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CHROMA Call Transcript 2021

Mar 11, 2021

52029_rns_2021-03-11_c41451aa-981a-491d-a237-f5d6bfb813b6.pdf

Call Transcript

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CHROMA ATE INC. 2020.4Q Earnings Conference Call Paul Ying, CFO Leo Huang, Chairman & CEO

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25[th] February, 2021

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1

Disclaimer

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This presentation contains some forward-looking statements that are subject to substantial risks and uncertainties. Typically, these statements contain words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “plan”, “forecast”, “project”, “predict”, “potential”, “continue”, “may”, “should”, “will”, and “would” or similar words. You should consider these forward-looking statements carefully because such statements are only our expectations or projections about future events, and actual results may differ materially from those expressed or implied by such statements. The forward-looking statements in this presentation include, but are not limited to, growth rates for various markets estimated by third party sources, future products and technology development, widespread market acceptance of the hosted delivery model, future revenue growth and profitability. You should be cautioned that the forward-looking statements are no guarantee of our future performance. The forward-looking statements contained in this presentation are made only as of the date of this presentation and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances, except as required by law. This presentation and the information contained herein are the property of Chroma Ate Inc.

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2

Agenda

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Corporate ProfileFinancial ReviewOperation HighlightsQ&A

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3

CORPORATE PROFILE

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4

Corporate Profile

• Chroma Group founded in 1984, a world leading own brand turnkey test & automation solution provider, specialized in electronics test and measurement instruments and ATS (auto test system). Businesses cover test and measurement instruments and ATS for various industries, and a turnkey solution as an integration of Test and Measurement , Automation and MES (manufacturing execution system).

  • Key success: Precision, Reliability, Innovation

• Chroma group encompass business unit of Chroma Ate Inc., Modular Assembly System (MAS) and Chroma New Material Corp (CNMC).

  • 2020 Consolidated Sales : NT$ 15.5 billion

  • 2020 Net Income: NT$ 2.3 billion

  • Chroma Group total of 3,019 employees (as of

December, 2020)

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Consolidated Chroma Ate Sales Others Consolidated CNMC Sales Consolidated MAS Sales

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16,931
15,532
14,901
4%
29% 13,910
16%
17% 7%
11,624
15%
3% 14%
12%
20%
74% 66% 57% 76% 78%
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2016

2017

2018

2019 2020

5

Financial Performance

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Sales Revenues Gross Margin
Consolidated Sales Consolidated
R&D Expenses
Parent Only
Gross Margin R&D Expenses in % of Sales Revenues
16,931
9,180
15,532
8,111
14,901
8,018
13,910 7,547
7,233
11,624
49%
47% 47% 47%
53%
52% 52%
44% 51% 51%
Chroma Employees : 1,775 � (R&D 39%)
15% 14%
13% 13% 13%
937 1,085 1,143 1,172 1,216
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
In Million NTD
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6

Financial Performance

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ROE Dividend
Basic EPS Cash dividend
22% Payout ratio
18%
17%
6.41 6.22
15%
13%
4.53 4.48
4.50
4.20
3.28 3.30
3.01
2.40
2016 2017 2018 2019 2020 2015 2016 2017 2018 2019
In NTD
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7

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Global Operation Sites

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50 93 EST. 1999 EST. 2017 EST. 2008 EST. 2018 EST. 1993 EST. 2001
Operation Distributors
Sites
Netherlands: Germany: Japan: Korea: United States: United States:
Ede Augsburg Shin-Yokohama/ Pangyo Irvine, CA Foothill Ranch, CA
Nagoya/ Osaka Santa Clara, CA Marlborough, MA
Chandler, AZ Detroit, MI
Allentown, PA Mexico!
Albany, NY Ciudad Juarez
EST. 1998 EST. 1999 EST. 2000 EST. 2001 EST. 2003 EST. 2009
China/ Shenzhen China/ Beijing China/ Shanghai China/ Dongguan Taiwan: Taoyuan (Headquarters) Taiwan: Hsinchu Taiwan: Kaohsiung
EST. 2006 EST. 2011 EST. 2011
EST. 2016
Others:
India: New Delhi/ Mumbai/ Bangalore
Thailand: Bangkok
Vietnam: Hanoi/ Ho Chi Minh
Malaysia: Kuala Lumpur/ Penang
China/ Suzhou China/ Xiamen China/ Chongqing
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EST. 2016 Others: India: New Delhi/ Mumbai/ Bangalore Thailand: Bangkok Vietnam: Hanoi/ Ho Chi Minh Malaysia: Kuala Lumpur/ Penang Quantel!Singapore!SingaporeSingapore Philippines: Manila/ Cebu Indonesia: Jakartar

