CHROMA — Investor Presentation 2015

Jun 16, 2015

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CHROMA ATE INC.

2015.1Q Investor Conference

30[th] April, 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 2,224 employees (as

March, 2015)

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Consolidated Chroma Ate Sales Others Consolidated CNMC Sales Consolidated MAS Sales

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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 ： 1,312  (R&D 40%)
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 ： 2,268  , 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 2015.1Q Condensed Consolidated Income Statement

	Condensed Consolidated P&L (In Million NTD, except for EPS in NTD)		2015.1Q %		2014.1Q % YoY %
	Net Sales		1,924 100%		2,006 100.0% (4%)
	Consolidated Sales of Testing Business		1,065 56%		1,081 53.2% (1%)
	Consolidated Sales of MAS		161 8%		96 5.4% 68%
	Consolidated Sales of New Material		595 31%		728 36.3% (18%)
	Others		103 5%		101 5.1% 2%
	Cost of Goods Sold		(1,127) (59%)		(1,250) (62.3%) (10%)
	Gross Profit		797 41%		756 37.7% 5%
	Operating Expenses: General & Administration Research & Development		(472) (25%) (194) (10%)		(431) (21.5%) 10% (182) (9.1%) 7%
	Operating Income		131 6%		143 7.1% (8%)
	Non-Operating Income (Expenses), net		12 1%		54 2.7% (78%)
	Income (Loss) Before Tax Income Tax		143 7% (30) (1%)		197 9.8% (27%) (25) (1.2%) 20%
	Net Income		113 6%		172 8.6% (34%)
	Other Comprehensive Income (Losses)		(51) (3%)		48 2.4% n/a
	Comprehensive Income		$ 62 3%		$ 220 11.0% (72%)
	Net Income (Losses) Attributable To: Shareholders of the Parent Noncontrolling Interests		123 6% (10) -		178 8.9% (31%) (6) (0.3%) 67%
			$ 113 6%		$ 172 8.6% (34%)
	EPS (Basic)		$ 0.33		$ 0.48 (31%)
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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. March 4,601 1,587 323 2,422 9,444	2015. March 4,601 1,587 323 2,422 9,444	2014. Dec + / - % 4,129 11% 1,605 - 1% 423 - 24% 2,488 - 3% 9,373 1%
	Total Assets			14,945	14,970 -
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			137 127 102 -	91 108 76 -
	ROE (%)			5%	14%
	ROA (%)			3%	9%
	Cash Position EBITDA Cash Flow from Operation	2015.1Q 234 807		2014.1Q 271 303	YoY (14%) 166%
	Free Cash Flow	534		287	86%

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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
1,249
57%
56%
55%
53% 51%
937
864
24%
23%
18%
16%
13%
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2015.1Q Key Points

• Sales Revenue: $ 864 million,

down 36% QoQ, down 8% YoY

• Gross Margin: 57%

• Operating Margin: 13%

• Net Income: NT$ 123 million,

down 61% QoQ, down 31% YoY

• 2015.1Q Highlights:

• The first quarter sales revenues

mainly contributed from Test

Measurements and ATS.

2014.1Q 2014.2Q 2014.3Q 2014.4Q 2015.1Q

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Year 2015.1Q Condensed Income Statement

	Condensed P&L– Parent Only (In Million NTD, except for EPS in NTD)		2015.1Q %		2014.4Q % QoQ %	2014.1Q % YoY %
	Net Sales		864 100%		1,345 100% (36%)	937 100% (8%)
	Cost of Goods Sold		(369) (43%)		(664) (49%) (44%)	(421) (45%) (12%)
	Gross Profit		495 57%		681 51% (27%)	516 55% (4%)
	Operating Expenses: General & Administration Research & Development		(210) (24%) (176) (20%)		(259) (19%) (19%) (213) (16%) (17%)	(183) (19%) 15% (162) (17%) 9%
	Operating Income		109 13%		209 16% (48%)	171 19% (36%)
	Non-Operating Income (Expenses), net		31 4%		142 10% (78%)	31 3% -
	Income (Loss) Before Tax		140 16%		351 26% (60%)	202 22% (31%)
	Income Tax		(17) (2%)		(32) (2%) (47%)	(24) (3%) (29%)
	Net Income		$ 123 14%		$ 319 24% (61%)	$ 178 19% (31%)
	Other Comprehensive Income		(51) (6%)		102 7% n/a	47 5% n/a
	Comprehensive Income		$ 72 8%		$ 421 31% n/a	$ 225 24% (68%)
	EPS (Basic)		$ 0.33		$ 0.85 (61%)	$ 0.48 (31%)
	EPS (Diluted)		$ 0.32		$ 0.84 (62%)	$ 0.47 (32%)

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 11m (QoQ ↓ 42%, YoY ↓ 35%), MAS: 32m (QoQ - %, YoY ↑ 256%, ).

