EANS-Adhoc: ams AG / ams acquires high end optical packaging leader Heptagon to become clear worldwide leader in optical sensing; reports third quarter results around mid-point of expectations when ex

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Financial Figures/Balance Sheet/9-month report/Acquisition
24.10.2016

Transforming transaction to create end-to-end optical sensing and
packaging leader and drive ams' global leadership in sensor
solutions; key financial data for the third quarter 2016

Premstaetten, Austria (24 October 2016) - ams (SIX: AMS), a leading
worldwide manufacturer of high performance sensor and analog
solutions, has signed an agreement to acquire 100% of the shares in
Heptagon, the worldwide leader in high performance optical packaging
and micro-optics. With this transaction, ams becomes the clear global
leader in optical sensing technologies anticipating industry and
technology trends to drive growth in new applications. ams also
reports third quarter 2016 revenues and operating profitability
around the mid-point of expectations in a more positive consumer
market when excluding divestiture and exchange rate effects. ams
expects a muted fourth quarter 2016 due to customer-specific, product
line yield and non-consumer end market effects with revenues of EUR
127-134 million at a sequentially lower operating margin.

Heptagon is a global leader in micro-optics and optical sensing
solutions with particular expertise in high performance optical
packaging where the company is positioned as innovation leader.
Leveraging advanced optics capabilities in combination with a strong
optical design team, Heptagon has built a leading market position as
provider of world-class integration and high value packaging
solutions in optical sensing.

Currently focused on the consumer market, Heptagon is a major
supplier into applications for mobile devices requiring high volume
optical packaging at very small form factors. Leveraging its advanced
technology, Heptagon sees excellent growth opportunities with its
current customer base which includes a key customer serving the
smartphone and mobile device markets. Heptagon's headquarters and
manufacturing are based in Singapore while its R&D center is in
Rueschlikon, Switzerland. The company has over 830 employees
including around 120 engineers and 500 manufacturing staff. Heptagon
commands a very strong and protected IP portfolio, primarily in
optical packaging, including more than 250 patent families.

Heptagon's current 12 month revenue run rate is around USD 90m at
negative operating profitability due to current underutilization of
production capacity. Heptagon expects substantial revenue growth over
the coming years starting mid-year 2017, based on its existing
revenue and capacity pipeline and customer commitments. To prepare
for this expected growth, Heptagon has already embarked on a major
expansion of its Singapore manufacturing capacity with a total
capital investment of more than USD 250m in 2016/2017. The expansion
is based on a confirmed customer commitment for usage of the
additional capacity and is fully funded from existing cash in the
business, requiring no funding by ams.

The transaction combines an upfront consideration in cash and shares
with a substantial deferred earn-out consideration. The upfront
consideration includes USD 64m in cash from available funds, a
capital increase of 15% of outstanding shares from authorized capital
(excluding subscription rights) and shares from currently held
treasury shares for a total value of the upfront consideration of
approx. USD 570m. The earn-out consideration will be contingent on
future results of Heptagon's business over fiscal year 2017 with a
potential maximum value of USD 285m. Following the upfront share
transaction, current Heptagon shareholders which include financial
investors, management, and employees are expected to hold around 20%
in ams. The transaction is expected to close within the next three
months subject to certain approvals and the occurrence of certain
conditions defined in the agreements with the sellers. ams plans to
integrate Heptagon into its organization following the closing.

The combination of ams and Heptagon forms the clear worldwide leader
in end-to-end optical sensing solutions with global scale and the
ability to define and drive technology trends and innovation. Given
the increasing value-add of high end packaging technologies for
upcoming optical sensor applications the transaction fully leverages
ams' and Heptagon's outstanding know-how in optical design and
manufacturing. ams is convinced that this end-to-end solution
capability will allow it to better serve customers in high value
optical applications. Adding Heptagon also accelerates the expansion
of ams' capabilities in sensor fusion and sensor hubs. ams' market
access in the consumer and smartphone space is expected to support
Heptagon's customer relationships and broaden its customer base for
the combined company's sensor solutions.

