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Aixtron's Orders Up 17 Percent On Previous Year

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Continued demand for MOCVD systems for VCSELs, speciality LEDs and power electronics drives orders to €197.9m over last nine months

Aixtron SE, a provider of deposition equipment, has announced its financial results for the first nine months and the third quarter 2017.

Driven by continued demand for MOCVD systems for the production of VCSEL and other laser applications, ROY (Red-Orange-Yellow) and specialty LEDs as well as power electronics, order intake including spares and service in 9M/2017 came to €197.9m, 17 percent higher than in the previous year (9M/2016: €164.6m).

Order intake in Q3/2017 increased to €69.4m (Q2/2017: €66.6m). Order intake in Q3/2017 and 9M/2017 included a non-recurring positive effect of €4.9m from shipments made in prior years, but where payment had been regarded as unlikely (Q3/2017 adjusted: €64.6m; 9M/2017 adjusted: €193.0m).

Bernd Schulte, president of Aixtron SE, said: "Thanks to our broad product portfolio and the increased demand for MOCVD equipment for laser applications, we are pleased about the order development. Following the positive order intake development, we decided to raise our full-year guidance for order intake and to reiterate our revenue expectations for 2017. Based on our strong order backlog, we are optimistic we will return to profitability in 2018."

The adjusted net result in Q3/2017 amounted to €1.1m (Q3/2017 reported: 4.3m; Q2/2017: €-3.7m). Year-on-year the net result improved from €-30.4m in 9M/2016 to €-9.3m in 9M/2017 excluding non-recurring items totaling €11.3m (9M/2017 reported: €-20.6m).

Total revenues for 9M/2017 increased to €176.3m (9M/2016: €106.6m) year-on-year while also improving sequentially in a quarterly comparison (Q3/2017: €62.2m; Q2/2017: €60.6m). Both, Q3/2017 and 9M/2017 revenues include non-recurring positive effects of €4.6m from shipments made in prior years, but where payment had been regarded as unlikely (Q3/2017 adjusted: €57.6m; 9M/2017 adjusted: €171.7m).

As of September 30, 2017, equipment order backlog totalled €99.2m, an increase of 6 percent on the figure of €93.4m as of June 30, 2017 (September 30, 2016: €104.0m).

Adjusted by non-recurring effects of €2.2m, gross profit and gross margin in 9M/2017 improved to €50.8m and 30 percent respectively against the previous year (9M/2016: €26.9m; 25 percent gross margin).

Excluding non-recurring items of €4.6m, gross profit and gross margin also improved on a quarterly comparison (Q3/2017 adjusted: €20.1m, 35 percent gross margin; Q2/2017 adjusted: €16.0m, 26 percent gross margin) with the increased margin percentage being due to a more favourable product mix and despite an unfavourable US-Dollar/Euro exchange rate.

Cash and cash equivalents (including cash deposits with a maturity of more than 90 days) increased to €203.9m as of September 30, 2017, as against €197.1m as of June 30, 2017. Compared to €160.1m as of December 31, 2016, the difference of €43.8m reflected the operational performance in combination with reduced and more efficient use of working capital.

Cost of sales for 9M/2017 was €123.3m year-on-year, equivalent to 70 percent of revenues (9M/2016: €79.7m, or 75 percent of revenues). The improved cost of sales in percentage of revenues is mainly caused by higher sales volumes and the reduced influence of fixed costs. In Q3/2017, cost of sales improved to €37.5m or 60 percent of revenues (Q2/2017: €45.9m, 76 percent) which was mainly due to a more favourable product mix, the above mentioned non-recurring effect and was despite an unfavourable US-Dollar/Euro exchange rate.

Operating expenses in 9M/2017 were €72.5m (9M/2016: €56.2m) including restructuring expenses of €13.6m. Sequentially, operating expenses adjusted by €1.4m due to the ongoing restructuring activities fell to €18.7m (Q2/2017 adjusted: €19.6m).

The 9M/2017 EBIT adjusted by restructuring costs and other effects of €11.3m was € 8.2m. Compared to the previous year, EBIT improved mainly due increased volumes and better margins. (9M/2016: €-29.3m). In Q3/2017, EBIT adjusted by €3.2m improved to positive €1.4m (Q3/2017 reported: €4.6m; Q2/2017: €-3.6m, adjusted by €7.7m).

Business Development

Continuing market demand for VCSEL and other laser applications, ROY and specialty LEDs as well as power electronics led to a stable order intake for MOCVD equipment in Q3/2017.

Aixtron continued to reorganise the company and its product portfolio in order to return to profitability in 2018. The sale of the ALD/CVD product line to Eugene Technology (South Korea) received approval from the Committee of Foreign Investment in the United States (CFIUS) on October 23, 2017. Management expects the transaction to be closed in 2017.

APEVA SE, a 100 percent subsidiary of Aixtron SE for its OLED deposition technology, officially started its business operations on October 1, 2017. Aixtron continued discussions with potential industry and financing partners in order to form a Joint Venture with APEVA.

"In addition to the positive operating results in 9M/2017, we have made significant progress with the strategic reorganisation of Aixtron. Following the launch of business operations of APEVA SE on October 1, we have also obtained approval by US authorities to sell our ALD/CVD business to Eugene Technology. With that we expect to be at EBIT break-even for 2017", comments Felix Grawert, president of Aixtron SE.

Guidance

Following the 9M/2017 results and internal assessments and excluding orders and revenues from the ALD/CVD product line from the date of closing, Aixtron increases the 2017 order guidance to €240 250m (at the prevailing budget rate of EUR/USD 1.10) and refines the revenue guidance to €220 230m (both from €210 230m previously).

Due to the successful sale of the ALD/CVD memory product line to Eugene Technology which is expected to be closed during 2017, Management expects to achieve EBIT break-even for fiscal year 2017.

Aixtron says it continues to execute restructuring measures as well as to seek the establishment of partnerships for its OLED business in order to return to profitability in 2018.

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