u-blox slide deck - full year 2014 financials

Annual results 2014

u-blox Holding AG

March 19, 2015

Thomas Seiler, CEO

Roland Jud, CFO

locate, communicate, accelerate

© u-blox Holding AG, March 19, 2015

Disclaimer

Slide 2

This presentation contains certain forward-looking statements. Such forward-looking

statements reflect the current views of management and are subject to known and

unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance or achievements of the Group to differ materially from those

expressed or implied herein.

Should such risks or uncertainties materialize, or should underlying assumptions prove

incorrect, actual results may vary materially from those described in this presentation.

u-blox is providing the information in this presentation as of this date and does not

undertake any obligation to update any forward-looking statements contained in it as a

result of new information, future events or otherwise.


Agenda

• Introduction

• Operational highlights 2014

• Financial results 2014

• Business review

• Outlook

• Q&A

Slide 3

Operational highlights 2014

• Strong business growth driven by the increased demand for mobility

solutions and Internet of Things

• Expanded positions in our target markets

• Strategic new product category short range radio through acquisitions

• Bluetooth and Bluetooth low energy

• Wi-Fi

• Strengthened organization

• Strong growth in personnel – 614 FTE at year end

• Addition of R&D facilities – u-blox had operations in 17 countries

• Continued adaptation of organizational framework

© u-blox Holding AG, March 19, 2015 Slide 4

u-blox group


Change 2014

to 2013

Revenue 270.0m - 22.9%

Gross profit 122.7m 45.4% 21.3%

EBITDA 58.6m 21.7% 26.9%

Operating profit (EBIT ) 39.1m 14.5% 30.0%

Net profit, attributable to owners of

the parent 34.4m 12.7% 39.6%

Net cash generated from

operating activities 53.7m 19.9% 39.5%

Payout of a dividend of CHF 1.60 per share from capital reserves proposed

Key figures Amount CHF In relation to

revenue

Revenue and EBITDA


• Solid revenue growth of 22.9% compared to 2013

• Organic growth of 19.6%

• Acquisition related growth of 3.3%

• At constant exchange rate: Revenue growth of 34.8%

• Growth of EBITDA of 26.9% compared to 2013

Comments Revenue and EBITDA

112.8 124.7

173.1

219.8

270.0

27.7 29.1 35.2 46.2

58.6

0

50

100

150

200

250

300

2010 2011 2012 2013 2014

Revenue EBITDA

(million CHF)

Industrial

Consumer

Automotive

Markets trends


Note: Estimate

• Growth in all markets

• Continued strong momentum in automotive market

• Accelerated growth in industrial markets for connected healthcare, point-of-sales and factory automation

• Growth in consumer products for driving recorders, watches and radar detectors

Comments Revenue split per market for 2014

0

50

100

150

200

250

300

2010 2011 2012 2013 2014

Americas EMEA APAC

(million CHF)

48%

25%

27%

46%

25%

28%

35%

24%

41%

45%

26%

29%

48%

27%

25%

Revenues by geography


Note: based on customers’ billing location

Growth of business in all regions

Revenue development according to billing location:

• Strong increase of 26.7 % in APAC

• Strong growth of 19.9% in EMEA

• Continued growth of 19.1% in the Americas

Comments Revenues by geographic region

+ 22.9%

58.9 62.881.2

101.2

122.7

34.5%

47.2% 50.3%46.0%

45.4%

0%

10%

20%

30%

40%

50%

60%

0

20

40

60

80

100

120

140

2010 2011 2012 2013 2014

Gross Profit % of revenue

(million CHF) (in % of revenue)

Gross profit


• Increase in gross profit to CHF 122.7m in 2014

• Strong growth of gross profit of 21.3% compared to 2013

• Gross profit margin in 2014 of 45.4%, slightly declined due to product mix containing more wireless products

Comments Gross profit / Gross profit margin

+ 21.3%

0

1

2

3

4

5

6

0

5

10

15

20

25

30

2010 2011 2012 2013 2014

Antaris u-blox 5 u-blox 6

u-blox 7 u-blox M8 ASP

(million units) (CHF)

0

2

4

6

8

10

12

14

16

0

5

10

15

20

25

2010 2011 2012 2013 2014

Shipments modules ASP

(million units) (CHF)

