VAT Group AG

Hello and welcome to VAT's full year 2025 results and outlook video statement. I'm Michel Gerber, Head of Investor Relations. Joining me today are Martin Komischke, our chairman, and Urs Gantner, CEO of VAT. Before we begin, a short note. Today's statement and discussion may include forward-looking statements, and the actual results may differ from what is discussed today. A full safe harbor statement will be displayed at the end of this video. So over the next few minutes, we'll cover review of the full year results, current market dynamics and the mid-term semiconductor outlook, the technology update and where VAT will play in, and of course our 2026 guidance. And last but not least, the rationale behind the dividend proposal that we will give to the AGM. For details and figures, please refer to the media release and the annual report that also have been published today. So let's start with the full year 2025 result. Martin, from a board's perspective, what do you think was the most important or noticeable achievement in 2025?

Three major, let me call it success factors, stand out. Number one, resilience. Number two, balance. And to number three, readiness. Resilience, what do I mean? 25 was a challenging year. I'm talking about FX, currency headwinds. And I think I'm not exaggerating when I say we lived in a pretty unstable environment being driven by geopolitics which were unpredictable. But yet VAT delivered. VAT came out with a strong performance and stayed pretty much focused on execution. Number two, after resilience, I've mentioned balance. Balance is of utmost importance in a cyclical industry. We achieve growth, profit, very nice cash flow, and could afford to invest continuously into technology and capacity. Number three, readiness. In terms of readiness, we advanced our milestones, which put us in a good position for the upcoming race in the next cycle. From global footprint to innovation capabilities, we are set up pretty well. This underpins the confidence of the board and somehow the optimism going forward.

Thank you, Martin. Urs, when I ask you the same question looking back at 2025, what were the greatest achievements from your point of view?

Well, 2025 was a year of celebration. So we marked the 60 years anniversary. And what can we do better than giving ourselves a present, a gift by new records, right? So we achieved highest factory output. We achieved the highest number of spec wins. And very important, we delivered record free cash flow of 230 million Swiss francs. So that's certainly a fantastic number. Also in sales, we had a nice growth as well with 1.074 billion Swiss francs. Not a record so far, but I think we are on the track to beat that. next year. Also in profitability, 30% APTI, despite all the headwinds we were achieving, which is a very healthy number. And in the end of the year, in the year end rally, we achieved a book to bill of 1.2 in Q4. And this is underlying and showing that the market is picking up.

Thank you, Urs. Martin, coming back to you, how does the board interpret that performance, that operational performance in terms of value creation?

Well, for me and the entire board, this is the proof point of the VAT model, let me call it VAT model, consisting of technology leadership, market leadership, associated with very disciplined execution all over the time. From the governance standpoint, we constantly look whether our performance is achieved sustainably. Are the investments right? Is the organization strong? And is our risk management prudent? And I'm very happy that I can confirm we made good progress in all these dimensions. This is what the board wants to see.

Great. Now let's move to the market. And again, Martin, from your standpoint and the board's standpoint, how do you read the current semiconductor dynamics and the midterm outlook in this industry? Nicely.

I see happily a supportive environment. after some years where the environment was not that supportive in my perception. This supportive environment is driven, and this is very important, by structural trends. AI, which is the driving factor, is best understood as a multi-year infrastructure built out that impacts the entire value chain from advanced logic to high performance memory down to state of the art manufacturing equipment on which these outstanding devices are produced. At the same time, we have to remain realistic. As we all know here, semi-business is cyclical business. So the board view is best described as confidence in structural drivers, and I'm happy to say structural drivers, being associated with discipline and execution. That is what determines whether you win across the cycles. Thank you, Martin.

Urs, what should stakeholders, all our stakeholders, watch most closely in 2026 and what's particularly relevant to VAT?

