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X-FAB Third Quarter Results

Intermediate declaration by the Board of Directors

TESSENDERLO, Belgium--(BUSINESS WIRE)-- Regulatory News:

Highlights for Q3 2017:

  • Revenue of USD 140.3 million, up 9% year-on-year and up 1% quarter-on-quarter
  • EBITDA of USD 26.7 million with an EBITDA margin of 19%
  • Both revenue and EBITDA are in-line with guidance
  • EBIT of USD 12.8 million, down 35% year-on-year and up 40% quarter-on-quarter
  • Net profit of USD 22.4 million, up 34% year-on-year and down 7% quarter-on-quarter
  • Earnings per share of USD 0.17

Q4 2017 Outlook:

  • Revenue expected of USD 147-153 million with an EBITDA margin of about 20%

In the third quarter, the integration of X-FAB France moved forward. As scheduled, first production on X-FAB’s proprietary technologies was delivered out of the factory in Corbeil-Essonnes.

The capacity expansion of the Malaysian fab is on track after the USD 40 million CAPEX project was kicked off in the second quarter of 2017. The capacity of the site will increase by 4,000 wafer starts per month to a total of 28,000 wafer starts per month, which will become fully effective in the second quarter of 2018.

X-FAB Texas is expected to record first SiC production revenue in the fourth quarter of 2017.

In the third quarter, the utilization rate of the factories increased. In addition to this, the share of X-FAB’s core market segments automotive, industrial and medical went up while the lower margin consumer business decreased. These factors contributed to an improved profitability. Revenues in the consumer segment experienced a dip in the third quarter due to an ongoing transition to next generation products on customer side. The consumer segment is expected to strengthen in the fourth quarter of 2017.

At a constant USD/Euro currency exchange rate, revenues grew by 8% year-on-year and were flat quarter-on-quarter.

Revenue Breakdown per Quarter

in millions of
USD

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017
Automotive 46.2 52.9 55.9 56.0 54.5 59.3 66.5
Industrial 11.8 11.3 14.9 12.7 15.2 16.5 16.7
Medical 2.7 2.6 4.1 3.5 4.6 4.5 6.6

Subtotal core
business1

60.6 56.9% 66.8 56.4% 74.8 58.2% 72.2 45.3% 74.3 50.2% 80.3 57.6% 89.8 64.0%
CCC2 24.8 25.5 29.8 30.5 30.9 24.4 18.8
Others 0.7 0.7 0.3 0.7 0.7 0.5 0.8
Subtotal1 86.1 80.8% 93.0 78.5% 105.0 81.6% 103.4 64.9% 106.0 71.7% 105.2 75.5% 109.5 78.0%
X-FAB France3 0.0 0.0 0.0 31.6 26.5 31.0 30.8

Subcontracted
business

20.4 25.5 23.6 24.3 15.4 3.2 0.0
Total revenues 106.5 118.5 128.6

159.3

147.9 139.3 140.3

1 Without X-FAB France and Subcontracting Business

2 Consumer, Communications & Computer

3 X-FAB France business is predominantly CCC with a small amount of Automotive and Industrial business

In the third quarter of 2017, prototyping revenues as indicator for future business came in at USD 12.8 million. Year-to-date, prototyping revenues totaled USD 39.1 million, which is an increase of 25% compared to the same period last year. Prototyping revenues in the core market segments automotive, industrial and medical typically convert into production revenues within four to five years after initial prototyping. With the stronger contribution from the core markets in the third quarter representing 66% of total revenue, overall visibility continued to improve.

Commenting on the development of X-FAB’s medical business, Rudi De Winter added: “I am very excited about our medical business which reached a share of 5% of total sales in the past quarter. The medical business grew by 68% in the first nine months of the year compared to the same period of last year. This was mainly driven by revenues for various lab-on-a-chip diagnostic devices, e.g. for the DNA analysis of tumor cells. As these lab-on-a-chip applications keep progressing with FDA approvals, and as they are more and more qualifying for reimbursement by medical insurances, the adoption of these techniques will increase.”

FX Sensitivity
Relating to the financials as per September 2017 YTD, an evolution of the USD/Euro exchange rate from 1.10 to 1.20 would translate into a net positive effect on the financial result by about USD 10 million while on a yearly basis it would have a negative effect of USD 12 million on the operational result.

X-FAB Quarterly Conference Call
X-FAB’s third quarter results will be discussed in a live conference call on Tuesday, November 7th, 2017 at 5.00 pm CET. The conference call will be in English. Please register in advance of the conference using the following link: http://emea.directeventreg.com/registration/7598149

Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and a unique registrant ID. In the 10 minutes prior to the call, you will need to use the conference access information provided in the email received at the point of registering.

