Welcome to the VAT Second Quarter and Half Year 2023 Results Conference Call and Live Webcast. I'm Andre, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing Star and One on your telephone. Webcast viewers may submit their questions or comments in writing via the relative field. For operator assistance, please press Star and Zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Mike Allison, CEO of VAT Group. Please go ahead. Thank you. Good morning, ladies and gentlemen. Thanks for joining this webcast on our Q2 and half year 2023 results. As you know, VAT has pre-released preliminary key figures, including order, sales, EBITDA, and EBITDA margins already on July the 13th, 2023. You see that the final numbers are well in line with what we announced back then. Today, I'm joined on this call with our CFO, Fabian Chiozza, and VAT's new CEO-elect, Urs Gantner. Also here with me is Michel Gerber, our Head of Investor Relations and Sustainability, and Christoph Wickli, who joined Michel in the IR department on June the 1st, 2023. Slide 2, please. Before we start with the half year results presentation, I'd like to say a few words about the second announcement we have released this morning. The board of directors had its meeting yesterday, has appointed our Executive Vice President of Semiconductor Solutions Group, Urs Gantner, as the new CEO of VAT, effective January 1st, 2024. I'm personally delighted and fully supportive of this decision. Over the last five and a half years, I've been working with Urs, first as the business unit head, Semiconductor, and then since last August in his present role. In this time, I've got to know Urs is a very dedicated businessman with an enormous understanding of the semiconductor industry. Since joining VAT back in 2004, at a time when VAT had less than 300 million CHF in sales, Urs has witnessed, shaped, and executed the transformation of VAT from a small family-owned company to today's global market leader in vacuum solutions. His central role in the development and growth of VAT's manufacturing in Malaysia is only one of his latest achievements, together with the implementation of new and adjacent products with our customers. I and the whole group management are looking forward to help Urs making the transition into the CEO role a flawless exercise. I wish him all the best in his new and well-deserved role. Moving to slide 3, the agenda. We'll cover 3 parts before opening for a Q&A session. I will start with the highlights of the Q2 and half year results. Fabian will go through the results and financials in more detail. I will conclude with a look ahead, followed by the usual moderated Q&A session. Slide number 4. As we communicated back in March with the full year 2022 results, and reiterated in April with a Q1 2023 trading update, VAT's markets, especially in semiconductors, are going through a rough patch this year with lower order momentum across all our businesses. This soft market environment also negatively impacted VAT sales, despite the fact that we started the year with roughly half a billion CHF in order backlog. In the first half, all our trading currencies have weakened against the Swiss franc, posing another headwind, and Fabian will talk more about this in his remarks later. In this environment, with lower sales and adverse FX movements, it doesn't come as a surprise that our EBITDA margin came down significantly compared to the record level we've seen in 2022. It does take us about six months to get our operational cost in line with the output. Despite the sizable decline of close to six percentage points compared to a year earlier, we are confident of bringing the margin performance back to the bottom end of the margin corridor that we committed in the capital markets day in 2022. We have an incredible operations capability, continuously focused on cost reduction and cyclical management, and this will ensure strong performance over the cycle. In implementing these cost reduction measures, you can be assured that VAT is ready to bounce back as soon as the market improves. We have maintained a strong infrastructure and have not reduced our spending on future capacity or R&D. This is the lifeblood of VAT and the reason why we maintain our above-market growth and strong customer satisfaction. For the rest of 2023, we confirm our expectations of lower overall results. The strength in Advanced Industrials is not enough to offset the weak market environment in semiconductors that negatively impacts both our Semiconductors business as well as the global service activities. Moving on to slide 5. This slide gives you an overview of the half-year key figures and the segment breakdown. Valves, our largest segment, accounted for about 79% of our sales, down from 81% in total a year ago. The global service business increased its share despite lower sales compared to the first half, 2022, as its decrease was less than the