Q4 and Full Year 2014 Results 19 February 2015 Forward looking - - PowerPoint PPT Presentation

Q4 and Full Year 2014 Results

19 February 2015

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 2

Forward looking statement

This presentation contains “forward-looking statements” that reflect management’s current views with respect to future events. The words “anticipate,” “believe,” “estimate, “expect,” “intend,” “may,” “plan,” “project” and “should” and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties, including, but not limited to: an economic downturn in the semiconductor and telecommunications markets; changes in currency exchange rates and interest rates, the timing of customer orders and manufacturing lead times, insufficient, excess or

• bsolete inventory, the impact of competing products and their pricing, political risks in

the countries in which we operate or sale and supply constraints. If any of these or

• ther risks and uncertainties occur (some of which are described under the heading

“Risks and their management” in Dialog Semiconductor’s most recent Annual Report)

• r if the assumptions underlying any of these statements prove incorrect, then actual

results may be materially different from those expressed or implied by such statements. We do not intend or assume any obligation to update any forward-looking statement, which speaks only as of the date on which it is made, however, any subsequent statement will supercede any previous statement.

Agenda

Q4 2014 Executive Overview Outlook Business Review Q4 and full year 2014 Financial Overview Appendix

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 4

Dialog at a glance

Q4 2014 – Strong revenue growth and cash flow generation

$435m IFRS Revenue

(Q4 2013 Actual: $351m)

27.1% Underlying EBIT margin

(Q4 2013 Actual: 21.7%)

$1.17 Underlying Diluted EPS

(Q4 2013 Actual: $0.70)

46.6% Underlying gross margin

(Q4 2013 Actual: 43.0%)

19.5% Underlying OPEX %

(Q4 2013 Actual: 21.3%)

$119.3m

Cash flow from

• perating activities

(Q4 2013 Actual: $46.2m)

+360bps (180)bps +540bps +67% +158% +24%

Underlying definition on slide 22

Agenda

Outlook Business Review Q4 and full year 2014 Financial Overview Appendix

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 6

Q1 2015 Outlook

■ Given our current visibility, we expect 2015 to be another year of good growth. As in previous years, revenue performance will be strongly weighted towards the second half of the year ■ Q1 2015 revenue will reflect the expected seasonal pattern and deliver year

• n year growth. We expect revenue for Q1 2015 to be in the range of

$265m to $300 million ■ In line with the seasonal lower revenue, gross margin in Q1 2015 will decline sequentially but improve on a year-on-year basis. ■ Gross margin for 2015 is expected to remain broadly at a similar level to the full year 2014

Agenda

Business Review Q4 and full year 2014 Financial Overview Appendix

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015

527 774 901 1,156

1.54 1.96 2.30 2.66 1.69 2.10 2.48 2.90

FY 2011 FY 2012 FY 2013 FY 2014 Total revenue (LHS) Total ASP exc. Power Conversion (RHS) ASP exc. Connectivity and Power Conversion(RHS)

8

Delivering revenue and earnings growth

Revenue and ASP

($ million and $)

20% ASP CAGR 2011-2014

80 108 140 230

1.11 1.19 1.44 2.27

FY 2011 FY 2012 FY 2013 FY 2014

Underlying EBIT and Diluted EPS

($ million and $)

42% EBIT CAGR 2011-2014

■ Revenue growth well above industry

average

30% CAGR 2011-2014

■ R&D investment supports future and new

revenue streams

■ SG&A costs at best in class levels ■ Underlying EBIT doubled from 2012

ASP

+28% +58% +65%

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 9

Broadening our customer base

127 308 357

2012 2013 2014

Number of trading customers

+16%

■ Focus on fast growing China

consumer electronics – early success in Mobile Systems and Connectivity

■ Maintained our technology advantage

in Bluetooth Smart and started high volume shipments in Q4 2014

■ Strengthened our leadership position

in the LED SSL dimmable segment and fast charging AC/DC converters

2.0™ 2.0™ Pump Express™

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 10

Well positioned for future growth

■ Exposed to high growth markets with differentiated power management and

low power connectivity solutions

■ Broadening our customer base in new addressable markets ■ Establishing strategic collaborations to focus on fast growing China consumer

electronics market

■ Strong cash generative business capable of funding new strategic initiatives

Agenda

Q4 and Full Year 2014 Financial Overview Appendix

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 12

Dialog at a glance

Full year 2014 – Solid growth and earnings acceleration

$1,156m IFRS Revenue

(FY 2013 Actual: $901m)

