PVA TePla AG

Good morning, ladies and gentlemen, and a warm welcome to today's earnings call of the PVRT Plage, following the publication of the Q3 figures of 2024. We are delighted to welcome the CEO and CFO, Jaline Ketter, and Head of Finance, Elke Klemann, who will give us a presentation on the results in a moment. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly via audio line to the management. We are looking forward to the presentation. And having said this, Miss Ketter, this stage is yours.

Thanks a lot. Good morning and welcome to our earnings call of the third quarter 2024. The general economic situation, as well as in particular the semiconductor market, are still at a low level. Despite this challenging situation, we again achieved a very great quarter with MPPA-Tibla, and we are well on track to fulfill our guidance on the lower end of the range. In the short-term view, we are still dependent on single economic cycles such as the semiconductor market. The upcoming year 2025 is a year of transition with only slight growth potentials. In the long-term view, We want to be independent from single market cycles. To achieve this, we strongly focus to execute the foundation of our long-term growth. And again, we made a lot of progress during the third quarter 2024. Let me start with some highlights of the third quarter before Elke Kleemann, our head of finance, will lead you through the financials. I'll take over afterwards to take the opportunity to give you a better understanding of our technology hub before I will end with the guidance of 2024. Metrology demand still remains strong. Business activities in this area are mostly related to already developed customers and markets. We further make progress with the qualification processes in new market opportunities in the back end of the semiconductor industry, especially in Asia. With PVA Technology Hub, we started a long-term R&D approach in Q1 2024. Within this concept, we set a short-term focus to silicon carbide, and we made a lot of progress within this project. Today, we are able to produce silicon carbide powder in various grain sizes in a reproducible format. Further, we stepped into a strategic partnership with Scientific Visual, With this technology, we extended our metrology portfolio meaningful, related to the challenges of silicon carbide. I will explain you more about this later. In early Q4, we finalized our new facility in Italy. With this new and modern production line, we are strengthening our presence in southern Europe. Here we are producing one of our key components in the product group material solutions, the process chamber, the heart of the system technology. With this, we further reduce dependencies on external suppliers and improve our resilience and control about quality and delivery time. This location will also drive a metrology application center and a service hub to support our local customers. With these kind of investments, we are also strengthening our after-sales capacities and set the foundation of a long-term growth also in this field of operation. The facility further achieves full autonomy in energy and supports our sustainability approach. Before I come back to our technology hub, I hand over to Elke Kleemann for the financials.

