Trade and other payables	56,725	36,033
Other provisions	1,614	(1,366)
Cash flow from operating activities	176,518	176,665
Capital expenditure for property, plant and equipment and intangible assets	(304,498)	(145,517)
Proceeds from the sale of property, plant and equipment and intangible assets	452	42
Capital expenditure for financial assets	(53,178)	(47,933)
Proceeds from the sale of financial assets	149,623	93,603
Cash flow from investing activities	(207,601)	(99,805)
Proceeds from borrowings	109,627	78,809
Repayments of borrowings	(83,994)	(18,034)
Proceeds from government grants	29,102	1,321
Dividends paid	(9,713)	(23,310)
Hybrid cupon paid	(8,313)	(8,313)
Cash flow from financing activities	36,709	30,473
Change in cash and cash equivalents	5,626	107,333
Cash and cash equivalents at beginning of the year	417,950	326,841
Exchange losses on cash and cash equivalents	(29,662)	(1,515)
Cash and cash equivalents at end of the period	393,914	432,659

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

					Equity
					attributable to owners	Non
	Share	Other		Retained	of the parent	controlling	Total
€ in thousands	capital	reserves	Hybrid capital	earnings	company	interests	equity
31 Mar 2019	141,846	42,444	172,887	446,274	803,451	–	803,451
Profit for the period	–	–	–	25,202	25,202	–	25,202
Other comprehensive income for the period	–	(44,400)	–	–	(44,400)	–	(44,400)
thereof currency translation differences, net of tax	–	(39,261)	–	–	(39,261)	–	(39,261)
thereof remeasurement of post-employment obligations, net of tax	–	(4,109)	–	–	(4,109)	–	(4,109)
thereof change in hedging instruments for cash flow hedges, net of tax	–	(1,030)	–	–	(1,030)	–	(1,030)
Total comprehensive income for the period	–	(44,400)	–	25,202	(19,198)	–	(19,198)
Dividends paid relating to 2018/19	–	–	–	(23,310)	(23,310)	–	(23,310)
Hybrid cupon paid	–	–	–	(8,313)	(8,313)	–	(8,313)
31 Dec 2019	141,846	(1,956)	172,887	439,853	752,630	–	752,630
31 Mar 2020	141,846	9,419	172,887	436,107	760,259	–	760,259
Profit for the period	–	–	–	37,260	37,260	–	37,260
Other comprehensive income for the period	–	(42,661)	–	–	(42,661)	–	(42,661)
thereof currency translation differences, net of tax	–	(39,234)	–	–	(39,234)	–	(39,234)
thereof remeasurement of post-employment obligations, net of tax	–	(2,949)	–	–	(2,949)	–	(2,949)
thereof change in financial assets, net of tax	–	(56)	–	–	(56)	–	(56)
thereof change in hedging instruments for cash flow hedges, net of tax	–	(422)	–	–	(422)	–	(422)
Total comprehensive income for the period	–	(42,661)	–	37,260	(5,401)	–	(5,401)
Dividends paid relating to 2019/20	–	–	–	(9,713)	(9,713)	–	(9,713)
Hybrid cupon paid	–	–	–	(8,313)	(8,313)	–	(8,313)
31 Dec 2020	141,846	(33,242)	172,887	455,342	736,833	–	736,833

SEGMENT REPORTING

	Mobile Devices & Substrates		Automotive, Industrial, Medical		Others		Elimination/ Consolidation		Group
	1 Apr - 31	1 Apr - 31	1 Apr - 31	1 Apr - 31	1 Apr - 31	1 Apr - 31	1 Apr - 31	1 Apr - 31	1 Apr - 31	1 Apr - 31
€ in thousands	Dec 2020	Dec 2019	Dec 2020	Dec 2019	Dec 2020	Dec 2019	Dec 2020	Dec 2019	Dec 2020	Dec 2019
Segment revenue	733,709	590,396	244,416	259,290	–	–	(94,341)	(96,452)	883,785	753,234
Internal revenue	(62,229)	(70,562)	(32,111)	(25,890)	–	–	94,341	96,452	–	–
External revenue	671,480	519,834	212,305	233,400	–	–	–	–	883,785	753,234
Operating result before depreciation/amortisation	169,454	129,211	16,618	24,091	668	3,089	–	–	186,740	156,391
Depreciation/amortisation incl. appreciation	(99,416)	(89,271)	(19,064)	(17,208)	(2,461)	(2,220)	–	–	(120,941)	(108,699)
Operating result	70,038	39,940	(2,446)	6,883	(1,793)	869	–	–	65,799	47,692
Finance costs - net									(19,278)	(3,298)
Profit/(loss) before tax									46,521	44,394
Income taxes									(9,261)	(19,192)
Profit/(loss) for the period									37,260	25,202
Property, plant and equipment and intangible assets1)	988,991	788,225	159,949	151,553	11,672	8,806	–	–	1,160,612	948,584
Additions to property, plant and equipment and intangible assets	328,300	163,151	30,579	25,232	5,646	2,965	–	–	364,525	191,348

1) Previous year values as of 31 March 2020

INFORMATION BY GEOGRAPHIC REGION

Revenues broken down by customer region, based on customer's headquarters:

€ in thousands	1 Apr - 31 Dec 2020	1 Apr - 31 Dec 2019
Austria	11,472	11,751
Germany	93,835	105,472
Other European countries	48,267	57,295
China	33,485	17,706
Other Asian countries	42,896	42,026
Americas	653,830	518,984
Revenue	883,785	753,234

Property, plant and equipment and intangible assets broken down by domicile:

€ in thousands	31 Dec 2020	31 Mar 2020
Austria	118,065	106,173
China	987,951	787,932
Others	54,596	54,479
Property, plant and equipment and intangible assets	1,160,612	948,584

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Gerda Königstorfer Phone: +43 (0)3842 200-5925 g.koenigstorfer@ats.net

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DISCLAIMER

This report contains forward-looking statements which were made on the basis of the information available at the time of publication. These can be identified by the use of such expressions as "expects", "plans", "anticipates", "intends", "could", "will", "aim" and "estimation" or other similar words. These statements are based on current expectations and assumptions. Such statements are by their very nature subject to known and unknown risks and uncertainties. As a result, actual developments may vary significantly from the forwardlooking statements made in this report. Recipients of this report are expressly cautioned not to place undue reliance on such statements. Neither AT&S nor any other entity accept any responsibility for the correctness and completeness of the forward-looking statements contained in this report. AT&S undertakes no obligation to update or revise any forwardlooking statements, whether as a result of changed assumptions or expectations, new information or future events.

Percentages and individual items presented in this report are rounded, which may result in rounding differences.

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Published on 2 February 2021

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