ASML Holding N.V.

Thank you, operator. Welcome, everyone. This is Skip Miller, Vice President of Investor Relations at ASML. Joining me today on the call, our ASML CEO, Peter Winnick, and our CFO, Roger Dawson. The subject of today's call is ASML's 2023 second quarter results. The length of this call will be 60 minutes and questions will be taken in the order that they are received. The call is also being broadcast live over the internet at asml.com. A transcript of management's opening remarks and a replay of the call will be available on our website shortly following the conclusion of this call. Before we begin, I'd like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve material risks and uncertainties. For a discussion of risk factors, I encourage you to review the Safe Harbor Statement contained in today's press release and presentation found on our website at asml.com and in ASML's annual report on Form 20F and other documents as filed with the Securities and Exchange Commission. With that, I would like to turn the call over to Peter Winnick for a brief introduction.

Thank you, Skip. Welcome, everyone, and thank you for joining us for our second quarter 2023 results conference call. Before we begin the Q&A session, Roger and I would like to provide an overview and some commentary on the second quarter 2023, as well as provide our view on the coming quarters. And Roger will start with a review of our second quarter 2023 financial performance with added comments on our short-term outlook. And I will complete the introduction with some additional comments on the current business environment and on our future business outlook. Roger?

Thank you, Peter, and welcome, everyone. I will first review the second quarter financial accomplishments and then provide guidance on the third quarter of 2023. Let me start with our second quarter accomplishments. Net sales come in at 6.9 billion euros, which is at the high end of our guidance. We shipped 13 EUV systems and recognized 2 billion euros revenue from 12 systems this quarter. Net system sales of 5.6 billion euros, which was mainly driven by logic at 84%, with the remaining 16% coming from memory. The net sales value of our fast shipments not yet recognized in revenue in the first half of 2023 amounts to 1.4 billion euros. Install-based management sales for the quarter came in at 1.3 billion euros as guided. Gross margin for the quarter came in at 51.3%, which is above our guidance, primarily driven by additional DPV immersion revenue in the quarter, partly related to starting revenue recognition upon shipment for immersion systems that are fast shipped. On operating expenses, R&D expenses came in at €1 billion, and SG&A expenses came in at €281 million. Both basically as guided. Net income in Q2 was €1.9 billion, representing 28.1% of net sales and resulting in an EPS of €4.93. Referring to the balance sheets, we ended the second quarter with cash, cash equivalents and short-term investments at a level of €6.3 billion. Moving to the order book, Q2 net system bookings came in at €4.5 billion, which is made up of €1.6 billion for EUV bookings, and 2.9 billion euros for non-EUV bookings. These values also include inflation corrections. Net system bookings in the quarter were driven by logic, with 69% of the bookings, while memory accounted for the remaining 31%. At the end of Q2, we have around 38 billion euros in our backlog. With that, I would like to turn to our expectations for the third quarter of 2023. We expect Q3 net sales to be between 6.5 billion euros and 7 billion euros. We expect our Q3 install base management sales to be around 1.4 billion euros. Gross margin for Q3 is expected to be around 50%, a little below last quarter due to DPV mix. The expected R&D expenses for Q3 are around 1 billion euros and SG&A is expected to be around 285 million euros. Our estimated 2023 annualized effective tax rate is expected to be between 15% and 16%. An interim dividend of 1.45 euros per ordinary share will be made payable in August 10, 2023. In Q2 2023, we purchased around 0.8 million shares for a total amount of around 500 million euros. As mentioned last quarter, in the current environment, we expect to see ongoing pressure on our free cash flow. As a result, we will be prudent in managing our cash flows and maintaining relatively higher levels of cash. With that, I would like to turn the call back over to Peter.