CHROMA — Interim / Quarterly Report 2016

Mar 20, 2017

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CHROMA ATE INC.

2016.4Q Investor Conference

Paul Ying, CFO Leo Huang, Chairman & CEO

21[st] February, 2017

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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).

• 2016 Consolidated Sales : NT$ 11.6 billion

• 2016 Net Income: NT$1.7 billion

• Chroma Group total of 2,497 employees (as December, 2016)

• Chroma Wins Fifth National Innovation Award –

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Consolidated Chroma Ate Sales Others Consolidated CNMC Sales Consolidated MAS Sales

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11,644 11,624
5% 3%
10,171 10,307
9,692
7% 20%
15%
13%
48%
29%
24%
34%
44% 47% 60% 58% 74%
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Distinguished Enterprise Innovation Award.

2012

2013

2014

2015

2016

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Financial Performance

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Sales Revenues Gross Margin
Consolidated Sales
R&D Expenses
Gross Margin Consolidated R&D Expenses in % of Sales Revenues
Parent Only
7,233
11,644 11,624
10,171 10,307
9,692
56%
47% 55%
54% 54%
53%
5,135
39% 44%
4,539
37%
4,174
3,926
29%
16% 17%
15% 15%
13%
755 784 937
637 631
Chroma Employees ： 1,521  (R&D 40%)
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
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Financial Performance

ROE

Dividend

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EPS Cash dividend
Payout ratio
4.53
17%
15%
3.51 3.30
14%
3.28
3.21
13%
12%
2.52 2.60
2.50
2.40
2.00
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
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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 ： 2,497  , Branch Offices x24, Distributors x72

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Europe :
Netherlands
Germany
US :
Irvine/
Foothill Ranch, CA
Hong Kong :
Neworld
SE Asia: Singapore
India / Thailand / Vietnam Japan: Shin-Yokohama
Malaysia / Philippines /
Indonesia
China : Beijing / Nanjing / Shanghai / Suzhou
Chongqing / Xiamen / Shenzhen / Dongguan
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FINANCIAL REVIEW

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Year 2016 Condensed Consolidated Income Statement

	Condensed Consolidated P&L (In Million NTD, except for EPS in NTD)		2016 %		2015 % YoY %
	Net Sales		11,624 100%		9,692 100% 20%
	Consolidated Sales of Testing Equipment Business		8,587 74%		5,666 58% 52%
	Consolidated Sales of MAS		382 3%		1,261 13% (70%)
	Consolidated Sales of New Material		2,269 20%		2,328 24% (3%)
	Others		386 3%		437 5% (12%)
	Cost of Goods Sold		(6,196) (53%)		(5,471) (56%) 13%
	Gross Profit		5,428 47%		4,221 44% 29%
	Operating Expenses: General & Administration Research & Development		(2,380) (21%) (1,035) (9%)		(2,128) (22%) 12% (873) (9%) 19%
	Operating Income		2,013 17%		1,220 13% 65%
	Non-Operating Income (Expenses), net		29 1%		263 2% (89%)
	Income (Loss) Before Tax Income Tax		2,042 18% (346) (3%)		1,483 15% 38% (288) (3%) 20%
	Net Income		1,696 15%		1,195 12% 42%
	Other Comprehensive Income (Losses)		(224) (2%)		(132) (1%) 70%
	Comprehensive Income		$ 1,472 13%		$ 1,063 11% 38%
	Net Income (Losses) Attributable To: Shareholders of the Parent Noncontrolling Interests		1,720 15% (24) -		1,237 13% 39% (42) (1%) (43%)
			$ 1,696 15%		$ 1,195 12% 42%
	EPS (Basic)		$ 4.53		$ 3.28 38%
	EPS (Diluted)		$ 4.23		~~10~~ $ 3.10 36%

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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		2016. Dec 5,829 1,906 1,012 2,765 10,788	2016. Dec 5,829 1,906 1,012 2,765 10,788	2015. Dec + / - % 5,116 14% 1,636 17% 333 n/a 3,142 - 12% 9,531 13%
	Total Assets			18,633	16,060 16%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			104 88 101 Negative	108 108 91 Negative
	ROE (%)			17%	13%
	ROA (%)			10%	8%
	Cash Position EBITDA Cash Flow from Operation	2016 2,423 2,001		2015 1,853 2,269	YoY 31% (12%)
	Free Cash Flow	894		1,101	(19%)

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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

2016.4Q Key Points

• Sales Revenue: $ 1,617 million,

down 32% QoQ, up 36% YoY

• Gross Margin: 54%

• Operating Margin: 21%

• Net Income: NT$ 382 million,

• down 33% QoQ, up 53% YoY

• 2016.4Q Highlights:

• The sales is mainly coming from

Test & Measurement and

Semiconductor Testing Solutions.

