Melexis N.V.

Earnings Release • Aug 1, 2018

Press release - Regulated Information

Melexis Q2 2018 results – Solid growth

Intermediate declaration by the Board of Directors

Ieper, Belgium – August 1st, 2018, 07.00 hrs CET

CONFORM IFRS	Q2 2018	Q2 2017	YOY growth	Q1 2018	SEQ growth
in k EUR			(%)		(%)
Sales	141,753	128,343	10%	139,322	2%
Gross result	65,822	59,431	11%	63,110	4%
Gross Margin	46.4%	46.3%		45.3%
EBIT	35,397	33,090	7%	34,335	3%
EBIT in %	25.0%	25.8%		24.6%
EBITDA	45,423	41,792	9%	42,542	7%
EBITDA in %	32.0%	32.6%		30.5%
Net result	28,116	30,806	-9%	28,786	-2%
Net result per share (EPS)	0.70	0.76		0.71
CAPEX	20,080	13,635		20,436

Sales for the second quarter of 2018 were 141.8 million EUR, an increase of 10% compared to the same quarter of the previous year and an increase of 2% compared to the previous quarter.

The EUR/USD exchange rate evolution had a negative impact of 4% compared to the same quarter of last year and a positive impact of 1% compared to the previous quarter.

The gross result was 65.8 million EUR or 46.4% of sales, an increase of 11% compared to the same quarter of last year and an increase of 4% compared to the previous quarter.

R&D expenses were 13.5% of sales, G&A was at 5.3% of sales and Selling was at 2.7% of sales. The operating result was 35.4 million EUR or 25.0% of sales, an increase of 7% compared to the same quarter of last year and an increase of 3% compared to the previous quarter.

The net result was 28.1 million EUR or 0.70 EUR per share, a decrease of 9% compared to 30.8 million EUR or 0.76 EUR per share in the second quarter of 2017 and a decrease of 2% compared to the previous quarter.

CONFORM IFRS	HY 2018	HY 2017	YOY growth
in k EUR			(%)
Sales	281,075	251,904	12%
Gross result	128,932	116,037	11%
Gross Margin	45.9%	46.1%
EBIT	69,732	64,615	8%
EBIT in %	24.8%	25.7%
EBITDA	87,964	80,537	9%
EBITDA in %	31.3%	32.0%
Net result	56,902	56,249	1%
Net result per share (EPS)	1.41	1.39
CAPEX	40,516	20,025

Sales for the first half year of 2018 were 281.1 million EUR, an increase of 12% compared to the first half year of 2017.

The EUR/USD exchange rate evolution had a negative impact of 6% compared to the first half year of 2017.

Gross result was 128.9 million EUR, an increase of 11% compared to the same period last year.

The operating result was 69.7 million EUR, compared to 64.6 million EUR in the same half year of 2017, an increase of 8%.

Net income was 56.9 million EUR or 1.41 EUR per share, an increase of 1% compared to 56.2 million EUR or 1.39 EUR per share in the first half year of 2017.

Dividend

The Board of Directors decided to pay out an interim dividend of 1.30 EUR gross per share. The Melexis shares will start trading ex coupon on October 23, 2018 (opening of the market). The record date is October 24, 2018 (closing of the market) and the dividend will be payable as from October 25, 2018.

Outlook

Melexis expects sales in the third quarter of 2018 to be around the level of 148 million EUR.

For the full year 2018, Melexis expects sales growth to be between 13% and 14%, a gross profit margin around 45% and an operating margin around 25%, all taking into account a EUR/USD exchange rate of 1.17 for the remainder of the year.

Business comment – Françoise Chombar, CEO:

"I am proud to announce that Melexis second quarter and first half 2018 performance is well in line with our expectations. Excluding strong USD currency headwinds, Melexis first half year sales growth was 18%. The main growth drivers year to date were temperature sensors, embedded lighting and our magnetic sensor product family.

The temperature sensors product line experienced a growing demand from its distribution customer base. These distributors serve a variety of applications in the areas of consumer, white goods and small appliances, mainly targeted for the Asian market. A second growth pillar for the product line is its automotive thermocouple interfaces. These are used in the powertrain and address the growing need for more stringent engine and exhaust thermal management and control.

In embedded lighting, we continue to benefit from existing ambient lighting programs ramping up, as well as new programs which are being added gradually.

The Triaxis® products which form a cornerstone of our magnetic product sensor family are being used in many applications such as steering systems, gear shifters, pedals and transmissions. High demand for electric power steering and advanced powertrain systems, along with the evolution towards autonomous driving, are key drivers for further growth.

Melexis continues to enjoy a positive customer sentiment, translated in a healthy order book further driving our growth in the second half of the year.

