BE Semiconductor Industries

Good morning, good afternoon, ladies and gentlemen, and welcome to BASIC quarterly conference call and audio webcast to discuss the company's 2025 fourth quarter results. You can register for the conference call or log into the audio webcast via BASIC's website, www.basic.com. Joining us today are Mr. Richard Blakeman, Chief Executive Officer, and Mrs. Andrea Kopp, Senior Vice President Finance. Currently, all participants are in listen-only mute. 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 will now turn the call over to Mr. Richard Blickman. Please go ahead, sir.

Thank you. Thank you for joining us today. We will begin by making a few comments in connection with the press release issued earlier today, and then take your questions. 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 Basie's current view 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 filed with the AFM. Such forward-looking statements, including guidance provided during today's call speak only as of this date, and Basie does not intend to update them in light of new information or future developments, nor does Basie undertake any obligation to update the forward-looking statements. For today's call, we'd like to review the key highlights of our first quarter ended March 31st of this year and update you on the market, our strategy, and the outlook. First, some overall thoughts on the first quarter. Basie reported solid first quarter results, important new advanced packaging orders in a challenging market environment. Revenue of 144.1 million euros was down 1.5% versus the first quarter last year due to the ongoing weakness in mobile and automotive end-user markets, partially offset by strong revenue growth from hybrid funding and other AI-related computing applications. In contrast, orders increased 3.3% versus the first quarter last year and 8.2% versus the fourth quarter last year due primarily to increased bookings by Asian subcontractors and AI-related data center applications. Basics profitability in the first quarter of this year remained at attractive levels despite ongoing weakness in mobile, automotive, and Chinese end-user markets, and expanded R&D investment in next-generation assembly solutions. Net income of €31.5 million decreased 7.4% versus the first quarter of last year, primarily due to lower revenue and gross margins realized partially offset by an 8.9% decrease in operating expenses. Basics gross margin has trended towards the lower end of our target range over the past three quarters due to primarily a less favorable product mix, particularly with respect to high-end smartphones and net Forex headwinds beginning in the second half of 2024. from adverse movements in some of our principal transaction currencies versus the euro. On a sequential basis, Q1-25, operating expense growth of 10.3% versus the fourth quarter of last year was due to higher consulting costs. It was at the lower end of guidance as we continue to control overhead development despite increased R&D investment. In addition, cash flow generation remains positive with net cash increasing by 10.8% versus the fourth quarter last year to reach 159.4 million euros, which represented 26.3% of our latest 12-month revenue. As such, we continue our highly attractive capital allocation policy. In Q1 2025, we repurchased 22.1 million euros of our shares bringing total cumulative purchase to 51.4 million euros under the current 100 million euros program. Further, at our AGM today, shareholders approved the proposed dividend for 2024, which will distribute 172.5 million euros in cash to shareholders, which equals 2.18 euros per share. Next, I'd like to speak a little bit about the current market environment and our strategy. Tech Insights currently forecast a 13% assembly market upturn in 2025, followed by a 26% increase in 2026. Most analysts continue to expect significant growth in advanced packaging for AI applications in 2025, and a second half turn in mainstream assembly markets. However, the slope of the current trajectory anticipated for mainstream markets this year is subject to many variables, including the potential impact of tariffs on a global trade. Despite near-term uncertainty, we believe that the long-term fundamentals of our market remain strong due to the ongoing AI build-out. on-shoring of advanced packaging fabs in the US and Europe, and increased adoption of hybrid bonding and other next-generation assembly systems for new AI, logic, memory, and consumer use cases. Of note, significant progress was made on Bayes' wafer-level assembly agenda this quarter, as we received hybrid bonding orders for two leading from two leading memory producers for HBM4 applications, as well as follow-on orders from a leading Asian foundry for logic applications. Further important announcements were made by two leading semiconductor producers with respect to future hybrid bonding applications, such as ASICs and co-packaged optics. In addition, a leading U.S. logic manufacturer successfully began production of AI-related logic devices utilizing BASIC's hybrid bonders in integrated production lines. Finally, Applied Materials announced on April 14 a 9% ownership position in BASIC. BASIC and Applied Materials have been successfully collaborating since 2020 to develop the industry's first integrated equipment solution for dye-based hybrid bonding. The collaboration brings together applied expertise in front-end wafer and chip processing with base leadership position in bonding accuracy and speed. We welcome their shareholding as a strategic long-term investment and view it as further validation of our wafer-level assembly technology and strategy. Now a few words about the guidance. BASIS business development this year reflects the contrasting growth trends seen in the assembly equipment market between AI and mainstream applications. The timing and trajectory of a mainstream assembly upturn is more difficult to predict now given new tariff uncertainties. However, demand for advanced packaging for AI applications remain strong given upcoming new device introductions and use cases planned in 26 to 28 time periods. We continue to assess the potential impact of tariffs on basics customers, right chain and end user markets. For the second quarter 25, we forecast that revenue will be flat plus or minus 10% versus the first quarter of 25, with gross margins in the range between 62% and 64%. In addition, aggregate operating expenses are forecast to decrease 0% to 10% versus the first quarter this year, primarily due to a reduction in consulting costs. That ends my prepared remarks. I'd like to open the call for questions. Operator.

Thank you. If you'd like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. We kindly request you to limit the number of questions to two questions per person. You will be advised when to ask your question. We will take our first question from Nigel Van Putten. Morgan Stanley, your line is open. Please go ahead.