EANS-Adhoc: ams AG / ams reports second quarter revenues in upper half of guidance range with profitability above expectations; positive momentum for optical and 3D sensing tech-nologies in Android market; ... EAE

Tuesday, 23. July 2019 07:26
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Selected financial information for the second quarter and first half 2019

Mergers - Acquisitions - Takeovers/Mid Year Results/Mid Year Financial
Report/Quarterly Report
23.07.2019

Premstaetten - (PR title cont'd) ... strong third quarter ex­pected with
revenues of USD 600-640 million, up 49% quarter-on-quarter, based on consumer
ramps; opera­tional improvements drive significant increase in expected third
quarter adjusted EBIT margin to above 25%; update on strategic transaction
opportunity

Premstaetten, Austria (23 July 2019) -- ams (SIX: AMS), a leading worldwide
supplier of high performance sensor solutions, reports second quarter results
with revenues in the upper half of the guidance range and operating
profitability above expectations. Driven by ams' consumer business, the results
reflect the strength of ams' portfolio and more supportive demand trends in the
consumer market. ams expects strong revenue and profit growth for the third
quarter based on high volume ramps in the consumer market and significantly
improved operational performance with expected revenues of USD 600-640 million
and a strongly higher adjusted operating margin of above 25%.

Second quarter group revenues were USD 415.2 million, up 8% sequentially
compared to the first quarter and up 72% from USD 241.6 million in the same
quarter 2018. Group revenues for the first half of 2019 were USD 801.2 million,
up 22% compared to USD 655.2 million recorded in the first half of 2018.
Adjusted gross margin for the second quarter was 37% (excluding acquisition-
related and share-based compensation costs) with IFRS reported gross margin at
35% (including acquisition-related and share-based compensation costs), compared
to 15% and 9% respectively in the same quarter 2018. For the first half of 2019,
adjusted gross margin stood at 35% (excluding acquisition-related and share-
based compensation costs) and IFRS reported gross margin at 32% (including
acquisition-related and share-based compensation costs), compared to 28% and 24%
respectively in the first half of 2018.

The adjusted result from operations (EBIT) for the second quarter was USD 50.0
million or 12% of revenues (excluding acquisition-related and share-based
compensation costs), strongly increasing from a loss of USD 46.4 million in the
same period 2018 (USD 21.9 million or 5% of revenues including acquisition-
related and share-based compensation costs, up from a loss of USD 72.8 million
in the same period 2018). For the first half of 2019, the adjusted EBIT was USD
73.2 million (excluding acquisition-related and share-based compensation costs),
up from USD 24.2 million in the same period 2018 (USD 17.5 million including
acquisition-related and share-based compensation costs, up from a loss of USD
30.3 million in the first half year 2018).

Adjusted net income for the second quarter was USD 25.2 million (excluding
valuation effect of option element of foreign currency convertible bond),
compared to a loss of USD 99.0 million for the same period 2018 (second quarter
2019: USD 25.1 million including valuation effect). Adjusted basic/diluted
earnings per share for the second quarter were CHF 0.31/0.28 or USD 0.31/0.28
based on 80,773,555/86,504,145 shares (weighted average; second quarter 2019:
CHF 0.31/0.28 or USD 0.31/0.28 including valuation effect; second quarter 2018:
CHF -1.24/-1.19 or USD -1.19/-1.15 based on 83,377,425/86,388,635 shares,
weighted average). Adjusted net income for the first half year 2019 was USD 15.8
million (excluding valuation effect of option element of foreign currency
convertible bond), compared to a loss of USD 7.7 million for the same period
2018 (first half 2019: USD 15.8 million including valuation effect). Adjusted
basic/diluted earnings per share for the first half were CHF 0.20/0.19 or USD
0.20/0.19 per share based on 80,504,466/81,864,338 shares (weighted average;
first half 2019: CHF 0.19/0.19 or USD 0.20/0.19 including valuation effect;
first half 2018: CHF -0.10/-0.10 or USD -0.10/-0.10 based on 77,344,938/
80,159,144 shares, weighted average).

