ams-reports-record-results-for-full-year-2019

ams reports record results for full year 2019, revenues up 32% year-on-year;

2020/02/11

Selected financial information for the fourth quarter and full year 2019

German version

Financial information FY 2019

FY 2019

(PR title cont'd) ... record fourth quarter revenues of USD 655 million, above guidance range with strong operating profitability,acquisition of OSRAM on track; expected first quarter revenues of USD 480-520 million, up 28% year-on-year, showing less pronounced seasonality


Premstaetten, Austria (11 February 2020) -- ams (SIX: AMS), a leading worldwide supplier of high performance sensor solutions, reports record revenues and results for full year 2019, with revenues up 32% year-on-year, and fourth quarter revenues exceeding expectations with strong adjusted operating profitability. Full year 2019 revenues grew significantly to USD 2,085.9 million as fourth quarter revenues reached USD 655.3 million, above the previous guidance range. This growth was particularly driven by ams’ consumer business including 3D sensing and advanced light sensing in the second half of 2019. ams saw continued strength in the fourth quarter given healthy consumer demand and very good operational performance. Reflecting less pronounced first quarter consumer market seasonality as well as revenue deconsolidation and assuming no meaningful negative impact from coronavirus infections, ams expects first quarter 2020 revenues of USD 480-520 million with significantly improved profitability year-on-year.

Group revenues for 2019 of USD 2,085.9 million grew by 32% from USD 1,578.1 million in 2018 while revenues for the fourth quarter 2019 of USD 655.3 million were up 2% sequentially compared to the third quarter and up 38% from USD 476.5 million in the same quarter 2018. Adjusted gross margin for 2019 was 41% while adjusted gross margin for the fourth quarter 2019 was 45% (excluding acquisition-related and share-based compensation costs), compared to 32% and 35% respectively in 2018 (excluding acquisition-related, one-time restructuring and share-based compensation costs). IFRS reported gross margin for 2019 was 38% and for the fourth quarter 2019 was 42% (including the abovementioned costs), compared to 27% and 39% respectively in 2018 (including the respective abovementioned costs).

The adjusted result from operations (EBIT) for 2019 was USD 433.4 million or 21% of revenues and the adjusted result from operations (EBIT) for the fourth quarter 2019 was USD 184.3 million or 28% of revenues (excluding acquisition-related and share-based compensation costs), compared to USD 141.2 million or 9% for 2018 and USD 60.1 million or 13% for the fourth quarter 2018 (excluding acquisition-related, one-time restructuring and share-based compensation costs) (including these adjustments USD 363.7 million or 17% of revenues for 2019 and USD 200.9 million or 31% of revenues for the fourth quarter 2019, compared to USD 14.3 million for 2018 and USD 8.6 million for the fourth quarter 2018).

Adjusted net income for 2019 was USD 331.6 million while adjusted net income for the fourth quarter 2019 was USD 158.9 million, compared to USD 11.8 million for 2018 and USD 1.6 million for the fourth quarter 2018 (excluding valuation effect of option element of foreign currency convertible bond) (including valuation effect USD 331.7 million for 2019 and USD 159.1 million for fourth quarter 2019). Adjusted basic/diluted earnings per share for 2019 were CHF 4.15/4.05 or USD 4.13/4.03 based on 80,261,853/81,864,338 shares (weighted average; including valuation effect CHF 4.15/4.05 or USD 4.13/4.03; 2018: CHF 0.15/0.14 or USD 0.14/0.13 based on 81,836,472/88,509,392 shares, weighted average). Adjusted basic/diluted earnings per share for the fourth quarter were CHF 1.94/1.76 or USD 1.96/1.78 based on 81,104,760/86,007,105 shares (weighted average; including valuation effect CHF 1.94/1.77 or USD 1.96/1.78; 2018: CHF 0.02/0.02 or USD 0.02/0.02 based on 81,944,770/87,259,562 shares, weighted average).

Operating cash flow for 2019 was USD 714.4 million, significantly up from USD 349.0 million for 2018, while fourth quarter 2019 operating cash flow was USD 273.5 million. Net debt amounted to USD 1,750.1 million on 31 December 2019 (including effects from OSRAM share purchases, year-end 2018: USD 1,320.9 million). This corresponds to a leverage of 1.3x net debt/EBITDA (excluding effects from OSRAM share purchases) at year-end 2019, significantly down from 5.3x at year-end 2018 and fully in line with ams’ previous expectation of a year-end 2019 maximum of 1.5x. Cash and cash equivalents were USD 553.7 million on 31 December 2019, compared to USD 691.7 million at year-end 2018. Capital expenditures for 2019 decreased strongly to USD 200.9 million from USD 456.9 million for 2018, fully in-line with expectations. Total backlog on 31 December 2019, excluding consignment stock agreements, was USD 265.1 million compared to USD 251.6 million on 30 September 2019 and USD 322.9 million at year-end 2018. 2019 backlog figures include ongoing higher levels of customer-driven intra-quarter business compared to historic values while 2018 figure is not fully comparable due to a narrower backlog definition since 2019.

