X-Fab Silicon Foundris Se

Ladies and gentlemen, welcome to the X-Fab second quarter 2026 results conference call. The speakers will be Damien Macq, CEO, and Alba Morganti, CFO. For the first part of the conference call, the participants will be in listen-only mode. During the question and answer session, participants are able to ask questions by dialing pound key 5 on their telephone keypad or through the hand raising option on the player. I will now hand the conference over to Damien Macq, CEO. The floor is yours. Please, go ahead.

Thank you, Gaïa. Thank you, everyone. Good evening, everyone, and thank you for joining us today. The second quarter of 2026 showed another quarter of disciplined execution in a market environment that remains mixed. The revenue came in at 199.8 million USD, down 7% year-over-year and up 2% sequentially. Excluding revenue recognized over time, revenue was 196 million USD within the guidance. Booking reached 173.3 million USD, up 2% quarter-on-quarter. while backlog ended at $291.8 million. Importantly, excluding the temporary impact of the Erfurt end-of-life program, our underlying book-to-bill ratio returned above for the first time since Q2 2024, providing an encouraging sign that demand conditions are gradually improving. Our core markets of automotive, industrial, and medical represented 93% of revenue, totaling 182.1 million US dollars. Automotive revenue was 160 million US dollars, down 19% year-over-year, and 5% sequentially, reflecting continued inventory normalization. However, booking improved significantly and automotive book-to-bill reached its highest level in almost two years. Combined with a growing number of design wins, this supports our view that the market is gradually recovering. Industrial revenue was $45.2 million, down 4% year-over-year and 13% quarter-on-quarter. primarily due to temporary order volatility from a major silicon carbide customer. Medical continue to perform strongly, reaching 21 million US dollar, up 39% year over year and 9% sequentially. This is driven by pacemaker and ultrasound applications. In smart CMOS and SOI, Revenue reached 156.7 million USD. During the quarter, we saw a significant increase of new automotive opportunities, particularly in Europe, and one of our top 10 customers renewed and extended its long-term commitment in pressure sensing. We continue to see healthy demand in battery management systems in China. while opportunities like link to robotics are becoming increasingly visible. We are also seeing growing demand from AI-enabled infrastructure where our technology address power management, sensing, infrastructure control, cooling, and connectivity applications. The broader manufacturing landscape is also evolving. AI-related demand is driving the reallocation of capacity at several 8-inch fabs in Asia, while supply resilience and geographic diversification have become increasingly important for customers. With the completion of our Malaysia expansion and availability capacity across Europe, the US, and Asia, its fab is well positioned to benefit from these trends. In microsystem and photonics, Revenue amounted to 28.7 million USD, up 14% year-over-year. We secured a new high-volume microfluidics application for blood analysis. We continue to see healthy MEMS demand and expanded opportunity for our aluminum nitride platform. Photonics remain a particularly exciting area. We are making progress in co-packaged optics, data communication, augmented reality, virtual reality, and quantum computing related applications. Through our collaboration with LIGENTECH, we have established advanced business interaction with emerging photonics and quantum computing leaders in Europe and the United States. We continue to expect photonics volume production to start in 2028. A major milestone during the quarter was the award of €127.4 million under the European Ship Act to support the expansion of microsystems and photonics manufacturing in Erfurt. Together with the launch of Fab4Micro, this investment reinforced our specialization strategy and positions Erfurt as a key growth engine for MEMS, microfluidics and photonics. Turning to wideband gap, revenue was $10.6 million, up 34% year over year. While quarterly demand remained somewhat volatile, we secured three new silicon carbide design wins, expanded our opportunity pipeline, and continued to advance customer programs towards future production. Execution of our gallium nitride roadmap remains on track, and customer interest continues to increase. Looking ahead, one of the most exciting opportunities for ISOP is the rapid growth of AI-driven data center infrastructure. We see opportunities across all three business units, including power conversion, sensing, photonic connectivity, silicon carbide, and gallium nitride technologies. Based on today's pipeline and customers' engagement, We estimate a long-term revenue potential of approximately $300 million annually for data center applications. Finally, the AirFox end-of-life program remains fully on track, and we continue to expect substantial completion during the first half of 2027. Together with Fab4Micro, this transformation supports our specialization strategy and creates the foundation for future growth. At the same time, we continue to execute our cost control and productivity initiative with discipline across the group. And now I will hand over to Alba for financial updates.

Thank you, Damien. Good evening, ladies and gentlemen. We will now continue with the financial update. From a financial point of view, Q2 was a quarter of disciplined execution in a still challenging market environment which weighed on revenue development and capacity utilization. Nevertheless, we delivered revenue within our guided range. Our EBDA was of $33.6 million with an EBDA margin of 16.8%. If we exclude the impact of revenue recognized over time, the EBDA margin would have reached 17.6% within the guided range of 17 to 20%. Our second quarter profitability mainly reflected the softness in the automotive and market, which limited our capacity utilization. As already mentioned by Damien, our cost savings program is progressing as planned with expected positive effects towards the end of the year. We also continue to manage our cash carefully with cash and cash equivalents of $163.6 million at the end of the quarter. In the second quarter, we recorded a non-cash tax impact of $11 million related to the derecognition of deferred tax assets in Malaysia, which affected our net results but had no impact on our cash. Overall, our financial priorities remain unchanged. Preserving liquidity, improving operational efficiency, and supporting the group's long-term growth opportunity in automotive recovery, data centers, microsystems, photonics, and wideband gap technologies. Looking ahead, I can only repeat what Damien said. We remain focused on cost efficiency, cash, Our business continued to be naturally hedged and our profitability remains unaffected by exchange rate fluctuations. At a constant US dollar-euro exchange rate of 1.13 as experienced in the previous year's quarter, the EBDA margin would have been 0.1 percentage points higher. Our capital expenditures in the second quarter amounted to $24.2 million bringing first half 26 capex to $50.2 million. Cash and cash equivalents totaled $163.6 million at the end of the quarter. while our net debt amounted to 312.3 million dollars, which is an increase of 20.9 million from the previous quarter. And to conclude this financial section, I would like to share our next guidance. For Q3, 2026, our revenue is expected to come in within the range of 195 to 205 million dollars with an ABBA margin in the range of 17 to 20%. This guidance is based on an average exchange rate of 1.14 US dollar to Euro and does not take into account the impact of IFRS 15. I would like to conclude this financial section by saying that we remain confident in the medium term outlook and our strong operating leverages Diversify Technology Portfolio and Long-Term Customer Relationship Position ask very well to benefit from a recovery in the demand. And now I would like to give the board back to Damien.