Operating cash flow for the second quarter was USD 50.7 million compared to USD
-69.1 million in the same quarter last year, while operating cash flow for the
first half was USD 145.7 million compared to USD -17.6 million in the first half
year 2018. Total backlog on 30 June 2019 (excluding consignment stock
agreements) was USD 304.2 million compared to USD 285.2 million at the end of
the first quarter and USD 525.6 million on 30 June 2018.

ams' business performed well in the second quarter and first half of 2019 with
second quarter results in the upper half or above the published expectation
range. This strong development was again driven predominantly by ams' consumer
business where the demand environment turned more supportive compared to the
previous quarter.

ams' consumer business once more provided the largest contribution to its
overall results. ams holds a leading market position in optical sensing where
its extensive portfolio comprises advanced solutions for 3D sensing including
VCSEL (Vertical Cavity Surface-Emitting Laser)-based illumination, high quality
display management including behind-OLED and TrueColor technologies, micro-scale
proximity sensing, bio- and spectral sensing, and other optical applications.
ams is a leader in 3D sensing technologies and an important supplier of high
volume 3D sensing solutions. ams' extensive 3D sensing portfolio and system
know-how covers all three technologies structured light (SL), time-of-flight
(ToF), and active stereo vision (ASV) for both front-facing and world-facing 3D
systems with a current focus on 3D illumination.

The anticipated positive momentum in 3D sensing adoption shows as ams moves
through the current year and looks at market developments going forward. ams is
shipping 3D sensing solutions to the world's top smartphone OEMs in volume while
ams added an expanding volume base in the Android market in the first half. As
ams moves along a multi-year adoption timeline for front-facing 3D sensing and
is in the very early stages of a comparable multi-year timeline for world-facing
applications ams is able to serve different customer needs across all three
technologies. Offering projection, illumination and distance measurement
solutions in ams' extensive 3D portfolio for SL, ToF and ASV, ams continues to
strengthen its market position in 3D illumination and sees further device
launches in the second half of this year. ams' advanced VCSEL technology offers
advantages in 3D sensing illumination for all 3D technologies which makes its
high power VCSEL portfolio a key driver of the ongoing success of ams in 3D
sensing. ams is able to provide full 3D illumination solutions to OEMs which
incorporate VCSELs, VCSEL drivers, optics, module design and/or manufacturing.
Given their high differentiation and optimized performance the solutions create
a competitive advantage compared to VCSEL-focused vendors.

Following platform launches in the first half, ams has already shipped high
volumes of illumination products for first world-facing iToF 3D sensing systems
at two leading Android OEMs as ams' business with major Asian OEMs is not facing
any noticeable constraint due to the current trade-related uncertainties. ams is
supplying increasing volumes in this area as it enters the second half
supporting camera enhancing features and sees a positive momentum for this
business in the coming year. Other 3D sensing solutions continued to ship in
substantial volumes through the second quarter as anticipated. ams recently
announced another partnership in 3D sensing with leading Chinese software expert
MEGVII to accelerate market availability of ASV designs for consumer-oriented 3D
authentication outside smartphones. The reference designs will target
applications such as access control/locks and point-of-sale payment systems. The
partnership confirms the growing market interest in expanding 3D authentication
to additional areas as well as the leading position of ams in 3D sensing which
makes ams a preferred partner in 3D sensing development. ams is also seeing very
good market traction for its long-distance 1D ToF solution for precise distance
measurement up to around 2.5 meters. Here ams has won a first design for laser
detect autofocus (LDAF) for backside cameras and sees further opportunities in
the smartphone market as well as in IoT.

ams has recently also entered into an important partnership with China-based
leading image sensor vendor SmartSens in the field of illumination and Near
Infrared (NIR) image sensing for 2D and 3D solutions and applications requiring
high quantum efficiency (QE) in the NIR range. Together, the partners will first
advance an ASV reference design for consumer 3D applications based on the latest
near-infrared (NIR) image sensor with state-of-the-art QE of up to 40% and ams'
illumination system capabilities. ams is excited about this partnership for
faster time to market which leverages its 3D illumination offering and core IP
in global shutter technology to enable high performance depth maps for payment,
face recognition and AR/VR at competitive system cost. Importantly, this
partnership extends into the sizeable automotive market where it will help
enable innovative applications applications for 2D and 3D in-cabin optical
sensing such as driver monitoring and identification, and accelerate time to
market. The co-operation will also advance industrial opportunities, here ams is
already engaging with a large OEM for an ASV application for a consumer-oriented
household device. Together with the co-operation with MEGVII, the partnerships
underscore the attractiveness of ASV for a broad spectrum of cost-efficient 3D
solutions with wide-ranging appeal in diverse markets.

