Guido Pickert - Investor Relations and Corporate Communications Martin Goetzeler - President and Chief Executive Officer Bernd Schulte - Chief Operating Officer

David Mulholland - UBS Youssef Essaegh - Barclays Andrew Abrams - Supply Chain Market Research Gunther Hollfelder - Baader-Helvea Equity Research Colin Rush - Oppenheimer Mark Heller - CLSA Janardan Menon - Liberum Capital Tammy Qiu - Berenberg Bank Malte Schaumann - Warburg Research Unidentified Analyst - EXANE BNP Paribas

Good day, everyone and welcome to AIXTRON’s Q3 2015 Results Conference Call. Please note that today’s call is being recorded. At this time I would like to turn the conference over to Mr. Guido Pickert, Director of Investor Relations at AIXTRON, for opening remarks and introductions.

Thank you, operator and good day to all of you. Let me start by welcoming you all to AIXTRON’s Q3 2015 results conference call. Joining me on this call are our President and CEO Martin Goetzeler as well as our COO Dr. Bernd Schulte. As the operator indicated, this call is being recorded by AIXTRON and is considered copyright material. As such, it cannot be recorded or re-broadcast without express permission. Your participation in this call implies your consent to this recording. As with previous results conference calls, I trust that all participants have our results presentation slides, Page 2 of which contains the usual Safe Harbor statement. I will therefore not read it out loud, but would like to point out that it applies throughout this conference call. You may also wish to have a look at our latest IR presentation, which includes additional information on AIXTRON’s markets and its technologies, and is available on our website. This call is not being immediately presented via webcast or any other medium. However, we will place an audio file of the recording or a transcript on our website at some point after the call. With that, I would like to turn over the call to Martin Goetzeler, AIXTRON’s President and CEO for opening remarks.

