fy2019 financial results and fy2020 forecast · 2020-04-23 · ordinary income 38,314 38,974 - -...

$: FY2019 Financial Results and FY2020 Forecast · 2020-04-23 · Ordinary Income 38,314 38,974 - - 2UGLQDU\ ,QFRPH 0DUJLQ27.2% 26.4% - - Income before income taxes and minority interests$
DISCO CORPORATION All rights reserved

Apr. 23, 2020

FY2019 Financial Results and FY2020 Forecast

DISCLAIMER Statements in this PowerPoint with respect to DISCO's current strategies, plans, estimates, and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of DISCO. These statements are based on management's assumptions and beliefs in light of the information currently available to it and therefore you should not place undue reliance on them. DISCO cautions you that a number of important factors could cause actual results to differ materially from those discussed in the forward-looking statements, and you should not make decision on your investment thoroughly based on these statements. Such factors include, but not limited to, (i) general economic conditions and levels of demand in DISCO's markets; (ii) developments in technology and resulting changes in semiconductor and/or electronic component manufacturing process; (iii) levels of capital investment for manufacturing semiconductors and/or electronic components; (iv) expansions of the area for products and technologies using semiconductors and/or electronic components and its expanding speed; (v) DISCO's ability to continue to offer products and services corresponding to developments of new semiconductors and/or electronic components and new technologies for manufacturing them; (vi) exchange rates, particularly between the yen, the U.S. dollar, and the euro, and other currencies.


Change in Accounting Policy

2

Due to change in accounting policy, starting from FY2019, the timing of

revenue recognition has been changed to Inspection/Acceptance Basis.

BeforeManufacture/OrderInquiry Shipment

Sale

Inspection/Acceptance

After Manufacture/OrderInquiry Shipment

Sale



FY2019 Highlights

3

Net sales GP margin Operating income Ordinary income margin

141.0 B

Third highest

CAPEX

60.1 %

R&D Total assets Ordinary income margin averaged over four-year

period

FCF ROE EPS Annual dividend

36.4 25.8%

25.9 15.9 274.3

5.6 769JPY438JPY

27.4%

12.7 %Per share

New record High level High levelPrevious year: JPY 147.5 B Previous year: 58.9% Previous year: JPY 38.6 B Previous year: 26.2%

Previous year: JPY 15.3 B Previous year: JPY 15.4 B Previous year: JPY 258.1 B Previous year: 26.7%

Previous year: JPY 12.7 B Previous year: 13.6% Previous year: JPY 802 Previous year: JPY 322

JPY BJPY

BJPY BJPY BJPY

BJPYNew Record

DISCO CORPORATION All rights reserved4

FY2019 4Q Earnings Results (Consolidated)

FY2019 　 FY2019 　 FY2018

Millions of Yen 4Q 　 3Q Amount (%) 　 4Q Amount (%)

Net Sales 38,784 　 34,435 4,350 12.6% 　 33,186 - -

Gross Profit 23,045 　 21,036 2,009 9.5% 　 19,700 - -

　Gross Profit Margin 59.4% 　 61.1% -1.7p - 　 59.4% - -

SG&A 12,263 　 12,598 -335 -2.7% 　 11,975 - -

Operating Income 10,781 　 8,438 2,344 27.8% 　 7,725 - -

Ordinary Income 11,296 　 8,492 2,804 33.0% 　 8,008 - -

　Ordinary Income Margin 29.1% 　 24.7% 4.4p - 　 24.1% - -

Income before income taxes

and minority interests11,268 　 8,734 2,534 29.0% 　 7,920 - -

Net Income 8,275 　 6,333 1,942 30.7% 　 6,236 - -

QoQ YoY

Inspection/Acceptance basis

Sales: ＱoＱ Increased drastically for precision processing equipment and steady for precision processing tools.GP margin: ＱoＱ Declined due to change in product composition.SG&A: ＱoＱ Declined slightly, but R&D expenses remain at a high level.


FY2019 Earnings Results

5

Note: Due to the change in the accounting policy, a comparison has not been compiled.

