Besi ip q312 231012

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Besi ip q312 231012

  1. 1. INVESTOR PRESENTATIONQ3-2012 QUARTERLY RESULTSOctober 2012 1
  2. 2. SAFE HARBOR STATEMENTThis presentation contains statements about managements future expectations, plans and prospects of our business thatconstitute forward-looking statements, which are found in various places throughout the press release, including, but notlimited to, statements relating to expectations of orders, net sales, product shipments, backlog, expenses, timing ofpurchases of assembly equipment by customers, gross margins, operating results and capital expenditures. The useof words such as “anticipate”, “estimate”, “expect”, “can”, “intend”, “believes”, “may”, “plan”, “predict”, “project”, “forecast”,“will”, “would”, and similar expressions are intended to identify forward looking statements, although not all forward lookingstatements contain these identifying words. The financial guidance set forth under the heading “Outlook” constitute forwardlooking statements. While these forward looking statements represent our judgments and expectations concerning thedevelopment of our business, a number of risks, uncertainties and other important factors could cause actual developmentsand results to differ materially from those contained in forward looking statements, including our inability to maintaincontinued demand for our products; the impact on our business of potential disruptions to European economies from eurozone sovereign credit issues; failure of anticipated orders to materialize or postponement or cancellation of orders,generally without charges; the volatility in the demand for semiconductors and our products and services; failure toadequately decrease costs and expenses as revenues decline, loss of significant customers, lengthening of the sales cycle,incurring additional restructuring charges in the future, acts of terrorism and violence; risks, such as changes in traderegulations, currency fluctuations, political instability and war, associated with substantial foreign customers, suppliers andforeign manufacturing operations; potential instability in foreign capital markets; the risk of failure to successfully manageour diverse operations; those additional risk factors set forth in Besis annual report for the year ended December 31,2011 and other key factors that could adversely affect our businesses and financial performance contained in our filings andreports, including our statutory consolidated statements. We are under no obligation to (and expressly disclaim any suchobligation to) update or alter our forward-looking statements whether as a result of new information, future events orotherwise.October 2012 2
  3. 3. AGENDA I. Company Overview II. Market III. Strategy IV. Financial Review V. Outlook & SummaryOctober 2012 3
  4. 4. I. COMPANY OVERVIEWOctober 2012 4
  5. 5. COMPANY OVERVIEW • Leading assembly equipment supplier with #1 and #2 positions in key products. 27% addressable market share • Broad portfolio: die attach, packaging, plating, wire bond Corporate Profile • Strategic positioning in wafer level and substrate packaging • Global manufacturing operations in 7 countries; 1,615 employees worldwide. HQ in Duiven, the Netherlands • 2011 revenue and net income of € 326.9 and € 26.7 million Financial Highlights • Cash at 9/30/12: € 89.8 million • Total debt at 9/30/12: € 30.6 million • 2009 acquisition, restructuring and Asian production transfer Investment have transformed company and earnings potential • Advanced packaging, smart phone/tablet growth and Asian Considerations production transfer offer significant upside potential • Stock market valuation at significant discount to peersOctober 2012 5
