VAT Group Capital Markets Day 2020: Positive guidance for FY 2020 confirmed – 2025 financial targets set Mittwoch, 02. Dezember 2020 - 07:00

• VAT confirms superior performance in 2020 with around 20% net sales growth to CHF 680 million and an EBITDA margin of over 30%
• Four strategic priorities set to accelerate future growth:
  • Market share gains in our core valve business
  • Growing Service business by leveraging the increasing installed base of valves and introduction of new products
  • Harnessing favourable organic adjacencies within the seminconductor sector & introduction of a next generation digital platform “Connected VAT”
  • Diversification and expansion of operational footprint to improve customer proximity and cost base
• 2025 financial targets of expected sales of about CHF 1.1 billion and an EBITDA band of 30-35% over the cycle

At today’s Capital Markets Day of VAT, Mike Allison, CEO of VAT said: “VAT is the undisputed global leader in the strongly growing vacuum valves business. This is such an exciting time for us as a company, we are at the epicenter of megatrends such as digitalization which will drive our long-term growth across all business segments. Additionally, we are taking steps to accelerate the business development by creating adjacent growth options and the transformation of our operational footprint will bring us closer to our customers as well as improving profitability. Our strategic plan and clear priorities will allow us to meet or exceed the ambitious financial targets we have outlined up to the financial year 2025. VAT is well positioned for long-term success and to deliver outstanding value for all stakeholders over the next five years.”

Leader in a growing industry

VAT has an unrivaled market share position of about 50% in high-end vacuum valves across all industries and even 70% in the semiconductor area. It is about 8x larger than the closest competitor and VAT’s share increases with application complexity such as the progression to smaller transistor sizes. VAT is at the center of the Internet of Things, cloud computing and storage, artificial intelligence and many other global digitalization trends which will drive a doubling of silicon chip demand in the next ten years. The growth of semiconductors is leading to strongly increasing demand for vacuum valves. VAT expects the silicon chip market to grow at 8% CAGR over the next five years to about USD 650 billion and to more than USD 1 trillion by the end of the decade.

Strategic priorities to secure sustainable future growth of VAT

VAT has a strong track record of financial excellence since th IPO in 2016. The Company delivered 10.5% growth CAGR and a strong EBITDA performance of 27-31% over the cycle. VAT has now set four strategic priorities to continue its growth and to further improve profitability over the next five years:

1. Gain market share in core valves business: The focus on innovation and continuously high levels of R&D investments, even through the recent downturn, are driving VAT’s specification wins. Coupled with a fast track development process for VAT’s customers and the growing and diversifying operational footprint, VAT has the scale to be the preferred partner of choice for the semiconductor industry. As the customers continue to move to the next generation process tools, VAT will increase its market share by at least 10%.

2. Grow the service business: VAT has the largest network of repair centers plus a new portfolio of upgrade products which will drive very strong market share gains and maintain strong profitability in this business. The increasing installed base of valves creates a unique opportunity for VAT’s growth of more than 9% CAGR in this segment by 2025.

3. Harness close valve adjacencies and new digital platform “Connected VAT”: VAT continues to develop new growth options and will expand its focus on close organic adjacencies without deflecting activities on the core business. VAT has identified three key areas to develop: motion components, advanced modules and upstream valves. VAT is expecting to add around CHF 140 million of revenues within five years through these organic adjacencies.

In a second step, VAT creates a new digital framework called “Connected VAT”. VAT will add sensors and analytics to future VAT valve products and adjacencies to allow connectivity between them and to provide stronger solutions for customers. Connected VAT will support the addition of dignostics, sensors and new differentiating technology and further fuels the transition to a digital future.

4. Improve operational footprint: VAT Switzerland will remain the backbone of its operational footprint while future growth is targeted at its expanded facility in Malaysia. This improves customer proximity, business continuity plans and our overall cost basis. Transforming its supply chain and factory footprint will increase best cost country operations from less than 20% today to over 50% by 2025. This will also help mitigate the challenges that a strong Swiss Franc presents.

FY 2025 financial targets

VAT also gave an update in its financial guidance for the period between 2020 and 2025. Over this five year period, VAT expects the following1:

• High single digit sales growth over the cycle
• EBITDA margin corridor of 30-35% of sales
• Free cash flow conversion rate of 60-65% of EBITDA
• Return on invested capital (ROIC) of over 40%
• Capex remains 4-5% of sales
• R&D spending of 5-6% of sales
• Dividend pay out of up to 100% of free cash flow as long as the leverage is 1x net debt to EBITDA

1 Guidance assumes an USD/CHF exchange rate of 0.9:1 and an unchanged scope of consolidation

Additional information

VAT’s Capital Markets Day can be followed via a live webcast or via phone (+41 58 310 50 00) starting at 1pm CET. The presentations are available from 12.00pm CET on www.vatvalve.com. A playback of the webcast can be accessed through our website approximately 24 hours after the webcast has finished.

In case of any difficulties with pre-registration, participants may dial one of the following numbers:

+41 58 310 50 00 (CH/Europe)

+44 207 107 06 13 (UK)

+1 631 570 56 13 (USA)

For further information please contact:

VAT Group AG

Communications & Investor Relations

Michel R. Gerber

T +41 81 772 42 55

investors@vat.ch

Financial calendar 2021