19.9% Underlying EBIT margin

(FY 2013 Actual: 15.4%)

$2.27 Underlying Diluted EPS

(FY 2013 Actual: $1.44)

45.3% Underlying gross margin

(FY 2013 Actual: 40.5%)

25.4% Underlying OPEX %

(FY 2013 Actual: 25.1%)

$270.5m

Cash flow from

• perating activities

(FY 2013 Actual: $110.7m)

+480bps +30bps +450bps +58% +144% +28%

Underlying definition on slide 23

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015

87 162 218 296 527 774 901 1,156

200 400 600 800 1000 1200 1400

2007 2008 2009 2010 2011 2012 2013 2014

13

8th consecutive year of growth

■ Q4 2014 IFRS revenue $435 million

• 24% YoY revenue growth
• 55% sequential increase over Q3 2014

■ H2 2014 IFRS revenue $716 million up 26% on H2 2013

• 63% sequential increase over H1 2014

Full year IFRS revenue ($ million) 40% Revenue CAGR 2009-2014

41% Q4 Revenue CAGR 2009-2014

+28%

14 14 25 35 32 34 44 52 36 45 59 78 61 69 80 88 98 116 141 172 166 160 180 268 180 151 219

352

221 219 281 435

40 80 120 160 200 240 280 320 360 400 440 480

Q1 Q2 Q3 Q4

2007 2008 2009 2010 2011

Quarterly IFRS revenue ($ million)

2012 2013 2014

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 37.8 39.0 44.5 38.0 40.5 45.3 30 35 40 45 50 FY 2012 FY 2013 FY 2014 FY 2012 FY 2013 FY 2014

%

38.6 38.2 38.0 40.1 43.0 43.3 44.5 45.4 46.6

30 35 40 45 50

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

% Underlying gross margin

14

Delivering year on year gross margin improvement

IFRS gross margin Underlying gross margin

■ Q4 2014 Underlying gross margin of 46.6%

• 360 bps improvement over Q4 2013

■ Full Year 2014 IFRS and Underlying gross margin up on FY 2013

• 550bps IFRS improvement
• 480bps Underlying improvement

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 15

Investing in R&D for future growth

■ Full year underlying OPEX% at 25.4%

• R&D 30 bps above FY2013
• Industry leading SG&A flat on FY 2013

%

Full year underlying OPEX % of revenue *

25.1 25.4 17.2 17.5 7.9 7.9

5 10 15 20 25 30 35 40 30 FY 2013 FY 2014 OPEX % of revenue R&D % of revenue SG&A % of revenue

%

72 88 115 128 161 214 16.5 17.8 18.5 9.3 9.8 9.9

5 10 15 20 25 30 60 90 120 150 180 210 240 270 300 330 360 FY 2012 FY 2013 FY 2014 SG&A R&D R&D % of revenue(RHS) SG&A % of revenue(RHS)

Full year IFRS Actual

($ million and as a % of revenue) *

■ Full year 2014 IFRS OPEX%

• Investing in future growth: 70 bps increase
• n R&D% on FY 2013
• SG&A in line with FY2013 at 9.9%

(*) Other operating expenses included in SG&A

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 16

Operating Profit (EBIT)

Underlying Q4 2014 EBIT up 54% year on year

70.6 105.1 102.7 185.9

10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 Q4 2013 Q4 2014 FY 2013 FY 2014

IFRS EBIT and EBIT %

($ million) 20.1% 11.4%

76.4 117.9 139.6 230.3

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 110.0 120.0 130.0 140.0 150.0 160.0 170.0 180.0 190.0 200.0 210.0 220.0 230.0 240.0 250.0 Q4 2013 Q4 2014 FY 2013 FY 2014 21.7% 19.9%

Underlying EBIT and EBIT %

($ million) 27.1% 15.4% 24.2% 16.1%

■ Q4 Underlying EBIT(*) of $117.9 million or 27.1% of revenue

• 540bps increase from Q4 2013
• 180bps year-on-year decrease on OPEX%

■ Full year IFRS EBIT up 81% to 185.9 million

• r 16.1% of revenue
• 470bps increase on EBIT%
• 80bps year-on-year increase on OPEX%

■ Full year Underlying EBIT(*) up 65% on previous year to $230 million

• 450bps increase on EBIT %
• OPEX% broadly in line with 2013

+54% +65% +81% +49%

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 17

Net income

48% Diluted EPS growth in Q4

Net Income – Strong earnings acceleration

■ Effective tax rate for FY 2014 at 18.5%, including one-off non-cash deferred tax credit of $17.8 million in 2014 ■ 2014 IFRS effective tax rate of 29.0% excluding one-off item

