CHROMA — Interim / Quarterly Report 2016

Dec 1, 2016

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CHROMA ATE INC.

2016.3Q Investor Conference

Paul Ying, CFO

24[th] October, 2016

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Disclaimer

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 forwardlooking 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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Agenda

• Corporate Profile

• • Financial Review

• • Operation Highlights

• • Q&A

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CORPORATE PROFILE

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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).

• 2015 Consolidated Sales : NT$ 9.69 billion

• 2015 Net Income: NT$1.24 billion

• Chroma Group total of 2,450 employees (as September, 2016)

• Harvard Business Review (HBR) names Chroma CEO Leo Huang as “The Taiwan Best Performing CEO” (Rank 38).

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Consolidated Chroma Ate Sales Others Consolidated CNMC Sales Consolidated MAS Sales

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14,148
8%
11,644
5%
10,171 10,307
9,692
7%
48%
15%
13%
48% 29%
24%
34%
41% 44% 47% 60% 58%
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2011

2012 2013

2014 2015

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Financial Performance

Consolidated Sales

Gross Margin

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Sales Revenues Gross Margin R&D Expenses

R&D Expenses in % of Sales Revenues

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Parent Only
Consolidated
56%
55%
54% 54%
14,148
5,338
5,135
52%
44%
4,539
11,644 37% 39%
4,174
3,926
10,307
10,171
28% 29% 9,692
17%
16%
15% 15%
12%
784
755
630 637 631
Chroma Employees ： 1,490  (R&D 39%)
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015
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Financial Performance

ROE

Dividend

EPS Cash dividend Stock dividend Payout ratio

4.06

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19%
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15%
14%
13%
12%
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3.51
3.28
3.21
2.52 2.60
2.50 2.50
2.40
2.00
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2011 2012 2013
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2014
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2011 2012 2013 2014 2015

2015

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Chroma Global Network

Global Employees ： 2,450  , Branch Offices x17, Distributors x68

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US :
Irvine/ Santa Clara/
Foothill Ranch, CA
Hong Kong : Neworld Tempe, AZ
Europe : Netherlands
SE Asia: Singapore Japan: Yokohama
China : Beijing / Nanjing / Shanghai / Suzhou
Chongqing / Xiamen / Shenzhen / Dongguan
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FINANCIAL REVIEW

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Year 2016.1~3Q Condensed Consolidated Income Statement

	Condensed Consolidated P&L (In Million NTD, except for EPS in NTD) (unaudited)		2016.1~3Q %		2015.1-3Q % YoY %
	Net Sales		8,849 100%		7,131 100% 24%
	Consolidated Sales of Testing Equipment Business		6,640 75%		4,105 58% 62%
	Consolidated Sales of MAS		264 3%		952 13% (72%)
	Consolidated Sales of New Material		1,658 19%		1,745 24% (5%)
	Others		287 3%		329 5% (13%)
	Cost of Goods Sold		(4,732) (53%)		(4,057) (57%) 17%
	Gross Profit		4,117 47%		3,074 43% 34%
	Operating Expenses: General & Administration Research & Development		(1,729) (20%) (762) (9%)		(1,513) (21%) 14% (646) (9%) 18%
	Operating Income		1,626 18%		915 13% 78%
	Non-Operating Income (Expenses), net		(26) -		251 3% n/a
	Income (Loss) Before Tax Income Tax		1,600 18% (290) (3%)		1,166 16% 37% (205) (3%) 41%
	Net Income		1,310 15%		961 13% 36%
	Other Comprehensive Income (Losses)		(177) (2%)		(30) - n/a
	Comprehensive Income		$ 1,133 13%		$ 931 13% 22%
	Net Income (Losses) Attributable To: Shareholders of the Parent Noncontrolling Interests		1,338 15% (28) -		986 14% 36% (25) (1%) 12%
			$ 1,310 15%		$ 961 13% 36%
	EPS (Basic)		$ 3.54		$ 2.62 35%
	EPS (Diluted)		$ 3.31		~~10~~ $ 2.48 33%

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Balance Sheet Highlights & Financial Ratio

	Consolidated (In Million NTD)(unaudited) Balance Sheet Highlights Cash & Short Term Investments Inventory Short Term Debt Long Term Debt Shareholders Equity	Consolidated (In Million NTD)(unaudited) Balance Sheet Highlights Cash & Short Term Investments Inventory Short Term Debt Long Term Debt Shareholders Equity		2016. Sept 5,279 1,826 1,411 2,915 10,249	2015. Dec + / - % 5,116 3% 1,636 12% 333 n/a 3,142 - 7% 9,531 8%
	Total Assets			18,017	16,060 12%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			99 87 90 Negative	108 108 91 Negative
	ROE (%)			18%	13%
	ROA (%)			10%	8%
	Cash Position EBITDA Cash Flow from Operation	2016.1~3Q 1,887 978	2015.1~3Q 1,444 1,277		YoY 31% (23%)
	Free Cash Flow	(380)	560		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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Quarterly Highlights

2016.3Q Key Points

• Sales Revenue: $ 2,373 million,

up 49% QoQ, up 75% YoY

• Gross Margin: 50%

• Operating Margin: 26%

• Net Income: NT$ 574 million,

• up 30% QoQ, up 19% YoY

• 2016.3Q Highlights:

• The major growth driver in this

quarter is Turnkey Solutions,

presented a growth of 501% QoQ.

