CHROMA — Interim / Quarterly Report 2016

Jun 15, 2016

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CHROMA ATE INC.

2016.1Q Investor Conference

Paul Ying, CFO

28[th] April, 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

• 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
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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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Taiwan Top 50 Best-Performing CEOs by HBR

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Harvard Business Review

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No.38
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No.13
1,011%
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2016

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No.70
NTD
34.5b
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Overall ROE Market
Ranking Value
Appreciation
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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 ： 1,447  (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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3.51
3.28
3.21
15%
14%
13% 2.52 2.60
2.50 2.50
12% 2.40
2.00
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2011 2012 2013 2014 2015
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2011 2012 2013 2014 2015
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*** The dividend will be paid out after the resolutions of Annual General Shareholders meeting.**

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Chroma Global Network

Global Employees ： 2,367  , Branch Offices x17, Distributors x68

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US :
Irvine/ Santa Clara/
Foothill Ranch, CA
Tempe, AZ
Hong Kong : Neworld
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 2016.1Q Condensed Consolidated Income Statement

	Condensed Consolidated P&L (In Million NTD, except for EPS in NTD) (Unaudited)		2016.1Q %		2015.1Q % YoY %
	Net Sales		2,610 100%		1,924 100% 36%
	Consolidated Sales of Testing Equipment Business		1,904 73%		1,065 56% 79%
	Consolidated Sales of MAS		41 2%		161 8% (75%)
	Consolidated Sales of New Material		568 22%		595 31% (5%)
	Others		97 3%		103 5% (6%)
	Cost of Goods Sold		(1,456) (56%)		(1,127) (59%) 29%
	Gross Profit		1,154 44%		797 41% 45%
	Operating Expenses: General & Administration Research & Development		(533) (20%) (237) (9%)		(472) (25%) 13% (194) (10%) 22%
	Operating Income		384 15%		131 6% 193%
	Non-Operating Income (Expenses), net		(12) (1%)		12 1% n/a
	Income (Loss) Before Tax Income Tax		372 14% (66) (2%)		143 7% 160% (30) (1%) 120%
	Net Income		$ 306 12%		113 6% 171%
	Other Comprehensive Income (Losses)		(21) (1%)		(51) (3%) (59%)
	Comprehensive Income		$ 285 11%		$ 62 3% 360%
	Net Income (Losses) Attributable To: Shareholders of the Parent Noncontrolling Interests		321 12% (15) -		123 6% 161% (10) - 50%
			$ 306 12%		$ 113 6% 171%
	EPS (Basic)		$ 0.85		$ 0.33 158%
	EPS (Diluted)		$ 0.80		$ 0.32 150%
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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. March 5,323 1,779 577 2,880 9,872	2016. March 5,323 1,779 577 2,880 9,872	2015. Dec + / - % 5,116 4% 1,636 9% 333 73% 3,142 - 8% 9,531 4%
	Total Assets			16,539	16,060 3%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			106 85 93 Negative	108 108 91 Negative
	ROE (%)			13%	13%
	ROA (%)			8%	8%
	Cash Position EBITDA Cash Flow from Operation	2016.1Q 468 391		2015.1Q 234 807	YoY 100% (52%)
	Free Cash Flow	(240)		534	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

2016.1Q Key Points

• Sales Revenue: $ 1,654 million,

up 39% QoQ, up 91% YoY

• Gross Margin: 50%

• Operating Margin: 23%

• Net Income: NT$ 321 million,

• up 28% QoQ, up 161% YoY

• 2016.1Q Highlights:

• 1Q sales hit the third highest

revenues in company history

• The major growth driver came from Turnkey Solutions, presented a

403% growth QoQ

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Sales Revenues Gross Margin
Operating Margin
1,654
1,356
1,193
57% 1,126 57%
55%
53%
50%
864
23%
22%
20%
16%
13%
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2015.1Q 2015.2Q

2015.3Q 2015.4Q 2016.1Q

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Year 2016.1Q Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD) (Unaudited)		2016.1Q %		2015.4Q % QoQ %	2015.1Q % YoY %
	Net Sales		1,654 100%		1,193 100% 39%	864 100% 91%
	Cost of Goods Sold		(821) (50%)		(515) (43%) 59%	(369) (43%) 122%
	Gross Profit		833 50%		678 57% 23%	495 57% 68%
	Operating Expenses: General & Administration Research & Development		(234) (14%) (213) (13%)		(237) (20%) (1%) (204) (17%) 4%	(210) (24%) 11% (176) (20%) 21%
	Operating Income		386 23%		237 20% 63%	109 13% 254%
	Non-Operating Income (Expenses), net		(7) -		50 4% n/a	31 4% n/a
	Income (Loss) Before Tax		379 23%		287 24% 32%	140 16% 171%
	Income Tax		(58) (4%)		(37) (3%) 57%	(17) (2%) 241%
	Net Income		$ 321 19%		$ 250 21% 28%	$ 123 14% 161%
	Other Comprehensive Income		(20) (1%)		(101) (9%) n/a	(51) (6%) (61%)
	Comprehensive Income		$ 301 18%		$ 149 12% 102%	$ 72 8% 318%
	EPS (Basic)		$ 0.85		$ 0.66 29%	$ 0.33 158%
	EPS (Diluted)		$ 0.80		$ 0.62 29%	$ 0.32 150%

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100% owned subsidiaries’ income - New Material: 12m (QoQ ↑ 9%, YoY -), MAS: (4m) .