• 170bps below 2013

97.6 172.2 52.1 89.2

50 100 150 200 FY 2013 FY 2014 Q4 2013 Q4 2014 Underlying Net Income ($’m) +76% +71%

0.92 1.93 1.44 2.27

1 1 2 2 3 FY 2013 FY 2014 FY 2013 FY 2014 FY Diluted EPS ($) IFRS Underlying

20.5% 14.8%

■ Convertible Bond was dilutive in Q4 and full year

14.9% 10.8%

+110% +58%

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015

119 118 148 145 152 144 114 81 120 109 92 52 62 86 88 38

• 100
• 50

50 100

$0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14

Finished goods Work in process Raw Materials DIO

18

Inventory value decreased as expected

Inventory ($ million) and Days Inventory Outstanding (# days)

■ Inventory value at the end of Q4 2014 down 33% on Q3 2014 ■ In Q1 2015 we expect inventory value and DIO to increase from Q4 2014

inventory balance over the period

DIO (1)

28% 9% 11% 63% 59% 14% 34% 52% 30% 30% 18% 52% 31% 28% 41% 99 13% 35% 52% 12% 23% 65% Average DIO of 81 days 88 67% 21% 29% 9% 41% 50% 4%

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015

312 319 347 157 186 286 272 257 324

50 100 150 200 250 300 350 400

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014

Strong free cash flow generation

19

■ $324 million cash & cash equivalents balance at 31 December 2014

• After $40 million debt repayment
• No outstanding debt facilities

■ $119 million cash flow from operating activities in Q4 2014 (Q4 2013: $46 million) ■ FY 2014 free cash flow of $213 million almost x3 FY 2013 - excluding the

• utflow relating to the acquisition of

iWatt in 2013

Cash and cash equivalents balance ($ million)

iWatt acquisition

Cash Flow Bridge from Q3’14 ($ million)

257.3 120.4 2.3 (8.0) (1.3) (12.5) (40.0) 6.1 324.3

$100 $150 $200 $250 $300 $350 $400

The power to be...

Agenda

Appendix

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 22

Notes to the financials

Underlying definition - Q4 2014

(*) Underlying results (net of tax) in Q4-2014 are based on IFRS, adjusted to exclude share-based compensation charges and related charges for National Insurance of US$10.0 million, excluding US$0.2 million of amortisation of intangibles associated with the acquisition of SiTel (now Dialog B.V.), excluding US$2.1 million non-cash effective interest expense in connection with the convertible bond, excluding US$ 0.5 million non-cash effective interest expense related to a licensing agreement, excluding US$1.0 million acquisition and integration expenses in connection with the purchase of iWatt, and excluding US$0.9 million of amortisation and depreciation expenses associated with the acquisition of iWatt. Underlying results (net of tax) in Q4-2013 are based on IFRS, adjusted to exclude share-based compensation charges and related charges for National Insurance of US$2.2 million, excluding US$1.1 million of amortisation of intangibles associated with the acquisition of SiTel (now Dialog B.V.), excluding US$2.0 million non-cash effective interest expense in connection with the convertible bond, excluding US$ 0.2 million non-cash effective interest expense related to a licensing agreement entered into in Q3-2012, excluding US$0.5 million acquisition and integration expenses in connection with the purchase of iWatt and excluding US$2.8 million of amortisation and depreciation expenses associated with the acquisition of iWatt, deferred sales and related cost of sales that were reversed in connection with the iWatt business integration of US$ 0.6 million were brought back. Furthermore the gain US$ of 3.2 million from the release of an earn-out provision in relation to the iWatt acquisition was reversed and a recorded income related to a payment the company received in connection with the insolvency of BenQ of US$0.7 million was also taken out. The term “underlying” is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other

• companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures. Underlying results (net of

tax) have been fully reconciled to IFRS results (net of tax) above. All other underlying measures disclosed within this report are a component of this measure and adjustments between IFRS and underlying measures for each of these measures are a component of those disclosed above. EBITDA in Q4 2014 is defined as operating profit excluding depreciation for property, plant and equipment, (Q4 2014:US$5.4 million, Q4 2013:US$5.4 million), amortisation of intangible assets (Q4 2014:US$9.8 million, Q4 2013:US$9.1 million) and losses on disposals and impairment of fixed assets (Q4 2014:US$0.1 million, Q4 2013:US$0.8 million). Free Cash Flow in Q4 2014 is defined as net income of US$71.3 million plus amortisation and depreciation of US$15.2 million, plus net interest expense of US$4.0 million, plus change in working capital of US$2.3 million and minus capital expenditure of US$12.5 million.