  6. 6. CORPORATE TRANSFORMATION Revenue Gross Margin Record Revenue: 400 € 351 million 60% Record Profit: € 47 million Die Attach Acquisitions 350 55% 50% 300 Cost 13% Restructuring Dragon I Dragon II complete: complete: savings Headcount € 6 million € 15 million plan reduction; 45%Revenue (€ million) initiated Plating unit 250 cost savings cost savings restructuring Gross Margin 40% Asian Production Transfer 200 35% 150 Dutch tooling & DB 2100 transferred to DB 2009 Hungarian die bonding Malaysia transfer to 30% transferred Malaysia 100 initiated Standard packaging and certain die 25% bonding systems transferred to Malaysia 50 Asia € 14 million spent to build, expand and equip Malaysian system and 20% capacity Chinese tooling operations expansion Asian headcount increased from 34% in ‘06 to 51% in ‘11 completed 0 15% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 October 2012 6
  7. 7. STOCK PRICE INFORMATION• Market cap € 195 million: 37.8 million shares x € 5.15 price (October 23)• Shares listed on NYSE Euronext Amsterdam (BESI) and NASDAQ OTCQX International (BESIY). 2011 average daily volume of 132,079 shares• Trading at significant discount to industry multiples: Besi (a) Peers (b, c) Industry (c, d) TTM P/S 0.7x 1.2x 1.9x TTM EV/EBITDA 3.7x 6.1x 7.8x 2012E P/S 0.7x 1.1x 1.6x 2012E EV/EBITDA 2.9x 6.2x 8.1x Source: a) Besi: Canaccord Genuity, SNS Securities research & ABN Amro b) Peers: ASMPT, Disco Corp, Mühlbauer, Tokyo Seimitsu, Shinkawa, Suess Microtec and K&S c) Reuters & MS estimates d) Industry: Reuters semi equipment universeOctober 2012 7
  8. 8. BESI EQUIPMENT PORTFOLIODie Attach Packaging & Plating Wire Bonding • Die Sorting • Molding • 3100 - DS 9000E New - AMS series • 3100 - CS 1250 - AMS Foil Smart Card - DS 11000 - AMS WLM New • 3200 Smart Card • Die Bonding • Trim & Form - 2100 xP - Compact series - 2009 series - Power series - 2100 hS New - Compact Line - 2100 sD New New XHD • Component • Singulation In Development Packaging - FSL New - 2200 evo • Common die attach platform • Common packaging platform • Flip Chip • Plating - 8800 Quantum - Leadframe - 8800 Chameo - Solar - "Smart Line" - Film & foil - 2100FCOctober 2012 8
  9. 9. BESI PRODUCT POSITIONING Back-end Semiconductor Assembly Process Dicing Die Attach Wire Bond Packaging Plating Die Sort Die Bond Wire Bond Molding Trim & Form Plating Leadframe Assembly Singulation Substrate Ball Grid Array Wire Bond Assembly Die Sort FC Die Bond Molding Singulation Ball Grid Array Substrate Flip Chip Assembly Die Sort FC Die Bond Molding Singulation Wafer Level Packaging Flip Chip Assembly Die Attach Packaging Ball AttachOctober 2012 9
  10. 10. GLOBAL OPERATIONS Duiven & Drunen, (The Netherlands) Cham, Radfeld, (Austria) (Switzerland) Salem* Chandler Suzhou Chengdu Korea Shanghai Leshan Sales Office Taiwan Shenzhen Production Site Malaysia Philippines Sales & Production Site Singapore** R&D Site as of 30 September 2012• Development activities in Europe and USA Europe/N.A. Asia• Increasing production and sales & service Revenue (MMs) € 54.2 24.9% € 163.2 75.1% activities in Asia Headcount 761 47.1% 854 52.9%October 2012 10
  11. 11. CUSTOMER ECOSYSTEM Customers End Products End Use • Blue chip customer base, top 10 customers represent 45% of 2011 revenue • Leading IDMs and Asian Subcontractors. 41%/59% split in 2011 • Equipment utilized to produce chips for leading fabless companies: Qualcomm, Broadcom, MediaTek • Long term relationships, some exceeding 45 yearsOctober 2012 11
