Technoprobe Spa U/Adr

Good evening and thank you for joining us. With Stefano Beretta, our CFO, presenting the first quarter 2025 results and the guidance for the second quarter of this year. As usual, Q&A session will follow at the end of the presentation. Revenues recorded in the first three months of the year are in guidance, also mirroring trends of our reference market. So first of all, let's talk about artificial intelligence. Artificial intelligence is confirming an extremely strong trend. We are arriving as leader in the testing of the logic chips. As recently discussed during our capital market day, these architectures, which use sophisticated technology and aggregate components to create single electronic device, require advanced testing solutions based on MEMS technologies. That said, we are assuming a progressive and steady increase in demand for advanced logic testing solutions. Second, the reference market is the consumer market. So more consumer-exposed markets, as expected, posted a slight growth in the first quarter. In fact, we think that they will still suffer from a slower adoption of AI at the edge, which is confirmed to be the real catalyst. Last is the automotive and industrial. Automotive and industrial are still suffering of the ongoing inventory correction, which is expected to continue also for the next month. Based on the visibility we have right now, we confirm our positive view of 2025. So now let me turn to Stefano Beretta, who will give you more colors on our numbers.

Thank you, Stefano. Good afternoon, and thank you for joining us. As you will have seen in our press release, our revenue in the first quarter were 127.2 million euro, in line with the midpoint of our guidance, registering an increase of 54.4% compared to the same quarter of prior year. And pretty in line with the prior quarter with a sequential increase of 0.6%. Gross profit increased 64.3% compared to the same period of 2024 up to 70.8 million euro representing 45% margin above the midpoint of our guidance. And consistently also the EBITDA closed above the midpoint of the guidance it has almost doubled, growing by 94.3% compared to the first quarter of 2024 with a margin of 30.5%. We can flip to the next page, please. Thank you. On this page, you can see a summary comparison between the financials at the end of the first quarter of 2024 and 2025. So just to comment that further, so revenue year-on-year increase of 54.4%, was driven by volume increase related to the artificial intelligence testing solutions, together with a slight recovery of the consumer market, partially mitigated by the weakness in automotive and industrial that is expected to continue for the rest of the year. It's worth also to highlight the inorganic growth related to the DIS business that was not present in the first quarter of 2024. If we have a look at the revenue expressed at the cost and currency, so using the average FX rate of the Q1 2024, would have been approximately 4 million lower than reported revenues, meaning approximately 2.5% favorable impact. In fact, the three months average US dollar euro for 2025, for the Q1 2025, was more or less three points more favorable compared to prior year. to be precise, 1.052 compared to 1.086 for 2024. On a gross profit level, the increase in the margin from 42.3 to 45% was the result of the expected recovery of our efficiency in the production processes, together with the operating leverage that our business model allows us when certain production thresholds are reached. Gross profit and constant currency would have been approximately 3.4 million lower by using the three months 2024 average rate. And consistently, the EBITDA reflected the same trend, showing an increase in the margin from 24.3 to 30.5%, and including a positive foreign exchange impact for approximately 3.1 million. Moreover, as mentioned during Q4 2024, A significant reorganization process has affected the US structure, whose first effects began to show in the last weeks of the quarter. Finally, to have a look at the net financial position, that is down for almost 24 million euro in the three months period, mainly due to 7 million generated through the operating activities, more than offset by 12 million absorbed by the investment of the period, 7 million absorbed by the acquisition of a minority stake in InnoStar Service Inc. So a company listed in Taiwan is emerging stock market from the 8th of May. So we have purchased slightly more than 9% stake. Another absorption is theoretically represented by 10 million euro for the unrealized FX impact on the foreign currency bank accounts we currently have. We can move to the next page, thank you. So as said during our latest Capital Market Day, we confirmed the projection for the overall mid-single digit growth in our reference market. with a consistent sequential increase in revenue together with a more pronounced recovery of the profitability. That said, the second quarter of the year is expected to show the following. Revenue to be about 168 million plus minus 3%. Gross margin in the range of 45.5% plus minus 2%. And finally, the EBITDA margin in the range of 33.7% plus minus 2%. So thanks everyone for your attention. Now we can move to the Q&A session.

Thank you to the management team. Let me kindly remind everyone that for the Q&A session, you are suggested to raise your hand or if for those dialing in, press star nine on your keypad. Our first question today comes from Mr. Gianmarco Bonaccina. Please, the floor to you.

