VAT Group AG

Ladies and gentlemen, good morning and thank you for joining today's webcast on our second quarter and first half 2026 results. Apart from this, I'm delighted to share an important milestone in VAT's long-term growth journey, our planned acquisition of Adenarp. Joining me today is our CFO Fabian Chiozza and members of our investor relation team. After Fabian's and my remarks, we will have a moderated Q&A session to answer your questions. The first thing we want to cover today are the H1 results. Semiconductor markets are in a unique situation. There is a clear supply and demand imbalance. We will discuss the Q2, record 500 million Swiss francs, order flow and the successful start to our ramp up to support this demand. The second thing we want to share with you is an acquisition. Our press release this morning might have come as a bit of a surprise. We have been talking in the past years that we are always looking for technologies that excites us. With the signing of the SPA, I'm delighted to share that we are bringing Adenarp's breakthrough molecular sensing technology into the VAT family. Together, we will create a powerful integrated offering that enables our customers to generate new value and opens exciting growth opportunities for the future. But let's start with the highlights in the first half of 2026. Next slide, please. It is impossible to talk about our business without mentioning AI and the massive investments in data centers. To be precise, however, our products are not used inside the data centers themselves. Rather, we benefit from the industry's need to expand semiconductor manufacturing capacity to produce the advanced chip that power them. The key driver is the growing imbalance between demand for leading-edge semiconductors and the industry's ability to supply them. Advanced AI chips require the latest generation of semiconductor manufacturing equipment operating in the most demanding vacuum environments. Yet existing fab capacity is insufficient to meet this demand. As a result, More than 140 semiconductor fabs are currently being built or expanded and will be equipped over the coming years with advanced edge, deposition and EUV tools. These chip manufacturing tools incorporate VAT valves and adjacent technologies, creating not only significant near-term demand in VAT products, but also a growing installed base that will generate service opportunities for many years to come. As a result, we continue to see very strong demand for our products in the second quarter, leading to a record order intake of more than 500 million Swiss francs. First half orders increased 75% year over year, reflecting the industry's confidence that this growth cycle is more than a short-term AI-driven search. In the first We discussed how we were ramping capacity to meet customer demand and highlighted our target of increasing output by 20 to 30 percent per quarter. In Q2, we exceeded that commitment, achieving a 32 percent increase in output and keeping us firmly on track to reach a quarterly factory output run rate of more than 450 million Swiss francs by year-end. To support this ramp, we focused on two key areas, people and supply chain. Over the past six months, we have added more than 700 employees across Malaysia, Switzerland and Romania. At the same time, we invested in strengthening the resilience and security of our supply chain to ensure we can reliably support our customers' growth plans. While executing this rapid ramp-up, we have also remained focused on the future. Moore's law continues to be a fundamental driver of growth in our industry and we are actively preparing for the next generation of semiconductor manufacturing equipment. Our innovation efforts are delivering results with 60 specification means secured in the first six months of the year. These specification wins demonstrate how we are extending our technology leadership within our core markets. At the same time, we are investing beyond our traditional boundaries to create new avenues for growth and deepen the value we deliver to customers. So, the acquisition of UpToNorth marks an exciting step in this direction. It allows us to look beyond the current growth cycle and broaden our value proposition to customers. By adding advanced molecular sensing and analytics capabilities to our vacuum expertise, we are laying the foundation for integrated system solutions that enhance process control, improve productivity, and create new sources of value for our customers. Next slide, please. Turning to slide six, we can see an overview of the performance of our business and market segments. Valves, our largest segment, accounts for about 79% of our sales, which are down from 84% a year ago. Global service has shown relative growth to 21% amid the overall high utilization rate in the fabs. With all the activity in the market, 81% of VAT sales were from semiconductor customers. Geographically, in line with the location of fab build-outs, we now have 73% of our products and services being delivered to Asia. And our direct China business accounted for about 28%, down from around 35% a year earlier. As anticipated, China sales as percentage of total sales declined as rest of world sales accelerated. Next slide. If you have met me over the past few months, you may have heard me compare our ramp-up to an idle diesel engine starting up. A lot of noise, a lot of smoke, but not yet operating at full speed. With our Q2 performance, I am pleased to say that the engine is now running smoothly. In the first half of the year, we welcomed more than 700 new colleagues to VAT. Consistent with our flexible operating model, the majority of these additions were temporary employees supporting our production ramp. Around 85% of the new hires joined machining, assembly, vulcanization, and other manufacturing-related functions. Approximately half of these employees were hired in Malaysia, where we continue to expand capacity close to our customers. The second major focus area was our supply chain. Our teams worked closely with suppliers to secure the materials and components needed to support the ramp. This included targeted inventory buildup, both internally and at key suppliers, as well as selective multi-sourcing initiatives to reduce risk and enhance flexibility. Next slide. Despite our intense focus on executing the current ramp, we remain equally committed to investing in the next phase of VAT's growth. We will discuss Atenar, which we believe will become an important new growth pillar for the company, in more detail following the financial review. At the same time, innovation within our core business remains central to our strategy. It is the foundation of our long-term Our partnership with customers enables the next generation of semiconductor manufacturing technologies. In the first half of the year we invested approximately 7% of sales in R&D. Across the organization more than 130 development projects are currently underway, creating a robust pipeline of products and technologies that will support future growth. Specification wins remain one of the most reliable leading indicators of our future business. We delivered another strong performance in the first six months, securing 60 specification wins. This success demonstrates that our customers continue to rely on VAT as a key innovation partner. The industry's technology roadmap remains highly compelling. While 2nm production is now being rolled out, Development efforts are already advancing towards 1 nanometer class technologies, including CFET-based architectures. This highlights an important point. The demand environment we are experiencing today is not a one-time event, but a part of a long-term technology cycle. The path forward is clearly defined and VAT is well positioned to support our customers through each technology node and capture the opportunities that compensate. This concludes my initial remarks for the H1 2026 review and I would now like to hand over to Fabian for a more detailed look at our financials.