The conference call will be available for replay from November 7th 8 pm CET until November 13th 8 pm CET. The replay number will be +44 (0)1452550000, conference ID 7598149.

The fourth quarter and full year results will be communicated on February 13th, 2018.

About X-FAB
X-FAB is the leading analog/mixed-signal and MEMS foundry group manufacturing silicon wafers for automotive, industrial, consumer, medical and other applications. Its customers worldwide benefit from the highest quality standards, manufacturing excellence and innovative solutions by using X-FAB’s modular CMOS processes in geometries ranging from 1.0 to 0.13 µm, and its special BCD, SOI and MEMS long-lifetime processes. X-FAB’s analog-digital integrated circuits (mixed-signal ICs), sensors and micro-electro-mechanical systems (MEMS) are manufactured at six production facilities in Germany, France, Malaysia and the U.S. X-FAB employs more than 3,800 people worldwide.

For more information, please visit www.xfab.com.

Forward-looking information
This press release may include forward-looking statements. Forward-looking statements are statements regarding or based upon our management’s current intentions, beliefs or expectations relating to, among other things, X-FAB’s future results of operations, financial condition, liquidity, prospects, growth, strategies or developments in the industry in which we operate. By their nature, forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results or future events to differ materially from those expressed or implied thereby. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein.

Forward-looking statements contained in this press release regarding trends or current activities should not be taken as a report that such trends or activities will continue in the future. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any such forward-looking statements, which speak only as of the date of this press release.

The information contained in this press release is subject to change without notice. No re-report or warranty, express or implied, is made as to the fairness, accuracy, reasonableness or completeness of the information contained herein and no reliance should be placed on it.

Consolidated Statement of Profit and Loss

in thousands of USD

Quarter
ended
30 Sep 2017

Quarter
ended
30 Sep 2016

Quarter
ended
30 Jun 2017

Nine months
ended
30 Sep 2017

Nine months
ended
30 Sep 2016

Revenue

Revenues in USD in %

Revenues in EUR in %

140,287

81%

19%

128,588

86%

14%

139,340

83%

17%

427,569

84%

16%

353,599

87%

13%

Cost of sales -112,081 -95,103 -115,409 -346,123 -276,466
Gross Profit 28,206 33,485 23,931 81,446 77,133
Gross Profit margin in % 20,1 26,0 17,2 19,0 21,8
Research and development expenses -6,995 -6,869 -6,697 -21,195 -17,769
Selling expenses -2,123 -1,642 -2,151 -6,644 -5,193
General and administrative expenses -6,992 -5,269 -6,938 -21,699 -14,870

Rental income and expenses from
investment properties

628 -182 954 1,637 -969
Other income and other expenses 103 215 73 5 361
Operating profit 12,826 19,739 9,171 33,550 38,693
Finance income 19,294 217 24,928 44,935 2,014
Finance costs -9,857 -2,647 -10,127 -20,931 -7,206
Net financial result 9,437 -2,429 14,802 24,004 -5,192
Profit before taxes 22,263 17,309 23,972 57,554 33,501
Income tax 146 -590 122 163 -685
Profit for the period 22,409 16,708 24,113 57,742 32,810
EBITDA 26.742 32,539 23,144 74,975 75,656
EBITDA margin in % 19.1 25.3 16.6 17.5 21.4
Earnings per share at the end of period 0.17 0.17 0.19 0.48 0.33
Weighted average number of shares 130,631,921 99,381,921 128,571,481 119,642,910 99,381,921
EUR/USD average exchange rate 1.17442 1.11677 1.09860 1.11274 1.11604

