INFICON Holding (SIX Swiss: IFCN) Q4 2025 Earnings Call

0:00 Well, it's 09:30 by my watch. So good morning, and welcome, everyone. My name is Bernard Sveitze, Investor Relations contact at INFICON. I have the pleasure of hosting this webcast. Thank you for joining INFICON's conference on its first quarter twenty twenty six results. With us today are Oliver Reesch, CEO of INFICON and Matthias Strande, CFO of INFICON. We would also like to welcome our future CFO, Dmitry Wysak, on this webcast. Dmitry will take over from Matthias on July first this year. He will present the first quarter financials in greater detail. The management team will first present the results and then take your questions. During management's prepared remarks, you are kindly asked to turn your microphones and cameras off.

0:46 You should have received by now the press release on the Q1 twenty twenty six results together with the links to the accompanying presentation for this conference. All these documents are available for download in the investor section of the INFICON website. During the Q and A session, you can ask questions either in writing using the chat function in MS Teams, or you can add yourselves to the queue by clicking on the raise your hand icon. I would also like to inform you that we are recording this web conference in order to archive the audio file later on the INFICON website. The oral statements made by INFICON during this MS Team session may contain forward looking statements that do not relate solely to historical or current facts.

1:32 These forward looking statements are based on the current plans and expectations of our management and are subject to a number of uncertainties and risks that could significantly affect our current plans and expectations as well as future results of operations and financial condition. We undertake no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Having said all that, I would now like to hand over to Oliver Birch. Oliver, please. Thank you very much. Welcome everybody to the earnings release first quarter twenty twenty six.

2:17 Very pleased to welcome you here today. About the agenda, we have the usual structure. I will first tell you a couple of key messages and highlights of the quarter, talk about the different markets and the full year expectations. After that, I will hand over to our CFO, Matthias Turnge, and our future CFO, Dmitry Dilsack for more details on the financials. About the Q1 twenty twenty six results. We saw a very strong quarterly sales result and strong order momentum with a book to bill ratio develop of one, a solid underlying profitability with one off restructuring costs.

3:04 The Q1 sales reached $181,000,000 growing plus 14% year on year and nearly on the same level as the last quarter, which is seasonally normally the biggest one, so this quarter is the second biggest of all times, which if you take seasonality into account is a fantastic achievement. The orders are, particularly in pre conductor, continuously increasing and also have increased during this first quarter and that's why we reached a book to bill ratio well above one. If you look at semiconductor and vacuum coating, market has delivered a growth of plus 24% year on year and grew even on a high comparison of Q4 another 1.5%.

4:01 It's an accelerating market development here. The general vacuum continued its positive momentum delivering another solid quarter of plus 20% year on year and also an increase of over 1% quarter on quarter. RSC also increased by nearly 3% year on year and 11% on Q4. A challenging market environment but I believe our strong position gives us here the continuous opportunity to further grow. Security and energy is a cyclical market. It's down again versus Q4 currently, but with very good outlook. If you look at the operating result, gross margin reached nearly 46%, which is above previous quarter.

4:51 It reflects the improved operational inefficiencies. There is still some tailwinds in FX and tariffs, but there is also with the one off costs clearly then a move in the right direction based on last year's difficulties. We have been with our improvement plans making great progress. If you look at the operating income of US29.4 million dollars or 16.3% margin, that is a solid profitability in particular when you look at about three percentage points one off restructuring costs which are related with our reconfiguration. The operating cash flow is solid with US22 million dollars in Q1.

5:37 The production reconfiguration that we talked a lot about last year which was accelerated due to the trade disputes, is concluded and with this new setup we are very confident in this ever changing world and geopolitical difficult situation that we can go and react also to future changes. We have also discussed efficiency measures implemented and this is related with the one off restructuring costs These are the deficiency measures that we have triggered also based on these reconfigurations and the changed environment related with FX and tariffs as well. We continue our investment in leading edge R and D. Actually, this part of the market is truly on fire, so much going on, so much exciting innovation partnerships working.

6:35 I believe also our approach last year proved to be a right to work closely with the customer, especially also during these trade disputes. Our partnerships have strengthened and we have clearly made a step forward in these partnerships to even further work together on the next generation of our customers' products. The CapEx is in Q1 at US3.8 million dollars That is the timing question, it's relatively low. For the full year we would estimate it at around $30,000,000 you now jump into the worldwide markets, you can see we we could say, show growth in all of the four regions that we are reporting.

7:22 The most exciting certainly is Asia Pacific. That's where most of the AI driven semiconductor manufacturing is happening, but also China has shown good development and especially also Europe there is semiconductor driver but there is also the advanced industrials in Genmabag a driver in there. Americas is probably the least exciting one but it's a tough comparison also with Q4 if you look at the development over the last quarters. We're optimistic but it is less dynamic as the other regions because many of these AI driven initiatives materialized for us in Asia.

8:10 If you then jump into the end markets first, our biggest market is semiconductor and vacuum coating. We have a strong leading position and you can see how we are able to grow over multi years even in different cycles and geopolitical uncertainties. And the industry up cycle we expect to further accelerate. We have just seen quite an acceleration again in Q1 after already good momentum last year in the second half. If you compare the growth is 23.5% above Q1 twenty twenty five and the sequential growth of 1.5 with a tough comparison.