In December 2019 ams was successful with an all-cash public tender offer for OSRAM Licht AG (“OSRAM”). ams pursues the acquisition of OSRAM as a highly compelling and complementary strategic transaction with the aim to create a global leader in sensor solutions and photonics. The combination of ams and OSRAM will bring together two leaders in optical technologies that will jointly be able to offer market-leading coverage of light emitting technologies, light detecting and sensing, optics, as well as related hardware, software and algorithms. This will create a compelling technology platform and a stronger combined company to benefit all stakeholders. In October 2019, ams became the largest shareholder of OSRAM with a shareholding of 19.99% and on that basis launched the successful public tender offer for OSRAM in November 2019. To refinance part the acquisition financing, ams’ Extraordinary General Meeting (EGM) on 24 January 2020 approved a capital increase in form of a rights issue of up to EUR 1.649bn which ams expects to implement in a timely manner. ams is in the process of attaining required merger control clearances for the transaction and currently expects the transaction to close in the second quarter 2020 subject to receipt of these required clearances. In addition, ams yesterday announced the firm intention to pursue a Domination and Profit and Loss Transfer Agreement with OSRAM to accelerate implementation of the companies’ joint strategic vision. ams will announce further developments related to the transaction in due course.

ams’ business showed a very positive performance for the year 2019 which was concluded by a strong fourth quarter with excellent results. Very good demand for consumer solutions enabled ams to achieve record results for 2019 despite a rather subdued market situation in ams’ non-consumer end markets.

ams’ consumer business is a global leader in advanced sensor solutions for smartphones and consumer devices and was again the company’s key growth driver last year. ams‘ consumer business also provided the largest contribution to the results of the fourth quarter.

Leading in optical sensing, ams offers a broad portfolio of high performance solutions for 3D sensing including VCSEL-based illumination and NIR image sensing, advanced display management including behind-OLED sensing, ultra-compact proximity sensing, spectral and bio-sensing, and other optical applications. ams continued to drive innovation in optical technologies last year and introduced significant new technologies to the market. ams is a leader in 3D sensing technology serving an increasing range of consumer 3D applications and implementations. ams’ broad 3D sensing portfolio and system expertise supports all three approaches, structured light (SL), time-of-flight (ToF), and active stereo vision (ASV), for front-facing and world-facing applications. ams’ advanced high power VCSELs, its optics competencies and its unequaled hard- and software portfolio enabling broad system capabilities are driving ams’ market and technology position in 3D sensing.

Last year, ams shipped very substantial volumes of 3D sensing solutions to leading smartphone OEMs globally and expanded its position in the Android market. ams currently supplies high quality 3D sensing illumination in all technologies SL, ToF and ASV serving different customer needs. ams’ differentiated VCSEL technology is recognized in the market for its excellent 3D sensing performance. As a result and supported by ams’ 3D system know-how, ams has built an attractive market position in high value VCSEL solutions for consumer 3D sensing. A key development in 2019 was the introduction of world-facing iToF systems in smartphones, driving strong volumes of ams VCSEL 3D illumination solutions for world-facing iToF. These iToF systems enable camera enhancement features for better picture quality which are highly successful with consumers. Based on design-wins, ams expects customer adoption of these world-facing features to continue in 2020.

ams helped introduce the ASV 3D technology last year and is shipping into a first smartphone implementation of front-facing ASV. ASV offers high 3D performance including support for payment security at lower system complexity and total system cost. ams therefore expects ASV to establish a significant market position in 3D applications going forward as well as beyond mobile devices. ams is seeing additional positive market feedback for the technology including OEM interest in ASV implementations for the industrial and computing markets. Last summer, ams announced a partnership with image sensor specialist SmartSens for near-infrared (NIR) image sensing with high quantum efficiency (QE) which enables advanced optical performance. ams recently presented first ASV system implementations with NIR sensors incorporating ams IP. The systems combine ams illumination, sensing, software and biometrics into fully integrated ams 3D solutions demonstrating ams’ unequaled system capabilities and portfolio in 3D sensing.