Thanks, Charlene, for handing over. And good morning to everyone on the line from my side. Let's start with the key figures. Overview. And some remarks up front from my side. The financial year 2024 has been very successful for us so far. And I am in particular pleased about that because of two things. The first one is we have succeeded in doing so in this indeed current weak macroeconomic environment. Secondly, we achieved that while working intensively on implementing our strategy and investing in our technologies and our organizational structure. In a nutshell, I can once again report a good set of results for the first nine months. starting with sales. Sales are up by 3.7%, amounting to 198.3 million in the first nine months. We announced that we are heading towards a transition period with a moderate growth for the next one or two years. And that's exactly what we are seeing here starting. Profitability, EBDA is up over proportionally compared to sales, plus 11% at 32.4 million. This translates into a nine-month EBDA margin of 16.3% compared to 15.2% last year. A really good improvement considering the somewhat lower volume growth we see and the strategy-driven transition investments we are making. At 107.2 million, the order intake is still subdued, and the order backlog has decreased to 187.3 million. We will have a closer look at the order situation later on. Before moving on, I would like to point out and highlight the CapEx development. The CapEx at 19.5 million is at a record level. And, of course, it reflects our future-oriented investments in research and development, to name the technology hub here, in buildings and capacities, as well as in sales and the sales infrastructure. Already in the first half-year call, we highlighted that we spent already more than the full year 2023 amount in capex. And as we see, we further continued in Q3 in a similar pace and will do so in Q4 as well. Jalene already elaborated on our progress in the capex. Next to this, we acquired a somewhat below 25% stake in scientific visual, which is not included in the capex. Moving on to group sales. What catches the eye here is that actually nothing seems to have changed here significantly in the last three months. The regional sales split shows that as in the first half of this year, with 56%, the highest share is coming from Asia. This results from the execution of our bulk orders where we work off the part we deliver to Asia. 12% of sales relate to North America. It has been 13% in the first half year. Happy to see this as the growth in North America is one of our strategic initiatives. Europe, including Germany, accounted for the remaining 32% here. We see a 3.7% year-on-year growth in sales. Our segment, semiconductor, contributing 68%, and our industrial segment contributing 32%. Hence, a slight shift, but no real structural change. What is very important? Both of our segments have increased in sales, and that's good. The growth rates differ, with the industrial segment showing the higher growth rate, a development we have been seeing since 2023, driven by industrial applications and our acquisition in CVD technology in France. This is part of our Syngesis product line. That's the first important message here. Within the semiconductor segment, the contribution to sales from the execution of our bulk orders decreased in absolute terms and in relative terms. We have seen that in the first half as well. This development was compensated by the growth of our metrology business, resulting in a moderate absolute growth of segment sales by 1.5%. We are excited to see sales from Metrology continue growing as this perfectly matches our strategic plans. And that's the second very important message here. Coming to group profit, the quarterly development. In a direct comparison, quarter to quarter, sales are slightly down, minus 2.3%. From our updated guidance, you can see that we expect a higher sales share in Q4 2024 again. In Q3, EBITDA and EBIT are down in the direct comparison with last year. The good news here is that cross profit was on the same level as in Q3 last year, despite the somewhat lower sales level. Hence, we achieved a really sound cross margin of 30.8% in Q3, and this is even increased compared to the previous year. Next to that, we see that the overhead and holding costs are going up. This comes along with our investments in, on one hand, our organizational structure, including the sales organization, and secondly, in our technologies, so to say, in research and development. Both are core elements of our strategy and its implementation. Overall, margins are excellent and remain strong. This all is reflected in the EBDA and EBIT development we see here on the slide. But now to the year-to-date perspective. The nine-month group profit development here looks really good. We see a positive development in all key figures, in absolute as in relative terms. All the three earning figures give us a fairly uniform picture and show a year-on-year growth of around 11%, and that at a 3.7 sales growth rate in brackets only. Cross-profit at 68.8 million with a cross-margin of 31.2, a very sound level and a good improvement. EBITDA at 32.4 million and a margin of 16.3%. And EBIT finally 26.6 million at 13.4% margin. To summarize that, we are really pleased with that performance. It provides a good starting base for the upcoming fourth quarter and it prepared the crown for us to achieve a margin increase for the full year 2024 and staying in the guided corridor. Coming to our two segments and starting with the semiconductor. Sales are up by 1.5% year-on-year and amounted to 135.7 million. We see a stable development in sales despite the current challenging environment. The continuous growth in metrology compensates the effects of the progressing finalization of the bulk orders. I already mentioned we are satisfied to see that continuous growth in metrology as this precisely is where we see excellent long-term growth opportunities. EBIT margin improved to 17.3%, which is driven by a positive product mix and, of course, an effective cost control. The order intake reflects the current general weakness in the industry and stayed subdued at 71.4 million, minus 39.8%. The sound order intake from acoustic metrology didn't compensate the weakness in other areas here. Thus, our order backlog was down by 46.5%. and lower, of course, as in last year. Sorry, my voice. Industrial. The industrial segment was able to nearly maintain the growth rate of the first six months and outperformed the previous year by 9%, with sales amounting to 62.5 million. As in the first half of this year, the main contributors were material solutions for industrial applications and MPA, the new business we acquired end of 2022. At an EBIT in the amount of 6.7 million in the first nine months, the segment margin remained well above 10%. The more, it even increased further during Q3. to now 12.2%. Thus, the industrial segment showed a more than solid performance in Q3. We see a sound increasing level of customer activities, but on the other hand, also longer decision cycles in customer awards. Therefore, the order intake fell short of the previous year by 39% to 35.8 million in the first nine months. At 78.6 million, the order book, despite being down by 16.5% year-on-year, is at a really sound level and provides us visibility for future sales. Finally, let's have a look at the order intake. In Q3, the order intake stayed at a level we have seen in the last couple of quarters. At 107.2 million, it stayed behind the previous year of 177.6 by 39.7%. With the semiconductor segment contributing 67% and the industrial 33%, there was no material change here to report. While, on the other hand, the regional split keeps changing. We see an increasing share of oil intake coming from North America with 23%. It was 11% in the last year. In the half-year call, I already highlighted this gratifying increasing share from North America underpinning our strategy. The share coming from Asia continued increasing as well to 42%. To recall its first half, it was at 38%. This is driven by the joining technology. The contribution of Germany and Europe in combination went down from a peak of more than 60% to 35%. Despite these quite significant shifts here, the order book is still very well diversified. In terms of product lines, you can see that in the middle, the pie chart in the middle of the slide, metrology has still his nose ahead. contributing 53% to the overall order intake after 57 in the first year, first half of 2024. Order intake in essence, what do we see? Recovery continues, but at a lower pace than we expected. From the customer requests, the market activities, and the customer feedback we get, we clearly see ourselves on the right track. We see signs for a gradual semiconductor recovery and expect the market to pick up in Q4 and beyond. This could soften up the current more than 50% share of metrology. The difficulty here is it's really hard to predict the exact pace of the pickup. However, this does not change our fundamental and high-level confidence in the PVA growth opportunities. And with that, I'm handing back to Jaline for further explanations on the technology hub, the outlook, and some closing remarks.