Through the addition of Heptagon ams expects to increase and
accelerate its mid-term growth opportunities, particularly in
consumer optical sensing. Including Heptagon, ams therefore targets
business growth of 30% CAGR (compound annual growth rate) for the
coming three years combined with a profitability target of 30%
operating (EBIT) margin from 2019. Substantial expected ams content
increases in the smartphone and mobile device space will serve as
important drivers of this expected growth.

Alexander Everke, CEO of ams, commented on the transaction,
"Combining ams and Heptagon creates the clear #1 in optical sensing
technologies and fast-tracks our innovation capabilities. As a
result, we expect ams to drive the optical sensing agenda in the
years to come and broaden its market reach. Together with our
leadership position in our other sensing focus areas Environmental,
Imaging, and Audio, this strategic transaction is going to transform
ams into the global leader in sensor solutions."

For the third quarter 2016, reported group revenues were EUR 146.7
million (equivalent to around mid-point of previous expectations when
excluding divestiture and exchange rate effects), up 11% sequentially
compared to the second quarter and decreasing 4% from EUR 153.0
million in the same quarter 2015. On a constant currency basis, third
quarter revenues were 4% lower compared to the third quarter last
year.

Adjusted gross margin (excluding acquisition-related and share-based
compensation costs) remained high at 55% with IFRS reported gross
margin at 53%, compared to 56% and 54% respectively, in the same
quarter 2015. The adjusted result from operations (EBIT) (excluding
acquisition-related and share-based compensation costs and result
from divestiture) for the third quarter was EUR 28.0 million or 19%
of revenues in line with previous expectations, decreasing from EUR
38.5 million in the same period 2015. The IFRS reported result from
operations (EBIT) for the third quarter was EUR 49.7 million or 34%
of revenues, up from EUR 35.1 million in the same period 2015. This
IFRS reported result includes a result from divestiture of EUR 29.7
million from the divestiture of the wireless business in the quarter.

The net result for the third quarter was EUR 55.9 million compared to
EUR 34.0 million in the same period last year. Basic and diluted
earnings per share were CHF 0.91/0.88 or EUR 0.84/0.81 based on
66,860,524/69,171,109 shares (basic/diluted; weighted average)
compared to CHF 0.54/0.52 or EUR 0.49/0.47 for the third quarter 2015
based on 68,935,827/71,718,080 shares (basic/diluted; weighted
average). The net result and earnings per share include effects
ensuing from the result from divestiture regarding the divestiture of
the wireless business. Underlying basic and diluted earnings per
share for the third quarter excluding these effects were CHF
0.42/0.41 or EUR 0.39/0.37. Operating cash flow for the third quarter
was EUR 45.2 million compared to EUR 36.2 million in the same quarter
last year. Total backlog on September 30, 2016 (excluding consignment
stock agreements) was EUR 132.2 million compared to EUR 146.6 million
at the end of the second quarter and EUR 101.4 million on September
30, 2015.

ams' business performed well in the third quarter of 2016 showing an
attractive quarter-on-quarter increase in revenues and profitability
driven by higher volume demand in the consumer and smartphone
markets. These results demonstrate the strong market position of ams
in the consumer space and across its balanced portfolio of consumer
and non-consumer businesses.

ams' consumer and communications business showed positive results in
the third quarter with a meaningful sequential increase in total
volumes. ams benefited from the launch of new smartphone platforms in
a more attractive market environment which drove higher run rates of
ams' high performance light sensor solutions such as ambient light
sensors, combination modules, and integrated multi-function modules
for leading OEMs. ams' other consumer product lines including audio
solutions continued to ship to major device vendors in attractive
volumes supporting the development of the consumer business. At the
same time, ams continued its extensive development and design-in
activities for its strong consumer revenue and product pipeline which
extends several years out and includes ams' next generation mobile
device light sensors and True Color technology.

ams' industrial, medical, and automotive businesses recorded results
in line with expectations. Demand in these non-consumer end markets
continues to develop in a pattern similar to the first half showing
limited business momentum as certain end market and macroeconomic
uncertainties appear to prevail. With its differentiated sensor and
sensor interface solutions ams holds a strong market position in
industrial sensors enabling advanced applications for leading OEMs
and their customers worldwide. ams' medical business continues to be
driven by digital imaging sensor solutions for computed tomography
(CT), digital X-ray, and mammography where ams is the technology
leader. Production ramp for a new Asian medical imaging customer
continued in the quarter. ams' automotive sensor and sensor interface
technologies remain focused on safety, position and emerging sensing
applications.