Shipments and ASP development


• Continued growth of chips and modules volume

• First shipments of u-blox M8 chip

GPS/GNSS chips Modules

Note: incl. Atmel-Chipset sales

+ 17.9% + 51.7%

Global customer base


• Strong and stable customer base

• More than 5’000 customers worldwide

• Good spread over different applications and geographical regions

• Largest customer accounts for less than 7% of total revenue

• 10 biggest customers account for 36.6% of total revenue

• No bad debtors

• Strong market and technology position with further potential for profitable growth

Comments Number of customers totaling 80% of revenue

68 65 57

67 69

0

10

20

30

40

50

60

70

2010 2011 2012 2013 2014

Distribution & marketing / Research & development


Research & development expenses Distribution & marketing expenses

14.6 14.2 17.8

21.2 24.5

12.9%

11.4%10.3%

9.7%9.1%

0%

2%

4%

6%

8%

10%

12%

14%

0

5

10

15

20

25

30

2010 2011 2012 2013 2014

D&M % of revenues


21.3 22.1

32.7 38.9

49.9

18.9%17.7%

18.9%17.7% 18.5%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

10

20

30

40

50

60

2010 2011 2012 2013 2014

R&D % of revenues


Research & development

70%

Sales, marketing,

support

19%

Logistics, admin 11%

Total = 614 FTE

428

117

69

Employees


Average employee level (2010 – 2014, FTE based) Employee breakdown (end of 2014, FTE based)

Note: 74.8% of employees based outside Switzerland (spread over 17 countries) Note: Average number of employees (FTE = full time equivalent)

196 215 294

408

538

0

100

200

300

400

500

600

2010 2011 2012 2013 2014

(Average FTE)

Income statement


• Revenue increase mainly organic

• Increased gross profit by 21.3%

• Higher absolute OPEX due to expansion of activities; decrease of relative OPEX to revenue

• EBITDA margin of 21.7%

• EBIT margin of 14.5%

• Share based payment cost in the amount of CHF 3.3m

• Finance costs contains unrealized/realized foreign exchange gains of CHF 3.5m

• Tax rate of 19.9%

Comments Consolidated income statement (condensed)

*) Management calculates EBITDA (earnings before interest, taxes, depreciation and amortization) by adding back depreciation and amortization to operating profit (EBIT), in each case determined in accordance with IFRS.

for the year ended December 31, June 30,

(in CHF 000s) 2014 2013 2014

(audited) (audited) (unaudited)

Revenue 270'045 219'813 121'625

Cost of sales -147'323 -118'654 -64'031

Gross profit 122'722 101'159 57'594

Operating expenses -84'515 -71'192 -38'897

Other income 868 83 101

Operating profit (EBIT) 39'075 30'050 18'798

Finance income 4'546 1'013 1'090

Finance costs -658 -2'193 -385

Profit before income tax (EBT) 42'963 28'870 19'503

Income tax expense -8'566 -4'227 -5'100

34'397 24'643 14'403

Operating profit (EBIT) 39'075 30'050 18'798

Depreciation and amortization 19'529 16'138 8'489

EBITDA*) 58'604 46'188 27'287

Net profit, attributable to owners

of the parent

Segment information


(in CHF 000s) 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

Revenue third 269'799 218'888 246 925 270'045 219'813 270'045 219'813

Revenue intragroup 23'827 17'988 23'827 17'988 -23'827 -17'988 0 0

Total revenue 269'799 218'888 24'073 18'913 293'872 237'801 -23'827 -17'988 270'045 219'813

EBITDA*) 54'889 43'526 4'436 3'612 59'325 47'138 -721 -950 58'604 46'188

Depreciation -4'602 -3'018 -1'670 -1'123 -6'272 -4'141 -6'272 -4'141

Amortization -12'238 -10'359 -1'019 -1'638 -13'257 -11'997 -13'257 -11'997

Operating profit (EBIT)

Finance income 4'546 1'013 4'546 1'013

Finance costs -658 -2'193 -658 -2'193

EBT 3'167 -2'130 42'963 28'870

Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

Assets 223'485 142'431 13'460 15'521 236'945 157'952 64'802 68'557 301'747 226'509

Liabilities 79'835 34'776 4'931 8'374 84'766 43'150 4'105 2'923 88'871 46'073

additions to

non-current assets 45'434 29'826 1'099 3'890 46'533 33'716 - - 46'533 33'716

38'049 30'149 1'747 851

January - December January - December

31'00039'796 -721 -950 39'075 30'050

January - December January - December January - December

Positioning and

wireless products

Wireless services Total segments Non-allocated/

eliminations

Group

*) Management calculates EBITDA (earnings before interest, taxes, depreciation and amortization) by adding back depreciation and amortization to operating profit (EBIT), in each case determined in accordance with IFRS.

