Mycronic AB (publ)

Hello and welcome to the presentation of Micronic's Q2 report. My name is Sven Četković, I'm the Director of Investor Relations at Micronic and with me I have Micronic's CEO Anders Lindqvist and CFO Pierre Bruchon who will be presenting today. As you can see, we have moved to a live video format, which we hope you will enjoy. And with that, I hand over to Anders. Please go ahead and present Micronix Q2 report.

Thank you very much, Sven, and welcome to everyone to this new format and our Q2 report. So what we will talk about today, the agenda is similar or the same as it has been before. So I will give a brief introduction of the second quarter of this year. We will go a little bit deeper per division and see the divisional development. Pierre Brosian, our CFO, will go deeper into the financials. We will talk a little bit about sustainability. And then at the end of the session, we will have a Q&A session as well. So with that, I would like to start with the highlight of the quarter two, and that was really the strong order intake. We had an increase of order intake of 45% up to a little bit more than 1.7 billion, which is extremely strong for us. And it's very much driven by really good performance in the patent generators division. The sales development compared to same quarter last year was almost flat. It was a decrease of 2%. And the EBIT ended at 170 million. But it has to be noted here also that including in that we had a one-time cost, a non-recurring cost of 60 million related to business development. So taking that into consideration, we were more or less equal to same quarter last year with the EBIT. margin with that development cost included and that 14%. And with the strong order intake, you could see that the backlog increased up to almost 4.5 billion, which is the highest we have ever had. And that backlog contains 31 mask writers. In addition to that, and that was per end of the quarter, And then in addition to that, we also had two more orders for one SLX each after the end of the quarter too. So starting with pattern generators, as I said, we had a record order intake and it was very much related to the pattern generators. We increased the order intake up to 804 million. And in that order intake, we had six systems, two different variants of precision mask writers, which are writing photo masks for the display industry. And then we also had four SLX mask writers, which are writing photo masks for the semiconductor industry. We had a really good development of gross margin. It increased up to 64%. And the reason for that increase is that we have increased the value of the delivery system. Also, we have a little bit of positive currency effect, and also we are continuously working on operational improvements. So all that together resulted in a very nice increase of gross margin. And EBIT ended at 191 million. So the backlog, majority of backlog of 4.5 billion is in patent generators with 3.3 billion. And as I said before, that consists of 31 systems at the end of the quarter. So moving on to high flex division, what we see here is that we have seen a very strong demand from our customers' customers, like the end customer, in the focus segments where we operate, which are aerospace, defense, medical, and industrial applications. That demand has not really yet translated into a bigger demand from our direct customers, but of course it's very good when the end customer market is strong. If you look on the different regions that we have, we could see that Europe and North America performed well. And this is similar to the previous quarterly presentation we had. And China continued to be weak. We have not yet seen the upswing in China that everyone is waiting for. We had an increase of sales with 13%, up to 350 million. And we also initiated a project to close down production of storage towers. And storage towers is also what you see on the presentation picture here, which we today manufacture in Germany. And that manufacturing will be transferred and consolidated in Sweden with other production. Gross margin at 39%, which is reasonably okay. And the EBIT decline to 14 million. And a bit of that decline, 10 million, relates to cost of transfer to production I just mentioned. Backlog at 175 million, which is kind of normal for us. If we move into high volume division, focusing on delivering dispensing equipment for the electronics industry, Also here we see the weak demand in China impacting this. We see that the investments in consumer electronics manufacturers in China is still weak, similar to the previous quarter that we had. We can also see that our customers are actually replacing manual tasks by increasing efficiency by automation rather than invest in new production lines. On the other hand, we have been very successful in changing focus from consumer electronics into the electric vehicle industry, where we have been very successful and see a very strong increase. The size of that segment is smaller, so it doesn't make up for the weak demand in consumer electronics. But it's very nice, of course, to see that we can refocus into other healthy segments. Order intake decreased 24%, sales down 32%, and this is all compared to the... to the same quarter last year. Actually, if we look on the order intake, which we had 370 million of in this quarter, it's the best quarter in three. The previous quarter was actually much less. So we are seeing a change here in the order intake if you look on it quarter by quarter sequentially. EBIT down to 38 million and that's a good number actually. We are working a lot on efficiency to keep our profitability up and backlog ended at 723 million at the quarter. If we move on to the next division, global technologies. In global technologies today we have two different lines of businesses. One is electrical testing and this is the equipment you see on the picture here. And we have also a technology called dye bonding, mainly focusing on equipment for the telecom and data market. And we have a mixed picture in performance. We can see that the electrical testing of printed circuit boards and substrates have recovered in this quarter and in terms of sales. And we have seen that demand in this segment is very much driven by investments in AI and also servers. In die bonding on the other hand, we have seen very strong demand from aerospace and defense. But our biggest segment or market in this is data and telecom. Here we have seen that this market remains weak and therefore we see this mixed picture in performance. So combined, the order intake increased 11%, sales down 15%. and the order intake of 246 million is actually the best order intake in the last four quarters so also here we see a little bit of trend shift um ebit was down to 9 million which is unusually low and we have seen that the aftermarket business was impacted in the electrical test line of business and backlog ended at 272 million So if we move on, that was the divisions. If we look on our outlook for 2023, we confirm that we remain at the same number as before, that our outlook is that we should reach net sales of 5.5 billion for the full year. And with that, I will hand over to Pierre Broson to go a little bit deeper into the financials. Thank you.

Good morning from my side as well, and thank you Anders. Looking at the development over time, we can see that the rolling 12 months took a little bit down. We took the 12-month number a little bit down by declining 2% in the quarter on the same quarter of last year. And you can see that on a rolling 12-month basis, the EBIT margin is around 16 percent of the market continued to increase as before sequentially now since 2021 despite some challenges in particularly in the gt division in the quarter If we look at it on a quarter by quarter basis, you can see that we are having quarters in the beginning of the year around 1.2 billion. And given our guidance for the year to reach 5.5 billion, we are then predicting to be on average at 1.5 billion for the remaining two quarters of the year. So predicting a stronger ending than start of the year. As Anders mentioned, we had business development project cost in the quarter amounting to around 60 million, which took down the EBIT margin to a level a little bit below what we've had lately in this quarter. If we look at it by cost category, you can see that we had an improvement in the gross margin. This stems largely from our pattern generators division, where we had improved gross margin last year due to improved efficiency in our own operations and also higher value in the machines that went out. We had also a slightly higher mix of the pattern generators in the quarter. On the cost side, the main difference on quarter by quarter is, of course, the business development project cost that we have in the quarter. And on these other items, we have the main parties there related to the restructuring of Royal Tech within the HyFlex division. That brought us to 170 million at the end of the quarter. Division by division, we had a good contribution from the patent generators quarter on quarter, whereas all the other divisions declined for various reasons on a quarter versus quarter basis. And on top then, the group functions where we host the business development costs also contributed to a lower EBIT for the quarter compared to the same period of last year. Looking at the cash flow for the year, we have a strong cash flow. We had a strong cash flow in the quarter as well. We have improved working capital. This stems both from reduced receivables, which is not necessarily only a good thing. We could have had higher sales, of course. We had very high sales towards the end of the year, but also from advanced payments, in particular in the patent generators division. that contributed to a strong working capital improvement. Last year, we had the divestment of AEI, which generated about 215 million in cash, which we didn't have this year. And having paid the dividend, we still have a very solid cash position of 1395 million. And on the bank, we have 1.6 billion at the end of the quarter. And with that, I hand the word back to Anders again.