8:56 We have built out our number one position and are continuously building it out. There is about 80%, 90% where we are number one, so we're continuously working on this. We expect for this year strong growth and see obviously the mentioned industry upside still gaining momentum. If you look at it a bit more specifically, the HPC, the leading logic development already has started some time ago with HPM or memory DRAM accelerating also for some time now, but now we see it really going beyond that, broader also in more mature nodes, into power, into IoT and other places. So that is now a truly broad momentum building up.

9:47 We have a very strong pipeline at INFICON with new products, new applications, a lot of design wins. Again, I want to stress that our strategy last year to stay close with the customers in difficult times proved to be the right one. All these partnerships have further strengthened and actually give us even more opportunities when we think not only short term but also mid term. So there's a lot of interesting product upgrades in the works and being launched as we speak on these new tech nodes, gate all around or the smaller tech nodes also in memory and so on. If you then jump in the next end market, automotive refrigeration and air conditioning, We have a very strong position there. I think even in a difficult market that is in part consolidating with strong headwinds, were able to show sustained growth over the last years, including also this quarter, quarter on quarter plus 11%, year on year plus 3%, good order intake.

10:54 I think here it's important to see that a part of the market is still slow. The EV transition has been soft, also the underlying automotive market has been soft, but there is recovery signs, which is positive to see. The consumer battery has been continuously more resilient and also growing. Then you have the RSC portion of this market breaking down in different subparts, which one is related with the automotive market, which is rather the slower end. Then you have in the middle the continuously growing HVAC market, is core growing continuously, but it is accelerated for us for some time through these new refrigerant regulations through climate change, but the most exciting one now developing more and more is data center supply with air conditioning on a whole new level there. A new market is just about to form with new products and new requirements and we have first product launch also from our end. Also in this market, strong R and D pipeline, very close with the customer, lots of momentum, lot of exciting new stuff coming.

12:13 Then we jump into general market, general vacuum, our next market. Strong sales growth. This is a broad market with about 20 submarkets in it. We rigorously test them and check them if they are in line with our overall growth and profitability and technology synergies requirements and we have a couple of smaller markets in here that push us forward, big science, space, robotics, a few more. We also have broad positive development on industrials. We have a clear number one position here in vacuum instrumentation that we further build out. We also work here on different channel partners which we have expanded, which is exciting long term development as well. And maybe the last note is the slow part in this market is probably the portion around solar and I think last time we spoke in the full year results we were expecting this to be recovering after 2026.

13:20 Most recently actually there have been a couple of positive signals. I'll be in China next week again, so I'll get the latest and greatest from the market. Believe there could be some reason for optimism that we have a recovery sooner, but we'll have to still watch that closely. Then we jump to the last market, security and energy. Again, cyclical market depending on very long qualification cycles with governments. Generally, defense market is growing really fast. We are growing with it. The activity is high, so we are staying committed to this and are also excited about it, but this quarter in was bit slow. As you see, Q4 was much bigger than the others, so this shows also this attractiveness but at the same time also the cyclicality.

14:09 The products, we have very strong products specifically with the hapside line which we continue to show in the market a very strong performance. And with that I jump to the expectations for 2026. INFICON raises the full year 2026 guidance. The orders have developed strong in Q1. The semiconductor industry itself, the momentum is accelerating which really gives us a lot of optimism. Hence, in spite of geopolitical risks and trade disputes ongoing, we raised the guidance for 2026 to sales of $710,000,000 to $750,000,000 and an operating income of 18% to 20%.

15:01 And with that, I'll remind you, as always, if you're interested in INFICON, go have a look at our different channels. You'll see a bit under the hood what's happening, exciting technology developments, new innovations, openings and so on. Lots going on, actually a very exciting time. Believe another growth spurt, another big leap in many technologies. So, we're quite optimistic looking into the future and want to share that with you. Then, I conclude my part and would like to hand over to Matthias Pearndley, our CFO and our future CFO, Emile Klysak, for some financial details. Thank you, Oliver, and good morning everyone to our Q1 call. As you know and as communicated in December, we will or I will hand over the CFO, Rolf Dimitri, soon. Dimitri will be the new CFO of INFICON starting July 1. Therefore, Dimitri will take over the financials today and walk you through the financials.

16:06 And, yeah, for me, it's to say I would like to thank you for your interest, support, and also sometimes the tricky questions over the last nearly eighteen years. As I'm from finance, it would be exactly 17.83. And then, yeah, it was a pleasure meeting and working with you. Thank you very much for that. I'm very sure INFICON is in good hands with Dimitri and you will enjoy working with him, I'm pretty sure. With that, I hand over to Dimitri. Dimit, it's your turn, please. Thank you very much Matthias for nice words and for the introduction and Welcome everyone also from my side. I'm pleased to guide you through a little bit more in detail for the quarter financials, the guidance and the corporate calendar.

