CHROMA — Interim / Quarterly Report 2015

Jan 4, 2016

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CHROMA ATE INC.

2015.3Q Investor Conference

Paul Ying, CFO

30[th] October, 2015

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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).

• 2014 Consolidated Sales : NT$10.31 billion

• 2014 Net Income: NT$1.32 billion

• Chroma Group total of 2,294 employees (as Sept,

2015)

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Consolidated Chroma Ate Sales Others
Consolidated CNMC Sales
Consolidated MAS Sales
14,886
14,148
11%
8%
11,644
5% 10,307
10,171
7%
47% 48%
15%
48% 29%
34%
40% 41% 44% 47% 60%
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2010

2011

2012

2013 2014

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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

Parent Only

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Consolidated
14,886
5,640 55%
54% 54%
14,148
5,338
55% 5,135
52%
11,644 37% 39%
4,174
3,926
10,307
10,171
29% 29%
28%
16%
15% 15%
12%
11%
755
603 630 637 631
Chroma Employees ： 1,421  (R&D 37%)
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
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Financial Performance

ROE

Dividend

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EPS Cash dividend
Stock dividend
5.05
25%
Payout ratio
4.06
19% 3.80
3.51
3.21
15%
14%
2.52 2.60
2.50 2.50
12%
2.00
0.40
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2010 2011 2012 2013 2014
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2010 2011 2012 2013 2014

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Chroma Global Network

Global Employees ： 2,294  , Branch Offices x16, Distributors x65, Subsidiaries x6

Europe : Netherlands

US : Hong Kong : Neworld Irvine / Foothill Ranch, CA Tempe, AZ Japan: Shin Yokohama

China : Shenzhen / Dongguan / Xiamen / Suzhou

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FINANCIAL REVIEW

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Year 2015.1~3Q Condensed Consolidated Income Statement

	Condensed Consolidated P&L (In Million NTD, except for EPS in NTD)		2015.1-3Q %		2014.1-3Q % YoY %
	Net Sales		7,131 100%		7,700 100% (7%)
	Consolidated Sales of Testing Business		4,105 58%		4,508 59% (9%)
	Consolidated Sales of MAS		952 13%		480 6% 98%
	Consolidated Sales of New Material		1,745 24%		2,360 31% (26%)
	Others		329 5%		352 4% (7%)
	Cost of Goods Sold		(4,057) (57%)		(4,682) (61%) (13%)
	Gross Profit		3,074 43%		3,018 39% 2%
	Operating Expenses: General & Administration Research & Development		(1,513) (21%) (646) (9%)		(1,437) (18%) 5% (604) (8%) 7%
	Operating Income		915 13%		977 13% (6%)
	Non-Operating Income (Expenses), net		251 3%		179 2% 40%
	Income (Loss) Before Tax Income Tax		1,166 16% (205) (3%)		1,156 15% 1% (173) (2%) 18%
	Net Income		961 13%		983 13% (2%)
	Other Comprehensive Income (Losses)		(30) -		(100) (2%) n/a
	Comprehensive Income		$ 931 13%		$ 883 11% 5%
	Net Income (Losses) Attributable To: Shareholders of the Parent Noncontrolling Interests		986 14% (25) (1%)		898 12% 10% (15) (1%) 67%
			$ 961 13%		$ 886 11% 8%
	EPS (Basic)		$ 2.62		$ 2.66 (2%)
	EPS (Diluted)		$ 2.48		$ 2.56 (3%)
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Balance Sheet Highlights & Financial Ratio

	Consolidated (In Million NTD) Balance Sheet Highlights Cash & Short Term Investments Inventory Short Term Debt Long Term Debt Shareholders Equity			2015. Sept 4,134 1,646 864 2,601 9,390	2014. Dec + / - % 4,129 - 1,605 3% 426 103% 2,488 5% 9,373 -
	Total Assets			15,895	14,970 6%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			108 119 93 -	91 108 76 -
	ROE (%)			14%	14%
	ROA (%)			8%	9%
	Cash Position EBITDA Cash Flow from Operation	2015.1-3Q 1,443 1,277	2014.1-3Q 1,396 682		YoY 3% 87%
	Free Cash Flow	560	(844)		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

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Sales Revenues Gross Margin
Operating Margin
1,604
1,345 1,356
1,249
57% 1,126
56% 55%
55% 53% 51% 53%
937
864
24%
23%
22%
18%
16% 16%
13%
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2015.3Q Key Points

• Sales Revenue: $ 1,356 million,

up 20% QoQ, down 15% YoY

• Gross Margin: 55%

• Operating Margin: 22%

• Net Income: NT$ 482 million,

up 27% QoQ, down 1% YoY

• 2015.3Q Highlights:

• In the third quarter sales

revenues, the major growth driver is coming from Turnkey Solution, which presented a growth of

145% QoQ.

