LPKF Laser & Electronics : 3-Month Financial Report 2021

Quarterly Financial Report

1 January - 31 March 2021

Quarterly Financial ReportTable of contents

Table of contents

	LPKF Laser & Electronics AG at a glance ...............................................................................	3
	Letter from the CEO ..............................................................................................................	4
	Interim Management Report as of 31 March 2021 ..............................................................	6
1	Basic information on the Group ..........................................................................................	6
2	Report on economic position ..............................................................................................	6
	2.1 Net assets, financial position and results of operations of the Group.....................................	6
	2.1.1	Results of operations...............................................................................................................	6
	2.1.2	Financial position.....................................................................................................................	7
	2.1.3	Net assets ................................................................................................................................	7
	2.1.4	Segment performance.............................................................................................................	8
	2.2 Employees ................................................................................................................................	8
	2.3 Overall assessment of the Group's economic situation...........................................................	8
3	Supplementary report .........................................................................................................	9
4	Opportunities and risks .......................................................................................................	9
5	Report on expected developments .....................................................................................	9
	5.1 Management's assessment of the Group's expected development........................................	9
	5.1.1	Group performance.................................................................................................................	9
	5.1.2	Key financial indicators..........................................................................................................	10
	Consolidated financial statements......................................................................................	12
	Financial calendar................................................................................................................	17
	Publishing information ........................................................................................................	17

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At a glance

Quarterly Financial Report

LPKF Laser & Electronics AG at a glance

Key Group figures after 3 months 2021

3 Months 2021

3 Months 2020

Revenue (Mio. EUR)

EBIT (Mio. EUR)

EBIT margin (%)

Free Cash Flow (Mio. EUR)

EPS, diluted (EUR)

Order entry (Mio. EUR)

16.3

-4.1

-25.5

-2.1

-0.12

21.5

19.5

-2.4

-12.1

-10.3

-0.07

21.2

			As of 03/31/2021		As of 03/31/2020
Net Working Capital (Mio. EUR)	19.5	22.8
Equity ratio (%)	74.6	70.1
Order backlog (Mio. EUR)	43.5	34.5
Employees	700	682

Segments and markets

LPKF Laser & Electronics AG	3/18

Quarterly Financial Report

Letter from the CEO

Letter from the CEO

Garbsen, April 29th, 2021

Ladies and Gentlemen,

As Chief Financial Officer, I am pleased to report on the business performance of LPKF Laser & Electronics AG in the first quarter of 2021.

Overall, the first quarter was weak for LPKF. On the one hand, the year-on-year decline in revenue is almost exclusively attributable to the Solar segment, since the new orders we received and reported in September and December last year will not be delivered until the second half of the year as agreed with the customer. On the other hand, we could not compensate for this decline in revenue in the first three months with growth in the other segments. This is not satisfactory.

By contrast, incoming orders in the first quarter were slightly higher than in the prior-year quarter and significantly higher than the revenue achieved. It should be noted that the COVID-19 pandemic had little impact on the prior-year period. In the first quarter, the book-to-bill ratio was 1.3 and thus orders on hand increased further compared with the end of the year. This is a good basis for the growth expected in 2021.

We are seeing a gradual improvement in the coronavirus situation in various regions. In the US, the working environments of our customers are normalizing along with the growing vaccination rate; in Europe, people have learned to deal with the pandemic in the working environment; and Asia is following the development of global demand.

We also see positive impetus for our business from various technological developments, product innovations and sales initiatives. Momentummay come, for example, from the ongoing application of 5G technology and continued good demand for products we have launched in the last 15 months, such as in the Stencil area. We succeeded in acquiring new customers in medical technology and electromobility, broadening the fields of application and our customer base. These are all clear indications that the measures implemented in sales and product management will enable us to continue to take our share as the economy begins to recover. This will be our particular focus in the coming months.

The COVID-19 pandemic will continue to affect our daily lives and overall economic development. We have further adapted and, in some cases, strengthened our protective measures in the company in response to the rising infection figures. All employees for whom it is possible have already been working at home since February 2020, and our sites remain divided into sections with minimal physical interaction. Production at all sites continues to operate without restrictions. No company employee has been infected with COVID-19 since the pandemic began. We will continue to do everything we can to protect our employees, their families, our business partners and our communities, to minimize the economic impact, and to continue to serve our customers as effectively as possible during the pandemic.

In the LIDE (Laser Induced Deep Etching) business, we continue to work intensively on opening up the market for various specific applications. As announced, we have been producing samples and small batches for our customers in the new clean room factory in Garbsen since December last year. In addition, we have made significant technological progress, e.g. significantly higher break resistance for rigid as well as foldable display glasses. We have thus overcome important technological hurdles in recent weeks and months. We expect customers to use our LIDE technology in a number of volume production applications. These are the next milestones for this area.

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Letter from the CEO

Quarterly Financial Report

In the first three months, we generated consolidated revenue of EUR 16.3 million, around 17% less than in the previous year. This decline was mainly due to the Solar segment (EUR -3.0 million). At EUR 21.5 million, incoming orders were slightly above the previous year's figure of EUR 21.2 million. As of 31 March 2021, orders on hand amounted to EUR 43.5 million, significantly above the previous year's figure of EUR 34.5 million. The overall weak development of revenue in the first three months resulted in negative EBIT (earnings before interest and taxes) of EUR 4.1 million (previous year: EUR -

2.4 million). At EUR -2.1 million, free cash flow in the first quarter was significantly better than in the previous year (EUR -10.3 million). The net cash position at the end of March was EUR 13.4 million (previous year: EUR 14.0 million) with cash and cash equivalents of EUR 17.8 million.

LPKF is well positioned and financially stable: we continue to be debt-free and have adequate cash reserves. We are continuing to invest in our development projects and are taking various measures to ensure that we can respond as quickly as possible to any significant short-term increases in demand when the economy recovers. We are confident that LPKF will successfully overcome the challenges posed by the current crisis, and that we will ultimately emerge stronger from this crisis.

Despite the weak first quarter, we believe that we will again grow significantly in 2021, especially in the second half of the year. The scheduled delivery of the solar orders we have received in the second half of the year will already contribute to this. We also expect to achieve profitable growth again in the other segments.

Overall, the company expects moderate macroeconomic growth in the current year. Against this background, LPKF anticipates growth of between 15% and 25% to consolidated revenue of EUR 110 million to EUR 120 million in 2021. The EBIT margin is expected to be between 10% and 13%.

In addition, the company sees a realistic chance of receiving and delivering a major order for LIDE (Laser Induced Deep Etching) technology in the current year.

We continue to expect sustainable, profitable growth in all segments in the coming years, and confirm our medium-term outlook.

I would like to take this opportunity to express my sincere thanks to my colleague and CEO Götz Bendele for the good and trusting cooperation over the past three years. We joined the Management Board in 2018 when the company was in a difficult phase. Together, we embarked on and successfully implemented a change of course towards growth, profitability and financial stability. Götz Bendele will leave LPKF on 30 April. On behalf of our employees too, I wish him every success for the future, both privately and professionally.

Best regards,

Christian Witt

Chief Financial Officer

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