FY2019 　 FY2018

Millions of Yen Full Year 　 Full Year Amount (%)

Net Sales 141,083 　 147,500 - -

Gross Profit 84,792 　 86,910 - -

　Gross Profit Margin 60.1% 　 58.9% - -

SG&A 48,341 　 48,264 - -

Operating Income 36,451 　 38,645 - -

Ordinary Income 38,314 　 38,974 - -

　Ordinary Income Margin 27.2% 　 26.4% - -

Income before income taxes

and minority interests38,277 　 38,256 - -

Net Income 27,653 　 28,824 - -

YoY


Reference: Quarterly Results Overview Based on Previous Accounting Policy

6

Reference information; According to previous accounting policy, shipment basis.

Shipment Basis

FY2019 　 FY2019 　 FY2018

Millions of Yen 4Q 　 3Q Amount (%) 　 4Q Amount (%)

Net Sales 39,856 　 35,194 4,662 13.2% 　 33,186 6,670 20.1%

Gross Profit 23,495 　 21,812 1,683 7.7% 　 19,700 3,794 19.3%

　Gross Profit Margin 58.9% 　 62.0% -3.1p - 　 59.4% -0.5p -

SG&A 12,278 　 12,610 -331 -2.6% 　 11,975 303 2.5%

Operating Income 11,216 　 9,201 2,015 21.9% 　 7,725 3,491 45.2%

Ordinary Income 11,569 　 9,152 2,416 26.4% 　 8,008 3,561 44.5%

　Ordinary Income Margin 29.0% 　 26.0% 3.0p - 　 24.1% 4.9p -

QoQ YoY

Sales: YoY Increased drastically for equipment and consumables.ＧP margin: YoY Declined due to change in product composition.SG&A: YoY Remains at a high level, centered on R&D expenses.


Reference: Full Year Results Overview Based on Previous Accounting Policy

Shipment Basis

Sales: YoY Decrease in blade dicing saw shipments due to decline in customer willingness to invest.GP Margin: YoY Increased due to change in product composition.SG&A: YoY Remains at a high level, centered on R&D expenses.

FY2019 　 FY2018

Millions of Yen Full Year 　 Full Year Amount (%)

Net Sales 139,220 　 147,500 -8,280 -5.6%

Gross Profit 83,791 　 86,910 -3,119 -3.6%

　Gross Profit Margin 60.2% 　 58.9% 1.3p -

SG&A 48,307 　 48,264 43 0.1%

Operating Income 35,483 　 38,645 -3,162 -8.2%

Ordinary Income 36,701 　 38,974 -2,273 -5.8%

　Ordinary Income Margin 26.4% 　 26.4% 0.0p -

YoY


Due to the change in accounting policy, the timing of revenue recognition has been changed to Inspection/Acceptance Basis.

Quarterly Consolidated Financial Results

0%

10%

20%

30%

40%

50%

0

100

200

300

400

500

FY10

1Q

2Q

3Q

4Q

FY11

1Q

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4Q

FY12

1Q

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FY19

1Q

2Q

3Q

4Q

Net Sales Operating Income Ordinary Income Margin

100 million yen (Oku yen)

Performance remains steady. Profit rates continue to be over 20%.（FY19_4Q Net sales: 27.8％, Ordinary income: 29.1% Operating income: 21.3%）


Accounting policy change

Quarterly Consolidated Sales Breakdown by Product

Note: Composition percentages are listed as additional information on the DISCO website.

0

100

200

300

400

500

FY15

1Q

2Q

3Q

4Q

FY16

1Q

2Q

3Q

4Q

FY17

1Q

2Q

3Q

4Q

FY18

1Q

2Q

3Q

4Q

FY19

_1Q

2Q

3Q

4Q

Industrial Products

Others

Maintenance Parts

Consumables

Precision Processing

Equipment

100 mill ion yen (Oku yen)


