LTC — Call Transcript 2023

Jun 29, 2023

1Q23 Earnings Conference LITEON Technology

2 0 2 3 / 4 / 2 7

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Agenda

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• Host, 1Q23 Results Julia Wang, IR Senior Director

• Operation Plan and Growth Strategy Anson Chiu, President

• Q&A

2

Safe Harbor Notice

LITEON Technology’s statement of its current expectations are forward-looking statements which are subject to significant risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements.

The numbers of the presentation are prepared under IFRS.

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Information
Opto- Cloud & Technology &
electronics AIoT Consumer
Electronics
Opto-semiconductors, Datacenter, Server, NB, Workstations,
Automotive Electronics, Networking, AIoT, Tablets, DT,
Intelligent Transportation Smart Devices,
Gaming,
Lighting Solutions Video Intelligence
Consumer Electronics
Solutions
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3

1Q23 Income Statement

In NT Millions	1Q23	QoQ YoY 1Q22 4Q22	QoQ YoY 1Q22 4Q22	QoQ YoY 1Q22 4Q22
	Amount %	Amount % % Amount % %
Net Sales	34,174 100.0	43,095 100.0 -21 41,230 100.0 -17
COGS	27,752 81.2	34,679 80.5 -20 34,163 82.9 -19
Gross Profit	6,422 18.8	8,416 19.5 -24 7,067	17.1	-9
Operating Expenses	4,268 12.5	5,088 11.8 -16 4,086 9.9 4
Operating Profit	2,154 6.3	3,327 7.7 -35 2,981 7.2 -28
Other Income/ Expense	821 2.4	1,520 3.5 -46 -324 -0.8 -
Profit Before Tax	2,975 8.7	4,848 11.2 -39 2,657 6.4 12
Income Tax Expense	610 1.8	994 2.3 -39 545 1.3 12
Non-Controlling Interests	12 0.0	6 0.0 87 8 0.0 40
Profit Attributable to Parent	2,353 6.9	3,847 8.9 -39 2,104 5.1 12
After Tax EPS	1.03	1.68 0.92

• 1Q23 revenue -15%/-12% QoQ/YoY, excluding IMG disposal

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4

1Q Performance of Core Business in recent years

1Q23 Core Business Revenue YoY

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2020~2023 1Q Core Business Performance
Opto-semiconductor
NT$ Mn CAGR: ~12% in 1Q20~1Q23 Photocoupler Automotive Electronics
20%
25,000 15%
10%
20,000 5% 2%
0%
15,000 -5%
-10% -7%
10,000
AIoT Cloud Computing Power
20%
16%
5,000 15%
10%
- 5% 3%
0%
1Q20 1Q21 1Q22 1Q23
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Cloud & AIoT Opto-electronics (including auto electronic)

• High-end photocoupler continues to grow, while the demand of general -5% purpose photocoupler declines due to industry adjustment -10%

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5

Revenue contribution in 1Q23 is approaching our 4/3/3 target

1Q	23 Product Mix 1Q22 P 22% 36% 42% Opto-electronics (including auto electronic) Cloud & AIoT Information Technology & Consumer Electronics $34,174 NT$mn
					Q22	roduct Mix 21% 31% 48% $41,230 NT$mn
		Revenue GPM from High-End Products Amount YoY %
NT$Mln							1Q23 1Q22
Opto-electronics (includingauto electronic)		7,645 -11%	22%	30%+			482 1,087
Cloud & AIoT		12,151 -5%	36%	25%+			788 692
Information Technology & Consumer Electronics		14,378 -28%* 42% 18%+					1,894 1,920

