X FAB Silicon Foundries : FAB Third Quarter 2020 Results

X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

Regulated Information

X-FAB Third Quarter 2020 Results

Intermediate declaration by the Board of Directors

Tessenderlo, Belgium - October 27, 2020, 05.40 p.m. CET

Highlights Q3 2020:

• Revenue was USD 96.1 million, within the guidance of USD 91-97 million, down 26% year-on-year (YoY) and down 19% quarter-on-quarter (QoQ)
• Bookings were USD 111.6 million, down 8% YoY and up 12% QoQ, recording a substantial increase in September
• EBITDA margin of 4.9% above the 0-4% guidance
• EBITDA was USD 4.7 million, down USD 7.9 million YoY and down USD 11.1 million QoQ
• EBIT was USD -13.9 million, down USD 7.8 million YoY and down USD 11.2 million QoQ
• Net loss was USD -12.9 million, down USD 4.7 million YoY and down USD 7.0 million QoQ

Outlook:

• Q4 2020 revenue is expected to rebound markedly in the range of USD 120-127 million with an EBITDA margin in the range of 10-14%.
• The guidance for Q4 2020 is based on an average exchange rate of 1.18 USD/Euro.

Revenue breakdown per quarter:

in millions of USD

Automotive

Industrial

Medical

Subtotal core business

CCC1

Others

Total revenues

Q4 2018

59.7

24.3

7.3

91.3

66.4%

45.9

0.3

137.4

Q1 2019	Q2 2019

64.1 62.5

1. 23.3

1. 6.3

95.0 92.1

72.5%	70.0%
35.8	39.1

0.20.3

131.0

131.6

Q3 2019	Q4 2019

60.5 56.7

24.4 20.1

8.86.3

93.7 83.2

71.8%	73.3%
36.7	30.1

0.00.1

130.5

113.4

Q1 2020	Q2 2020

68.3 61.6

1. 23.9

1. 7.3

96.9 92.7

76.4%	78.1%
29.7	25.9

0.30.2

126.9

118.8

			Q3 y-o-y
Q3 2020
		growth

40.8 -33%

1. -2%

1. -12%

72.3-23%

75.2%
23.7	-36%

0.1

96.1

-26%

1 Consumer, Communications & Computer

in millions of USD

CMOS

MEMS

Silicon carbide

Total revenues

Q4 2018

122.0

10.4

5.0

137.4

Q1 2019	Q2 2019

118.2 114.4

8.1 10.7

4.76.4

131.0

131.6

Q3 2019	Q4 2019

114.4 98.1

9.59.9

6.55.5

130.5

113.4

Q1 2020	Q2 2020

1. 103.4

1. 10.4

4.55.0

126.9

118.8

			Q3 y-o-y
Q3 2020
		growth

1. -29%

1. 3%

5.2 -20%

96.1

-26%

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X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

Business development

As anticipated, the third quarter was marked by weaker sales. Quarterly revenues came in at

USD 96.1 million, at the upper end of the guided USD 91-97 million. Revenues were down 26% year-on-year and 19% quarter-on-quarter. Despite this fall in revenue and as a result of the company's ongoing cost- saving initiatives, X-FAB has reached an EBITDA margin of 4.9% exceeding its 0-4% guidance. Bookings have strongly picked up since the start of September. This is a positive sign for business development going forward, underpinned by a solid return to growth in the fourth quarter with revenue guidance in the range of USD 120-127 million.

Quarterly revenues in X-FAB's core business, namely automotive, industrial and medical, amounted to USD 72.3 million, down 23% year-on-year and down 22% quarter-on-quarter.

In the third quarter, the Automotive as well as the Consumer, Communications & Computer (CCC) businesses were the main contributors to the strong decline, which was in line with expectations and primarily caused by the impact of the COVID-19 pandemic on the global economy.