Consolidated Sales Breakdown by RegionAccounting policy change

0

100

200

300

400

500

FY15

_1Q

2Q

3Q

4Q

FY16

_1Q

2Q

3Q

4Q

FY17

_1Q

2Q

3Q

4Q

FY18

_1Q

2Q

3Q

4Q

FY19

_1Q

2Q

3Q

4Q

North America

Europe

Japan

Asia


FY19_4Q Overseas sales ratio: 84.8%


Quarterly Consolidated Shipment/Orders

0

100

200

300

400

500

600

FY10

1Q

2Q

3Q

4Q

FY11

1Q

2Q

3Q

4Q

FY12

1Q

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3Q

4Q

FY13

1Q

2Q

3Q

4Q

FY14

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2Q

3Q

4Q

FY15

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4Q

FY16

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FY17

1Q

2Q

3Q

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FY18

1Q

2Q

3Q

4Q

FY19

1Q

2Q

3Q

4Q

Order Backlog from shipment basis Shipment Figures Order


Shipment Basis

FY19_4Q Orders received: Approx. JPY 47.3 B, Shipments: Approx. JPY 39.8 B,Order backlog: JPY 27.0 BAlthough there have been many inquiries, due to leadtime adjustments caused by COVID-19, an order backlog has accumulated.


FY15

_1Q

2Q

3Q

4Q

FY16

_1Q

2Q

3Q

4Q

FY17

_1Q

2Q

3Q

4Q

FY18

_1Q

2Q

3Q

4Q

FY19

_1Q

2Q

3Q

4Q

Non-semiconductors

Other semiconductors

Optical

semiconductors

Package

IC

12

Non-consolidated Sales by Usage of Dicing Saws

Shipment Basis

QoQ: Increased due to increase in other semiconductors and optical semiconductors.YoY: Continued recovery centered on semiconductors, in contrast to the same time last year, during which there was deceleration.


FY15

_1Q

2Q

3Q

4Q

FY16

_1Q

2Q

3Q

4Q

FY17

_1Q

2Q

3Q

4Q

FY18

_1Q

2Q

3Q

4Q

FY19

_1Q

2Q

3Q

4Q

Non-semiconductors

Wafer manufacturing


Optical semiconductors

IC

13

Non-consolidated Sales by Usage of Grinders

Shipment Basis

QoQ: Continued high-level investment in a wide range of utilizations, centered on memory and other semiconductors.YoY: Increased significantly in comparison to the same time last year, due to an increase in a wide range of utilizations other than IC.


FY15

_1Q

2Q

3Q

4Q

FY16

_1Q

2Q

3Q

4Q

FY17

_1Q

2Q

3Q

4Q

FY18

_1Q

2Q

3Q

4Q

FY19

_1Q

2Q

3Q

4Q

14

Consolidated Consumable* Sales

No decline in demand was observed in Q4 (Jan. – Mar.), which typically experiences seasonal decline, and QoQ increased.


Balance Sheet (Summary)

FY2019 FY2019

Millions of Yen 4Q 3Q Amount

Cash and deposits 87,909 84,862 3,047

Notes and account receivable 25,614 23,570 2,044

Inventories 50,369 46,842 3,528

Total current assets 169,990 160,197 9,793

Property, plant and equipment 93,415 88,890 4,525

Total noncurrent assets 104,334 98,680 5,654

Total assets 274,325 258,878 15,447

Current liabilities 46,905 39,686 7,219

Noncurrent liabilities 529 497 33

Total liabilities 47,435 40,183 7,252

Total net assets 226,890 218,694 8,196

Total liabilities and net assets 274,325 258,878 15,447

Equity Ratio 82.2% 84.0% -1.8p

Total assets: Increase in inventory due to busy period at the factories. Increase in tangible fixed assets with construction of new building at the factories

Liabilities: Increase in current liabilities, such as accounts payable and income tax payable.Net assets: Increase in earned surplus.


Cash Flow (Summary) FY2019 FY2018

Millions of Yen Full Year Full Year Amount

Net cash provided by (used in) operating

activities31,299 27,311 3,988

Income before income taxes and minority

interests38,277 38,256 21

Depreciation and amortization 6,612 6,095 517

Decrease (increase) in notes and

accounts receivable-trade-5,202 8,695 -13,899

Decrease (increase) in inventories -33 -3,744 3,711

Increase (decrease) in notes and

accounts payable-trade-466 -3,785 3,319

Income taxes (paid) refund -5,425 -17,204 11,779

Others -2,461 -1,001 -1,461

Net cash provided by (used in) investing

activities-25,660 -14,513 -11,147

Purchase of property, plant and

equipment-24,868 -14,436 -10,432

Free cash flow 5,639 12,798 -7,159

Net cash provided by (used in) financing

activities-10,580 -12,982 2,403

Cash dividends paid -10,741 -13,001 2,259

Net change in of cash and cash equivalents -5,568 -193 -5,375

Cash and cash equivalents at beginning of

period85,351 85,545 -194

Cash and cash equivalents at end of period 79,782 85,351 -5,569

•Sales CF: Approx. JPY 31.2 B (increase)