one experienced in Semiconductors. The 6-month EBITDA margin in the valve segment decreased by about 6 percentage points to 29% from 34.6% a year earlier. Global service sales also saw a decline of about 6% year-on-year, mostly due to low utilization rates, wafer start reductions, and high inventory levels at wafer fabs across the industry. The segment posted an EBITDA margin of just shy of 40%, down 5 percentage points. For the group, orders of CHF 290 million are 55% below the record level of 2022. On EBITDA, with 29.2%, the margin is substantially lower than the 35% record set last year due to lower volumes and adverse FX movements. Fabian will give you more details on this in due course. We also saw a satisfying increase in our spec wins, up 13% year-on-year. This is not only an indicator for future business success and market share gains, but also even more proof that our close collaboration with all our key customers, coupled with our world-class innovation team, consistently delivers products and solutions that solve their biggest technology challenge. This is a win for VAT, but more importantly, a win for our customers. Slide 6, please. On this slide, you will see a split of our revenues into the different market segments. Remember, the display activities were integrated into Semiconductors business unit at the beginning of the year, and Solar is within the Advanced Industrials business unit. With about 80% of the service business geared towards the semiconductor industry, VAT has an exposure of about 75% towards the semiconductor industry as a whole. As a result, VAT's business development is highly correlated with semi investments or the wafer fab equipment spend. Advanced Industrial now accounts for about 20% of our business, after roughly 15% a year earlier. This is a result of the ADV business growing its sales by 25% in the first 6 months of the year, while the Semi and the global service businesses declined. From a geography point of view, more than half of our products and services end up in Asia, about a third in the U.S., and the rest in Europe, reflecting the global semiconductor footprint. Slide number 7. In this chart, you'll see our innovation power and the development of our adjacencies. During the first 6 months of the year, we've recorded 41 spec wins, an increase of about 13% compared to the same period, 2022. This is the highest level of spec wins in the past three years and shows that the industry continues to invest in new production platforms aimed at the leading edge, node sizes of three nanometers and less. Our spec win rate has continued to be very high due to a huge focus on customer value, innovation, and cost. We also continue to focus on innovation cycle time with our top customers, so we can always be first to deliver them the solution they need. Our business and adjacencies has moved in line with the general semi market. Nevertheless, we continue to see a successful execution of our strategy in this area, and it's on track with our expectations. About 25% of all our spec wins in our semi business are actually in adjacencies, and in 2023, we've been able to ship several prototypes of adjacent products to our customers. The margin profile of our adjacent portfolio continues to be supportive of our overall margin profile. With that, concludes my initial remarks, and I'd now like to hand over to Fabian for a more detailed look at the financials. Fabian? Welcome to all of you who are joining us on the webcast today. Let's start on slide 9 with a quick recap of our key figures, as Mike has covered the highlights already. Our results reflect the overall subdued market conditions, H1 2023. We're down compared to the record-breaking 2022 results, as the semi-cycle showed us its ugly side. However, there are three key messages I want to demonstrate to you in this section. First, while orders and sales are down, we have been focused on costs. Despite the downturn, we achieved an EBITDA margin of 29.2%. On constant currency terms, this would have equated to a margin of roughly 30.3%. Second, our free cash flow is down year-over-year. This reflects our continued commitment to both building out our capacity globally, as well as ensuring we are ready for the next upcycle. Third, VAT retains a conservative balance sheet with leverage about the 0.6 times level and an equity ratio of 56%, which compares to 0.5 times and 53% respectively for H1 2022. Let me take you in detail through our results. Chart 10 shows the development of orders in the second quarter and half year. As our customers continue to manage down their inventories during the course of H1, we have seen promising signs that we might have reached the trough of this market cycle. On one hand, we can see that while orders are down 56% year-over-year, they are up sequentially to the previous quarter at CHF 155 million versus CHF 136 million. For the first six months of the year, orders