Automotive revenues for the third quarter decreased 33% compared to the same quarter last year and were down 34% quarter-on-quarter due to a drop in automotive bookings in the previous quarter, which was related to client's inventory corrections. Production revenues (which excludes prototyping) decreased year- on-year(-33%) as well as quarter-on-quarter(-36%). Automotive prototyping revenues declined 27% year- on-year due to an exceptionally strong quarter last year but were up 13% quarter-on-quarter.

Industrial revenues for the third quarter were down 2% year-on-year and flat quarter-on-quarter, both for production and prototyping. Production revenues decreased 7% year-on-year, while prototyping revenues increased 12%.

X-FAB's medical revenues of the third quarter declined 12% year-on-year and increased 6% quarter-on- quarter. The decline is mainly caused by a 27% year-on-year drop in production revenues due to an exceptionally high quarter last year. Quarter-on-quarter, medical production revenues increased by 6%. Medical prototyping revenues have been growing steadily over the past quarters and, in the third quarter, recorded a 15% growth year-on-year and 5% increase compared to the previous quarter.

In the third quarter, X-FAB's CCC business decreased 36% year-on-year and 8% quarter-on-quarter. Prototyping revenues decreased 39% compared to the same quarter last year and slightly increased quarter- on-quarter. CCC production revenues were down 35% year-on-year and down 10% quarter-on-quarter. The decline was not only driven by the ongoing gradual decrease of the legacy business at X-FAB France but also, to some extent, by the impact of the general economic slowdown related to COVID-19.

In the third quarter, the share of the French site's revenues based on X-FAB technologies amounted to 17%.

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X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

Prototyping revenues of the third quarter totaled at USD 16.0 million, down 7% year-on-year and up 3% quarter-on-quarter.

While bookings remained relatively weak over the first two months of the third quarter, there was a strong pick up towards the end of the reporting period with half of the quarterly order entries booked in September, mainly coming from automotive customers. Overall, bookings were at USD 111.6 million, up 12% quarter-on- quarter and down 8% year-on-year.

Operations update

The various safety measures implemented at all locations in response to the COVID-19 pandemic helped to ensure the health and well-being of X-FAB's employees in the third quarter and will be pursued going forward contributing to the continuity of production.

In response to the low utilization levels and as part of X-FAB'scost-saving initiatives, X-FAB's manufacturing facilities were temporarily shut down in July. While this was initially planned to take place later in the third quarter, X-FAB brought those fab shutdowns forward, following a cyber attack at the beginning of July. After all the systems were successfully restored and production was resumed, all sites were in position to execute all orders received and catch up on any delays. At the same time, X-FAB has also taken measures to upgrade its cyber security across the Group.

The silicon carbide (SiC) business recorded quarterly revenues of USD 5.2 million, which is a 20% decline year-on-year, essentially due to the impact from the COVID-19 slowdown on the global economy but also in light of a strong comparative quarter. This is mainly reflected in the fall of SiC production revenues down

56% compared to the same quarter last year, whereas the SiC prototyping revenues recorded a growth of 42% year-on-year. The pipeline of new projects remains strong with existing customers constantly expanding their portfolio of offerings. In addition, X-FAB won a new customer for its SiC business bringing the total up to

22. The process of qualifying X-FAB'sin-house SiC epitaxy line with various customers keeps progressing well with additional customers having initiated this process during the quarter.

Quarterly capital expenditures amounted to USD 6.8 million, down 64% year-on-year.

Financial update

Despite the decline in quarterly revenues, the EBITDA of the third quarter amounted to USD 4.7 million with an EBITDA margin of 4.9%, exceeding the guided 0-4%. This is mainly attributable to X-FAB's ongoing cost- saving initiatives with a variety of cost reduction measures related to staff, travel, electricity and raw materials. The use of short-time work schemes in France and Germany has been a major contributor to savings during the quarter.

The inventory of unfinished and finished goods decreased by USD 0.5 million, which had a negative impact on profitability for the third quarter.

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X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

Cash and cash equivalents at the end of the quarter were at USD 179.7 million, down 7% versus the end of the previous quarter, which is primarily due to the drop in revenues.