Leveraging its different 3D technology partnerships, ams is strengthening its
leadership position in 3D sensing which is built around hardware and software IP
and its industry-leading portfolio and system expertise. ams sees positive
momentum for this market as application areas for 3D technolgies continue to
broaden, opening up new opportunities for the future.

In display management, ams is recording high shipment volumes of its new
solutions for high performance behind-OLED-display proximity and light sensing
which demonstrate the excellent success of this innovation shortly after market
introduction. ams' behind-OLED sensing enables OEMs to place light and proximity
sensing invisibly behind the OLED display in order to pursue maximized screen-
to-body ratio and bezel-less phone designs. ams is already supplying several
major Asian OEMs for a range of recently launched high volume smartphone
platforms which are successful in the market. Supporting the trend to remove
bezel-placed elements from the front side of smartphones, this unmatched
technology is showing very good traction at consumer OEMs with behind-OLED
sensing adoption expected to expand meaningfully into the next year. Significant
shipments of customized TrueColor sensing solutions for advanced display
management continued in the quarter, while ams is shipping high volumes of new
flicker detection light sensors, which improve picture quality by detecting
artificial light flicker, to several Asian smartphone OEMs.

ams' development focus on new optical sensing technologies and applications is
unchanged including biosensing and under-display optical technologies with a
roadmap for 3D. As mentioned, ams' biosensing solution offers high quality blood
pressure measurement providing valuable personal health data which ams augments
by further health-related information. ams is actively engaging with OEMs for
future devices and pursues medical grade certification for blood pressure
measurement in the United States which is expected by year-end, to be followed
by China. ams' audio sensing business performed well in the first half while
ams' other consumer product lines saw attractive volumes at a range of OEMs.
Leading in audio and active noise cancellation, ams has launched an innovative
solution for high quality noise cancellation in loose-fitting true wireless
earbuds and is seeing strong interest from consumer OEMs. Additionally, ams'
exclusive augmented hearing technology allows relevant audio information such as
speech to selectively
by-pass noise cancellation.

ams' automotive, industrial, and medical businesses showed an overall good
performance in the second quarter and first half that tracked expectations. ams'
automotive business recorded a second quarter in line with expectations,
successfully navigating through a more challenging market environment with
continuing mixed end demand across regions. Based on a diversified solution and
customer portfolio, ams' main focus are applications for safety, driver
assistance/autonomous driving, position sensing, and chassis control. While
automotive sensing content continues to expand, ams' portfolio focus areas are
not not propulsion technology-specific allowing ams to benefit irrespective of
propulsion technology market shares. In the quarter, ams announced details
around the previously reported large program for VCSEL illumination in solid-
state 3D LIDAR where ams works with tier 1 system supplier ZF and technology
partner IBEO. Strong development activities continue for this program where ams
is able to combine the advantages of non-scanning and scanning approaches into a
true solid-state scanning architecture based on addressable VCSEL arrays. Given
ams' strong automotive VCSEL capabilities ams is actively engaged with
additional tier 1 system vendors in multiple regions for LIDAR illumination. As
mentioned above, ams is also addressing sizeable opportunities in other new
automotive optical and 2D/3D sensing such as in-cabin monitoring. ams is moving
ahead in development of 3D illumination for an in-cabin ToF sensing solution for
a tier 1 supplier while ams is able to address several content opportunities in
different system designs for this market. Additionally, ams sees attractive
momentum in automotive projected lighting where applications for miniaturized
projector solutions are bound to expand from today's focus on comfort to
innovative safety and differentiated lighting features.

ams' industrial business recorded attractive results in the second quarter and
first half despite an overall less favorable demand environment for industrial
applications. ams serves the industrial and factory automation, HABA, other
industrial sensing, and industrial imaging markets as a leading provider of
industrial sensing solutions and continued to see broad-based contributions from
a wide range of applications. ams' imaging business is seeing ongoing positive
momentum reflecting ams' leadership in global shutter technology while the above
mentioned partnership with SmartSens for high performance NIR sensors leverages
the combined IP in this area. ams' medical business was again successful in the
second quarter with digital imaging for computed tomography (CT), digital X-ray,
mammography, and miniature camera applications contributing positively to ams'
results. In the growth region Asia/Pacific ams sees ongoing positive traction
for its medical imaging portfolio enabling ams to strengthen its market
position. Market momentum for ams' leading micro camera solutions continues to
increase as application opportunities expand into multiple end markets.

