Mycronic AB (publ)

Hello and welcome to the presentation of Micronic's Q2 report. My name is Sven Kjetkovic, I'm the Director of Investor Relations at Micronic. And with me I have Anders Lindqvist, Micronic's CEO, and Pierre Brouchon, Micronic's CFO, who will be presenting today. And with this little introduction, I now hand over to Anders. Please go ahead and present Micronic's Q2 report.

Thank you very much, Sven, and most welcome to everyone to this presentation of the second quarter. So what we will cover today is the usual agenda for those who have seen it before. It's a short summary of the second quarter. go a little bit deeper on the different divisions uh pierre will talk a little bit more on the financials and also we will have some words on sustainability and we will end the session with the question and answer session and in the material that you can find on the website there's also an appendix where we have the market update which will not be presented I'm starting to talk a little bit about the quarter. We have quite a good increase compared to the same quarter last year, both on order intake as well as on sales. The order intake of about 2 billion is a very good level and contributes really to our long-term growth ambition. You can see that the order intake is mainly driven by pattern generators division, but also very positive contributions both from the high flex division as well as from high volume division, which is very nice. Sales a little bit more than 1.5 million, which is kind of normal. Quarter two is normally seasonally a little bit slower. Sales quarter and it's an increase of 23% compared to the same quarter last year. So a good difference there. And EBIT doubled to 348 or equal to 23% and very strong backlog of 4.7 million, which is I would guess a little bit more than eight months of orders. And in that backlog at the end of the quarter, we had 30 systems for the pattern generators, which is a very good number. We also had two very important product launches, the Precision 8000 from pattern generators and also the MMX. And the closing of the Vanguard acquisition that will form a business line within the global technologies division. We go a little bit more in details on the different divisions, starting with patent generators. We have seen that in both our segments where we are active, we have seen a strong and a continuous strong market development, both from semiconductor segment, but also the display segment. You can see that in the order intake, up almost 50% to 1.2 billion. And we had both display mask writers and Semicon mask writers in that order intake, eight systems in total. One Precision 80 EVO, one Precision 8 EVO, one Precision Light 8 EVO. They're all from the display industry. And four SLX and one MMX for semiconductors. So a good mix on that one. Sales up 47%, 650. We also delivered five systems, two display machines, one precision 8 EV and one precision MMS and then also three SLXs for the Semicon. Gross margin quite stable on 67% and EBIT margin corresponding to 53%. So very strong performance from the patent generators in the quarter and continuous good backlog of 3.4 billion. If we move into HyFlex, so we have seen previously in HyFlex a little bit of headwind from the market, and we've seen that it has improved slightly compared to the preceding quarter. Not a lot, but at least a positive trend here, where we can see demand in Europe was good. The US is still difficult. You see that it's characterized by uncertainty, very much driven by the autumn elections. Order intake, a little small increase, 4%. Net sales, 2% up. Gross margin, very stable at 40. I'm happy that we can keep it on this level. And an EBIT of 18 million. The order backlog of 167 is a little bit on the low side. We would like to see more here, but anyway, we have much shorter lead times in the high-flex division, so that's also a reason for that. Going to high volume, I think we have a solid performance in the high volume market. I think we could see that the Chinese market is slowly recovering. I think we have said that many quarters now in a row, and it continues to improve. We can see that the consumer electronic market for domestic China, which is the majority of our business, has improved a little bit. You see that the electric vehicle industry has been a little bit slower, especially outside of China. So order intake up 2%, sales up almost 30%. Also here we are able to maintain a good stable gross margin, 41%, an EBIT of 14%. And quite strong backlog of 780 million almost in this division. On the global technologies, we have a little bit of quite a mixed development, where we can see that on the PCB test, which is one of the business lines in global technologies, we have healthy demand, very much driven by AI investments in here. On the other hand, the die bonding business line was quite slow. I must say also that in die bonding, we have quite few orders of high values. This could change quite a lot between the quarters, and we didn't have a lot of sales in the quarter. Also, we have integrated the recent acquisition of Vanguard Automation to form a new business line and not much contribution to the sales and orders yet. And a decline of order intake by 16%. And as I said, there is some slow development in die bonding. And the same also goes for the sales decrease. On the EBIT side, so you see that we have a minus 15 million there. And we had a negative impact from the acquisition of Vanguard Automation of 16 million. So without that, it would have been literally a little bit positive. Backlog, 330 million, which is quite good. If we then move into the outlook, where we have made a change, or the board of directors have made a change in what we believe we will end the year at. So we believe that our sales will end at 6.5 billion at the end of the year, and the previous outlook was 6.25. All right, so yep, then I will hand over to Pierre Brochon to talk a little bit more on the financials.

Thank you so much, Anders. And if we start by looking at where we stand on a rolling 12-month basis, we are after three really strong quarters approaching 6.5 billion in sales. Our EBIT margin is at the moment on a high level at 28%. And even if it's not super clear in this picture, I'm very happy to see that we are continuing still to increase every quarter, a little bit quarter on quarter on our aftermarket revenue. This represents currently 26% of the net sales, and this can vary a little bit about depending on the equipment sales, of course, but really good that we continue to build this base of recurring revenues. Here is what I refer to that we have now had three really strong quarters above 1.5 billion in net sales. And even if we could not match the two last quarters, which were super high, we think that this is a really good level for us. And we had also a solid EBIT margin of 23%. And 23% was the number of the quarter as the net sales also grew equivalently 23% year on year. If we look at it in components of the income statement, We had a good sales increase, as we spoke about, and this gives us additional gross margin of around 135 million. We had an improvement of the gross margin and This is largely driven from an increased share of patent generators, but solid margin in all four divisions generally. On the R&D side, we continue to invest, and this is rather broad-based across the group. And what you cannot see here is that we are also investing on the sales side. But last year, we had exceptionally high business development costs in the first and second quarter. So this is why we have a positive impact on this component for the quarter versus the same period last year. And this basically takes us to a doubling of the profit up to $348 million. If we cut it the other way and look division by division, you can see that the majority of the margin improvement is coming from patent generators where 150 million was added. You can see contributions also quarter on quarter in high flex and high volume despite rather difficult business circumstances in both these two divisions. So we are happy with that. Global technologies, as Anders mentioned, this result is not according to plan, and we have different businesses here, and the PCB test is running well and delivering good results in the quarter as well. Die bonding is essentially running okay, but we had a weak quarter both in terms of order intake and sales, and we do not foresee this level is going to continue, so there will be improvement. With regards to Vanguard, they've just entered the group and had no impact on sales and orders. But we believe that this will come and that the negative result impact will go down towards the end of the year for Vanguard. Group functions improved then with lower business development costs compared to prior year. Cash flow continues to be strong. We measure this here or display this here on a year-to-date basis. And in the quarter, we had the acquisition of Vanguard going out with 160 million. We had also a dividend, which was 440 million. But still, we have a cash position of 2.5 billion. And with that, I hand the word back to Anders to take us further on sustainability.