BE Semiconductor Industries

Good morning, good afternoon, ladies and gentlemen, and welcome to Basie's quarterly conference call and audio webcast to discuss companies' 2024 third quarter results. You can register for the conference call or log in to the audio webcast via Basie's website, www.basie.com. Joining us today are Mr. Richard Blakeman, Chief Executive Officer, and Mrs. Andrea Koh, Senior Vice President, Finance. Currently, all participants are in listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in whole or in part without written permission from the company. I'd like to remind everyone that on today's call, management will be making forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements reflect basis current views and assumptions regarding future events, many of which are by nature inherently uncertain and beyond basis control. Actual results may differ materially from those in the forward-looking statements due to various risks and uncertainties. including but not limited to factors that are discussed in the company's most recent periodic and current reports filled with the AFM. Such forward-looking statements, including guidance provided during today's call, speak only as of this date, and BASIS does not intend to update them in light of new information or future developments, nor does BASIS undertake any obligation to update the forward-looking statements. I would now like to return the call over to Mr. Richard Bleekman.

Thank you. Thank you for today's call. We'd like to review the key highlights for our third quarter and nine months, ended September 13, 2024, and update you on the market, our strategy, and outlook. First, some overall thoughts on the third quarter. Bezi reported significant growth in revenue, orders, and net income in the third quarter of this year versus the comparable period last year, as we continue to benefit from strength in our advanced packaging product portfolio for AI applications despite continued headwinds in mainstream and Chinese assembly equipment markets. For the quarter, revenue of 156.6 million euros and orders of 151.8 million euros grew by 27% and 19.2% respectively versus the third quarter last year due primarily to strong growth by computing and user markets including hybrid bonding, photonics and other AI applications. Such growth was partially offset by weakness in automotive and Chinese end user markets continuing trends we've experienced this year. Net income of 46.8 million euros grew by 11.8 million euro, or 33.7%, reflecting a number of favorable trends, including increased advanced packaging systems revenue, increased gross margins related thereto, and better than forecasted operating expense levels, despite continued growth in R&D spending, for next generation hybrid bonding and TCP systems. For the first nine months of this year, revenue of 454.1 million euros and orders of 464.8 million euros increased by 8.3% and 21.7% respectively. Growth was due to significantly higher demands by computing and user markets, particularly for AI-related hybrid bonding and photonics applications, and from Taiwanese and Korean subcontractors. Net income of in total 122.7 million euros was approximately equal to year-to-date 2023, as higher revenue and gross margins this year were offset by higher R&D spending in support of wafer-level assembly development and share-based compensation expense. Our financial position improved as well in the third quarter of this year, with net cash increasing to 110.7 million euros at the end of the quarter, an improvement of 36.3 million euros versus the second quarter of this year, and 20.5 million euros versus the third quarter last year. despite increased share buyback activity. Total cash and deposits at quarter end grew to 637.4 million euros, including net proceeds from our senior note offering in July of this year, which positions us favorably for anticipated growth in the next market upcycle. Next, I'd like to speak a little bit about the current market environment and our strategy. The primary trends affecting the assembly equipment market in the first half of this year continued in the third quarter. Namely, strong growth in AI-related applications were offset by ongoing weakness in mainstream assembly applications. As a result, Tech Insights further reduced its 2024 growth forecast to 2.9% from 9.3% previously with a strong cyclical upturn pushed out to 2025 and 26. As we've noted previously, assembly equipment market trends have diverged from front-end markets for the past two years, primarily given the absence of geopolitical trade restrictions in our market segment. We are pleased with our strategic progress in 2024 in a challenging market environment. BASIC continues to expand its development spending in support of the industry's leading advanced packaging portfolio and has seen significant growth in both hybrid bonding orders and revenue this year. During the third quarter this year, we received substantial orders for hybrid bonding systems from existing and new customers and anticipate additional orders in the fourth quarter this year from a variety of customers as adoption continues to expand globally. We've also received increased interest for Basie's TCB, next system from leading logic and memory customers, which positions us favorably for anticipated growth in the next generation 2.5D and HBM applications. As such, We have taken steps recently to expand our advanced packaging production capacity in anticipation of future growth. In 2025, we intend to approximately double the cleanroom capacity of our Malaysian facilities and increase R&D and process development for hybrid bombing and TCB capabilities and customer support at our Singapore facility. Now a few words about our guidance. Looking forward to the fourth quarter, we expect expanded adoption for hybrid bonding applications to be mitigated by ongoing weakness in mainstream assembly markets. For the fourth quarter this year, we forecast that revenue will be flat plus or minus 10% versus the third quarter, partially due to shipment delays by a customer for certain hybrid bonding systems scheduled for delivery which were scheduled for delivery in the fourth quarter of this year. In addition, gross margins are anticipated to range between 63% and 65% based on our projected product mix. Aggregate operating expenses are forecasted to be flat to up 5% versus the third quarter this year. This concludes my prepared remarks. Before we begin Q&A, I would like to remind everyone to limit your questions to two at a time, so all participants have an opportunity to ask questions. Operator.

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