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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. March 2,340 1,315 140 2,297 9,334	2015. March 2,340 1,315 140 2,297 9,334	2014. Dec 2,168 1,257 151 2,361 9,271	+ / - % 8% 5% - 7% - 3% 1%
	Total Assets			13,144	13,290	- 1%
	Inventory Turnover (Day) AR Turnover (Day) AP Turnover (Day) Net Debt to Equity (%)			314 216 124 1%	186 141 71 5%
	ROE (%)			5%	15%
	ROA (%)			4%	11%
	Cash Position EBITDA Cash Flow from Operation	2015.1Q 186 419		2014.4Q 397 187	QoQ (53%) 124%	2014.1Q YoY 240 (23%) 354 18%
	Free Cash Flow	224		412	(46%)	332 (33%)

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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 Solution

(Unit: Million NTD) Test Instruments & ATS Semiconductor Test Solutions Turnkey Solutions Service & Others		2015.1Q % 646 75% 152 18% 28 3% 38 4%		2014.4Q % QoQ 810 60% (20%) 291 22% (48%) 179 13% n/a 65 5% (42%)	2014.1Q % 594 63% 158 17% 146 16% 39 4%	YoY 9% (4%) n/a -
Total		864 100.0%		1,345 100.0% (36%)	937 100.0%	(8%)

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Consolidated Sales Breakdown by Quarter

(Unit: Million NTD) Chroma Ate. Inc. included overseas affiliates MAS New Material Others		2015.1Q % 1,065 56 161 8% 595 31% 103 5%		2014.4Q % QoQ 1,667 64% (36%) 201 8% (20%) 623 24% (4%) 116 4% (11%)	2014.1Q % YoY 1,081 54% (1%) 96 5% 68% 728 36% (18%) 101 5% 2%
Consolidated Sales		1,924 100.0%		2,607 100.0% (26%)	2,006 100.0% (4%)

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Year 2015 Guidance

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Due to low capital spending and seasonality effect in the first quarter 2015, the Chroma parent sales revenues presented a decline of 8% YoY. Despite the weak first quarter sales revenues, Test Instruments & ATS still presented a growth of 9% compared to year 2014. The Company expected the net profit in second quarter will be better than previous two quarters based on the IA projects deliver. Industrial Automation (IA) remains strong, the Company expected IA related businesses (Turnkey Solutions + MAS) to reach 20%+ of the group consolidated sales in year 2015 compared to 16% in 2014. Corporate strength in testing solutions and system integration enhance the penetration in IoT devices market. This will drive up the Company growth in the near future.

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Corporate Growth Strategy

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(NT$ Million)
6,000
5,000
Turnkey Solutions
Semiconductor Test Solutions
4,000
Test Instruments & ATS
Others
3,000
2,000
1,000
1984
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Application Roadmap

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Emerging Industries Smart Factory Internet of Things

Growth Engines

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LED
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Photovoltaic
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Electric Vehicle
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Battery
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Power Passive Internet/
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Niche Market Niche Product

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Test Solutions

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FPD/
Video &
Color
Optical Power
Devices Electronics
Passive
Turn- Component
Battery &
Electrical
Key
Safety
Solution
Provide
r
Semi-
Electric
conductor
Vehicle
/ IC
Photo- LED/
voltaic Lighting
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Turnkey Solutions for Smart Factory

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Turnkey Solutions in Smart Factory Application

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Automation Integration
Test & Manufacturing
Measurement Execution Sys.
3C Device Automatic Testing
Battery Pack Automatic Assembly
Passive Component Testing & Packing
LED Lighting Auto Assembly & Testing
Battery Cell Formation
Photovoltaic Automatic Testing & Sorting
Flat Panel Display Burn-in & Testing
IC (CIS) Automatic Testing & Sorting
2008 2009 2010 2011 2012 2013 2014 2015 2016
Solutions
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IoT Test Solutions

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Semiconductor Testing in IoT Application

• Sensor Layer Wireless MCU PMIC Sensors Applications • Connectivity (WiFi, • MCU • LDO • CIS Bluetooth, GPS) • MCU + ADDA • Regulators • Light Sensors

• • Mobile (GSM, • MCU + E-MEM • DC/DC • Compass WCDMA, LTE) • MCU + RF • AC/DC • M Sensors

• • PA / FEM • MCU + PMIC • PMIC • G Sensors

• DUT • TV / FM Tuner • LED Driver • Gyro • Integrated Power • RF ID/Smart Card MOS • Temperature Sensor

• • Motor Drive

• PXI RF System

• Test 36XX / 33xx Series 36XX Series 33XX Series

• Solutions 3240Q RF IC Handler 3380P + 3270

• 31XX series VI45/PVI100 Integrated Solution

• Adivic MP5800

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Optical Device & Wireless Testing In IoT Application

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Network Layer
Wafer Package Wireless
Applications
● VCSEL ● TO-CAN ● WiFi
● EEL ● TOSA ● Bluetooth
● Photo Diode ● ROSA ● GPS
DUT ● BOSA ● LTE
● CoC
● CoS
Wireless Communication
Test System
TO-CAN package
Test Inspection System
Burn-In system VCSEL Tester
Bluetooth Tester
Solutions TO-CAN Laser Diode
Burn-In system
Wireless Test Station
GPS Simulator
Double Sides Wafer
Laser Diode
Inspection System
Characterization System
RF Recorder/Player
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www.chromaate.com

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let’s make a better world Thank You!

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