Last month, Melexis announced the start of the construction of a new building in Sofia, Bulgaria, which will accommodate increased capacity in test facilities. Also the building expansion in Ieper, Belgium is on schedule. At the end of the year, a new R&D center in Düsseldorf, Germany, will be fully operational. These initiatives demonstrate that Melexis continues to invest both in infrastructure as well as in R&D in order to benefit from the structural growth drivers for our products.

Sales to automotive customers represented 89% of total sales in the second quarter and 90% of total sales in the first half of 2018. The portion of standard product (ASSPs) sales represented 66% o f total sales in the second quarter and 65% of total sales in the first half of 2018."

The statutory auditor PwC Bedrijfsrevisoren bcvba has confirmed that the review, which is substantially complete, has not to date revealed any material misstatement in the draft consolidated accounts, and that the accounting data reported in the press release is consistent, in all material respects, with the draft accounts from which it has been derived.

Financial Calendar

• Publication Q3 2018 Results: October 24, 2018
• Dividend pay date: October 25, 2018 (ex coupon on October 23, 2018)
• Analyst Day: December 5, 2018
• Publication FY 2018 Results: February 6, 2019

The company's results will be discussed in a conference call on Wednesday, August 1st , 2018 at 17 hrs CET. The conference call will be in English. You have to register for this conference call in advance. You can register by clicking on the following link and filling out the requested information: http://emea.directeventreg.com/registration/2799237 Conference ID: 2799237.

After registration, you will receive the conference call number, a participant user pin, conference pin and instructions on how to join the conference call. For security purposes all participants must register individually if they wish to join the call. A replay number for this call is available for 7 days after the end of the conference call. The replay number for this call is +44 33 33 00 97 85, access code: 2799237.

For further information: Investor Relations Phone: +32 13 67 07 79 Fax: +32 13 67 21 34 Email: investor@melexis.com

About Melexis

Combining a passion for technology with truly inspired engineering, Melexis designs, develops and delivers innovative micro-electronic solutions that enable designers to turn ideas into applications that support the best imaginable future. The company's advanced mixed-signal semiconductor sensor and actuator components address the challenges of integrating sensing, driving and communication into next-generation products and systems that improve safety, raise efficiency, support sustainability and enhance comfort. Melexis is headquartered in Belgium and employs over 1,400 people in 19 locations

worldwide. The company is publicly traded on Euronext Brussels (MELE). For more information, visit www.melexis.com

Disclaimer

Except for those statements that report the Company's historical results, the statements being made are forward looking statements. Actual results could differ materially from those projected in the forward-looking statements. Factors which could cause actual results to differ from expectations include the following: volatility in supply and demand affecting revenues and market prices, price and availability of silicon foundry, assembly and test prices, assembly and test subcontract capacity required to meet financial targets and/or meet backlog requirements, risks and delays associated with bringing up new production capabilities or with deliveries from subcontractors, timing and market acceptance of new products, increased expenses associated with new product acceptance of new products, increased expenses associated with new product introductions of process changes, delays in developing or achieving volume production of new products, which can result in delays or failure to contribute to revenues and profits, ability of the Company to maintain its customer and vendor base and delays in and/or inability in raising additional capital.

Consolidated Income Statement

CONFORM IFRS	Quarter ended 30/06/2018	Quarter ended 30/06/2017	Half Year ended 30/06/2018	Half Year ended 30/06/2017	Year ended 31/12/2017
in k EUR					audited
Sales	141,753	128,343	281,075	251,904	511,661
Cost of sales	-75,931	-68,912	-152,143	-135,867	-276,265
Gross result	65,822	59,431	128,932	116,037	235,396
R&D	-19,170	-17,460	-37,690	-34,408	-69,483
G&A	-7,447	-5,963	-14,327	-11,535	-23,835
Selling	-3,808	-2,917	-7,183	-5,479	-11,660
Other operating result					2,190
Operating result (EBIT)	35,397	33,090	69,732	64,615	132,608
Financial result	-820	3,087	294	1,811	3,379
Result before taxes	34,578	36,177	70,027	66,426	135,986
Income taxes	-6,462	-5,371	-13,125	-10,177	-25,032
Net result	28,116	30,806	56,902	56,249	110,955
Net result per share in EUR	0.70	0.76	1.41	1.39	2.75

Consolidated Statement of Financial Position

CONFORM IFRS	Half Year ended 30/06/2018	Half Year ended 30/06/2017	Year ended 31/12/2017
in k EUR			audited
Current Assets :
Cash and cash equivalents	28,763	78,041	75,478
Current investments	154	2,716	415
A/R Trade	75,901	61,733	68,753
A/R from related parties	136	6,177	357
Advance related parties
Assets for current tax	873	680	1,589
Assets held for sale
Other current assets	12,677	13,639	10,121
Inventories	115,271	81,645	97,625
Total current assets	233,776	244,633	254,338
Non-current assets :
Costs of incorporation
Property, plant and equipment	140,515	103,810	116,780
Financial assets		6
Intangible fixed assets	5,370	6,779	5,556
A/R directors
Other non-current assets	5	8	5
Deferred tax assets	25,260	24,896	26,682
Total non current assets	171,149	135,499	149,022
Total assets	404,924	380,132	403,361