Quantel!Singapore!SingaporeSingapore

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Others: Qingdao/ Zhengzhou/ Xian/Hefei/ Chengdu/ Wuhan/ Hangzhou/ Changsha/ Guangzhou/ Hong Kong

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8

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FINANCIAL REVIEW

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9

Year 2020 Condensed Consolidated Income Statement

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Condensed Consolidated P&L
(In Million NTD, except for EPS in NTD)
2020
%
2019
%
YoY %
Net Sales 15,532
100%
13,910
100%
12%
Consolidated Sales of Testing Equipment Business 12,045
78%
10,546
76%
14%
Consolidated Sales of MAS 618
4%
1,009
7%
(39%)
Consolidated Sales of New Material 2,551
16%
2,097
15%
22%
Others 318
2%
258
2%
23%
Cost of Goods Sold (7,988)
(51%)
(7,329)
(53%)
9%
Gross Profit 7,544
49%
6,581
47%
15%
Operating Expenses:
General & Administration
Research & Development
(3,405)
(22%)
(1,342)
(9%)
(3,238)
(23%)
5%
(1,283)
(9%)
5%
Operating Income 2,797
18%
2,060
15%
36%
Non-Operating Income (Expenses), net 232
2%
279
2%
(17%)
Income (Loss) Before Tax
Income Tax
3,029
20%
(648)
(5%)
2,339
17%
29%
(449)
(3%)
44%
Net Income 2,381
15%
1,890
14%
26%
Other Comprehensive Income (Losses) 78
1%
(250)
(2%)
n/a
Comprehensive Income $ 2,459
16%
$ 1,640
12%
50%
Net Income (Losses) Attributable To:
Shareholders of the Parent
Noncontrolling Interests
2,324
15%
57
-
1,854
14%
25%
36
-
58%
$ 2,381
15%
$ 1,890
14%
26%
EPS (Basic) $ 5.56 $ 4.48
24%
EPS (Diluted) $ 5.51 $ 4.42
25%

10

Balance Sheet Highlights & Financial Ratio

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Consolidated
(In Million NTD)
2020. Dec 2019. Dec + / - %
Balance Sheet Highlights
Cash & Short Term Investments 4,442 3,455 29%
Inventory 3,028 2,665 14%
Short Term Debt 3,187 2,381 34%
Long Term Debt 2,405 2,422 - 1%
Shareholders Equity 16,389 14,785 11%
Total Assets 28,129 25,437 11%
Inventory Turnover (Day) 130 127
AR Turnover (Day) 120 133
AP Turnover (Day) 122 129
Net Debt to Equity (%) 7% 9%
ROE (%) 15% 13%
ROA (%) 7% 8%
Cash Position 2020. A 2019. A YoY
EBITDA 3,527 2,839 24%
Cash Flow from Operation 2,712 1,365 99%
Free Cash Flow 1,165 (902) n/a

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All ROE + ROA has been annualized.

Free Cash Flow = Net Cash Provided by Operating Activities + (Net Cash used by Investing Activities)

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11

Quarterly Highlights

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Sales Revenues Gross Margin Operating Margin

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2020.4Q Key Points

  • Sales Revenue: $ 2,421 million, up 1% QoQ, down 6% YoY

  • Gross Margin: 51%

  • Operating Margin: 22%

  • Net Income: NT$ 686 million,

up 18% QoQ, up 14% YoY

  • 2020.4Q Highlights:

  • The sales revenues in fourth quarter

is mainly contributed from Turnkey

Solutions

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2,571
2,421
2,394
2,313
2,053
2,037
1,961
1,541
55% 55% 55%
51% 52% 52% 51%
47%
27%
25% 25%
20% 23% 21% 22%
19%
In Million NTD
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2019.1Q 2019.2Q 2019.3Q 2019.4Q 2020.1Q 2020.2Q 2020.3Q 2020.4Q

