Sharing our DNA - Neways · Automotive Medical Other FY-19 vs FY-18 Strong growth in automotive, amid weaker market climate, due to position in e-mobility Industrial, Medical and

Sharing our DNA

Neways Annual Results 2019

Amsterdam, February 21, 2020

1© NEWAYS | February 2020

Safe harbor statement

© NEWAYS | February 2020 2

This presentation may include forward-looking statements. Other than reported financial results and historical information, all statements included in this press release, including, without limitation, those regarding our financial position, business strategy and management plans and objectives for future operations, are forward-looking statements. These forward-looking statements are based on our current expectations and projections about future events and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.

Many of these risks and uncertainties relate to factors that are beyond Neways’ ability to control or estimate precisely, such as future market conditions, the behaviour of other market participants and the actions of governmental regulators. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation and are subject to change without notice. Other than as required by applicable law or the applicable rules of any exchange onwhich our securities may be traded, we have no intention or obligation to update forward-looking statements.

Agenda


❖ Main points

❖ Neways today

❖ Financials

❖ Operations

❖ Management agenda & outlook

Main points


Main points

Market trends


▪ Globalization of OEMs

▪ Increasing demand from OEMs for Product Lifecycle Management services

▪ Early involvement, system innovation and shared participation in product development

▪ Technological developments such as artificial intelligence, self-driving cars, robotics and internet of things

▪ Become more and more prominent in our daily lives

▪ Require more electronics and complex integrated solutions

▪ Intensified supply chain cooperation through improved transparency and communication

▪ Further consolidation of the EMS market

▪ 2019 saw rising geopolitical tensions and international trade barriers which increased overall market volatility

Main points


Turnover and results▪ Net turnover € 532 mln, organic growth rate of 4.9%

▪ Strong growth in Automotive, other segments relatively flat

▪ High fluctuations in customer demand and shifts between product lines

▪ Well positioned portfolio across and within segments

▪ E-mobility strong driver of Automotive growth

▪ Book-to-Bill 0.98 vs 1.08 in 2018, correction overbooking 2018

▪ Normalized operating result at € 15.9 mln (2018: € 22.0 mln)

▪ Result impacted by ramp-up of new products under development and higher costs to facilitate rapid fluctuations in demand

▪ Second half slow down in combustion part of Automotive and in Semiconductors

▪ Transformation and component shortage in certain categories amid volatile market demand remained challenging for organization

▪ Price pressure on supply side could not be fully passed on to customers

Main points

Inventory management


▪ Various challenges

▪ Increased volatility and unpredictability of customer demand and more complexity in orders

▪ Ramp-up with limited predictability of new projects at existing and new customers

▪ Pressure on supplier lead-times in certain categories due to continued scarcity

▪ Which caused

▪ Need for safety stocks and early purchasing to ensure supply availability

▪ Unbalanced factory loads

▪ Offset by ongoing supply chain initiatives

▪ Ongoing integration and standardization of processes and inventory parameters (e.g. master data)

▪ QLTC improvement program with suppliers further extended and intensified

▪ Resulting in

▪ Strong reduction of inventories from € 115 million to € 101 million under difficult circumstances

▪ Better control of supply chain and further supplier reduction

Main points

Market outlook


▪ Certain market sectors have strong structural underlying growth drivers

▪ Electrification in Automotive, Medical, Semiconductors and Industrial Automation

▪ Neways positioned well for further growth given focus on these sectors

▪ Automotive is re-inventing itself causing major chain disruptions

▪ Combustion automotive is slowing down

▪ E-mobility is hot, but time-to-market is difficult to predict

▪ Causing strong volatility (the only constant is change)

▪ Driving potential scarcity in specific component categories

▪ Increased electronics in automotive and medical end products

▪ Increased demand for product traceability

▪ Semiconductors is predicted to show slight recovery in 2020

▪ Content of semiconductors in cars is growing fast

▪ Industrial submarkets expected to remain rather flat

Neways today



Neways today

Company overview

€ 531.7m

▪ Custom-made total solutions for product life cycle management of advanced and integrated electronic applications

▪ Active in select growth sectors of the Electronic Manufacturing Services (EMS) market

