EANS-Adhoc: ams AG / ams reports third quarter ams revenues near top end with profitability towards top end of expected ams range; resilient ams consumer business compensates ... EAE

Friday, 06. November 2020 07:03
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Selected financial information for the third quarter 2020

Quarterly Report

Premstaetten - (PR title cont'd) ... for still lagging ams Automotive and
Industrial demand; high volume ramps and positive consumer momentum in ams
business drive further robust expected growth in fourth quarter despite Covid-19
with ams revenues of USD 650-690 million, up 19% sequentially at midpoint, and
strong ams adjusted EBIT margin of 24-27%; OSRAM shareholders approved DPLTA
paving way for planned full integration of OSRAM

Premstaetten, Austria (6 November 2020) -- ams (SIX: AMS), a leading worldwide
supplier of high performance sensor solutions, reports third quarter results
with revenues and adjusted operating (EBIT) margin for its ams business near or
towards the top end of the guidance range, as previously announced. The ams
consumer business remained resilient during the third quarter while the ams
Automotive and Industrial businesses started to show signs of improving demand.
For the fourth quarter, ams expects continuing positive momentum for its ams
business based on meaningful ramps in the consumer market with expected revenues
for the ams business of
USD 650-690 million and an adjusted operating (EBIT) margin of 24-27%.

As the majority shareholder, ams is now fully consolidating OSRAM Licht AG
(OSRAM) as of the beginning of the third quarter. Financial results presented
below therefore include OSRAM financial results where reference is to group
figures, otherwise reference is to the ams business.

Third quarter consolidated group revenues were USD 1,428 million, up 192%
sequentially from the second quarter and 111% up nominally compared to the same
quarter 2019 due to consolidation effects. In the ams business, third quarter
revenues were USD 564 million, up 15% sequentially from the second quarter and
near the top end of the published expectation range for ams. Adjusted group
gross margin for the third quarter was 27% (excluding acquisition-related, one-
time restructuring and share-based compensation costs) compared to 44% for the
ams business only in the same quarter 2019 (21% including acquisition-related,
one-time restructuring and share-based compensation costs, 42% for the ams
business only in the same quarter 2019).

The adjusted group result from operations (EBIT) for the third quarter was USD
60 million or 4% of revenues (excluding acquisition-related, one-time
restructuring and share-based compensation costs), decreasing from USD 187
million for the ams business only in the same period 2019
(USD -94 million or -7% of revenues including acquisition-related, one-time
restructuring and share-based compensation costs, down from USD 154 million for
the ams business only in the same period 2019). In the ams business, the
adjusted result from operations (EBIT) for the third quarter was USD 128 million
or 23% of revenues (excluding acquisition-related, one-time restructuring and
share-based compensation costs) which was towards the top end of the published
expectation range for ams.

Adjusted group net income for the third quarter was USD 11 million (excluding
acquisition-related, one-time restructuring and share-based compensation costs),
compared to USD 199 million for the ams business only for the same period 2019
(third quarter 2020: USD -143 million including the aforementioned costs).
Adjusted group basic/diluted earnings per share for the third quarter were CHF
0.09/0.06 or USD 0.10/0.06 based on 260,621,033/265,484,088 shares or CHF -0.37/
-0.39 or USD -0.40/-0.43 including the aforementioned costs (third quarter 2019:
CHF 2.30/2.24 or USD 2.46/2.40 based on 81,059,682/82,981,954 shares for the ams
business only; all weighted average).

Group operating cash flow for the third quarter was USD 84 million while group
free cash flow for the third quarter was USD 1 million.

ams' business performed strongly in the third quarter 2020 in spite of the
continuing impact of Covid-19 on regional economies and global end markets. In
its ams business, ams achieved third quarter results near or towards the top end
of the published expectation range for ams. The strong quarter-on-quarter
revenue growth for the ams business resulted from continued resilient demand in
the ams consumer business driving robust volumes for ams consumer solutions.
Fully consolidating OSRAM as the majority shareholder, ams has included OSRAM as
a separate reporting segment in the group financial information.

The domination and profit and loss transfer agreement (DPLTA) for OSRAM which
ams concluded in September was approved by OSRAM shareholders in an
Extraordinary General Meeting on 3 November 2020. Following the widely expected
shareholder approval, ams regards implemen­tation of the DPLTA around year-end
2020 as a possible timeline. Based on the DPLTA ams will be able to drive and
accelerate the integration and alignment of both companies' businesses in the
most efficient way. ams will unite the complementary strengths of ams and OSRAM
in order to create a strongly profitable combined company within the next years.
During the quarter ams has also taken three seats on the Supervisory Board of
OSRAM as planned and intends to eventually increase ams representation to four
seats. Before implementation of the DPLTA, OSRAM remains a majority-owned
independent listed subsidiary of ams.