Yeah, as just Martin pointed out, the structural change will start in 2026 or already started at the end of 2025. So first of all, it is all this AI driven investment and how it translates in wafer fab equipment in the coming years. So this is still the best proxy for VAT, how wafer fab equipment will kick in. Second one is that everybody can watch is also the transformation, the transition towards gate all around technology. So the industry is an inflection point and these new chip architectures will require completely new manufacturing technologies and this will again translate a new way for fab equipment. And then the third one we also cannot neglect is the regional behavior. So everybody is trying for self-sufficiency, including China as the main driver, but also the other regions. And this will also have an impact on our business. so this is more on the investments on the semiconductor OEM business then of course we also have the service business very interesting business as well we hear that some of the fabs are already sold out in capacity this means service will also kick in so they will have to have service consumable will kick in as well And then we have also, not to neglect as well, the non-semi-business. Here the signs are a little bit more muted and mixed, but also here we are focusing on some leading vacuum applications where we can add value to the market.

Thank you Urs. Martin, just to come back a little bit, one sentence on the midterm outlook, confidence level and what the board wants management to stay focused on.

The most prominent sentence is the confidence is high. If you allow more than one sentence, I would add because of structural growth, again, structural growth, because of our leadership positions we inherit. And the message to the management is crystal clear. maintain the outstanding customer intimacy VAT always had, and keep on focusing on disciplined execution. And be ready when the market accelerates, and this is the time now, be ready to scale.

Excellent. Urs, technology is central for VAT's story. Can you give us a short update on what kind of key developments we're working on and what we have introduced in the market in 2025?

Well, very important, as I mentioned already before, we are moving into an era of atomic precision. So gate all around technology and the node size reduction in logic, but also in memory, it increases the number of process steps, the precision of each process. And this is the field that we feel comfortable. So the industry is at a turning point that they don't exactly know what they need in the future. And this whole supply chain, we have to support them to make it happen. A very concrete example is when we came in with our gas inlet valve, a product that was not available in the market. We anticipated years before that this will be a bottleneck and they will need it. And in 2025 we were launching this new product to the market.

And we also are here in a very nice innovation center. How important is that to the whole innovation technology story for VIT?

Yeah, well, of course, it's wonderful to be here in this new building and to have everybody under one roof. And I always say if you have to bring bright people together and then they will become even better. Creativity starts through the discussion and not sitting at home in front of the screen. And also here, the innovation center is just next door to our manufacturing, where we have the discipline to first of all, the discipline to execute. But it's also so important that our engineers are very close to the manufacturing to come up with the best products.

Thank you Urs. Now, Martin, we talked about technology leadership. Why is that so important? Why do you have to be in the forefront of development, sometimes setting standards even?

Because technological leadership is the mother of it all. It is a foundation for customer trust. for competitiveness and for the long-term value creation. For all of this, we are talking about technological leadership, the mother of it all. The board supports focused innovation and insists on that this innovation translates into scalable execution and profitable sales. That's why we look at the full equation consisting of R&D, infrastructure and capacity. In 25, we invested in innovation, but could advance our worldwide footprint as well. So the board ensures smart and wise capital allocation, not only into products, but into the ability to deliver and the ability to scale. And this is the time now.

Great. I remember a sentence, a quote from your stakeholder letter in the annual report where you say that since 1988 VAT has been with its customers. And I think what you say there is that in 1988 the average node size was 1,500 nanometers. Now we're working with our customers on nanometer sizes of less than two nanometers. I think that's also proof that innovation is absolutely key for our success.

I even have a better one for you. I saw a very nice video which blew my mind. In that video, they had the question, how big... And I don't know whether I already came with the question or whether you know the answer. How big... Would an iPhone be, an iPhone, today's iPhone, be if it would be based on the very beginnings of transistor structures? At that time, it was still tubing. It was right at the edge to transistors. How big? A soccer field? You know too much. I don't know. Even you don't know? You may guess one time or two times. First time, wrong. Take the second time.

Must be more, right? Yes. Much more.

Third time?

Like Switzerland.

Not bad. 470 miles. It would have the length 470 miles if it would have been constructed on the basis of the technology at that time around the 50s.

