LTC — Call Transcript 2024

Mar 1, 2024

4Q23 Earnings Conference LITEON Technology

2 0 2 4 / 0 2 / 2 6

Agenda

==> picture [952 x 43] intentionally omitted <==

• Host, 4Q23 Results Julia Wang, IR Senior Director

• Operation Plan and Growth Strategy Anson Chiu, President

• LITEON 2024 Transformation Jason Tsao, CTO

• Q&A

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.

==> picture [466 x 179] intentionally omitted <==

----- Start of picture text -----

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
----- End of picture text -----

==> picture [58 x 21] intentionally omitted <==

3

4Q23 Income Statement

ome Statement	ome Statement	ome Statement	ome Statement	ome Statement
In NT Millions QoQ YoY 4Q23 4Q22 3Q23
	4Q23
	Amount %	Amount % % Amount % %
Net Sales	36,909 100.0	39,957 100.0 -8 43,095 100.0 -14 *
COGS	28,773 78.0	30,526 76.4 -6 34,679 80.5 -17
Gross Profit	8,137 22.0	9,432 23.6 -14 8,416	19.5	-3
Operating Expenses	4,719 12.8	4,812 12.0 -2 5,088 11.8 -7
Operating Profit	3,418 9.3	4,620 11.6 -26 3,327 7.7 3
Other Income/ Expense	934 2.5	1,124 2.8 -17 1,520 3.5 -39
Profit Before Tax	4,352 11.8	5,744 14.4 -24 4,848 11.2 -10
Income Tax Expense	894 2.4	1,178 2.9 -24 994 2.3 -10
Non-Controlling Interests	-2 0.0	9 0.0 -122 6 0.0 -
Profit Attributable to Parent	3,460 9.4	4,558 11.4 -24 3,847 8.9 -10
After Tax EPS	1.51	1.99 1.68

• 4Q23 revenue -8.5% YoY, excluding IMG disposal

==> picture [58 x 21] intentionally omitted <==

4

2023 Income Statement

Statement
In NT Millions	2023	YoY 2022
	Amount %	Amount % %
Net Sales	148,333 100.0	173,456 100.0 -14 *
COGS	115,665 78.0	140,194 80.8 -17
Gross Profit	32,668 22.0	33,262	19.2	-2
Operating Expense	18,152 12.2	18,190 10.5 0
Operating Profit	14,516 9.8	15,073 8.7 -4
Other Income/ Expense	3,850 2.6	2,773 1.6 39
Profit Before Tax	18,366 12.4	17,846 10.3 3
Income Tax Expense	3,767 2.5	3,658 2.1 3
Non-Controlling Interests	28 0.0	36 0.0 -23
Profit Attributable to Parent	14,571 9.8	14,151 8.2 3
After Tax EPS	6.36	6.19

• 2023 revenue -9% YoY, excluding IMG disposal

==> picture [58 x 21] intentionally omitted <==

5

Core Business & Profit expansion by growth engines since 2020

==> picture [960 x 20] intentionally omitted <==

NT$ Mn

2023 Product Mix

==> picture [872 x 377] intentionally omitted <==

----- Start of picture text -----

300,000 25.0%
21%
22.0%
250,000
20.0%
19.2% 44% $148,333
18.5% 56%
17.4% NT$mn
200,000
173,456 15.0%
157,134 164,828 148,333 * 35%
150,000
9.8%
10.0%
100,000
8.7% 2020 Product Mix
7.9%
Revenue
6.5% 5.0%
50,000 GP%
18%
OP%
- 0.0% $157,134
2020 2021 2022 2023 49%
NT$mn
51%
NT$ 2020 2021 2022 2023 CAGR 31%
EPS 4.31 6.01 6.19 6.36 14%
Excluded IMG divestment
----- End of picture text -----*

==> picture [51 x 19] intentionally omitted <==

----- Start of picture text -----

49%
----- End of picture text -----

6

Enhanced ROIC over 4 years creating resources for new business

==> picture [960 x 20] intentionally omitted <==

Significant increase of ROIC

==> picture [543 x 346] intentionally omitted <==

----- Start of picture text -----

•
Higher proportion from high growth & high value business
ROIC%
•
Aggressive working capital management
•
Continuous improvement of invested capital and
60%
operational efficiency 54%
50%
43%
40%
35%
28%
30%
22%
20%
15%
10%
2018 2019 2020 2021 2022 2023
----- End of picture text -----

• ROIC: Operating Profit after tax / Average [Net Working Capital + Net PP&E + Right-of-use Assets + Intangible Assets]

7

Revenue and profits contribution by segment in 4Q23

4Q23 Product Mix

4Q22 Product Mix

==> picture [636 x 366] intentionally omitted <==

----- Start of picture text -----

19%
19%
46% $36,909 48% $43,095
NT$mn
NT$mn
33%
35%
Revenue Operating Profit
NT$Mln Amount YoY % 4Q23 4Q22 YoY
Cloud & AIoT 12,871 -11% 35% 1,714 1,235 39%
Information Technology &
16,891 -5% 46% 2,341 2,435 -4%
Consumer Electronics
Opto-electronics
7,147 -12% 19% 715 903 -21%
(including auto electronic)
----- End of picture text -----

* Excluded IMG divestment

==> picture [58 x 21] intentionally omitted <==

8

Robust Balance Sheet

ance Sheet
In NT millions	4Q23	3Q23 4Q22
	Amount %	Amount % Amount %
Cash & Equivalent	92,742 49%	94,834 47% 91,066 46%
Accounts Receivable	31,586 17%	36,663 18% 38,128 19%
Inventories	25,808 14%	26,015 13% 27,747 14%
Current Assets	155,618 82%	167,111 83% 164,953 83%
Short Term Debt	22,493 12%	31,999 16% 32,629 16%
Accounts Payable	40,918 22%	43,215 22% 44,883 22%
Current Liabilities	98,001 52%	109,929 55% 111,781 56%
Long Term Borrowings	3,000 2%	3,000 1% 3,000 2%
Equities Key Indices Quick Ratio (x)	85,067 45% 1.3	84,510 42% 81,987 41% 1.3 1.2
Net Cash (NT Millions)	67,249	59,835 55,437
BVPS	37	36 35