• ITCE revenue -18% YoY, excluding IMG

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6

Robust Balance Sheet

lance Sheet
In NT millions	1Q23	4Q22 1Q22
	Amount %	Amount % Amount %
Cash & Equivalent	77,675 42%	91,066 46% 68,517 37%
Accounts Receivable	30,423 17%	38,128 19% 38,099 20%
Inventories	25,366 14%	27,747 14% 31,307 17%
Current Assets	149,469 81%	164,953 83% 150,602 81%
Short Term Debt	20,840 11%	32,629 16% 27,304 15%
Accounts Payable	37,828 21%	44,883 22% 44,646 24%
Current Liabilities	100,962 55%	111,781 56% 110,997 60%
Equities	77,401 42%	81,987 41% 72,199 39%
Key Indices Quick Ratio (x)	1.2	1.2 1.1
Net Cash (NT Millions)	56,835	58,437 41,213
BVPS	33	35 31

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7

Enhanced ROIC over years creating resources for new business

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60% Significant increase of ROIC
ROIC% • Higher proportion from high growth & high value business
•
Aggressive working capital management
•
Continuous improvement of invested capital and
50%
operational efficiency
43%
40%
35%
30% 28%
22%
20%
15%
10%
2018 2019 2020 2021 2022
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• ROIC: Operating Profit after tax / Average [Net Working Capital + Net PP&E + Right-of-use Assets + Intangible Assets]

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8

1Q23 Executive Summary

• 1Q23 consolidated sales reached NT$34.2 billion, down 12% YoY(excluding IMG), which mainly benefited from the YoY growth of cloud computing power, auto electronics, 5G and networking. Gross margin reached 18.8%, up 1.7ppts YoY, attributable to the optimization of product and customer portfolios.

• RD expense accounts for 5.5% of sales in 1Q23, up nearly 20% YoY, mainly reflecting LITEON’s investment on cloud, 5G, auto electronics and new business.

• 1Q23 profits reached NT$2.35 billion and EPS reached NT$1.03, up 12% YoY.

• The ex-dividend date of 4Q22 cash dividend was 3/16, and the payment date was 4/21. The dividend of 2022 FY reached NT$4.5, with payout ratio of 73%.

• The Annual Shareholders Meeting is expected to be held on May 17[th] , 2023.

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© LITE-ON Technology Corporation. All Rights Reserved.

Developing high-end PSUs to align with AI Server requirement

• LITEON continues to focus on the rapid development of AI/GPU trend, developing high efficiency PSUs with power wattage ranging from 6KW~8KW and efficiency levels surpassing titanium level(97.5%) to meet high power, high efficiency and from energy saving requirements datacenters.

• The combines customized power system

• transformer design and optimized circuit architecture to break through the technical level of higher power and efficiency.

• The application of AI is becoming increasingly widespread, and the demand for GPU servers is optimistic in the next 2- 3 the demand of GPU years. Recently, has increased

• power products significantly in the market.

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20KW
Max Power Consumption
15KW
9KW PSU 8kW
97.5%
5.5kW 97%
3kW 97%
GaN/SMD Device/
Advanced Product Design Magnetic Integration
with SiC
Device/Circuit/Mag
Optimization
2020 2023 2025
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Max Power Consumption per GPU Server

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48Vo
54Vo
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11

Operation Plan and Growth Strategy

2Q23 Outlook

• Three major business and the whole operational performance are expected to grow, mainly driven by high growth & high value core business such as cloud computing power, auto electronics, 5G small cell and networking.

• Shipment of high-end products in ITCE is expected to grow. Besides, ITCE product portfolio continues to diversify.

• Continue our RD investment(5~6% of sales) to increase added-value and GP from core business.

2023 Outlook

• Expected to see high growth & high value products such as AI server, auto electronics(ADAS, EV), 5G network to drive revenue back to a sequential growth trajectory.

• ROIC has increased from 15% in 2018 to 43% in 2022. Profits and returns from core generated

• business have created the resources needed to develop new business. More strategic investments in new business are expected, with continuous improvement of operational efficiency in core business, so that long-term ROIC can keep growing and sustaining.

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12

光電節能環境永續 Empowering A Green Future https://www.liteon.com/en-us liteontech.ir@liteon.com

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