Soitec : Résultats semestriels 2020-2021

SOITEC REPORTS FIRST HALF RESULTS OF FISCAL YEAR 2021

• Sales of €254m, stable at constant exchange rates and perimeter1
• Electronics EBITDA2 margin3 slightly up at 30.4% of sales, in line with FY'21 guidance
• Very strong Electronics net operating cash flow at €102m
• FY'21 sales still expected to be stable at constant exchange rates and perimeter1 and FY'21 Electronics EBITDA2 margin3 confirmed around 30%
• FY'21 planned CAPEX increased to around 135m€
• FY'22 sales now expected above $900m / €800m based on €/$ exchange rate of 1.13.

Bernin (Grenoble), France, November 18th, 2020 - Soitec (Euronext Paris), a world leader in designing and manufacturing innovative semiconductor materials, today announced its results for the first half of fiscal year 2021 (period ended on September 30th, 2020). The financial statements4 were approved by the Board of Directors during its meeting today.

Paul Boudre, Soitec's CEO, commented: "With stable revenue and an Ebitda margin just above 30% in the first half of our fiscal year 2021, we are well on track to achieve our guidance for the full year. In the meantime, we generated very strong operating cash flows, further strengthening our solid financial position and allowing us to continue investing in our industrial facilities to support further growth.

1 At constant exchange rates and comparable scope of consolidation; scope effect relates to the acquisition of EpiGaN N.V. in May 2019, which was renamed Soitec Belgium N.V. in July 2020; its revenues are included in the caption Royalties and other revenues.

2 The EBITDA represents the current operating income before depreciation, amortization, non-monetary items related to share-based payments, and changes in provisions on current assets and provisions for risks and contingencies, excluding income on asset disposals. This alternative indicator of performance is a non-IFRS quantitative measure used to measure the company's ability to generate cash from its operating activities. EBITDA is not defined by an IFRS standard and must not be considered an alternative to any other financial indicator.

3 Electronics EBITDA margin = EBITDA from continuing operations / Sales.

4 The half-year accounts were reviewed by auditors.

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The recent signing of a couple of strategic supply agreements, one with Qualcomm regarding POI substrates for their new generation of RF filters, and another one with GlobalFoundries regarding RF-SOI wafers for their most advanced solutions for smartphones RF front-end-modules, provides strong evidence that we are increasingly well positioned to lead the opportunities created by the advent of 5G market.

On the strength of the growing adoption of our innovative engineered substrates and thanks to the continuous and compelling dedication of our teams in the context of the Covid-19 situation, Soitec is accelerating its capacity expansion plans to deliver further growth in fiscal year 2022 and beyond," added Paul Boudre.

Stable revenue and sustained level of EBITDA2 margin3

Consolidated income statement (part 1)
(Euros millions)	H1'21	H1'20	% change
Sales	254.4	258.5	-2%
Gross profit	77.4	87.4	-11%
As a % of sales	30.4%	33.8%
Research and development expenses	(17.5)	(16.0)	+10%
Selling, general and administrative expenses	(22.7)	(20.2)	+13%
Current operating income	37.2	51.3	-28%
As a % of sales	14.6%	19.9%
Electronics EBITDA2 (continuing operations)	77.3	78.1	-1%
As a % of sales	30.4%	30.2%

Consolidated sales reached 254.4 million Euros in H1'21, down 1.6% compared with H1'20. This is the result of a 0.4% decline at constant exchange rates and perimeter1, a negative currency impact of -1.3% and a scope effect of +0.1% which is related to the acquisition of EpiGaN in May 2019.

• 150/200-mmwafer sales reached 138.4 million Euros, up 14% on a reported basis and up 15% at constant exchange rates. They represent 57% of total wafer sales. Sales increase essentially reflects a more favorable product mix as a result of the sustained growth achieved in 200-mmRF-SOI wafer sales dedicated to radiofrequency applications for smartphones which was partially offset by lower sales of Power-SOI as a result of the difficulties met by the automotive market in the context of the Covid-19. Combined with the early stage of the ramp-up in sales of 150-mm POI (Piezoelectric-on-Insulator) wafers for RF filters, 150/200-mm wafer sales also benefitted from a slight increase in volumes.