Statement of financial position (1)


• Very strong financial position with a liquidity (incl. marketable securities) of CHF 59.4m

• Inventory CHF 33.3m (thereof WIP CHF 10.2m)

• Goodwill increased due to acquisitions

• Increase of intangible assets due to capitalization of R&D expenses

Comments Statement of financial position (condensed)

Dec. 31, Dec. 31, June 30,

(in CHF 000s) 2014 2013 2014


ASSETS

Current assets

Cash and cash equivalents 37'662 33'163 30'390

Marketable securities 21'730 27'395 24'920

Trade accounts receivable 38'842 29'204 35'179

Other current assets 54'862 32'589 38'558

Total current assets 153'096 122'351 129'047

Non-current assets

Property, plant and equipment 14'836 13'764 13'824

Goodwill 57'903 37'825 53'512

Other Intangible assets 70'502 44'570 58'864

Financial assets 584 1'222 480

Deferred tax assets 4'826 6'777 6'104

Total non-current assets 148'651 104'158 132'784

Total assets 301'747 226'509 261'831

Statement of financial position (2)


• Current liabilities contains short-term bank borrowing of CHF 20m used for acquisitions

• Trade accounts payable of CHF 28.6m, in line with increasing business

• Non-current liabilities contains provisions, deferred tax liabilities and pension liabilities

• Share capital increase due to exercise of options

Comments Statement of financial position (condensed)

Dec. 31, Dec. 31, June 30,

(in CHF 000s) 2014 2013 2014


LIABILITIES AND EQUITY

Current liabilities 70'860 35'974 56'017

Non-current liabilities 18'011 10'099 14'615

Total liabilities 88'871 46'073 70'632

Shareholders’ equity

Share capital 5'930 5'810 5'899

Share premium 89'531 92'556 88'340

Retained earnings 117'415 82'070 96'960

212'876 180'436 191'199

Total liabilities and equity 301'747 226'509 261'831

Total equity, attributable to

owners of the parent

Statement of financial position


• Strong equity ratio with 70.5%

• Payout of a dividend of CHF 1.60 per share proposed to the Annual General Meeting

• Increase of 23% to 2013

• Dividend payout ratio of 30.6% of net profit

Comments Total equity and equity ratio

120138 151

180213

87.5%84.2%

78.7% 79.7%

70.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

50

100

150

200

250

2010 2011 2012 2013 2014

Equity Equity ratio

(million CHF) (% of total assets)

Statement of cash flows


Comments Consolidated cash flow Statement (condensed)

• Strong operational cash flow with 19.9% of revenues (increase by 39.5% to 2013)

• Investing activities:

• CHF 30.1m investments into acquisitions (connectBlue and Antcor)

• CHF 7.5m prepayment for acquisition of Lesswire assets in 2015

• CHF 26.7m investments into intangible assets, mainly capitalized R&D expenses and intellectual property

• CHF 7.0m investments into fixed assets

• CHF 5.4m net proceeds from marketable securities

• CHF 0.5m interest received

• Financing activities:

