Technoprobe Spa U/Adr

Good afternoon, and thank you for joining us. Today, Stefano Beretta and myself will drive into the first part of 2020, three results, also sharing our view for the third quarter of this year. As usual, Q&A session will follow at the end of the presentation. We closed the first half of the year at €196.3 million, confirming the sequential upward trend in the second quarter we anticipated during our call in May, also beating Q2 guidance in terms of revenue, mainly due to the advanced shipments requested by some of our clients. Our reference markets maintain the same path registered in the first quarter. From the end market perspective, we are still facing a sluggish consumer applications market and inventory adjustments, which seems to be slower than expected. As opposite, automobile and artificial intelligence markets are keeping growing. Since our last call, the big trigger that is shaking the same space is the artificial intelligence potential impact. As mentioned, we have been able to register patents this year and we are confident to be in the best shape to serve this market in the future. Said that, I want to clarify that in our view, the growing path confirmed in the artificial intelligence in the second half of this year will not be enough to offset the overall cyclicality of the business that we estimate will be affected by lower volumes in the consumer market and the related inventory adjustment. Now, let me turn to Stefano Beretta, who will give you more colors on our figures.

Good afternoon, everyone, and thank you for joining us. As you saw in our press release, revenues in the second quarter were approximately 105 million euro, registering a decrease of 18.6% compared to the same quarter of prior year, but with a remarkable 14.9% sequential increase compared to Q1, and approximately 4 million above the high range of the prior guidance. Consequently, gross profit and EBITDA decreased consistently compared to Q2 2022 to 55.7 million and 37.8 million, respectively, but still representing a remarkable 53.1 and 36% on revenues, despite of the already predicted contraction of revenue. As you can notice, gross margin has been confirmed in the mid-range of the guidance, while the EBITDA margin at the high range of the guidance was raised at the end of prior quarter. Moving to the year-to-date figures, total revenues were 196.3 million, with an year-on-year decrease of 21.6%. Gross profit was 101.8 million, 31.7% lower compared to the same period of 2022, representing a margin still close to 52%. EBITDA closed at 64.7 million, down 39.4% compared to the same period of 2022, but still representing a remarkable margin of 33%. Looking at this page, you can see a summary of the comparison between the financials at the end of the first six months in 2022 and 2023. Just to give you some color on that, revenue year-on-year decrease of 21.6% was driven entirely by the market downturn initiated at the end of 2022 that largely impacted the volume of orders and related deliveries. On a gross profit level, we saw a decrease in the margin from 59.6% to 51.9%, which is the result of maintaining a consistent organization of priority, in particular in terms of labor and capacity, together with a significant reduction in revenue. In fact, it's worth reminding that at the end of June 2023, we currently employ approximately 200 people more than at the end of half year 22. Moreover, we registered an expected penalty with a supplier for approximately 1.5 million due to a partial cancellation of a purchase order that we already disclosed during the presentation of Q1 results, as well as a prudent inventory reserve of approximately 5 million recorded in the second quarter of the year. Consistently with this information, the EBITDA reflected the same trend, showing a decrease in the margin from 42.6% to 33% year-on-year, even including a positive Forex impact for approximately 1 million. We wish to highlight in this case that EBITDA is also impacted by a consistent amount of R&D costs approximately 23 million compared to 22 million in the same period of 2022, representing now approximately 12% of the half-year revenues to confirm once again the mindset, the commitment of our leadership to develop products expected to generate higher revenue starting from the end of 2023. Finally, net financial position is down 43 million in the six-month period, due to essentially 31 million generated through the operating activities, together with 1 million generated through the combined impact of financial activities and forex. More than offset in this case by 32 million absorbed by investment of the periods, capex, and 39 million due to the payment of current tax. Still inclusive of 18.7 million in advance and related to fiscal year 2023. So once again, investments in the capacity and R&D are not planning to stop in the remaining part of 2023. But consistently, with a weaker market outlook, we will remain cautious. Now let me turn to Stefano Felici, who will share with you some more comments on the recent acquisition announced yesterday.

Thank you, Stefano. Let me give you more color on the position of Harbour Electronics. We just finalized yesterday. Harbour Electronics, based in Santa Clara, was part of a Chinese group, Passprint, and it is focused on the manufacturing of highly specialized printed circuit boards for the semiconductor industry. Due to the high level of technological evolution of their products, Harbor Electronic was already one of our key suppliers for the most advanced PCB. We know each other very well, and I think this is an edge in the integration process that will follow in the next months. The company serves and will continue to serve the biggest players and pro-car manufacturers in the same space with 180 employees occupied in two plants in California, as well as three design centers in the UK, Philippines, and Malaysia. As reported in the press release published yesterday, the total amount paid for the acquisition, full in cash, has been in the region of 50 million US dollars. The rationale behind the acquisition is to fully integrate our manufacturing process. As you know, we designed PCB, MLO, ceramics plates, and contact probes. But before the acquisition, we fully outsourced PCB manufacturing. During the last quarter, we finally got the opportunity to tackle the market and find suitable targets. which was perfect for our strategy due to their high level of technological footprint. Being fully vertical integrated is definitely a competitive edge, both in terms of costs and process optimization, and also for R&D leverage. You know how the complexity boosts the development of new testing solutions in our industry. We expect to benefit from the acquired skills to foster new product development process. In addition, they also fit one of our growth drivers, entry into the final test market. In fact, Harbour is already involved in the manufacturing of final test board. So we expect also synergies to speed up the development of products to serve this segment. Now I hand over to Stefano Beretta who will comment our guidance for the third quarter of 2023.