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Gross Margin Sales Revenues
Operating Margin
2,373
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1,654
1,589
1,356
1,193
57% 1,126 57%
55%
53% 55%
50%
50%
864
26%
25%
23%
22%
20%
16%
13%
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12 2015.1Q 2015.2Q 2015.3Q 2015.4Q 2016.1Q 2016.2Q 2016.3Q 12

Year 2016.3Q Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD) (unaudited)		2016.3Q %		2016.2Q % QoQ %	2015.3Q % YoY %
	Net Sales		2,373 100%		1,589 100% 49%	1,356 100% 75%
	Cost of Goods Sold		(1,186) (50%)		(721) (45%) 64%	(610) (45%) 94%
	Gross Profit		1,187 50%		868 55% 37%	746 55% 59%
	Operating Expenses: General & Administration Research & Development		(327) (13%) (251) (11%)		(255) (16%) 28% (222) (14%) 13%	(235) (17%) 39% (207) (16%) 21%
	Operating Income		609 26%		391 25% 56%	304 22% 100%
	Non-Operating Income (Expenses), net		55 2%		136 9% (60%)	243 18% (77%)
	Income (Loss) Before Tax		664 28%		527 34% 26%	547 40% 21%
	Income Tax		(90) (4%)		(84) (5%) 7%	(65) (4%) 38%
	Net Income		$ 574 24%		$ 443 29% 30%	$ 482 36% 19%
	Other Comprehensive Income		(79) (3%)		(74) (5%) 7%	141 10% n/a
	Comprehensive Income		$ 495 21%		$ 369 24% 34%	$ 623 46% (21%)
	EPS (Basic)		$ 1.52		$ 1.17 30%	$ 1.28 19%
	EPS (Diluted)		$ 1.42		$ 1.09 30%	$ 1.20 18%

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100% owned subsidiaries’ income - New Material: 6m (QoQ ↓ 57%, YoY ↓ 68%), MAS: 44m (QoQ ↑ 214%, YoY ↑ 110%) .

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Year 2016.1~3Q Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD) (unaudited)		2016.1~3Q %		2015.1~3Q % YoY %
	Net Sales		5,616 100%		3,347 100% 68%
	Cost of Goods Sold		(2,728) (49%)		(1,505) (45%) 81%
	Gross Profit		2,888 51%		1,842 55% 57%
	Operating Expenses: General & Administration Research & Development		(817) (14%) (686) (12%)		(673) (20%) 21% (581) (17%) 18%
	Operating Income		1,385 25%		588 18% 136%
	Non-Operating Income (Expenses), net		185 3%		499 15% (63%)
	Income (Loss) Before Tax		1,570 28%		1,087 33% 44%
	Income Tax		(232) (4%)		(101) (3%) n/a
	Net Income		$ 1,338 24%		$ 986 30% 36%
	Other Comprehensive Income		(173) (3%)		(32) (1%) n/a
	Comprehensive Income		$ 1,165 21%		$ 954 29% 22%
	EPS (Basic)		$ 3.54		$ 2.62 35%
	EPS (Diluted)		$ 3.31		$ 2.48 33%

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 32m (YoY ↓ 18%), MAS: 54m (YoY n/a).

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Balance Sheet Highlights & Financial Ratio

	Parent Only (In Million NTD) (unaudited) Balance Sheet Highlights Cash & Short Term Investment Inventory Short Term Debt Long Term Debt Shareholders Equity	Parent Only (In Million NTD) (unaudited) Balance Sheet Highlights Cash & Short Term Investment Inventory Short Term Debt Long Term Debt Shareholders Equity	2016. Sept 3,163 1,460 1,200 2,745 10,076	2015. Dec + / - % 2,703 17% 1,301 12% 100 n/a 2,988 - 8% 9,410 7%
	Total Assets		16,366	13,965 17%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)		137 99 88 8%	231 159 101 4%
	ROE (%)		18%	13%
	ROA (%)		12%	9%
	Cash Position EBITDA Cash Flow from Operation	2016.3Q 710 350	2016.2Q 573 415	QoQ YoY 24% 19% (16%) 77%
	Free Cash Flow	(233)	456	n/a 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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OPERATION HIGHLIGHT