This is innovation. Impressive, impressive. I'm glad I don't have to carry a 470 mile iPhone with me. Yes, in particular in the car.

Exactly.

So Urs, let's turn to 2026. How should viewers think about our guidance, both near term and for the full year?

Yeah, this is also the preferred questions we get from from the investors and the capital market. I think Most important is to note this, and this is also what Martin likes to hear now, the ramp is here. So since I started as a CEO, I was always saying the ramp is coming. And now we can say the ramp finally is here. And we see that in the order pattern of our customers. So for the full year, 2026, we expect a record order intake, record sales and also record free cash flow. That's what I stand behind. This will be new records year for VAT. Additionally, we will also see higher profitability, so meaning higher EBITDA, EBITDA margin and net income compared to 2025. So for the Q1, certainly it will be a transition quarter again, where we will be ramping factory output further, so up to 30% more in factory output, and this will then turn into higher sales in Q2. But in the end, what matters most is to stay Focused, focused, deliver reliably and responsibly scaling as well. Even if now the limit is the sky, we still have to be disciplined and invest wisely in the long run. Most important in this phase, stay close to the customer and align with their needs. Thank you Urs.

Martin, what are you watching most closely when you see 2026 and how it's being executed by management?

I'm monitoring what matters most in these times. What are these times? We are in upcycle time. So we have to follow the execution levers that matter most for that, which is pretty easy quality of culture, ramp capacity, and very important supply chain readiness. Once again, associated with strong customer intimacy, because that is our recipe. We also have to focus on smart and disciplined capital allocation. So we will look at it. We have at the same time, we have to invest into capturing growth. But we want to maintain a strong balance sheet. This is what we have to look at as a board.

Good. So before we close, Martin, let's touch on another positive topic. Yeah. The dividend. Yeah. I mean, for fiscal year 2025, the board proposes to the AGM to be held on April 28 in St. Gallen, an increase of the dividend of 12% to 7 Swiss franc per share. That's right. What's the capital allocation logic behind this decision?

This dividend proposal reflects our confidence in business. and the strong cash flow we can generate. Our capital allocation follows pretty straightforward principles. Number one, invest into long-term competitiveness. Number two, maintain a strong balance sheet. And number three, pretty easy, return the excess cash to our shareholders. So based on the cash flow 25 and our outlook into 26, the board feels comfortable to increase our dividend by 12% to seven Swiss francs. This balances, very importantly, shareholder returns with our needs in investment into technological leadership, capacity readiness and operational robustness.

Urs, a short comment from management on this proposal?

The management fully supports this proposal. It reflects our performance in 2025 and also our confidence in the future. Thank you.

So with this, we come to an end of today's session. Thank you, Martin. Thank you, Urs. When I summarize what I've learned in today's discussion is that it was a very strong 2025 performance. We have a very supportive market environment. Yes, we do. With a clear mid-term opportunity. It's structural growth. We continue our technology leadership. We have clear expectations for 2026. Yes, we do. And the dividend proposal, as just discussed, is a strong statement of confidence in future performance of VAT. Perfectly right. So one final sentence to close off from you, Martin.

VAT is well positioned for the plenty of opportunities ahead. And the board of directors feels fully committed to sustainable long-term value creation. Great.

Urs, from your point of view?

Yeah, my final sentence. I think I want to point out that our position we achieved in the industry comes with a responsibility as well. So first of all, as a supplier in the market. So we have to be ready when the market is needing us. And so the ramp is here. So now we have to focus on a flawless execution, what customers need. And secondly, our responsibility as engineering partner to our customers and the industry to anticipate what the industry will need, not tomorrow, but the day after and start all this innovation right at the time to be ready when the inflection point is there. So with that two pillars, I would say we are ready to continue our profitable growth story.

Thank you Urs. So thank you all for watching. You find further information in the annual report and the sustainability reports that have been published today as well on our website vatgroup.com. Thank you for watching and have a good day.