EANS-Adhoc: ams AG / ams reports record results for full year 2019, revenues up 32% year-on-year; record fourth quarter revenues of USD 655 million above guidance range with strong operating profitability; ... EAE

Tuesday, 11. February 2020 07:27
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Selected financial information for the fourth quarter and full year 2019

Quarterly Report
11.02.2020

Premstaetten - (PR title cont'd) ... acquisition of OSRAM on track; expected
first quarter revenues of USD 480-520 million, up 28% year-on-year, showing less
pronounced seasonality

Premstaetten, Austria (11 February 2020) -- ams (SIX: AMS), a leading worldwide
supplier of high performance sensor solutions, reports record revenues and
results for full year 2019, with revenues up 32% year-on-year, and fourth
quarter revenues exceeding expectations with strong adjusted operating
profitability. Full year 2019 revenues grew significantly to USD 2,085.9 million
as fourth quarter revenues reached USD 655.3 million, above the previous
guidance range. This growth was particularly driven by ams' consumer business
including 3D sensing and advanced light sensing in the second half of 2019. ams
saw continued strength in the fourth quarter given healthy consumer demand and
very good operational performance. Reflecting less pronounced first quarter
consumer market seasonality as well as revenue deconsolidation and assuming no
meaningful negative impact from coronavirus infections, ams expects first
quarter 2020 revenues of USD 480-520 million with significantly improved
profitability year-on-year.

Group revenues for 2019 of USD 2,085.9 million grew by 32% from USD 1,578.1
million in 2018 while revenues for the fourth quarter 2019 of USD 655.3 million
were up 2% sequentially compared to the third quarter and up 38% from USD 476.5
million in the same quarter 2018. Adjusted gross margin for 2019 was 41% while
adjusted gross margin for the fourth quarter 2019 was 45% (excluding
acquisition-related and share-based compensation costs), compared to 32% and 35%
respectively in 2018 (excluding acquisition-related, one-time restructuring and
share-based compensation costs). IFRS reported gross margin for 2019 was 38% and
for the fourth quarter 2019 was 42% (including the abovementioned costs),
compared to 27% and 39% respectively in 2018 (including the respective
abovementioned costs).

The adjusted result from operations (EBIT) for 2019 was USD 433.4 million or 21%
of revenues and the adjusted result from operations (EBIT) for the fourth
quarter 2019 was USD 184.3 million or 28% of revenues (excluding acquisition-
related and share-based compensation costs), compared to USD 141.2 million or 9%
for 2018 and USD 60.1 million or 13% for the fourth quarter 2018 (excluding
acquisition-related, one-time restructuring and share-based compensation costs)
(including these adjustments USD 363.7 million or 17% of revenues for 2019 and
USD 200.9 million or 31% of revenues for the fourth quarter 2019, compared to
USD 14.3 million for 2018 and USD 8.6 million for the fourth quarter 2018).

Adjusted net income for 2019 was USD 331.6 million while adjusted net income for
the fourth quarter 2019 was USD 158.9 million, compared to USD 11.8 million for
2018 and USD 1.6 million for the fourth quarter 2018 (excluding valuation effect
of option element of foreign currency convertible bond) (including valuation
effect USD 331.7 million for 2019 and USD 159.1 million for fourth quarter
2019). Adjusted basic/diluted earnings per share for 2019 were CHF 4.15/4.05 or
USD 4.13/4.03 based on 80,261,853/81,864,338 shares (weighted average; including
valuation effect CHF 4.15/4.05 or USD 4.13/4.03; 2018: CHF 0.15/0.14 or USD
0.14/0.13 based on 81,836,472/88,509,392 shares, weighted average). Adjusted
basic/diluted earnings per share for the fourth quarter were CHF 1.94/1.76 or
USD 1.96/1.78 based on 81,104,760/86,007,105 shares (weighted average; including
valuation effect CHF 1.94/1.77 or USD 1.96/1.78; 2018: CHF 0.02/0.02 or USD
0.02/0.02 based on 81,944,770/87,259,562 shares, weighted average).