Thanks Guido, and a warm welcome to you all, on behalf of AIXTRON’s Executive Board, to the presentation of our Q3 2015 results. I will start by discussing our financial performance as well as our recent decision to bring down revenue guidance for 2015. Bernd will then discuss the ongoing rollout of our AIX R6 MOCVD tool, and then I will conclude with some comments about how we view our major markets as well as how we see our business prospects going forward. During our full year 2014 conference call on February 24th, we gave our 2015 guidance for revenues in the range of somewhere between EUR220 million and EUR250 million. We also stated that we would reach EBITDA breakeven in the second half of this year, with significant improvements in earnings and free cash flow over the course of the year. We reiterated that guidance on both our Q1 and Q2 conference calls. We are happy to report that we reached not only a positive EBITDA in Q3 but even a positive net result for the first time since 2013. This supports our target to see a significant improvement in earnings and free cash flow year-on-year. That said we had to announce earlier this month that we would not be able to meet our revenue guidance of EUR220 million to EUR250 million and reduced our guidance to the range of EUR190 million to EUR200 million. This is due to the postponement of shipments to our major Chinese customer which were planned for delivery in late 2015. Let me now take you through our numbers for Q3 starting with Slide 3. Revenues for the quarter came in at EUR54.6 million, which was 35% higher than the previous quarter’s EUR40.4 million and 20% ahead of the same quarter last year when we generated EUR45.6 million in revenues. On a nine-month basis, revenues for the year-to-date came in at EUR135.3 million, which is more or less in line with the EUR135.8 million we generated for the first nine months of 2014. As I said earlier, we had expected a much stronger 2015 in terms of revenue growth and much of this weakness comes from our business with LED production equipment. Despite very strong value based growth in LEDs for general lighting, in some applications as much as 40% year-on-year, 2015 has shown to be a challenging year for many LED makers due to significant price declines in their end-markets. I will return to this point later. At the end of Q3 our equipment order backlog excluding spares and services, was EUR72.3 million which was 2% higher than this time last year but 20% -- 21% lower than the previous quarter. This sequential drop in backlog is a consequence of a book-to-bill ratio below 1 due to a total order intake in Q3 2015 of EUR34.4 million and total revenues at actual U.S. dollar euro exchange rates of EUR54.6 million. However, please note that we have not included any tools from the order of our major Chinese customer in our backlog. Our largest market in Q3 was Asia representing some EUR97.2 million or 72% of revenues for the first nine months of 2015. This was down both on absolute terms and relative terms from last year when sales to Asia were EUR110.6 million representing 81% of total revenues. The big change has been deliveries to the Americas, which are up over two-fold from EUR6.5 million in the first nine months of last year to EUR21.9 million for the same period this year. This is a reflection of increased demand of non-LED application tools. In addition, 12% of revenues came from Europe, which is a slight decrease on last year’s 14%. Equipment revenues in the first nine months of 2015 were EUR99.1 million representing 73% of the total revenues with the remainder coming from the sale of equipment, spares and services. Turning to Slide 4. In Q3 2015, gross margin was a much stronger 33% as opposed to 9% in the previous quarter and 15% in Q3 last year. This increase in gross margin is a clear reflection of stronger revenues in the quarter as well as a favorable product mix including the above mentioned solid contribution from tools for non-LED applications. Operational expenses for the quarter came in at EUR16.3 million, which was below the previous quarter’s EUR21.5 million and the same quarter last year when costs totaled EUR24.6 million. On a nine month basis operational expenses totaled EUR55.4 million down from EUR68.7 million last year. This is a clear reflection of our focus on key spending as well as on R&D and other key projects across the organization. In Q3 2015 we also recorded a net operating income resulting from grants we received as well as an income from a contractual compensation payment. The result of the strong gross profit contribution, ongoing control of operational expenses and a little help from the contractual compensation payment was that we were able to return to profitability for the first quarter in two years. We increased operating income from negative minus EUR17.9 million in the previous quarter to positive EUR1.5 million in this quarter. We also generated EUR0.3 million in net income in the quarter. These results illustrate the extensive work we have done over the last quarters, which we believe bodes well for the future. Moving to Slide 5, you can see our cash flow statement. In Q2 2015 and Q3 2015, our free cash flow was at minus EUR10 million, which reflects the increase of inventories for scheduled deliveries over the next month. Before moving to the balance sheet let me be clear that we continue being fully focused on managing our cash and working capital. Turning to Slide 6, you will see that we continue to have a solid balance sheet with equity of EUR396.5 million, an equity ratio of 75%, cash and cash equivalents totaling of EUR243.5 million and no bank borrowings. In summary, Q3 was a good quarter in terms of revenues and earnings. We have had some setback in deliveries expected for this year but we are confident that these are only slippages. We believe we are well positioned with a good balance sheet and strong product offerings in all of our core markets. Now let me hand you over to Bernd who will talk about the ongoing qualification of the AIX R6 MOCVD tool with our core Chinese customer. Bernd?

Thanks, Martin. I’d like to start off by sharing our perspective on the launch of the AIX R6, which is currently going through qualification processes at a number of LED producers. With our largest customer for the R6, we have agreed on a structured milestone based plan to address the open issues toward the full production qualification of our tool. Recently, we have reached the first milestone representing a significant progress in the qualification process. We are now focusing on the improvement of the process and productivity performance on our platform. From our customers we are receiving good and constructive feedback on the product and we are confident that we will establish the AIX R6 across the LED industry. We will continue to build on the advantages of our R6 for our customers. Following the acquisition of PlasmaSi in April 2015, we have successfully completed the integration into our Sunnyvale operations in Q3 2015. This was an important step on the execution of our business plan and a prerequisite for the order we have received in this quarter. Additionally, I also want to point out that we are continuing to build on our strong positioning in the power electronics market as well to foster our broad positioning in the research and development of Carbon Applications although revenue contribution still being on low levels. Our magnetic series tools for the manufacturing of graphene, carbon nanotubes or carbon nanowires are increasingly sold to research labs of meaningful industry players versus labs of Universities or research centers. We recently shipped a newly developed 8-inch R&D system, which is a clear indication of development work being done on end-applications that are becoming increasingly more tangible. With those words let me hand you back to Martin.