•Investment CF: Approx. JPY 25.6 B (decrease)

•Financial CF: Approx. JPY 10.5 B (decrease)

•Free cash flowApprox. JPY 5.6 B (increase)

Cash balance at end of March: Approx. 79.7 B

Increase in assets mainly due to profit before tax

Mainly expenses related to the construction of new buildings at the factories

Chino factory: Approx. JPY 10.3 BKuwabata factory: Approx. JPY 4.4 B

Mainly payment of dividends


Dividend Policy and Dividend Payments

Dividend Policy• Decisions concerning the distribution of surpluses are made at the general shareholders meetings, in the case of final dividends, and by the Board of Directors, in the case of interim

dividends. • 1. Adopting a performance-linked dividend policy and aiming at giving clearer priority to shareholder returns, our target dividend payout ratio is 25% of the consolidated half-yearly net income.

There will be interim and final dividends, each of which will be equivalent to 25% of the half-yearly consolidated net income.• 2. Irrespective of the level of income, a reliable dividend of ¥10 per half-year will be maintained. This means that the minimum yearly dividend will be ¥20.• 3. Unless there is a loss, if the year-end balance of cash and deposits after payment of dividends and income taxes is greater than the projected funding requirements for the acquisition of

technology resources, such as through patent purchases and investments in venture businesses, facility expansion, the retirement of interest-bearing debt, and other purposes, one-third of that surplus will be added to dividends.

[Remarks]The ¥20 payout stipulated in our stable dividend policy may be reviewed if there are consolidated net losses for three consecutive years.

114 91

87 102

121

245

0

100

200

300

400

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

1H Dividend Per Share 2H Dividend Per Share Additional Dividends

(Yen)

Financial performance for FY19 – Half-year: JPY 91, Year-end: JPY 347 (Additional dividend: JPY 245) Total JPY 438

Financial performance for FY18 – Half-year: JPY 114, Year-end: JPY 208 (Additional dividend: JPY 121) Total JPY 322


Reference: Calculation of Surplus Distribution as Additional Dividends

18

Year-end

balanceSurplus

funds

Necessary

funds

1. Linked to financial

performance and

condition

2. Provision based

on a plan １/３

JPY 86.0 B JPY 59.5 B JPY 26.4 B

JPY 8.8 B

Operating funds

Facility expansion

Refund ofinterest bearing debt

Taxes and dividends

Technical purchases (including M&A)

Consolidated sales

Previous year÷ 12 months x 2

Average of past 3 yearsConsolidated sales

x 10％

D zone in Kuwabata plant

B building in Nagano plant

JPY

23.5B

JPY

14.0B

－

JPY

4.0B

JPY

18.0B

1

2

Contents of necessary funds:

Additional

dividends

Current Forecast

Note: Excludes some liabilities determined at the end of the term. Rounded down.


Earnings Forecast 1Q FY2020

Note: From FY19, the timing of revenue recognition has been changed to inspection/acceptance basis. Assumed exchange rate: USD 1 = JPY 100, EUR 1 = JPY 115Currency sensitivity (consolidated, annualized) USD: Approx. JPY 600 – 700M, EUR: Approx. JPY 30 M

100 million yen (Oku yen) Forecast

FY191Q

2Q 3Q 4QFY201Q

　Net Sales 328 351 344 388 337

　Operating Income 71 101 84 108 76

　Ordinary Income 81 104 85 113 77

　Net Income 57 73 63 83 55

　Operating Income Margin 21.7% 28.8% 24.5% 27.8% 22.6%

　Ordinary Income Margin 24.7% 29.7% 24.7% 29.1% 22.8%

　Net Income Margin 17.5% 20.8% 18.4% 21.3% 16.3%

　Shipment Figures 322 320 352 399 491


Sales Forecast By Product

20

Shipment BasisQoQ FC

FY20_1Q

DGP (for thin wafers) 70%

Normal Grinders 20%

Grinders 40%

Blade Dicers 50%

Laser Saws 80%

Dicers 60%

Precision Processing Equipment 60%

Consumables -10%

Others -5%


R&D/CAPEX Forecast

0

50

100

150

200

250

300

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

100 million yen(Oku yen) CAPEX Depreciation R&D Expenses

21

FY20 ForecastFacility investment: Including new buildings at Kuwabata and Chino factories Approx. JPY 18 B (JPY 25.9 B in FY19)Depreciation: Expected to be similar to last year Approx. JPY 6.5 B (JPY 6.6 B in FY19)R&D: Planning proactive R&D Approx. JPY 16.5 B (JPY 15.9 B in FY19)