Operating cash flow for 2019 was USD 714.4 million, significantly up from USD
349.0 million for 2018, while fourth quarter 2019 operating cash flow was USD
273.5 million. Net debt amounted to USD 1,750.1 million on 31 December 2019
(including effects from OSRAM share purchases, year-end 2018: USD 1,320.9
million). This corresponds to a leverage of 1.3x net debt/EBITDA (excluding
effects from OSRAM share purchases) at year-end 2019, significantly down from
5.3x at year-end 2018 and fully in line with ams' previous expectation of a
year-end 2019 maximum of 1.5x. Cash and cash equivalents were USD 553.7 million
on 31 December 2019, compared to USD 691.7 million at year-end 2018. Capital
expenditures for 2019 decreased strongly to USD 200.9 million from USD 456.9
million for 2018, fully in-line with expectations. Total backlog on 31 December
2019, excluding consignment stock agreements, was USD 265.1 million compared to
USD 251.6 million on 30 September 2019 and USD 322.9 million at year-end 2018.
2019 backlog figures include ongoing higher levels of customer-driven intra-
quarter business compared to historic values while 2018 figure is not fully
comparable due to a narrower backlog definition since 2019.

In December 2019 ams was successful with an all-cash public tender offer for
OSRAM Licht AG ("OSRAM"). ams pursues the acquisition of OSRAM as a highly
compelling and complementary strategic transaction with the aim to create a
global leader in sensor solutions and photonics. The combination of ams and
OSRAM will bring together two leaders in optical technologies that will jointly
be able to offer market-leading coverage of light emitting technologies, light
detecting and sensing, optics, as well as related hardware, software and
algorithms. This will create a compelling technology platform and a stronger
combined company to benefit all stakeholders. In October 2019, ams became the
largest shareholder of OSRAM with a shareholding of 19.99% and on that basis
launched the successful public tender offer for OSRAM in November 2019. To
refinance part the acquisition financing, ams' Extraordinary General Meeting
(EGM) on 24 January 2020 approved a capital increase in form of a rights issue
of up to EUR 1.649bn which ams expects to implement in a timely manner. ams is
in the process of attaining required merger control clearances for the
transaction and currently expects the transaction to close in the second quarter
2020 subject to receipt of these required clearances. In addition, ams yesterday
announced the firm intention to pursue a Domination and Profit and Loss Transfer
Agreement with OSRAM to accelerate implementation of the companies' joint
strategic vision. ams will announce further developments related to the
transaction in due course.

ams' business showed a very positive performance for the year 2019 which was
concluded by a strong fourth quarter with excellent results. Very good demand
for consumer solutions enabled ams to achieve record results for 2019 despite a
rather subdued market situation in ams' non-consumer end markets.

ams' consumer business is a global leader in advanced sensor solutions for
smartphones and consumer devices and was again the company's key growth driver
last year. ams' consumer business also provided the largest contribution to the
results of the fourth quarter.

Leading in optical sensing, ams offers a broad portfolio of high performance
solutions for 3D sensing including VCSEL-based illumination and NIR image
sensing, advanced display management including behind-OLED sensing, ultra-
compact proximity sensing, spectral and bio-sensing, and other optical
applications. ams continued to drive innovation in optical technologies last
year and introduced significant new technologies to the market. ams is a leader
in 3D sensing technology serving an increasing range of consumer 3D applications
and implementations. ams' broad 3D sensing portfolio and system expertise
supports all three approaches, structured light (SL), time-of-flight (ToF), and
active stereo vision (ASV), for front-facing and world-facing applications. ams'
advanced high power VCSELs, its optics competencies and its unequaled hard- and
software portfolio enabling broad system capabilities are driving ams' market
and technology position in 3D sensing.

Last year, ams shipped very substantial volumes of 3D sensing solutions to
leading smartphone OEMs globally and expanded its position in the Android
market. ams currently supplies high quality 3D sensing illumination in all
technologies SL, ToF and ASV serving different customer needs. ams'
differentiated VCSEL technology is recognized in the market for its excellent 3D
sensing performance. As a result and supported by ams' 3D system know-how, ams
has built an attractive market position in high value VCSEL solutions for
consumer 3D sensing. A key development in 2019 was the introduction of world-
facing iToF systems in smartphones, driving strong volumes of ams VCSEL 3D
illumination solutions for world-facing iToF. These iToF systems enable camera
enhancement features for better picture quality which are highly successful with
consumers. Based on design-wins, ams expects customer adoption of these world-
facing features to continue in 2020.

ams helped introduce the ASV 3D technology last year and is shipping into a
first smartphone implementation of front-facing ASV. ASV offers high 3D
performance including support for payment security at lower system complexity
and total system cost. ams therefore expects ASV to establish a significant
market position in 3D applications going forward as well as beyond mobile
devices. ams is seeing additional positive market feedback for the technology
including OEM interest in ASV implementations for the industrial and computing
markets. Last summer, ams announced a partnership with image sensor specialist
SmartSens for near-infrared (NIR) image sensing with high quantum efficiency
(QE) which enables advanced optical performance. ams recently presented first
ASV system implementations with NIR sensors incorporating ams IP. The systems
combine ams illumination, sensing, software and biometrics into fully integrated
ams 3D solutions demonstrating ams' unequaled system capabilities and portfolio
in 3D sensing.