  12. 12. PRODUCT SHIFT TO ADVANCED PACKAGINGEND USER APPLICATIONS 2011 Service • Tablets and wireless 12% Computer, devices now equal LED PCs 35% of end user 2008 5% 21% revenue Service Industrial 2% 10% LED Industrial 3% 10% • Automotive has also Tablets & increased Auto Wireless Devices significantly in recentAuto 17%13% Computer, 35% years PCs 50% Tablets & • Service/spare parts Wireless have grown to 12%. Devices Less cyclical revenue 22% streamSource: 2011 Company EstimatesOctober 2012 12
  13. 13. II. MARKETOctober 2012 13
  14. 14. ASSEMBLY EQUIPMENT MARKET COMPOSITION Assembly Equipment Market * Besi Addressable Market * (2011: $4.2 billion) (2011: $1.7 billion) Plating Lead Trim & 2% FormWire Bonding Die Attach 7% Die Bonding25% 27% 44% Molds 15% Presses Die Attach 9% 60% Packaging 39% Packaging SingulationOther Assembly 18% 8% Plating(Inspection, Dicing) 1% Die Sorting29% Plating 3% 1% Flip Chip 12%• 52% assembly market 2011 represented by die attach and wire bonding equipment• Besi focus: die attach and packaging segments * Source: VLSI January 2012October 2012 14
  15. 15. ASSEMBLY EQUIPMENT MARKET FORECAST Assembly Equipment Market Size YoY Growth Rate 6 160% 140% 120.5% 5 4.5 120% 4.2 4.0 4.0 100% 4 80% 3 2.9 60% 2.1 40% 2 20% -3.7% -1.0% -7.8% 0% 1 -26.2% -28.2% -20% 0 -40% 2008 2009 2010 2011 2012E 2013E Source: VLSI October 2012 • VLSI estimates total assembly market of $4.2 billion in 2011 • 2012/2013 estimates uncertain given market volatilityOctober 2012 15
  16. 16. IC PRICING AND ASSEMBLY MARKET TRENDS Assembly Capacity Utilization Book to Bill Ratio & IC Pricing 100.0% 1.40 SEMI Equipment Market 1.38 (3 month moving average) 1.36 1.50 3 Month Avg Pricing ($) 90.0% 1.40% Capacity Utilization 1.34 1.40 1.32 1.30 Assembly 80.0% 1.30 1.20 1.28 1.12 1.10 70.0% 1.26 1.00 1.24 0.90 1.22 Total 0.81 60.0% 0.80 1.20 1.18 0.70 50.0% 1.16 0.60 2010 APR JUL OCT 2011 APR JUL OCT 2012 APR JUL 0.54 JAN JAN JAN 0.50 Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Assembly Utilization IC ASP 10 10 11 11 11 11 11 11 12 12 12 12 Source: VLSI September 2012 Source: Semi September 2012 • Softening seen at end of Q2 accelerated in Q3 • Assembly equipment market fell much more than overall semi equipment market in Q3 • Some mixed signals: • Assembly capacity utilization trends ok • Semi pricing seems stable for now…although at much lower levels than 2011 October 2012 16
  17. 17. BESI COMPETITIVE POSITION Assembly Addressable Market Share Market Share40% 40% • #3 leading assembly supplier30% 30% 27% 24% 27% 11% 14% 14% • #2 in addressable market with20% 20% 27% share10% 10% • Leader in die attach Mkt Size: $4,192MM Mkt Size: $1,700MM 0% 0%Competition: 2009 2010 2011 ASM-PT, K/S, Shinkawa, Tokyo Competition: 2009 2010 2011 ASM-PT, Disco, Shinkawa, Towa, • Gained market share in 2011: Semitsu, Disco Hanmi, Hitachi • Die attach (die bonding andCompany Position: #3 Company Position: #2 sorting) • Packaging (molding) Die Attach Packaging Market Share Market Share • Leader in growth areas:40% 32% 40% • Multi module die attach30% 29% 29% 30% • Flip Chip20% 13% 10% 12% • Ultra thin molding 20%10% Mkt Size: $1,015MM 10% Mkt Size: $668MM • Accuracy, precision and 0% 0% speed distinguishes Besi vs. 2009 2010 2011 2009 2010 2011 competition, particularly forCompetition: ASM-PT, Shinkawa, Panasonic, Muhlbauer Competition: Towa, ASM-PT, Yamada, Dai Ichi Seiko, Gallant, Hanmi, Rocco mainstream marketCompany Position: #1 Die Bonding, #1 Multi Module, Company Position: #2 Molding, #2 T&F #1 Flip Chip, #3 Singulation #2 Die Sorting *Source: VLSI Jan 2012 October 2012 17
