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AIXTRON: Financial targets achieved in 2016

Positive net income in Q4/2016 / Full year negative due to ongoing high research and development costs / Order Intake and Equipment Order Backlog increase significantly

AIXTRON SE (FSE: AIXA; OTC: AIXNY), a leading provider of deposition equipment to the semiconductor industry, today announced its financial results for fiscal year 2016 and the fourth quarter 2016.

Following a strong second half, AIXTRON met its guidance published at the beginning of the year. At EUR 196.5 million, total revenues for 2016 virtually matched the previous year’s figure (2015: EUR 197.8m), while Q4/2016 revenues came to EUR 89.8m (Q3/2016: EUR 51.2m). This figure, which represents the highest quarterly revenues since 2011, was due to a high volume of planned system shipments. The largest contributions came from production systems for LED, telecom and optoelectronics, as well as for the silicon industry.

EBITDA in 2016 rose year-on-year by 52% (2016: EUR -7.9m; 2015: EUR -16.4m). This development was driven by the strong fourth quarter of 2016 (Q4/2016: EUR 12.5m; Q3/2016: EUR -0.4m) for which a positive EBIT and net result of EUR 7.9m and EUR 6.4m respectively were also posted. As expected, overall EBITDA in H2/2016 came in positive at EUR 12.1m.

The free cash flow of EUR -42.9m in 2016 improved by EUR 14.4m, or 25%, on the previous year (2015: EUR -57.3m). The negative free cash flow of EUR -4.9m in the fourth quarter of 2016 (Q3/2016: EUR 3.0m) was mainly due to high shipment volumes at the end of the year. A large part of the resultant increase in outstanding receivables has converted into cash in Q1/2017.

Total order intake in 2016 came to EUR 225.1m, 35% higher than in the previous year (2015: EUR 167.1m) and the highest figure in five years. In Q4/2016, total order intake of EUR 60.5m was slightly down on the previous quarter but significantly higher than in the previous year (Q3/2016: EUR 69.0m, Q4/2015: EUR 31.3m). This was due to consistently high demand for LED, telecom and optoelectronic applications, including the sale of AIX R6 inventories.

As of December 31, 2016, the equipment order backlog totaled EUR 78.1m, a 67% increase on the figure of EUR 46.7m at the beginning of the year (December 31, 2015: EUR 42.9m; September 30, 2016: EUR 104.0m).

Key Financials

 

2016

2015

+/-

2016

2016

+/-

(in EUR million)

FY

FY

 

Q4

Q3

 

Revenues

196.5

197.8

-1%

89.8

51.2

75%

Gross profit

56.3

49.8

13%

29.4

16.9

74%

Gross margin

29%

25%

4pp

33%

33%

0pp

Earnings before interest, tax, depreciation and amortization (EBITDA)

-7.9

-16.4

52%

12.5

-0.4

n/a

Operating result (EBIT)

-21.4

-26.7

20%

7.9

-3.4

n/a

EBIT margin

-11%

-14%

3pp

7%

-7%

14pp

Net result

-24.0

-29.2

18%

6.4

-3.8

n/a

Net result margin

-12%

-15%

3pp

7%

-7%

14pp

Net result per share - basic (EUR)

-0.22

-0.26

15%

0.05

-0.04

n/a

Net result per share - diluted (EUR)

-0.22

-0.26

15%

0.05

-0.04

n/a

Free cash flow (FCF)*

-42.9

-57.3

25%

-4.9

3.0

n/a

Total order intake

225.1

167.1

35%

60.5

69.0

-12%

Equipment order backlog (end of period)

78.1

42.9

82%

78.1

104.0

-25%

*Operating CF + investing CF + changes in cash deposits, adjusted for acquisition effects (upfront payments and loans)

 

Business Development

Revenues developed in line with expectations in the year as a whole and in Q4/2016. The key driver for the development in revenues and the order intake in the fourth quarter 2016 was demand for production systems for LED, telecom and optoelectronics, as well as for the silicon industry. This in turn was mainly attributable to technology trends, such as big data, cloud computing, electromobility, and the upcoming 5G mobile communication standard.

Cost of sales for 2016 fell year-on-year to EUR 140.2m, equivalent to 71% of revenues (2015: EUR 147.9m, or 75% of revenues). This was mainly due to enhanced production and service efficiency, a development which also led to lower write-downs on inventories. Compared to the previous quarter, cost of sales in Q4/2016 remained stable in relation to revenues (Q4/2016: EUR 60.5m or 67% of revenues; Q3/2016: EUR 34.2m or 67% of revenues).

The gross profit and gross margin showed correspondingly positive developments in 2016, improving to EUR 56.3 million and 29% respectively (2015: EUR 49.8m, 25% gross margin). The same applies for the quarterly comparison (Q4/2016: EUR 29.4m, 33% gross margin; Q4/2015: EUR 19.6m, 31% gross margin; Q3/2016: EUR 16.9m, 33% gross margin).

At EUR 77.7m, operating expenses in 2016 were almost unchanged on the previous year (2015: EUR 76.5m). This was mainly due to consistent cost control, which also enabled operating expenses to be kept within the annual limit of around EUR 80m. Operating expenses corresponded to almost 40% of revenues in 2016 (2015: 39%). Compared to the previous quarter, operating expenses rose to EUR 21.4m (Q3/2016: EUR 20.4m).