In addition, ams expects dToF 3D technology to play an important role going
forward as 3D sensing applications continue to evolve. dToF offers strong
performance across challenging lighting conditions and for longer distances of
several meters. dToF is therefore a very attractive technology but technically
highly demanding. ams' development efforts are progressing well for a high
performance full dToF 3D system combining ams illumination and sensing into a
high value solution. At the same time, OEM interest is accelerating in this
promising area. Validating industrial use cases, market interest in industrial
access 3D applications is growing while ams is working with a global OEM for an
industrial ASV design-win in a household device. Additionally, ams introduced a
highly accurate long-distance 1D ToF solution for precise distance capture last
year. The solution quickly gained a first design-win for laser detect autofocus
(LDAF) in a high volume smartphone platform with planned launch this year.

Based on its broad 3D sensing portfolio ams is able to cover different and
evolving customer needs and roadmaps across all technologies, regardless of
whether SL, iToF, dToF or ASV is the preferred customer approach.

In other optical sensing, ams underscored its market leading position in display
management for high performance ambient light and proximity sensing. ams
introduced a significant innovation in 2019 allowing OEMs to move high
performance proximity and light sensing invisibly behind OLED displays (BOLED).
The unmatched BOLED technology saw very strong market success last year as OEMs
are keen to pursue maximized screen-to-body ratio and bezel-less phone designs.
Adoption expanded quickly with ams BOLED solutions already shipping in a broad
range of high volume Android smartphone and mobile device platforms. With
further designs won, the ability to remove bezel-placed elements from the device
front is expected to drive further adoption of BOLED solutions across leading
consumer OEMs. Looking across technologies, ams is shipping an extensive range
of high volume display management solutions to a broad base of consumer OEMs.

Leveraging its unmatched BOLED capabilities for 3D sensing, ams expects to be
able to move front-facing 3D sensing for face authentication invisibly behind
the display. Development is progressing well and ams now expects to demonstrate
a BOLED ASV full 3D system solution within six months. The solution combines
VCSEL illumination, NIR sensing, software and algorithms from ams and based on
ams IP, showcasing ams unmatched portfolio for a full 3D system offering.
Helping OEMs reduce visible components on the device front, ams expects 3D BOLED
technology to drive attractive new opportunities in consumer devices.

Significant R&D activities for new and future optical sensing, 3D sensing and
VCSEL illumination continued through 2019. Leveraging spectral sensing
technology, ams introduced an innovative solution for extremely accurate
automatic white balancing in smartphone cameras using lower resolution spectral
sensing. Correct white balancing plays an essential role in photography to
realize best picture quality and color expression. Through detailed spectrum
analysis of the light environment the solution offers previously impossible
white balancing accuracy that approaches professional grade. ams thus enables
significantly higher picture quality and vivid natural colors for mobile
devices. As a result, ams won a first design for a high end smartphone platform
to be launched in 2020. ams additionally started shipping newly introduced
flicker detection sensors in high volume last year that improve picture quality
by detecting artificial light flicker and see growing adoption at Android OEMs.
ams remains engaged with OEMs for its personal health optical sensing solution
that measures blood pressure and additional data at outstanding accuracy and
provides high quality personal health information.

ams' audio sensing and other consumer product lines shipped in high volume to a
range of OEMs with attractive contributions to 2019 results. MEMS microphone
interfaces where ams has been a market leader showed a positive business
development again last year. In December 2019, ams announced and closed the
divestment of its MEMS microphone interface IC assets including related IP to
Knowles Corporation, a long-time customer of ams, for USD 58 million in cash.
This portfolio alignment supports ams' continuing focus on sensor solutions. ams
is a leader in active noise cancellation for the growing ear- and headphone
market serving accessory and device OEMs. Last year ams introduced an industry-
first solution for high quality digital noise cancelling in loose-fit true
wireless earbuds which has since gained a first design win with a large consumer
OEM.

ams' automotive, industrial, and medical businesses showed an overall muted
performance in 2019 reflecting a difficult automotive and industrial market
environment during the year. Focused on high value sensing solutions, ams
benefited from its diversified range of non-consumer end markets and continued
to drive innovation as a leading supplier. In the fourth quarter, however, the
automotive, industrial and medical businesses recorded a more positive revenue
trend.