Thanks Urs and a warm welcome to everyone on the line. Let me take you through the truly remarkable order momentum we are seeing in H1 2026. On this slide, you see the order development of the second quarter and half year 2026. Very clearly, the order patterns reflect the above-mentioned demand from our customers and from the fabs for new manufacturing equipment. This is, as far as we can tell, based on configurations arising from the demand for advanced DRAM and logic chips. With capacity for chip manufacturing fully booked into 2027, the build-up of new fabs, including the latest chip-making tools from our customers, are the main source of our growth in the quarters to come. Reported Q2 orders were up 40% sequentially, and we hit the record 500 million Swiss francs of orders. Year on year, the order intake even more than doubled and grew by 102%. When we look at the order book, it increased by 50% since last reporting and was over 120% versus last year. And while we are increasing factory output constantly, two-thirds of the order book currently will convert into sales in the next three to four months. On slide 10, I want to put the current demand momentum in historical context. Looking back, we would have seen the last peak in orders in Q4 2021 and the trough in Q1 2023. In Q4 2021, at the last peak, the order intake was 434 million Swiss francs. We have surpassed that number by a good margin. And the record 500 million Swiss francs order intake is now nearly three times higher than the trough quarterly intake of 134 million in 2023. The book-to-bill ratio rose again in Q2 versus Q1 to 1.7 times on the back of sequential order growth outpacing sequential sales growth. With regards to the business units driving this momentum, it is no surprise that both semiconductor OEM valve sales for greenfield investments as well as the global service business are driving the robust growth. with semiconductor new wall sales increasing by 134% year-over-year. Also, Advanced Industries is showing orders up 36% year-over-year, which includes demand from scientific applications, industrial applications, and power-related growth. Moving on to slide 11. But it's not only the OEM business that is contributing to growth. As we can see, also adjacencies and global surveys are contributing meaningfully to the H1 results. Adjacencies are starting to slightly accelerate with growth at 5%. As mentioned previously, this is in line with expectations. In BOSC, as inlet valves and motion components, we are seeing solid double-digit growth in products. In our advanced modules, order growth is still a bit sluggish as the advanced tools that we have are starting to be deployed in volume with the fabs. So we can expect more growth to come through there. In global service, growth was seen across all product groups as semi-spending picked up. Consumables saw solid growth as high utilization drove demand for spare gates. Fabs were minimizing downtime, resulting in slow growth and repairs and for retrofitting or upgrading activity. Finally, as a reminder, the potential of global service is not fully visible yet as the growth we are seeing in OEM walls will really only start converting into service sales 12 to 24 months from now. Let's move to slide number 12 and let's look at our profitability starting with gross profit and the gross profit margin. For those of you who I met in the past weeks, you will remember that I have mentioned there a number of effects that will impact our margin, making it difficult to predict H1 numbers. Overall, our gross profit for the first six months declined 7% year-on-year, which is slightly less than the reported 8% year-on-year decline in H1 sales. The gross profit margin, however, went to 6%. Thank you very much. Let's move to slide 13. As mentioned to you in our meetings in the past weeks, we expected EBDA margins to reflect the stage of the ramp we are currently in. We achieved 29% in H126 compared to 29.6% last year. The main reason that we are below our target bank currently is Thank you very much. Let's move on to slide number 14, please. Taking a step back and reviewing H1, we were quite busy at VAT this year. We transitioned our organization from ramp-ready into ramp-mode, adding more than 700 colleagues, especially in the production sites, Switzerland, Malaysia, and Romania. We worked with our suppliers to have them bring their capacity online to support our manufacturing. We also have been continuously optimizing While adding 22% new colleagues and increasing our sales by more than 30% quarter over quarter, we have maintained a margin in line with prior years. We have the same proven recipe that applies here, our ability to drive efficiency gains from our Darwin program. This capacity expansion is not without costs. In addition, we are mitigating the impact of any cost inflation where we can. And for us, these are not expenses, but investments in our ability to deliver profitability and free cash flow as the operating leverage materializes. Finally, in H1, we have been preparing the acquisition of Atenorp, an important future driver of growth for VAT in the future. We are excited about bringing in this additional growth pillar to the VAT Group and that we have been able to secure an attractive financing package for this asset. For the second half, I foresee the following. As mentioned just prior, the expenses in H1 are investments for our ability to deliver profitability in H2, and