▪ Products range from electronic components to complete (box-build) control systems

engineering connectivity micro electronics PCB assembly system integration

PROFILE

CORE ACTIVITIES

KEY FIGURESFY-19 net turnover FY-19 net income FY-19 avg of staff

2.940€ 8.5m

Neways today

4.0

Our productsNew

ays

Insid

e

Charging station

A

I

M

S© NEWAYS | February 2020 11

Industry sectors

Neways today

Product

Development

NPI

(DfM-DfT)

&

Proto-

production

Supply

chain

management

Manufac-

turing

&

Assembly

Qualification

&

Testing

After sales

(Mainte-

nance &

Upgrades)

Cabinet

assembly/

System

integration

Box build

Your Product Lifecycle Partner and System Innovator


Endmarketintelligence

Spearpoint technologies

Use caseBusiness case

Customer proposition


Neways today

Business strategy

AMBITION

FOCUS AREAS

Leverage three-pillar improvement program (2018 – 2022)

The product life cycle and technology partner of choice

MEANSServe select market sectors and PMCs

Maximize customer value

Industrysectors

Build long term partnerships

Accele-rate

acquisition

strategy

Bottom line

improve-ment

Keyaccount manage-

ment

Leadership

& talent Develop-

ment

Capabili-ties across

thelifecycle

OneNeways

CONDITION Understanding customer views, dilemmas, requirements and ideas


Neways today

Three-pillar improvement program: ‘Up to the next level’

Moving up the value chain

Driving growth

Improving profitability

UNLOCKING GROUP

POTENTIAL

Anchor:Customer intimacy supported by the rightbalance in operational and technology leadership

6. Outlook & Summary

15

Outlook & SummaryFinancials

© NEWAYS | February 2020


Financials

Key figures

€ million unless stated otherwise FY-19 change FY-19 change

Net turnover 531.7 +4.9% Interest coverage** 5.4 -51.8%

Normalizedoperating result 15.9 -27.7% Net debt / EBITDA** 2.3 +64.3%

Net result 8.5 -41.0% Solvency % ** 38,2 -8.0%

Net cash flow** 16.4 na Employees (FTEs) 2,940 -0,1%

Profit per share (€) 0.70 -41.7% Equity 106,0 +4,3%

** impacted by IFRS 16


Profit & Loss(€ mln) FY 2019 H1-19 FY 2018 H1-18 FY 2017 FY 2016

Net turnover 531,7 264,5 506,8 247,0 438,7 393,2

- nominal growth in % 4,9% 7,1% 15,5% 15,6% 11,6% 5,1%

- comparable growth in % 4,9% 7,1% 15,5% 15,6% 11,6% 5,1%

Operating result 15,1 8,5 21,0 10,5 14,3 11,8

Normalized operating result ** 15,9 8,9 22,0 11,0 15,3 12,7

Normalized net result ** 9,1 5,4 15,1 7,2 10,0 9,2

Extraordinary income/expenditure -0,6 -0,3 -0,7 -0,4 -0,1 0,5

Net result 8,5 5,1 14,4 6,8 9,9 9,7

Gross margin/net turnover 37,0% 38,4% 38,5% 39,1% 39,0% 39,1%

Gross margin/per employee (k€) 66,9 34,2 66.3 33,1 62,3 60,0

Operating margin ** 3,0% 3,4% 4,3% 4,5% 3,5% 3,2%

Net margin ** 1,70% 1,9% 3.0% 2,9% 2,3% 2,3%

EPS (€) 0,70 0,42 1,20 0,57 0,86 0,85

** Excluding extraordinary income and expenditure

Financials


Financials

Turnover and Order book

Net turnover – FY-19 vs FY-18

▪ Y-o-Y organic net sales growth of 4.9%▪ Strong growth in Automotive▪ Moderate growth in 2nd half 2019▪ High volatility and lower predictability more

challenging for organization▪ Good spread and positioning within segments

Order book – FY-19 vs FY-18

• Order book -/-4.1% y-o-y. Reduction, except Automotive, visible in all segments

