Mycronic AB (publ)

Hello and welcome to the presentation of Micronic's Q4 report. My name is Sven Tjatkovich. I'm the Director of Investor Relations at Micronic. And with me I have Anders Lindqvist, CEO, and Pierre Broson, CFO, who will be presenting. And with that I hand over to Anders. Please go ahead and present Micronic's Q4 report.

Thank you very much, Sven, and good morning to everyone online. So the agenda today, what we will present is as usual. So I will talk about the quarter four in short. Summary, Pierre will talk about, or I will also explain the divisional development in the business, and then Pierre will talk a little bit deeper on the financials. Very short notice on sustainability, and then, as usual, we will end with the question and answer session. And in the material, which you will find on the website, there is also an update on the market from external sources for your help. So, starting with the quarter four, we are very happy, very proud to report that we finished the record year in a very strong way. In terms of order intake, we had the second best quarter ever, an increase of 64% to the comparable quarter in 2023, up to almost 2.4 billion. In terms of sales, we saw a record, 5% up to almost 2.1 billion. Compared to the same quarter the previous year. And of course, in our business, this can go up and down quite big when comparing to the quarters. But a very strong quarter in terms of sales and orders. EBIT margin a little bit lower than the quarter. Corresponding quarter 26%, meaning that we ended on 527 million, which is nevertheless a very strong number for us. Backlog is really high, also a record actually of 4.702 billion. And for the full year, we also have a record with our EBIT which exceeded 2 billion for the first time ever. What was also very good in the quarter and the full year is that all the divisions delivered a margin of about 10% in terms of EBIT for the full year, which is our lower threshold for the divisions. So, very good. And because of a strong result, we will propose to the AGM a dividend of... 5.5 krona per share which is one krona up compared to the previous dividend last year and also in addition to that also propose an extra dividend of two krona per share. So moving a little bit more into the different divisions, starting with pattern generators, we had a really good order intake. You can also see that the markets, both in our Semicon business and also in display business, continue to be stable and strong. We had a notable event end of last year where we received a very important award on an industry conference in the United States. called Bacchus, which we are very happy and proud about. The order intake was up a lot, 123 percent to a little bit more than 1.1 billion, and a little bit down on sales to 700 million. Gross margin ended at 63 percent compared to 68, the same corresponding quarter previous year, and this is because of a less favorable product mix, so different margins on different products. And because of that, EBIT declined to 311. So here we have a very strong backlog of a little bit more than 3.3 billion. In terms of systems, this is 29 systems in the backlog. And after the quarter, We received quite some important orders, especially one which is our first order for a Precision 8000 EVO. The first ever. This is a recently launched machine. And also for two Precision MMS EVOs and also Precision 8 entry EVOs. So good order intake after the quarter as well. Moving to high flex. Had a very strong finish to the year. Struggled here a little bit. The market, especially in Europe, remains weak. We could see some improvement, signs of recovery in the U.S., likely following the election. in the US and also we could see that in high flex division we have gained market share in a weak market especially as the segments that we operate in have a stronger demand so typically our segments is in the industrial aerospace defense med tech industry which are doing better than the average industry I would say. So, meaning that order intake was strong, actually. We increased 8%, up to $389 million. And the deliveries were really good at the end of the year. And we compared to a very strong quarter the preceding year, but despite that, we increased sales with 2% to $486 million. Very strong gross margin. It follows the sales, the volume, a little bit, so 45%. And a good EBIT of 106 million. The order backlog of 102 is a little bit on the low side and this is of course also because deliveries was really good at the end of the year. Moving to high volume, here we can see some change, continued improved demand. I think we saw those signs already before during last year and we see that continue. And this demand is improved both in the Chinese domestic market and also in the markets outside of China. And in terms of customer segments, we could see that this is both the case for the automotive industry, which has been a bit slow, but also for the consumer electronics industry, which is picking up. Notable event in the quarter was that we acquired a company in Germany called Modus High Tech Electronics. Modus is a provider of optical inspection systems for high volume electronics production. So this will be a very good addition to this division. Looking a little bit on the order intake. So yeah, improved demand means increase in orders of 40% up to 387 million, which is a good number. and also sales up a lot 53 percent to 467 million and here we had a contribution from the acquired business models of 9 million gross margin a little bit lower than normal i would say 35 percent it was 40 percent the same quarter pre corresponding year and this is because we had a mix with less favorable projects in the deliveries ebit increased to 76 million also a good number And here the contribution of motors is actually a negative impact of 4 million to that number and a strong backlog of 752 million. So solid performance, I would say, in the high volume division. Then we move to global technologies. Here we can see the most direct impact of AI-driven demand. And we have different lines of business here. If we start with the testing of PCBs, which are used in advanced servers for AI applications, we saw a good demand here. You could see also that investments in Southeast Asia is strong, and this is in their strategy to be less dependent on China and have alternative and additional manufacturing sites outside of China, where Southeast Asia is a clear winner. We see good demand because of that. Also in die bonding, the next business line, we see also demand supported by AI applications, especially in the high-speed optical transceiver technology. And also we had a good quarter for the newly acquired business, Photonics Interconnect. And a good quarter is we had a good order intake. So for the whole division, we had an increase of 52% to 461 million in the quarter. Good number. Sales up 30% to 400, a little bit more than 400. A strong gross margin of 44 and a good increase in EBIT to 86 million. So very happy with that as well as the backlog that we go into this year with a strong number of 514. So good numbers from global technologies division. If we look this year, our outlook for the year, we believe that we will reach a sales of 7.5 billion during this year, which will be the guidance from the board of directors. So with that, I will hand over to Pierre to talk a little bit more about the finances.