In addition, ams expects dToF 3D technology to play an important role going forward as 3D sensing applications continue to evolve. dToF offers strong performance across challenging lighting conditions and for longer distances of several meters. dToF is therefore a very attractive technology but technically highly demanding. ams’ development efforts are progressing well for a high performance full dToF 3D system combining ams illumination and sensing into a high value solution. At the same time, OEM interest is accelerating in this promising area. Validating industrial use cases, market interest in industrial access 3D applications is growing while ams is working with a global OEM for an industrial ASV design-win in a household device. Additionally, ams introduced a highly accurate long-distance 1D ToF solution for precise distance capture last year. The solution quickly gained a first design-win for laser detect autofocus (LDAF) in a high volume smartphone platform with planned launch this year.

Based on its broad 3D sensing portfolio ams is able to cover different and evolving customer needs and roadmaps across all technologies, regardless of whether SL, iToF, dToF or ASV is the preferred customer approach.

In other optical sensing, ams underscored its market leading position in display management for high performance ambient light and proximity sensing. ams introduced a significant innovation in 2019 allowing OEMs to move high performance proximity and light sensing invisibly behind OLED displays (BOLED). The unmatched BOLED technology saw very strong market success last year as OEMs are keen to pursue maximized screen-to-body ratio and bezel-less phone designs. Adoption expanded quickly with ams BOLED solutions already shipping in a broad range of high volume Android smartphone and mobile device platforms. With further designs won, the ability to remove bezel-placed elements from the device front is expected to drive further adoption of BOLED solutions across leading consumer OEMs. Looking across technologies, ams is shipping an extensive range of high volume display management solutions to a broad base of consumer OEMs.

Leveraging its unmatched BOLED capabilities for 3D sensing, ams expects to be able to move front-facing 3D sensing for face authentication invisibly behind the display. Development is progressing well and ams now expects to demonstrate a BOLED ASV full 3D system solution within six months. The solution combines VCSEL illumination, NIR sensing, software and algorithms from ams and based on ams IP, showcasing ams unmatched portfolio for a full 3D system offering. Helping OEMs reduce visible components on the device front, ams expects 3D BOLED technology to drive attractive new opportunities in consumer devices.

Significant R&D activities for new and future optical sensing, 3D sensing and VCSEL illumination continued through 2019. Leveraging spectral sensing technology, ams introduced an innovative solution for extremely accurate automatic white balancing in smartphone cameras using lower resolution spectral sensing. Correct white balancing plays an essential role in photography to realize best picture quality and color expression. Through detailed spectrum analysis of the light environment the solution offers previously impossible white balancing accuracy that approaches professional grade. ams thus enables significantly higher picture quality and vivid natural colors for mobile devices. As a result, ams won a first design for a high end smartphone platform to be launched in 2020. ams additionally started shipping newly introduced flicker detection sensors in high volume last year that improve picture quality by detecting artificial light flicker and see growing adoption at Android OEMs. ams remains engaged with OEMs for its personal health optical sensing solution that measures blood pressure and additional data at outstanding accuracy and provides high quality personal health information.

ams’ audio sensing and other consumer product lines shipped in high volume to a range of OEMs with attractive contributions to 2019 results. MEMS microphone interfaces where ams has been a market leader showed a positive business development again last year. In December 2019, ams announced and closed the divestment of its MEMS microphone interface IC assets including related IP to Knowles Corporation, a long-time customer of ams, for USD 58 million in cash. This portfolio alignment supports ams’ continuing focus on sensor solutions. ams is a leader in active noise cancellation for the growing ear- and headphone market serving accessory and device OEMs. Last year ams introduced an industry-first solution for high quality digital noise cancelling in loose-fit true wireless earbuds which has since gained a first design win with a large consumer OEM.

ams’ automotive, industrial, and medical businesses showed an overall muted performance in 2019 reflecting a difficult automotive and industrial market environment during the year. Focused on high value sensing solutions, ams benefited from its diversified range of non-consumer end markets and continued to drive innovation as a leading supplier. In the fourth quarter, however, the automotive, industrial and medical businesses recorded a more positive revenue trend.

ams’ automotive business achieved solid results last year despite a generally weakened demand situation in the automotive market worldwide. Demand trends turned increasingly muted across regions in 2019, resulting in a subdued market environment. Focused on safety, driver assistance/autonomous driving, position sensing, and chassis control with a wide spectrum of sensing solutions, ams’ automotive portfolio serves a range of Tier 1 suppliers, OEMs and market segments. Leading automotive system suppliers rely on ams’ differentiated solutions as market traction continues to increase in Asia including Japan.

