Aixtron Se Unsp/Adr

Good afternoon, ladies and gentlemen, and welcome to the conference call regarding Q2 2022 results of EXTRON SE. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Guido Picard.

Thank you very much, operator. Welcome to EXTROM's presentation of our Q2 and first half 22 results. I'd like to welcome our CEO, Dr. Felix Graver, and our CFO, Dr. Christian Danimer. As the operator indicated, this call is being recorded by EXTROM and is considered copyright material. As such, it cannot be recorded or rebroadcast without permission. Your participation in this call implies your consent to this recording. Please take note of our safe harbor statement, which can be found on page two of our results presentation slide deck, as it applies throughout the conference call. This call is not being immediately presented via webcast or any other medium. However, we will place an audio file of the recording or a transcript on our website at some point after the call. I would now like to hand over to our CAO for opening remarks. Steve?

Thank you, Guido. Let me also welcome you all to our results presentation. I will start with an overview of the highlights in the quarter and then hand over to Christian for more details on our financial figures. Finally, I will give you an update on the development of our business. Let me start by giving you an overview of the key business developments in Q2 on slide two. Demand for our equipment remains dynamic across the board. resulting in an outstanding order situation with an order intake of 153 million euros for Q2. We have received our first order for the volume production of micro-LEDs, which is very encouraging. In addition to that, demand for our equipment to produce efficient power electronics was again very strong this quarter, with demand for laser tools remaining strong as well. This leads us right now with an order backlog of 314 million euros, of which the majority is due for delivery still this year. Revenues in the quarter increased by 51 year-on-year to 103 million euros. Gross margin was slightly lower than normal at 37% in the quarter due to a high share of tool deliveries to make traditional red LEDs and some one-time project costs to further optimize our operations. EBIT more than tripled year on year to 17 million euros, resulting in a quarterly net profit of 17 million euros or 16 cents per share due to the further recognition of tax loss carry forward. Based on the strong demand for our products, we can again confirm our original guidance for the fiscal year 2022, which we have first given in February of this year, as we are fully on track to achieve what we have guided order, revenues, and profit margins. Orders will remain on high levels, while revenues and margins are expected to be higher in the second half of 2022 versus the first half of the year. In fact, we expect Q3 to be stronger than Q2 and Q4 to be stronger than Q3 in terms of revenue this year again. I'm glad that today's global crisis situation still do not have a significant impact on our business. Logistics and supply chains are still not back to normal. They remain tense, but they continue to be stable. We are in close exchange with our suppliers and support them wherever required. Now, I will hand over to our CFO, Christian Dumminger. He will take you through the Q2 financials. Christian? Thanks, Felix, and hello to everybody. I'm happy to share with you that we had a very strong quarter again, both from an operational as well as from a financial perspective. Let me start with our income statement on slide three. Total revenues for the second quarter 2022 were close to 103 million euros, 51% above the same quarter of last year. Gross profit went up by 36% year-on-year to 38 million euros. The gross margin at 37% was influenced by less favorable product mix and one-time costs for projects to further strengthen our production and supply chains. Both effects were only partially offset by a favorable U.S. dollar-euro exchange rate, which affected around 36% of our revenues that were recorded in U.S. dollars. Opposite in the quarter decreased to 21 million euros from 22 million euros in the same quarter of 21, mainly due to lower R&D spending resulting from the timing of projects. Our EBIT in the quarter more than doubled year on year to 17 million euros from 6 million the year before. EBIT margin was 17%. We again utilized tax loss carry-forwards and capitalized additional deferred tax assets in the amount of 2.5 million euros due to expected future profits. We can therefore report the quarterly net profit of 17 million euros, which also more than doubled compared to 8 million euros recorded in the same quarter of last year. Turning to the balance sheet on the next slide. Inventories at the end of June 2022 have risen to 162 million euros from 144 million euros at the end of March in preparation for the higher expected business volume in the coming quarters. As part of our supply chain strategy, we also keep strategic inventories of selected components to maintain and ensure our capability to timely deliver our tools to our customers. Due