In its ams business, consumer solutions continued to contribute the largest
share to ams' results for the quarter. ams' leading position in optical sensing
is built on the broad ams portfolio for 3D sensing including VCSEL (Vertical
Cavity Surface-Emitting Laser) illumination, high quality display management
including behind-OLED (BOLED) sensing, micro-scale proximity sensing, spectral
and bio-sensing, and other optical applications. Continuous significant R&D
investments allow ams to drive innovation in new optical technologies.

ams is a major player in 3D sensing technologies where its industry-leading
system know-how and high value IP offer an unmatched platform to serve all
architectures, structured light (SL), time-of-flight (iToF/dToF), and active
stereo vision (ASV). Shipping 3D sensing products to leading smartphone OEMs for
front-facing and world-facing applications, ams has built its strong position
focused on 3D illumination for SL, iToF and ASV. Here ams continues to leverage
its advanced optics expertise and leading VCSEL technology. At the same time,
ams is driving the expansion of its 3D offering, including by integrating high
performance NIR image sensing, to create 3D solutions in different technologies.

For world-facing 3D ams continues focused development in its ams business for 3D
dToF technology, an advanced ToF architecture that offers clear advantages for
longer distances in world-facing and AR-oriented applications. ams leverages its
leading 3D system capabilities developing a full ams dToF solution that includes
VCSEL illumination, high performance SPAD sensing and related software and
algorithms. High performance 3D systems in this area will be an innovation focus
for ams going forward. ams sees increasing market interest to explore AR-related
applications on the basis of full 3D and dToF technology and expects these
applications and dToF to emerge as an attractive 3D market in the next years.

At the same time, for front-facing 3D ams is developing front-facing 3D sensing
technology in its ams business for face authentication that is invisible behind
the display and eliminates bezel-placed components from the device front. This
cutting-edge approach leverages ams' singular expertise in behind-OLED (BOLED)
light emission and sensing together with its deep 3D system know-how. The highly
innovative BOLED 3D technology includes VCSEL illumination, 3D NIR sensing,
software and algorithms and ams continues to progress towards demonstrating ams
BOLED 3D in ASV early in the first quarter. In a following step ams plans to
explore BOLED 3D sensing architectures that support SL.

Overall, early market feedback supports ams' view that both dToF and BOLED 3D
technologies are able to offer volume opportunities for the coming years.

ams' BOLED light and proximity sensing solutions continue their success in the
Android market which has already shown strong adoption of ams' innovation in
display management. Forming the basis for its BOLED 3D developments ams realized
light and proximity sensing behind the OLED display to remove related components
from the device face. Supporting major Android OEMs ams advances its BOLED light
sensing roadmap as part of ams' display management portfolio. Ultra small-scale
integrated light and proximity sensing solutions are also receiving increasing
market attention. In combination ams serves leading consumer OEMs with a range
of display management solutions in high volume in its ams business.

Going forward ams expects sophisticated camera enhancing technologies to offer
attractive adoption opportunities as camera-related features will drive key
value propositions for smartphone users. This includes areas such as automatic
white balancing (AWB), laser-detect autofocus (LDAF) / 1D ToF, wide-range
flicker detection and AR-oriented camera support functions. As an example, ams'
innovative AWB solution uses accurate spectral sensing analysis to open a new
way of boosting picture quality and natural color expression and is seeing
additional market traction. In audio sensing which includes ams' portfolio of
active noise cancelling solutions results matched expectations as customer
traction confirms ams' strong position in high performance digital and hybrid
noise cancelling.

In the ams business, the automotive, industrial, and medical areas recorded a
more positive overall performance in the third quarter. Compared to the first
half this development reflects a decreasing total impact from the Covid-19
pandemic with signs of improving demand in non-consumer markets. The ams
automotive business performed in line with expectations. ams saw more signs of
recovering demand and better order trends in the third quarter as automotive
production volumes are improving. In its ams business, ams continues to invest
in automotive R&D and focuses on differentiated applications in safety, driver
assistance/ autonomous driving, position sensing, and chassis control.

