Melexis Nv Ieper

Hello, and welcome to the MyLexus Q1 2025 Results Conference Call. My name is George. I'll be the coordinator for today's event. Please note that this conference is being recorded, and for the duration of the call, your lives will be in listen-only mode. However, you have the opportunity to ask questions towards the end of the presentation, and this can be done by pressing star one on top of the keypad. Also, during today's question and answer session, please limit yourselves to one question, to allow most people to ask their questions. If you require assistance at any point, please press star zero, and you'll be thanked to an operator. And I'm going to call over to host today, Mr. Marc Biron, CEO of Briege Drieschamp. Please go ahead, sir.

Hello, everyone, and welcome to our first quarter 2025 earnings call. Together with our CFO, Karen Van Grisven, I will discuss how the year has started for Melexis and how we are preparing for the future as an electrified and robotized world remains the growth driver for Melexis. While taking into account the changes in external conditions and adjusting where needed, we always focus on things within our control. In Q125, sales were within our guidance, despite a volatile and fast-changing market environment. Sales to customers in Asia-Pacific were 64% of total sales, while from end-market perspective, beyond automotive sales were 12%. The current gross profit margin is clearly below where we want to be, and the actions we are taking are expected to have an impact by the end of this year. You may have read that we did not include a comment in our expectation after the first half of this year. Since we reported full-year results last February, customers in our end market are facing a wider range of scenarios due to tariff announcements. Importantly, on average, customers and DC inventories look stable at acceptable levels. The current uncertainty seems to delay the order pickup, and we are also seeing orders coming in very late. Those are the reasons why we did not provide an outlook for the second half of 2025. I would add that there are no signs of customers pulling in order forward to anticipate potential changes to trading terms. Turning back to our results, in the first quarter of this year, our inductive position sensors have performed very well, addressing needs in the powertrain of electrified vehicles and also in the advanced steering and braking system, which are crucial for assisted driving. Similarly, our latest generation of electric motor drivers has excelled for small motor in valves and for larger motor in pump, which are two key applications of the thermal management and in-cabin comfort system. Some of those fun drivers have also found success beyond automotive, such as in refrigerators, to improve cooling efficiency. As for our temperature sensor, our solution continues to be very successful in consumer health wearable applications. Among the product launches, I would like to highlight our automotive dual LED drivers, enabling the most demanding light animation for interior and exterior lighting. Lastly, I remain personally involved in our strategic activities targeting innovative applications in robotics. It is an area where we aim to capture significant market share in the mid-term, and particularly in China. To reach our ambition, we are accelerating the development of several sensor and driverless products, and we start to heavily promote them globally at customers and at fairs. As a takeaway, I reconfirm that wherever electrification or robotization exists, there are growth opportunities for Melexis in the automotive and beyond automotive applications. I also want to highlight more broadly our progress in China. In 2024, sales in Greater China were 28% of Melexis total, coming from less than 20% just five years ago. This is due to bringing strong innovation, product quality, and local technical support. We are pleased to take the next step in our strategy as announced in Electronica China in April. The objectives are to accelerate innovation, intensify customer collaboration, and reduce lead time in this key market. To do this, we have established partnerships to outsource semiconductor assembly and testing. We will also manufacture in China, product developed by Melexis, tailor to the Chinese market, and scheduled to enter production in the first half of 26. We have moved to a new larger office in Shanghai in March to accommodate our growing commercial and technical support activities. Customer feedback has been very positive as we deliver on commitment made in our China for China strategy. Last but not least, according to Tech Insights more recent report released earlier this month, Melexis ranks number four globally in automotive sensor, with one of the highest sales CAGR over the past five years. All in all, I'm pleased to see how our team are managing the present and preparing the future success of Melexis. Now, I will hand it over to our CFO, Karen Van Grisven, who will comment on our financial performance.

Thank you, Marc. And hello, everybody. So as already mentioned, the sales for the first quarter of 2025 were 198.2 million euro, a decrease of 18% compared to the same quarter of the previous year, and stable compared to the previous quarter. And the euro-US dollar exchange rate evolution had a positive impact of 1% on sales compared to both the same quarter of last year and the previous quarter. And the gross result was 75.7 million euros, or 38.2% of sales, a decrease of 29% compared to the same quarter of last year, and a decrease of 2% compared to the previous quarter. R&D expenses were 14.3% of sales, G&A was at 6.8% of sales, and selling was at 2.4% of sales. The operating result was 29 million euro or 14% of sales, a decrease of 55% compared to the same quarter of last year and an increase of 5% compared to the previous quarter. The net result was 24.6 million euro or 0.61 euro per share, a decrease of 54% compared to 52.9 million euro or 1.31 euro per share in the first quarter of 2024, and an increase of 35% compared to the previous quarter. Now, looking at the outlook, so despite a weaker euro-US dollar exchange rate of 1.09, previously 1.03, Manexis confirms its outlook for sales to be around 400 million euros for the first half of 2025. And for the same reason, Menexis now expects a gross profit margin around 39%, previously around 40%, and an operating margin around 15%, previously around 16%, for the first half of 2025. Menexis continues to expect an upturn in sales later this year, Sorry, Menexis expects capex to be around 50 million euro. I would like to now actually open the Q&A session. Operator, please go ahead.