Consolidated Statement of Financial Position

in thousands of USD

Nine Months ended
30 Sep 2017

Nine months ended
30 Sep 2016

Year ended
31 Dec 2016
audited

ASSETS
Non-current assets
Property, plant and equipment 297,290 260,338 265,472
Investment properties 8,737 9,137 9,143
Intangible assets 6,672 7,046 7,874
Non-current investments 680 278 190
Other non-current assets 147 49 36
Deferred tax assets 23,968 14,679 19,904
Total non-current assets 337,493 291,528 302,618
Current assets
Inventories 105,417 74,619 88,972
Trade and other receivables 72,690 77,186 77,292
Other assets 35,047 10,757 18,881
Cash and cash equivalents 343,389 77,080 104,157
Total current assets 556,543 239,642 289,303
TOTAL ASSETS 894,036 531,169 591,921
EQUITY AND LIABILITIES
Equity
Share capital 432,745 265,231 265,231
Share premium 349,446 264,535 255,262
Retained earnings -138,764 -209,318 -196,506
Cumulative translation adjustment -420 -956 -879
Treasury shares -770 -10,043 -770
Total equity attributable to equity holders of the parent 642,237 309,450 322,338
Non-controlling interests 364 379 400
Total equity 642,601 309,829 322,738
Non-current liabilities
Non-current loans and borrowings 118,941 107,284 132,407
Other non-current liabilities and provisions 8,893 1,451 8,481
Total non-current liabilities 127,834 108,734 140,888
Current liabilities
Trade payables 28,022 35,046 49,032
Current loans and borrowings 36,175 33,581 31,432
Other current liabilities and provisions 59,404 43,978 47,831
Total current liabilities 123,600 112,606 128,295
TOTAL EQUITY AND LIABILITIES 894,036 531,169 591,921

Consolidated Statement of Cash Flow

in thousands of USD

Quarter
ended
30 Sep 2017

Quarter
ended
30 Sep 2016

Nine months
ended
30 Sep 2017

Nine months
ended
30 Sep 2016

Income before taxes 22,263 17,309 57,554 33,501

Reconciliation of net income to cash flow arising from
operating activities:

4,871 15,801 17,332 41,947

Depreciation and amortization, before effect of grants and
subsidies

13,917 12,800 41,425 36,963

Recognized investment grants and subsidies netted with
depreciation and amortization

-892 -169 -2,754 -1,951
Interest income and expenses (net) 803 1,046 2,452 3,212
Loss/(gain) on the sale of plant, property and equipment (net) -64 -17 -64 -232
Loss/(gain) on the change in fair value of derivatives (net) -3,489 0 -11,229 0
Other non-cash transactions (net) -5,402 2,141 -12,498 3,955
Changes in working capital: -16,986 20,496 -27,456 -13,504
Decrease/(increase) of trade receivables -2,754 7,425 6,123 -26,570
Decrease/(increase) of other receivables & prepaid expenses -6,779 17,699 -11,340 -2,366
Decrease/(increase) of inventories -7,390 -3,623 -14,595 -12,762
(Decrease)/increase of trade payables -4,587 17,638 -21,930 20,579
(Decrease)/increase of other liabilities 4,525 -18,642 14,286 7,614
Income taxes (paid)/received -618 -2,545 -870 -2,675
Cash Flow from operating activities 9,530 51,061 46,559 59,269
Cash Flow from investing activities:
Payments for property, plant, equipment & intangible assets -17,836 -27,803 -67,827 -60,747
Payments for investments 0 -70 0 -278
Acquisition of subsidiary, net of cash acquired 0 0 0 0
Payments for loan investments to related parties -33 -5,556 -95 -5,639
Proceeds from loan investments related parties 30 34 111 103
Proceeds from sale of property, plant and equipment 66 18 67 735
Interest received 495 39 1,292 138
Cash Flow used in investing activities -17,277 -33,337 -66,453 -65,688

Consolidated Statement of Cash Flow – con’t

in thousands of USD

Quarter
ended
30 Sep 2017

Quarter
ended
30 Sep 2016

Nine months
ended
30 Sep 2017

��

Nine months
ended
30 Sep 2016

Cash Flow from (used in) financing activities:
Proceeds from loans and borrowings 0 17,555 0 27,080
Repayment of loans and borrowings -7,978 -5,253 -23,182 -14,365
Receipts from sale & leaseback arrangements 8 4,731 8 5,399
Payments of lease installments -670 -293 -1,909 -983
Receipt of government grants and subsidies 329 -626 375 1,807
Interest paid -768 -280 -2,157 -1,587
Gross proceeds from capital increase 0 0 266,575 0
Direct cost related to capital increase 0 0 -7,389 0
Distribution to non-controlling interests 0 0 -11 0
Cash Flow from (used in) financing activities -9,079 15,834 232,311 17,351
Effect of changes in foreign currency exchange rates on cash 9,907 -1 26,814 65
Increase/(decrease) of cash and cash equivalents -16,826 33,558 212,418 10,931
Cash and cash equivalents at the beginning of the period 350,307 43,536 104,157 66,084
Cash and cash equivalents at the end of the period 343,389 77,093 343,389 77,080

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X-FAB Silicon Foundries
Uta Steinbrecher
Investor Relations
+49-361-427-6489
uta.steinbrecher@xfab.com

Source: X-FAB