In manufacturing operations, ams has been able to significantly improve the
efficiency of production processes in Singapore resulting in more efficient
staffing and materials usage. These advances are driving clear benefits for ams'
operational performance as capacity utilization increases with expected higher
production volumes in the third quarter and second half. The strongly higher
VCSEL volumes ams is shipping this year compared to 2018 are supported by its
expanded out­sourced supply chain comprising several partners. ams' internal
VCSEL production line is moving towards the expected start of its multi-quarter
production ramp around year-end as previously men­tioned. In line with previous
expectations, ams sees significantly lower capital expenditures for 2019
compared to last year with the dominant share of expenditures completed in the
first half of 2019.

ams recently confirmed that it has been engaged in discussions with OSRAM Licht
AG regarding a potential transaction. ams requires M&A opportunities to be
strategically compelling and demonstrably value enhancing, and for larger
transactions, financially accretive, achievable with a sustainable capital
structure and fitting ams' financial model. Against this background and under
the circumstances at the time, ams did last week not see a sufficient basis for
continuing the discussions with OSRAM Licht AG. However, as part of its
technology-led M&A strategy ams continues to evaluate all opportunities with the
objective to create value for its shareholders while satisfying the criteria
above, and has today decided to re-evaluate a potential transaction with OSRAM
Licht AG. In addition, ams was recently approached by potential financial
partners and has exchanged views which confirm its belief that ams can arrange
prudent and committed financing for this potential transaction.

For the third quarter 2019, ams expects strong sequential and year-on-year
growth driven by high volume ramps for smartphone sensing solutions while its
other end markets continue their contri­bution to ams' overall results. Based on
available information, ams expects third quarter revenues of USD 600-640
million, up 49% sequentially and 29% year-on-year at the midpoint, which reflect
the strength of ams' portfolio in high performance consumer applications such as
3D and light sensing. On the basis of current information, ams expects the third
and fourth quarter to show a comparable revenue scale.

Benefitting from higher capacity utilization and positive effects from the
significant improvements in operational and manufacturing performance, ams
expects the adjusted operating (EBIT) margin for the third quarter to increase
strongly to above 25%, more than doubling quarter-on quarter and up more than
90% year-on-year. Based on its positive outlook, ams currently targets leverage
in terms of net debt / EBITDA to decrease significantly to a level of below 2 at
year-end 2019.

The half year report 2019 including additional financial information is
available on the company website at https://ams.com/financial-reports [https://
ams.com/financial-reports].

###

About ams
ams is a global leader in the design and manufacture of advanced sensor
solutions. Our mission is to shape the world with sensor solutions by providing
a seamless interface between humans and technology.
ams' high-performance sensor solutions drive applications requiring small form
factor, low power, highest sensitivity and multi-sensor integration. Products
include sensor solutions, sensor ICs, interfaces and related software for
consumer, communications, industrial, medical, and automotive markets.
With headquarters in Austria, ams employs about 9,000 people globally and serves
more than 8,000 customers worldwide. ams is listed on the SIX Swiss stock
exchange (ticker symbol: AMS). More information about ams can be found at https:
//ams.com [https://ams.com/]

Join ams social media channels:
>Twitter [https://twitter.com/amsAnalog] >LinkedIn [https://www.linkedin.com/
company/ams-ag] >Facebook [https://www.facebook.com/amsAnalog] >YouTube [https:/
/www.youtube.com/user/amsAnalog]

ams is a registered trademark of ams AG. In addition many of our products and
services are registered or filed trademarks of ams Group. All other company or
product names mentioned herein may be trademarks or registered trademarks of
their respective owners. Information provided in this press release is accurate
at time of publication and is subject to change without advance notice.

Further inquiry note:
Moritz M. Gmeiner
Vice President Investor Relations
Tel: +43 3136 500-31211
Fax: +43 3136 500-931211
Email: investor@ams.com

end of announcement                         euro adhoc
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issuer:       ams AG
              Tobelbader Strasse   30
              A-8141 Premstaetten
phone:        +43 3136 500-0
FAX:          +43 3136 500-931211
mail:         investor@ams.com
WWW:          www.ams.com
ISIN:         AT0000A18XM4
indexes:      
stockmarkets: SIX Swiss Exchange
language:     English

EAX0003    2019-07-23/07:26

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