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INFICON - library.corporate-ir.netlibrary.corporate-ir.net/library/12/124/124424/items/265413/INFICON... · Management’s current views and estimates. ... Significantly higher sales

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INFICON Q3 2007Earnings Conference

October 18, 2007

3

Safe Harbor StatementThis presentation contains forward-looking statements that reflect Management’s current views and estimates. The forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These forward-looking statements address, among other things, our strategic objectives, trends in vacuum technology and in the industries that employ vacuum instrumentation and the anticipated effects of these trends on our business.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Lukas WinklerPresident& Chief Executive Officer

5

Steady progress in two key areas- Improving internal operations- Expanding our business

Revenues rose 7% to USD 58.2 million- Increase despite slowdown in a key market

Net income rose excluding one-time, non-cash charge- Impact of corporate tax rate change in Germany

Q307 – Solid Execution Continues

6

Semiconductor and Vacuum CoatingSales increased on a year-over-year basis

Orders from end-users for whole suite of in Situsensors and FabGuard process analysis software - Stiletto Scanning-Laser Particle Detector

- Newly introduced Sion RF Detector

Growing U.S. market share in leak detectors

- Good leak detector sales to new fabs

- Replacement orders also strong

7

Growth in OEM business- Increased sales of advanced sensors and vacuum gauges - Expect expanding demand for advanced

process control products

Vacuum coating OEM business contributed to solid 3Q- Maxtek acquisition added new thin film products and customers

Business in China accelerating – taking market share from major competitors for crystals

Growing concern for energy efficiency creating opportunities in solar panel manufacturing

Semiconductor and Vacuum Coating

8

Refrigeration and Air ConditioningSales remain at high level after record 2Q07- Rapid ramp-up by air conditioning manufacturers in China

benefiting INFICON- First sales to auto manufacturer in China for airbag testing

INFICON leak detectors the premier products for RACquality testing and aftermarket service

Sales to RAC and automotive customers in U.S. also remained strong

9

Emergency Response and SecuritySales on par with 3Q06 and in line with expectations

Continuing to provide HAPSITE upgrades and training to U.S. Air Force.

New HAPSITE® Viper Chemical Identification System in evaluation at European customers

- Only truly portable analytical tool for military fieldreconnaissance vehicles

10

General Vacuum Processes3Q a very robust quarter

- Unaffected by typical “summer lull” in Europe

Sales channels include private label partners and directsales to industrial OEMs and distributors

Increasingly diverse customer base contributing to goodresults

INFICON and other vacuum gauges manufactured for private label partners

Peter Maier

Vice President

& Chief Financial Officer

12

Q3:06 Q3:07

+6.8%

Air conditioning and semiconductor sales were main drivers for sales growth

F/X Effect+1.1

+2.0%

Revenues ($M)

54.4 58.2

13

Revenue by MarketSemiconductor and Vacuum Coating

Increased demand from semiconductor device makers and OEMs for leak detectors, process control instruments & software and vacuum gauges

32.5%32.5%21.1

19.5

Q3:06 Q3:07

+8.2%

35.8% 36.3%

($M)

14

Revenue by MarketRefrigeration and Air Conditioning

7.1

9.6

Q3:06 Q3:07

+35.2%

16.5%

13.1%

Significantly higher sales to air conditioning manufacturers in Asia and higher sales to the automotive industry in Europe and North America

($M)

15

Revenue by MarketGeneral Vacuum Processes

24.524.0

Q3:06 Q3:07

-2.0%

41.3%45.0%

Slightly lower demand from private label partners partially offset by sales to new customers, industrial OEMs and distributors

($M)

16

Revenue by MarketEmergency Response and Security

+3.0%

Increased international sales were mostly offset by lower U.S. government sales

3.43.3

Q3:06 Q3:07

5.9%6.1%

($M)

17

Geographic Revenue Breakdown

11.713.4

Q3:06 Q3:07

North America

21.5%23.0%

+14.2%

17.419.0

Q3:06 Q3:07

Asia-Pacific

31.9%32.7%

+9.3%

24.625.0

Q3:06 Q3:07

Europe

45.3%43.0%

+1.4%

Growth driven primarily by North America and Asia-Pacific

($M)

18

Gross Profit Margin

46.546.6

Q3:06 Q3:07

+7bps

(in %)

Improved mfg. overhead cost absorption, improved mix and a one-time charge in 2006,partially offset by price pressure and temporarily higher warranty costs

19

Research & Development

4.64.8

Q3:06 Q3:07

+4.6%

8.5%8.3%

Intensified new product development and inclusion of Maxtek operations in 2007 caused modest increase

($M)

20

Selling, General & Administrative

13.514.0

Q3:06 Q3:07

+3.9%

24.8%24.1%

Improved operational leverage despite increased investment in personnel and infrastructure in Asia to support growth and the inclusion of the Maxtek business this year

($M)

21

Income from Operations

7.2

8.2

Q3:06 Q3:07

+14.4%

13.2%

14.2%

Operating income and margin continued to increase as sales grewin line with strategic goals for profitable growth

($M)

22

Interest andOther Income/(Expense)

294 257

Q3:06 Q3:07

-37

Interest Income on cash down slightly on lower avg. cash balance this yearIncrease in Other Expense due to foreign currency exchange losses this year

572

-112

Q3:06 Q3:07

-684

Interest Income Other Income / (Expense)

($Tsnd)

23

Income Tax Provision

1.2

2.22.2

Q3:06 Q3:07

+60.1%

26.6%26.9%

Higher taxes driven by impact of one-time, non-cash charge for corporate tax reform on German subsidiary. Otherwise avg. effective tax rate unchanged.

14.8%

3.541.4%

($M)

24

Net Income and EPS

5.9 4.9

Q3:06 Q3:07

-16.8%

10.8% 8.4%

Excluding one-time charge, Net Income grew 4.2% and EPS grew 6.8%on higher sales and increased operational efficiency

2.49 2.13

Q3:06 Q3:07

-14.5%

Net Income ($M) EPS ($/share)(Diluted)

One-TimeCharge

-1.2-210 bps

One-TimeCharge

-0.53

25

Balance Sheet Highlights

Solid balance sheet and strong cash flow validate strategic direction of INFICON

12/31/2006 9/30/2007Cash & Short-term Inv. 67.6 48.7Long-term Debt - -Shareholders' Equity 155.8 133.2

Q3:06 Q3:07

Days Sales Outstanding 50.7 50.6Inventory Turns 4.9 4.5

Operating Cash Flow 13.1 9.7

($M)

26

Returning Cash to ShareholdersShare buy-back: up to 10% of registered shares during 2007

• 210’855 shares (8.95%) repurchased to date

• MCHF 42.4 spent to date

• CHF 200.88 average price paid per share

• 2’169’929 shares outstanding on 9/30/2007

• 24’732 shares remain available for repurchase

27

Full Year 2007 GuidanceWe are on track to reach our financial targets for this year

Sales Growth Target: close to 10%

Operating Margin Target : ~ 14%

28

Full Year 2008 Guidance

Sales TargetMUSD 250 – 260

Operating Margin Target14.5 – 15.5%

Market Assumptions and Sales Drivers:Generally favorable global economic conditions

Moderate Semiconductor &Vacuum Coating markets growth combined with market share gains

Modest growth of RAC market combined with market share gains

Moderate growth of General Vacuum Processes markets and new customers

Mostly stable sales to emergency response market with upside opportunity

Cost Plans:Significant investments to continue to strengthen INFICON technology

Additional investments in sales and marketing infrastructure to support growth