Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orders have increased by 74% compared to last year, indicating strong demand recovery.
- EBITDA margin improved to 30.1%, up from 29.2% last year, reflecting better operational efficiency.
- Sales in the semiconductor business unit surged by 140% compared to last year.
- The company achieved 48 spec wins in H1 2024, a 17% increase from the previous year.
- Strong performance in the global service segment, with sales of replacement gates growing over 40%.
Negative Points
- Sales for H1 2024 were flat compared to the previous year, indicating no growth in revenue.
- Consumer electronic sales are running slower globally due to post-COVID inflation.
- Some industrial and automotive chipmakers are still experiencing slow demand due to high inventory levels.
- The ADV business saw a decline in orders by 23% compared to Q2 2023.
- Free cash flow decreased by 29% year-on-year, reflecting high capital expenditure.
Q & A Highlights
Q: Can you quantify the impact of the ERP implementation on Q3 revenues?
A: The ERP implementation led to CHF8 million of advanced shipments in Q2. If we assume that was pulled into Q3, it would imply CHF253 million, which is broadly flat versus Q2. The ERP certainly has an impact on the numbers for Q2 and Q3. (Urs Gantner, CEO)
Q: Are you changing your expectations for order growth in the coming quarters?
A: No, there is no change in our outlook for low-double-digit sequential growth in orders over the next few quarters. (Urs Gantner, CEO)
Q: How do you see the trajectory into Q4 and full year after the ERP implementation?
A: We expect to return to normal operations towards the end of Q3. In Q4, we will be fully back to the normal run rates. We have enough headroom to ramp up in Malaysia and Switzerland. (Fabian Chiozza, CFO)
Q: What is your view on the sustainability of China government incentives for the semiconductor industry?
A: We expect that China will continue to invest in building up its semiconductor industry. We do not anticipate that these incentives will stop. (Urs Gantner, CEO)
Q: Can you provide more color on the R&D investments and their impact on adjacencies?
A: Our R&D investments are focused on both core products and adjacent products. We are working on Horizon 2 products for future technologies. About 20% of our spec wins in H1 2024 were for adjacent products. (Urs Gantner, CEO)
Q: What is the expected impact of the Malaysian expansion on your EBITDA margin?
A: Labor rates in Malaysia are about 3 to 3.5 times lower than in Switzerland. This will contribute to cost savings, but the overall impact on EBITDA margin will also depend on operational leverage and supply chain adjustments. (Fabian Chiozza, CFO)
Q: How should we think about the ramp of adjacencies from below CHF100 million this year to CHF300 million and above by 2027?
A: The growth in adjacencies will be quite linear, driven by the adoption of new technologies in the market. (Fabian Chiozza, CFO)
Q: What is your best guess for when you will see the strong semi CapEx expected in 2025 in your order book?
A: We expect to see the DRAM recovery first, followed by NAND. Orders typically come in one quarter ahead of the actual ramp in wafer fab equipment. (Fabian Chiozza, CFO)
Q: Can you elaborate on the competitive landscape for your spec wins in adjacencies?
A: We win business from competitors and also from clients who want to outsource certain technologies to us. Our spec wins are a mix of these factors. (Urs Gantner, CEO)
Q: How do you view the potential for revenue growth in 2025 given the expected WFE CapEx growth?
A: Our goal is to outgrow the market. With new technologies entering the market, we expect to benefit and achieve higher growth rates. (Urs Gantner, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