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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. March 2,822 1,400 348 2,730 9,766	2016. March 2,822 1,400 348 2,730 9,766	2015. Dec + / - % 2,703 4% 1,301 8% 101 245% 2,988 - 9% 9,410 4%
	Total Assets			14,726	13,965 5%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			148 102 81 2%	231 159 101 4%
	ROE (%)			13%	13%
	ROA (%)			9%	9%
	Cash Position EBITDA Cash Flow from Operation	2016.1Q 425 276		2015.4Q 333 718	QoQ YoY 28% 128% (62%) (34%)
	Free Cash Flow	(487)		423	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 & ATS Semiconductor Test Solutions Turnkey Solutions Service & Others		2016.1Q % QoQ 739 45% (2%) 144 9% (36%) 714 43% 403% 57 3% (19%)		2015.1Q % 646 75% 152 18% 28 3% 38 4%	YoY 14% (5%) n/a 50%
Total		1,654 100% 39%		864 100%	91%

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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 1,654
Parent Only
6% 5% 4% 4% 3%
9% 12% 43%
10% 18%
Others
17% 21% 17%
Turnkey Solutions 21%
Semiconductor Test Solutions
9%
Test Instruments & ATS
63% 67% 65% 57% 45%
2012 2013 2014 2015 2016.1Q
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Sales Breakdown by Consolidated Entities

(Unit: Million NTD) Chroma Ate. Inc.included overseas affiliates MAS New Material Others		2016.1Q % QoQ 1,904 73% 22% 41 2% (87%) 568 22% (3%) 97 3% (10%)		2015.1Q % YoY 1,065 55% 79% 161 9% (75%) 595 31% (5%) 103 5% (6%)
Consolidated Sales		2,610 100% 2%		1,924 100% 36%

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Year 2016.2Q Guidance

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As an increasing investment in clean tech industries, particularly in EV used lithium battery and solar cell, the Chroma parent sales revenues in first quarter 2016 hit the third highest in company history presented a strong growth of 39% QoQ and 91% YoY. The major growth driver is coming from Turnkey Solutions, which outperform the total sales of Turnkey Solution in 2015 by 1.3 times. Meanwhile, the core business of Test Instruments and ATS also presented a double digits growth of 14% compared to last year first quarter. The Company expected the sales revenues in 2016 would be the same seasonal pattern as usual, the 2Q sales revenues will be higher than 1Q.

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Test Instruments & ATS (1/2)

TECHNOLOGY

System Integration, GB/T 18487.1 System Integration Automated AC Type: 1~40KW, USB Power Delivery Emulator Testing DC Type: 10~200KW Power/Comm./Protection Test High Voltage Solar Array Simulator High Transient Linear Load: 10us Power/Battery Voc :1000 – 1500V , Isc: Up to 150A High Power Density: 6kW@4U Testing Power Rating: 22kW – 225kW Passive Impedance Measurement Impulse & Hi-pot test with Vacuum Comp. Testing Wide Freq. range: 30MHz 7 in 1 (ACW/DCW/IR/IWT/DCR/L/Q Phase) ’15 ‘16 EVSE/ Battery/ PV/ USB PD/ Monitor/3C Adapter & Charger/Portable & Wearable Device/ Motor MARKET USB PD USB PD AC/DC EVSE ATS Emulator ATS 8020 8000 High Power DC Load 150~1200V,4~24kW 1500V Solar Array 632XXA Simulator HF LCR Meter Motor Stator SOLUTION 11050-30M

Motor Stator Test System

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Test Instruments & ATS (2/2)

TECHNOLOGY

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5K x 3K@60Hz
FPD Testing 8K x 4K@60Hz
5.4Gbps lane rate
High Capacity Burn-in High Temperature Uniformity
Optical Testing
Max. 1,280 DUT, up to 120 ℃ ± 0.5 ℃ temperature stability
High Precision PXI DPS High Precision PXI SMU/CMU
PXI SMU/CMU
4 CH/Slot, 600k sampling rate Ultra high resolution
’15 ‘16
MARKET HD Display/ Fiber Communication/ Mobile Phone/ Component Manufacturing/ Semiconductor/ LED
FPD Tester 27014 8K FPD Tester
TO-CAN/CoC TOSA/BOSA
Burn In System Temp. Control
58603 System
58691
PXIe
PXI e SMU
SMU/CMU
52304
SOLUTION 52XXX
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Semiconductor Test Solutions

TECHNOLOGY

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High Parallel Sites Testing High Multi-site Testing
Logic Testing
1024 digital pins, 200Mbps 512 sites supported
High parallel sites for ADC/DAC testing
Analog Testing
16 bits 32 CH, 32 CH DIG, per card
IC Testing Thermal Engine
Handler Nitro-TEC (Liquid Nitrogen)
’15 ‘16
MARKET IC – SoC/ MCU/ PMIC/ Sensors (touch-screen, fingerprint) / Connectivity (WiFi, BT)
SoC Test System
High Density Instrument 3650-EX
HDADDA
Full Range Active
Thermal Control
Handler 3160-F
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SOLUTION

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Turnkey Solutions

TECHNOLOGY

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Integrated System
Automation
Automation
Collaborative Robotic Application
Battery Regenerative CH/DCH System ,
Formation Negative Pressure Formation
MES Intelligent Process System
’15
‘16
MARKET Industry 4.0 – Battery Cell Formation/ Battery Pack Auto Assembly/ IT/ICT Auto Test Line/ Smart Factory
Battery Pack Automatic
Automated Optical
Assembly Line
Measurement System
Smart Conveyer
Battery Cell Formation
5703
System 17000
Intelligent Battery
SOLUTION Process System
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www.chromaate.com

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let’s make a better world.

Thank You!

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