Melexis Nv Ieper

Good day and welcome to today's Medexus Q3 2024 results conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. You may register for questions at any time by pressing star 1 on your telephone keypad, and we kindly ask you to limit your questions to one and one follow-up question. And now I would like to hand the call over to our host, Marc Viron, CEO. Please go ahead, sir.

Thank you. Dear audience, thank you for joining the Melexis third quarter 2024 earnings call. In Q3, our sales reached 247.9 million euros, which is within our guidance. It's in line with the Q3 of last year, and it represents a 1% increase from Q2 to Q3 this year. This being said, next to the solid sales in Q3, discussions with our automotive customers starting in September, indicate that, based on their current order book for the balance of 2024, they would end up with higher inventories than desired. During the past couple of months, we have all read announcements about the auto industry, with global car production down by more than 5% in Q3 2024. Our current order book would result in sales for Q4 which is in line with our full year guidance of around 1 billion euros. However, we have decided to assume this inventory correction at our customers, which will lead to lower sales for Melexis in Q4. Where we previously worked to avoid bullwhip effect, we now recognize that we would not prevent it fully, and thus we are also impacted. The inventory correction that Melexis decided to assume in Q4 follows a period of supply allocation, and is centered on automotive customers in Europe and in the US. Based on what we know today, global automotive sales and production are forecasted to grow in 2025. We anticipate that taking such inventory correction now will enable us to resume our growth trajectory sooner than it would otherwise be the case. It also shows our customer orientation and it provides clarity to our stakeholders. Typically, such inventory corrections are followed by a new upturn in demand for which we are already preparing. Returning to Q3 2024, our performance was mainly driven by our magnetic position sensors, both in automotive and beyond automotive applications. We also had growth in pressure sensor, sensor interface, and current sensor. In the third quarter of 24, Melexis has continued to introduce several innovations. For example, we have expanded our sensor portfolio. We have continued to address safety requirements with our Triaxis magnetic product for improved steering and pedal position application. We have also launched the Trifibion pressure sensor with a digital output designed for thermal management of electric cars. And we have enhanced our current sensor, improving both isolation capabilities and functional safety compliance for demanding automotive applications. In Q3, we are also encouraging a number of design wins, with an increasing amount realized in APAC and in particular in China. Those are some examples of design wins concluded in Q3. We had an important design win for embedded motor driver for EV powertrain in China and another one for HVAC application in Japan. We had also multiple design win for embedded lighting application in Europe and also in China. These examples demonstrate that we continue to win business globally and this is across the automotive platform and irrespective of the type of powertrain. Now, I will hand it over to our CFO, Karen Van Grisven, who will share some financial insights.

Thank you, Marc. So, hello, everybody. A bit more on the financial results for the third quarter. So, the sales came out at €247.9 million, stable versus the same quarter from the previous year, and an increase of 1% compared to the previous quarter. The Euro-US dollar exchange rate evolution had no impact compared to the same quarter a year ago, and a negative impact of 1% compared to the previous quarter. The growth result was 108.2 million euro, or 43.7% of sales, a decrease of 5% compared to the same quarter of last year, and stable compared to the previous quarter. R&D expenses were 10.7% of sales, G&A was at 5.1% of sales, and selling was at 1.9% of sales. The operating result was 64.2 million euro, or 25.9% of sales, a decrease of 10% compared to the same quarter of last year, and stable compared to the previous quarter. The net result was €51.2 million or €1.27 per share, a decrease of 10% compared to €56.8 million or €1.41 per share in the third quarter of 2023, and an increase of 4% compared to the previous quarter. Now, looking further ahead, Manexis expects sales in the fourth quarter of 2024 to be in the range of €200 to €210 million. For the full year 2024, Manexis expects sales to be around €935 to €945 million, previously around €1 billion, with a gross profit margin above 43%, previously above 44%. and an operating margin above 24%, previously above 25%, all taking into account a US dollar exchange rate of 1.08 for the remainder of the year. For the full year 24, Menexus expects CAPEX to be around €60 million. So operators, you can now open the Q&A session.