Mycronic AB (publ)

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

Thank you, thank you very much and warm welcome to everyone from me as well. So today we will of course present the Quarter 2 results in short. Also go a little bit deeper in the different divisions. Pierre will talk about financials and also today Pierre will talk about sustainability and then we will end with the question and answer session. And as usual in the material that is on the website there's also a market update that we will not present but it's there for everyone who wants to read that as well. So with that, start with the presentation about the second quarter. So we saw a strong sales, an increase of 35% compared to the same quarter last year to a little bit more than 2 billion. Also a strong increase of EBIT up to 568 million compared to 348 and the corresponding margin of 27%. So very strong sales side. A decline on the order intake down to 1.3 billion compared to a little bit more than two. And this is explained by the patent generators where we had no system orders coming back to that soon. The backlog is still very strong, even though reduced a little bit because of the less order intake and bigger sales. So now the backlog is a little bit more than 4 billion. and in the division global technologies we have completed two acquisitions within the quarter one is a robot and another one is surface we'll talk about this a bit more also very excitingly we had a share split where the existing share was split by two and at the end of the period or after the end of the period actually we also signed an agreement to acquire a korean company cohen So, a lot of activity in the second quarter. So, if we start with the Patreon generators, almost half of the business in terms of revenue. On this quarter, you could see that the market is still stable for both displays and the semiconductors. And we had no orders for new systems. So, the order intake that we recorded is only related to the aftermarket, which is, on the other hand, very strong. The ordering intake had a decline of 84% and was 191 million. We delivered eight systems, which is quite a lot, and that resulted in a net sales increase of 50%, up to almost a billion, and a strong gross margin of 69%. And EBIT follows the sales up to 537 million, so good. Of course, a decline in the order backlog because of the less orders, strong sales to 2.3 billion. And we have 19 systems in the backlog. So still a very strong backlog. And as I said, we signed the agreement with the Korean company, Cohen, to acquire that after the end of the period. Still not closed, however. Moving over to PCB assembly solutions, which is a new name, by the way. It was formerly named HyFlex. And the name changed just to better reflect what we actually do. And it was a little bit confusing for our customers. Markets have been quite weak here, especially European market has been weak, but we saw some sign of improvement from a very low level. US market is very uncertain, mainly caused by tariffs that create some uncertainty on the willingness to invest. And quite flat order intake compared to last year, a small decline of 2%, down to 356, and a decrease of net sales to 328. Margin 37, a little bit less than the same quarter last year, and EBIT 14%, which is 4% of sales. Backlog at the end of the quarter was 133 million, which is a little bit on the low side, you can see. High volume, here we could see very strong demand, very healthy demand from the market, especially from the Chinese domestic market, but also good performance from outside China. We had an order intake up 7% to 383, which is a very good number also, and sales also 40% up to 443, so even a better number. The recently acquired business Modus contributed 5 million to that sales, so not so much. Gross margin 38%, EBIT 74, and from Modus we had a loss or a negative impact of minus 7 million. Very strong backlog of 915 million, so very good on that side as well. So strong performance in this division. Also very strong performance in global technologies and here we had a lot of activity. We made two acquisitions. So one is Robot, a UK-based company that is doing, having a technology for test for signal quality on PCBs. So this will be part of the PCB test business. And then another company called Surface Technologies that are doing atmospheric plasma solutions for surface treatment, both cleaning and removal of oxide, etc. And that will form a separate business line. If we look on the existing business, the PCB test business was very strong during the quarter. And die bonding was a little bit less strong, very much affected by the uncertainties between the US-China tariff discussions. Very strong order increase of 95%, mainly attributed to the PCB test business, up to $402 million. Also strong increase of sales, almost 60%, up to 323%. And a small contribution from the recently acquired companies of 23 million. So EBIT up to 11 million compared to minus 15. And here we had quite a big negative impact of the recently acquired businesses of minus 23. So the underlying business performed about 10% in the quarter. Very strong backlog, more than 700 million. Good performance and a lot of activities of course here in this division. Then we're coming to the outlook and where we have changed that slightly or rephrase that a little bit and that is because of we had a very strong quarter in the quarter two. We also have made some acquisitions and also as we only have six months to go for the year, we have also less uncertainty for the remaining period. So we're coming back to the original outlook of having a sales of 7.5 billion by the end of the year. So with that, I will hand over to Pierre to talk a little bit more about the financials. Thank you.

Thank you so much, Anders, and welcome from my side as well. And taking a look at this graphically as well then, quarter by quarter, we had a very strong revenue quarter with net sales above 2 billion for the third quarter in a row. We also had a good aftermarket quarter of 465 million. Although this is below what we had in the first and fourth quarter of last year, but it's sequentially stronger than the same quarter of prior year. EBIT margin continued on a high level at 27% in the quarter. And if we look at how that plays out on a 12-month basis, we can see that we passed, for now, the 8 billion mark on a rolling 12-month basis, and that we are also hitting a 30% EBIT margin. And as Anders explained, the outlook for the year is 7.5, so we are not fully matching the quarter three and four of last year. Aftermarket continues to grow. We are approaching the 2 billion mark. However, as a percent of sales, this is slightly declining and is now at 24%. If we look at quarter on quarter versus the same quarter last year, We had a good growth primarily in the patent generators division, and this has a good volume impact for us looking at the result development. At the same time, you can see that we continue to spend our efforts in the R&D, growing the cost base in R&D with 60 million, limited effect of the acquired companies here. On the marketing and sales side, we are basically on par. You might remember from the Q1 that we were referring to especially high costs on certain trade fairs, which fell in Q1 this year rather than Q2 last year. So this is one of the explanations for this. On the G&A side, we have a little bit higher costs on the acquired entities and we continue to grow our global footprint. So this is also an explanation. On other, we have negative exchange rate effects mainly playing a role. But ending on a strong 568 million for the quarter. If we look at it, if we slice it in the other dimension, we see that very high improvement in the pattern generators, which stands for the majority of the profit generation in Micronic at the moment. On the PCB assembly solutions, we were close to par with last year, despite the tricky market situation and some negative influence on exchange rate that hits particularly hard on this division. High volume continued improvement, building on the continuous improvement that we also started in the first quarter. And the global technologies, despite negative impact from the newly acquired companies, delivered a strong improvement on last year. On the group function side, this is a reflection of largely the FX impact, but also some costs of the recently made acquisitions that has had an impact in the quarter. Ending as well then on the 568 or 27%. Cash flow with a strong result. It's clearly a strong contribution from the operations. Part of that, however, is already prepaid, mainly in the patent generators side. So looking at it this way, it comes as a plus in the operations and the negative in the working capital. We also have a somewhat higher inventory than we had a year ago, and this has an impact so that the cash flow from operations as a whole is 668 versus above 1 billion a year ago. On the investing activity side, we have been much more active than before and acquired three companies. This accounts for a little bit more than 900 million. And on the financing side, we had now in the second quarter also the dividends, which were including an extra dividend and added up to 734 million in total. Cash position is still solid. We have a net cash position of 1.6 and cash at the end of the period of 1.8 billion. And in addition to that, we still have the two revolving credit facilities of 2 billion in total. One of them was renewed during the second quarter. And we also added a link to sustainability and to our science-based targets, which will give us a small extra discount on the interests if we are able to fulfill the targets we have committed to. And with that, I hand the word back to Sven.