• CHF 8.5m Dividend 2013 payment

• CHF 5.6m Proceeds from issuance of ordinary shares

• CHF 20.0m Short-term borrowings of

• CHF 2.0m Purchase of treasury shares

(in CHF 000s) 2014 2013

Net cash generated from operating activities 53'686 38'483

Net cash used in investing activities -65'400 -33'638

Net cash provided by / used in financing activities 14'991 -4'784

Net increase in cash and cash equivalents 3'277 61

Cash and cash equivalents at beginning of year 33'163 33'416

Exchange gains/(losses) on cash and cash equivalents 1'222 -314

Cash and cash equivalents at end of year 37'662 33'163

For the year ended

December 31,

Business review

Technology for life


• Medical care industry faces

growing demand for better

and faster handling patients

and related information

• u-blox wireless and

positioning technologies

boost hospital and healthcare

efficiency

Ambulances

• Ambulances are high-tech,

mobile hospitals

• Integrated GPS determine

the exact location of

vehicle

• Wireless communication

advise care givers for better

patient‘s condition and

optimum hand-over


Hospital staff efficiency


• Short-range radio

technology provides

mobile connectivity to

any infrastructure and

equipment

• Short-range radio technology enables

hospital staff reading

analytics data from

instruments

Managing medical and surgical inventories

• Volatile drugs and blood

supplies require continuous

monitoring

• Cellular and short range

technology enables ongoing

monitoring and logging of

storage conditions

• Cellular and short range

technology identifies the

location, levels and

expiration dates of medical

stocks


Mobile health monitoring

• Wireless communication

provides connectivity for

medical equipment and

eliminates cabling

• With wireless technology,

patients with multiple

sensors attached to the

body can be wheeled

swiftly from ambulance to

emergency room

• Handover of heartbeat,

blood pressure, respiratory

and body temperature data

is seamless


Infusion pumps

• Infusion pumps are smart

devices that deliver a

precise and controlled mix

of nutrients and

medication to patients

• When medication bags need replacement, nurses

use a Bluetooth-enabled

barcode scanner to record

details of the patient, room

and bag

• Wi-Fi supports that the

correct fluids and

mediation are administered to the right patient


Click here for video

EmbeddedWorld2015-5.mpg

https://www.youtube.com/watch?feature=player_embedded&v=tukuRQptQak






Remote monitoring of sleep apnea

• Portable monitors with

cellular connectivity assures

uninterrupted monitoring at

home

• Cellular technology enable

hospitals or care givers to

administer treatment as

appropriate


Providing safety and security for the elderly

• People live longer, and

want to remain in the own

homes

• Wearable medical and

location monitoring

devices with a fall-alert

and panic button use

short range and cellular

communication combined

with positioning

technology


Product launch highlights


TOBY-L2

World‘s fastet 4G LTE module

LISA-C210

Excellent building penetration and wide-area coverage

ODIN-W160

Our first combined Bluetooth/Wi-Fi module for „Internet of Things“ applications

NEO-M8&, LEA-M8T

Precision timing modules

EVA-M8M

World‘s smallest multi-GNNS module

CAM-M8Q

Positioning module with integrated antenna

UBX-M8030-Kx-DR

3D automotive dead reckoning

UBX-M8030-Kx-FT

Simultaneously decoding GNSS signals from all constellations

SARA-G340

low-cost 2G modem supporting M2M applications in Europe and Asia

Expanded relationships with 5000 customers

Trax, Sweden

Personal tracking device


Holux, Taiwan

Bike computer

Large diversification by application, geography and end market

PUSH, Italy

Multi-sport smart gauge

Expanded relationships with 5000 customers


Ctrack, South Africa

Fleet management

Arvento, Turkey

Vehicle tracking &

diagnostics

Cohda Wireless, Australia

Advanced V2X solution

BARTEC PIXAVI, Norway

Safe smartphone

Continued high customer satisfaction

• Cobra Telematics (Vodafone Group) develops telematics components and services

for the automotive industry and the insurance business

• Major vehicle manufacturer has chosen Cobra as its partner for tracking systems

• Cobra’s needs

• Excellent product features such as fast time to first fix, high accuracy and low power consumption

• Exceptional quality. Auto manufacturers and auto buyers expect the absolute best

• How did u-blox enable Cobra to achieve growth?

• State-of-the art technology

• Cost effective solutions

• Extensive engineering support

• Automotive quality and reliability


Innovation

Chip know-how

• We have full control of the technology behind our products. Chips integrate

the entirety of our know-how and form the essence of our value for the

customer

• By managing all our chipset and software technology, we can address perfectly the requirements demanded by our customers.

Module expertise

• Modules deliver our technology in a quickly adoptable format to our

customer with perfect performance: They just connect power and antenna.

Synergies lead to particularly attractive products

• By combining our three technologies, we are producing assemblies that

make it easier than ever to create complete solutions. This enhances our position as a supplier of core technology.



