Mycronic AB (publ)

Hello and welcome to the presentation of Micronic's Q1 report. My name is Svend Tjetkovich, I'm the Director of Investor Relations at Micronic and with me I have CEO Anders Lindqvist and CFO Pierre Brusson, who will be presenting today. With that, I hand over to Anders. Please go ahead and present Micronix Q1 report.

Thank you, Sven, and welcome everyone to this call. So today we will of course talk about the report, Q1 in short. We will go deeper in the different divisions. Pierre will talk about the financials, a few words on sustainability, and then we end the session with the Q&A part. And as always, there is an appendix in the presentation that we will not present, which is containing data from independent sources on the market. So starting with the quarter. So we had a very good start, a good start of the year. And comparing to the same quarter last year, and the same quarter last year was also a good quarter. So it makes the figures even nicer, I would say. So we had a good increase in order intake with 25%. Up to a little bit more than 2 billion. And we had a record in sales increasing 27% over the same quarter last year up to 2.14 billion Swedish, which is very high and good. We also recorded a very strong EBIT, the highest ever in a quarter with $775 million and corresponding to a margin of 36%. Also, backlog has continued to be strong at $4.6 billion. And we also made two acquisitions this year. One within the quarter, which is H-Probe, which is a company that has developed a unique technology for high-speed testing of what's called MRAM, magnetic memories, and also magnetic sensors, based in France. And this will be integrated in the global technologies division. as a new business line. And after the quarter, we also made another acquisition with Global Technologies, a company called Robot, which has a good, unique technology for testing of signal quality on PCBs, and that will be an important part of the PCB test business area, also within the Global Technologies division. So, good start of the year on numbers, but also on acquisitions, two very good acquisitions so far. If we then move into the different divisions, starting with the patent generators, a lot of the records are coming from here. So we can see that the markets, both for displays and semiconductors, have continued to be stable. We also saw the first order for the Precision 8000 EVO, the newly launched high-end machine for mask writing in the display industry. And we can see that it confirms our thinking that it was well in line with the industry needs for more advanced photo masks and really to take the most out of the capacity of aligners, etc. And so on. So, very happy with that. Also, we could see that the order intake was very strong, up 48% to almost a billion. And the record in sales to very close, increasing 43%, close to 1.2 billion. Gross margin 76, good. And the record EBIT 752 million. So very strong start. And backlog a little bit more than 3 billion, which contains 27 systems at the moment. So strong performance in patent generators. HyFlex is maybe that division where we did not see a strong performance. I think every other division contributed nicely. And in the HyFlex business, we could see that the demand in Europe was very weak. We also took part in the largest show or exhibition in North America called Apex, which generated a lot of interest. And at the same time, we could see that the order intake declined 12% down to 295 million. And we also could see the first impact of tariffs. The new tariffs for the US have led to delays in deliveries. Things get stuck in customs longer than normal. And for the quarter, we saw a negative impact or delay, actually, but it's a negative impact for the quarter, about 15 million. And overall net sales down 1%. Gross margin okay at 37% and EBIT mine at 13. Backlog 105, which is quite low level of backlog for us. So not that good. High volume, much better. We could see that China is really coming back. We had a very good demand in the Chinese domestic market. We could see the order intake rose with 42% to 553 million, which is a very high number. For this division, we had an increase of sales up to 330 million. And the newly acquired company Modus contributed with 9 million to that. Good gross margin at 43%, EBIT 59. And we had an impact of 4 million on that EBIT because of acquisition cost of Modus. Also strong backlog of 975 million. So overall good performance from the high volume division. Then we moved to global technologies and as I said initially we had these two acquisitions. We could start with the business side. We could see that we have a slowdown in the order intake from the dye bonding business in the quarter. It's not related to market. We have not that many customers in this business and we saw just fewer orders coming in. And at the same time we saw that the PCB test business line continued to be very strong. What you see in the picture is the equipment from the newly acquired company H-Probe, based in Grenoble, France, that has a unique technology for high-speed testing of MRAMs and magnetic sensors. This is a technology that is coming, so we believe very much in this acquisition. The orders situation, so we had a decrease of 8%, down to 254, while the increase, there was an increase of sales, 31%. Gross margin, good, at 46%. And EBIT, 54. And in that 54, we have a negative impact of 18 millis from the previous and recently acquired businesses. Backlog was 445, which is reasonably strong. And after the quarter, as I said, we also acquired a robot that has the technology for testing the signal quality on PCBs. So overall, I think a very good performance from the global technologies division. And we are happy with that. we talk about the outlook so of course there's a lot of talk on tariffs and what impact that will have on the business because of that we could see that the uncertainty have increased and it's more difficult really to say now after one quarter how the year will end we believe that we can still reach the seven and a half but there is also a little bit downside to that you can all all have seen i guess that the currency have changed quite a lot since we gave the forecast and The board of directors opinion now is that we will reach a sales of between seven and seven and a half. So introducing a range instead for a fixed number here. And talking more about the tariffs. So the direct impact on tariffs are quite limited on Micronic. We have not that much flows between US and China that are directly impacted. And in most cases, the customer is the importer and we don't carry the cost of the duties or the tariffs in that case. But we believe that the indirect impact has a bigger impact on us. And we can see that the investment climate can change and there's most likely hesitation to invest. We could see changes in currency, etc. So therefore, we see that it is uncertain to have definitely increased since the introduction of this. All right. So with that, I hand over to Pierre Brochon to talk about the financials.

