Mycronic AB (publ)

Hello and welcome to the presentations of Micronix Q1 report. My name is Sven Kjetkovic. I'm the Director of Investor Relations at Micronix. And with me today I have Anders Lindqvist, Micronix CEO, and Pierre Broson, Micronix CFO, who will be presenting today. And with that, I hand over to Anders. Please go ahead and present Micronix Q1 report.

Thank you very much, Sven, and a warm welcome to everyone online. So today we will present our first quarter of 2024. So I will start with the short summary of the quarter. And then as usual, we'll go a little bit deeper within the different divisions. Pierre Brochon, CFO, will talk about financials a little bit more in detail, a small mention about sustainability. And then as usual, we will end this session with the question and answer session. In the material, which is also on our website, there is a market update, which we will not present, but it contains some interesting and useful information about the market we serve. So starting with the quarter in general. So we believe that we had a good start to the year. You could see that the order intake increased 2%, which is not a big number in terms of percent, but the level is very high or a very healthy level, same level as we had the same quarter last year, a little bit more than 1.6 billion. We had quite some increase in sales driven by the pattern generators division with almost 40% to close to 1.7 billion, which is a very good number. And a really good number is that we had also our second ever best EBIT at almost 600 million, which is also corresponding to a margin of 35%. Backlog increased a little bit to 4.1 billion, which is a good backlog for us. It will take us a bit into next year. We had some events also happening after the first quarter. One is that we received one more order for an SLX mask writer for the semiconductor industry. We also closed the acquisition that we announced earlier of a company called Vanguard Automation. We'll talk a little bit more about that. when we talk about global technologies, which is the acquiring division. And we closed that acquisition early in April. We also launched two new products. We'll talk about that also in a minute here. Very interesting. So, starting with... pattern generator so we could see from the market the photo mask market so the photo mask market is the market for our customers that are using our mask writers you could see that for the displays the market was stable in the first quarter and this is after a small decline in quarter four last year the photo mask market for semiconductors remain on a high level which is good for us You could see that order intake relatively favorable level. We had a decline of 21% down to 645, but that's still a good number. So it depends very much on what we compare to And in the quarter, we had orders for five systems, one Precision 8 EVO, which is display mask writer, and four SLXs for the Semicon industry. Sales, very strong net sales. And this is because of very good deliveries in the quarter. We delivered one Precision 800 EVO, one Precision 8 entry EVO, and three SLXs. So sales increased with almost 140% to $838 million. Gross margin 76 and this together gives us a very good EBIT of 543 million. Backlog is rather flat at almost 2.9 billion. I said before we also launched two new products in the quarter so one is the Precision 8000 which is the most advanced mask writer for displays on the market. So our current model, P800, the P8000 can write with a resolution which is 10% better and maintain the very high writing speed as we have in the P800. So very interesting product for the display market, which will enable our customers to take one more step when it comes to productivity and quality on their products. We also launched called MMX, which is an inspection tool or a measurement tool for the masks, photo masks for the Semicon industry. So measure the position of the masks, the lines written by mask writers, such as our SLX. So very good complement to that product. So that's very exciting. Also exciting is that this year we actually celebrate more than 50 years of innovation. It's more than 50 years ago we launched our first or we filed our first patent for innovation. So we have been in this business now for more than 50 years and continue to launch high-end products in this market. So very nice. Hyflex, next division, you could see quite slow start to 2024. We have seen demand decline a little bit in Europe and US. China, on the other hand, shows some indications of recovery. China is a much smaller portion than Europe and US. The numbers are down a little bit. We have also launched new products here. This is end of last year. And we are starting to receive very positive feedback from customers regarding stencil printers that we are now having in the portfolio, which is a very good combination to the recently launched Mipro A40, which is a new and fast pick and place machine. And so market decline results in an order intake decline of 13% and the sales decline of 11%. Gross margin at 36% and quite low EBIT at 1 million only here and the backlog of 160 million almost. So a little bit slower than usual on the high flex side. High volume, on the other hand, we see that the market is recovering. So the majority of our business here is in consumer electronics. But we also have started to gain quite a good presence in the electric vehicle industry. We have seen that these two markets are recovering and increasing both in China, which is our main market, but also outside of China. This is visible in the order intake, which we could see it rose 73%. Not yet visible in the sales, where we had a decline of 9%. And the gross margin quite stable at 41%. We have taken a lot of efficiency measures in these divisions during the last years and can still produce an EBIT of 55 million. even at the lower sales volume. So quite good performance here. And a good increase of the backlog with this order intake, of course, 741 million. Also very good quarter in global technologies. We have launched new products or a new product in the dye bonding business, an active alignment of optical components. So this will, we can address additional process steps in our customer's production process. We also acquired or signed the agreement to acquire Vanguard Automation that was then closed in April. Just recently, Vanguard Automation is a small company. The product is here on the picture, actually. So this is an equipment for automated printing, 3D micro printing of optical interconnects. And we can print fibers and we can print lenses that connects different type of optical devices. This is a very interesting technology, especially for the telecom industry and transceivers. because to use optics instead of electrics will increase communication speed and can also decrease energy consumption and size. So this is really enabling this industry to take the next step. Order intake, good increase of 46%, driven by PCB test, actually, and an increase of sales to 29. So gross margin at 42%, which is a good level, a good increase of EBIT to 30, and a backlog of 327 million. So quite good performance in global technologies. If we move to our outlook, so we remain at what we communicated the previous quarter, that we will reach a net sales of 6.25 billion at the end of this year. And with that, I will hand over to Pierre Brosian, CFO. Thank you.

