MERRY — Interim / Quarterly Report 2020

Sep 7, 2020

TWSE 2439

Merry Electronics 2020 Second Quarter Earnings Result Conference

Presented by: Allen Huang Date: Jul. 30, 2020

0

Safe Harbor Notice

Except for historical information contained herein, the matters set forth in this presentation are forward looking statements subject to significant risks and uncertainties that could cause actual results to differ materially, including the impact of competitive products and pricing strategies, whether the design is accepted by our customers timely, the prompt introduction of new technologies, the capability for mass production of new products, the risk of excess capacity, the availability of production capacity, the financial stability in terminal markets or other risks, and so on.

1

Consolidated Statements of Comprehensive Income

(audited)

					(NT$ Thousand)
Item	Q22019	Q12020	Q22020	QoQ	YoY
Net Revenue	10,064,072	5,176,663	6,445,201	24.50%	-35.96%
Gross Profit	16.12%	10.75%	15.53%	4.78pp	-0.59pp
Operating Expenses	-748,632	-601,312	-721,120	19.92%	-3.67%
Operating Margin	8.68%	-0.87%	4.34%	5.21pp	-4.34pp
Non-Operating Income	151,618	87,308	160,027	83.29%	5.55%
Net Income	773,150	40,564	298,847	636.73%	-61.50%
Net Profit Margin	7.68%	0.78%	4.63%	3.85pp	-3.05pp
EPS(NT$)	3.8	0.23	1.47	1.24	-2.33

*. Diluted weighted average outstanding shares were 206,616K units in Q22020.

2

Balance Sheets & Key Indices(CQ)

	20190630		20200331		20200630
(NT$ Thousand)	金額	%	金額	%	金額	%
Cash and Cash Equivalents	4,178,222	16%	7,137,339	29%	6,242,503	25%
AccountReceivable	9,210,118	35%	3,957,331	16%	5,134,937	20%
Inventories	2,141,320	8%	2,160,257	9%	2,645,490	11%
OtherCurrentAssets	977,493	4%	1,619,124	7%	993,808	4%
Investments	3,684,061	14%	3,953,955	16%	3,968,689	16%
Property, plant and equipment	2,051,228	8%	2,260,918	9%	2,407,905	10%
Other Non-currentAssets	4,141,802	16%	3,423,102	14%	3,671,533	15%
Total Assets	26,384,244	100%	24,512,026	100%	25,064,865	100%
CurrentLiabilities	11,185,170	42%	10,207,870	42%	9,986,211	40%
Non-currentLiabilities	3,883,766	15%	3,963,877	16%	3,937,205	16%
Total Liabilities	15,068,936	57%	14,171,747	58%	13,923,416	56%
Total Shareholders’ Equity	11,315,308	43%	10,340,279	42%	11,141,449	44%
Key Indices
A/R Turnover (CQ)	67.1		82.8		64.2
Inventory Turnover Days (CQ)	26.9		42.1		40.2
Current Ratio (x)	1.5		1.5		1.5

3

Cash Flow

(NT$ Thousand)	2Q2019	1Q2020	2Q2020
Beginning Balance 4,805,254 6,589,863 7,137,339
Cash from operating activities -662,418 1,961 -577,838
Capital Expenditures -76,832 -208,632 -184,685
Short-term Loans 233,110 586,497 -406,896
Long-term Loans 0 130,640 -84,130
Issuance of Common Stock for Cash 0 0 350,860
Investments and Others -120,892 37,010 7,853
Ending Balance 4,178,222 7,137,339 6,242,503
Free Cash Flow -739,250 -206,671 -762,523

*. Free cash flow = Cash from operating activities - Capital expenditures

4

Q22020 Proportion of the Product Revenue

Microphone 0.6% Battery 0.6% Healthcare 1.5%

Speaker 29%

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5

Q2 Proportion of the Products Revenue (%)

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Headset
80% 69% 68%
60%
40% QoQ: 111%
40%
YoY: -39%
20%
0%
2Q2019 1Q2020 2Q2020
■ Audio
■ TWS
2Q2019 1Q2020 2Q2020
■ Gaming
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6

Q2 Proportion of the Products Revenue (%)

Speaker

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70%
57%
55%
QoQ: -38%
40%
27% 29% YoY: -34%
25%
10%
■ Non-PC/NB 2Q2019 1Q2020 2Q2020
■ PC/NB
■ SPK System 2Q2019 1Q2020 2Q2020
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7

Q2 Proportion of the Products Revenue (%)

Microphone

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1.0% QoQ: 9% | YoY: -49%
0.7%
0.6%
0.6%
0.0%
2Q2019 1Q2020 2Q2020
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Healthcare Battery
4.0% QoQ: 37% | YoY: -55% 2.0% QoQ: -16% | YoY: -76%
1.5%
2.0%
2.0% 1.5% 1.0% 0.8%
1.3%
0.6%
0.0% 0.0%
2Q2019 1Q2020 2Q2020 2Q2019 1Q2020 2Q2020
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8

Key Information

1. Merry set up a joint venture company with USI in Taiwan.

2. The ex-dividend date is August 27.

9

2020 Q3 Outlook

10

Q & A

11

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12