16:52 Well, first of all, Q1 was a quarter strong on both sales and orders as well as the further improved operational efficiencies and a strong cash generation, while we actually kept investing into the future and into new technologies in R and D. Going through the main highlights, book to bill, as mentioned, was well above one. We generated sales of CHF181 million, which is an increase of 14.4% versus prior year. A gross margin of 45.9%, which is an increase of sequentially of around 1.6 percentage points and compared to last year, a decrease of roughly 3.5 percentage points. We generated an operating income of 29.4%, which results in 16316.3% operating margin.

17:46 This is a decrease versus prior year of 7.8%. And this number includes the one off cost and one off impact already mentioned before of around three percentage points, as well as certain headwinds from FX and from tariffs that remain in the operating income. The equity ratio remains very strong at 74.1%, underlining the overall financial resilience of our business. Hence, the operating cash flow as well as the net cash increased and continues to be strong. Operating cash flow at US21.7 million dollars which is US3.6 million dollars above the comparing quarter and net cash of US96.5 million dollars which is a growth of 10.5%.

18:36 Finally, CapEx at 3,800,000 which is €1,400,000 lower than last year. Here, as previously mentioned, this is more a seasonality topic and a timing topic because we actually expect the CapEx to be higher than in 2025 at around €30,000,000 Going to the sales, overall sales growth was 14.4%, growing in all regions and three out of four markets. Specifically, on the regional side, the most exciting, the strongest growth came from Asia Pacific 30.5%, China at 6.7%, Europe at 22% and Americas with a very slight decrease of 0.2%. And looking at the markets, the strongest growth came from semi with 23.5% in the accelerating market, followed by general vacuum growing at 20.3% year over year and ROCE also increasing by moderately by 2.7% year over year, while security and energy driven by seasonality and more temporarily effects declined by 59%.

19:49 Operating expenses remained under tight management and tight control. While R and D costs actually increased by 10.9%, reflecting mainly investments into the future and to the upcoming product launches as well as an FX impact, the SG and A costs increased to 17.8%. Here it's worth noting that a significant part of this increase is resulting from the one off restructuring measures we mentioned before, as well as unfavorable FX impacts. If we take all these two impacts mentioned, we're actually structurally reducing our SG and A costs. And finally, the operating income and gross profit performance, so gross profit margin, as mentioned, reduced by 3.5 percentage points to 45.9%, which is also at the same time an increase of 1.6 percentage points sequentially versus the previous quarter, while operating income generated or operating income reduced by 7.8% and generating a margin of 16.3%.

20:54 Let me summarize the key drivers behind this performance. First of all, the operating income is the underlying result is structurally very solid and clearly reflects the improvements in the operational efficiencies we've been working on in the past months. There are certain negative effects that remain from tariffs and impacts on the costs, but at the same time, the effect of the capacity duplication is actually reducing significantly and improving. And we were also able to mitigate partially the FX impact with our relocation efforts and with our restructuring, basically reducing the footprint in the urine and cistern. Finally, as mentioned, the significant impact in this quarter resulted from one off restructuring costs. These costs actually came in both in COGS and in OpEx And this is related to the previously initiated production and cost optimization.

21:58 The income tax increased to 21.8%, reflecting overall a slightly higher tax rate of 22.5%, mainly due to timing and mix effects, while the net income decreased by 7.3% and the margin reaching 12.8% net sales, mainly driven by the lower operating income. The balance sheet remains consistently solid. I mentioned the cash flow increase both on operating cash flow and net cash. Operating cash flow generating US21.7 million dollars which is a 19.7% increase versus Q1 twenty twenty five. And net cash generated US96.5 million dollars which compares versus US81.2 million dollars in the reference period Q4 twenty twenty five.

22:48 Overall, also the what's positive to highlight is the inventory turns. So our inventory turns actually improved. Our inventory remained more or less flat versus prior year, while accounts receivables increased mainly due to the strong invoicing in the previous quarter as well as in Q1. This had an effect on overall accounts receivables, but also a slight increase of DSO and with this leading to a net working capital of €241,500,000 Coming to the full year 2026 guidance, as mentioned, we are raising the full year 2026 guidance both for sales and operating income.

23:34 This is based on a strong order intake and solid market a solid outlook in most markets, specifically an acceleration in the semiconductor market and the mentioned improved operational efficiencies. This means that the new guidance will be for sale of US710 million to US750 million dollars and operating income 18% to 20%. And with this, I conclude the financial update and I would like to highlight the next events on the corporate calendar. We will have the upcoming analyst visit in Liechtenstein in Walzers on the May 27, the Q2 twenty six media conference on July 30, all of the Q3 media conference October 27, and the last analyst visit of the year in Walthers as well on November 19.

24:29 With this, I conclude the financial update, we are happy to take your questions. Thank you, gentlemen. The first question comes from Martin Comtes. Good morning, gentlemen, and thanks for taking my question. Good morning. Hey. I would just like to understand the margin profile a little bit better. There's been 5,500,000 in one off costs in the first quarter. Can I just confirm that the increased guidance on EBIT margin for the full year is on reported and on the underlying EBIT margin because it would basically assume that for the next nine months, you would return to 20% EBIT margin if you were to reach the midpoint of that new guidance? Just so we're clear here and we're talking the same same numbers. And then maybe also if you could help me understand a bit better where these 5,500,000 one off costs were really put in the first quarter and if there's any more one off costs expected as the year progresses.