Thank you so much, Anders, and welcome everyone from my side as well. Looking where we stand then after this quarter on a rolling 12-month basis, we are currently at almost 6.2 billion after two strong quarters. Our EBIT margin is now up to 27%. That means distinctly above our long-term financial target. Also after two very, very strong quarters. Our aftermarket revenue is declining as a share of sales, but increasing in absolute value. And this is really what is important for us. And further equipment sales will continue to increase. to be supportive to the long-term trend for our aftermarket business. So we're very happy with having that now for three years, increasing every quarter. Here, if we look at it quarter by quarter, you can see the really strong two last quarters that we have had. This quarter, where we had a sales increase of 39% above a relatively modest quarter in last year. And also then an exceptional high EBIT margin of 35%. So now we have two quarters with an EBIT close to 600 million. This one just below and the previous one just above with even higher volumes. If we look at it then compared to the modest quarter of last year, we can see that we have a distinct volume increase. We can also see that we have a much better gross margin. This is approximately or a little bit more than half of this is coming from a stronger margin in patent generators and half of it through the mix between the different divisions where patent generators now constitutes a higher share of the total sales. On the cost side, we are increasing gradually as we are growing the business. But you can also see that we have a positive impact on the marketing and sales versus last year. And some of you may remember that we had large business development costs in the first half of last year. This is the main explanation for this positive impact there. Ending the quarter almost at 600 million. If you look at the division by division, you can see that pattern generators, of course, we've spoken about it already, both me and Anders, has a strong improvement over last year. We can see that HyFlex has a decline. There is a bit of seasonality in HyFlex where we have typically a weaker first half of a year and a stronger ending of a year. We had an exceptionally strong ending of last year. which eliminated some of the backlog towards the end of the year. And this is one factor, but it's also true that both in Europe and North America, the business is somewhat slower than it has been. And we were just above zero for the quarter. If we look at high volume, this can look negative, that we are minus five, but we are actually quite happy with the result here. where we saw a decline in sales, but a growth in order intake and a result which is very positive in relative terms. So hopefully we see a bit of a turning the corner in China, even if it's a bit too early to say. Global Technologies, we are now performing very well in the die-bonding business line for the quarter, and this is supportive to the result. In the quarter, we also had a very strong order intake, but this was in the other leg of this division, the PCB test, which had a very good order intake, and this together makes it a very good quarter, both order intake-wise and result-wise for the Global Technologies division. In the group functions, we have the mentioned business development costs, which then did not happen this year to the same degree. On the cash flow side, we had a strong result, and this is going right through to the cash. So very strong result and cash flow from the operations. We have a positive in the working capital, mainly collecting the receivables that we had in the exceptional sales of Q4. And this is basically the base for improving our cash position even further. And we have now a very, very solid cash position with 2.8 billion in cash. And as you may know, 2 billion of facilities on top of that ready to draw on if we need to. And with that, I hand the word back to Anders again.