ams' automotive business achieved solid results last year despite a generally
weakened demand situation in the automotive market worldwide. Demand trends
turned increasingly muted across regions in 2019, resulting in a subdued market
environment. Focused on safety, driver assistance/autonomous driving, position
sensing, and chassis control with a wide spectrum of sensing solutions, ams'
automotive portfolio serves a range of Tier 1 suppliers, OEMs and market
segments. Leading automotive system suppliers rely on ams' differentiated
solutions as market traction continues to increase in Asia including Japan.

ams continued its significant R&D investments for advanced LIDAR architectures
where ams' VCSEL illumination is seeing very good traction with major automotive
players. Next to the large-scale 3D true solid-state LIDAR illumination program
for ZF, the leading tier 1 system supplier, in conjunction with IBEO, ams has
active engagements in different geographies winning two further LIDAR
illumination projects for two additional tier 1 system suppliers with life time
values of several hundred million USD. ams' addressable high power VCSEL arrays
offer significant system-level advantages in different scanning architectures,
where for several architectures ams provides complete subsystems including
dedicated driver ICs. In-cabin monitoring is evolving into a meaningful new
optical automotive application as OEMs and Tier 1 suppliers show strong interest
in different 2D/3D use cases. ams sees attractive opportunities for its
portfolio in this interesting market and has won a first 3D ToF illumination
project at a global tier 1 supplier. Recently, ams showcased a full ams 3D
system solution for miniaturized dashboard-integrated driver recognition using
ASV with ams illumination and NIR sensing. The sizeable emerging market for
automotive projected lighting is showing good momentum with ams' customer base
expanding last year. Advanced VCSEL/micro-lens projector systems enable
differentiated lighting applications for new comfort and safety features such as
welcome light carpets.

ams' industrial business performed in line with muted expectations against the
background of weaker end market demand over the course of 2019. ams is a leading
supplier of industrial sensing to OEMs worldwide serving the industrial
automation, factory automation, HABA, and additional industrial markets. ams'
broad and differentiated industrial portfolio addresses market developments in
sensor-rich industrial IoT and Industry 4.0 as new applications including 3D
create opportunities for the coming years. In industrial imaging and machine
vision ams continued to leverage its industry-leading global shutter technology
with new designs last year. ams offers innovation in high performance image
sensing for growth applications such as 3D which creates new optical sensing
markets. With 3D sensing starting to emerge in the industrial market, ams'
extensive hard- and software portfolio including the SmartSens partnership
enables the creation of full ams 3D systems.

ams' medical business recorded a very positive performance and significant
growth in 2019 despite a generally challenging macro-economic environment
worldwide. ams confirmed its market-leading position in Medical Imaging for
computed tomography (CT), digital X-ray, and mammography which was again the
core driver of ams' medical business. The medical imaging business continued to
expand in Asia serving several regionally based OEMs. ams is a leader in next
generation medical endoscopy offering the world's smallest endoscopy cameras and
shipping NanEye solutions in volume to several customers. Recently, ams
introduced an industry-first ASSP sensing solution for CT imaging where
previously only fully customized solutions were available. Based on monolithic
integration of the sensing and analog-to-digital conversion, the innovation
offers high performance imaging at significantly lower system cost and
complexity while doctors and patients benefit from high resolution diagnostics
at low radiation doses.

In January 2020, ams closed the joint venture transaction for its environmental
sensing activities which had been announced in spring 2019. The joint venture
with Wise Road Capital, in which ams holds a minority shareholding, will allow
the business to successfully address growth opportunities in environmental and
related applications with a focus on Asia. Related to the joint venture
creation, ams received an undisclosed consideration in cash.

In operations, ams significantly redesigned and improved manufacturing processes
in Singapore in 2019. As a result, production efficiency and yields increased
strongly with lower levels of labor and materials required when compared to
previous manufacturing. These achievements allowed ams to record meaningfully
better profitability in its Singapore manufacturing compared to the year before.
ams' front-end wafer manufacturing in Austria was again fully utilized in 2019.
ams successfully completed the construction of its internal VCSEL production
line last year. The production ramp of the front-end facility started, as
envisaged, at the end of the year and is expected to extend through the current
year. The investment allows ams to exploit differentiation opportunities in high
power VCSELs through both design and manufacturing. Combining scalable
outsourced and internal VCSEL capacity positions ams strongly for expected
future needs in this growth area.