  18. 18. III. STRATEGYOctober 2012 18
  19. 19. BUSINESS STRATEGYVision World class assembly equipment manufacturerMarketpositioning Fast growing, leading edge market segmentsHow to win Technology-led, mainstream supplier of substrate and wafer level packaging solutions Enter selected Maximize product Exit when markets with value with transfer technology becomes leading technology into mainstream “commoditized”Actions (I) (II) (III) (IV) (V) Maintain Accelerate Reduce Transfer Acquire leading edge revenue structural costs production to complementary technology growth Asia companies Leverage "One Besi" StrategyOctober 2012 19
  20. 20. PRODUCT STRATEGY:ADVANCED PACKAGING IS THE FUTURE Greater Miniaturization Greater High Growth End Higher Accuracy Complexity User Areas: Die Attach • Die Sorting: DS 9000 • Die Bonding: ES 2009, 2100 Tablets, Smart • Flip Chip: DC 8800 FC • Multi Module: DC EVO 2200 phones, Digital set top boxes, Autos, Lower Power Increased MEMS Consumption Packaging Density • Molding: AMS-W • Singulation: FCL Higher Performance• High growth applications require ever smaller, denser and more complex chips with increased performance, all at lower power usage.• <40 nanometer geometry will be the standard chip design over the next 3-5 years• System on Chip or System in Package via substrate and wafer level packaging process is the only answer• Besi has full range of AP systems. 2011E revenue: 70% substrate/wafer level vs. 30% leadframeOctober 2012 20
  21. 21. SMART PHONE / TABLET MARKET TRENDS Smart Phones 2011-2016 2,500 76.4% 2,000 30.8% 62.5%million phones 1,500 • Rapid unit growth in smart 850 1,500 phones and tablets forecast 400 650 1,000 over next 5 years 500 1,050 900 850 • Estimated unit growth rates: 600 0 2011 2012 2013 2014 2015 2016 • Smart phones: Basic Phones Smart Phones • 2012: 62.5% • 2016: 3.5x Tablets 2011 - 2014 • Tablets: • 2012: 120% • 2014: 4x • Significant potential revenue growth driver Source: Prismark October 2012 21
  22. 22. SMART PHONE ILLUSTRATIONMain Components Manufacturer Country Besi Systems Utilized Processor Samsung South Korea 8800FCQ, AMS-W, Singulation DRAM Memory Samsung South Korea 2100sD, AMS-W, Singulation Flash Memory Chip Samsung South Korea 2100sD, AMS-W, Singulation Battery Samsung South Korea N/A Power Management Dialog Germany 2100sD, 2009 Compass AKM Japan N/A Accelerator/Gyroscope ST Micro Italy/France 2100sDCommunications Radio Frequency Memory Intel USA 8800FCQ, Singulation Wi-Fi/Bluetooth/GPS Broadcom USA 2200 evo, AMS-W, Singulation Receiver/Transceiver Infineon Germany 8800FCQ, AMS-I, Singulation Skyworks, 2200 evo, AMS-W, Singulation, 8800 PA Module Triquint USA ChameoVideo/Audio Touch Screen Control TI USA 2100sD, AMS-W, Singulation Audio Codec Cirrus Logic USA 2100sD, AMS-W, Singulation LCD Display LG South Korea N/A Touch Screen Wintek USA N/A LG, Foxconn, South Korea, Camera – 5/8 megapixel/VGA CoWell China 2200 evoBesi systems are capable of assembling components representing up to 50% of smart phone content October 2012 22
