Mycronic AB (publ)

Hello and welcome to the presentation of Micronic's Q3 report. My name is Sven Kjetkovic, 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. And with that I hand over to Anders, please go ahead and present Micronic's Q3 report.

Thank you very much, Sven, and most welcome to everyone to join this session. As usual, we have an agenda which is similar to before. So I will start to talk a little bit about the quarter in short. We will go a little bit deeper into the different divisions after that. Pierre will talk about the financials in depth, and also we will have a section on our work with sustainability. And then at the end of the session we will also have the opportunity for questions and answers. As usual, also in the material which is available on our website, we also have an appendix with market information, all coming from third parties. So if I should start to summarize the third quarter. So in our opinion, we think it was a very good quarter. It was a good quarter both in terms of business performance, but also in terms of activities from the company. And if we start with activities from the company, one milestone that we had during the quarter is that we shipped our first precision system with a solid state laser. The solid state laser is instead of the gas laser that we normally use and that reduces the energy consumption up to almost up to 99% compared to the old solution. In addition to that, we also received orders after the quarter for an upgrade from gas lasers to solid state lasers in an already existing installation. So we are very happy now to be able to offer this. If we look on the order intake, starting a little bit on the business performance here, we could see that it decreased with 9%, but still the level is very high, close to 1.5 billion, which is above our annual average that we need to reach our target for the year. Sales increased with 5% to close to 1.3 billion, and also good increase in EBIT up to 263 million, which is equal to a margin of 21%. We have again in the quarter a record order backlog of close to 4.7 billion, which is almost double as it was compared to last year. And in that backlog, we have 31 systems for patent generators at the end of the quarter. You have also seen in previous reports that we have reported quite large numbers on the business development cost and this has been related to a large acquisition project that we decided to terminate without a transaction at the end and that happened also in the quarter. If you go a little bit deeper on the different divisions, starting with the pattern generator. So the mask writer that we delivered with the solid-state laser was a Precision Light 8 EVO. This is for the display industry. We received one order for an upgrade of gas lasers to one customer, which have several mask writers installed. So we're very happy to see that that effort pays off. We had a little bit decline on the order intake compared to the same quarter, declined by 22%, but still we received orders for three different mask writers, one Precision 8 Evo, this is for the display industry, and two SLX mask writers, this is for the semi-con industry. A good increase in sales, up to 435 million, which is 77%, and we delivered three mask writers, one Precision Lite 8 Evo and two SLX. Gross margin up to 66% and EBIT improved to a little bit more than 200 million. And the majority of the backlog I mentioned on the group is referring to pattern generators with 3.4 billion, which is quite high backlog. And we have quite fully booked orders now for many months ahead. If you go to HyFlex division, we have made a strategic change here. So we have switched product lines between HyVolume and HyFlex. So HyFlex is now responsible for offering stencil printing. which is coming from the acquisition we made some time ago from the company HC Xin, that is China-based, which provides stencil printers for application of solder paste. The logic behind that is very much the same, customer-based as in HyFlex, and also has a natural position in a full-line solution with other equipment from HyFlex. So HyFlex will be now able to offer complete solutions to meet all different customer demands when it comes to solder paste dispensing. We are also very happy with the business performance in HyFlex. We have seen that the market is strong in Europe and also in North America. which is where we have our majority of our footprint and our sales. But we also have seen that the demand in China and Asia has been weak as it has been the previous months as well. Order intake up 15% and sales up 7%. Very stable gross margin at 41. And we're very happy with the EBIT of 60 million, which equals to 16%. So I think very good performance from the HyFlex division. Backlog at 240, which is, I would say, quite a normal number for us in this business. On the high volume, so on the other side of this switch between product lines, high volume is taking over dispensing globally. We had a dual product line that was also offered to HyFlex before. But now we have decided that high volume takes the global responsibility for both what the product line is called MySmart dispensing product and also including then the Mexico office from HyFlex. So everything with dispensing is now offered through the high volume division. On the business performance, we saw a small recovery in China, especially in the mobile phone segment during the quarter, and also continued good demand from the electrical vehicle industry. Nevertheless, compared to one year ago, the same quarter we had a decline in order intake with 19% and sales decreased with 39%. In this division, we have a high flexibility when it comes to managing cost, and we're very happy to see that we can maintain the same gross margin as the same quarter last year of 41%, and an EBIT decline down to 41, but maintaining an EBIT margin of 17%. Backlog is at 700, which is also quite normal for our business here. If we then move to the global technologies, one event that happened during the quarter is that we had an acting senior vice president from this division, Magnus Martensson. He has now taken over this role permanently, so he will be the head of the division going forward. On the market, we still see a little bit of sluggish market demand, especially from China. However, I've seen there's a good boost from AI-driven or AI-related demand, and this is applicable both to our dye-bonding business and as well as our electrical test business. We had an increase in order intake of 8%, very much supported by good performance and good development in the dye bonding business. Sales almost flat, down 1%, margin at 37, and EBIT lower than last year at 10 million, which is equal to 5%, and a backlog of 300 million. So, when it comes to the end of the year, which is coming closer and closer, we continue to confirm our sales target for the year of 5.5 billion. And with that, I will hand over to Pierre Broson, who will now go a little bit deeper into the numbers. Thank you.

