Advantest Corp Sp/Adr

Thank you very much for joining Advanced Desk Corporation's financial briefing for the first quarter for FY2025, despite your busy schedule. I'd like to introduce attendees from my side today, from the left side of the slide. Mr. Douglas LaFever, Representative Director, Senior Executive Officer, and Group CEO. Mr. Koichi Tsukui, representative director, senior executive officer, and president group COO. Mr. Sanvi Mohan, appointed SCCRO, chief customer relations officer as of July 1st this year. And he is Hisako Takada, senior executive officer and CFO. I am Simba from the IR department serving as your moderator of today's session. In this financial briefing, Douglas will first report the financial summary. After that, Ms. Takada will report financial result for FY25 first quarter, and then Douglas will present FY2025 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 Japanese-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. globe icon on the lower left of the WebEx screen and select Japanese in the menu that says My Interpretation Language. If you slide the bar of the balance to the right and to the interpreter, you'll hear interpretation into Japanese when the original language is English. Today's presentation materials are available on TDNet and on our company website. The audience joining us from the telephone line is kindly requested to download the materials. Before we begin, we would like to remind you that today's briefing contains four looking statements. all of which are subject to risks and uncertainties that may cause our actual results to differ from those in such forward-looking statements. Now, Doug will present the summary of this quarter. Doug, please. Good afternoon, everyone.

Thank you for joining our financial briefing for the first quarter of fiscal year 2025. We've delivered an outstanding start to the fiscal year, posting highest ever quarterly sales, operating income, and net income. Our first quarter performance underscores the sustained strength of AI-related demand and is a testament to our ability and commitment to scale supplies capabilities. This result could not have been achieved without the dedication of our production partners and suppliers. I want to extend my sincere appreciation to all of them for their continued support and collaboration. We also achieved a notable expansion in both gross and operating profit margins. This performance was made possible by a unique alignment of numerous factors. Economies of scale driven by higher sales, including pull-ins, a favorable product mix, disciplined cost management models, absence of one-off losses, and the fruits of prior investments, particularly in capacity expansion. Looking ahead, we are raising our full-year guidance to reflect the stronger-than-expected performance in the first quarter. I will give details of this later in the presentation. While we anticipate a temporary digestion period in the latter half of the year, we expect growth to reaccelerate in FY2026. This lumpiness is largely driven by the timing of next-generation device transitions. Since customer demand does not flow evenly throughout the year and can shift abruptly, we have been strengthening our operational agility and supply chain resilience to better respond to these fluctuations. As we move forward, the central thesis we laid out in the third midterm plan of complexity-driven growth remains firmly on track. and is expected to unfold for the remainder of the midterm plan period. With that, let me turn the call over to Takada-san to provide details on our first quarter results. Takada-san?

I will now explain the summary of results for the first quarter of FY25. In the first quarter, we achieved our highest ever sales and profit on a quarterly basis. Continuing from the previous fiscal year amid growing customer demand for AI-related product deliveries, we worked to expand the procurement of parts and product supply capabilities in order to meet delivery timelines to the greatest extent possible and successfully carried out timely product deliveries. Despite the yen appreciating against the US dollar compared to the previous quarter, we achieved record high quarterly results, driven by a significant increase in SOC tester shipments. Before going into the details of our performance, I would like to first explain the changes made to our reportable segments. In efforts to provide comprehensive test solutions that include not only test equipment but also peripherals, Advanced Test revised its importable segments, starting from FY25 based on the management approach perspective. Specifically, the previously three segments have reorganized into two segments, Test Systems Business and Services and others. The Test Systems Business segment includes associate testers and memory testers, as well as other systems. products that are highly correlated with tester demand, such as test and loads and device interfaces. In addition, products related to the system-level test business acquired from Astronix Corporation in the U.S. in CY 2019 are also included in other systems. Service and other segments include support services, nanotechnology products, and consumables such as test sockets and interface boards for testing, which were acquired in the past through acquisitions. Now, let me move on to the details of our financial performance. Now, I'll talk about quarterly sales by segment. Test systems business is displayed on the right-hand side. Associate tester sales were 191.3 billion yen, an increase of 42.4 billion yen quarter-in-quarter. We were able to increase product deliveries compared to the previous quarter, mainly for high-performance computing slash AI-related semiconductors, which continue to grow in complexity and performance. Memory tester sales were 33.5 billion yen, maintaining a higher level comparable to the previous quarter, mainly driven by high-performance DRAM. Now I will talk about service in others. While sales for support services maintained a steady level, sales for technology further declined compared to the previous quarter. Next, sales by region, shifted region. Starting with Taiwan, Sales increased significantly quarter in quarter primarily driven by those testers. This is mainly due to higher quality assurance requirements for high-end semiconductors at several U.S. fabless companies. This resulted in an increase in sales to the related foundries and onsets. South Korea. Sales of memory testers and related device interfaces increased. Now, on to sales, gross profit, and operating income. Gross margin increase quarter-and-quarter, primarily driven by the growth in sales of high-end associate testers with high profitability. SG&A, including the total of other income and expenses, decreased by 27.5 billion yen quarter-and-quarter. As written in the note in the previous quarter, an impairment loss of approximately 21.4 billion yen was recorded for goodwill and intangible assets. Also in the first quarter, we recorded a gain of approximately 22.5 billion yen from the partial transfer of a business. As a result, the operating profit margin for the first quarter reached 47%, marking a record high. Now, R&D expenses, CapEx and DNA. R&D expenses were 17.1 billion yen, and CapEx was 6.1 billion yen. On the right-hand side, you can see our cash flow. In the first quarter, there was a decline in approaching cash flow quarter-in-quarter due to an outflow associated with corporate tax, bonus payments, and other items. Finally, balance sheet for the period ended June 30th. Cash and cash equivalents were 273.4 billion yen and inventories were 29.3 billion yen because of the end of June. Ratio of equity attributable to owners of the pair was 64.5%. As our business continues to perform strongly, 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 it over to Doug.