For the fourth quarter 2016, ams sees a muted development of its
business in revenues and earnings, particularly due to a negative
development at a specific customer in the consumer end market and a
production yield issue in an industrial product line. Based on
available information and a current USD/EUR exchange rate of 1.09,
ams expects fourth quarter revenues of EUR 127-134 million reflecting
the impact of the customer-specific negative development, the
industrial product line production yield issue which ams currently
does not expect to resolve before early 2017, product maturity and
mix effects, and an unsupportive subdued demand momentum in
non-consumer markets where uncertainties continue. The
customer-specific development may also result in negative
profitability effects due to depreciation of work-in-progress
inventory. ams therefore expects the adjusted operating margin for
the fourth quarter (excluding acquisition-based and share-based
compensation costs) to be impacted by revenue, gross margin and
product mix effects resulting in a meaningfully lower level of
11-13%.

Looking into 2017, however, the addition of Heptagon substantially
expands ams' broad and confirmed revenue and development pipeline
resulting in major expected revenue effects from mid-year 2017
onwards. Combining the growth potential from the ams pipeline with
Heptagon's growth opportunities strongly supports ams' increased
growth targets for the coming years.

The quarterly report on the third quarter 2016 including additional
financial information is available on the company website at
www.ams.com/eng/Investor/Financial-Reports .

ams will hold a combined conference call on the acquisition and the
third quarter results tomorrow morning, 25 October 2016, at 9.00am
CEST / 8.00 am GMT, replacing the conference call on the third
quarter results planned for 10.00am CEST / 9.00am GMT. To dial into
the conference call please use the following access numbers: +41 58
310 5000 (Switzerland), +44 20 3059 5862 (UK), +43 1 25 302 1402
(Austria), +49 69 505 0 0082 (Germany), +33 1 7091 8706 (France), +1
631 570 5613 (USA). A recording of the conference call will be
available from tomorrow, 25 October 2016, noon via the following
access numbers: +41 91 612 4330 (Switzerland), +44 20 7108 6233 (UK),
+1 631 982 4566 (USA), +43 125 302 1403 (Austria), access code 15171#

###

about ams

ams is a global leader in the design and manufacture of advanced
sensor solutions and analog ICs. Our mission is to shape the world
with sensor solutions by providing a seamless interface between
humans and technology.

ams' high-performance analog products drive applications requiring
extreme precision, dynamic range, sensitivity, and ultra-low power
consumption. Products include sensors, sensor interfaces, power
management, and wireless ICs for consumer, communications,
industrial, medical, and automotive markets.

With headquarters in Austria, ams employs over 2,100 people globally
and serves more than 8,000 customers worldwide. ams is listed on the
SIX Swiss stock exchange (ticker symbol: AMS). More information about
ams can be found at www.ams.com

Further inquiry note:
Moritz M. Gmeiner
Senior Director Investor Relations
Tel: +43 3136 500-31211
Fax: +43 3136 500-931211
Email: investor@ams.com

end of announcement euro adhoc
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issuer: ams AG
Tobelbader Strasse 30
A-8141 Premstaetten
phone: +43 3136 500-0
FAX: +43 3136 500-931211
mail: investor@ams.com
WWW: www.ams.com
sector: Technology
ISIN: AT0000A18XM4
indexes:
stockmarkets: official dealing: SIX Swiss Exchange
language: English

Original-Content von: ams AG, übermittelt durch news aktuell