I'm confident that we will achieve the target I mentioned in the full-year conference call of being in the upper half of the lower half of our guidance band. But this requires continued discipline and monitoring and I'm working closely with our operations to understand their needs around capacity, the output they can achieve and cash. This is a truly unique ramp environment we are in and one that is likely to persist. And as they say, it's not a sprint, it's a marathon. We have to pace ourselves. Finally, the wildcard is the geopolitical macroeconomic environment, which remains unpredictable and volatile. Not only does this impact our supply chain, but also on our sales and foreign currencies. We are always thinking about creating additional resilience against the ethics impact. For example, we added the most staff in Malaysia in H1, growing our team there by nearly 40%. The Unforeseen Effect of Geopolitical Developments in Commodity Prices, which have been impacted by the global uncertainty and which we are also monitoring closely from our side. That's it from me. I'm looking forward to a further exchange with you in the Q&A. But in the meantime, Urs will take you through the strategic rationale of this exciting acquisition of Opelon.

Yeah, thanks Fabian. So let's talk about this new acquisition and Aton Arp. I am truly excited about this company and even more about their people and the technology. Let me first remind you on the strong results we have delivered over the past years, increasing our market share, expanding our share of wallet, and driving sustained revenue growth. Our ambition through 2029 is clear. So we want to grow our core valve business by further increasing our share on wafer fab equipment tools while benefiting from the rising number of process steps and increasing vacuum intensity. And we want to expand our share of wallet through our adjacent components and subsystems. Until now, we have been cautious when discussing our growth opportunities beyond 2030. Today, We can be more specific. As semiconductor manufacturing becomes increasingly complex, success will depend not only on enabling advanced backup environments, but also on providing the technologies that allow customers to precisely monitor and control their processes in real time. FIT Forward Pressure Control and Gas Flow Control are areas where we already have a strong presence. But as the industry moves to 2 nm, 1 nm and beyond, our customers require even deeper process insight and control at the molecular level. That is the strategic rationale behind FATONAR. The acquisition expands VST's technology It creates a new avenue for growth beyond our current portfolio. And it will enable customers to solve some of the most critical challenges in next-generation semiconductor manufacturing. Next slide. Adenauer was founded in 2009 to develop a new generation of miniaturized mass spectrometry. The key advantage of the system is its ability to measure gas composition in real time directly within the process environment, which means integrated in the chamber. This gives customers visibility into what is happening during critical process steps and enables them to make proactive adjustments to process receipts, improving both yield and process stability. As the industry moves to sub-2 nanometer architectures, this capability becomes increasingly important. Many of the new manufacturing steps required for these advancements cannot be effectively monitored with existing technologies. With the Aston product family, customers will be able to transition from conventional time-based process control to adaptive chemistry-based control. can make decisions based on actual molecular conditions and process outcomes, enabling higher precision, greater consistency, and improved manufacturing performance. Through this acquisition, we are gaining a differentiated technology platform protected by a strong portfolio of patents and deep R&D expertise. It extends VAT's capability beyond vacuum Our customers will benefit from the combination of the Aston Sensor family with VAT's existing technology portfolio as illustrated on this slide. In green, you see our established OEM valve solutions which continue to evolve and support the most advanced semiconductor manufacturing processes. In blue, You see our adjacencies, where demand is now accelerating with the deployment of the latest generation of semiconductor tools. And in purple, Aston adds a critical new capability, real-time process sensing, effectively providing the eyes into processes that today remain largely invisible. Next slide, please. Based on this, we believe this transaction represents a major step forward for both VAT and Athonark, with each company bringing highly complementary strengths to the partnership. We gain access to a unique technology platform that would have been difficult and time-consuming to develop internally, and we can prepare the next chapter of the VAT growth story. This is about positioning VAT beyond the next three years. We have identified a critical future need in semiconductor manufacturing and are investing in technology that will help our customers continue pushing miniaturization towards its physical limits. For Atonar, VAT is the ideal partner to accelerate commercialization. The first Aston systems are already deployed and VAT's deep customer relationship, strong market position and proven specification win track record provide a powerful