Good afternoon. A couple of questions for me. The first one is, we know that your visibility is limited, but assuming that AI demand will continue and that the trends in consumer and the auto industrial will remain unchanged, so no growth in the second alpha, is fair to assume that for the total company, your revenues in the second alpha of the year should be at least similar to the one in the first half, and this actually should imply revenues around 650 million for the full year. The second question is about your acquisition of this minority stake with Taiwanese company. If you can elaborate a little bit on this acquisition, what is, let's say, the optionality with this purchase, and if you can have, let's say, already a collaboration with this company, and what's the next step on this, let's say, stake? Thank you.

Thank you Gianmarco. Let me take the first part of the question. So about the second half estimate. So as you said, the visibility is always shorter, so we don't have much visibility other than the following quarter. But overall, we remain consistent with our guidance and with the information we gave during the capital market day. So we do expect an organic growth of 2025 in the mid single digit range. together with the inorganic growth of the IS for the first part of the year, so already represented by January, February, March, already actual, plus April and May expected in the second quarter. So overall, the number you said, of course, it's not confirmed million by million by us, dollar by dollar, but the range is fairly, we can fairly assume it is correct. So we do expect the second part of the year in line with the first part. Then we have some effect that we cannot control, like effects impact. As you may know, slightly 1% of fluctuation of US dollar compared to Euro can bring easily 3, 4, 5 million difference in our estimate. But overall, we expect to land in the range you mentioned.

Let me answer to your second question about InnoStar, the recent acquisition. the investment, I would say. So InnoStar is a company that we knew already since several years, and they are specialized in equipment, tools, to make broadcast, build broadcast, different tools, let's say. And so for us, we are following them since again several years, and they did a good job. Even though it's a small company, it's really an engineering company, a lot of engineers. And we saw them developing, starting to develop interesting things. And so we decided to invest in them because we can speed up some development, internal development. with them. So we have already more than five joint development projects together. And it's about machines and that we meant to speak to to improve the automation, building the cars. Okay, thank you.

Our next question today comes from Mr. Alberto Jager, please the floor to you.

Good afternoon, everybody. Can you hear me?

Yes, we can.

Okay, so my first question is your Forex assumption behind the guidance for the second quarter. Then I have a question on the EBITDA margin for the full year, because during the last turning call, you mentioned some 30% EBITDA margin as a sort of floor for the year. Now, after this Strong second quarter guidance. You will have first half around 32%. So I wonder if you have any update on the full year indication. Last one on tariff. If I'm not wrong today, you should have in place the 10%. of baseline tariff applied to all the countries. So how are you currently managing these 10% considering your 15 to 20% of sales delivered to the US?

OK, thank you. So let me start from the bottom. So in this case, for the tariff, general 10% is still doubtful is to be applied, if to be applied. We have information from the US that is not a clear information, even from the customs. Even them doesn't have much clarity on that. We have all our shipment addressed to the US that are currently on the Ex Works terms. So meaning that customer assume 100% the cost of the custom in case is applied. So for the moment, the company has not been affected at all from this change. When I say there is no clarity because the specific HTS related to our segment is expressly free of charge. Then there are information about the generic 10%. And then there are information about the pause of all the tariff for many countries, including Italy and Europe. So there are many confusing information, but so far there is no impact at all in our sales. If this is the final point to be reached for the moment, we have not been affected. About the profitability, we mentioned to arrive at the end of the year in the range of 1-32% EBITDA. And this is still our target for the remaining part, considering the entire year. You will see some very positive numbers right now. So we expect more than 33% in the second quarter. Considering that the second quarter is expected to be the peak for 2025, so most of the customers now have moved their biggest campaign in the first half of the year, so meaning that the second part, as mentioned, will be We expect to be almost flat compared to the first part. So that's why the biggest rate, the biggest peak we have now in the second quarter will be partially offset in the second part of the year. So we expect to be in that range. We confirmed already during the capital market day. Can you remind me the first question was about our Forex about the second quarter. So unfortunately, we have a headwind in the second quarter. So the expected Forex impact is in the range of 1.12, 1.13 for the second quarter standalone. We have seen now in the last three to four days, it is already below this target. So it's now in the range of 1.11. It is better than 11.14 or 11.13. We had a peak on 11.15 during the quarter. But this is the estimate for the Q2. So meaning that our revenue in the US dollar increased more compared to the increase in Europe in the second quarter.

just a quick follow-up because during the capital market day you gave us a sensitivity in terms of your saints exposure to the us dollar can you give us also a rough indication of how much of your cost base is in the us dollar in terms of ratio between euro and us dollar the ratio in favor of the dollar let me say

has increased a bit compared to the past, especially after the acquisition of Arbor and DIS Group that are entirely expressed in US dollar. So we are benefiting from this natural coverage currently when there is a fluctuation compared to the past. So if we have to consider all the revenues we are exposed, let me say the range of 80, 85% in US dollar, then we have, of course, Korean Won and Japanese yen and Taiwan dollar, but the most part in the USD. For the cost, well, I don't have this information perfectly aligned, but I would say roughly in the range of 60%, no more. Even low, 60%, sorry, in terms of Euro compared to USD. So the majority is still in Euro.

