Dialog Semiconductor. Q4 and Full Year 2016 Results. 23 February connected

Transcription

1 Dialog Semiconductor Q4 and Full Year 2016 Results 23 February 2017 personal portable connected

2 Forward looking statement This presentation contains forward-looking statements that reflect management s current views with respect to future events. The words anticipate, believe, estimate, expect, intend, may, plan, project and should and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: an economic downturn in the semiconductor and telecommunications markets; changes in currency exchange rates and interest rates, the timing of customer orders and manufacturing lead times, insufficient, excess or obsolete inventory, the impact of competing products and their pricing, political risks in the countries in which we operate or sale and supply constraints. If any of these or other risks and uncertainties occur (some of which are described under the heading Managing risk and uncertainty in Dialog Semiconductor s most recent Annual Report) or if the assumptions underlying any of these statements prove incorrect, then actual results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made, however, any subsequent statement will supercede any previous statement. 2

3 Agenda Q Financial Highlights Outlook Business Review Financial Review Q&A Insert Agenda Text Here 3

4 At a glance Q Revenue -8% YoY $365m (Q4 2015: $397m) Underlying gross margin +20bps YoY 46.1% (Q4 2015: 45.9%) Underlying OPEX % +340bps YoY 22.9% (Q4 2015: 19.5%) Underlying EBIT % Underlying diluted EPS $ Cash from operations -330bps YoY -20% YoY -4% YoY 23.2% (Q4 2015: 26.5%) 78 cents (Q4 2015: 98 cents) $115m (Q4 2015: $120m) Reconciliation to underlying measures slide 19 4

5 Agenda Q Financial Highlights Outlook Business Review Financial Review Q&A Insert Agenda Text Here 5

6 Outlook Based on our current visibility and typical seasonal trends, we anticipate revenue for Q to be in the range of $255-$285 million. Good business momentum and a pipeline of key product launches, gives us confidence in expecting 2017 to be a year of good revenue growth. As in previous years, revenue performance will be strongly weighted towards the second half of the year. In line with the revenue performance, we expect gross margin percentage for Q and the full year 2017 to be broadly in line with Q

7 Agenda Q Financial Highlights Outlook Business Review Financial Review Q&A Insert Agenda Text Here 7

8 A summary of the year behind us During 2016 we expanded our product portfolio, accessing new addressable markets: Charger ICs High-voltage companion charger GaN ICs Expansion of Bluetooth low energy range Digital audio and audio CODEC for consumer headsets Lower year-on-year Mobile Systems volumes combined with excellent revenue performance from our Power Conversion and Bluetooth low energy businesses Dialog is well positioned to capitalise on the growth opportunities in mobility and smart connected devices Power Management Charging Connectivity 8

9 Solid competitive positioning Focus on creating value for customers Rooted in deep R&D investment and IP Strong focus in power management and power efficient technologies for portable devices and consumer electronics Strong focus and investment on new and differentiating IP Global R&D organisation with early and indepth understanding of customers roadmap Technical excellence and highest level of integration compatible with short design cycle Underlying R&D and R&D % 17% CAGR FY 2012 FY 2013 FY 2014 FY 2015 FY

10 Structural growth Double digit SAM expansion Further potential for market share gains Increasing share of wallet with existing customers Maintaining technology leadership and focus Charging technologies Strategic partnership in Greater China Bluetooth low energy System-on-Chip Rapid charge is the fastest growing AC/DC segment Accessing adjacent PMIC segments 2,000 1,800 1,600 1,400 1,200 1, Revenue ($ m) and Average Selling Price (ASP) $ 11% ASP CAGR ($2.10-$3.15) , ,355 1,198 FY 2012 FY 2013 FY 2014 FY 2015 FY KPI transition from ASP to content per device ASP exc. Connectivity and Power Conversion Constant scope ASP exc. Connectivity and Power Conversion All products 10

11 Growth drivers Mobile Systems Increasing content with existing customers in 2017 Strategic partnerships Wider portfolio of ASSPs Charger ICs and PMICs Addressing new segments Computing systems, DSLR cameras, auto-infotainment, TVs and Set-top boxes and WiFi routers Connectivity Expanding Bluetooth low energy product portfolio Bluetooth low energy SoCs enabling a fast go-to-market Addressing consumer headset market with audio DSP product Power Conversion Building on 70% market share of rapid charge smartphone market Size reduction combined with energy efficiency improvement Higher content gain potential with the introduction of GaN ICs Wireless charging 11