Good morning. Good morning from my side as well. And if we start by looking at the trend over the last 12 months, I think we can note two positive things in this. And first one being that the profit margin is moving slightly upwards. You will see that more clear in the specific quarter on the next picture. We can also see that for the 11th quarter in a row, we have growing aftermarket revenues. And this is a very important foundation for our business in the various legs that we have. And this is now up to 1.6 billion. Looking on the quarter by quarter, you can see here that we have for the first time during my two years, a margin in line with our long-term profitability ambitions of above 20%. And this is largely driven by a strong quarter in the pattern generators, but also solid results in high flex and in high volume. On this chart you see that we have been a couple of quarters around the 1.2 billion and given our outlook for the fourth quarter we will have a very strong ending of the year where we need to be between 1.7 and 1.8 billion and we have the orders that is necessary to be able to have that as a forecast for the fourth quarter. Looking a little bit in the income statement where we have done well and maybe not so well as well. You can see that we have improved the gross margin both with volume slightly and the relative margin and this is largely driven by strong development in the pattern generators and foremost that the share of the Micronic sales that is coming from pattern generators moved up significantly in the quarter versus the same quarter last year. On the cost side, we have actually lower operating costs than we had last year, despite inflation and slight volume increase. And this stems mainly from the high volume division, where we have a high portion of variable cost. We have not made any significant redundancies, but rather good cost control and a limited outcome on the variable part of the pay there. In this other, outside the operating cost, this is mainly an effect of unrealized and realized FX changes that we have during this quarter, which was negative, and last year, same quarter was somewhat positive. This resulted in an EBIT of 263 million, which is then 60 million above last year. Looking at it, slicing it in the other direction, meaning the different business units we have. We have strong improvement in the pattern generators. We had also a significant improvement in the high flex division. On the high volume side, I think, as Anders mentioned, we are happy with the relative profitability despite the volume. And it has been a challenging environment in being relatively dependent on investments from the 3C industry in China, as we are with the high volume division. But really good adaptation to the new volume level and strong strong relative result despite low volumes on the global technology side we had good order intake from the dive in the die bonding entity driven by ai mainly there still a little bit low profitability but we do see good signs of of improvement in that in that part of the business On the group functions, we did have a little bit of residual business development costs, but the majority of this is also related to FX, which we have on group level as well for internal loans and other things, transactions. So this is then making the outcome 263 or 21%. Cash flow wise, we have a strong contribution from the operating result. In the quarter, we had somewhat less. positive in the change in the working capital, and this is largely driven by increased inventory to do the deliveries we need to do in the fourth quarter, mainly on the patent generators. When we look at it on a yearly basis, we have a strong contribution from the advance payments that we get on the large projects in particular. On the financing side, we have the majority is related to the dividend and we continue to report a very solid cash position. And this is based both for the resilience in case of a downturn in an unsecure environment, as well as potential to use for acquisitions and other things going forward. And with that, I hand the word back to Anders.