Mycronic AB (publ)

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

Thank you, Sven, and good morning, everyone. So, today, we have the standard agenda. So, talk about the Q2 in general, in short. Go deeper in the different divisions. Pierre will talk about the financials, some words on sustainability, and then we end the session with the Q question and answer session. And as usual in the material that is on the website, you also have the The market update, which we will not present, but it's there for information. So just to summarize the second quarter, it was an excellent quarter, really. Many records in different ways. So we had record order intake up 119%. But also the level is very high at 2.9 billion, so we have never been higher. And what is very nice to see is that we have contributions from all the different divisions, very much from global technologies, you will see. but also very strong development in high volume and pattern generators. And pattern generators is compared to a quite weak quarter two last year, but still decent level. Also very nice to see is that sales is also picking up. So not only orders alone, that second best level up to 2.4 billion, very much from global technologies in that increase. Very strong gross margin at 57%. Also very strong EBIT at close to 700 million, corresponding to 29%. So because of strong order intake, of course, we could say that the backlog has increased to 5.25 billion Swedish, which is quite a good level for us to have. So going a little bit more in detail on the different divisions. starting with pattern generators. So percentage-wise, it looks like you had the superorder intake with 253%, but last year, quarter two was very weak, where we had no system orders at all, actually. So the level we reached now is 625, which is a decent level, but compared to a weak quarter, a lot of percent, of course. We had four different SLX orders in the quarter, three normal machines, and then we had this one customized Aesthelix that we announced already last quarter which is a one-off project with a very high sales price, almost $30 million on that one. Sales a little bit down to $900, and this is positively impacted by the COVID acquisition by $26 million. Strong gross margin at $72, EBIT close to $500, where we had the negative impact from COVID acquisition of minus $14 million, and overall an EBIT margin of 53%, which is quite nice. Order backlog 1.7 and we have 13 systems now in the backlog as of end of the quarter. So, quite solid basic PCB assembly solutions. So here we have both positive and negative. So we have the two largest order ever taken in the quarter and both of them coming from the defense industry. So very strong orders and this is as resulted in a record order intake of 444 million. At the same time, you can feel that we continue to make a loss. We had a sales of 303 million and gross margin of 37, but still we had a negative EBIT of 44. And in that 44, there is a restructuring cost of 39, but even taking that out, we're still negative on the EBIT. And this is also why we now have started a restructuring program. where we want to bring the EBIT margin back about 10% and this should happen latest by next year at current volumes so make PCDS family solutions great again really high volume very strong demand here as well as you can see very much coming from the Chinese consumer electronics industry that has started to invest a lot in launching new products, but also markets outside of China. And we can also see in this division that we have a positive impact from opportunities when it comes to building up AI infrastructure. where we have sold the dispensing solutions to server assemblies and final assembly of optical modules. Strong order intake, almost 700 million Swedish krona, up 82%. Sales a little bit less, up 513 million. Very strong gross margin at 44 and the EBIT 68 million, which is equal to 13%. And here we have financial impact of ESOP of minus 24 as well, included in that number. So, strong backlog at close to 1.2 billion, so very good performance from high volume. The best performance of all the divisions we have in global technologies. You can see that especially in the PCB test and die bonding, but very good contributions from the other businesses as well in this division. So ordering take up above 1 billion for the first time. 1, 1, 1, 1. So 1.11 billion Swedish, which is 176% up. Sales also very good to see that this is following. up to 700 million that we don't only build backlog, but also we're building up the delivery capacity. We have a small positive impact from acquisitions of Surfex and the German company ITZ, less than 1 million. But nevertheless, very strong sales increase. And gross margin, super strong at 56%, and EBIT up to 250 million, which is a very strong pickup from the same quarter last year. Small impact of the different acquisitions. We have some noise from acquisitions in here. negative from Surfex and easy said but also positive impact of an earn out that was reversed in Surfex that was 14 million. So all that together means a very strong EBIT margin at 36% and an increase of backlog to 2.1 billion. So I think we can start to see that global technologies start to have quite a meaningful contribution to the group numbers. And all that, the strong momentum we have right now in the business, a little bit of currency also in our favor right now, has made us to revise the outlook for the full year, and we revised that up half a billion to 9.25 billion to reach that by the end of the year. So with that, I will hand over to Pierre Rochon for a while.

Thank you so much Anders and I will take you through a bit of a graphical look on the numbers. We increased year on year with 17% on a already quite good quarter last year up to the second best level at 2.4 billion in the quarter and we also had another record when it comes to off the market revenue which was 544 million just above what we had in Q1 Our EBIT margin on a high level, close to 30%, that's 29, which is not a record, but still very, very strong. If we look where we stand on a rolling 12-month basis, we have now reached 8.65 billion, with an EBIT margin at a solid 26% after two strong quarters starting this year. The aftermarket revenue crossed the line of 2 billion for the first time and that corresponds now to 24% of our net sales and this is something that we put strong emphasis on. If we look at the quarter on quarter and where did the result improvement come from, it was all in the gross margin. it was both improved gross margin which we have had in global technologies as well as in high volume and then we had a volume effect on top of that on the cost side we continue to invest both in building the organizational footprint globally in various parts of the divisions and we continue to invest in technology and this is the technology investments in R&D is this quarter more broad-based than before So in three of the divisions, we have continued to increase the spend distinctly. So patent generators, high volume, and global technologies. On the PCD assembly, we have more moderate level of spending in the R&D side at the moment. Marketing and sales and G&A, we continue to build and expand the footprint. There is a little bit of acquisition effect in these numbers as well, but we continue to expand and take advantage of the strong positions that we have. Ending the quarter at 698 or 29%. If we compare in the other direction and look division by division, you can see that all the improvement actually came from global technologies. In the quarter, patent generators had a strong comparison in the same quarter last year. In PCB assembly solutions, as Anders mentioned, we have 39 million of exceptional costs for restructuring. high volume good quarter and also loaded with the ESOP costs this year so actually underlying an improvement strong development in global technologies and that took us back to the 698 that we have reported cash flow We have a strong result, which of course is very supportive to the cash flow as well. The growth that we have is causing a bit of negative impact on the working capital, even if the effect was even bigger during last year, where we also started the year strong. But a little bit of cash impact there. On the investment side, we have relatively moderate acquisitions, ATZ and COVID, that we have invested in this year. We have also invested a little bit more in our organization than we would normally or historically have done among other things we are investing in TEBI and KISA for the PG and PA divisions on the financing activity side we had the dividend is the majority of that and that takes us to cash at the end of the period of 2.7 billion or net cash position of 2.3 billion. And with that quick walkthrough of the numbers, I hand the word back to Anders again.