Thank you, Bernd. Going forward, the major short term growth driver should continue to be in the LED general lighting market. Let’s not forget that based on the LED units installed, adoption within general lighting is still very small, in and around 10% globally, which means that this remains to be a multi-year growth opportunity for not only us but the whole LED industry. Our view is that the LED producers are coming to the point where they might consider investing in highly productive systems or upgrades not just to meet increasing demand for LEDs but particularly to strengthen competitiveness. In addition, we are expecting increasingly healthy contributions from other end markets such as production equipment needed for power electronics applications, solar, OLEDs and silicon semiconductor equipment where we do expect to achieve a qualification from a second memory manufacturer very soon. In the OLED space, after having acquired PlasmaSi in April as Bernd has just mentioned, we were able to secure an order for our TFE technology, which was in line with our expectations and our business plan. Additionally we also see progress in getting our large area demonstration tool ready for customer testing and due to increasing customer interest we expect results from customer demos late this year. However, the macroeconomic environment, particularly in China, remains fragile, potentially impacting the timing risk on orders and shipments. On the other hand, China is currently pushing the development of their semiconductor industry as part of the 13th 5-year plan intending to invest US$19 billion. This central governmental investment is to be supplemented by contributions from private equity and local governments in the amount of close to US$100 billion. These investments are expected to support midterm further growth for several technologies and applications. In summary, 2015 is another year of transition for AIXTRON, a year in which we have accomplished a lot particularly in strengthening our business model, bringing our new technologies closer to market and adjusting our cost base. Our immediate goal is to getting our AIX R6 tool qualified and gain momentum in our core LED market, while also gaining traction in other markets such as power electronics, lasers, solar, memory or carbon nanomaterials. In Q3 with regard to the different application areas we have seen initial success. We have also made good progress in our value propositions as evidenced by our gross margin as well as our cost control demonstrated in the OpEx development. On a final note, we remain confident about our strategy and positioning in our core markets and believe that we have the right business model with the right kind of flexibility and resilience. With the described risks all around us, we need to remain disciplined and proactive in executing our strategy, while at the same time, as demonstrated, remaining vigilant about costs and cash flows. We believe that AIXTRON is well positioned to take full advantage of the different industry trends with our technology portfolio, as well as our service offerings and strong customer relationships. Ladies and gentlemen, this concludes our Q3 2015 results presentation. Bernd and I are now available to answer your questions.

Thank you, Martin and Bernd. Before we take questions could I ask everyone to limit your questions to a maximum of two each time. This will allow everyone to have a chance as to have their questions answered. Thank you. Operator, we’ll now take the questions.

Thank you, gentlemen. Ladies and gentlemen, we will now start the Q&A session. [Operator Instructions] The first question comes from David Mulholland from UBS. May we have your question please.

Hi and thanks for taking the questions. Firstly, apologies if I missed the -- when you joined the initial remarks. But I wonder, if you would give us an update on where we are with the progress with San'an and whether that's to the compensation payment related to in the quarter and how far are we from qualification in getting clarification on the shipments there? And then secondly, obviously quite strong performance from the gross margin in the quarter, but it's been quite volatile over the past two to three years. I wonder, if you can give us some color on whether you think this is at the new level that we can now sustain above 30% from here or whether we should still expect volatility as product mix could potentially get a bit worse from here in future quarters?

Thanks for your question. Bernd will answer on the San'an and I will come back then on the gross margin.

Yes. Hi there, first let me review what I said there. So it is important to understand that we have a defined milestone plan with our customer and we have achieved accordingly the timing of the first milestone that has been accomplished. But there are obviously more steps to go, which we are working on. But we are quite confident that we are following this milestone plan successfully. So the next milestone will be by end of the year and there will be other milestones in early 2016. So we are following the plan. So we are on plan. But besides San'an we are making also good progress with other customers. So we focus there, mainly on ensuring the productivity matters [until] we can reach.

The compensation payment is not related to the customer, San'an. Clearly considering your question on the cost margin I think we can -- we said that we want to achieve 30% to 35% previously and we still have in our focus. There will be volatility depending on the shipments we have in the different quarters. It can also depend for example on the rate of service or particular our final [ATP] effort. So our final approval portion of the business, so there can be volatility but our goal as I said is really to move towards the 30% to 35%.

Just to clarify on that. Do you think we are in that range and [we done] we revive it again or as we look to Q4 and Q1 is there potential it could drop below 30% to get and you still got a bit of work to be sustainably in that level?