2014.1Q 2014.2Q 2014.3Q 2014.4Q 2015.1Q 2015.2Q 2015.3Q

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Year 2015.3Q Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD)		2015.3Q %		2015.2Q % QoQ %	2014.3Q % YoY %
	Net Sales		1,356 100%		1,126 100% 20%	1,604 100% (15%)
	Cost of Goods Sold		(610) (45%)		(524) (47%) 16%	(752) (47%) (19%)
	Gross Profit		746 55%		602 53% 24%	852 53% (12%)
	Operating Expenses: General & Administration Research & Development		(235) (17%) (207) (16%)		(229) (19%) 3% (198) (18%) 5%	(268) (17%) (12%) (201) (13%) 3%
	Operating Income		304 22%		175 16% 74%	383 23% (21%)
	Non-Operating Income (Expenses), net		243 18%		225 20% 8%	168 11% 45%
	Income (Loss) Before Tax		547 40%		400 36% 37%	551 34% (1%)
	Income Tax		(65) (4%)		(19) (2%) n/a	(63) (4%) 3%
	Net Income		$ 482 36%		$ 381 34% 27%	$ 488 30% (1%)
	Other Comprehensive Income		141 10%		(122) (11%) n/a	(66) (4%) n/a
	Comprehensive Income		$ 623 46%		$ 259 23% n/a	$ 422 26% 48%
	EPS (Basic)		$ 1.28		$ 1.01 27%	$ 1.30 (2%)
	EPS (Diluted)		$ 1.20		$ 0.96 25%	$ 1.14 5%

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 19m (QoQ ↑ 111%, YoY ↑ 19%), MAS: 21m

(QoQ n/a, YoY ↓ 62%, ).

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Year 2015.1~3Q Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD)		2015.1-3Q %		2014.1-3Q % YoY %
	Net Sales		3,347 100%		3,790 100% (12%)
	Cost of Goods Sold		(1,505) (45%)		(1,718) (45%) (12%)
	Gross Profit		1,842 55%		2,072 55% (11%)
	Operating Expenses: General & Administration Research & Development		(673) (20%) (581) (17%)		(688) (18%) (2%) (541) (15%) 7%
	Operating Income		588 18%		843 22% (30%)
	Non-Operating Income (Expenses), net		499 15%		290 8% 72%
	Income (Loss) Before Tax		1,087 33%		1,133 30% (4%)
	Income Tax		(101) (3%)		(134) (4%) (25%)
	Net Income		$ 986 30%		$ 999 26% (1%)
	Other Comprehensive Income		(32) (1%)		(101) (2%) n/a
	Comprehensive Income		$ 954 29%		$ 898 24% 6%
	EPS (Basic)		$ 2.62		$ 2.66 (2%)
	EPS (Diluted)		$ 2.48		$ 2.47 -

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 39m (YoY ↓ 13%), MAS: 217m (YoY ↑ 158%). Foreign exchange gain of 59m.

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Balance Sheet Highlights & Financial Ratio

	Parent Only (In Million NTD) Balance Sheet Highlights Cash & Short Term Investment Inventory Short Term Debt Long Term Debt Shareholders Equity		2015. Sept 2,388 1,303 626 2,451 9,250	2014. Dec 2,168 1,257 151 2,361 9,271	+ / - % 10% 4% n/a 4% -
	Total Assets		13,679	13,290	3%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)		230 178 102 7%	186 141 71 5%
	ROE (%)		14%	15%
	ROA (%)		10%	11%
	Cash Position EBITDA Cash Flow from Operation	2015.3Q 595 198	2015.2Q 447 188	QoQ 33% 5%	2015.1-3Q YoY 1,228 (2%) 805 27%
	Free Cash Flow	254	(5)	n/a	473 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		2015.3Q % QoQ 840 62% 7% 197 15% 7% 257 19% 145% 62 4% 24%		2014.3Q % YoY 781 49% 8% 376 23% (48%) 407 25% (37%) 40 3% 55%		2015.1-3Q % 2,273 68% 534 16% 390 12% 150 4%		2014.1-3Q % YoY 2,109 56% 8% 794 21% (33%) 756 20% (48%) 131 3% 15%
Total		1,356 100% 20%		1,604 100% (15%)		3,347 100%		3,790 100% (12%)

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Chroma Ate. Inc. Sales Mix Breakdown (YTD)

A Turnkey Solution and Intelligent Automation Line Provider

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Parent Only 5,338 4,174 3,926 5,135 3,347
7% 6% 5% 4% 4%
9% 12%
10% 18%
Others
21%
16%
17% 21%
Turnkey Solutions 9% 21%
Semiconductor Test Solutions
Test Instruments & ATS
63% 67% 65% 57% 68%
2011 2012 2013 2014 2015.1-3Q
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Sales Breakdown by Consolidated Entities