ams continued its significant R&D investments for advanced LIDAR architectures where ams’ VCSEL illumination is seeing very good traction with major automotive players. Next to the large-scale 3D true solid-state LIDAR illumination program for ZF, the leading tier 1 system supplier, in conjunction with IBEO, ams has active engagements in different geographies winning two further LIDAR illumination projects for two additional tier 1 system suppliers with life time values of several hundred million USD. ams’ addressable high power VCSEL arrays offer significant system-level advantages in different scanning architectures, where for several architectures ams provides complete subsystems including dedicated driver ICs. In-cabin monitoring is evolving into a meaningful new optical automotive application as OEMs and Tier 1 suppliers show strong interest in different 2D/3D use cases. ams sees attractive opportunities for its portfolio in this interesting market and has won a first 3D ToF illumination project at a global tier 1 supplier. Recently, ams showcased a full ams 3D system solution for miniaturized dashboard-integrated driver recognition using ASV with ams illumination and NIR sensing. The sizeable emerging market for automotive projected lighting is showing good momentum with ams’ customer base expanding last year. Advanced VCSEL/micro-lens projector systems enable differentiated lighting applications for new comfort and safety features such as welcome light carpets.

ams’ industrial business performed in line with muted expectations against the background of weaker end market demand over the course of 2019. ams is a leading supplier of industrial sensing to OEMs worldwide serving the industrial automation, factory automation, HABA, and additional industrial markets. ams’ broad and differentiated industrial portfolio addresses market developments in sensor-rich industrial IoT and Industry 4.0 as new applications including 3D create opportunities for the coming years. In industrial imaging and machine vision ams continued to leverage its industry-leading global shutter technology with new designs last year. ams offers innovation in high performance image sensing for growth applications such as 3D which creates new optical sensing markets. With 3D sensing starting to emerge in the industrial market, ams’ extensive hard- and software portfolio including the SmartSens partnership enables the creation of full ams 3D systems.

ams’ medical business recorded a very positive performance and significant growth in 2019 despite a generally challenging macro-economic environment worldwide. ams confirmed its market-leading position in Medical Imaging for computed tomography (CT), digital X-ray, and mammography which was again the core driver of ams’ medical business. The medical imaging business continued to expand in Asia serving several regionally based OEMs. ams is a leader in next generation medical endoscopy offering the world’s smallest endoscopy cameras and shipping NanEye solutions in volume to several customers. Recently, ams introduced an industry-first ASSP sensing solution for CT imaging where previously only fully customized solutions were available. Based on monolithic integration of the sensing and analog-to-digital conversion, the innovation offers high performance imaging at significantly lower system cost and complexity while doctors and patients benefit from high resolution diagnostics at low radiation doses.

In January 2020, ams closed the joint venture transaction for its environmental sensing activities which had been announced in spring 2019. The joint venture with Wise Road Capital, in which ams holds a minority shareholding, will allow the business to successfully address growth opportunities in environmental and related applications with a focus on Asia. Related to the joint venture creation, ams received an undisclosed consideration in cash.

In operations, ams significantly redesigned and improved manufacturing processes in Singapore in 2019. As a result, production efficiency and yields increased strongly with lower levels of labor and materials required when compared to previous manufacturing. These achievements allowed ams to record meaningfully better profitability in its Singapore manufacturing compared to the year before. ams’ front-end wafer manufacturing in Austria was again fully utilized in 2019. ams successfully completed the construction of its internal VCSEL production line last year. The production ramp of the front-end facility started, as envisaged, at the end of the year and is expected to extend through the current year. The investment allows ams to exploit differentiation opportunities in high power VCSELs through both design and manufacturing. Combining scalable outsourced and internal VCSEL capacity positions ams strongly for expected future needs in this growth area.

For the first quarter 2020, ams expects its business to continue to perform well against the backdrop of typically expected seasonality and a more uncertain global macro-economic and geopolitical situation. ams foresees high volume consumer programs to provide important contributions based on supportive smartphone volumes. In ams’ non-consumer end markets, however, business trends remain influenced by a challenging macro-economic and demand environment. The acquisition of OSRAM is progressing as expected with regulatory approval proceedings underway and the legal basis for implementing the planned rights issue in place. Encouraged by the constructive relationship with OSRAM and overwhelming positive feedback on the strategic merits of the transaction, ams expects to successfully close the transaction as envisaged.

On the basis of available information, ams expects first quarter revenues of USD 480-520 million showing a less pronounced level of seasonality and a strong year-on-year increase of 28% at the midpoint. The adjusted operating (EBIT) margin for the first quarter is expected to be 19-21% reflecting ongoing operational efficiencies in manufacturing and showing a very significant improvement year-on-year. Looking forward and based on current information, ams expects another year of business growth for 2020. When compared to historical figures, the revenue expectations above exclude deconsolidated revenues related to the mentioned divestment and joint venture of around USD 20-25 million per quarter which have been deconsolidated as of year-end 2019. All expectations above are based on the assumption that the consequences of the coronavirus infections will not have a meaningful negative impact on our business for the first quarter 2020 or the year 2020.

Additional financial information for full year 2019 and the fourth quarter 2019 is available here.


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