I think the important thing is that there will be volatility, particularly this, as large order kicks in as you know that we always mention that there is a different -- a little bit different price level. So that, that could impact that, but in general our goal in that I emphasize this is 30% to 35%.

That's great. Thank you very much.

The next question comes from Youssef Essaegh from Barclays. May we have your question please.

Thanks for letting me ask you a question. I was going to ask you about the point you made around the potential clients going forward but also look to invest -- even if the [indiscernible] were extra capacity but it still got costs. Can you elaborate a little bit on this? And then as a quick follow-up to that, if you see a potential in eventually upgrading the recycling tools that are currently already deployed? Thank you.

First of all your question on the investment behavior, I would say really the market as we see overall, I think, I would reemphasize what I said in our presentation, the growth for lightning will continue and that's what we see. We also see and that's for example also in the numbers of our Q3 that there are several customers who invest not at a large scale but at a smaller scale in order to add capacity as they need it. [They are] in certain steps and that these are the customers where -- when we look at our sales numbers this quarter where you see where it really this come from. Regarding your question there will be -- and I mentioned that, I think also and I can -- therefore you are right there will be also customers who really, particularly competing in the cost arena they will very much also look into further investing in more productive tools. And as we already mentioned, I think by having a new generation of tools, the latest generation is going to lead and those -- the customer can definitely achieve more reduction of 30% in cost of ownership. And therefore there is high interest also if you compete on basically on the cost side to invest in this area. So I see that this will continue to further grow. I also mentioned that customers also look into upgrading and checking if there is also a possibility basically for certain segments there -- to invest and upgrade not the full -- into fully new systems of the business going on and clearly we also watch out on what we call let's say refurbished [equipment] that's something which we also follow. Also currently what we see is that if there is a consolidation then clearly this is supporting basically the use of these equipment. Until now the development of basically used equipment market is still slow, but we will watch it.

Okay. That's actually extremely useful. But I also meant will you be able to make a business out of selling the upgrade packages or recycling for customers as they -- for instance or that once it's going to be ready some of the R6 and therefore there will be like, well just buy back from me this amount of the previous generation and you will re-commission them for example and then sell them back?

First of all, this is Bernd speaking, we do upgrade business in the system of business as part of our service business.. It is an interesting part of our business and certainly the customers will have install base of many hundreds of tools of various generations, how we can improve there, the cost of ownership legacy in those existing tools. But certainly what is not going to happen that we upgrade all systems to the latest say R6 like platform with this from the payment perspective would not be economical.

Thanks.

The next question comes from Andrew Abrams, Supply Chain Market Research. Please sir, your line is open now.

Hi. Thanks for taking the call. One question on the milestones and qualification process. Once you reach your final qualification, which I am assuming is going to be sometime next year, what does the delivery schedule look like relative to what it was originally? Is it staged in equal segments over a 12-month period or are they looking to take half the order and then stage out the rest? Can you give us some perspective on what that looks like?

Yes. Thanks for your question. Definitely we have to talk and we will discuss with the customer the exact shipments. We also assume that as the customer has also to budget all these deliveries that it will be a [stepped] approach of the exact schedules we have still to define with the customer.

Okay. And on the OLED Gen-8 demo, it sounds like you are on schedule for getting that up and running. Would you expect that demo to be ready before the end of this year or are we talking about early next year? And then how long would it take you to actually put one of those units at a customer, if a customer so desired from when you actually get the demo up and running?

Yes. Thanks for the question. For the Gen-8 demo we are ready to show customer the tool and demo -- the process performance as we speak. So this is achieved. Your second question, what is the delivery time of the Gen-8 system, well first of all that little bit depends on the integration level. The customer is buying from us and meaning how much automation parts is billed in the order, but we see delivery time is between 12 and 18 months.

Got it. Thank you very much.

The next question comes from Gunther Hollfelder from Baader Bank. Please sir your line is open now.

Thank you. First on the gross margin, can you disclose what's the gross margin on the Planetary systems you are selling?

