ASM INTERNATIONAL N.V. REPORTS FOURTH QUARTER 2014 RESULTS - PDF

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Almere, The Netherlands March 4, 2015 ASM INTERNATIONAL N.V. REPORTS FOURTH QUARTER 2014 RESULTS ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its fourth quarter 2014
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Almere, The Netherlands March 4, 2015 ASM INTERNATIONAL N.V. REPORTS FOURTH QUARTER 2014 RESULTS ASM International N.V. (NASDAQ: ASMI and Euronext Amsterdam: ASM) reports today its fourth quarter 2014 operating results (unaudited) in accordance with US GAAP. FINANCIAL HIGHLIGHTS Quarter EUR million Q Q Q Full Year Pro-forma 1) New orders Net sales Gross profit margin % 39.3% 43.2% 43.0% 39.0% 43.1% Operating result Result from investments (excl. amortization and fair value purchase price allocation) Remeasurement gain, realized gain on sale of ASMPT shares, amortization and fair value adjustments 1) (343.2) (5.7) (6.0) 1,006.4 (22.5) Net earnings (334.0) , Normalized net earnings (excl. remeasurement gain realized gain on sale of ASMPT shares, amortization and fair value adjustments) Net sales for the fourth quarter 2014 increased with 2% compared to the third quarter. Year-on-year net sales decreased with 2%. New orders at 154 million were slightly above our guidance of a million range. Normalized net earnings for the fourth quarter 2014 decreased compared to the third quarter, mainly due to a lower result from investments which includes a provision for a tax settlement of ASMPT in Hong Kong for the period with an impact of 9 million, and less positive currency effects on cash we hold in foreign currencies (especially US$). Compared to the same quarter last year, besides the effect of higher results from investments and currencies, the improvement was mainly due to higher sales in combination with effects of changes in our manufacturing operations and supply chain. 1) Following the close of the sale on March 15, 2013 of a 12% share in ASMPT, the entity in which the Back-end segment is organized, ASMI's shareholding is reduced to 40%. As a consequence, as from March 15, 2013 the results of ASMPT are deconsolidated. From that date onwards the net result of ASMPT is reported on the line 'result from investments'. In 2013 a purchase price allocation took place, which was finalized in the fourth quarter, resulting in the recognition and subsequent amortization of certain intangible assets. 1 of 3 COMMENT Commenting on the results, Chuck del Prado, President and Chief Executive Officer of ASM International said: 2014 was a strong year for ASM. We realized, excluding ASMPT, the highest sales level ever with a stable gross margin during the year of approximately 43%. (PE)ALD demand was strong and we extended our customer base. This creates a solid base and has led to the decision to propose in the coming AGM an increase of our dividend with 20% to 0.60 per share. Q4 showed relatively stable sales as compared to Q3, while our order intake at 154 million was slightly above the range as indicated. This established a strong backlog of 176 million at the beginning of 2015. OUTLOOK For Q1 we expect sales between 150 and 160 million. For Q2 we expect a double digit sales increase as compared to Q1. For the second half of 2015 the current visibility is limited. The Q1 order intake is expected to be in the range of million. SHARE BUYBACK PROGRAM On October 29, 2014, ASMI announced a share buyback program, to purchase up to an amount of 100 million of its own shares within the time frame. The repurchase program is part of ASMI's commitment to use excess cash for the benefit of its shareholders. ASMI intends to use part of the shares for commitments under employee share-based compensation schemes. The buyback program is executed by intermediaries through on-exchange purchases or through off-exchange trades. The program started on November 24, 2014, and will end on completion of the program but ultimately on November 20, The maximum number of shares to be repurchased on any given day will not exceed 25% of the average daily trading volume on the regulated market on which purchases are made, calculated over the last 20 trading days before the date of repurchase. The program does not include the repurchase of ASMI's New York Registry Share program. On March 3, 2015 of the total program 47% has been repurchased of which 32% was repurchased in Q ANNUAL REPORTS On April 9, 2015 ASMI will publish its 2014 Annual Report on Form 20-F and Statutory Annual Report. The reports will be published on our website at About ASM International ASM International NV, headquartered in Almere, the Netherlands, its subsidiaries and participations design and manufacture equipment and materials used to produce semiconductor devices. ASM International, its subsidiaries and participations provide production solutions for wafer processing (Front-end segment) as well as for assembly & packaging and surface mount