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Gross Margin Sales Revenues
Operating Margin
2,373
1,654
1,617
1,589
1,356
1,193
57% 1,126 57%
55% 55%
53% 54%
50%
50%
864
26%
25%
23%
22% 21%
20%
16%
13%
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12 2015.1Q 2015.2Q 2015.3Q 2015.4Q 2016.1Q 2016.2Q 2016.3Q 2016.4Q 12

Year 2016.4Q Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD)		2016.4Q %		2016.3Q % QoQ %	2015.4Q % YoY %
	Net Sales		1,617 100%		2,373 100% (32%)	1,193 100% 36%
	Cost of Goods Sold		(741) (46%)		(1,186) (50%) (38%)	(515) (43%) 44%
	Gross Profit		876 54%		1,187 50% (26%)	678 57% 29%
	Operating Expenses: General & Administration Research & Development		(283) (17%) (251) (16%)		(327) (13%) (13%) (251) (11%) -	(237) (20%) 19% (204) (17%) 23%
	Operating Income		342 21%		609 26% (44%)	237 20% 44%
	Non-Operating Income (Expenses), net		96 6%		55 2% 75%	50 4% 92%
	Income (Loss) Before Tax		438 27%		664 28% (34%)	287 24% 53%
	Income Tax		(56) (3%)		(90) (4%) (38%)	(37) (3%) 51%
	Net Income		$ 382 24%		$ 574 24% (33%)	$ 250 21% 53%
	Other Comprehensive Income		(46) (3%)		(79) (3%) (42%)	(101) (9%) (54%)
	Comprehensive Income		$ 336 21%		$ 495 21% (32%)	$ 149 12% 126%
	EPS (Basic)		$ 0.99		$ 1.52 (35%)	$ 0.66 50%
	EPS (Diluted)		$ 0.92		$ 1.42 (35%)	$ 0.62 48%

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100% owned subsidiaries’ income - New Material: 15m (QoQ ↑ 150%, YoY ↑ 36%), MAS: 3m (QoQ ↓ 93%, YoY ↓ 80%) .

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Year 2016 Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD)		2016 %		2015 % YoY %
	Net Sales		7,233 100%		4,539 100% 59%
	Cost of Goods Sold		(3,469) (48%)		(2,019) (44%) 72%
	Gross Profit		3,764 52%		2,520 56% 49%
	Operating Expenses: General & Administration Research & Development		(1,101) (15%) (937) (13%)		(910) (20%) 21% (784) (18%) 20%
	Operating Income		1,726 24%		826 18% 109%
	Non-Operating Income (Expenses), net		281 4%		548 12% (49%)
	Income (Loss) Before Tax		2,007 28%		1,374 30% 46%
	Income Tax		(287) (4%)		(137) (3%) 109%
	Net Income		$ 1,720 24%		$ 1,237 27% 39%
	Other Comprehensive Income		(218) (3%)		(134) (3%) 63%
	Comprehensive Income		$ 1,502 21%		$ 1,103 24% 36%
	EPS (Basic)		$ 4.53		$ 3.28 38%
	EPS (Diluted)		$ 4.23		$ 3.10 36%

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 47m (YoY ↓ 6%), MAS: 57m (YoY ↓ 75%).

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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		2016. Dec 3,656 1,458 800 2,597 10,617	2016. Dec 3,656 1,458 800 2,597 10,617	2015. Dec + / - % 2,703 35% 1,301 12% 100 n/a 2,988 - 13% 9,410 13%
	Total Assets			16,586	13,965 19%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			145 100 91 Negative	231 159 101 4%
	ROE (%)			17%	13%
	ROA (%)			11%	9%
	Cash Position EBITDA Cash Flow from Operation	2016 2,192 1,975		2015 1,561 1,523	YoY 40% 30%
	Free Cash Flow	914		896	2%

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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		2016.4Q % QoQ 965 60% 5% 333 21% (9%) 245 15% (76%) 74 4% (4%)	YoY 2016 % YoY 28% 3,570 49% 18% 48% 1,209 17% 59% 73% 2,143 30% 303% 6% 311 4% 42%		2015 % 3,029 67% 759 17% 532 12% 219 4%
Total		1,617 100% (32%)	36% 7,233 100% 59%		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 7,233
Parent Only
6% 5% 4% 4% 4%
9% 12%
10% 18%
Others 30%
17% 21% 17%
Turnkey Solutions 21%
17%
Semiconductor Test Solutions
Test Instruments & ATS
63% 67% 65% 67% 49%
2012 2013 2014 2015 2016
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Sales Breakdown by Consolidated Entities