Gunther, thanks for this question. I hope you accept that we are not publishing this in detail information, but its kindly as you saw in this quarter. I think it's definitely that you can say it's developing on a good level here. So it's nearly at the upper part of the range.

Okay. Looking at the order intake during the quarter, which was back in the range we saw in 2014 and 2013, what's your visibility in the current market environment? You know that you can get back to levels we have seen in the first half of 2015 and independent from -- of course from the San'an business?

If you look at our product portfolio its currently -- definitely the focus is on the applications, which we mentioned like LED, its power, its solar and also other opto-electronic like telecommunication, data communication and in the semiconductor it's about ALD. These are the areas where we have very crucial in 2015. We see now also kicking in the first orders from our acquisition, as we mentioned, since the May calculation, which should also become sales in next year. We will also have a smaller contribution next year on our Three-Five business where we received an order this year. So there are several activities, but clearly the drivers have to be initial ones which I mentioned, and therefore so the contributions from R6 and from power and from the Atomic Layer Deposition. And therefore this is what our focus is for next year and then in the years to come we will really see then the benefits coming out from the Three-Five and also from the OLED -- our OLED business and that's how we see the future here. And therefore it's also for us a key besides the R6 to have -- to continue this success, which we have shown in Q3 as with our Planetary technology.

Thank you.

The next question comes from Colin Rush from Oppenheimer. May we have your question please.

Sure. Can you a little bit about the mix of revenue this quarter. How much of the revenue is just actually acceptance payments out of the sum for the equipment?

You mean, final approval which is 10% of the -- its basically not -- its actually if you take it in percentage it's not higher relative than in last quarter. So therefore, not a major contributor. The major contributor really was we had some higher service and spare sales and we had also a good mix in our products. So those which were the key drivers for in our shipments, so in our equipment. The final acceptance is basically on a percentage basis similar to the last quarter.

All right, perfect. And then just shifting gears into the semi cap business a bit. What are you seeing from customers or we are seeing that chip manufacturers saying that CapEx will be up next year and equipment companies are concerned about being flat to down. What are you focusing right now?

I think for us independently of the final decisions on equipment orders, what our focus is really to develop further service requirement of customers and also get qualified at more customers. That's our focus and that will also then reduce any risk if there is a delay in certain investments on our existing business.

Okay. Thanks so much.

The next question comes from Mark Heller from CLSA. May we have your question please.

Thanks for taking my question. Can you just clarify the R6, is it qualified at any customers and is it in mass production at any customers right now?

There is [25] as customers and I wouldn't call it mass, we call it pilot production.

Okay. Got it. And then in terms of when you will be recognizing the order for San'an and the R6, what is that hinged on? Is that achieving the milestone -- the milestones at this point or is it just delivery timing that's keeping you from recognizing the order?

It's basically somehow bullish because we saw before -- we have -- clearly to have shipments and we have to schedule but we also want to reach the milestones in order to be recognized. But the primary things at the end I think is that we have scheduled on the shipments because when we have the shipments also the confidence of the customer is there.

Okay. Got it. And then last question for me is, can you just quantify the contractual settlement payment, what was the benefit to gross margin in the quarter?

There was no benefit to the gross margin. The benefit was to the EBIT and we show that in the other operating income and the impact was EUR1.9 million.

Thank you.

The next question comes from Janardan Menon from Liberum. May we have your question please.

Yes. Thanks for taking the question. You have been doing quite a lot of business in the non-LED side this year from opto, direct communications, et cetera, power. I am just wondering, how the outlook for all of that looks into 2016? Can we assume that that market will grow next year based on what you are seeing in terms of customer interactions, requests, et cetera? And then as anything comes from San'an and the LED side that will be on top of that or can this market sort of be flat to down next year? And then I have a brief follow-up.

Yes. Thanks for your question. This is -- and you make a good point here which is really a good year for us and these other applications as you mentioned like data communications, telecommunication, but also solar and some other opto-electronic applications like LED. My impression -- my point is here, this is always difficult to predict exactly in which direction it goes. But it has been over the last years a quite stable business for us. So this year is a very good year. We have to see how next year can be. The goals should come actually as we mentioned from the growth -- the higher penetration in the power electronics field and also clearly then also the return in the LED field.