25:42 Thanks a lot. Yeah, Martin, obviously an expected question. I will give a few high level explanations and then Dominik can ask bit more on the financial side. Yes, don't plan on reporting different operating income numbers, so the guidance the guidance of the operating income as we reported. Hence the logic is relatively clear, but just to confirm it, yes, it's one off costs now, it's all bundled together. Obviously this is a large program across all the different locations, across different functions that we have based on longer term strategy and then this acceleration last year and then we have added some more aspects to it as well, right, and triggered was this additional program basically by last year, April, where the trade dispute escalated and then we really went into a review of these plans and then expanded it further and accelerated it.

26:53 Of course there is also these efficiency measures in there. As you remember, we had these three buckets FX, tariffs and under absorption. Under absorption was because of the duplication of production line, meaning when we move from one place to the other you cannot immediately switch off the old line, right? You want to have continuity for the customer. So this is something we've been working on with high priority and I think we made good progress and so this is the back end of this, obviously. The idea for me is for the outside but particularly also for the inside in the company to turn the page with this and now we go full on into growth mode. There's no reason to not be very optimistic, as I mentioned, because the markets are exciting, the technology are exciting, the technologies we're working on, the fire customers are exciting, but also what happens inside of our R and D, the whole acceleration, we already write a lot of lines of code automatically spreading everywhere, so it's one of the most exciting times for different reasons, right? And then you have these upcoming new technologies down to space and quantum technologies and so on, but already semi is exciting with the new technology.

28:12 So I would like to move on to the growth mode after this and that's an answer to what you said. If you want to look at what's remaining of these three buckets from last year, I would think we were around residual value of one to two percentage points there. Some of it will stay, right, the ethics, the economic influence so far and the tariffs, they will be going down, but they have been around before and not everything will be gone even with refunds and whatever we can do. So we continuously work on this but the improvement is going be a bit slower there. But we can already show improvements also there, obviously, as you can see when you do the math.

29:00 I hope this helps. Maybe, Ludwig, if you have more. Well, think, well, somewhere there's just two things to your question about how the split is, so actually or what this one off costs are affecting, they're affecting both OpEx and gross margins. So we have effects in both areas. And the rest actually, Oliver mentioned, I think it's aside from this, from the one off effect, also have some remaining effects that we had in previous quarters, but these are gradually reducing. While I would say tariff stays, you know, as the most prominent one, but the other effects, especially under absorption, we are managing very closely and we see quite a positive development there in the direction. Yeah, maybe that is a reference where you see the gross margin, as we often say, right, is not the best measure for INFICON as we have a big mix in the product portfolio, but you can see that's why we spoke about this too. You can see the improvement which clearly shows how we address the under absorption.

30:03 That's very clear. If you allow me a very quick follow-up, can you maybe just also give a bit more color on the development of the semi market in China in particular? I know you're going there next week, but I'm sure you might be aware of what's going on on the ground. Already a couple weeks back, and, obviously, we all come there. We have a large team there. So so, yeah, I think there's good reason to be optimistic. Certainly the fifteen five year plan is a course correction where we believe that in China the market courses will be led to play more and some of the players that are not profitable or viable will go and be allowed to shut down.

30:48 What that means is we probably have a little bit more closer market development there in semi but also outside another technology space where we are. As we know it's from the West, we also see that we actually with our setup are very well positioned to compete with Chinese companies and that there is actually no big difference with our footprint. And so the market itself certainly is not going to go back to this growth rate before COVID, but I think the tech market is quite resilient, building global players there that will also come out of China where we see some of this in automotive for instance and also in semi.

31:40 The strong partnership we have with them for a very long time, I would say for more than decades, some two decades remains. So for us we're committed to the Chinese market, it's a good market, we have these good partnerships and they also have nice growth. Some of this growth is of course also still replacement of U. S. American players. This is due to geopolitics largely. I think for us we're in a very good position where we are and how we set ourselves up to profit from it and again see the market also optimistic. The development quarter to quarter is a bit harder to say. Many of these projects are a bit chunky and they move around. It depends on planning and approvals, so I would not exactly look at quarter to quarter, more long term trends, and those are good.

32:37 That helps. Perfect. Thanks so much. And Matthias, enjoy the summer. Future endeavors. Try my best. The the motorbike is already ready. Yeah. Which one? A big one. Very good. Alright. The next question comes from Michel Inou. And, Michel, please. Yes. Good morning, everyone. Hope you can hear me. So congrats on the good results. Really surprisingly strong. I was wondering if you could I mean, I have three things that I would like to high raise. First of all, maybe you can give us a little bit insight in your thought processes one month ago. It sounded a little bit different when you were presenting, and you tried to be at least cautious in your guidance, and you were a little bit cautious in how you talked about the market. But now it looks a little different on the positive side. So maybe just a little hint on what changed in your thought process there.