X-FAB is well on track to achieve a natural currency hedging of its business thanks to the continued efforts to increase the share of Euro-denominated sales. In the third quarter, the share of Euro-denominated sales reached 35%. X-FAB aims to further increase the Euro share of sales to limit the impact of exchange rate fluctuations on its profitability.

The actual US-Dollar/Euro exchange rate for the third quarter of 2020 was 1.17 leading to an EBITDA margin of 4.9%. At a constant exchange rate of 1.11, as experienced in the third quarter of last year, the EBITDA margin would have been 5.8%.

Management comments & outlook

Rudi De Winter, CEO of X-FAB Group, said: "While in line with expectations, the third quarter was exceptionally weak in terms of revenues; however, I am confident that we have clearly passed the lowest point. The continued efforts to improve the cost structure across the group resulted in a better than planned EBITDA and is at a satisfactory level going forward. While uncertainties remain high, in particular due to the COVID-19 pandemic and its impact on the global economy, we do see strong positive signs. Bookings have been recovering significantly since September, mainly attributable to the automotive business indicating that customers in this segment are returning to normal order patterns. While remaining cautious going forward, it remains our top priority to ensure that we meet the supply of our customers and the increased demand of the market. Besides the general recovery of our main market automotive, I am very excited about the opportunities in the medical segment driven by the point-of-care diagnostics as well as lab-on-a-chip applications, and also the silicon carbide business to support the ongoing electrification in cars and other equipment."

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X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

X-FAB Quarterly Conference Call

X-FAB's third quarter results will be discussed in a live conference call on Tuesday, October 27, 2020, at

6.30 p.m. CET. The conference call will be in English. Please register in advance of the conference using the following link: http://emea.directeventreg.com/registration/8513379.

Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and a unique registrant ID. In the 10 minutes prior to the call, you will need to use the conference access information provided in the email received at the point of registering.

The conference call will be available for replay from October 27, 2020, 11.30 p.m. CET until November 3, 2020, 11.30 p.m. CET. The replay number will be [phone], conference ID 8513379.

The fourth quarter 2020 results will be communicated on February 11, 2021.

About X-FAB

X-FAB is the leading analog/mixed-signal and MEMS foundry group manufacturing silicon wafers for automotive, industrial, consumer, medical and other applications. Its customers worldwide benefit from the highest quality standards, manufacturing excellence and innovative solutions by using X-FAB's modular CMOS processes in geometries ranging from 1.0 to 0.13 µm, and its special silicon carbide and MEMS long- lifetime processes. X-FAB'sanalog-digital integrated circuits (mixed-signal ICs), sensors and micro-electromechanical systems (MEMS) are manufactured at six production facilities in Germany, France, Malaysia and the U.S. X-FAB employs about 3,800 people worldwide.

For more information, please visit www.xfab.com.

X-FAB Press Contact

Uta Steinbrecher

Investor Relations X-FAB Silicon Foundries [phone]

Forward-looking information

This press release may include forward-looking statements. Forward-looking statements are statements regarding or based upon our management's current intentions, beliefs or expectations relating to, among other things, X-FAB's future results of operations, financial condition, liquidity, prospects, growth, strategies or developments in the industry in which we operate. By their nature, forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results or future events to differ materially from those expressed or implied thereby. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein.

Forward-looking statements contained in this press release regarding trends or current activities should not be taken as a report that such trends or activities will continue in the future. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless legally required. You should not place undue reliance on any such forward-looking statements, which speak only as of the date of this press release.

The information contained in this press release is subject to change without notice. No re-report or warranty, express or implied, is made as to the fairness, accuracy, reasonableness or completeness of the information contained herein and no reliance should be placed on it.