12

Year 2020.4Q Condensed Income Statement

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Condensed P&L – Parent Only 2020.4Q % 2020.3Q % QoQ 2019.4Q % YoY
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2020.4Q
%
2020.4Q
%
(In Million NTD, except for EPS in NTD) %
%
Net Sales 2,421
100%
2,394
100%
1%
2,571
100%
(6%)
Cost of Goods Sold (1,184)
(49%)
(1,088)
(45%)
9%
(1,370)
(53%)
(14%)
Gross Profit 1,237
51%
1,306
55%
(5%)
1,201
47%
3%
Operating Expenses:
General & Administration
Research & Development
(365)
(15%)
(329)
(14%)
(353)
(15%)
3%
(339)
(13%)
8%
(307)
(13%)
7%
(311)
(13%)
6%
Operating Income 543
22%
646
27%
(16%)
551
21%
(1%)
Non-Operating Income (Expenses), net 275
11%
50
2%
450%
195
8%
41%
Income (Loss) Before Tax 818
33%
696
29%
18%
746
29%
10%
Income Tax (132)
(5%)
(113)
(5%)
17%
(142)
(6%)
(7%)
Net Income $ 686
28%
$ 583
24%
18%
$ 604
23%
14%
Other Comprehensive Income 105
4%
47
2%
123%
(211)
(8%)
n/a
Comprehensive Income $ 791
32%
$ 630
26%
26%
$ 393
15%
101%
EPS (Basic) $ 1.64 $ 1.39
18%
$ 1.45
13%
EPS (Diluted) $ 1.62 $ 1.38
17%
$ 1.43
13%

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100% owned subsidiaries’ income - New Material: - , MAS: 27m (YoY ↓ 45%),

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13

Year 2020 Condensed Income Statement

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2020 % 2019 % YoY
Condensed P&L – Parent Only
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ome Statement ome Statement
2020
%
(In Million NTD, except for EPS in NTD) %
Net Sales 9,180
100%
8,111
100%
13%
Cost of Goods Sold (4,313)
(47%)
(4,018)
(50%)
7%
Gross Profit 4,867
53%
4,093
50%
19%
Operating Expenses:
Selling and General & Administration
Research & Development
(1,390)
(15%)
(1,217)
(13%)
(1,231)
(15%)
13%
(1,172)
(14%)
4%
Operating Income 2,260
25%
1,690
21%
34%
Non-Operating Income (Expenses), net 535
5%
460
6%
16%
Income (Loss) Before Tax 2,795
30%
2,150
27%
30%
Income Tax (471)
(5%)
(296)
(4%)
59%
Net Income $ 2,324
25%
$ 1,854
23%
25%
Other Comprehensive Income 89
1%
(246)
(3%)
n/a
Comprehensive Income $ 2,413
26%
$ 1,608
20%
50%
EPS (Basic) $ 5.56 $ 4.48
24%
EPS (Diluted) $ 5.51 $ 4.42
25%

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 20m (YoY ↓ 31%), MAS: (136m).

14

Balance Sheet Highlights & Financial Ratio

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Parent Only
(In Million NTD)
2020. Dec 2019. Dec + / - %
Balance Sheet Highlights
Cash & Short Term Investment 902 459 97%
Inventory 2,331 2,026 15%
Short Term Debt 2,420 1,615 50%
Long Term Debt 2,230 2,285 - 2%
Shareholders Equity 16,063 14,489 11%
Total Assets 24,406 21,803 12%
Inventory Turnover (Day) 184 178
AR Turnover (Day) 106 123
AP Turnover (Day) 96 102
Net Debt to Equity (%) 23% 24%
ROE (%) 15% 13%
ROA (%) 10% 9%
Cash Position 2020. A 2019.A YoY
EBITDA 3,053 2,400 27%
Cash Flow from Operation 2,049 1,537 33%
Free Cash Flow 606 (218) n/a

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All ROE + ROA has been annualized.

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Free Cash Flow = Net Cash Provided by Operating Activities + (Net Cash used by Investing Activities)

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15

OPERATION HIGHLIGHT

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16

2020 Product Mix and Consolidated Sales Breakdown

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ated Sales Breakdown ated Sales Breakdown
(Unit: Million NTD) 2020
%
YoY
2019
%
Test Instruments & Automatic Testing System (ATS) 4,849
53%
5%
4,605
57%
Semiconductor / Photonics Test Solutions 3,025
33%
31%
2,311
28%
Turnkey Solutions 456
5%
(28%)
632
8%
Service & Others 850
9%
51%
563
7%
Total of Parent Company Sales 9,180
100%
13%
8,111
100%
+ Sales from Overseas Operations & Related
Subsidiaries
2,865
18%
2,435
Chroma Consolidated Testing Equipment Business
MAS
New Material
Other Subsidiaries
12,045
78%
14%
618
4%
(39%)
2,551
16%
22%
318
2%
23%
10,546
76%
1,009
7%
2,097
15%
258
2%
Consolidated Sales 15,532
100%
12%
13,910
100%

