BE Semiconductor Industries

Good morning, good afternoon, ladies and gentlemen, and welcome to Basie's quarterly conference call and audio webcast to discuss the company's 2026 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 Blickman, Chief Executive Officer, and Mrs. Andrea Kopp, 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 would now like to turn the call over to Mr. Richard Blickman. Go ahead.

Thank you. 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 views and assumptions regarding future events, many of which are by nature inherently uncertain and beyond BASIE's 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. BEZI does not intend to update them in light of new information or future developments, nor does BEZI undertake any obligation to update the forward-looking statements. For today's call, we'd like to review the key highlights for our third quarter and nine months ended September 30 of this year and update you on the market, our strategy and outlook. First, some overall thoughts on the third quarter. BASIE reported strong third quarter and year-to-date 2026 results as favourable order momentum continued for both our traditional and wafer-level assembly systems. For the quarter, revenue of 283.4 million euros increased by 13.3%. 4% and 113.6% versus the second quarter of this year and the third quarter of 2025 respectively. Year-over-year revenue growth was primarily due to increased demand for computing and markets with strengths in hybrid bonding, photonics and data center applications. Similarly, orders of €342.6 million increased by 17% versus the second quarter of this year and 96.1% versus the third quarter of last year, primarily due to increased orders for hybrid bonding, data center and AI-related mainstream computing applications, including power management. Basie's orders for the last 12 months increased to 1.2 billion euros as the expansion of digital infrastructure capacity significantly increased demand for our advanced packaging portfolio. The third quarter of this year net income of 107.2 million euros increased by 20.4% versus the second quarter of this year and 323.7% Strong profit growth versus the third quarter of last year was principally due to higher revenue, improving gross margins and disciplined expense management, which has significantly limited overhead development in the current revenue wrap. In fact, baseline operating expenses as a percentage of revenue decreased from 32% in the third quarter of last year to 16.4% in the third quarter of this year, underscoring the operating leverage in our business model. As a result, net margins increased from 37.8% in Q3'26, double the level of Q3'25. Year-to-date results also confirm the strength of Basie's advanced packaging portfolio in the present AI-CAPEX upcycle. Revenue of €718.1 million increased by 69% versus year-to-date 25%, primarily due to broad-based growth in computing and markets and to a lesser extent an increase in mobile shipments. Some modest recovery in more traditional automotive, industrial and non-AI computing markets has also been experienced. Year-to-date 26 orders of 905.2 million euros, more than doubled versus year-to-date 25. due to growth across all end-user markets with strength in hybrid bonding, photonics and data center applications. Further net income of €247.8 million increased by 179.1% versus the year-to-date 25% primarily due to significantly higher revenue and Gross margins primarily due to a more favourable product mix and the pass-through of price increases to help offset higher supply chain costs. Combined with ongoing cost control efforts, net margins increased to 34.5% versus the 20.9% Our results also indicate significant market share gains in our addressable markets, particularly for basis flipchip, multi-module die-attach and hybrid bonding systems. Increased profitability and careful working capital management have contributed to steady improvement in our liquidity position this year. Net cash reached €246.6 million at September 30, up €254.4 million versus September 30 last year. As a result, we will increase our share buyback programme to €100 million for the annual period starting October 27 of this year. Next, I'd like to discuss the current market environment and an update on our strategy. Tech Insights recently upgraded its 2026 assembly equipment forecast to growth of 37%, almost double their last forecast. They now expect the market to reach $12 billion by 2028, an increase of 122% compared to their last estimate of 53% growth. We expect to grow more than double their underlying market growth rate. We can report significant progress this quarter and this year on our wafer-level assembly agenda. Year-to-date hybrid bombing orders have more than doubled versus fiscal 25, as orders increased for HBM applications, more logic chiplet programs, entered production co-package optics use cases expanded faster than anticipated and edge AI device production began. To date in 2026 hybrid bonding customer adoption grew to 23 customers and total cumulative unit demand exceeded 215 systems. In the third quarter of this year, orders were received from customers for logic, co-package optics and memory and markets. Of note, we received orders for both hybrid bombing and TC-NEXT systems from a leading memory customer as they focus on the development of current and next-generation HBM device structures. Our competitive position in wafer-level assembly is very strong. Further underscored by the progress we've made this year and inclusion recently of an innovation partner at Applied Materials' EPIC Centre showcasing both Basis Hardware Bonding and TCnext solutions. We do not view ASML as a competitor, contrary to recent analyst reports. To the best of our knowledge, ASML is interested in a roadmap for 3D transistor stacking inside the chip over the next decade and is not competing with BASIE in the area of tie-to-wafer bonding. In fact, ASML and BASIE are jointly working together on distressed programs to improve placement accuracy and consequently throughput, as well as other mutually beneficial areas of collaboration. Now a few more words about our guidance. The favorable year-to-date order momentum should continue in the fourth quarter, as the multi-year AI capacity build-out progresses. We see strong demand continuing for data center and photonics applications from Asian subcontractors and market share gains in our traceable markets, particularly for basis flipchip and multi-module attached systems. Our results also indicate ongoing hybrid bonding capacity expansion planned by leading industry players for logic, CPO and HAI devices. Severe memory shortages this year have extended the use of lower stack heights in current HBM production beyond prior expectations. However, the need for higher power efficiency, energy efficiency, performance, bandwidth, interconnect density and speed has only increased interest in the use of hybrid bonding for HBM as the year has progressed. We anticipate that hybrid bonding will be adopted in a range of stack arts over the next two years and in new innovative stacks combining HBM Custom Advanced Logic Base Dice and the direct bonding of DRAM onto accelerator chips by decade end. Based on our current backlog and feedback from customers, we anticipate that basis Q4 revenue will be flat, plus minus 5%, as certain customers request delivery dates for third quarter 26 received orders, in alignment with H1 production capacity plans. In addition, gross margins are anticipated to range between the 63% and 65% and operating expenses are expected to increase between 5% and 10% versus the third quarter due primarily to increased strategic consulting costs. That ends my prepared remarks. I would like to open a call for questions.

Ladies and gentlemen, We are now ready for the question and answer session. If you would like to ask a question at this time, please press pound key five on your telephone keypad. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. Our first question comes from Didier Scamama from Bank of America. Didier, go ahead.