to the high demand supporting our revenue guidance for the year, advance payments received from customers by the end of June 2022 increased to 104 million euros from 81 million euros at the end of March representing about 33% of our order backlog. Trade receivables increased 58 million euros from 50 million euros at the end of March due to a higher share of shipment at the end of the quarter. Our cash balance, including our other financial assets, decreased to 346 million euros at the end of the quarter from 375 million euros at the end of March. The reduction being mainly due to the dividend payments of 34 million euros in May. Moving to our cash flow statement on slide 5. In Q2 of 2022, pre-cash flow was at 4 million euros compared to 18 million euros in the same quarter of last year, mainly due to an increase in inventories and trade account receivables, combined with a rise in advance payment received for customer orders. With that, let me hand you back over to Felix. Thanks. Thank you, Christian. Before giving you our updated view of the outlook for the second half of the year, I would first like to give you a quick update on the key developments in some of our addressed markets. In most of our addressed end markets, we continue to see strong momentum. As previously mentioned, we have shipped a sizable number of tools to produce traditional red LEDs representing the largest share of key tool revenues. The second largest contributor were tools shipped for silicon carbide power electronics. The next biggest contributor to Q2 revenues were tools to make datacom lasers. Energy-efficient power electronics based on wide bandgap materials continue to be broadly adopted in an increasing number of applications, replacing less efficient silicon. We see that in the orders and revenues for our systems in these areas. In GaN power, the strong momentum continues, going far beyond initial customer applications such as chargers. Our customers are already addressing opportunities and applications with 24-7 operations such as data centers, base stations, or household appliances such as refrigerators, just to name a few. Market adoption of GaN in these applications is driven by energy savings offered by efficient GaN-based power supplies, compared to silicon power electronics. In addition to these applications, we see our customers already looking further ahead, for example, towards motor drives or applications in battery electric vehicles. Therefore, we believe that demand will continue to be driven by the structural demand drivers behind it. In silicon carbide power, we see our customers building up or expanding their capacities based in the fast-growing adoption within battery electric vehicles, replacing silicon as a material. As we have said before, our new silicon carbide tool for 6- and 8-inch wafers is showing very good performance. It offers high throughput due to its multi-wafer batch approach in combination with full cassette-to-cassette automation. At the same time, it offers individual wafer process control with a high quality output. This makes us strongly believe that we have a highly attractive solution in our portfolio, particularly in comparison to single wafer solutions being offered by competition. The growing acceptance of our existing and our new customer confirms our view. In the area of micro-LEDs, we are very happy to announce that we have received a first order for the volume production of red, green and blue micro-LEDs from our customer. This is very encouraging as this is seen as clear evidence that preparations to develop and launch a first commercial product have started. As we have stated before, this development makes us increasingly confident that we will see further commercial products with micro-LED displays such as televisions, notebooks or smartphones and smartwatches going forward. With that, let me now give you an update on our full year guidance for 2022 on slide six. Based on the strong business development at the first half and our positive view on the development of our business in the second half of the year, we confirm our growth guidance for the full year 2022 originally issued in February. Including the 283 million euros of orders recorded in the first half, we continue to expect total orders for the year in a range between 520 and 580 million euros. We continue to expect our 2022 revenues to be in a range between 450 and 500 million euros. This is based on the 191 million euros of total revenues recorded in the first half and builds on our equipment order backlog of 314 million euros of which a large part is due for delivery during 2022. Based on the 39% gross margin and the 16% EBIT margin we achieved in the first half, we continue to expect a gross margin of around 41% and an EBIT margin in a range of 21 to 23% due to the stronger expected business volume for the second half of the year. These expectations for 2022 are subject to the provision that the current global crisis situations around us will not have a significant impact on the development of our business. With that, I will pass it back to Guido before we take questions.