Strategy

Acquisition for accelerating business growth

2009 2011

• NeonSeven

• Geotate

• Fusion Wireless

• SigNav assets

2012

• 4M Wireless

• Cognovo

• Fastrax

2014

• connectBlue

• Antcor

connectBlue

• Manufacturer of modules for BT and Wi-Fi connectivity

• Acquisition of 100% of the shares of connectBlue

• Acquisition price SEK 185 million (CHF 26.3 million)

• Fully paid-up in cash, Closing date: May 19, 2014

Antcor

• Provider of core IP for Wi-Fi connectivity

• Acquisition of 100% of the shares of Antcor

• EUR 5.2 million (CHF 6.3 million), excluding an earn-out

• Fully paid-up in cash, Closing date: August 6, 2014


lesswire

• Acquisition of assets as of 1 Jan 2015: BT and Wi-Fi products, designs and staff

• Not part of annual results 2014

2015

• lesswire assets

Strategic priorities 2015

Slide 36

Outlook 2015

• Expand 3G and 4G module portfolios with new variants addressing specific market regions and connectivity requirements

• Further develop our market-leading position in first-mount vehicle navigation systems based on new 3D Automotive Dead Reckoning technology

• Introduce new GNSS antenna modules based on the u-blox M8 and incorporating an integrated antenna

• Continue to develop products for the growing markets based on the Internet of Things and more connectivity solutions in the short range radio domain


Outlook 2015

• Take advantage of our expanded sales force and focus on specific market sectors to accelerate sales in vertical markets

• Build upon our leadership in global automotive markets by improving our navigation technology and automotive quality products

• Build market momentum with our LTE products

• Expand relationships with customers to allow them to deliver added value in their products

• Continue the growth trend in all regions through the cross selling between all product categories

Technology

and innovation

Market

Position

Strategic priorities 2015: Internet of Things (IoT)


Strategic priorities 2015 (2)


Outlook 2015

• Optimize internal structures and processing capabilities

• Increase internal resources to support business growth

• Promote further innovation in all three technology categories

• Set and meet targets for higher operational efficiency

• Boost marketing capacity and expand marketing and sales tools

Outlook 2015

• Investigate new and complementary technologies that will allow us to maximize growth in both the positioning and wireless sectors

• Establish additional partnerships to give customers even easier access to our technologies

• Empower customers with improved design tools to speed time to market for attractive products

• Review new acquisition opportunities through which we can open up additional market segments

Operational

excellence

Strategic partnership and

acquisition opportunities


Outlook

Outlook

Goals

• Grow business with new products

• Wireless

o Expansion of module product line for 3G and 4G

• Positioning

o Business growth based on u-blox M8

o Expansion of module product line

• Short Range

o Expand business with acquired products

o Launch continually new products

• Continued focus on strategic development

• Evaluating the bond market for an inaugural transaction to take advantage of the attractive terms in the capital market

• Strengthening of the global presence

• Operational excellence for higher efficiency

Slide 40

• Continued strong business growth in 2015

• Impact by product mix on relative gross margin

• Natural hedging protects relative gross margin against foreign exchange variations

Exchange rate assumptions for 2015: EUR/CHF: 1.065 USD/CHF: 0.974 GBP/CHF: 1.500

• FX-sensitivity against CHF on Guidance 2015

Financial performance outlook 2015


*) This guidance is based on the absence of unforeseen economic adversity and exchange rates assumed at budget level

+10% of USD EUR GBP

Revenue + 8.4% + 1.5% 0%

EBIT + 21.4% + 0.8% - 1.3%

Actual

FY 2013

Actual

FY 2014

Guidance 2015*)

Revenue 219.8m 270.0m 335m…345m

EBIT 30.1m 38.3m 48m… 53m

CHF CHF CHF


Upcoming events

• Latest registration date for AGM: April 19, 2015

• Annual General Meeting: April 28, 2015

• Shares traded ex dividend: April 30, 2015

• Dividend payout: May 5, 2015

• Half-year results 2015: September 4, 2015

Slide 41

Thank you!


u-blox slide deck - full year 2014 financials

Business

ublox group ublox

revenue revenue

ebitda ublox

geography ublox

growth of ebitda

solid revenue growth

strong business growth

organic growth