12 Agenda Q Financial Highlights Outlook Business Review Financial Review Q&A Insert Agenda Text Here 12

13 Maintained a healthy gross margin Q and FY 2016 revenue decline: Revenue ($m) Lower volumes sold in Mobile Systems Partially offset by solid revenue growth in Bluetooth low energy and Power Conversion ,355 1,198-12% -8% Q underlying gross margin 20bps above Q4 2015: Lower inventory write-offs Offsetting impact of lower volumes Q Q Q Underlying gross margin FY 2015 FY 2016 FY 2016 underlying gross margin 40bps below FY 2015: Lower volumes Rigorous control of costs Optimised yields 45.9% 46.6% 46.1% 46.7% 46.3% Q Q Q FY 2015 FY

14 Investing in future revenue growth Q and FY 2016 OPEX increase mostly driven by higher R&D costs: Q up 8% year-on-year FY 2016 up 6% year-on-year Underlying OPEX ($m and % of revenue) % % 22.9% % % +6% Sustainable R&D investment: Q up 11% year-on-year FY 2016 up 7% year-on-year Sequential decline of 9% as a result of R&D expenditure credits and capitalised R&D Moderate 2% year-on-year increase in SG&A costs in Q and FY 2016 Q Q Q FY 2015 FY 2016 Underlying R&D and SG&A ($m and % of revenue) % % % % 7.6% 15.3% % % % +7% % +2% Q Q Q FY 2015 FY

15 Sequential improvement in EPS Underlying operating profit for Q and FY 2016 down year-on-year as a result of lower revenue and slightly higher OPEX Underlying operating profit up 15% over Q underlying effective tax rate at 24.0%, 100bps below 2015 Q underlying diluted EPS down 20% year-on-year but 10% up over Q % 21.2% 23.2% 23.4% Underlying operating profit ($m) and margin % Q Q Q FY 2015 FY 2016 Underlying diluted EPS ($) % 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Q Q Q FY 2015 FY

16 Effective inventory management Inventory value down 27% sequentially and 22% year-on-year Full year 2016 free cash flow at $242.6 million up 26% year-on-year (2015:$192.3 million) $60 million returned to shareholders through our buyback programme in 2016: 1 st tranche 37.5 million ($42 million) 2 nd tranche: first settlement 17.5 million ($18 million) Subsequent to year end: 2nd tranche: second and final settlement million As at the 17 February 2017 the Company had purchased 2.8 million shares at a cost of million ( 33.7 per share) Inventory ($m and DIO) Cash and cash equivalents ($m) 105 Q Q Q Q Q

17 Q&A personal portable connected 17

18 Appendix personal portable connected 18

19 Underlying reconciliation Full Year 2016 US$ 000 IFRS basis Share-based compensation and related payroll taxes Amortisation of acquired intangible assets Aborted merger with Atmel Effective interest Strategic derivative investments Underlying basis Revenue 1,197, ,197,611 Gross profit 546,715 1,120 7, ,864 SG&A expenses (133,271) 15,826 7,473 3, (106,487) R&D expenses (241,345) 13, (227,775) Other operating - income 137, (137,300) Operating profit 309,807 30,516 14,502 (133,815) ,010 Net finance income/(expense) (4,601) - - 1, Profit before income taxes 305,206 30,516 14,502 (131,902) 526 (1,199) (1,199) (3,361) 217,649 US$ 000 Q FY 2016 Underlying measures Net income 61, ,420 Net finance expense 3,421 3,361 Income tax expense 19,419 52,229 Depreciation expense 7,284 27,219 Amortisation expense 6,112 21,452 EBITDA 97, ,681 Income tax expense (47,090) (4,686) (351) (383) (105) 386 (52,229) Net income 258,116 25,830 14,151 (132,285) 421 (813) 165,420 Q US$ 000 IFRS basis Share-based compensation and related payroll taxes Amortisation of acquired intangible assets Aborted merger with Atmel Effective interest Strategic derivative investments Underlying basis Revenue 364, ,705 Gross profit 166,404 (198) 1, ,967 SG&A expenses (32,587) 3,073 1, (27,595) R&D expenses (59,598) 3, (55,952) Other operating income Operating profit 74,249 6,521 3, ,450 Net finance income/(expense) expense (2,332) (1,199) (3,421) Profit before income taxes 71,917 6,521 3, (1,199) 81,029 Income tax expense (19,774) (307) (22) 386 (19,419) Net income 52,143 6,214 3, (813) 61,610 19

20 Growing business built on innovation Solid competitive positioning Structural growth High returns Strong cash generation Support organic and in-organic expansion Rooted in deep R&D investment and IP Technical excellence and highest level of integration compatible with short design cycle High Tier 1 customer penetration Core technical competencies aligned with secular trends in efficient power management in mobility and connected devices High touch fabless model; low capital intensity Rigorous working capital management Enhancing the competitive advantage of the business Expanding technology portfolio and customer base 20