==> picture [58 x 21] intentionally omitted <==

9

4Q and 2023 Executive Summary

4Q23

• Q4 Sales reached~NT$37 billion, Gross Margin and Operating Margin reached 22% and 9.3%, up 2.5 and 1.6ppts YoY respectively, attributable to synergies of enhanced high-value business, supply chain resilience, AI tools implemented and digitalized operational management.

• RD expense accounted for 6.2% of Q4 sales, up nearly 10% YoY, reflecting steady investment in cloud, opto-electronics, 5G and new business.

• Q4 Net profits reached NT$3.7 billion and EPS of NT$1.51.

• Cloud Computing Power Management grew 30% YoY, benefited from model migration of AI server power management and cloud computing products.

• New product launches by IT clients, resulting in the yearly sales and profit growth from high-end products in IT&CE.

• New progress in Opto-electronics, including automotive lighting and Infrared sensing applications, whereas impacted by the soft consumer demand and UAW incidents.

2023

• Sales of NT$148 billion, GPM and OPM reached 22% and 9.8%, up 2.8 ppts and 1.1ppts YoY, respectively. EPS reached NT$6.36, up 3% YoY.

• Return on invested capital (ROIC) lifted to 54%, reflecting the ongoing expansion in the intrinsic value of .

• the company

==> picture [58 x 21] intentionally omitted <==

10

Dividend Policy

==> picture [960 x 20] intentionally omitted <==

• BOD approved the fourth quarter of 2023 cash dividend of NT$2.5 per share.

• Including the NT$2 cash dividend per share in the first half of 2023, the cash dividend of 2023 FY reaches NT$4.5 per share with payout ratio of 71%.

• LITEON’s dividend policy will be flexible, considering financial, business and operational plans.

Period 2018 2019 2020 2021 2022 2023 EPS(NT$) 3.4 4.03 4.31 6.01 6.19 6.36

11

==> picture [152 x 55] intentionally omitted <==

© LITE-ON Technology Corporation. All Rights Reserved.

Operation Plan and Growth Strategy

==> picture [960 x 20] intentionally omitted <==

• Three major operating goals set to increase LITEON's overall value and initiate transformation in 2023 were accomplished: 1) Enhance profitability, 2) Increase the revenue portion of growth engines, and 3) Change the business model from a component supplier to solution provider.

• The next milestone is the expansion of the revenue scale. We plan to concurrently develop new businesses with high potential growth and high value in the future, in addition to the organic growth of our current businesses.

• LITEON Transformation Office was established with the tasks of defining a new business plan, encouraging internal entrepreneurship, and conducting a thorough review of the company's core competencies, technologies, resources, and business models. LITEON+ was also established as an innovation engagement platform to connect resources with international innovation teams and partners,

==> picture [960 x 35] intentionally omitted <==

Operation Plan and Growth Strategy

==> picture [960 x 20] intentionally omitted <==

• LITEON has been implementing global environmental regulations and ESG standards, by cutting greenhouse gas emissions in accordance with SBT standards, raising the share of renewable energy use, and completely transitioning to low-carbon design in production processes and product materials. Concurrently, LITEON is actively constructing a low-carbon economic competitiveness and has created a digital platform for carbon management.

• Looking forward, the cloud computing power management solutions will continue to grow, and shipments of high-end opto-semiconductors, information technology and other electronic products are expected to gradually pick up, laying the foundation for stable revenue and profit of the core business in 2024.

==> picture [960 x 35] intentionally omitted <==

2024 ESG Dashboard

==> picture [960 x 20] intentionally omitted <==

==> picture [330 x 43] intentionally omitted <==

==> picture [254 x 43] intentionally omitted <==

----- Start of picture text -----

-
Product footprint 5%
per generation
----- End of picture text -----

==> picture [213 x 65] intentionally omitted <==

RE100 by 2040

Greenhouse gas RE100 by 2040 reduction by 2024 vs base year 2014 31% 38.5% Est. carbon reduction Est. Renewable of 64,000 tons energy use in 2024

SBTi Net Zero To submit the 2050 Net zero target to SBTi for validation

To strengthen low-carbon competitiveness by self-built carbon management digital platform and an internal carbon cost mechanism

Carbon footprint reduction optimization for each product. Emission cut >6%

Develop alternative materials for three major high carbon emission raw materials, aiming for a 70% carbon reduction compared to virgin materials.

• Ranked top 5% in the Corporate Governance Evaluation for its rigorous sustainability governance

• Increase ESG threshold for supplier evaluation and focus on suppliers with higher emissions of PCB, plastics, and metal parts for carbon reduction optimization.

• Taiwan Intellectual Property Management Standards (TIPS) verification in 2023 to enhance innovation.

==> picture [31 x 115] intentionally omitted <==

New Employee Benefits: Lunch Subsidy, Employee Stock Ownership Trust (ESOT), Childcare Allowance, and 7 days of paid "Fun Leave."

WoW (Women of Wonders) Community: Initiated by female executives in 2023 and offering training, support, and

mentorship for female empowerment

• -1111 Ecorevolve Shopping Fair: Promoted circular economy and donated sales proceeds of 6,000+ high-quality items to NGOs.

==> picture [960 x 35] intentionally omitted <==

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