• Order book reflects relaxation supply chain• Book-to-bill 0.98 vs 1.08 last year, correction

overbooking in previous period

198 195214 225

247 261 265 267

184 191218

264301 304

343

291

H1-16 H2-16 H1-17 H2-17 H1-18 H2-18 H1-19 H2-19

Net turnover Orderbook

€ mln


Financials

Net turnover and gross margin trends

FY-19 vs FY-18

▪ Gross margin increased only by 0,8%

▪ Relative margin at 37.0% vs 38.5% in 2018 caused by lower yield following ramp up new products, relatively more box-build systems and increased automotive sales

▪ Relative decrease margin resulting from • Trend of increasing material content as

consequence of more complex Box-build systems and automotive sales

• Upward price pressure suppliers, following scarcity in market, not fully offset in customer pricing

• Partly offset by effects supplier improvement program and higher added value products

198 195

214225

247261 265 268

78 7685 86

97 98 102 96

H1-16 H2-16 H1-17 H2-17 H1-18 H2-18 H1-19 H2-19

Net turnover Gross margin

€ mln


Financials

29%

27%

30%

10%4%

Industrial

Semiconductor

Automotive

Medical

Other

31%

29%

26%

11%3%

Industrial

Semiconductor

Automotive

Medical

Other

FY-19 vs FY-18

▪ Strong growth in automotive, amid weaker market climate, due to position in e-mobility

▪ Industrial, Medical and semiconductors weaker in 2nd half

▪ Well balanced turnover across segmentsFY 18

FY 19€ mln FY-19 FY-18 ∆ (%)

Industrial 163 164 -0,6%

Semiconductor 145 149 -2,4%

Automotive 161 130 23,6%

Medical 54 56 -4,3%

Other 9 8 12,5%

Total 532 507 4,9%

Turnover breakdown by market sector

19


Opex and operating result trends Opex FY-19 vs FY-18

• Costs increased with 4.3%, relative decrease from 34.2% to 34.0% of turnover

• Cost development largely driven by higher employee costs following increased activity level and volatility demand

• Productivity affected by high efforts to ramp up new products and volatility demand in different segments: unbalanced capacity utilization across and within locations.

• Continued effort to improve productivity through improved operational processes

Normalized EBIT FY-19 vs FY-18

• EBIT ended at € 15.9 million, affected by increased cost levels and moderate margin contribution

70.4 70.777.6 78.4

85.6 88.592.7

88.0

H1-16 H2-16 H1-17 H2-17 H1-18 H2-18 H1-19 H2-19

Normalized EBIT (€ mln)

Opex (€ mln)

Financials

7.2

5.5

7.28.1

11.0 11.0

8.9

7.0

H1-16 H2-16 H1-17 H2-17 H1-18 H2-18 H1-19 H2-19


Financials

Net debt / EBITDA (ratio)

Financial condition

1.91.5 1.6 1.4

2.3

YE 15 YE 16 YE 17 YE 18 YE 19

Solvency % (Guaranteed)

FY-19 vs FY-18

▪ Sound and stable financial basis with increased balance sheet total of € 278 million vs € 245 million end 2018

▪ Increased balance sheet fully related to IFRS 16 effect of € 34.4 million.

▪ Equity increased by 4.3% to € 106.0 million vs € 101.6 million following additional realized profit and converted convertibles partly offset by paid dividend (€ 5.8 million).

▪ Net debt (excl IFRS 16) decreased by 18.1% to € 34.3 million vs € 41.9 million last year, fully related to reduced inventories

▪ LTM EBITDA € 25.2 million vs € 30.2 million in 2018▪ Incl IFRS 16 effect LTM EBITDA ended at € 30.3 million

▪ Solvency decreased to 38.2% fully related to IFRS 16 effect. Excl IFRS 16 effect solvency improved to 43.7%

42.6 44.6 44.0 41.9 38.2

YE 15 YE 16 YE 17 YE 18 YE 19

• With effect from 2016 Net debt excluding guaranteed capital• Excl IFRS 16 effect YE 19: 1.,3

* Excl IFRS 16 effect YE 19: 43.7%


Financials

Working capital

64.4

79.487.7

81.5

YE 16 YE 17 YE 18 YE 19

Net working capital (€ mln)

€ mln YE16 YE17 YE18 YE19

Inventories 86,3 98,0 115,2** 100,6**

Inventory days 79 76*) 85*) 72*)

