Melexis Nv Ieper

Good morning and welcome, everyone. Joining us today for Melexis' second quarter 2025 earnings call. I'm Philippe Ludwig, investor relations at Melexis, and today I'm joined by your speakers, CEO Marc Viron and CFO Karin van Gliensven. Marc, please go ahead.

Thank you, Philippe. Hello, everyone, and welcome to this earnings call. I will briefly discuss our second quarter performance Then I will hand over to Karen for our financial overview and outlook. So on-quarter sales grew sequentially and has included in-quarter customer orders. We are able to support this increase of these short-term orders because of the inventory we continue to build up in order to be ready for the next upturn in demand. We have recorded double-digit quarter-on-quarter sales growth in both China and EMEA. Sales for automotive applications were 88% of the total sales and I would like to highlight powertrain sales which grew both for internal combustion engines and electric motors. In interior lighting, where we have a leading position, sales were also up to double digits. Sales for beyond automotive applications were 12% of total sales We had mainly outperformance in cooling fans for consumer appliances and data centers. While today these applications are a small part of our sales, those show important growth opportunities for the future. To capture these opportunities, we continue to launch dedicated new products for Beyond Automotive applications. In the second quarter, we have added a temperature sensor which enables high accuracy and cost-effective solutions across household, industrial and AI-driven applications. We have also leveraged our tri-axis technology to launch a magnetic position sensor for joystick and human-machine interface applications. This innovation allows for accurate operation even in applications with high magnetic interference. is make it a unique feature for joystick and steering system in heavy machinery, medical device and automation equipment where safety is critical. We have also secured design wins in China and Europe with a good mix of application in all types of powertrain, but also outside the powertrain, for example in braking and lighting application. I also want to highlight a design win for our inductive position sensor in sophisticated service robots. We are very excited about the high number of sensors and the high number of drivers needed in the robotic market, which is a great potential for Melexis in the coming years. Now, I will hand it over to our CFO, Karen van Grinsven, who will comment on our financial results.

Thank you, Marc. And hello, everybody. The sales for the second quarter of 2025 were 211.6 million euro, and the euro-US dollar exchange rate evolution had a negative impact of 2% on sales compared to the same quarter of last year, and a negative impact of 3% on sales compared to the previous quarter. The gross result was 82.6 million euro, or 39.0% of sales. While volume growth will support margins as it returns, we are not waiting for this and are taking improvement actions. Amongst other, we are planning to bring innovative higher margin products on the market, resolve cost of yield issues, diversify our supply chain, and optimize our operations organization, and this by concentrating competencies and moving final testing closer to our customers. All of these should lead to better growth margins. In addition, we are closely managing fixed costs to be stable during this time. R&D expenses were less 13.6% of sales, G&A was at 6.3% of sales, and selling was at 2.3% of sales. The operating result was 35.7 million euro, or 16.8% of sales. The net result was 37.8 million euro or 0.94 euro per share. Furthermore, the Mlexis Board of Directors decided on an interim dividend of euro 1.3, the gross per share, which will be payable from October 16th. Moving to the outlook. Melexis expects sales in the third quarter of 2025 to be in the range of 210 to 215 million euros. And for the full year 2025, Melexis expects sales to be in the range of 835 to 845 million euros, with a gross profit margin around 39% and an operating margin around 16%. all taking into account a euro-US dollar exchange rate of 1.17 for the remainder of the year. And for the full year 2025, Melexis now expects CapEx to be around 40 million euros. This concludes our remarks. We can take your questions now. So, operator, please go ahead.