X-FAB First Quarter 2021 Results

Regulatory News:

X-FAB (Paris:XFAB)

Highlights Q1 2021:

› Revenue was USD 155.4 million, clearly exceeding the initial guidance of USD 145-152 million, up 22% year-on-year (YoY) and up 14% quarter-on-quarter (QoQ)

› Record quarterly bookings at USD 210.9 million, up 42% YoY and up 11% QoQ

› EBITDA margin of 22.9%, clearly above the 16-20% guidance

› EBITDA was USD 35.6 million, up 105% YoY and up 58% QoQ

› EBIT was USD 17.0 million, up USD 18.5 million YoY and up USD 13.4 million QoQ

Outlook:

› Q2 2021 revenue is expected in the range of USD 154-160 million with an EBITDA margin in the range of 17-21%.

› Based on projects in the pipeline, the strong demand and the backlog accumulated over the past two quarters, revenue guidance for the full year is raised to USD 610-630 million with an EBITDA margin in the range of 18-21%

› The guidance is based on an average exchange rate of 1.2 USD/Euro.

Revenue breakdown per quarter:

¹ Consumer, Communications & Computer

Business development

In the first quarter of 2021, X-FAB achieved revenues amounting to USD 155.4 million, clearly exceeding the guided USD 145-152 million. Revenues were up 22% year-on-year and up 14% quarter-on-quarter.

Business developed positively with strong double-digit growth across all X-FAB’s key end markets. Revenues of the automotive, industrial and medical businesses totaled USD 124.6 million, up 29% year-on-year and up 19% quarter-on-quarter. X-FAB’s core business represented a share of 80% of the first quarter revenues.

Bookings remained at a high level throughout the first quarter setting a new quarterly record of USD 210.9 million. This is an increase of 42% year-on-year and 11% quarter-on-quarter.

Prototyping and production revenue per quarter and end market:

X-FAB’s business development in the first quarter continued to be driven by the ongoing recovery after the COVID-19 related fall during the summer months of 2020 but also the introduction of new business. Automotive revenues recorded an all-time high at USD 83.5 million. The industrial business increased the strongest and was up 46% year-on-year. While X-FAB’s medical business was up 33% year-on-year, it decreased by 28% on a quarter-on-quarter basis due to the exceptionally strong fourth quarter 2020.

In the first quarter, X-FAB’s CCC (consumer, communications & computer) business recorded a 3% increase year-on-year and slightly decreased quarter-on-quarter. While the CCC legacy business that is being produced at X-FAB France has been stable, the share of the French site’s revenues based on X-FAB technologies increased to 18%.

Due to the massive demand, most of X-FAB’s factories are operating at high utilization levels and production capacity has had to be tightly allocated to customers. Considering the increased order lead time (increased time for orders to go into production and cycle time for the production process of a wafer) customers have been submitting orders earlier than usual and in higher volumes. X-FAB is making every effort to ensure its customers’ supply that is absolutely necessary and is working closely with customers to move business to X-FAB France, where spare capacity is available. This will also increase the share of X-FAB France’s revenues based on X-FAB technologies.

The accumulated backlog will contribute positively to business growth over the coming quarters, even after the current peak in demand ends and when bookings return to normal levels.

In the first quarter, prototyping revenues came in at USD 18.9 million. This is a 35% year-on-year increase, mainly driven by industrial market projects as well as CCC development projects for the Asian region. Prototyping revenues were down 15% quarter-on-quarter due to a particularly strong fourth quarter last year related to high activities of a major medical customer preparing for volume launch.

Operations update

Throughout the first quarter and in light of exceptional demand, X-FAB’s top priority was to ensure a reliable supply to its customers. With X-FAB’s factories mostly running at full capacity, all activities were directed at execution excellence, while continuing to drive productivity up and increase wafer output. Additionally, X-FAB qualified further 180nm automotive technology options in X-FAB France offering an alternative to customers limited by capacity allocations at the manufacturing site in Malaysia, X-FAB Sarawak.

The measures in place to ensure the health and well-being of X-FAB’s employees during the COVID-19 pandemic helped to prevent any disruptions of X-FAB’s operations in the first quarter and X-FAB will continue its efforts to ensure strict compliance to the regulations going forward, ultimately contributing to the continuity of production.

In the first quarter, X-FAB’s silicon carbide (SiC) activities gained momentum, as reflected by the strong increase in bookings. SiC order intake went up 47% year-on-year and 21% quarter-on-quarter. Quarterly SiC revenues came in at USD 6.1 million, up 35% year-on-year. Compared to the previous quarter, SiC revenues recorded a fall of 3%, mainly due to the impacts of a severe winter storm which hit Texas in February and caused two weeks of lost production. In the course of the first quarter, two additional customers started volume production, bringing their number up to ten out of a total of 23 SiC customers.

Capital expenditures in the first quarter amounted to USD 9.7 million, which is about the same level as in the first quarter last year. In response to the strong demand, X-FAB has kicked off new investments during the first quarter, which are expected to start having an impact in the fourth quarter of 2021.

Financial update

First quarter EBITDA was USD 35.6 million with an EBITDA margin of 22.9%, exceeding the guided 16-20%. This is mainly attributable to the persistently strong demand and the corresponding revenue increase, while X-FAB’s cost-saving program initiated in 2019 and intensified in 2020 after the COVID-19 pandemic also had a positive impact.

The inventory of unfinished and finished goods increased by USD 1.6 million, contributing positively to first quarter profitability.

Cash and cash equivalents at the end of Q1 were at USD 195.8 million, a decline of 5% against the end of the previous quarter as X-FAB had not used any external funding in the first quarter.

X-FAB continued to actively increase the share of Euro-denominated sales in order to limit the impact of exchange rate fluctuations on profitability and to ensure a natural hedging of the business. In the first quarter, the share of Euro-denominated sales amounted to 33%. With approximately 40% of its costs incurred in Euro, X-FAB intends to further increase the share of Euro-denominated sales to a similar level.

The actual US-Dollar/Euro exchange rate for the first quarter of 2021 was 1.21 leading to an EBITDA margin of 22.9%. At a constant exchange rate of 1.10, as experienced in the first quarter of last year, the EBITDA margin would have been 23.9%.

Management comments & outlook

Rudi De Winter, CEO of X-FAB Group, said: “We are experiencing an unprecedented period of exceptional demand, not only driven by the recovery after the past year’s demand weakness but also boosted by the launch of new products and the acquisition of new customers. It is great to see the strength of our business across all markets, but it is also a challenge to cope with the strong order intake exceeding the volumes which can be delivered in the short term. We are therefore working closely with our customers to ensure they receive the quantities required to secure their supply chains. Execution excellence is of essence and we are working on maximizing the production output across all sites. At the same time, I am very glad about the availability of our much sought after 180nm automotive high-voltage platform at X-FAB France. This offers our customers a genuine alternative and the chance to escape the tight supply out of our site in Malaysia.”

X-FAB Quarterly Conference Call

X-FAB’s first quarter results will be discussed in a live conference call on Thursday, April 29, 2021, 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/2592869.

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 April 29, 2021, 11.30 p.m. CET until May 6, 2021, 11.30 p.m. CET. The replay number will be +44 (0) 3333009785, conference ID 2592869.

The second quarter 2021 results will be communicated on July 29, 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’s analog-digital integrated circuits (mixed-signal ICs), sensors and micro-electro-mechanical 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.

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.

Condensed Consolidated Statement of Profit and Loss

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

Condensed Consolidated Statement of Financial Position

Condensed Consolidated Statement of Cash Flow

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Condensed Consolidated Statement of Cash Flow – con’t

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