33:46 And overall, a bit of broader question on the semiconductor market. I mean, you were growing really strongly. Of course, you report in U. S. Dollars, but still much better than some of your, let's say, broader peers in Switzerland, ComEd, VAT. Just trying to understand what drives that. I mean, obviously, we see a really strong, I would say, strong recovery in mature mature etch. Taxi instruments is really strong. I mean, we see those in the European chips stocks. Is it coming more from the mature side, or is it really memory partially where you're not super exposed? Or is it more leading edge? And then within that, would you say it's more OM or chipmaker driven? I'm just trying to understand, you know, what makes you grow so much more. So, maybe these two things, and I'll leave it with that. Alright. Good.

34:38 Okay. Let me go one by one through your sub questions there as well. So, I mean, first of all, I want to stress the reconfiguration, and I believe how we went through last year paid off for this year. I'm a big fan of ripping off the band aid early, then move on and look into the future, quickly refocus. So I think that's what we did last year with the production configuration, also then when we accelerate the long term strategy, moving also, I can say we're moving percentage wise our footprint towards Asia, obviously, and that's also the one off cost represents some of this. What we also have done is we have strengthened our supply chain and our production footprint, that's why we can also deliver a Q1 like this, not everybody was able to react like this. There is already some sand in the supply chain.

35:36 We know that, the freight, helium, aluminum, so we need to continue to monitor that and stay close to it as we ramp, right? We already made quite some investments in inventory and some more is coming as a plan there and also in CapEx to go and capture the ramp and taking into account potential bottlenecks on the other end. So that's work though that we have done, but we have seen and now I'm getting to this other part question that you have. In Q1 we needed to still figure a few things out and see if it works and align with some of the customers and the projections. This happened in Q1. Then there was Lunar New Year, which always gives a bit of projections because it gives a temporary slowdown and then an acceleration.

36:28 We saw a good Q4, but we couldn't really see if that is now a one off or is this going to be a trend. So I think all of this added together led us to go and doing this rate of guidance, but we are rather a company that first proves what we can do before we make big promises. I guess that's our brand and we continue to do this also as we look forward. So we try to do the hard work and then go and impress people with good results. And we have, of course, big curveballs coming our way like last year, then it's more work before we can then show good results. So I'm optimistic for this year for sure. That's on the topic of what changed.

37:14 Maybe on the semi more color, it's pretty broad based now. As I mentioned earlier, HPC started already some time ago, couple of quarters really, and then also memory started a couple of quarters. I want to stress again, the times are over where we're not exposed to memory. These customers buy the same sophisticated sensor packages as low chip customers now. As you can also see, the development even on litho, what kind of tools they buy. This is different now. And then the sophistication down into packaging, there is also some logic in each HPM package. This has really changed now. I believe the change has started probably seven, eight years ago, but now I would see memory customers equally important.

38:08 Naturally, the leading edge in terms of nodes is still the blood chain, but the sophistication is a similar level, while maybe different in nature, right, within memory. So, for us, and you asked OEM chip makers, we have this fiftyfifty split roughly. Each large customer has their own kind of waves, Epson waves, so that's fluctuating, but the overall trend is roughly that. And OEM, those who won big orders, there's always winners or losers in these expansion projects. I think everybody wins, but the question is rather are you growing 20%, 30% or are you growing beyond that or below that, right? That's a bit where the spectrum is this year, but fantastic obviously if you think about these numbers and these projections.

39:04 So I would say OEM equally because we have the central package for the OEMs equally comprehensive as we have it for chip makers, a little bit more sophisticated part. And I believe regionally we discussed a little bit already, China is its own ecosystem to some degree or more and more I would say. We are committed to China, we're well entrenched and I think we're optimistic. We have a good footprint there for a long time. We don't need to go and build anything. We're just expanding and we're localizing where it makes sense. We also have more innovation collaborations there, so we're optimistic there, but most exciting was really Asia Pacific region for us for obvious reasons. There's a lot of leading semi players there, memory and logic.

40:00 So as it happened last week in Japan, also there's a lot happening, but there's also a little bit of a trade war there with China. It's complicated also Asia, but we're navigating also this footprint. I think there's reason for optimism in all regions. That's roughly the summary. I'm thinking now did I miss any of your dimensions that you wanted to talk about? Oh yeah, exactly. Leading versus mature nodes, and that is definitely now starting. That is probably the last one we saw. And they buy simpler sensors, smaller sensor packages and more software and that is a good dynamic to see.

40:47 I think that is a bit earlier days, to be honest. I did still see mixed results from some of them over the last quarters and I believe now we can be optimistic how it develops further also with their expansion projects. So that's probably roughly all the dimension I hope, Michael. Yes, No. It's perfect. Thank you. Sorry for for asking such a broad question. So I leave it with that, and I wish you wish you guys a great time. All the best also to Matthias, of course, and looking forward to seeing you soon. Thank you. See you soon. Bye, guys. Thanks. Thank you. Thank you. Thank you, Michael. Next questions come from Johan Ifert. Please. Thanks. And, first of all, I wanted to quickly thank my peers and wish you all the best. Hopefully, we'll see each other at some point in time again.