70 70 70

50 50 50

115

60

30

15

F Y 2 0 1 8( A c t u a l )

F Y 2 0 1 9( E s t i m a t e d )

F Y 2 0 2 0( E s t i m a t e d )

F Y 2 0 2 1( E s t i m a t e d )

CAPEX Expenses

22

Expense for purchasing equipment and facilities

Zone D at Kuwabata Plant

Others


17.5BBuilding B at Chino Plant

14BZoneD at Kuwabata Plant

Others

FY20 ForecastExpenses related to purchased equipment and facilities: Approx. JPY 7 BZone D at Kuwabata factory: Planning to pay 1/3 corresponding to the construction period Approx. JPY 5 BBuilding B at Chino factory: Planning to pay final payment at completion Approx. JPY 6 B


FY16 FY17 FY18 FY19

Dicer

Grinders

Precision

blades and

wheels

1,342

1,674

1,475

1,411

313

510

386 365

55.5%59.2% 58.9%

60.1%

23.6%

31.5%

26.4%27.2%

0%

10%

20%

30%

40%

50%

60%

70%

0

200

400

600

800

1,0 00

1,2 00

1,4 00

1,6 00

1,8 00

FY2016 FY2017 FY2018 FY2019

Net Sales Operating Income

Gross Profit Margin Ordinary Income Margin

Shipment Trends

Equipment: While dicing saw shipments remain low, grinders stay firm.

Currently active inquiries for mass production from OSATs.

Consumables: Achieved record high. Demand for stock for mass production.

While shipments trended low, profitability increased due to steady

improvements (GP margin: 60%).

Although sales and profit declined, the annual dividend amount was JPY

438 (New record), in accordance with the dividend policy.

DISCO Business Environment and Operations: FY2019 Full Year Summary

23

Annual Shipmenttrends


Basis

Annual Trends (JPY 100 B)


Customer willingness to invest is strong, and shipments are expected to achieve a new

record in the first quarter.

Large amount of inquiries regarding investment in mass production, mainly from

China.

Closely monitoring market trends, particularly with leadtime adjustments in some

cases, due to COVID-19.

Promote continuous efforts towards business continuity management.

Maintain factory production and shipping systems by reinforcing existing infectious

disease prevention measures with stricter criteria for allowing employees to return to

work.

No changes to plant facility expansion policy

- Kuwabata plant expansion: Increasing production capacity of precision processing

equipment and precision processing tools (blades/wheels)

- Chino plant expansion: Increasing production capacity as the second production base

■ Focus on organizational management and business management, which will strength

the company (Will Accounting and PIM based on DISCO Values).

Forecast for FY2020

24

444

491

FY16

_1Q 2Q 3Q 4Q

FY17

_1Q 2Q 3Q 4Q

FY18

_1Q 2Q 3Q 4Q

FY19

_1Q 2Q 3Q 4Q

FY20

_1Q

Forecast

Quarterly Financial Performance Trends (JPY 100 M)


[Reference]

Half-Year and Fiscal Year Transition Graph


Half-Year1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Non-semiconductors


Optical

semiconductors

Package

IC


Shipment Basis


1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H


Non-semiconductors

Wafer

manufacturing

Other

semiconductors

Optical

semiconductors

IC

Semiconductor


Half-YearShipment Basis


1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H


28


Half-YearShipment Basis



FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Non-semiconductors


Optical semiconductors

Package

IC

Full-yearShipment Basis


FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Non-semiconductors

Wafer

manufacturing

Other

semiconductors

Optical

semiconductors

IC

Semiconductor





31

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19


fy2019 financial results and fy2020 forecast · 2020-04-23 · ordinary income 38,314 38,974 - -...

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