BE Semiconductor Industries

Welcome to the BE Semiconductor Industries Q1 conference call. I will now give the word to Richard Blickman. Richard, go ahead.

Thank you. Thank you all for joining this call. 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 BASI's 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 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. Basie does not intend to update them in light of new information or future developments, nor does Basie undertake any obligation to update the future forward-looking statements. For today's call, we'd like to review the key highlights for our first quarter ended March 31st, 2026, and update you on the market, our strategy, and outlook. First, some overall thoughts on the first quarter. Bezi reported strong first quarter results and advanced packaging orders in an improving industry environment. Revenue of 184.9 million euros. increased 28.3% versus the first quarter of 2025 due to higher shipments for high-end mobile and 2.5D AI photonics and data center applications. Q126 orders of €269.7 million more than doubled versus the first quarter of 2025 due to broad-based growth across all basis end-user markets, with particular strength in hybrid bonding, mobile and photonics applications. Orders increased 7.7% versus Q4 last year, due primarily to a significant increase in bookings for hybrid bonding systems from multiple customers and end-user applications. Increased revenue growth this quarter favorably influenced basis profitability. Net income rose 20.6% and 63.8% versus Q4-25 and Q1-25. respectively with net margin increasing to 27.9% versus the 21.9% in the first quarter of 2025. Improved profitability this quarter was due primarily to enhanced revenue growth, disciplined expense management and the benefits of operating leverage in Basie's business model. We realized a gross margin of 63.5% in the first quarter this year, as increased prices helped offset increased component and energy cost inflation. In addition, our liquidity position improved significantly, with net cash growing by 186.9% versus the fourth quarter last year to reach 103.3 million euros. Growth in our net cash position reflected improved profit and cash flow generation from operations of 93 million euros in the first quarter of 2026, which more than doubled versus the comparable period of the prior year. During the quarter, Basie repurchased for approximately 14.2 million euros of its shares, which brings the total under the current 60 million buyback program. Next, I'd like to discuss the current market environment and our strategy. We've noticed an important improvement in market conditions since our last report, driven primarily by strong growth in AI demand and, to a lesser extent, additions to mobile and automotive capacity. The latest Tech Insights forecast calls for 21% assembly market growth in 2026 and 75% between 2025 and 2030. We expect to significantly exceed such projected growth rates, given our leadership position in advanced packaging and wafer-level assembly, particularly in flip-chip, multi-module diet-edge, hybrid bonding, and next-generation TCB systems. Favorable order trends in the first quarter of this year reflect the strength of Basie's advanced packaging market position, particularly for next-generation 2.5D and 3D AI applications. Unit orders for hybrid bonding systems more than doubled versus the fourth quarter last year and exceeded the prior quarterly peak reached in Q2 2024 with respect to total units and order value. Growth was due primarily to a larger than anticipated capacity built this quarter by a customer and to a lesser extent, repeat orders from a memory customer for HBM applications. In addition, we shipped two evaluation tools to a second memory customer for HBM applications and adoption increased to 20 customers overall. Progress also continued on our TC Next agenda with two new orders received and adoption increasing to six customers. Basie's business prospects for 2026 were also enhanced by renewed growth for high-end mobile and automotive applications in this first quarter. Our business strategy is currently focused on supporting customer adoption of our wafer-level assembly and 2.5D AI product portfolio and ramping the supply chain and production personnel necessary to meet increased order levels. We are also developing additional Vietnamese production capacity for mainstream assembly applications in order to free up incremental capacity in Malaysia for wafer level assembly production. Further, BEZI is increasing its service and support efforts in Taiwan and Korea in anticipation of increased hybrid bonding activities in such regions. Our favorable outlook for hybrid bonding growth in 2026 is also supported by a series of new products and use cases announced this year for logic, memory, co-packaged optics, and consumer applications. Such announcements suggest that the pace of hybrid bonding adoption is increasing as we approach the timing for the introduction of many new AI-related products anticipated in the 2027-2030 period. Now a few words about our guidance. Based on our backlog and feedback from customers, we anticipate that Basics Q2 26 revenue will grow by 30 to 40% versus the first quarter of this year, as strong revenue and order growth continue versus the prior year period. In addition, gross margins are anticipated to increase to a range of 64 to 66%. Operating expenses are anticipated to be flat to up 10% due to increased revenue and customer support activities. As a result, we anticipate a significant expansion of our net income and profit margins relative to Q1 26 and Q2 2025. As a result, we forecast for H1 26 that revenue will increase by 49% versus the first half of 2025, assuming the midpoint of our second quarter 26 guidance with a substantial improvement in operating and net income. That ends our prepared remarks. I would like to open the call for questions. Operator.

Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press pound key five on your telephone keypad. Our first question comes from Didier Semama from Bank of America. Didier, go ahead.