Debtors (trade) 47,0 51,5 59,7 66,8

Debtor days 38 36 36 38

Creditors (trade) 46,8 51,1 65,8 62,3

Creditor days 63 61 64 56

*) based on realized turnover, excl. IFRS 15 adjustment

**) incl IFRS 15 adjustment

FY-19 vs FY-18

• € 6.2 million decrease working capitallargely related to:

• Despite higher activity level strongly reduced inventories, partly offset by increaseddebtors

• Reduced payables followingearlier payments

• DIO reduced compared to YE18 followingstock control improvement. Actions are paying off (SMOI, tighter monitoring of stocks, supplier reduction)

• Debtors days slightly increased followingrelative growth automotive, creditorsdays decreased


Financials

Cash flow and capex trends

Operating and net cash flow (€ mln)FY-19 vs FY-18

Operations▪ Operating cash flow positively impacted

by improved inventory control

Investments▪ Capex increased from € 12.1 million to

€ 13.0 million, above depreciation level to realize capacity growth Automotive

Financing▪ On balance net debt decreased, excl IFRS

16 impact, with € 9.4 million vs YE 18 largely due to lower working capital

7.4

10.6

3.2

7.6

29.4

2.9 2.6

-3.4-4.5

16.4

-10

-5

0

5

10

15

20

25

30

35

Operational cash flow Net cash flow

Cash flow FY 19 positively impacted by IFRS 16: € 4.8 million


Financials

Headcount trends

Average # staff Headcount

▪ Knowledge component in human resource mix increasingly important

▪ No. of engineers approx. 9% of total number of employees

▪ Headcount slightly below end of last year, productivity affected by unbalance demand between sites and ramp up new products

▪ Headcount end of 2019 at 2.808 fte of which 262 fte flex pool

▪ Recruiting (technically) talented employees increasingly difficult, requiring more effort and inventiveness

669 625 713 727 680

1924 19402037

2216 2260

2015 2016 2017 2018 2019

Western Europe

Eastern Europe,China & USA

Of which flex pool: 186 227 391 432 378


Financials

Data per share

(€) 2019 2018 2017 2016 2015

Operating result 1,24 1,76 1,25 1,03 0,52

Net result 0,70 1,20 0,86 0,85 0,28

Dividend 0,28 0,48 0,35 0,34 0,11

Shareholders' equity 8,83 8,50 7,40 6,89 6,19

Number of issued shares (x 1.000 year-end) 12.150 11.958 11.481 11.459 11.401


Financial condition

2019 2019 2018 2017 2016 2015

excl IFRS 16

Net debt / EBITDA ratio 2,3 1,3 1,4 1,6 1,5 1,9

Interest coverage ratio 5,4 6,9 11,2 10,2 6,8 4,9

Solvency (Guaranteed) % 38,2 43,7 41,9% 44,0% 44,6% 42,6%

Equity 106,1 101,6 85,0 78,9 70,6

EBITDA (LtM) 30,4 25,2 30,2 23,4 20,0 16,9

Financials


28

Outlook & SummaryOperations


Key account managementA

Capabilities throughout the life-cycleB

Operational Initiative Description

▪ Each sector will embrace Key Account Management Program, aimed at growing existing clients and targeting new accounts

▪ Building capabilities throughout the life-cycle, to become “I-EMS provider”

Bottom-line improvementC▪ Continue with focus on strategy to improve the bottom-line

results of the Group

One NewaysD▪ Lean harmonization of business processes to improve OC

integration in the Group and become one coherent company

Management developmentE ▪ Management and talent development in all leadership positions


Operations

Despite the more volatile market circumstances, we continue to invest in our future and pursue our strategic direction.