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17

Year 2021 Guidance

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In Year 2020, Chroma total consolidated sales revenues reached 15.5 billion NTD, presented a growth of 12% YoY. The Parent Company sales revenues hit historical record high reached 9.2 billion, presented a growth of 13% YoY, mainly contributed from Semiconductor / Photonics testing solutions which increased by 31% compared to year 2019.

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2021 Business Outlook:

  • ü Continue to see strong demand for Semiconductors / Photonics testing solutions, which is driven by global semiconductor chip shortage and development of 5G-related and high performance chip (HPC) applications. Key drivers are:

  • High Reliability Testing Solutions : Burn-in Test, SLT Test with thermal control

  • Wireless RF and MCU testing solutions

  • CIS / VCSEL / ToF testing solutions

  • Semiconductor inspection and metrology solutions

  • ü The Test Instruments & ATS for power testing solutions continues benefit from green energy, included EV related components, battery cell / module / pack and smart-grid and 5G / Server related power testing.

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18

TECHNOLOGY

Semiconductor Test Solution

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Fast & Reliable Operation Fast & Reliable Operation
IC • Multi-sites: 32 Sites • Multi-sites: 32 Sites
Testing Handler • High Temperature: ~170℃±2 ℃ • High Temperature: ~150℃±2 ℃
• UPH: Up to 10K • Light Source + Tester Integration
2H, ‘20 2021
MARKET
CIS, ASIC
ASIC Test Turnkey Handler CIS Test Turnkey Handler
3180-AS 3180-IS
SOLUTION
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19

CMOS Imager Sensor Test Solution

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CMOS Image Sensor 32 site CP Test

CMOS Image Sensor FT Test

  • ü High pixel, high resolution sensors

  • ü Wafer level packaging

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  • ü 32-site direct mount test

  • ü Based on 3380 VLSI Test System ü Integrated CRAFT Software

  • ü High pixel, high resolution sensors

  • ü Packaged sensors

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  • ü Flexible # of parallel test sites

  • ü Based on 3300 PXIe platform ü Integrated CRAFT Software

CMOS Image Sensor 8 site CP Test

CMOS Image Sensor FT Test with SLT Handler

  • ü Surveillance, <10M pixel sensors

  • ü Wafer level sampling test

  • ü 4-8 site cable mount test

  • ü Based on 3380 VLSI Test System ü Integrated CRAFT Software

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  • ü Surveillance, <10M pixel sensors ü Packaged sensors

  • ü 6-12 site parallel test

  • ü Based on 3300 PXIe platform ü Integrated CRAFT Software

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20

TECHNOLOGY

Photonics Test Solution

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Photonics Wafer Tester High Voltage SMU
• LIV & NF 2-in-1 test with one probe mark • High Voltage Source: Up to 80V DC
• Measureable Optical Power Range: 1mW~5W • Measurement Accuracy : 0.02uA
• Throughput: 2300UPH • DUT Protection: Spike Free
Photonics Testing
Photonics Module Tester

Max. 4 different optical heads

Measureable Optical Power Range: 1uW~20W

Wavelength Resolution: 0.05nm
2H, ‘20 2021
MARKET
3D Sensing, LiDAR, Optical Fiber Communication
Photonics Device Probing LIV &
NF Test System
58635-LN PD/APD Burn-in & Reliability
Test System
Photonics Module Semi-
58606
Automatic Test System
SOLUTION
58625
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21

TECHNOLOGY

Semiconductor Inspection & Metrology Solution

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2D/3D/2D+3D Metrology • XY / Z Resolution: 30nm / 0.05nm • Sensor: Optical & WLI dual modules with auto switch • Light Source: Multiple Light Sources Advanced Packaging Particle Inspection Chemical Overflow Inspection Inspection • Particles: >50um • Overflow: > 500um • Sensor: AOI modules • Residue: > 1mm*1mm • Light Source: Customized Light Source • Light Source: Customized Light Source 2H, ‘20 2021 MARKET Advanced Packaging Industry 2D/3D Critical Dimension Metrology 7980 Process Particle In-situ Inspection Chemical Overflow In-situ Inspection 7961 7961 SOLUTION