  23. 23. FLIP CHIP/WIRE BOND OPPORTUNITY Wire Bonding Flip Chip Bonding 2011 2016E Flip Chip Flip Chip $208 $337 16% 24% Wire Flip Chip Advantages Wire Bonding Bonding $1,067 $1,053 76%Reduces board area 84% Higher speed by up to 95%. CAGR 2011 – 16 electrical Requires far less Flip Chip 10.2% performance height Wire Bond 0.3% • Move to <40 nanometer can only be accomplished by More durable flip chip die bonding vs. wire bonding process Greater I/O interconnection connection flexibility • Flip chip revenue represents only 16% of total potential method market of $1.3 billion (2011) • Rapid share gain vs. wire bonding over next 5 years Lower cost for high (9.9% CAGR delta) as per VLSI volume production, with costs below • Growth rates could accelerate depending on adoption $0.01 per connection rates of key IDMs/subcons * Source: VLSI October 2012October 2012 23
  24. 24. KEY OPERATIONAL OBJECTIVES 2011 2012 2013Key Operational Objectives DB 2100 production transfer to Malaysia DB 2009 production transfer to Malaysia 50% MY/100% China capacity expansion Reduce European cost structure • Asian production transfer on schedule: • 80% of YTD 2012 systems produced in Asia • Transfer of DB 2100 epoxy die bonder from Switzerland to Malaysia completed in 2011 • DB 2009 soft solder system transfer accelerated to Q1-13 from Q4-13 • October 2012 headcount reduction plan initiatives: • Reduce European fixed headcount • Rationalize Dutch plating operations • Further integrate Die Attach operations • Align Asian production capacity with current demand • € 11 million annualized cost savingsOctober 2012 24
  25. 25. AQUISITION STRATEGY Packaging & Plating Die AttachPackaging Plating Leadframes Flip Chip Chip Sorting Flip Chip/ Single Chip Multi Chip 1993 1995 1997 2000 2002 2005 2009• € 50 million packaging company has become € 327 million assembly equipment supplier• Consolidating leading edge assembly technologies• 4 acquisitions since 2000 totaling € 80 million, net have created Die Attach leader• Seeking technology led companies which increase advanced packaging presence and can be incorporated into One Besi platformOctober 2012 25
  26. 26. IV. FINANCIAL REVIEWOctober 2012 26
  27. 27. SUMMARY FINANCIAL HIGHLIGHTSYear Ended December 31, • Financial transformation since 2008(€ millions, except share data) 2009 2010 2011 • Scale and market presence have changed due to Esec acquisition:Revenue 147.9 351.1 326.9 • Expanded mainstream presenceOrders 162.5 376.5 301.1 • Leveraged revenue potentialGross margin 28% 39% 40% • Strategic positioning in advanced packaging has yielded benefits:EBITDA 17.9 60.5 45.8 • Enhanced top line growthPretax income 4.9 47.4 34.6 • Increased gross marginsNet income 5.4 47.3 26.7EPS (diluted) 0.16 1.25 0.73 • Solid gross margins and profits in 2011 despite downturn due to:Net margin 4% 13% 8% • Advanced packaging presence • Ongoing Asian production transferAdj. net income (loss) (28.0) 41.6 27.4 • 2010 product line restructuringsAdj. EPS (diluted) (0.85) 1.11 0.75 • Solid liquidity base. Expanding net cashNet Cash 19.6 22.9 62.7 • Dividend initiated in 2010Dividend per share - 0.20 0.22 October 2012 27
  28. 28. REVENUE/GROSS MARGIN TRENDS Revenue Orders Gross Margin • Quarterly revenue/order patterns show 140 60.0% cyclicality of semiconductor business: 133.7 • Two cycles past 24 months; very volatile • Influenced by global macro demand 120 • 14.3% decrease in Q3-12 sequential 55.0% revenue 104.4 100.6 100 97.3 91.1 91.1 • Product mix shift past 3 years to higher 89.5 88.1 88.3 89.9 87.0 50.0% 82.5 75.6 84.2 margin advanced packaging systems:(euro in millions) • Multi module and flip chip die attach 80 75.1 74.6 70.4 • Ultra thin molding systems 45.0% • Influenced by smart phones, tablets and 57.4 intelligent automotive components 60 56.6 55.2 55.8 41.5% • Exit from lower margin wire bonding and 41.2% 40.1% 40.2% 40.0% 40.0% 48.7 packaging system sales has also helped 39.4% 38.7% 38.5% 40.3% 40.0% 40 • Gross margins remained relatively stable despite cyclical revenue/order trends: 20 33.4% 35.0% • Increased scalability of production model • Product mix shift to higher margin advanced packaging systems • Lower unit costs due to Asian production 0 30.0% Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 transfer October 2012 28