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• 300-mmwafer sales amounted to 105.1 million Euros, representing a 16% decrease on a reported basis and a 15% decline at constant exchange rates. Decline in sales essentially reflects a decrease in volumes. 300-mmRF-SOI wafer sales remained at a high level and continued to be supported by the still growing 4G market as well as the deployment of first generations of 5G smartphones. In the meantime, sales of FD-SOI wafers came significantly lower than last year despite intense design and tape-out activities for applications related to 5G, Edge-Computing and Automotive. Sales of other 300-mm products (Imager-SOI for 3D applications for smartphones and Photonics-SOI wafers for data centers) were robust.
• Total Royalties and other revenues decreased from 11.7 million Euros in H1'20 to 10.8 million Euros in H1'21, including 8.5 million Euros in sales generated by Frec|n|sys, Dolphin Design and EpiGaN.

Gross profit reached 77.4 million Euros in H1'21, down from 87.4 million Euros in H1'20, reflecting a decrease in gross margin from 33.8% of sales to 30.4% of sales. This mainly comes as a result of higher depreciation costs as well as of the ongoing ramp-up of Bernin III 150-mm facility partially compensated by more favorable bulk purchase prices.

Current operating income declined from 51.3 million Euros, i.e. 19.9% of sales, in H1'20 to 37.2 million Euros or 14.6% of sales in H1'21. In addition to lower gross profit, this decline is a direct consequence of the increasing R&D efforts and higher staffing made to support future expansion:

• Net R&D costs increased from 16.0 million Euros in H1'20 to 17.5 million Euros in H1'21. This increase essentially reflects slightly higher gross R&D Expenses, driven in particular by higher depreciation and labor costs, as well as lower prototype sales, which were partially offset by slightly higher subsidies and research tax credits.
• Selling, general and administrative (SG&A) expenses went up from 20.2 million Euros in H1'20 to 22.7 million Euros in H1'21, essentially reflecting an increase in costs related to employee compensation schemes (higher number of staff and employee shareholding plan set up in previous fiscal years). As a percentage of sales, SG&A expenses went slightly up from 7.8% in H1'20 to 8.9% in H1'21.

The EBITDA2 from continuing operations (Electronics) amounted to 77.3 million Euros. The EBITDA2 margin was slightly up, reaching 30.4% of sales in H1'21, compared with 30.2% of sales in H1'20.

Depreciation and amortization expenses went up from 19.4 million Euros in H1'20 to 27.4 million in H1'21 essentially as a result of the high level of investments carried out by the Group in previous years.

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Consolidated income statement (part 2)
(Euros millions)	H1'21	H1'20	% change
Current operating income	37.2	51.3	-28%
Other operating income and expenses	(0.0)	1.8
Operating income	37.1	53.2	-30%
Net financial result	(10.2)	(1.7)
Income tax	(4.8)	(9.9)
Net profit from continuing operations	22.2	41.6	-47%
Net profit / (loss) from discontinued operations	(0.0)	(0.0)
Net profit	22.2	41.5	-47%

The Group did not record any significant other operating expenses in H1'21 whereas it recorded a 1.8 million Euros gain on the disposal of an industrial site in H1'20. As a result, the operating income reached 37.1 million Euros in H1'21.

The net financial result reached (10.2) million Euros in H1'21 compared to (1.7) million Euros in H1'20. The financial expense, which mostly includes the non-cash interests related to the 5-year convertible bond issued in June 2018, was stable. On the other hand, the Group recorded a net foreign exchange loss of (6.4) million Euros in H1'21 compared to a foreign exchange gain of 2.1 million Euros recorded in H1'20.

Income tax amounted to 4.8 million Euros in H1'21 compared to 9.9 million Euros in H1'20.

The Group's consolidated net profit therefore amounted to 22.2 million Euros in H1'21, down 47% compared with a net profit of 41.5 million Euros recorded in H1'20.

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