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 today I have Anders Lindqvist, Micronic's CEO and Pierre Brouchon, CFO, who will be presenting today. With that, I hand over to Anders. Please go ahead and present Micronic's Q3 report.

Okay, thank you very much, Sven. And most welcome to everyone to today's session. So I will start to present a short overview of the quarter three results and what has happened. We'll also look into the different divisions and the development and Pierre will talk a little bit deeper on the financials and finally a few words on our work in sustainability. And then we finish with the question and answers. Starting with that, starting with the quarter, I think we saw a very good increase in sales and EBIT. Order intake was quite flat on not a super high level, declined with 1% to a little bit less than 1.5 billion, but we saw a really good increase in sales of 40% to almost 1.8 million. And this is very much driven by the PATI generators. We had very good deliveries in that division, but also we saw a very good contribution from other divisions such as high volume and also global technologies that contributed very positively to the performance. Because of the mix in PATI generators, we also have a very good EBIT margin of 31% and the absolute EBIT more than doubled compared to the same quarter last year to 547. Backlog a little bit done as we sold more than we had order intake. It was down to almost 4.4 billion, which is still quite good. And we had one event after the quarter and is that we acquired a company in Germany called Modus. Talk about that a little bit more when we come to the high volume division, which was the division that acquired this business. If we start with the patent generators, we have seen a stable market for photo masks, also both in display and in semiconductors. We have a milestone in the business, which is that we have got our first order for delivery in Europe for an SLX mask writer for the semiconductor industry. Order intake goes up and down very much with the quarters as it's more lumpy in the pattern generators business on short term. So we saw a decline down to 274. We had only two orders for two SLXs received in the quarter. Sales, we delivered quite a lot and very high value machines. So we delivered two Precision 8 Evos and also three SLX. So with that, we saw a strong increase in sales up to 800 million, which is 86% more. Also that contributes to a very strong gross margin of 73% and consequently also EBIT very strong at almost 500 billion. Augur backlog is stable, I would say, a little bit down because we delivered a lot in the quarter. Currently 2.9, which is equal to 27 systems. And after the period, after the quarter, we also received two more orders with one SLX each for the pattern generator. So strong performance. In the high-flex division then, serving the high-flex market with surface mount technology, we have seen for a while that Europe has been very slow and the large market in Europe for us is Germany, France and the UK. All of them we have seen a little bit weakened in demand. U.S.? ? has stabilized, but at the low level. Asia is not so big for this division, so it's not really contributing. And in total, the water intake declined with 5% and sales down 7%. Keep the gross margin quite stable, around 40% or just below at 39. And with all that together, EBIT down to 31 million and a backlog of 199. So that And then we go into the high volume market, which if you remember before, we have said that we have struggled quite for a while here in the high volume market. And we have talked also recently about we have seen signs of improvement and increase from low levels. This continues. We see a strong positive market development compared to history. And this is both the China domestic market, but also in the markets outside of China. So strong order intake, increase of 56%, sales up 37%, gross margin very stable at 40%, and EBIT up to 47%. million and a very strong backlog of 832 million. We have quite some time between order and delivery in this division, so backlog is large. And a notable event is that it was after the quarter that we acquired from the high volume division company in Germany called Modus High Tech Electronics. a very specialized company doing optical inspection of electronics after the process of coating soldering and components and pcb assembly so this will be a very good technical addition to the to the high volume products and enhance the functionality and features of them so we're very happy to have closed this one company is not super big but technology is very interesting so the last year's revenue were around 4 million euro for this business moving to global technologies so driving the market we have three different technologies now in the dive in the global technologies division so and we see good demand that is ai driven or driven by ai applications In die bonding, the demand translates into high-speed optical transceivers. use in data center and other places where AI application is driving the need and the speed of these. So we had good demand on that. And the same actually applies to PCB test business for the same reasons. And we have also the newly acquired business, a company called Vanguard Automation that we call the business line Photonics Interconnect. And we have seen the first order since the acquisition. However, we had no sales in this business, which you can see soon in the result. So order intake totally up 64%, sales up 31%, gross margin at 35, EBIT at 13. And in that EBIT, as we had no contribution from the photonics interconnect in sales, but only cost, had a negative impact of 14 million on that result. and backlog quite good at 457 million. So I believe the business is quite stable and good performing and because of that we believe that we can confirm our previously communicated target for 2024 to reach a sales of 6.5 billion at the end of the year. So with that, I will hand over to Pierre to dig a little bit deeper into the finances.

Thank you Anders. We take a look at this one where we see that we have a very strong development over the past year. We have now four super strong quarters after each other and we are touching the 7 billion mark on the rolling 12 months basis at an EBIT margin of 30%. On the aftermarket side, we see continuous growth, albeit small at the moment. Also a little bit fighting the somewhat stronger Swedish krona than a year ago in some of the markets we are operating. So we had a modest increase, but there's still a continued increase, which we've been having since the start of 2021 every quarter. Here you see even clearer that we have had now the four really strong quarters and you saw the confirmed outlook of 6.5 billion, which means that we will not fully meet the very strong record quarter we had in quarter four of last year, but still continuing on a very strong level. We are at the moment delivering 31% in this quarter and with the sales growth of 40% to almost 1.8 billion. If we look where this improvement comes from, it comes mainly in the gross profit. It's volume driven by patent generators mainly. where we also saw not only an increased volume but also an improved margin in the quarter. On the organization side, we continue to build our footprint in the marketing and sales and we continue to develop new innovative solutions in the R&D side and continue to increase the spend there, albeit at a slower pace than the revenue is growing at the moment. We see good opportunities both in improving the footprint as well as new innovative solutions in all divisions. If we look at where this improvement came from in the other dimension by division, we can see that the majority of the improvement came in the pattern generators division, which is also contributing by far the most. We had a decline in the high flex division, even if we don't see the same kind of decline as the market is declining volume wise. But this is still a decline of around 30 million for the quarter. Improvements in high volume. And in global technologies, it's fair to add that we also bore the cost of around 14 million for the newly acquired Vanguard, where we did not have revenues in the quarter. But we did get the first orders in, so there will be less of an impact going forward. So this division actually delivered a 10% margin if you exclude that for the quarter. Cash flow is still strong, especially the result, of course, but also on the working capital side, it's fair to mention that in the comparative period of last year, we had very strong advance payments coming into the patent generators. So we had an increased inventory between end of the year and the third quarter, which we also had last year, but then being offset by this high advance payments that we received. On the investing activity side, half of the amount that has gone out has gone to the acquisition of Vanguard and then we have investments in R&D and fixed assets making up the rest. On the financing activity side, the main part is related to the dividends paid out earlier in the year and some IFRS 16 repayment of leases. Still a very strong cash position and cash at the end of the period of 2.5 billion. With that short summary I hand the word back to Anders.