(Unit: Million NTD) Chroma Ate. Inc.included overseas affiliates MAS New Material Others		2016.4Q % QoQ YoY 1,947 70% (30%) 25% 118 4% (6%) (62%) 611 22% 10% 5% 99 4% 6% (8%)	2016 % YoY 8,587 74% 52% 382 3% (70%) 2,269 20% (3%) 386 3% (12%)
Consolidated Sales		2,775 100% (22%) 8%	11,624 100% 20%

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Year 2017 Guidance

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In the Year 2016, parent company sales was the biggest growth driver, presented a growth of 59%. The turnkey solutions and semiconductor testing solutions are the key drivers, which presented a strong growth of 303% and 59% YoY respectively. Meanwhile, the core business of Test Instruments and ATS also presented a double digits growth of 18% compared to year 2015.

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The Company expected another year of growth in year 2017.

• Growing of EV industry, the demand for power related components and battery cell testing equipment continues to increase.

• Semiconductor testing solution will have another year of double digits growth due to increasing demand of SLT and new Laser Diode (VCSEL) testing equipment.

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Test Instruments & ATS

TECHNOLOGY

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Passive Impedance Measurement
Comp. Testing Wide Freq. range: 30MHz
Insulation Resistance Test
Battery Testing Simultaneous Partial Discharge detection
Hi-pot Test and PD Test function
Electrical
High accuracy current meter : 0.1uA ~ 100uA
Safety
Measure. range: 1pC ~2000pC, 0.1pC resolution
’16 ’17
MARKET Portable & Wearable Device/IoT Battery Cell Optical Coupler/Transistor/Motor
HF LCR Meter
11050-30M
Battery Cell Insulation Tester
11210-K
Partial Discharge Tester
19501-K
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SOLUTION

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Battery Cell Manufacture Process

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Lamination
Test
between electrodes
Battery Cell Insulation Tester
11210-K
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Folding
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Test
between electrode and case
11210-K
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Package

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Test
between electrodes
11210-K
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Seal in aluminum film Case

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Test Instruments & ATS

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TECHNOLOGY Independent 8K Graphics Core
HDMI 2.0a / DisplayPort 1.3
8K Pattern switch time <200ms
Video /FPD
Testing
8K x 4K@60Hz 8K x 4K@120Hz
High Precision/High Speed
AOI 2D & 3D Measuring
2.5sec/pcs
High Voltage : 50V – 1000V
Power High Power 30KW – 300KW (parallel)
High Power : 60KW – 300KW
Testing Active AC load, Regenerative to Grid
Regenerative to Grid
’16 ’17
MARKET Display UPS/ EVSE/ Micro Grid/ PCS/PV Inverter EV / ESS Battery Pack
8K Video Pattern Generator 8K FPD Tester
2238 2918
Multi-Functional
Dimension Measuring
System 7505
Regenerative AC Load Regenerative Battery
61800 Pack Test System
SOLUTION
17040
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Semiconductor Test Solutions – 1/2

TECHNOLOGY

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PXIe form factor, Best Cost Of Ownership
Logic Testing
32- 256 digital pins, 100Mbps
SoC/VLSI Full Application & Flexible Config.
RF Testing WiFi/BT/LTE/GPS/Connectivity IC
IC Testing Thermal Engine
Handler Nitro TEC + Hybrid Chiller
’16 ’17
MARKET RF/Connectivity ICs, IoT, MEMS, Sensors, PMIC, MCU
+
RF Tester MP5800
Model 33010
3380x VLSI/3650x SoC
Test System
Full Range Active Thermal Control
SOLUTION
SLT Handler 3260C
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Semiconductor Test Solution – 2/2

TECHNOLOGY

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Laser Diode 6” VCSEL Wafer High Density Burn-in Module
Testing NF & FF Testing 256Ch SMU/module, and Spike free
High Speed Double Side Inspection
Laser Diode
15 ms per chip
AOI
’16 ’17
MARKET Laser Diode/ Fiber Optical Communication 3C Cosmetics
VCSEL Wafer Probing Laser Diode Burn-In
Test System Test System
58635 58604
Wafer Chip Inspection System
7940
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SOLUTION

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Innovation in Laser Diode Test Solution

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Wafer
New
New
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Module
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Package

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New
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New
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• VCSEL Wafer • Wafer Chip • Laser Diode • Laser Diode • TO-CAN Package
Probing Test System Inspection System Characterization System Burn In System Inspection System
58635 7940
Wafer
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• TOSA/BOSA Temperature
Control System
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Substrate
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Package
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Patterning

Dicing

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www.chromaate.com

let’s make a better world

Thank You!

Copyright© 2017 Chroma ATE Inc.

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