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 23

Notes to the financials

Underlying definition – Full year 2014

(*) Underlying results (net of tax) in 2014 are based on IFRS, adjusted to exclude share-based compensation charges and related charges for National Insurance of US$25.1 million, excluding US$1.2 million of amortisation of intangibles associated with the acquisition of SiTel (now Dialog B.V.), excluding US$8.3 million non-cash effective interest expense in connection with the convertible bond, excluding US$ 1.0 million non-cash effective interest expense related to a licensing agreement, US$ 1.2 million of expenses associated with the merger discussions with ams AG, excluding US$3.1 million acquisition and integration expenses in connection with the purchase of iWatt, excluding US$11.9 million of amortisation and depreciation expenses associated with the acquisition of iWatt and a US$17.8 million one-off tax impact of an intra-group reorganization of certain Intellectual Property. Underlying results (net of tax) in 2013 are based on IFRS, adjusted to exclude share-based compensation charges and related charges for National Insurance of US$7.8 million, excluding US$3.8 million of amortisation of intangibles associated with the acquisition of SiTel (now Dialog B.V.), excluding US$7.8 million non-cash effective interest expense in connection with the convertible bond, excluding US$ 0.8 million non-cash effective interest expense related to a licensing agreement entered into in Q3-2012, excluding US$6.3 million acquisition and integration expenses in connection with the purchase of iWatt and US$10.3 million of amortisation and depreciation expenses associated with the acquisition of iWatt, deferred sales and related cost of sales that were reversed in connection with the iWatt business integration of US$ 2.5 million were brought back. Furthermore the gain of US$ 3.2 million from the release of an earn-out provision in relation to the iWatt acquisition was reversed and a recorded income related to a payment the company received in connection with the insolvency of BenQ of US$ 0.7 million was also taken out. EBITDA in 2014 is defined as operating profit excluding depreciation for property, plant and equipment, (2014:US$22.1 million, 2013:US$18.6 million), amortisation of intangible assets (2014:US$33.4 million, 2013:US$28.6 million) and losses on disposals and impairment of fixed assets (2014:US$0.4 million, 2013:US$1.4 million). Free Cash Flow in 2014 is defined as net income of US$138.1 million plus amortisation and depreciation of US$55.6 million, plus net interest expense of US$14.4 million, plus change in working capital of US$47.8 million and minus capital expenditure of US$43.0 million.

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 24

Underlying adjustments FY 2014

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 25

Full year 2014 income statement

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 26

Statement of financial position as of 31 December 2014

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 27

Cash flow statement as of 31 December 2014

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 28

Cash flow statement as of 31 December 2014

Dialog Semiconductor Q4 and Full Year 2014 results, 19 February 2015 29

Investor Information

Calendar, events and analyst coverage

Analyst coverage Financial Calendar

AGM 30 April Q1 2015 Results 7 May Q2 2015 Results 30 July Q3 2015 Results 28 October

Key Events

Jose Cano Head of Investor Relations T: +44 (0)1793 756 961 jose.cano@diasemi.com Financial PR/IR Advisers: FTI Consulting – London Matt Dixon T: +44 (0)20 7831 3113 matt.dixon@fticonsulting.com FTI Consulting – Frankfurt Anja Meusel T: +49 (0)69 9203 7120 anja.meusel@fticonsulting.com

Contacts

Bank of America Merrill Lynch Adithya Metuku Baader Bank Guenther Hollfelder Bankhaus Lampe

• Dr. Karsten Iltgen

Barclays Capital Andrew Gardiner Berenberg Bank Ali Farid Khwaja CA Cheuvreux Bernd Laux Close Brothers Seydler Veysel Taze Commerzbank Thomas Becker Credit Suisse Achal Sultania Deutsche Bank Uwe Schupp DZ Bank Harald Schnitzer Exane BNP Paribas Jérôme Ramel Hauck & Aufhauser Tim Wunderlich HSBC Trinkaus & Burkhardt AG Christian Rath Jefferies International Lee Simpson JP Morgan Cazenove Chetan Udeshi, CFA Main First Bank AG Juergen Wagner Morgan Stanley Francois A Meunier Natixis Stephane Houri RBC Doug Freedman

4 March 2015, Barcelona

Mobile World Congress

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