For the first quarter 2020, ams expects its business to continue to perform well
against the backdrop of typically expected seasonality and a more uncertain
global macro-economic and geopolitical situation. ams foresees high volume
consumer programs to provide important contributions based on supportive
smartphone volumes. In ams' non-consumer end markets, however, business trends
remain influenced by a challenging macro-economic and demand environment. The
acquisition of OSRAM is progressing as expected with regulatory approval
proceedings underway and the legal basis for implementing the planned rights
issue in place. Encouraged by the constructive relationship with OSRAM and
overwhelming positive feedback on the strategic merits of the transaction, ams
expects to successfully close the transaction as envisaged.

On the basis of available information, ams expects first quarter revenues of USD
480-520 million showing a less pronounced level of seasonality and a strong
year-on-year increase of 28% at the midpoint. The adjusted operating (EBIT)
margin for the first quarter is expected to be 19-21% reflecting ongoing
operational efficiencies in manufacturing and showing a very significant
improvement year-on-year. Looking forward and based on current information, ams
expects another year of business growth for 2020. When compared to historical
figures, the revenue expectations above exclude deconsolidated revenues related
to the mentioned divestment and joint venture of around USD 20-25 million per
quarter which have been deconsolidated as of year-end 2019. All expectations
above are based on the assumption that the consequences of the coronavirus
infections will not have a meaningful negative impact on our business for the
first quarter 2020 or the year 2020.
Additional financial information for full year 2019 and the fourth quarter 2019
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]

Important notice:
These materials and information constitute neither an offer to sell nor a
solicitation to buy securities according to the European Prospectus Regulation
(EU) 2017/1129 or other applicable laws.
These materials and information do not constitute or form a part of any offer or
solicitation to purchase or subscribe for securities in the United States of
America, Australia, Canada or Japan, or any other jurisdiction in which such
offer or solicitation may be unlawful. The ams AG securities described herein
have not been and will not be registered under the U.S. Securities Act of 1933,
as amended (the "Securities Act") or under any securities laws of any state or
other jurisdiction of the United States and may not be offered, sold, taken up,
exercised, resold, renounced, transferred or delivered, directly or indirectly,
within the United States except pursuant to an applicable exemption from, or in
a transaction not subject to, the registration requirements of the Securities
Act and in compliance with any applicable securities laws of any state or other
jurisdiction of the United States.
These materials and information constitute neither an offer to sell nor a
solicitation to buy securities and does not constitute a prospectus according to
Articles 35 et seqq. of the Swiss Financial Services Act ("FinSA") or Articles
652a and 1156 of the Swiss Code of Obligations (as such articles were in effect
immediately prior to the entry into effect of FinSA) or Article 27 et seqq. of
the SIX Swiss Exchange Listing Rules.
The distribution of these materials and information may be restricted by law in
certain jurisdictions, and persons into whose possession any document or other
information referred to herein comes should inform themselves about and observe
any such restriction. Copies of these materials and information may not be sent
to countries or distributed or sent from countries, in which this is barred or
prohibited by law. Any failure to comply with these restrictions may constitute
a violation of the securities laws of any such jurisdiction.
In the United Kingdom, this document is only directed at (i) investment
professionals falling within article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 (the "Order"), (ii) high net worth
entities falling within article 49 of the Order or (iii) other persons to whom
it may lawfully be communicated, (all such persons together being referred to as
"relevant persons").
These materials and information may contain statements about ams and/or its
subsidiaries (together "ams Group") or that are or may be "forward-looking
statements". Forward-looking statements include, without limitation, statements
that typically contain words such as "anticipate", "target", "expect",
"estimate", "intend", "plan", "believe", "hope", "aims", "continue", "will",
"may", "should", "would", "could", or other words of similar meaning. By their
nature, forward-looking statements involve risks and uncertainties because they
relate to events and depend on circumstances that may or may not occur in the
future. ams cautions you that forward-looking statements are not guarantees of
the occurrence of such future events or of future performance and that in
particular the actual results of operations, financial condition and liquidity,
the development of the industry in which ams Group operates and the outcome or
impact of the acquisition and related matters on ams Group may differ materially
from those made in or suggested by the forward-looking statements contained in
these materials and information. Any forward-looking statements speak only as at
the date of these materials and information. Except as required by applicable
law, ams does not undertake any obligation to update or revise publicly any
forward-looking statement, whether as a result of new information, future events
or otherwise.
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

EAX0001    2020-02-11/07:27

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