VAT Group AG

Ladies and gentlemen, welcome to the VATQ1-2026 Trading Update Conference Call. I am Valentina, the conference call operator. I would like to remind you that all participants will be in this and only mode and the conference is being 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 Urs Gardner, CEO. Please go ahead.

Thank you. Ladies and gentlemen, good afternoon and welcome to VFB's Q1 2026 Trading Update conference call. With me this morning are Fabian Dioza, CFO, and Christopher Whitley from our IR team. After my introductory remarks, we will start a moderated Q&A session. We are pleased to connect with you again after our full year results in March and the following roadshow. A lot has happened around the world since then, but the one thing that has not changed, and I can reconfirm today, the rank is here. We are seeing very strong demand for our products from our customers across the semiconductor industry. Q1 orders of 356 million Swiss francs represent a 17% increase on the previous quarter and a full 47% increase on the same quarter last year. This is the second highest order intake that VAT has ever recorded. At constant currencies, orders would have been up 19% sequentially and up 67% year on year. The conflict in the Middle East has been a big topic in the past weeks, and we have not been completely immune to it. While we do not source components or commodities from the region, its important position in global shipping, including air freight, temporarily challenged our activities. We share these challenges and their impact already in our short press release on March 31st. Overall, we achieved Q1 sales of 221 million sweet frames. This means sales were down about 14% quarter-on-quarter and down about 20% year-on-year. On a constant currency basis, sales would have been down 13% sequentially and 9% year-on-year. The resulting book-to-bill ratio amounted to around 1.6 times and our order book increased by 42% to 431 CHF compared to the end of 2025. The Q1 sales impact due to the disruption in the supply chain amounted to roughly 20 million CHF. Let me provide you with some additional color on it. We had both our own components and components from our suppliers blocked in transit in the region for a limited period at the beginning of the conflict. As mentioned before, we do not source materials or components directly from the region. So the main challenge was to figure out where exactly our goods are located and then to find ways to get these components to our factories. As the globalized supply chain in semi-model actors works with tight schedules and just-in-time deliveries, already small and unforeseen disruptions can have a meaningful negative impact in the short term. This Q1 situation was a logistics challenge, but marked in any form a sign that the ramp is in danger. All orders placed for shipping in Q1, that got delayed, will be manufactured and delivered in Q2. As a result, we do, at this stage, not expect any negative impact on our full-year results from these disruptions, bearing any further escalation of the conflict, which we hope will not be the case. Within our business units, advanced industrials continue to see good demand for city-related end markets, such as metrology or inspection tools, but other project-related businesses remain subdued. Global service saw a slowdown quarter on quarter, following some restocking in June 4, but overall orders are higher on a year-on-year basis. The high utilization rate in the past was first viewed in the global service business in 2026. Over the past weeks, we have been very closely engaged with all our major semi-customers, and everyone agreed on the strengths of the current brand. WFAP equipment spending is estimated to amount to approximately 130-135 billion USD in 2026, and in 2027 this is expected to increase even beyond 150 billion USD. This WFAP equipment spending is a result of the build-out for the AI infrastructure, especially driven by the hyperscalers. The overall value of the semiconductor sales might even exceed the US$1 trillion mark in 2026, which is certainly driven by higher average sales prices, but also reflects the increase of units produced. So, thinking about the next quarters, we expect that the market is continuing its strong structural growth phase, this demand for advanced logic and not provide supply. One of the ten semiconductor banks are currently But the very steep rent environment is also tricky, as challenges can emerge from unexpected geopolitical events and their impact on the supply chain. Our globally diversified manufacturing footprint and its flexible operating model provides a good level of resilience. The rent environment we are in requires acute adjustment of the staffing levels, and we are in the process to hire over 450 colleagues globally to support this rent. We have discussed this with you in the past. Our FLEX model is capable to increase our factory output by 20 to 30 percent quarter over quarter. Our operation at full capacity in the second half of 2096. On this basis, we confirm the guidance provided at the full year results presentation in March, and we expect full year 2026 orders, sales, EBITDA, and EBITDA margin to be higher than in 2025. Net income and free cash flow are also expected to be higher in 2026. The corporate orders will continue to be in rainbowed. For the second quarter of this year, we expect sales between 265 and 295 million Swiss francs. This concludes my prepared remarks, and we are now turning the call back to the operator for the Q&A session. Operator, please.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. You will hear a tone to confirm that you have answered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking the question. Anyone who has a question may press star and one at this time. The first question comes from Yang Meiyan from God Knows Facts. Please go ahead.