EBARA CORPORATION Q4 FY2024 earnings call

• Company and Core Strengths • Ebara was founded in 1912, operates 5 business segments across Building & Industrial, Energy, Infrastructure, Environment, and Precision & Electronics, with 111 consolidated subsidiaries and ~20,000 global employees, 55% of whom are based internationally. • The company holds leading global market positions: 2nd global share for semiconductor CMP systems and dry vacuum pumps, and 1st global share for cryogenic pumps for LNG, creating a balanced portfolio of high-growth cyclical semiconductor demand and stable growing LNG/energy demand. • Stable, high-margin Service & Support (S&S) business makes up 50% of Energy Company revenue, 70% of Environment Company revenue, and Ebara is expanding S&S in Building & Industrial via the cloud-based EBARA Maintenance Cloud for predictive maintenance. • Ebara leverages cross-segment core technology synergies to develop new energy products: it has commercialized ammonia canned pumps for power generation (successfully demonstrated at JERA Hekinan Thermal Power Plant) and launched the world's first hydrogen booster pumps for liquid hydrogen fuel applications, with ongoing sales efforts for first orders. • Corporate governance is structured with 7 independent outside directors out of 10 total directors, with clear separation of oversight and execution, and a fully independent nomination process for the CEO, who will transition from Asami to Hosoda in March 2025.

• Mid-term Plan E-Plan2025 Progress • 2024 actual results: ROIC 12.2%, ROE 16.2%, operating margin 11.3%, and compound annual revenue growth 12.8%, all exceeding mid-term plan targets except for Precision & Electronics growth, which is impacted by near-term semiconductor market slowdown. • Total planned investment under E-Plan2025 is ~1.8x the level of the prior mid-term plan. 2024 investments included CMP production facility expansion, S&S base optimization for Energy, and group-wide ERP implementation. • Organizational restructuring to market-focused segments has delivered cross-selling synergies: integrated sales in Building & Industrial increased cross-product orders, and Energy secured a full package order for compressors, turbines, and custom pumps for a Middle Eastern petrochemical project. • Non-financial human capital targets are on track: non-Japanese and female representation in key global positions has increased year-over-year, female management ratio, male parental leave take-up, and disabled employment ratios all show continuous improvement.

• 2024 Full Year Results • Ebara achieved 4 consecutive years of record annual performance, with all top and bottom line metrics growing year-over-year, despite the goodwill impairment in Building & Industrial and slower than expected recovery in the semiconductor market. Cross-segment profit offsets delivered sustained group-wide profit growth.

Group total revenue: 866.6 billion yen; group operating profit: 97.9 billion yen; group operating margin: 11.3%. 66% of total revenue comes from international markets, and 38% of total revenue comes from after-sales service and support. The five segments all achieved year-over-year revenue growth: 1. Precision & Electronics Company: ~33% of total group revenue (≈286 billion yen), grew operating profit over 20% year-over-year, driven by semiconductor manufacturing equipment demand. 2. Energy Company: over 20% year-over-year revenue growth, over 20% year-over-year operating profit growth. 3. Environment Company: over 20% year-over-year revenue growth, over 20% year-over-year operating profit growth. 4. Infrastructure Company: achieved year-over-year revenue growth, with positive profit contribution offsetting segment weakness elsewhere. 5. Building & Industrial Company: achieved year-over-year revenue growth, but recorded a 7 billion yen goodwill impairment charge related to Turkey's Vansan, leading to over 30% year-over-year operating profit decline. Regionally: North America and China saw revenue growth (driven by Energy and Precision & Electronics segments respectively), while Europe and Other Asia (including Taiwan and South Korea) saw revenue declines.

• For 2025, the final year of E-Plan2025, Ebara targets total revenue of 900 billion yen and operating profit of 101.5 billion yen, which will be the first time group operating profit exceeds 100 billion yen in company history.
  • Full year 2025 annual dividend per share is planned at 56 yen, a 1 yen increase from 2024, maintaining the target payout ratio of 35% or higher.
  • 2025 will see expanded growth investment compared to 2024, including new facility establishment for Building & Industrial, new R&D and overhaul facility construction for Precision & Electronics, and continued investment in new business areas like hydrogen to build future revenue pillars.
  • All performance, efficiency, and growth targets for E-Plan2025 are on track to be exceeded (except Precision & Electronics growth, which is impacted by industry slowdown), with sustained profit growth targeted despite higher fixed costs from growth investment and depreciation.

• The semiconductor manufacturing equipment market is inherently cyclical with sharp demand swings, and the 2024 semiconductor market recovery was slower than management originally expected, impacting Precision & Electronics segment growth.
  • The Building & Industrial segment recorded a 7 billion yen goodwill impairment charge related to its Turkish acquisition Vansan, leading to a 30%+ year-over-year operating profit decline for the segment.
  • Geopolitical and regional economic risks have impacted revenue in Europe and Other Asia (including Taiwan and South Korea), which saw year-over-year revenue declines in 2024.

Q: What impact will Trump-era tariffs have on Ebara's business, especially in North America? / A: Management notes that any material impact from tariff changes will depend on the final policy terms. Ebara's diversified regional production and supply chain footprint helps mitigate potential cross-border tariff costs, and the company will adjust sourcing and pricing as needed if new policies are implemented.

Q: What is the expected production startup timeline and capacity outlook for Ebara's Kumamoto factory for semiconductor equipment? / A: The Kumamoto facility is being built to support growing demand for AI semiconductor-related equipment from Japanese and global customers. Management confirms the plant is on track for planned startup, with capacity phased in to match projected demand growth for CMP and plating equipment for advanced packaging.

Q: What is the 2025 growth plan and expected profit contribution from the Energy Company? / A: Energy Company is positioned to benefit from sustained LNG demand growth driven by energy security needs and the transition to cleaner fossil fuels. The segment will continue expanding its S&S business in emerging markets like Indonesia, and expects to deliver another year of double-digit profit growth in 2025, offsetting any near-term slowdown in the Precision & Electronics segment.