(Unit: Million NTD) Chroma Ate. Inc. included overseas affiliates MAS New Material Others		2015.3Q % QoQ 1,671 67% 22% 127 5% (81%) 587 23% 4% 113 5% 1%		2014.3Q % YoY 1,951 64% (14%) 208 7% (39%) 782 25% (25%) 126 4% (10%)		2015.1-3Q % 4,105 58% 952 13% 1,745 24% 329 5%		2014.1-3Q % YoY 4,508 59% (9%) 480 6% 98% 2,360 31% (26%) 352 4% (7%)
Consolidated Sales		2,498 100% (8%)		3,067 100% (19%)		7,131 100%		7,700 100% (7%)

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Year 2015 Guidance

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In the peak season of third quarter, Chroma parent sales revenues presented a consecutively growth of 20% QoQ. The major growth driver is coming from Turnkey Solution, which presented a growth of 145% QoQ, while Test Instruments & ATS also presented a consecutively growth of 7% QoQ and 8% YoY respectively.

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The US, Europe and Japan markets penetration have reached 26% of Chroma parent sales in first three quarters 2015 through increasing recognition from global top-tier customers.

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Industrial Automation (IA) remains strong, the Company expected IA related businesses (Turnkey Solutions + MAS) to reach over 20% of the group consolidated sales compared to 16% in 2014. The first three quarters of 2015 have reached 19% of . group consolidated sales

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Moving into low season, the Company expected the parent sales revenues in 2015 second half would outperform first half by over 20%, mainly due to delivery of Turnkey Solutions and increasing demand from clean tech related power testing businesses.

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Test Instruments & ATS (1/2)

TECHNOLOGY

System Integration Automated AC Type: 10KW, SAE J1772 Testing DC Type: 10~50KW, IEC61851 Parallel, High Efficiency, Regenerative 60~300kW, >85% Power Bi-direction, AC/DC, AC/AC Testing Ultra High Measurement Accuracy High Transient Linear Load: 10us Voltage: 0.015%+0.015%F.S. High Power Density: 6kW@4U Current: 0.04%+0.04%F.S. ‘15 ‘16 MARKET Server/ Telecom Power/ DD Converter/ Grid/ Green Energy/ Electric Vehicle/ Power Battery Pack High Power DC Load 150~1200V,4~24kW, 632XXA Regenerative Grid Simulator Regenerative Battery Pack Tester 0~400Vac,30~60kVA, 61800 0~200V, 0~2600A, 0.6W~50kW, 17020 EV Charging ATS 8000

SOLUTION

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Test Instruments & ATS (2/2)

TECHNOLOGY

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High Speed CSP (Chip-Scale
LED Testing Packaged) ; UPH : 25k
High Density Burn-in Module
Optical Testing
128ch/module; 10sec/DUT
Passive Impedance Measurement Impulse & Hi-pot test with Vacuum
Comp. Testing Wide Freq. Range: 60Hz~5MHz 7 in 1 (ACW/DCW/IR/IWT/DCR/L/Q Phase)
4K x 2K@60Hz
Video Testing
5.4Gbps Lane Rate
‘15 ‘16
MARKET HD Display/ Fiber Communication/ High Power Components/ LED/ Motor
FPD Tester 040201
HF LCR Meter Programmable HF
11050-5M AC Tester 11805-20-20
Motor Stator
Test System 1920
LD CoC Characterization LD CoC Burn-In Test
Test System 58620 System 58601/58603
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LED Tester & Tapper 58280

SOLUTION

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Semiconductor Test Solutions

TECHNOLOGY

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Thermal Engine
IC Testing
Nitro-TEC (Liquid Nitrogen)
Handler
Multi-site Testing Integrated Digital/ Mixed
Logic Testing
1024 digital pins, 200Mbps Signal Testing
High Power/High Accuracy
Analog Testing
VI 45/100/200; 4A Max; 0.05%
‘15 ‘16
MARKET IC – SoC/ MCU/ PMIC/ Sensors (touch-screen, fingerprint) / Connectivity (WiFi, BT)
Analog/power
Instruments
VI45/PVI100
SoC Test System VLSI Test System Full Range Active
3650-EX 3380-D Thermal Control
Handler 3160-F
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SOLUTION

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Turnkey Solutions

TECHNOLOGY

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Collaborative Robotic Application
Automation
Smart Conveyance System
Configurable/Scalable/Reusable
Battery Cell Regenerative CH/DCH System
Testing 5V/10A,20A,50A, 100A Tester
Real-Time
MES Multi Protocol Interface
Mobile Production Report
‘15 ‘16
MARKET
Industry 4.0 – Battery Cell Formation/ Battery Pack Auto Assembly/ IT/ICT Auto Test Line/ Smart Factory
Battery Cell Formation
System 17000
Battery Pack Automatic
Assembly Line
Smart Conveyer 5703
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SOLUTION

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www.chromaate.com

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let’s make a better world.

Thank You!

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