Yes, good morning from my side as well and I will then go through a little bit more graphically the strong ending we had of the year and a bit through the result of the full year as well. So we ended the year with a record sales level above 2 billion and this is even higher than we had in the fourth quarter of last year. We had an almost perfect execution in the fourth quarter where Things really went our way in all divisions, basically. And in addition, we had a relatively weak Swedish krona also supporting the number in krona. But fantastic result. And the order intake even stronger than this. So really, really good. Also very positive to note that we had the highest aftermarket revenue we have ever had, with above 500 million. So also good continued growth here. We ended with an EBIT margin of 26%, and this is not a record level. This is a good, healthy level for us, especially given the relatively modest share of revenues that came from pattern generators in the quarter. If we look at the full year graphically, we ended just above $7 billion. Continued growth throughout several quarters here consistently. And with the full year EBIT exceeding actually the long-term financial target that we put up of $2 billion and EBIT margin on the very high level of 29%. The aftermarket revenue continued up with a strong ending of the year and is now above 1.7 billion. In terms of share of sales, it has been higher before, but this is of course related to the strong equipment sales we've had throughout the year. And this is also promising for the future aftermarket revenue. If we look at bridges on the result, we had a lower result than what we had in the fourth quarter last year which at the time was the record level and this was mainly because we had a very high profitability in the pattern generators in the fourth quarter of last year and this is then displayed by a lower average gross margin for the company this year. So despite higher sales we had a lower gross margin in absolute terms. And as we have been growing the organization in line with our strategy, this resulted in a slightly lower total EBIT for the quarter. But the 527 is still a good, very good level for us. It's about one fourth of the annual result as well. If we look at the bridge for the full year, here you can see a bit the reverse, where you have a very strong positive volume effect and a strong margin effect positively as well. We have expanded in the R&D and we have actually expanded on the marketing and sales side as well. But in 2023, we had high M&A costs that we communicated around, which we did not have to the same extent this year. If we cut it the other way around and look at it by division, in the fourth quarter we had a lower profitability in the patent generators, largely driven by volume, but to some degree also driven by a lower gross margin, as Anders mentioned, where we had a somewhat worse product mix. All other divisions actually improved and we're very satisfied with the result in all divisions in the fourth quarter. If we look at it on an annual basis, you can see that the majority of the profitability increase is generated in the pattern generators division. And I think largely we are happy with the development in all divisions. I think HyFlex has been suffering from quite difficult market conditions, and we have seen that we are gaining market share in this market, but we could not fully meet the strong result of 23. On the cash flow side, we have a strong cash position with cash at the end of the period exceeding 3 billion. We have a strong contribution from the result during the year. However, we have built inventory in particular in patent generators and high volume divisions. We have invested in two acquisitions, not so big ones, but still two acquisitions. And we have invested in certain facilities in the global technologies division. On the financing side, the majority of that is related to dividend. So improving the cash position almost a billion. during the year and adding up to a position of 2.8 billion net at the end of the year. So with that I hand the word back to Anders again for some words on sustainability.