Okay, thank you very much.

Thank you very much for your questions. Our next question comes from Mr. George Brown. Please, the floor to you. Mr. Brown. Mr. Brown, can you hear us? Yeah, we can hear you. Thank you.

Brilliant. Yeah, thanks, guys, for taking my questions. I have two, if I may. So just firstly, I'm sure you've seen some reports that TSMC is asking some suppliers to cut pricing to help shield the FX impacts that they're seeing. TSMC, I think, is the majority of your sales, both directly and indirectly. So do you expect to see any pressure or price pressure going forward in the next couple of quarters? And then secondly, can you help us quantify your AI exposure as a percentage of your total revenues in Q1 and what's implied in your Q2 guide as well? Thanks, guys.

OK, let me answer to your first question about the pricing decency. So the answer is that we have a constant pressure. This is not related to Forex or any other. So this is every year, I would say, even more frequent. And then each year, there is a constant negotiation between us and TCNC and all the other customers. And the point here is that, of course, for existing technologies, there is a small erosion of the price year by year. But the good point is that we constantly develop new technologies for them because it's required for new nodes and for more complex testing. And these can allow us to keep the price higher because we bring more value on the table. So at the end, these customers, the most important thing is the cost of ownership, not just the price itself. And as far as we continue to innovate and bring new solution that can create more value, that can allow us to keep good pricing. Regarding the AI, it's, we give, we can give you the figure on the, considering the whole year, and we are targeting, it will be about 34%. This was 2024. It was about 34%.

Okay, brilliant. And then maybe just to follow up, just on HBM, I know you're investing a lot of capacity in Taiwan for MLOs, but I believe in HBM, the current sort of micro cantilever technology uses MLCs, so the ceramic substrates, I guess that's to do with sort of thermal issues. I just want to understand if you're entering memory, do you have to invest in MLC capacity as well or with virtual memory pro cards do you utilize MLOs rather than MLCs? Any sort of color there would be helpful.

Yes, the investment that we have done on MLO is good also for MLC actually. so i can confirm you that it it's an mlc for what uh we think will still be required even though we will not go with the our idea is not to go with micro anti-reverse springs but more with the technology that can leverage on vertical technologies, our SOC technologies. But an MLC will be in any case acquired in the middle as a space transformer. And the investment we've done in Taiwan for the MLO is good also for the MLC. It's just the difference is the starting material, the bulk material, but the process is basically the same. So we are already able to start the manufacturing of MLC right now.

Okay, brilliant. Thanks, guys.

Thank you very much, Mr. Brown, for your questions. Currently, we have no questions queued. We will wait just a few moments to give everyone the opportunity to raise their hands. Thank you. Let me kindly remind everyone that in order to ask a question, you should raise your hand or press star nine on your keypad if dialing in. Thank you. We have a follow-up question from Mr. Alberto Gegra. Please, the floor to you.

Yeah, just a quick follow up on HBM. If you can provide us any color on the qualification process. So do you confirm the timeline? How are the negotiations going on? If you are seeing some, let's say, specific problem, any update would be helpful.

Actually, we don't have a... Let's say new updates compared to what we said during the capital market day. So basically, we are in progress with the qualifications with all the main HBM players. And the expectation is to finish qualifications by the end of the year.

Thank you.

Thank you very much. We now have the next question from Miss Antonella Frangillo. Please, the floor to you. Miss Frangillo, kindly unmute your line. Miss Frangillo, can you hear us?

Yes.

Okay, perfect. We can hear you.

Sorry if you already answered this question, but I connected a bit later. Could you quantify the DIS impact on the first quarter revenues and on the second quarter guidance?

So as I mentioned, there is a peak in the second quarter. especially for the IS business that is more subject to cyclicality compared to the prop car business we're running for many years. So the peak in the second quarter is in the range of 50 million US dollar. So this is the range for the IS that is very positive results compared to the other months. But again, this is the best period for the final testing solution, the final testing campaign that are not expected to repeat in the next quarter. So that's why we expect the second part of the year still flat compared to the first part of the year, 2025.

Okay, thank you. Thank you, Ms. Pungillo, for your question. As there are no more questions queued, I will leave the floor to the management team for any final comments. Thank you.

Thank you, everyone, for joining us today and stay tuned for the next report. Thanks.