u-blox Holding AG

Ladies and gentlemen, welcome to the Half Year Results 2022 Conference Call and Live Webcast. I am Sandra, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. Webcast viewers may submit their questions in writing by the relative field. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Thomas Seiler, CEO. Please go ahead, sir.

Good afternoon and good morning, ladies and gentlemen. I'm very glad to welcome you to this presentation of our first half-year results. We are making this presentation with the usual disclaimer about forward-looking statements. And today, an agenda that we go quickly through a summary, then have the details of our numbers, and also give an outlook to how we will go on. So, the overview of numbers is in this table. You have probably seen our release this morning, so we can report a very strong growth in the first half year. or revenue of more than 50%. And even more, the profitability has increased for gross profit for EBTA and operating profit here to a very large extent, as you can see. And mainly our earnings per share have reached almost 10 times the levels we had in the first half of 2021. So an excellent result and of course we give you here more details and insight to why this has so much evolved. So these results have been a result of or based on the steady expansion of our production capacity mainly by receiving higher quantities of components. Our production capacity per se was always adjusted to what we expected to make. And therefore, most important was that our suppliers for the various components have constantly increased their output and delivery into our hands. At the same time, bookings have continued to be very strong and The current order book is double the amount we had at the end of 2021. That's, of course, an amazing increase and is, of course, also giving us the foundation for providing outlook for this year and even into 2023. We have continued to develop new products. We have launched major new products. R&D pipeline is well filled for more new products that we will launch this year. And in the far, we have not just made individual components, we have also worked for delivering solutions. Our customers want to have a full solution, something that is out of one basket and works and solves this problem. And this is what we have also enhanced and will continue to expand. And, of course, most importantly, we want many new customers. The customer base has once more enlarged, but not only that, we have more customers. We also have seen growing customers. Customers are successful with our product, and they are the main reason why we see such improved numbers. And with that, I hand over to my colleague, Roland Jut, the CFO, who provides details about this first half year's numbers. Please take control.