41:36 And then two to three questions, if I may, on the business. The first one would be, please, on your overall capacity. Is there a risk, I mean, that you could run some supply chain bottlenecks, not getting enough electronic components like you see in 2022? Or is this something which you're preparing going on inventories now in next one or two quarters? And also, I mean, are you able to have around $250,000,000 quarterly revenue capacity, for example, end of the year, if you can manage this? That would be the first question, please. And second question on Europe. If FX adjusted, maybe it's still around double digit growth, maybe around 10% plus minus, still pretty strong. In a weak industrial environment, is this mainly the indirect semi sales, where you are OEM partners?

42:24 Or how you describe this? And the third one is really just a double check this 300 basis point margin impact from restructuring. This is now really that's it. You pack any everything in in q one, and I assume a lot of noncash is in there in q one, but you don't expect more in Q2 from this point of view. Thank you very much. All right. Thank you, Jorn. You're breaking up a little bit, but I could hear you fine, I believe. So I think Q1, Q3, definitely Dmitry will have some additional details for you. Yes, on capacity, there has been a lot of discussions the last two quarters or three quarters probably on that, but it really accelerated in Q1 and we formalized, finalized and kicked off additional projects in Q1. So this is all kind of connected with also our more optimistic outlook for the year.

43:26 This customer's discussions and also how we navigate the supply. And one is production, right, that's tool, that's clean room, that's people and then there's also supply chain, which is certainly a topic of concern. There is a certain fear that there could be a similar situation back a couple of years ago in the COVID times where the demand went up and the supply was constrained, and we are certainly taking our learnings from that. Mean, the last three years we've spent a lot of time on hardening our supply chain, making it more resilient and I believe we are much better prepared and we definitely take actions in that direction. PCB we remember still what happened there on the PCB supply front and we have made quite significant actions on this side to be able to navigate this because now is the time, I think, after we built a strong foundation for growth last year with the reconfiguration, strong customer partnerships and now to really go and make the step ahead and not only grow with the market but take an extra chunk. That is the plan. So for us this is a big determination to supply in Iran.

44:50 Hence these investments are in there. I believe yes, we can go and supply that. Are not done actually with the expansion project designing and kicking off and implementing, so it's accelerating actually currently still. So I'm optimistic that we can provide this level of output. But again, I will make this disclaimer of the geopolitics and how some of the logistics are constrained. There is quite an amount of uncertainty obviously for everybody, not specifically for us. I think for us it's almost a little better because of our footprint.

45:36 But it's been hard to say, right, because we have every angle covered. So maybe that's on capacity. Then you want to add something? Maybe you can talk to ethics. Maybe we talked to the ethics. Had, I think, a little bit of a market question there as well, how Europe has developed. Right? I apologize. That was on if it was if I FX adjust Europe, it's still around 10% growth in the quarter, which is pretty strong. My question is where is this 10% growth coming from? Is it coming from your OEM partners, VHS and senior exposure, or where exactly would you attribute this? Some of it is there, but some of it is beyond that also in other industries. It's not only European semi, it's also the advanced industries in Europe.

46:28 And there's obviously not every piece that we sell in Europe goes to Europe, right? So there's partners there that integrate our sensors. But maybe if you want to say a few words about Yes, just to add to this, think that the growth in Europe is quite broad, in this quarter. So it's heavy but also in the other markets. Security and energy are a bit less exciting for this quarter. But other than that, actually, to your question, the growth is actually coming from it's quite broad that the growth is coming from almost all the markets. And you had a question on the restructuring costs, so a few words to this. We previously mentioned that we had this, call it, initiatives running, right, on the one hand the product reconfiguration, but also then the efficiency improvements. And for us, with this quarter, these initiatives and the cost from these initiatives are booked in and concluded.

47:23 Now we have the disclaimer that Oliver mentioned, of course, geopolitical situation and other factors, but this is another story to talk about. If you talk about the initiatives we discussed earlier in the earlier calls, these are concluded. Yeah, I think maybe, I mean, we can talk about what's not in there. I think there's a restructuring, the reconfiguration, the capacity expansion. This is all rip off the band aid, moving to full on growth mode. But there is inflation here, so when you think about the supply chain, right, the constraints, energy prices or oil prices feeding to different pieces of the supply chain, I think that's something we all watch closely together, right, and what's happening there. In an extreme situation we'll have again something like a couple of years ago where everybody's inflation, everybody needs to renegotiate, that's burning a little bit through time and money for renegotiations and realignment and all of it, with everybody ending up at the same margin roughly at the end.

48:24 We hope that this is not going to be too expensive. Right now there is still reason for optimism, but it is a bit related with how geopolitics develop now, right? Is there a little bit of an unchanging resolution specifically in The Middle East or how is this going to work out. But, yeah, look, our guidance is our guidance in the sense, this sounds trivial sentence, but in the end we practice it all in and I believe that's where we end up with as our realistic scenario with the full year guidance. Thank you very much. All right. You're welcome. All right. You, Yaron. We have next questions coming from Craig Abbott.