For 3D LIDAR, a core automotive sensing technology going forward, ams supports
illumination in multiple programs for Tier 1 system suppliers. Based on ams'
high power VCSEL technology, ams offers high count automotive-qualified VCSEL
arrays that enable advanced scan/non-scan LIDAR architectures. ams works in
close partnership with LIDAR technology leader IBEO as a key supplier for their
advanced true solid state LIDAR. During the quarter IBEO announced a further
program win for their LIDAR system at Chinese volume OEM Great Wall Motors which
is based on high power ams VCSEL arrays. Besides this partnership, ams sees
increasing supplier interest in VCSEL-based solid state LIDAR versus other
architectures given the design and performance advantages of the technology.
Optical in-cabin sensing (ICS) is an expanding emerging area in automotive
sensing. New interior comfort and safety functions such as monitoring are
receiving growing attention from OEMs and Tier 1 suppliers. ams continues its
development for first secured ICS projects including illumination and sees
increased interest to assess 3D technology and ams' 3D solution capabilities for
upcoming applications.

In the ams business, the industrial product lines performed well in line with
expectations in the third quarter. This development reflects a still muted but
less visibly impacted demand environment as reduced industrial investment
appears to improve. Supported by ams' leading position in industrial and factory
automation, HABA, industrial imaging and other manufacturing applications in its
ams business, the industrial lines in the ams business continue to benefit from
ams' extensive portfolio and customer base for high performance sensing which
includes global shutter imaging for automation and machine vision.

The medical product lines in the ams business showed a positive performance in
the third quarter. The portfolio in the ams medical business is built around
leadership in medical imaging for CT, digital X-ray, and mammography as well as
products for miniature camera endoscopy. ams is expanding this portfolio with
its highly innovative use of spectral sensing in medical lateral flow testing
(LFT). ams' unmatched solution optically analyzes LFT results with very high
accuracy at the point-of-care. Without the need for high cost dedicated lab
equipment the solution is able to support fast robust diagnostics at attractive
cost, creating a new growth opportunity for the coming years. In ams'
partnership with European medical test provider Senova production of an
integrated LFT test kit for Covid-19 antibody identification is starting in the
current quarter. Good traction continues to build for ams' digital LFT solution
given its advantages in a large scale testing market for different in vitro
diagnostic applications. For Covid-19 related testing ams is in advanced
discussions with a North American partner and in contact with government
authorities in Europe. To follow the
Covid-19 antibody test kit ams is in later stage development of a Covid-19
antigen test solution targeted at identifying current infections.

In manufacturing operations, ams is safeguarding volume production in its ams
business across its locations despite Covid-19 related challenges and
restrictions, and focuses on fully aligning with customer demand. In its ams
business ams implements comprehensive measures to protect the health of its
employees and its manufacturing capabilities on a worldwide basis. ams'
Singapore manufacturing continues its strong operational performance in line
with higher capacity utilization as ams supports large scale product ramps in
the second half. At the same time, ams is managing investment requirements for
its ams business to keep total capital expenditures for its ams business on a
limited scale and expects this to continue in the current quarter.

At the end of October ams successfully placed a EUR 760 million 7-year
convertible bond with inter­national institutional investors. The issue served
to secure comprehensive funding to implement the DPLTA with OSRAM as well as
subsequent steps in order to realize the full integration of OSRAM. In line with
ams' long-term funding strategy and prudent balance sheet management, the issue
complements the term profile of existing debt and maximizes ams' financial
flexibility going forward.

ams' financial outlook for the fourth quarter 2020 only comprises the ams
business given the financial guidance structure provided by OSRAM, as previously
mentioned. For the fourth quarter 2020, ams confirms the previously announced
expectation of further robust sequential growth for the ams business despite
continued effects from the Covid-19 pandemic impacting economies and ams'
markets globally. Based on currently available information and the definition
above, ams expects strong fourth quarter revenues for the ams business of USD
650-690 million, up 19% sequentially and up 2% year-on-year at the midpoint.
High volume ramps for smartphone sensing solutions and good consumer end demand
in the ams business are driving this expected growth in the ams business while
the ams non-consumer businesses in Automotive, Industrial and Medical see
positive demand trends taking hold and pointing towards recovering volumes in
several end markets.

ams also expects profitability in the fourth quarter to increase meaningfully
quarter-on-quarter for the ams business resulting in an expected ams adjusted
operating (EBIT) margin of 24-27%. This positive outlook for the ams business in
spite of the ongoing Covid-19 pandemic and related impacts demonstrates the
strength of ams' portfolio and operational management. The expectations above
assume no further unforeseen negative effects from the Covid-19 pandemic that
would result in a meaningful negative impact on ams' business.

The quarterly report for the third quarter 2020 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 around 9,000 people globally and
serves more than 8,000 customers worldwide. ams is listed on the SIX Swiss
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/
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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 500-0
Fax: +43 3136 500-931211
Email: investor@ams.com

end of announcement                         euro adhoc

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
stockmarkets: SIX Swiss Exchange
language:     English

EAX0005    2020-11-06/07:03

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