Cicor Technologies Ltd.

Ladies and gentlemen, welcome to the Half Year Report 2024 Conference Call and Live Webcast. I am Sandra, the Chorus Call Operator. I would like to remind you that all participants have been listened only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Alexander Hageman, CEO. Please go ahead, sir.

Thank you very much, and a very warm welcome to all of you who are in the call. I'm very glad that year after year we have a growing community that is tuning into our webcast, and as usual, Peter Neumann, CFO, and I will present the half year results to you, followed by a Q&A session. So, how does SECOR look after the first half of 2024? Our overall strategy has not changed, but we have sharpened our focus even more. What you are seeing today is a company where we are turning the ideas of our customers into highly advanced electronic solutions, mostly in three core markets. You will see that again later, that the three markets we have served are much more balanced than they used to be. It is, simply said, about a quarter of the business each in the medical and aerospace and defense sector and about a third in the industrial sector. With that, we have reduced our dependence from the more cyclical industrial markets and increased our focus on those sectors, medical and aerospace and defense, that are showing continued structural growth. So here on the left is the one important pillar of our strategy. pillar is also unchanged. The building of strategic customer relationships, where Secor is much more a partner for the long term, very often 10 or 15 years, and will not be replaced by competitors. So we are building a moat around our business, and the business relationship is extremely busy. We have started in 2021 to add the third pillar to our strategy, which is the market consolidation through M&A. And here again, I'm extremely pleased that we can present more progress to you. The business model is continuously evolving. We are a manufacturing partner to our customers and that we are for a very, very long time. So production continues to be the driver of revenues. However, to further strengthening the relationship with our customers and also to reduce any potential pricing pressure, so to gain more pricing power with our customers, we are starting the relationship earlier and earlier. Strengthening our product development capabilities is and will continue to be an important pillar of our company development. One of our acquisitions, Evolution MedTech, was done for exactly that purpose. Our footprint is constantly evolving with acquisitions that we are doing. We are very strong in our home markets and we are even stronger now in our home markets with market leadership in the United Kingdom, with having developed a very strong position in the German market, the largest market for advanced electronics in Europe, and with consolidating our strong Swiss market position. In the manufacturing footprint, we have added a site in the south of China. That actually is a very positive development for SECOR because we are able to support our European customer base also with local supply in China for China. So today our footprint is made in Asia that way that we manufacture in China for China and in Southeast Asia for the world. This has been a very exciting and very busy first half year for our whole team worldwide. We have seen in a very difficult environment where we have a clear recessionary trend and peers are reporting strong sales declines, we have been able to fight back and register only a very small decline in organic sales. And that was much overcompensated with the growth mostly from acquisitions. The stability and in the future also further increase of margins, operating margins is a priority. and we will continue to have that as a priority and work towards higher margins. The increase in free cash flow and net earnings, which Peter will explain into more detail, are really an extremely positive development, especially the free cash flow that we were able to generate as a business, which again Peter will explain in detail later, has strengthened our balance sheet and really made SECOR a stronger business. Now, as I mentioned, compared to last year, the share of industrial business has declined, whereas we see absolute growth in medical and very strong growth in the aerospace and defense sector. Today, you see an extremely balanced business, a business that is more robust, and a business that is more able to fend off effects from a sessionary environment. While we continue to be focused on our mostly European customer base, supplying them both in Switzerland, the rest of Europe, and in Asia. Now, reporting in our two divisions, EMS, electronic manufacturing services, that division continues according also to our strategy, the growth driver. And it's a growth driver, gaining market share and with leading profitability. Gaining market share, especially in our key markets is important because we have built platforms, especially in the medical and aerospace and defense sectors that are difficult to beat. more customers are attracted to SECOR, where we can realize the type of margins that we want. SECOR is in EMS, in the meantime, roughly number 10 amongst the European peers, in the medical market, number four, and in aerospace and defense, even number one. Sorry. Net sales have increased. 16.5%, which is consisting of a 6% organic decline, some negative currency effect, of course, and then a strong contribution from the acquired businesses, STS Defense, Evolution MedTech, and TT Electronics IoT division. I'm really happy that the EBTA margin has increased. We have added 20 basis points, and that is despite the largest acquisition, which for now has been dilutive in margins. TT Electronics, you see that in the report, has been acquired at a very modest valuation. It has been historically a lower margin business. I am very happy to say that after one quarter with Secor, we already see a significant margin pickup, and the business is moving very fast to fulfill CCOR's margin requirements. STS Defense has been a business contributing very strongly from day number one to the margins. So the focus in that division now, after three acquisitions in the first half year, is the rapid integration of the operations, especially the three sides from TT Electronics, And as mentioned already, the alignment of the margins of the TT sites to the expectations that we have. And as stated before, I am absolutely confident that already by year end, we will have made significant progress in that direction. To understand the margin better, it needs to be remarked that we have a one-time effect of roughly 0.8 percentage points of overall CCOR revenue, a negative one-off effect due to accounting procedures during the acquisition. This is a one-off. This has reduced the operating margin and is then not repeating at the second half or at any time in the future. Let me spend two minutes on these acquisitions. We are acquiring not only to make Secor larger and more profitable. We are acquiring to make Secor's strategic platform ever stronger. Being a strong supplier to our customers with an offering that is difficult to beat, this is our priority. And let me explain what these three acquisitions are contributing. STS Defense. STS Defense in the south of England is a tech and engineering provider for mostly communication control systems in aerospace and defense. It is a business that is extremely strong in engineering. About one-third of the revenue is product development revenue. Very important on our path to transform C-Corps from an EMS company to a true CDMO, a contract development and manufacturing organization. So we have expanded our platform in the UK market and we have, in the addition of excellence in engineering and excellence in manufacturing from Exus Electronics, significantly strengthened our exposure in the market. That acquisition was followed by Evolution MedTech. By revenue, a relatively small operation in the low single digit million Swiss franc range in Bucharest, which is very capable and totally focused on device development for the medical markets. And that can be complex medical products up to class three devices, so devices which have a life-sustaining function. Through that acquisition, And as mentioned in an earlier part of my presentation, we are further strengthening our position as a CDMO, in this case, to the medical market. We have doubled through this transaction our engineering resources for the medical market. The third acquisition, the carve-out of three manufacturing sites from TT Electronics, is very important as it provides us with additional customers and also additional manufacturing capacity. The sales of the business is roughly 70 million pounds a year, and it's, as mentioned, a profitable business with fast increasing profitability, however, with significant capacity reserves. That has allowed us, number one, to become market leader in the important and growing UK electronics markets. It has allowed us, number two, to obtain the European market leadership in electronic manufacturing services for aerospace and defense, and number three, it has added an excellent manufacturing site in Dongguan, China, to serve our European customers for their China demands. But let's not forget the smaller division, the advanced substrate division, which today is contributing 10% to group sales. The AAS division is a clear technology leader. We are operating in niches that are very relevant for the medical and the aerospace and defense markets, and that provides strong functional solutions for our customers. I am really happy that we are able today to show significantly improved sales and operating margins compared to last year the organic sales that we are seeing is positive it is coming from new customers one in the medical market and also increasing delivery shares with existing customers the increase in ebda margin is mostly the result of the successful completion of a multi-year operational excellence program at our printed circuit board site in Boudry Switzerland that is now again a very robust site it's ready for the future really strong with a strong customer pipeline so I couldn't be happier with the development of that division we are focusing for the rest of the year on continuing to grow the business organically and and increasing profitability further. With that, I want to hand over to Peter to discuss financial results for the first half. Peter.

Thanks a lot, Alexander. Let me lead you through some of the more details of the financials.