CONFORM IFRS	Half Year ended	Half Year ended	Year ended
	30/06/2018	30/06/2017	31/12/2017
in k EUR			audited
Liabilities and shareholders Equity
Current liabilities :
Bank loans and overdrafts
Derivative financial instruments		397	160
Current portion of LT debt	48	4,005	6,043
A/P trade	25,803	18,903	22,262
Affiliated companies	17,391	12,687	17,449
Accrued taxes	10,523	25,945	36,434
Accrued expenses and payroll	10,367	9,343	10,716
Other current liabilities	4,511	3,130	4,055
Deferred income	1,756	1,220	2,896
Total current liabilities	70,398	75,631	100,015
Non current liabilities :
LT debt less current portion	15,000	11,091	9,043
Deferred tax liabilities
Other non-current liabilities		2,133
Total non current liabilities	15,000	13,224	9,043
Shareholders' equity :
Shareholders' capital	565	565	565
Share premium
Treasury shares	-3,818	-3,818	-3,818
Revaluation reserve Hedge		-137	-49
Revaluation reserve Fair value
Legal reserve	57	57	57
Retained earnings	271,337	244,497	192,427
Current period's profit	56,902	56,249	110,955
Cumulative translation adjustment	-5,527	-6,145	-5,844
Equity attributable to company owners	319,516	291,266	294,292
Non controlling interests	10	10	10
Total shareholders equity	319,526	291,277	294,303
Total liabilities, shareholders' equity	404,924	380,132	403,361
and minority interests

Consolidated Statements of Cash Flow

CONFORM IFRS	Quarter ended 30/06/2018	Half Year ended 30/06/2018	Half Year ended 30/06/2017	Year ended 31/12/2017
(in k EUR)				audited
Cash flow from operating activities
Net income	28,116	56,902	56,249	110,955
Adjustments for :
Operating activities	12,679	19,804	13,024	18,694
Deferred taxes	810	1,422	-926	-2,712
Capital grants	103	117	427	1,447
Depreciation and amortisation	10,026	18,232	15,922	32,357
Unrealized exchange results	1,172	-838	-2,134	-6,199
Financial result	569	871	-266	-6,199
Operating profit before working capital changes	40,795	76,706	69,272	129,649
A/R, Trade	-3,105	-7,127	4,553	-2,560
A/R, affiliates	64	221	-5,759	61
Other current assets	-1,172	-1,903	-3,646	-1,990
Other non current assets	1	1	-1	2
Inventories	-15,643	-18,911	-7,632	-25,352
A/P	2,715	3,466	-624	2,833
A/P affiliates	386	-58	-1,864	2,898
Accrued expenses	654	8,841	7,270	25,613
Other current liabilities	-235	449	575	1,714
Other non current liabilities	-13	-1,300	-1,375	-2,069
Interest paid	172	119	-156	-268
Income tax paid	-13,850	-35,101	-10,744	-17,226
Cash flow from operating activities	10,768	25,402	49,869	113,306
Cash flow from investing activities
Acquisition of subsidiary, net of cash acquired
Financial fixed assets				6
Purchase of PPE and intangible assets (netted)	-20,080	-40,516	-20,025	-46,417
Interest received	2	5	20	102
Investments/proceeds/ from current investments	-151	261	-2,558	-256
Investments/proceeds/ from non current investments				2,190
(incl. financial instruments)
Cash provided from investing activities	-20,230	-40,250	-22,562	-44,376
Cash flows from financing activities
Payment to acquire own shares
Proceeds/Repayment of long-and short-term debt	6	-37	-42	-50
Proceeds/Repayment of bank loans and overdrafts
Proceeds from (repayment of) related party financing
Impact of exchange results on financing items	-1,539	184	3,045	11,153
Dividend payment	-32,045	-32,045	-28,038	-80,108
Capital Decrease
Non controlling interests
Cash provided from financing activities	-33,578	-31,898	-25,034	-69,005
CTA	4	31	-21	-237
Increase/decrease in cash and cash equivalents	-43,036	-46,715	2,252	-312
Cash at beginning of the period	71,798	75,478	75,789	75,789
Cash at the end of the period	28,763	28,763	78,041	75,478

Sales per Geography

	Q2/18	Q2/17	Q1/18	HY 2018	HY 2017
APAC Asia Pacific	48%	48%	49%	49%	48%
EMEA Europe - Middle-East - Africa	41%	40%	39%	40%	40%
NALA North America - Latin America	11%	12%	12%	11%	12%
TOTAL	100%	100%	100%	100%	100%