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, President and CEO, and Pierre Brouchon, CFO at Micronic. And with that, I hand over to Anders. Please go ahead and present Micronic's Q3 report.

Thank you, Sven, and very much welcome from me as well. So today we have the usual agenda, if you have seen us before. So a short summary of the quarter three result and achievements and actions. We will go a little bit deeper in the different divisions. Pierre will explain a little bit more about the financials. We'll talk shortly about sustainability. And at the end of the session, we will have a question and answer session as well. On our website in the material you can also find the market update which is third-party reports on how the market has developed previously. So talking about the third quarter, what we could see in the third quarter that we had a good order intake, a very strong order intake actually. We had an increase of 67% compared to the same quarter last year and it amounted to 2.431 billion Swedish kronor, which is also a very good number. So it was not only a good percentile increase, also the level as such is increasing. very high. We are very happy to see that all divisions contributed and especially strong in path generators and also the global technologies divisions. So very strong, but also the high volume and PCB assembly solutions also showed growth in order intake. On the sales side, we had a small decline of 4% to a little bit more than 1.7 billion, and we had a less lower sales in the pattern generators divisions than the same quarter last year, while we had growth in high volume and global technologies. EBIT declined quite a lot to 255 million, all explained by a product mix, especially in the patent generators or in the patent generators division. And EBIT margin then down to 15%. Backlog up to almost 4.8 billion, which is also a good number. And during the quarter, we also signed an agreement to acquire a Korean company, Cohen DST. If we start with the division patent generator, so we saw a very good order intake, 188%, so that's a lot of percent, but to a level of almost 790 million. And in that we saw orders for three Precision mask writers, which was one Precision 8 Evo, two Precision Lite Evo, and also two mask writers for the semiconductor industry, two SLX. We also signed an agreement to acquire the South Korean company Kowin. So Kowin is a company making repair equipment for display panels and also photo masks, both for Semicon and for display. So a very good fit with our pattern generators division. Sales down 40% to 487 million. We delivered five machines, so it was one precision eight. or a light eight Evo, three SLX and one MMX. And because of that mix, the margin declined of 59% on the gross margin and EBIT 161 million. Backlog a little bit more than 2.6 billion. And in that backlog, we have 19 systems to be delivered. And after the quarter finished, we also had an additional order for an SLX mask right there. So PCB assembly solutions, we have seen an improvement on the market in America or United States, especially during the third quarter, while still the European market is weak as before. We got full line orders, which is where we sell almost everything we have in the whole portfolio. We received that both in Europe, US and Asia, so that's pretty much everywhere. And also we are relocating the production from the previous premises in Täby to new premises in Kyrsten. And this is mainly to give more space for the pattern generators division to expand their production. So that is that, and that was successfully done. and order intake up to 400 million which is a good number and sales down to 314 a little bit down on the gross margin which is because of the lower net sales also the mix and small impact from tariffs in the us so ebit landed at 20 million and backlog 224 so which is a normal normal level i would say on the backlog Moving over to high volume. So we have seen in the beginning of the year, we had a very strong demand from the Chinese consumer electronic market. This was a little bit weakened order intake from that market during the quarter, still good, but it was more than good in the first two quarters or the first half of this year. We see good development in the markets outside of China, especially South Korea and Southeast Asia. So order intake, we had an increase of 40% to 444 million, which is a very good number. And the sales increase 49%, almost 500 million. And there is one acquisition that impacts this. It's Modus that we acquired last year, and it has a impact of 10 million gross margin 39 which is more or less normal i would say and ebit up to 79 million and the contribution from acquisition was 2 million in that ebit number strong backlog 860 million so high volume in in a very good shape i would say The global technologies is the star of the quarter. I would say we had a very strong order intake and it comes both from acquired companies, but also from already existing business, which has the majority of the contribution. So 94% up to almost 800 million. So that's almost double. That's the same quarter last year and the level as such is very high as well. Sales also up, follows a little bit, up to 416 million. And the impact from acquisitions here is 112 million. We have acquired three companies during the time that we compare against. Gross margin, strong increase to 52% and it's come from a little bit everywhere. We have improvements in the PCB test business line, in the die binding, photonics interconnect. Those are old businesses, but also the addition of the plasma business with the surface and the magnetic test business with the robot acquisition. So contribution from many places and the EBIT increase to 42 million and then Including in that number, we also had quite a lot of impact from the acquisitions with negative 21 million. So very strong EBIT on that. And also very strong order backlog, as you can see, more than a billion here. So super strong on all parameters, I would say, in the global technologies division. The outlook, not so much more time of the year to go, and we stay confident with the outlook of 7.5 billion for the full year. And with that, I will hand over to Pierre Brochon to talk about the financials.

Hello from my side as well. And going directly into the result for the quarter, we had after a number of very strong quarters with EBIT on or above 25%, we had a somewhat lower quarter as expected. We had 1.7 billion in sales and an EBIT margin on 15%. And the aftermarket revenue continued to be strong at 469 million in the quarter. If we look at it on a rolling 12-month basis, we are still on a good rolling 12-month margin at 27% and just shy of 8 billion in sales. Here you can also see that we continue to grow our aftermarket. So it's now up in absolute values just below 2 billion and representing 25% of net sales. If we look at the comparison against the very strong third quarter of last year, you can see that we have declined on all parameters. And on the volume side, I think this is mainly related to lower pattern generator sales. And this also affects the relative margin that we have in the Micronic Group. So about half of that is related to lower lower margin within pattern generators, and about half is related to the mix between the pattern generators and other divisions. So despite the strong development in global technologies, we had a decline of the gross margin. On the OPEX side, the main explanation to all this, which is about 140 million in total, is related to the acquisitions that we have made. More than half of it is related to that. But we also have increases in the R&D spend in patent generators, in particular to some degree in our high volume division. And in the high volume division, we are also building the global footprint, meaning that we are increasing also the spend in particular on the marketing and sales, but also on the G&A. This resulted in 255 million for the quarter. If we compare division by division, we had last year a fantastic third quarter in pattern generators, could not match that, did not expect to match that. This is in line with our expectation for the quarter. On the PCB assembly solutions, it's been a tough market. I think we have seen pretty good order intake the last couple of months, but the revenues were lower than last year and also the result. On the high volume division side, the comparative numbers is not so strong. It's a solid quarter in high volume this year. And I think it's a good result, but not out of the extraordinary. On the global technology side, this is a good increase on last year. But as Anders explained earlier, there is really a super performance underlying in global technologies. Very strong order intake, very strong gross margin. And there is quite a lot of acquisition related costs in this number and still improving 28 million. I think it's really good. Ending on the 15%, 255 million for the quarter. Cash flow wise, we have continued good cash flow from the result. If we compare with last year, we have a negative impact on the working capital side. We have a little bit lower order stock in patent generators. and thereby also less advanced payments. And we have, by growing the business, also increased the inventory somewhat during this period. On the investing activity side, we have mainly the acquisitions that account for the majority of this. And no drama on the financing side either, majority being the dividends that was paid out in the second quarter. Still on a healthy cash level at 2 billion. And with that quick walkthrough, I hand the word back to Anders again.