From EMS to Life Cycle Partner and System Innovator

Operations


Main points

▪ Dealing with and adapting to more eminent demand fluctuations

▪ Forced production transfers to meet customer demands and new product ramp ups led to efficiency losses

▪ Investments made in highly automated concept for various high-runner products

▪ Targeted reduction of flexible workforce to resolve over/under capacity issues across group in order to restore productivity

▪ Improving supply chain flexibility

▪ Supplier delivery performance became more reliable by end-2019

▪ Availability issues largely solved in H2, still risk when 5G, e-mobility ramp-up rapidly

▪ Improvement realized in working capital through structural measures

Operations


Main points

▪ Inventory management improvement initiatives pay off▪ Implemented One Stock program for the group

▪ One WoW for stock health check and maintenance

▪ One WoW for disciplined maintenance of master data settings

▪ One WoW for Order and Forecast management

▪ € 15 million inventory reduction to level of € 101 million

Operations


Main points

▪ Procurement capabilities and protocols further aligned and strengthened

▪ Procurement Academy established for on the job training

▪ Contract management

▪ Negotiation skills/tendering process

▪ Category management, deepening Strategy

▪ Next level QLTC meeting with suppliers

▪ QLTCS cross-functional supply chain approach

▪ Quotation process ready for pilot roll-out, including state-of-the-art software tool to improve speed, accuracy and competitiveness

Operations


Main points

▪ Ongoing production process improvement

▪ Trained over dedicated 32 staff in lean management (Poenk)

▪ Installed more improvement teams

▪ Equipment efficiency

▪ Production Line concepts (more flow)

▪ User interfaces at the shop floor (direct feedback to operators)

▪ Automation initiatives (reduction labour cost and quality control)

▪ Focus on yield

▪ Dedicated production concepts in place

Operations


Fully automated production concepts with Neways

Operations


Fully automated production concepts with Neways

Operations


Main points

▪ Process harmonization to enhance life cycle partner proposition

▪ Tightening of component category management ▪ Preferred resistors and capacitors defined and documented,

▪ Pilots started for switch to preferred components for existing designs

▪ Increased collaboration between Technology, Sales, Supply Chain Management and Procurement

▪ Multiple benefits improved commercial leverage of supply chain, less indirect efforts, and less stock positions; managing life cycle components more proactively

▪ One Quality Management System defined and implemented▪ All existing systems in use integrated in one system, ready for further harmonization

▪ One Non-Conformity Management System defined, and implementation started▪ Collect all relevant quality data over the life cycle

▪ Roll-out first plant done

▪ Further roll-out on track

▪ Safety▪ Material safety Data Sheets global Neways organized via Toxic

Operations


Main points

▪ Progress One Neways

▪ Future system landscape defined, based on business processes

▪ Several group processes introduced with current systems (people)

▪ Main system suppliers selected and contracted

▪ ERP kernel design project started

▪ MES kernel design project prepared

Operations


Main points

▪ People development

▪ Continue Neways DNA & Lean Leadership

▪ Young potential program

▪ Green belt training

▪ Production footprint expansion

▪ China plant opened officially in H2 2019

▪ Czech republic plant (high volume/low mix)

▪ Building operational

▪ Production capacity extended to 8.250 square meter

▪ Transfer current business H2 2019

▪ SMT capability released into new facility H1 2020

▪ Plans in progress to expand plant in Slovakia for high mix/low volume and box build/cables


39

Outlook & SummaryManagement agenda & outlook



Management agenda & outlook

2020 priorities

Develop and start implementation of

standardized core processes to support our strategy in the

daily operation

Focus on new business development, also with LCM

and System Innovator capabilities, and deliver higher added value solutions towards

our customers

Strengthen and expand long-term partnerships by applying customer intimacy principles,

anchored by technology leadership and operational

excellence

Roll-out our Neways DNA and lean leadership training

program in operating companies –

next level

Drive simplification and standardization of the supply

chain with a focus on materials, purchasing and

better supply risk management

Further strengthen our engineering organization

through additional development architects and

closer collaboration with operating companies

Management agenda & outlook


Outlook

In 2020 we will continue the implementation of our strategy, in which improvement of our operational processes,

scalability and customer focus, and our role as manager of the supply chain are the central issues.

If market conditions do not unexpectedly worsen, we expect an equal turnover over 2020 compared to 2019

and a higher operating result.

Questions & Answers

Striving for TCO partnerships


Sharing our DNA - Neways · Automotive Medical Other FY-19 vs FY-18 Strong growth in automotive, amid weaker market climate, due to position in e-mobility Industrial, Medical and

Documents