Okay. Just going back to the qualification, how many customers are currently qualifying the R6? You used to give some of that information in the early stage of the R6. I mean what are the updated number and how many of them have converted to any kind of firm order as yet?

That's [13 the number] we see but it's 8 customers.

Eight customers are qualifying here.

Yes.

And can you just -- one last one, can you confirm that your margin structure for everyone else except San'an, I mean all the people like that, that everybody else should be at a higher level than San'an, would that be a fair assumption?

I think the assumption is the following, the larger the deal is, the more you have also to discuss clearly about pricing. But in general I would say your statement is right.

Thank you very much.

The next question comes from Tammy Qiu from Berenberg. May we have your question please.

Hi, thank you for taking my question. The first one is on the qualification, because you have mentioned there are other milestones to be reached. Can I just confirm, is that something going to be impacting the gross margin negatively at some point going forward and also if the qualification about tool engineering or is it just basically about improving the throughput or there is something related to the cost effort that the tool needs to be improved?

I think -- thanks Tammy for your question. I think when we had our call last quarter I mentioned that we have some extraordinary impact also from the -- from some adjustments we did at this tool that impacted last quarter. That on a lower scale of things is still going on, which also impact our results this quarter and also may be in Q4. But this is at a much lower level and therefore I don’t -- it doesn’t become really -- obviously it’s a small number. So the focus now as Bernd said is really on productivity and driving -- on getting the tool to the performance we would like to see in order -- [with] this customer in order to achieve the productivity specifications.

Okay. And the other question as you mentioned, are you still running qualification on the [indiscernible] is that because of the same problem they had?

I think as with the topic, first of all I think some of you -- customers we are talking about started significantly later. Some actually have already qualified the devices and we also got the same on productivity topics. So there is several reasons but also there is no, let's say, immediate need for further investment and getting it finalized. So there is a lot of reasons why things might still be in discussion. But in general I think the progress we have seen at our customers, is really getting in the right -- giving us the right direction, getting in the right direction.

Okay. Thank you very much.

The next question comes from Malte Schaumann from Warburg Research. May we have your question please.

Yes. Good afternoon. The first one is a follow-up on the non-LED side of your business. The opto-electronic is quite strong this year. You have said you don’t really expect growth going forward, especially in 2016 coming from that side. But are you -- if you are comfortable to [peak] the level which was significantly higher this year in comparison to 2014?

What you said is basically that this is a particular high level right, for these applications compared also to last couple of years. What we said, it's -- since its already a mature business in many cases and these are applications, which our customers run for many years and for their -- also have regulatory approvals which is not tremendous or step by step they add to their capacity. We say it' difficult to predict the exact development next year. So the grunt work I mentioned is that we count on the growth coming from power electronics and LEDs for next year.

Okay. Understood. And that could you provide us maybe an update or shed some color on the development you see in your OLEDs business, any signs that customers move quicker or slow down activities in terms of may be both in the encapsulation business as well as on the deposition side?

On the encapsulation, I mean you understand this is perhaps still a young business, so you can assume that in this relatively short period we do not see a big change and the shipments do not change in the speed of adoption. And we mentioned about the order we got in Q3 and we booked in Q4 and we are very, very happy that we will get -- ensure this deal and we are also looking further -- I mean small scale business in these applications. On the OLED side you probably noticed that there are basically two main players both from Korea and there has been some repositioning of one of the players which we think is not in our added advantage.

Yes. Okay. Thanks.

The next question comes from Daniel [indiscernible] from EXANE BNP Paribas. Please sir, your line is open now.

Good afternoon. I have just a very brief question, this EUR1.9 million payment from contractual settlements, from who did this come from or what was it related to exactly?

So, I hope you accept that we don’t disclose this customer but basically we discussed and re-negotiated the complete contract, which leads to certain shipments and also to this contractual compensation payment.

Okay. Thanks a lot.

Gentlemen there are no further questions.

Thank you very much to everyone listening and asking questions. This concludes our Q3 '15 results conference call. Please feel free to contact us any time here in Germany or in California, if you have any questions and we are happy to talk to you and hear you later. Thank you. Bye-bye.

Conference recording has stopped.