Thank you, Thomas. Good morning. Good afternoon, ladies and gentlemen. Also warm welcome from my side. I'm very pleased to give you an overview of the financials in the first half year 2021. As a highlight, Total revenue was 294.4 million Swiss francs for each in the first half year, an increase of 52.7%. Thomas mentioned as well profitability went up. The gross margin went increased to 48.9% from 46.7% in the first half year of 2021. EBTA adjusted was in the first half of the year, 76.6 million compared to the 28.7 million in the corresponding period in previous year. And also adjusted net profit, we reached 48.7 million Swiss francs in this first half year 2022. Cashflow from operating activities, was 30.4 million Swiss francs and free cash flow in this first half year, 6.6 million Swiss franc. We have an equity ratio at the moment of 63.1% of the assets. Going a little bit deeper into the details, the strong growth, I mentioned it, 52.7% over the first half year 2021 A strong rebound of orders since August 2022 helped to this good result. We have also the accelerated trend for connected devices and the expansion of the production output, which lets us reach such a good result. The US dollars rate impacted revenue this year positively with the growth at the rates of 2021. would have been 49.9%, so nearly 50% growth also if we take the lower US dollar rate into account. EBTA adjusted margin was 26.7%, which is at the end 76.6 million. This compares to the 19% in the first half year 2021 where the EBTA was 28.7 million Swiss francs. We see this year's strong growth in every region, the high demand in industrial automation and healthcare applications and also the strong expansion in the automotive application helped the in the Americas to grow the revenue by 60.8%. In this first half year, compared to the previous year period, the growth of revenues of 41.8% in EMEA was on one hand driven by an increased demand in industrial automation solutions and on the other hand by the buoyant demand in the automotive applications. And also APEC, I mentioned it, saw a very strong growth with 54.9%. This growth comes from healthcare, from the automotive and also network applications help here to this good result. But due to the supply constraints and the COVID impacts in China, the business in China remain rather flat. Otherwise the growth in APEC would have even been bigger. If you look at the market also here, All three markets where uBlocks is in are growing. Industrial and automotive markets grew by 62% each, and in consumer market, we have a growth of 18%. The split between the markets remain, therefore, nearly similar to the first half year of 2021. 61% we made with industrial, 28% of our revenues result from automotive, and 10% is then from the consumer applications area. If we have a look into the volumes, in the first half of year 2022, the module business has had a strong growth. The volume grew significantly. by 34.3% over the first half year 2021 and 15% over the second half year 2021 to a total of nearly 27 million units which we sold. Also, the ASP has an increasing trend in the last three semesters. This is due to changes in the product mix where we can sell sell more products with higher prices and also the price increase has a certain impact on this increasing average sales price, which is in the first half year 2022, 9.18 Swiss francs for modules. On the chipset side, we sold roughly 22 million chips in the first half year 2022. And the chip volume showed a strong growth over the second half year of 2021, nearly 40% increase. This growth is mainly driven by uBlocks 8 chipsets and the uBlocks 8 series. Also, on the chipset side, the average sales price increased due to the product mix and due to some sales crisis increases, which we were able to realize. Average sales price on chipset is 2.10 Swiss francs. The trend in sales we already saw last year is continuing. Sales are moving from chipsets to modules also in the first half year 2022. Now, uBlocks makes 83% of its revenue with modules and 16% with chipsets in the first half year 2022. I mentioned it already, gross profit increased, gross profit grew by nearly 60% over the first half year 2021 to a level of 143.8 million Swiss francs. Gross profit margin now is 48.9% compared to the 46.8% we had in last year. The foreign currency impact on gross profit has nothing to contribute to the growth here because we are still naturally have a natural hatching in gross marching. On the cost side, the development distribution marketing expense were on the slight increase compared to the sector of year 2022. where it was 21.6 million Swiss francs in the first half year 2022. In percentage of revenue, the distribution marketing expenses reduced from 9.4% to 7.3%. This, of course, because of the increased top line. On revenue, R&D expenses in percentage of revenue are significantly reduced as well to 17.9% from 27.1 in the first half year 2020, one with this increased top line. We expense roughly 52.6 million in the first half year for R&D, which is now roughly at the same level as in the first half year 2021, where we expensed 52.3 million Swiss francs. In the first half year, we invested more into new products, into establishing our service offering, but R&D expenses profited also from a positive impact of the Euro, which gets weaker. And with that, we have this, where we're able to keep the level at the level in the first half of the year 2021. If you now have a look on the complete income statement, you see again the 294.4 million Swiss francs revenue, which ended up in a net profit adjusted of 48.7 million Swiss francs. Swiss francs, the adjustments we made here are the usual one, the adjustments for the share-based payment of 1.4 million, then the impact from the valuation of pensions according to EIS 19. This impact in the first half year was 800,000 Swiss francs, and we also deducted the amortization of intangible assets acquired. of 1.4 million. If that, we have an EBIT impact of 3.6 million, so that from the IFRS EBIT of 53.9 million Swiss francs, we ended up an adjusted EBIT of 57.4 million Swiss francs. In the financial result, this has turned. So the financial income mainly consists of foreign exchange gains now. And on the other hand, we have the financial costs which are significantly reduced on one hand, because in the first half year 2021, we have here foreign exchange losses to take. But on the other hand as well, because one of the bonds we repaid in 2021, And therefore, there is only the interest from the remaining bond, which has a due date now on the 23rd of April, 2023. Also a change you for sure have seen, share of profit of equity accounted investees reduced. This is because... We have now taken over the full ownership of sub-core GmbH, and with that, the costs for this activity went up in the income statement up to the cost side, but the share of loss here is reduced so that the remaining share of loss in equity accounting investees is roughly $100,000. For all these calculations and adjustments, we take a corporate tax rate of 18.1% which was applied. Now let's have a look onto the balance sheet. We have still a solid financial position. We have liquidity end of June of 89.3 million Swiss francs compared to the 83.7 million. end of 2021. Inventory, which consists mainly of raw material and work in progress, is 46.5 million Swiss francs and trade receivables, 76.6 million. On the asset side, we have the capitalized R&D, which is now 183.3 million compared to 175.5 million end of 2021. In the liabilities on the balance sheet, you have quite a change on one hand in the current liabilities with trade papers of 40.3 million Swiss francs. We have also now the repayable bond in April 2022 of 59.9 million. This was end of the year still in the non-current liabilities, so that's why the non-current liabilities are reduced and the current liabilities increased due to this change in disclosure in the balance sheet. In the non-current liabilities, these contain deferred tax liabilities of $5 million, the employee benefits according to IAS 19 of 11, and provisions of... 8.5 million Swiss Francs. So with that we come to the cash flow statement. The high revenue growth is especially very good June with around 70 million revenue has now unfortunately negative impact on cash flow from operating activities as networking capital increased significantly by roughly 51 million Swiss Francs. On the other hand, in the first half year 2021, we had a cash inflow in the other direction of 9 million. So with that, we ended with operating cash flow of 30.4 million Swiss francs in the first half year 2022. As we've invested another 5 million more into the development of future products and our service offering than in the first half year 2021. We ended with a free cash flow for this period of 6.6 million Swiss francs. Net crash in total increased by that, including the FX effects by roughly 6 million. This leads then to the cash balance of 89.3 million Swiss francs by end of June. I mentioned the equity base was further improved. We have now an equity of 357.2 million Swiss francs, which represents 63.1% of the assets. This compares to the equity ratio in 2021 of 59.9%. In the equity also deducted is the treasury shares for the option program. end of 2021, there was roughly 32 million Swiss francs. Now, treasury shares are reduced and we have still 28 million in equity deduction. Without these treasury shares, our equity ratio would even have been higher with 64.9%. This compares to the 62.3 end of 2021. All this is a based on a widespread customer base across different applications and geographical regions. So we have a very little cluster risk in this regard, but also from the customer side, we are very well diversified and have nearly no cluster risk. Our largest customer accounted in the first half year for 4% of our total revenues and our total Top 10 largest customer accounted for 29.5% of total revenue in the first half year. 65 customers accounted for 80% of our revenues. This number decreased especially because of the strong growth of some top league customers. On employee side, we continued the expansion of our workforce. End of June, Ublox has 1,281 FTEs engaged and there of 76% of the employees are based outside Switzerland and spread across 18 countries. The major part is as always in R&D, 66% of our employees work in the R&D departments. There is a marketing And logistics and administration both have 17% of our workforce. So, and with that, the last information about segments. The segments are still the same positioning and wireless products with a total revenue of 293.9%. million swiss francs and an operating profit of 53.6 million the wireless services segment has improved the revenue for third parties here you see the effect of the first services sold from 50 to 500 000 swiss francs in in the first half year 2022 but also still here the major Income comes from intergroup revenue, so the total revenue of this segment is 21.5 million Swiss francs, and the operating profit, 274,000 Swiss francs. And with that, I hand it back to Thomas for the business review and the strategy. Thank you.