21 At a glance FY 2016 Revenue -12% YoY $1,198m (FY 2015: $1,355m) Underlying gross margin -40bps YoY 46.3% (FY 2015: 46.7%) Underlying OPEX % +460bps YoY 27.9% (FY 2015: 23.3%) Underlying EBIT % Underlying diluted EPS $ Cash from operations -490bps YoY -31% YoY +6% YoY 18.5% (FY 2015: 23.4%) 209 cents (FY 2015: 302 cents) $386m (FY 2015: $363m) 21

22 Q revenue Strong growth in Power Conversion and Bluetooth low energy Q IFRS revenue $365 million Quarterly IFRS revenue ($ million) % Q4 Revenue CAGR Q1 Q2 Q3 Q4 Full year IFRS revenue 1600 ($ million) % Revenue CAGR ,156 1,355 1,

23 Effective inventory management At the end of Q inventory value stable and DIO down 21 days over Q In Q we expect inventory value to be at a similar level to Q and days of inventory to increase from Q Inventory ($ million) and Days Inventory Outstanding (# days) $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $ % 45% 45% 50% 50% 60% 59% 46% 38% 29% 37% 30% 38% 32% 34% 32% 25% 26% 11% 16% 18% 18% 16% 8% DIO (1) % 28% 12% Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4' Average DIO of 67 days Finished goods Work in process Raw Materials DIO (1) Calculated using average inventory balance over the period 23

24 Income statement Three months ended 31 December 2016 Three months ended 31 December 2015 US$ 000 IFRS Reconciliation Underlying IFRS Reconciliation Underlying Revenues 364, , , ,230 Cost of sales (198,301) 1,563 (196,738) (215,947) 1,173 (214,774) Gross profit 166,404 1, , ,283 1, ,456 Selling and marketing expenses (16,710) 2,513 (14,197) (16,230) 2,390 (13,840) General and administrative expenses (15,877) 2,479 (13,398) (30,071) 16,772 (13,299) Research and development expenses (59,598) 3,646 (55,952) (53,893) 3,497 (50,396) Other operating income Operating profit 74,249 10,201 84,450 81,279 23, ,111 Interest income 1,037-1, Interest expense (323) 110 (213) (1,599) 1,319 (280) Other finance (expense)/income (3,046) (1,199) (4,245) Profit before income taxes 71,917 9,112 81,029 80,441 25, ,592 Income tax expense (19,774) 355 (19,419) (27,876) (145) (28,021) Net income 52,143 9,467 61,610 52,565 25,006 77,571 Shareholders in the Company 52,605 9,333 61,938 53,356 25,006 78,362 Non-controlling interests (462) 134 (328) (2,108) 0 (2,108) Earnings per share (in US$) Basic Diluted

25 Consolidated statement of income Year ended 31 December 25

26 Consolidated balance sheet As at 31 December 26

27 Cash flow statement - I Year ended 31 December 27

28 Cash flow statement and II Year ended 31 December 28

29 Investor information Analyst coverage Financial Calendar Key Events Bank of America Merrill Lynch Adithya Metuku Baader Bank Bankhaus Lampe Barclays Capital Berenberg Bank Bryan, Garnier & Co ODDO Seydler Commerzbank Guenther Hollfelder Dr. Karsten Iltgen Andrew Gardiner Tammy Qiu Dorian Terral Veysel Taze Thomas Becker Q May 2017 Q July 2017 Q November 2017 Analyst roundtable 3 March 2017, London Natixis TMT Conference 21 March 2017, Paris J.P. Morgan Tech CEO Conference 20 June 2017, London Credit Suisse Achal Sultania Deutsche Bank Rob Sanders DZ Bank Harald Schnitzer Exane BNP Paribas David O Connor Hauck & Aufhauser Tim Wunderlich JP Morgan Cazenove Main First Bank AG Morgan Stanley Natixis RBC Stifel Sandeep Deshpande Juergen Wagner Francois A Meunier Stephane Houri Mitch Steves Lee Simpson Contacts Jose Cano Head of Investor Relations T: +44 (0) jose.cano@diasemi.com Financial PR/IR Advisers: FTI Consulting London Matt Dixon T: +44 (0) matt.dixon@fticonsulting.com FTI Consulting Frankfurt Anja Meusel T: +49 (0) anja.meusel@fticonsulting.com 29

30 Powering the Smart Connected Future personal portable connected 2017 Dialog Semiconductor 30