Thank you so much, Anders. And going back then to the first quarter, which we are super happy about on a total level. We had the increase of 27% on a pretty good quarter of last year to the level of 2.1 billion Swedish. We had also the highest ever aftermarket revenues, 531 million. You can see that we have now two really strong quarters in the aftermarket side, and this is mainly in the patent generators division where we have additional contracts, but we also have some one-time effects there, works that we have been doing on that side. You can see on this picture that we have also an EBIT margin higher than before, breaking the level of last year where we were at 35% now even up to 36% on the quarter. So exceptionally high profitability levels on record sales levels. Here you can see that we have now reached our previously communicated outlook of 7.5 billion, which is still the upper range of the interval. So good continued growth over many quarters. and a very high EBIT level at 29%. And with the aftermarket, we have been able to continue to grow quarter on quarter all the way back since early 21, which we're really proud about and happy about. If we look at the bridge comparing this quarter with a similar quarter of last year, We had a strong improvement of the gross profit partly or largely because of higher volumes at maintained levels, which was the case for pattern generators. But we also had improvements in the gross margin, in particular in the global technologies division, as well as in the high volume division. There is also a portion of that which is related to a higher share of pattern generators sales. On the cost side, we have added costs in all categories, deliberately so, because we see opportunities both in developing new products and in the markets. A large portion of the R&D expansion relates to patent generators, whereas the marketing and sales cost is more spread across the divisions, and it also includes a portion of acquisition costs for the two acquisitions we have been able to complete in the beginning of the year. Also the G&A is spread across divisions and here the new companies in global technologies has also an important portion. Other items is largely related to currencies, actually the revaluation of receivables is in particular affected because you get paid later than when the receivables are created so we have a negative impact here and the impact of the exchange rates is actually bigger than the total 46 here so we have received more other positive impacts from largely from government's grants in this amount so about 60 million is effects related to this Despite that, we end on a new record level of 775 million. If we cut it the other way around and look at it based on how we are organized, you can see that the main part of the improvement comes from pattern generators, where we have added 209 million, largely by selling more than the prior year. In the HyFlex division, as Anders mentioned, we are actually making a small loss in the quarter, which we are not happy about, but based on the volumes that we saw, and the additional cost that we had to bear for having the largest fair we have in North America in the first quarter compared to in the second quarter of last year. This is the main explanation for the negative result and the residual between this quarter this year and last year. On the high volume side, we had fantastic order intake driven by a strong business in China. We couldn't get that all to revenues, so the improvement on the result is limited. But we still consider this as a very good first quarter of the year for high volume. For global technologies, as Anders referred to, we had a very good quarter in the PCB test division. And we had also a strong result improvement in the die bonding. part of the business and this more than covered for the costs that we have with the newly acquired technology companies compared to last year. On the group function side we have, it's a bit split in two, we have on one hand exchange rate differences on loans that we do from the group to subsidiaries which are in different currencies. and acquisition costs for the two acquisitions we have made. By that, we ended up at 36% or 775 million. On the cash flow side, We continue to have strong cash flow from our operations, but in the quarter we had lower advance payments and this is mainly a reflection of patent generators having stronger sales than order intake. And we also built inventory and in particular in the high volume division where we had strong order intake but could not realize the sales. And this is where we are Having a rather late point of revenue recognition, customer has to accept before we recognize revenue. On the investing activities, we had mainly the acquisition of H-Probe in the quarter. And by that we had a relatively modest cash flow for the period. With that, I hand the word back again to Anders.