49:09 Craig, please. Yes, good morning, gentlemen. Yes, first of all, on general vacuum, I just I know you don't publish specific figures per segment, but maybe from a color perspective you said orders are all well again. But I just wonder, I mean, you confirm if that book to bill in general vacuum was also again above one? And just to follow just the second part of that question, which end markets in particular performed so strongly within that general? Like I know you gave us some color in your initial comments, but and do you expect that to like continue heading into Q2 and Q3? And then I have one more follow-up. Thank you. Okay, Ansin. Dimitri, can also add some maybe.

49:54 So I mean, generally, yes, this is a broad market with some market curated and selected depending on technology synergies and also a financial profile. It has to have a certain growth, it has to have certain profitability that is comparable to the semi market, so more are also above. There's markets that grow faster. So battery was for a long time like this, solar also for some time. So this is all in this market. About half of this market is done with channel partners so to serve the advanced industries that is an easier way.

50:39 So some of the transparency is not 100% for us, but certainly we try to go and steer this into the right direction. The book to bill is positive, but it's not, of course, comparable with what we see in semiconductor. I think though a lot of the AI trends lifts also other industries and sometimes as we all kind of realizing now, it's going through different corners and then pulls up industries that you would not even think that are closely related because of this whole infrastructure impact that this data center build out has. So I believe there's a good amount of that in there, but in some of the tech markets they have their own development, right?

51:28 I mean, I said a very early market would be maybe quantum technology, but then at the other end there's markets that are more established, like life science, and then solar will be one of those, and I made my comments about solar. Think we're more optimistic now than quarters ago or also in the full year reporting if you compare directly there's a bit more optimism again. And then there's these smaller markets like robotics or space that they all have very good momentum and that's actually, I would say, somewhat independent of the data center build out. Robotics obviously is the next stage of AI, physical AI, but it's a bit independent still, so not a positive, so whenever there's centralization.

52:22 So I'm trying to give you a little bit more color there. Hope that helps. Do you want to add something? Maybe just we have great two words on the book to bill question. So you said it yourself, I mean, we don't disclose every single detail of this per market and per for the book to bill performance. But overall, what we can say is that also for general vacuum, we saw that order performance grew, so the order intake grew, maybe not as much as INFICON, but we definitely see their growth versus prior year. Okay, thank you. And then INFICON, you kind of alluded to this a little bit earlier in your commentary, at least, but you certainly you hope to gain market share. But I just wondered, in addition to the strength in the WFE CapEx trends that we continue to see, are you already seeing market share gains as you compare with your direct competitors and particularly your most important competitor in that area? Thank you.

53:22 I would say yes. I mean that's a continuous development and then we're very determined there, laser focused on doing that. But I think when you look at the CAGR in our markets where we, in all markets, can outperform the market. If you just look at the last five years, it's 10% plus, right, which is clearly not the market development itself there, so it's above. And I believe that comes from the fact that more things are measured, which are not measured or have been measured in the past, and things are measured more sophisticated, meaning with a higher price sensor which has maybe more analytical capabilities, more sensitivity or is a multi sensor with different sensors and then you correlate it all with more software.

54:16 So that is a very strong trend that we see continuously actually as well. So it's a bit both with that as an explanation. Yes. Thank you. Mhmm. Alright. Good. Was that the second question, Craig? It was my second question. It was. Thank you. Thanks. Very good. Thank you, Craig. We have our next Craig on the queue. This time it's Craig McDowell. Please, Craig. Hi, Craig. Hi. Morning, gentlemen. Thanks for taking my questions. The first one, just following up on the general back to your teams. Obviously there's a distribution channel partners there. Do you get any stocking happening in your number and maybe you could speak to some of your distributors as well.

55:08 And then secondly on the security and the performance, also weaker Q1 than maybe we were expecting but it seems like you've raised the FY twenty six guide from decreased to flat on revenue. What's going on in the next nine months to get us back to flat for the full year? Thank you. All right. I'll quickly try to answer this too. On Genvag, largely it's not stocking. There might be some of it in it, right, and you are right, maybe we do not have the full visibility, but I would say at this point of time, also when you consider that there's some of these industries ramping because of AI or other technologies that I mentioned, I would say there's another large effect, if at all, so rather smaller effect or no effect. And then on the SNE, yeah, we have to realistically look at our pipeline. The timing is difficult, right, and then the realistic look at the pipeline, the decrease didn't make sense. So, we need to be more optimistic mid term. We are very optimistic for mid term anyway, we need to also this year, be reflected a little bit of how the pipeline developed over the last most recent time and how this will materialize.

56:21 So obviously we cannot disclose tenders or proposals or timings of it or our estimation of when they're going to hit, but that's based on this basically on the sales funnel that we see or the project funnel. Super, thanks very much. Sounds good. All right. Thank you, Craig. We have the next question from Martin Maran of Carlion. Hi. Thanks for taking my question. The first one is on the semiconductor division. I mean, looking at the strong growth in Q1 and comments on book to bill, should we assume that we see a similar kind of growth in that division this year? So I guess outperforming the WAC by a few percentage points? Or are there some elements of comps or cyclicality from quarter to quarter that we have to take into account as well? That will be the first one. The first one? Okay. Yes, there is definitely cyclicality.