  29. 29. NET INCOME TRENDS Net Income Adjusted Net Income 20 19.4 • Cyclical peak earnings of € 47.3 million reached in 2010 • Significant contribution from Esec products/turnaround 15.4 15.0 • Restructuring benefits 15 14.4 • 2011 earnings declined to € 26.7 million. Adversely affected by: • Global macro concerns/increased 11.0 customer caution 9.6 10.0 • Increase of CHF vs. euro reduced 10 operating profit by € 4 million(euro in millions) 8.8 • Increased incentive stock based comp of € 3.1 million • Renewed volatility in 2012: 4.9 5 4.2 4.3 • Significant quarterly profit swings 3.4 • Macro uncertainty causes very short term customer purchasing patterns 1.2 • Significant leverage in operating model 0.2 • Quarterly opex have ranged between 0 € 20-24 million over past 8 quarters Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 (2.6) -5 October 2012 29
  30. 30. LIQUIDITY TRENDS Cash Debt 100 93.5 • Net cash position has grown to € 59.2 89.8 90 87.5 million from € 19.6 million at year end 2009 • Significant increase in profitability 80 76.6 77.3 • Redemption and share conversion of 5.5% convertible notes in Q2-11 69.3 70 65.5 • Improved inventory management 61.8 • € 1.57 per share relative to share price 60 of € 5.62 at end of Q3-12 (euro in millions) 55.0 49.4 47.7 49.9 48.1 50 46.8 46.4 45.9 • € 25 million spent on share repurchases and cash dividends in 40 2011/2012 • Dividends initiated in 2011 27.9 30.6 • 1.5 million share buyback program 30 27.0 24.8 announced in October 2012 23.1 20 16.1 • Strong balance sheet supports future 10 organic growth and acquisition strategy 0 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12Net Cash 0.9 (1.3) 5.1 22.9 19.6 45.7 49.6 62.7 70.4 49.4 59.2 October 2012 30
  31. 31. V. OUTLOOK & SUMMARYOctober 2012 31
  32. 32. Q4-2012 GUIDANCERevenue Gross Margin* Operating Expenses* Capex € 74.6 40.3% € 22.6 € 1.5 Down 36% Down Up 25% - € 0.6 € 0.3 - 38% MM MM 35%Q3 Q4 Q3 Q4 Q3 Q4 Q3 Q4* Excluding restructuring• Customer caution continues into Q4-12• Q4-12 sequential revenue down 25-35% vs. Q3-12• Gross margins (ex restructuring) will range between 36-38%• Opex declines to approximately € 22.0 million (ex restructuring)• Capex of € 1.8 million to complete Asian capacity expansionOctober 2012 32
  33. 33. SUMMARY Leading semi assembly equipment supplier with #1 Scalability and profitability Macro uncertainty causes or #2 positions in fast of business model greatly volatility in quarterly results growing advanced enhanced 2011-2012 packaging segments Significant upside potential. Solid liquidity position. Advanced packaging, smart phone/tablet growth, Attractive stock market € 59.2 million net cash at valuation relative to peers ongoing cost reduction end of Q3-12 and Asian production transferOctober 2012 33
  34. 34. FINANCIAL CALENDAR 25-Oct-12 Roadshow Frankfurt, Germany, organized by ABN AMRO Bank 14/16-Nov-12 Morgan Stanley Technology, Media & Telecom Conference, Barcelona, SpainOctober 2012 34

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