AIXTRON: Order intake and revenue development in Q3/2016 support full year 2016 outlook

AIXTRON SE (FSE: AIXA, AIXC; NASDAQ: AIXG) a leading provider of deposition equipment to the semiconductor industry, today announced its financial results for the first nine months and the third quarter 2016.

Financial Highlights

Total order intake came to EUR 164.6m in 9M/2016 (9M/2015: EUR 135.8m). Due to higher demand for LED, telecom and optoelectronic applications including the sale of AIX R6 inventories with low margins, total order intake in Q3/2016 amounted to EUR 69.0m (Q2/2016: EUR 51.1m).

As of September 30, 2016, the equipment order backlog totaled EUR 104.0m (Q3/2015: EUR 72.3m; Q2/2016: EUR 86.2m).

Total revenues in 9M/2016 came in at EUR 106.6m (9M/2015: EUR 135.3m) while revenues in Q3/2016 amounted to EUR 51.2m (Q2/2016: EUR 34.1m).

Although 9M/2016 revenues fell 21% short of the previous year's figure, the development of revenues and earnings in the first nine months of 2016 was consistent with Management expectations. The development of total order intake and equipment order backlog support the significant revenue growth expectation for Q4/2016.

Free cash flow in 9M/2016 was EUR -38.0m (9M/2015: EUR -22.3m). Compared to Q2/2016, the positive free cash flow of EUR 3.0m in the third quarter of 2016 (Q2/2016: EUR ‑20.7m) was mainly due to reduced operating losses and higher advance payments from customers.

Key Financials

*Operating CF + Investing CF + Changes in Cash Deposits, adjusted for acquisition effects (upfront payments and loans)

Business Development

The development of revenues emerged as expected in the third quarter. The growth of revenues and order intake in Q3/2016 was mainly driven by demand for production systems for LED, telecom and optoelectronics, as well as for the silicon industry.

As outlined above, the revenues of EUR 106.6m in 9M/2016 decreased year-on-year (9M/2015: EUR 135.3m). This particularly reflects comparatively low revenues in the first half of 2016. Revenues in Q3/2016 rose to EUR 51.2m (Q2/2016: EUR 34.1m) due to a scheduled increase in systems supplied.

Cost of sales for 9M/2016 fell year-on-year to EUR 79.7m, equivalent to 75% of revenues (9M/2015: EUR 105.1m, or 78% of revenues). This relative improvement was mainly due to a more favorable product mix and significantly lower AIX R6 qualification costs. Compared with the previous quarter, cost of sales for Q3/2016 grew less rapidly than revenues, rising to EUR 34.2m (Q2/2016: EUR 27.2m). This in turn was mainly due to a more favorable product mix and improved capacity utilization.

Gross profit and the gross margin developed accordingly (9M/2016: EUR 26.9m, 25% gross margin; 9M/2015: EUR 30.2m, 22% gross margin; Q3/2016: EUR 16.9m, 33% gross margin; Q3/2015: EUR 17.8m, 33% gross margin: Q2/2016: EUR 6.9m, 20% gross margin).

At EUR 56.2m, operating expenses in 9M/2016 were almost unchanged to the previous year (9M/2015: EUR 55.4m; Q3/2016: EUR 20.4m; Q2/2016: EUR 18.0m).

The aforementioned developments led to slightly lower nine-month EBITDA in 2016, but also to an improvement compared with the previous quarter (9M/2016: EUR -20.4m; 9M/2015: EUR -17.6m; Q3/2016: EUR -0.4m; Q2/2016: EUR -8.2m).

The operating result (EBIT) fell year-on-year from EUR -25.2m in 9M/2015 to EUR -29.3m in 9M/2016. Compared with the previous quarter, the operating result for Q3/2016 improved to EUR -3.4m (Q2/2016: EUR -11.1m).

The net result for 9M/2016 amounted to EUR -30.4m and thus deteriorated year-on-year by 11% (9M/2015: EUR -27.3m) while improving compared with the previous quarter (Q3/2016: EUR -3.8m; Q2/2016: EUR ‑11.1m).

Cash and cash equivalents (including cash deposits with a maturity of more than 90 days) came in at EUR 163.5m as of September 30, 2016 compared with EUR 209.4m as of December 31, 2015. The difference is mainly attributable to the negative net result, payment of the second installment of the agreed return of advance payments to San'an, and an agreed milestone payment made in Q1/2016 for the purchase of PlasmaSi (acquired in 2015). Compared with June 30, 2016, cash and cash equivalents increased slightly (June 30, 2016: EUR 161.3m), a development due to lower operating losses and higher advance payments received from customers in this period.

Management Review

'Despite a comparatively weak development in revenues in the first nine months of 2016, we have reiterated our 2016 full year revenue guidance. This is due to solid order situation within recent months. Prior to transaction-related effects and under the conditions mentioned in our guidance, we expect to see a slight year-on-year improvement in our results and free cash flow. These key figures will nevertheless remain negative for the full year, as expected revenue volumes continue to be too low to fully finance all of the products in the development pipeline.', explains Martin Goetzeler, President and CEO of AIXTRON SE.

Guidance

Total order intake in Q3/2016 as well as the respective order backlog support Management's expectation of revenue growth in Q4/2016. Consequently, Management generally reiterates the full year 2016 guidance given in February 2016 with slight adjustments for order intake and revenues.

Based on its assessment of AIXTRON's current order situation, including current risks and opportunities as well as on the internal budget rate of USD/EUR 1.10, Management expects for fiscal year 2016 to achieve total revenues between EUR 180 and EUR 200 million. Total 2016 order intake is expected to be in a range between EUR 200 and EUR 220 million. The increase in order intake is primarily due to the sale of AIX R6 inventories with low margins.

Based on the internal budget rate of USD/EUR 1.10 and depending on the successful completion of qualification processes, market entry efforts, as well as the achievement of revenues at the high end of the guidance range, Management expects to achieve another improvement of results in 2016. Before transaction-related impacts, EBITDA, EBIT, net result and free cash flow are expected to improve slightly compared to 2015, but remain negative for the full year 2016.

Due to uncertainties in terms of investment requirements for certain product groups, potential restructuring costs or consequences from the transaction, Management will review EBITDA development for 2017.

Financial Tables

The 9M/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 quarterly group statement for the first nine months of 2016 and are available at http://www.aixtron.com/en/investors/financial-reports/.

Investor Conference Call

AIXTRON will host a financial analyst and investor conference call on Tuesday, November 08, 2016, 3:00 p.m. CET (6:00 a.m. PST, 9:00 a.m. EST) to review the 9M/2016 results. From 2:45 p.m. CET (5:45 a.m. PST, 8:45 a.m. EST) you may dial in to the call at +49 (69) 247501-899 or +1 (212) 444-0297. 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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