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22

AOI for Advanced Packaging

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Measurement

  • ü Critical Dimension

  • ü TSV

  • ü Overlay

ü Film Thickness

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Process In-situ Inspection

  • ü SAW Particle

  • ü Underfill Glue Residue

  • ü Flux Particle

  • ü Trim Particle

  • ü Mount Particle

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Source: tsmc Website

3DFabric! for HPC - Taiwan Semiconductor Manufacturing Company Limited (tsmc.com)

  • ü Plating Chemical Residue

  • ü Grinding Tape Residue

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23

Test Instruments & ATS

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Two-quadrant Operation Regenerative Simulator
Power Testing • Bidirectional: Source & Load • High Voltage: 800VLN/105kVA
• Power: 0~100V, 0-540A, 6kW-18kW • Universal AC Input : 200Vac~480Vac
• Load Changed +90%~ -90%, <4ms • 100% Regenerative Capability
Power HIL Test
Electric Propulsion • Integrated with AC/DC source & load
Testing • EVSE simulator for OBC/DC-DC
• ISO-26262 Compatible
2H, ‘20 2021
MARKET 48V-MHEV EV Power Electronics, Green Energy (PV,ESS, PCS, Battery/Fuel Cell), Battery Storage, Micro Grid
Bidirectional DC Power Supply
62180D-100
OBC & DC-DC Converter Power HIL Testbed Regenerative Grid Simulator
8620 61800-100HV
SOLUTION
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24

TECHNOLOGY

Test Instruments & ATS

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Multiple Test Applications Multiple Test Applications
Electrical Safety • Voltage: 1~1000V, 1mA~50mA • Partial discharge detection range: 1 pC ~ 2000 pC
Testing ü ü
Jelly-roll Insulation Test Photo-Coupler/Digital Isolators PD Test
ü MLCC Flash Test & BDV Test ü HV Relay/Transformer PDIV Test
ü Power transistors ü Power Semiconductors Safety Test
Independent 8K Graphics Core
HDMI 2.1: FRL / DSC/ HDCP 2.3 / HEVC
Video Testing
USB-C: DP 1.4 Alt Mode / PD 3.0
8K x 4K@60Hz
2H, ‘20 2021
MARKET
IGBT/MOSFET Power IC, Gate Driver Transformer
EV, ESS, MLCC, Power Resistors Display
HV Relay, Photo-coupler, Digital Isolators
8K Video Pattern Generator
Insulation Tester Partial Discharge Tester
2238
11210 19501-K
SOLUTION
HDMI 2.1 / USB-C
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Turnkey Solution

TECHNOLOGY

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Automation Formation System Application • Capacity: 15PPM • Battery Type: Prismatic Cell Battery Cell • OCV/ACIR: Alternative measurement Formation • Formation: 5V,120A, Vacuuming function • DCIR: 5V, 450A Charging System • Grading: 5V,160A, Cabinet with Temp. control • Logistic: Crane / Conveyor / Sorter 2H, ‘20 2021 MARKET Battery Cell Formation System with Grading System Automation: OCV/ACIR DCIR 17000-K03X SOLUTION

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Semiconductor In-line Nanoparticle Monitoring System

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Monitoring Materials
SuperSizer [TM] Series
The Unprecedented Yield Enhancer in theNanometer Range
Slurry NH4OH
IPA
(High Purity PGMEA &
H202
Liquid PGME
Chemicals)
Isobutyl
H2SO4
Propionate
HCI HF
Butyl
Acetate
Core Technology
SuperSizerTM V SuperSizerTM VI
Aerosol Measurement Technology
Resolution
Semi S2 certified Semi S2 certified
Target ~1nm@20nm
TS explosion-proof certified For H2O2 /UPW
(at 20nm, the scale gap is around 1nm)
Particles (hard particles)
For IPA/Organics
Impurities (soft particles) Report
US Pat. No 10545082B2 TW Pat. No I583439B Advantage Particle Size Distribution
Total Count
US Pat. No 9625365B2 TW Pat. No I549745B No Bubble Interference
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www.chromaate.com

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Keep going beyond Thank You !

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Copyright © 2018 Chroma ATE Inc. All rights reserved.

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