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X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

Condensed Consolidated Statement of Profit and Loss

	in thousands of USD			Quarter				Quarter			Quarter				Nine months			Nine months
				ended				ended			ended				ended			ended
				30 Sep 2020				30 Sep 2019			30 Jun 2020				30 Sep 2020			30 Sep 2019
				unaudited				unaudited			unaudited				unaudited			unaudited
Revenue		96,085		130,462	118,756		341,735	393,027
	Revenues in USD in %		65		73	67		68	75
	Revenues in EUR in %		35		27	32		32	25
Cost of sales		-97,233		-118,960	-107,942		-317,594	-361,425
	Gross Profit			-1,148			11,503			10,814			24,141			31,602
Gross Profit margin in %		-2.0		8.8	9.1		6.8	8.0
Research and development expenses		-5,462		-8,055	-5,891		-17,253	-21,683
Selling expenses		-1,798		-2,013	-2,118		-5,928	-6,016
General and administrative expenses		-6,897		-7,248	-6,992		-21,544	-22,811
Rental income and expenses from investment		765		-110	183		988	-297
properties
Other income and other expenses		583		-199	1,210		1,359	-2,775
	Operating profit			-13,957			-6,122			-2,794			-18,238			-21,980
Finance income		4,262		3,145	3,410		11,171	10,106
Finance costs		-3,240		-3,851	-5,260		-16,935	-11,437
Net financial result		1,022		-706	-1,850		-5,764	-1,331
	Profit before tax			-12,935			-6,828			-4,644			-24,002			-23,311
Income tax		5		-1,361	-1,243		-1,540	-3,323
	Profit for the period			-12,930			-8,189			-5,887			-25,541			-26,634
Operating profit (EBIT)		-13,957		-6,122	-2,794		-18,238	-21,980
Depreciation		18,700		18,807	18,657		56,188	52,956
	EBITDA			4,743			12,685			15,863			37,950			30,976
EBITDA margin in %		4.9			9.7	13.4			11.1	7.9
	Earnings per share at the end of period			-0,10			-0,06			-0,05			-0,20			-0,20
Weighted average number of shares		130,631,921		130,631,921	130,631,921		130,631,921	130,631,921
EUR/USD average exchange rate		1.16732		1.11236	1.10006			1.12418	1.12398

Amounts in the financial tables provided in this press release are rounded to the nearest thousand except when otherwise indicated, rounding differences may occur.

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X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

Condensed Consolidated Statement of Financial Position

in thousands of USD	Quarter ended		Quarter ended	Year ended
	30 Sep 2020		30 Sep 2019	31 Dec 2019
	unaudited		unaudited	audited
ASSETS
Non-current assets
Property, plant, and equipment	337,130		369,115	368,754
Investment properties	8,701		9,231	9,128
Intangible assets	4,747		8,355	8,363
Non-current investments	0		741	736
Other non-current assets	4,712		29,327	27,568
Deferred tax assets	33,103		34,397	33,922
Total non-current assets	388,393		451,166	448,471
Current assets
Inventories	160,088		153,026	154,649
Trade and other receivables	51,274		63,670	55,636
Other assets	35,285		23,475	34,429
Cash and cash equivalents	179,662		189,250	173,211
Total current assets	426,309		429,421	417,925
TOTAL ASSETS	814,702		880,587	866,397
EQUITY AND LIABILITIES
Equity
Share capital	432,745		432,745	432,745
Share premium	348,709		348,709	348,709
Retained earnings	-159,743		-112,183	-133,835
Cumulative translation adjustment	-715		-496	-445
Treasury shares	-770		-770	-770
Total equity attributable to equity holders of the parent	620,225		668,005	646,403
Non-controlling interests	356		377	377
Total equity	620,581		668,382	646,781
Non-current liabilities
Non-current loans and borrowings	76,860		93,381	92,389
Other non-current liabilities and provisions	7,409		7,435	7,407
Total non-current liabilities	84,269		100,816	99,795
Current liabilities
Trade payables	20,376		25,929	38,327
Current loans and borrowings	29,381		30,651	26,658
Other current liabilities and provisions	60,094		54,809	54,835
Total current liabilities	109,852		111,389	119,821
TOTAL EQUITY AND LIABILITIES	814,702		880,587	866,397

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X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

Condensed Consolidated Statement of Cash Flow

in thousands of USD

Income before taxes

Reconciliation of net income to cash flow arising from operating activities:

Depreciation and amortization, before effect of grants and subsidies

Recognized investment grants and subsidies netted with depreciation and amortization

Interest income and expenses (net)

Loss/(gain) on the sale of plant, property, and equipment (net)

Loss/(gain) on the change in fair value of derivatives (net) and financial assets (net)

Other non-cash transactions (net)

Changes in working capital:

Decrease/(increase) of trade receivables

Decrease/(increase) of other receivables & prepaid expenses

Decrease/(increase) of inventories (Decrease)/increase of trade payables (Decrease)/increase of other liabilities

Income taxes (paid)/received

Cash Flow from operating activities

Cash Flow from investing activities:

Payments for property, plant, equipment & intangible assets

Payments for investments

Proceeds from sale of financial assets Acquisition of subsidiary, net of cash acquired

Payments for loan investments to related parties

Proceeds from loan investments related parties

Proceeds from sale of property, plant, and equipment

Interest received

Cash Flow used in investing activities

Quarter		Quarter			Quarter				Nine months			Nine months
ended		ended			ended				ended			ended
30 Sep 2020		30 Sep 2019			30 Jun 2020				30 Sep 2020			30 Sep 2019
unaudited		unaudited			unaudited				unaudited			unaudited
-13,685		-6,828		-4,644		-24,752		-23,311
9,974		19,154		18,427		54,623		52,794
18,700		18,807		18,657		56,188		52,956
-852		-712		-851		-2,603		-2,199
348		382		1,114		1,980		1,224
-270		0		-34		-584		6
0		-35		0		-420		-360
-7,953		713		-458		63		1,167
1,897		3,510		16,687		12,929		-21,399
-2,663		-763		15,547		3,954		7,978
4,800		-1,848		3,107		20,077		-12,940
5,928		4,933		-4,984		-4,692		-5,875
-7,082		2,480		-4,950		-15,581		-8,383
914		-1,293		7,967		9,172		-2,178
-113		-157		-92		-833		-667
-1,926		15,679		30,379			41,969			7,417
-6,756		-18,600		-7,492		-23,849		-63,356
0		0		0		0		-350
0		0		0		1,156		0
0		0		0		0		0
-34		-63		-42		-172		-223
40		44		51		154		177
1,208		0		40		1,526		40
436		672		475		1,406		1,959
-5,105		-17,947		-6,967			-19,780			-61,753

Continues on next page

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X-FABSilicon Foundries SE | Press Release October 27, 2020 | Regulated Information

Condensed Consolidated Statement of Cash Flow - con't

in thousands of USD

Cash Flow from (used in) financing activities:

Proceeds from loans and borrowings Repayment of loans and borrowings Receipts from sale & leaseback arrangements Payments of lease installments

Receipt of government grants and subsidies Interest paid

Gross proceeds from capital increase Direct cost related to capital increase Payment of preference dividend Distribution to non-controlling interests

Cash Flow from (used in) financing activities

Effect of changes in foreign currency exchange rates on cash

Increase/(decrease) of cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

		Quarter			Quarter				Quarter			Nine months			Nine months
		ended			ended				ended			ended			ended
		30 Sep 2020			30 Sep 2019				30 Jun 2020			30 Sep 2020			30 Sep 2019
		unaudited			unaudited				unaudited			unaudited			unaudited
	-266	24,706		8,813		8,547	24,706
	-7,781	-7,329		-6,547		-20,718	-21,913
	0	1,181		0	0	1,181
	-1,390	-1,311		-1,453		-4,201	-4,086
	0	6,300		0	696	6,300
	-185	-383		-260		-627	-1,194
	0	0		0	0	0
	0	0		0	0	0
	0	0		0	0	0
	0	0		0	-12	-11
		-9,622			23,162			553			-16,315			4,983
	4,679	-2,877		1,084		577	-4,165
	-16,654	20,895		23,965		5,874	-49,353
	191,636	171,232		166,587		173,211	242,768
		179,662			189,250			191,636			179,662			189,250

###

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