The operating result (EBIT) improved year-on-year by EUR 5.3m to EUR -21.4m (2015: EUR -26.7m). The operating result for Q4/2016 increased to EUR 7.9m, significantly higher than in the previous quarter (Q3/2016: EUR -3.4m).

The net result for 2016 amounted to EUR -24.0m and thus improved by 18% on the previous year (2015: EUR -29.2m). In Q4/2016, the Company generated a net profit of EUR 6.4m (Q3/2016: EUR -3.8m).

Cash and cash equivalents (including cash deposits with a maturity of more than 90 days) came to EUR 160.1m as of December 31, 2016, as against EUR 209.4m as of December 31, 2015. The difference is chiefly due to the negative net result, payment of the second installment of the agreed refund of EUR 17.2 million in advance payments to a Chinese customer, and an agreed milestone payment of EUR 4.1m for the purchase of PlasmaSi (acquired in 2015) in Q1/2016. Due to high shipment volumes at the end of 2016, receivables rose at the end of 2016.  A large part of these receivables were paid in early 2017.

 

Management Review

“The dominant topic in fiscal year 2016 was certainly the planned takeover by Grand Chip Investment, which was intended to secure the company’s access to the major Chinese market while also ensuring that all of AIXTRON’s product portfolio could be brought to market maturity. Following the US President’s order prohibiting the bidder’s acquisition of AIXTRON’s US business and the investor’s subsequent withdrawal, AIXTRON acted to realign its corporate strategy targeting a sustainable return to profitability and to report a positive EBIT for full year 2018. Now it is a matter of implementing this strategy”, comments Martin Goetzeler, CEO of AIXTRON SE.

“Operationally, we made major progress in numerous areas in fiscal year 2016 and met the financial targets communicated at the beginning of the year. The strong performance in the second half, and especially in the fourth quarter of 2016, enabled us to further improve the company’s full-year results, even if we did not yet return to profitability due to ongoing high research and development costs.

It was important that we continued to press ahead with diversifying our technology and product portfolio last year. That is also one of the reasons why, based on our own calculations, we were once again the global market leader for MOCVD systems in 2016. The strong reported equipment order backlog gives us reason to be confident in our outlook for 2017, in particular with regard to opto- and power electronics as well as to the silicon business. We took a decisive step forward by supplying a Beta system with Gen1 (200 x 200 mm) configurations to a major display manufacturer to demonstrate our production processes on site. This way, we have moved significantly closer to obtaining the first order initially targeted for 2016.

With the strategy it has taken, the innovative products it can offer to numerous key markets of the future, the processes and structures it has put in place in recent years, and its clear results focus, AIXTRON is on the road towards sustainable profitability.”

 

Guidance

Following the termination of the planned takeover transaction by a Chinese investor in December 2016, AIXTRON is now focusing on the optimal structure of its technology portfolio as part of its corporate strategy. Against this background, AIXTRON is currently pursuing different options in order to successfully reduce required upfront expenses for the development of future technologies. These options include looking for partners, joint ventures or other alternatives. All these measures are targeted to enable a sustainable return to profitability and to report a positive EBIT for full year 2018.

Based on the existing business structure and the assessment on AIXTRON’s current order situation with the internal budget rate of USD/EUR 1.10, Management expects for fiscal year 2017 to achieve revenues and an order intake between EUR 180 million and 210 million.

Due to planned additional upfront expenses for development of future technologies and based on the existing structure, AIXTRON expects to achieve lower EBITDA, EBIT and net result for fiscal year 2017. As previously discussed, AIXTRON is pursuing the options mentioned above in order to return to sustainable profitability. Depending on the execution of above mentioned strategy with its various options and due to the uncertainty of its impact on earnings, Management is currently not in the position to offer guidance on EBITDA, EBIT and net result for fiscal year 2017. Management will provide an update on the 2017 earnings outlook as the above mentioned plans materialize.

Influenced by the significant reimbursement of an advance payment in Q1/2016 which will not repeat, Management expects a further improvement of the free cash flow in 2017.

In addition to above mentioned activities, Management will continue to focus on costs, margin contributions and the allocation of funds and will continuously review the performance and prospects of the Companies’ product portfolio.

As in previous years, Management expects that the Company does not require any external bank debt financing in 2017. Furthermore, the Company will retain its strong equity base also in the foreseeable future.

Financial Tables

The full year 2016 results presentation is available at http://www.aixtron.com/en/investors/ir-presentation. The consolidated financial statements (income statement, statement of comprehensive income, balance sheet, cash flow statement, statement of changes in equity) relating to this press release are part of AIXTRON’s Annual Report 2016 and are available at http://www.aixtron.com/en/investors/financial-reports/. AIXTRON’s interactive online Annual Report 2016 is available at http://annualreport2016.aixtron.com.

 

Investor Conference Call

AIXTRON will host a financial analyst and investor conference call on Thursday, February 23, 2017, 3.00 p.m. CET (6.00 a.m. PST, 9.00 a.m. EST) to review its 2016 results. You can dial into the call at +49 (69) 247501–899 or +1 (212) 444–0297 From 2.45 p.m. CET (5.45 a.m. PST, 8.45 a.m. EST). An audio replay or transcript will be available after the conference call at http://www.aixtron.com/en/investors/events/conference-call/.

 

Contact:

Guido Pickert
Investor Relations and Corporate Communications
T: +49 (2407) 9030-444
F: +49 (2407) 9030-445
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