technology (Back-end segment) through facilities in the United States, Europe, Japan and Asia. ASM International's common stock trades on NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM). For more information, visit ASMI's website at Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: All matters discussed in this statement, except for any historical data, are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These include, but are not limited to, economic conditions and trends in the semiconductor industry generally and the timing of the industry cycles specifically, currency fluctuations, corporate transactions, financing and liquidity matters, the success of restructurings, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder and other issues, commercial and economic disruption due to natural disasters, terrorist activity, armed conflict or political instability, epidemics and other risks indicated in the Company's filings from time to time with the U.S. Securities and Exchange Commission, including, but not limited to, the Company's reports on Form 20-F and Form 6-K. The Company assumes no obligation nor intends to update or revise any forward-looking statements to reflect future developments or circumstances. ASM International will host an investor conference call and web cast on Thursday, March 5, 2015 at 15:00 Continental European Time (9:00 a.m. - US Eastern Time). 2 of 3 The teleconference dial-in numbers are as follows: United States: International: + 44 (0) The Netherlands: + 31 (0) Access Code: A simultaneous audio web cast will be accessible at CONTACT Investor contact: Victor Bareño T: E: Mary Jo Dieckhaus T: E: Media contact: Ian Bickerton T: of 3 ANNEX 1 OPERATING AND FINANCIAL REVIEW FOURTH QUARTER 2014 The following table shows the operating performance for the fourth quarter of 2014 as compared to the third quarter of 2014 and the fourth quarter of 2013: EUR million Q Q Q Change Q to Q Change Q to Q New orders (1)% 16 % Backlog % 53 % Book-to-bill Net sales % (2)% Gross profit % 7 % Gross profit margin % 39.3% 43.2% 43.0% Selling, general and administrative expenses (18.6) (19.9) (21.5) 8 % 16 % Research and development expenses (15.0) (15.7) (18.5) 18 % 23 % Restructuring expenses (0.5) n/a n/a Operating result (3.8) (2.4) Operating margin % 12.5% 14.1% 10.8% Financing costs (4.5) (7.9) 12.7 Income tax (3.6) (3.9) (3.6) 0.3 Result from investments (21.8) 7.4 Remeasurement gain, realized gain on sale of ASMPT shares, amortization and fair value adjustments (343.2) (5.7) (6.0) (0.3) Net earnings (334.0) (33.6) Normalized net earnings (excl. remeasurement gain, subsequent impairment charge, realized gain on sale of ASMPT shares, amortization and fair value adjustments) (33.3) 17.6 Net earnings per share, diluted (5.70) (0.51) 6.03 Normalized net earnings per share, diluted (0.51) of 17 Results The backlog increased from 147 million at the end of the third quarter to 176 million as per December 31, 2014, an all time high level. The book-to-bill ratio for Q4 was 1.2. The following table shows the level of new orders for the fourth quarter of 2014 and the backlog at the end of the fourth quarter of 2014, compared to the previous quarter and the comparable quarter previous year: EUR million Q Q Q Change Q to Q Change Q to Q Backlog at the beginning of the quarter % 32 % New orders for the quarter (1)% 16 % Net sales for the quarter (126.9) (122.2) (124.3) 2 % (2)% FX-effect for the quarter (2.7) 3.8 (0.9) Backlog at the end of the quarter % 53 % Book-to-bill ratio (new orders divided by net sales) Net sales for the fourth quarter 2014 increased with 2% compared to the previous quarter and decreased with 2% year-on-year, mainly driven by lower ALD and PEALD, as customers are absorbing the investments made in the last quarters. The impact of currency changes was an increase of 2% quarter to quarter and an increase of 3% year-on-year. The gross profit margin in the fourth quarter was stable on a level of 43.0% (Q3 2014: 43.2%), mainly caused by mix effects. For Q gross profit margin as a percentage of sales was 39.3%. The improvement year- on-year is caused by higher sales in combination with effect of changes in our manufacturing operations and supply chain. The impact of currency changes on gross profit was flat quarter to quarter and an increase of 2% year-on-year. Selling, general and administrative expenses increased with 8% compared to the previous quarter. As a percentage of sales SG&A expenses were 17% (Q3 2014: 16%, Q4 2013: 15%). The impact of currency changes on SG&A expenses was an increase of 2% quarter to quarter and an increase of 3% year-on-year. SG&A expenses included certain one offs mainly related to the reassessment of vesting of options under employee share based compensation schemes. Excluding those one offs SG&A would have been at the same level of the previous quarter. Research and development expenses increased with 18% compared to the previous quarter. As