platform to scale adoption across the semiconductor industry. VAT also brings world-class industrialization and manufacturing capabilities. While Adenarp has developed a breakthrough technology, VAT's global manufacturing expertise across Switzerland, Romania and Malaysia provide the scale, quality and operational excellence needed to support broader market adoption. So in short, Atonar brings unique technology and VAT brings customer access, manufacturing expertise and industrial scale to unlock its full potential. Together, we are creating a stronger platform for long-term growth. Next slide, please. Let me close this section with a brief note and overview on the transaction terms. We are excited to move forward and will provide updates as we progress toward closing in the coming months. Given the nature of the transaction, we do not anticipate any significant regulatory hurdles and expect a straightforward approval process. Finally, I would like you to take away three key messages from this transaction. First, ATONAR is a continuation of the strategy we presented at our 2025 Capital Markets Day. We will continue to drive organic growth through our core wealth and adjacency portfolio. Second, we recognize that not every critical technology can or should be developed internally. Attenab's mass spectrometry capabilities are exactly the type of differentiated innovation that will become increasingly important as semiconductor manufacturing advances beyond the two nanometer node. This acquisition brings us technology and expertise that would be difficult and time consuming to build ourselves. and third, the success of this transaction should not be measured by near-term accretion, dilution or cost synergies. This is fundamentally a technology and capabilities acquisition. It strengthens our position in the semiconductor value chain and expands the opportunity available to VAT beyond 2030. Ultimately, the true measure of success will be our ability to translate these new capabilities into future specification wins. That is what investors should watch in the years ahead. Next slide, please. The outlook section. The best proxy to start the outlook section is always the estimates for wafer fab equipment spending, which in both 2026 and 2027 have continued to move higher. This is confirmed by our customers, which are providing increasingly positive signals regarding demand visibility over the coming quarters. Current market consensus points to a wafer fabricated market of approximately 145 billion US dollars in 2026. This growth is being driven by the massive investments hyperscalers are making in data centers, creating extraordinary demand for high-performance chips. The challenge remains that semiconductor manufacturing capacity has not kept pace with demand. To address this gap, more than 140 fabs are currently being built or equipped through the end of the decade. At the same time, the industry is progressing rapidly along its technology roadmap. While the first gate-all-around architectures are now entering production, the next node transition, including 1.6 nanometer and 1.4 nanometer technologies, are already on the horizon. These trends reinforce our conviction that the growth story we have been discussing for several years is now unfolding. Demand is strong. Capacity is being added at high pace and the pace of semiconductor innovation remains as compelling as ever. The latest synthesis surveys indicate that approximately 140 semiconductor fabs are currently under construction or being equipped worldwide. Current wafer fab equipment forecasts already highlight a and many others. In addition, we expect new semiconductor manufacturers and chip initiatives to enter the market. These new entrants will require substantial manufacturing infrastructure, creating an additional source of demand beyond the expansion plans of today's leading chip makers. These factors give us confidence that the current investment cycle is supported by strong structural drivers and that the long-term growth outlook remains highly attractive. Coming to the last one-minute outlook. Based on the positive market backdrop and our strong operation and execution, we remain firmly on track to achieve our 2026 targets and to reach our planned quarterly factory output run rate of more than 450 million Swiss francs by year-end. Growth will continue to be driven primarily by our semiconductor OEM valve business, supported by strong contributions from our global service segment, benefiting from high fab utilization rates, as well as from semiconductor-related markets within ATV, including our semiconductors and inspection. As a result, we expect 2026 to be another record year for orders, sales and free cash flow with higher EBITDA, EBITDA margin and net income compared to 2025. For the third quarter of 2026, we expect sales in the range of 355 million to 385 million Swiss francs. Looking further ahead, the continued increase in wafer fabrication forecasts has strengthened our confidence in the market outlook. As a result, we are currently reviewing our 2027 targets. While all indications point to 2027 being another year of growth for VAT, we do not yet have sufficient visibility into customer ordering patterns to quantify the magnitude of that growth with the precision we require. We will provide an update as soon as visibility improves, and we can do so with confidence. With that, moderator, please open the line for the questions.