Advantest Corp Sp/Adr

Thank you very much for joining Adventist Corporation's financial briefing for fiscal 2024, despite the busy schedule. I'd like to introduce attendees on our site today. Mr. Douglas Raffiever, Representative Director, Senior Executive Officer, and Group CEO. Mr. Tsukui, Representative Director, Senior Executive Officer, President, and Group COO. Mr. Natahara, Senior Executive Officer, CCRO, and Executive Vice President of Sales Group. Ms. Takada, commencing in April, Ms. Takada joins ADVANTIS as Senior Executive Officer and CFO. And I am Oike of IR Department Corporate Strategy Group, serving as a moderator of today's session. In this financial briefing, Mr. Refiever will first report the financial summary. After that, Mr. Kada will report financial results for fiscal year 2024. And then Mr. Refiever will present the third midterm management plan progress and fiscal year 2025 outlook before entertaining questions from the audience. We plan to close this session at 5.30 p.m. Japan time. In today's financial briefing, we will use English-Japanese simultaneous interpretation. If you prefer to hear the original audio of both Japanese and English, you don't need to change the setting. Please join us with the default setting. If you prefer the Japanese language channel, you are kindly requested to click the globe icon on the lower left of the WebEx screen and select Japanese in the menu of My Interpretation Language. If you slide the ball of balance to the right-hand interpreter, you will hear interpretation into Japanese when the original language is English. The today's presentation materials are posted on TDNet and our website. The audience joining us through a telephone line is kindly requested to download the materials. Before we begin, we'd like to remind you that today's briefing contains forward-looking statements, although which are subject to risks and uncertainties that may cause our actual result to be different from those in such forward-looking statements. Firstly, Mr. Refiba will present a brief summary, including fiscal 24 results and fiscal 25 outlook. Doug, please go ahead.

Hello, everyone. I'm happy to welcome you all to our call. Let me start by providing an overview of today's presentation. Our FY 2024 sales, operating income, and net income all posted record highs on a full year basis. Really great performance. Tester demand for AI-related high-performance semiconductors continued to perform strongly throughout the fiscal year due to increasing complexity of semiconductors. In order to meet such strong demand, we executed timely procurement and enhanced supply capabilities, which were achieved through long-term agreements and diversification of our supply chain for core parts. These are the main factors that contributed to our very strong results. We expect high level of tester demand to continue in FY 2025, driven by AI-related SOC semiconductors. And at this time, we do not see any major direct impact from tariffs. We are actively monitoring developments which could potentially weigh on our business outlook for FY 25. Now, I will hand over to our new CFO, Hisako Takata, who joined Advantis on April 1st. Takata-san has an outstanding track record of achievements in her career in investment banks and operating companies. We are delighted to welcome her to our company. Mahashi-san did a great, great job and will now be able to focus on his role as Chief Strategy Officer. Takata-san, please go ahead.

Thank you for the introduction. I'm Hisako Takahara. It is my pleasure to be here in FI 2024. Amid strong tester investments from customers for AI-related applications, we have been striving to enhance our procurement of materials and product supply capabilities. The depreciation of the yen against US dollar also served as a tailwind, resulting in record high sales. In terms of profitability, in addition to the increase in sales, the improvement in the product mix has led to record high operating profit and net profit. Full-year sales exceeded the guidance issued in January 2025 by approximately JPY 40 billion, mainly due to greater than expected delivery of products to customers, particularly C testers. Core operating income that excludes one of items was 249.7 billion yen, and the core operating income margin was 32%, both of which significantly exceeded our guidance. when including the one-time items such as an impairment loss, outbidding margin, and net profit default below guidance. But with these write-downs, the company goes into FY25 with a very clean balance sheet. Also noteworthy is the effective tax rate, which rose to approximately 28%, higher than expected due to impairment losses, which are not deductible for tax purposes. Combining our year-end dividend forecast of JPY 20 yen and the interim dividend of 19 yen already paid out, our annual dividend forecast is 39 yen. This slide shows our annual sales trend comparison by segment and by region. By business segment, HPC slash AI-related applications drove the SOC testers. With regards to memory testers, sales grew for high-performance DRAM, particularly HBM. On the other hand, demand for semiconductors for applications other than AI has remained soft throughout the fiscal year. By region, there was a notable growth in sales to Taiwan. This is mainly due to strengthened quality assurance requirements for high-end associate semiconductors from several U.S. fabulous companies, resulting in increased sales to the related foundries and OSATs. For high-performance DRAM applications, sales to Korea increased. Sales to China accounted for approximately 22% of total sales. Next, I will give a summary of the quarter results. Our fourth quarter results are shown on this slide. Details of performance will be explained in the subsequent slides. Our fourth quarter sales results reached a record high on a quarterly basis. I will now explain the breakdown of each segment. I will start with semiconductor and test component test systems. Please take a look at the right-hand side of this page. SOC tester sales were 148.8 billion yen, an increase of JPY 35.8 billion yen Q&Q amidst the continued robust demand for HPC AI-related tester demand. We achieved significantly higher sales compared to the previous quarter. Memory tester sales were 35.1 billion yen, a decrease of 19.5 billion yen due to the progress in product delivery in the previous quarter. Next, mechatronic systems. Sales of device interface products decreased in tandem with lower sales of memory testers. Lastly, service support and others. In addition to the stable booking of service sales, system level test sales for high-end SoC applications increased. This slide shows Q4 sales by SHIP-2 region. For Taiwan, sales increased significantly quarter and quarter, primarily driven by SOC testers. For South Korea, sales of memory testers and related device interfaces as well as SOC testers declined. Next, I will explain Quarterly sales, growth, profit, and operating income. Growth margin increased by approximately 5% quarter and quarter as a result of product mix improvement. SG&A, including the total of other income and expenses, has increased by 25.6 Japanese billion yen quarter-and-quarter, and the operating income margin was 27.6%. This is mainly due to the breaking of impairment loss by approximately 24.1 billion yen for a portion of goodwill and intangible assets of other expenses. This impairment loss is related to SI's socket business, which we acquired in FY 2019. Softness in sales for a major customer and delays in expanding sales to new customers were taken into consideration for the booking of this impairment loss. With this impairment loss, the value of goodwill and intangible assets related to the acquisition of SI have been reduced to zero. Next, earned expenses and cash flow. In the, you can see the R&D capital expansion and depreciation. On this slide, we executed investment and development initiatives to grow our business further. On the right-hand side, you can see our cash flow status. In the fourth quarter, there were cash outflows due to our investment in TechnoPro, FormFactor, and Micronics Japan. On the other hand, amidst high levels of sales and profits, operating cash flow and free cash flow increased significantly. Operating cash flow and free cash flow for FY24-24 reached a record high as did sales and profits. Finally, balance sheet for the period ended March 31, 2025. Cash and cash equivalents were 262.5 billion yen and inventory assets were 209.7 billion yen as of the end of March. We will continue to work on cash allocation and balance sheet management while optimally balancing growth investment and capital efficiency. This concludes my presentation. Now I will hand over to Doug.