a percentage of sales R&D expenses were 15%, compared to 13% for the previous quarter. For the fourth quarter of 2013 this was 12%. The impact of currency changes on R&D expenses was an increase of 2% quarter to quarter and an increase of 1% year-on-year. Financing costs are mainly related to translation results. A substantial part of ASMI's cash position is denominated in US dollar. Currency changes, mainly between US dollar and Euro during Q4 resulted in a translation gain of 8.2 million compared to a gain of 16.6 million in the previous quarter. Result from investments includes our 40% share in net earnings of ASMPT. In Q4 ASMPT showed a sales decrease of 29% compared to the previous quarter, from HK$4,852 million to HK$3,446 million. Sales were 25% above the level of Q4, 2013 of HK $2,764 million. Net earnings, on a 100% basis, decreased from 77 million in Q3 to 23 million (excluding one-offs 45 million). Q4 last year, also on a 100% basis, showed net profit at 5 million (excluding one-offs 13 million). The amortization of the recognized intangible assets and the depreciation of the fair value adjustment for property, plant & equipment negatively impacted net earnings with 6.0 million in Q4. For the full year of 2014 this amortization and depreciation amounted to 22.5 million. For the year 2015 and 2016 this amount will remain at the same level. 2 of 17 Cash flow, balance sheet, liquidity and capital resources Cash flow. The following table shows the cash flow statement on a comparable basis. The ASMPT numbers have been deconsolidated and the effects of the purchase price allocation have been eliminated. EUR million Q Q Q Net earnings Adjustments to cash from operating activities Depreciation and amortization Income tax 4.0 (1.6) 3.4 Result from investments (1.5) (30.7) (8.9) Other adjustments 1.4 (13.2) (5.6) Changes in other assets and liabilities Accounts receivable (21.1) 0.6 (3.3) Inventories 9.0 (4.6) (12.9) Accounts payable Other assets and liabilities (1.2) 3.1 (4.3) Net cash provided (used) by operating activities Capital expenditures (8.8) (9.9) (14.1) Other 1.2 (1.3) Net cash provided (used) in investing activities (7.6) (9.9) (15.4) Debt issuance fees paid (0.1) Share buy back (29.3) Shares issued Dividend paid and capital repaid to shareholders ASMI 0.1 (4.1) Dividend received from investments 12.5 Net cash provided (used) in financing activities (27.6) Net cash (used) provided (32.0) 3 of 17 Balance sheet. EUR million December 31, 2013 December 31, 2014 Cash and cash equivalents Accounts receivable Inventories Other current assets Total current assets Investments and associates ,092.1 Property, plant and equipment Goodwill Other non-current assets Total non-current assets 1, ,208.9 Total assets 1, ,826.9 Accounts payable Other current liabilities Total current liabilities Pension liabilities Total non-current liabilities Shareholders' equity 1, ,690.2 Total liabilities and shareholders' equity 1, ,826.9 Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue, increased to 108 million compared to 100 million per September 30, On a currency comparable level net working capital would have been 106 million. The number of outstanding days of working capital, measured against quarterly sales, increased from 73 days at September 30, 2014 to 78 days on December 31, Inventories include approximately 30 million of finished goods, already shipped to customers which will be recognized as revenue in future quarters. At the end of the third quarter this amount was 8 million. Sources of liquidity. On December 31, 2014, the Company s principal sources of liquidity consisted of 386 million in cash and cash equivalents and 150 million in undrawn bank lines. 4 of 17 OPERATING AND FINANCIAL REVIEW FULL YEAR, 2014 The following table shows the operating performance for the full year 2014 as compared to the same period of the previous year on a pro-forma basis: EUR million Full Year, 2013, Pro- Forma 2014 Change New orders % Backlog % Book-to-bill Net sales % Gross profit % Gross profit margin % 39.0% 43.1% Selling, general and administrative expenses (70.7) (80.5) 14% Research and development expenses (58.3) (63.9) 10% Restructuring expenses (2.5) (0.1) n/a Operating result Operating margin % 9.9% 16.6% Financing costs (10.7) Income tax (9.5) (17.6) (8.1) Result from investments Remeasurement gain, realized gain on sale of ASMPT shares, amortization and fair value adjustments 1,006.4 (22.5) (1,028.9) Net earnings 1, (914.6) Normalized net earnings (excl. remeasurement gain, subsequent impairment charge, realized gain on sale of ASMPT shares, amortization and fair value adjustments) Net earnings per share, diluted (14.21) Normalized net earnings per share, diluted The pro-forma figures show ASMI numbers whereby ASMPT is deconsolidated. Result from investments reflects ASMI's share in the net earnings of ASMPT. In the pro-forma results for Q1, 2013 a share of 52% in ASMPT's net earnings is presented for the period January 1- March 15. For the period March 16 - March 31 the actual 40% shareholding is reflected. 