57:25 There's underlying, right? We have a big cycle, the ramp coming, and you can argue is this several ramps or how big is it compared to the past ones? It's all a bit hard to say at this point. We can certainly say it's quite steep and it's accelerating and there's a lot of optimism. It's a chunky business though how it materializes for us, particularly the chipmaker side of things because you need to imagine that these chipmakers talk to us about the whole build out plan over a longer period of time and then the timing is moved, not the actual project, right? So it's not that suddenly somebody sends a big order.

58:14 That's not what typically happens. We design it into a certain technology node during the R and D process and then it's defined of how big is this production going to be and then there's different expansion phases that can change and move around. And those have been most recently pulled in being pulled in. And sometimes what happens otherwise is typically no cancellations is they get stretched out on the timeline. So it's definitely chunky. We see bit of a slower Q3 normally seasonally and a higher Q4 typically seasonally as well, There is maybe Q1, Q2 a little bit in the middle to say this.

59:03 So there is still a lot of volatility in there, think largely with upside risk, I think, as we've seen most recently. That's why the transition from when we just spoke recently full year results to now, we have seen a lot of this kind of moving in and so we don't know how this is going to continue. This is normal actually, even in a ramp, where there can be slow downs or one customer wins over another one a big bid, who makes for a certain phone the display or the chip, the memory chip or that chip or the other one, all of this is kind of in the mechanics of that. To maybe give a bit of color on how it works under the hood.

59:52 It is all projected in different scenarios. And then our guidance is basically the realistic one. Okay, great. And the second one and the final one for me is just on the general Vacuum division on the solar business. I understand that you see this market is still being in overcapacity this year. But let's say the ramp happens in '27 or 2027, Do you think it would be a steep ramp or more of a gradual one if you look at past cycles on that division? Yes. I wish I knew I can almost say there because that has been a bit unpredictable. This overcapacity trend in China has been making it much harder also to predict.

1:00:42 And now I mentioned this fifteen five year plan, which tries to go and rectify this also that maybe there's fewer plays but stronger plays. At the same time on the demand side there is increasing demand while capacity is consolidated. And the increasing demand, there's everything in there from just the base demand and large expansion projects, more sustainability push up to data centers in space with solar power. And that is actually not so hypothetical. So I have to go next week and specifically look at it and we are monitoring it.

1:01:30 Yeah, it could be moving into 'twenty six. It's not going to be soon in 'twenty six, right? I think it could come sooner. The shape of it is very hard to tell. Also solar has sometimes had quite some acceleration so it depends a little bit on tech nodes as well. So there's a few smaller improvements there and then the bigger step coming from TOPCOM and Periscope. Everything is kind of not too far away. So it's interesting times actually in that end, too. It's much smaller, right, compared to semi, but yeah, there's reason for optimism, I think, at this point.

1:02:17 It certainly goes up one way or another over the timeline in some shape or form. I know this is not great, Marcus, but it's just not so easy to say. We have analytics and you all have great analytics and we probably look at similar kind of projections and scenarios there. I hope this helps a little bit. Yes, it does. Thank you very much. You're welcome. Thank you, Martin. There are no further questions at this time. So, gentlemen, maybe you want to add some closing remarks? Yes, if I may. Today may be a little bit longer because I would also personally like to thank and also in the name of the company, our CFO, Matthias Turnslev, for so many years, eighteen plus years of really fantastic work. It was a big pleasure to work with you before our CEO, but especially also in CEO times, had some stormy times, for sure. You always are a rock in a storm, which is great when you have a CEO like me who has a million ideas and there's a little action. So we did a little great, I think, teamwork there and that was just a lot of fun. I also very much appreciated, Nick, your really broad knowledge, also your really sharp analytics, you know where to go, where it hurts, and then pull it out. That was extremely helpful in

1:03:49 sometimes of the super very confusing data in the market and everywhere else. So that was just fantastic. A truly exceptional CFO, a huge big thank you for all you've done for the company, but also for me. It was really great work, but also it was a lot of fun. So really enjoyed that. We all meet each other still, obviously, right, but also in the name of the company and we want to do this in a public setting like here, big thanks and all the best for the future. We for sure stay in touch. And maybe from my side to add two words Matthias also to you a big thank you for the smooth and very constructive professional handover and for actually handing over a finance function that is well oiled and a super strong balance sheet, so I'm also thankful for that, and I wish you also, from the bottom of my heart, all the best for the future.

1:04:47 Thanks a lot, both. Thanks for the nice words and, yeah, I'm still here, right? Know you too. Thanks a lot. Thank you also. And, yeah, with that, I would also like everybody to thank everybody for their big interest and the support over all these times in the calls and good and the bad times. Yes, stay tuned. You heard from Dimitri what's up next. There's plenty of ways to hear from us and interact with us. We're looking forward to seeing you again. Have a wonderful day and talk soon.