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Chroma Ate Inc. Sales Breakdown by Testing Solutions

(Unit: Million NTD) Test Instruments & Automate Testing System (ATS) Semiconductor Test Solutions Turnkey Solutions Service & Others		2016.3Q % QoQ YoY 916 39% (4%) 9% 365 15% (1%) 85% 1,015 43% 501% 295% 77 3% (25%) 24%	2016.1~3Q % YoY 2,605 46% 15% 876 16% 64% 1,898 34% 387% 237 4% 58%		2015 % 3,029 67% 759 17% 532 12% 219 4%
Total		2,373 100% 49% 75%	5,616 100% 68%		4,539 100%

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Chroma Ate. Inc. Sales Mix Breakdown (YTD)

A Turnkey Solution and Intelligent Automation Line Provider

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4,174 3,926 5,135 4,539 5,616
Parent Only
6% 5% 4% 4% 4%
9% 12%
10% 18% 34%
Others
17% 21% 17%
Turnkey Solutions 21%
16%
Semiconductor Test Solutions
Test Instruments & ATS
63% 67% 65% 67% 46%
2012 2013 2014 2015 2016.1~3Q
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Sales Breakdown by Consolidated Entities

(Unit: Million NTD) (unaudited) Chroma Ate. Inc.included overseas affiliates MAS New Material Others		2016.3Q % 2,784 78% 126 4% 554 16% 93 2%	QoQ YoY 43% 67% 30% (1%) 3% (6%) (4%) (18%)		2016.1~3Q % YoY 6,640 75% 62% 264 3% (72%) 1,658 19% (5%) 287 3% (13%)
Consolidated Sales		3,557 100%	33% 42%		8,849 100% 24%

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Year 2016.4Q Guidance

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In the first three quarters 2016, turnkey solutions and semiconductor testing solutions are the biggest drivers for Chroma parent sales, which presented a strong growth of 387% and 64% YoY respectively. Meanwhile, the core business of Test Instruments and ATS also presented a double digits growth of 15% compared to last year. Company expected the fourth quarter will be better than last year. The semiconductor testing solutions will be the major growth driver compare to 2015 fourth quarter.

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Business Development Roadmap

Turnkey (Test & Measurement + Automation + MES)

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ICT Industries
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Industry 4.0

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Clean Tech. 2010 2016

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I984

Test Instruments & ATS

TECHNOLOGY

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Power Wider Operation Voltage: Up to1200V 1~60 Series Cell Voltage Simulation
Testing Max. Power: 240kW (parallel) Active and Passive Balance Test
Wide Range Inductance:
Electrical
10~1,000V; 0.1uH~100uH
Safety
High speed: <18mS
FPD Testing 8K x 4K@60Hz 8K x 4K@120Hz
’16 ’16.2H
MARKET Server & Telecom Power/ EV/EVSE/Battery/UHD Display/ Mobile Phone/Power Choke
High Power DC Load
632XXA
BMS ATS
Impulse Winding Tester 8700
19301A
FPD Tester 8K FPD Tester
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SOLUTION

27014

2918

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Test Instruments & ATS

TECHNOLOGY

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High Precision/High Speed
AOI
2D & 3D Measuring
2.5sec/pcs
New Application:
LED Testing
UVA, UVB, UVC
Optical Device Bar Type Sorting High Density Burn-in Module 6” VCSEL Wafer
Testing No Probing Mark 256Ch SMU/module NF &FF Testing
’16 ’16.2H
MARKET 3C Cosmetics/LED/Fiber Optical Communication
Multi-Functional
Dimension Measuring
System 7505
UV LED Chip Prober
58212-C
Laser Diode/Photo Diode Laser Diode Burn-In VCSEL Wafer Probing
Mapping Sorter Test System Test System
58205 58604 58630
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SOLUTION

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Semiconductor Test Solutions

TECHNOLOGY

Touch Sensor/Finger Printing IC testing Analog Testing 256 I/O, 16 bits ADC/DAC Compact Size, Best Cost Of Ownership Logic Testing 256 digital pins, 100Mbps IC Testing Thermal Engine Handler Nitro-TEC (Liquid Nitrogen) ’16 ’16.2H MARKET IoT, Touch Sensor ICs, Finger Printing IC , MCU VLSI Test System 3380D Full Range ATC Cold Temperature Handler 3160C

SOLUTION

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Turnkey Solutions

TECHNOLOGY

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MES Intelligent Process System
Battery
Regenerative CH/DCH System ,
Formation Negative Pressure Formation
’15
‘16
MARKET Industry 4.0 – Battery Cell Formation
Intelligent Battery
Process System
Battery Cell Formation
System 17000
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SOLUTION

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www.chromaate.com

let’s make a better world

Thank You!

Copyright© 2016 Chroma ATE Inc.

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