5 of 17 Results The backlog increased with 53% compared to December 31 last year. The book-to-bill ratio was 1.1. The following table shows the level of new orders for the full year 2014, the backlog as per December 31,2014 compared to the comparable period of 2013: Full Year, EUR million % Change Backlog at the beginning of the year % New orders % Net sales (452.0) (545.6) 21% FX-effect (4.4) 4.8 Backlog as per reporting date % Book-to-bill ratio (new orders divided by net sales) Net sales for the full year 2014 increased with 21% year-on-year, mainly driven by ALD and PEALD sales, which were subsequently higher than in the comparable period last year. The impact of currency changes was a decrease of 1%. The gross profit margin for the full year 2014 increased to 43.1% (2013: 39.0%). This resulted from continued positive mix effects and a high utilization in combination with effects of changes in our manufacturing operations and supply chain. The impact of currency changes was a decrease of 2%. Selling, general and administrative expenses increased with 14% compared to the comparable period previous year. As a percentage of sales SG&A expenses were 15% compared to 16% for the same period previous year. The impact of currency changes was a decrease of 4%. Research and development expenses increased with 10% compared to the comparable period previous year. As a percentage of sales R&D expenses decreased to 12%, compared to 13% for the same period previous year. The impact of currency changes was flat. 6 of 17 Cash flow Cash flow. The following table shows the cash flow statement on a comparable basis. The ASMPT numbers have been deconsolidated: Full Year, EUR million Net earnings Adjustments to cash from operating activities Depreciation and amortization Income tax Result from investments (20.9) (61.1) Other adjustments 4.5 (15.7) Changes in other assets and liabilities Accounts receivable (26.5) 6.8 Inventories 9.8 (11.7) Accounts payable Other assets and liabilities 6.9 (7.0) Net cash provided (used) by operating activities Capital expenditures (9.0) (38.3) Other (0.3) (1.5) Net cash provided (used) in investing activities (9.3) (39.8) Purchase treasury shares (29.3) Shares issued Debt issuance fees paid (1.4) Dividend paid and capital repaid to shareholders ASMI (301.2) (31.8) Dividend received from investments Net cash provided (used) in financing activities (285.1) (37.9) Net cash (used) provided (244.7) of 17 ANNEX 2 RECONCILIATION RESULTS TO ASMI CONSOLIDATED The results of Back-end were consolidated until March 15, From that date on the net result of ASMPT is reported on the line result from investments . FULL YEAR 2014 Full year EUR million, except earnings per share % Change Net sales (11)% Gross profit % Gross profit margin % 35.0% 43.1% Selling, general and administrative expenses (96.3 ) (80.5 ) (16)% Research and development expenses (75.4 ) (63.9 ) (15)% Restructuring expenses (2.5 ) (0.1 ) n/a Result from operations n/a Net earnings -1-1, n/a Net earnings per share, diluted in euro n/a 1) Allocated to the shareholders of the parent Net Sales Full year EUR million % Change Front-end % Back-end n/a ASMI consolidated (11)% Gross Profit (Margin) Full year EUR million Gross profit Gross profit margin Increase or (decrease) percentage points Front-end % 43.1% 4.1ppt Back-end % % n/a ASMI consolidated % 43.1% 8.1ppt 8 of 17 Selling, General and Administrative Expenses Full year EUR million % Change Front-end % Back-end 25.6 n/a ASMI consolidated (16)% Research and Development Expenses Full year EUR million % Change Front-end % Back-end 17.1 n/a ASMI consolidated (15)% Result from Operations Full year EUR million Change Front-end Before special items Restructuring expenses (2.5) (0.1) 2.4 After special items Back-end (4.3) 4.3 ASMI consolidated Net Earnings allocated to the shareholders of the parent Full year EUR million Change Front-end Before special items Restructuring expenses (2.5) (0.1) 2.4 After special items Back-end Until March 15, 2013 consolidated (2.8) 2.8 As from March 15, 2013 as a 40% investment Total Realized gain on the sale of 11.88% of the ASMPT shares (242.8) Unrealized remeasurement gain on the remaining 40% of the ASMPT shares and amortization intangibles recognized in purchase price allocation (22.5) (786.1) Total net earnings allocated to the shareholders of the parent 1, (914.6) 9 of 17 ANNEX 3 ASM INTERNATIONAL N.V. CONSOLIDATED STATEMENTS OPERATIONS Three months ended December 31, Full year EUR thousand, except earnings per share (unaudited) (unaudited) (unaudited) (unaudited) Net sales 126, , , ,604 Cost of sales (77,015) (70,809) (397,727) (310,606) Gross profit 49,933 53, , ,999 Operating expenses: Selling, general and administrative (18,561) (21,533) (96,269) (80,527) Research and development (15,033) (18,534) (75
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