are, however, down 55% year-on-year, reaching CHF 292 million for the first half of 2023. With a second quarter book-to-bill ratio of 0.7, our order backlog has pulled back as inventory levels, both in-house at VAT and with our customers, normalize as we see stocking ahead of cyclical upswing. Our backlog stands now at CHF 340 million, down 39% year-on-year. This backlog represents a strong base. Moving to slide 11. Putting this development in historic context, here we see the development of orders and sales since the first quarter of 2018. In the previous downturn, we reached the bottom of the cycle in the first half of 2019. Our ability to work through a full order book and diversification has allowed us to manage the sharp drop in orders better than in 2019, where the delta between the order intake and sales was more pronounced. We are now seeing signs of customer re-engagement, the sequential book-to-bill improvement off the Q1 lows to 0.7 times provides comfort. We are still somewhat away from the previous year's level of 1.24 times, so more work ahead for us there. Chart 12 shows the development of net sales and EBITDA. Off-year sales are down 17%, and we achieved an EBITDA margin of 29.2%. As mentioned previously, we are focused on cost and execution, but we do not have control over all factors. FX has taken its toll with our exposures, predominantly in the US dollar, the Japanese yen, and the Chinese renminbi, weighing in on the operational results. Sales would have been 5% higher, assuming constant currencies. Price effect was virtually flat, i.e., aside from FX, volumes were the only driver for the lower sales. In turn, these sales were a major driver of EBITDA margin impact of 5.8 percentage points. Profitability improvement measures, introduced as the downturn became apparent in late 2022, greatly contributed to the bottom line, whereas the full effect of our measures is materializing at the moment. As the business corrected in the first 6 months of 2023, we performed below the margin target band communicated at the CMD in 2022. Adjusting for constant currencies, we would have achieved a margin of about 30.3 percentage points for the first half, 2023. Putting this performance into historic context, again, on slide 13, you see the sequential EBITDA margin development since H1, 2018. As you can see, we have constantly improved our EBITDA margin since the last downturn in H1, 2019. H1, 2023, shows, again, a sharp decline in EBITDA margins, driven by the decline in orders and sales. The year-over-year EBITDA margin decrease in H1 of 5.8 percentage points is less pronounced compared to the 2019 down cycle, when the reduction amounts to 6.5 percentage points. The overall EBITDA margin of 29.2% is 4.1 percentage points higher than in the 2019 trough, despite the substantial FX headwinds. Our operational efforts, including efficiency measures, short-time work, and increasing our footprint in Malaysia, are all contributing to this achievement. With these developments, we wanted to provide our outlook, that year-end headline EBITDA margin could come out just shy of the lower end of our communicated EBITDA margin range of 32%-37%. Moving on to slide 14. This is one of my favorite slides, as we get to talk about the future based on our investments made today. I mentioned that one of our core focus points was to ensure we do not deviate from our investment program into the future. Value creation is measured at VAT, based on Return on Invested Capital and the Cash Return on Invested Capital. Our tested flexible operating models that got us through the 2019 downturn, has been further optimized since. We have maintained our investment program in anticipation of the next upcycle to ensure maximum rebound capability going forward. The spread of returns over the WACC, which stands at 13%, remains above 20%, even in this downturn, creating substantial economic value. Let's now get to the bottom line with some of the other financials on chart 15. Depreciation and amortization are about the same level as during the first six months of last year, yielding in an EBIT of 112 million CHF and corresponding EBIT margin of 25%. Net finance costs were 11.3 million CHF for the first six months. FX hit us here again, as we were required to reevaluate our bank loans and balances in various currencies. On a separate note, hedging activities of our operational FX exposures netted out nearly perfectly and are reflected in the other income line. The revaluation of various balance sheet items, including accounts receivable, payables, and as shown here, the loans and balances, have been impacting us in the past quarter. Effective tax rate for the first six months of 2023 was at 16% compared with 14% a year earlier. In absolute terms, however, the tax expenses were considerably lower. Taking that all together, net income declined by 43% to CHF 84 million. On free cash flow generation, is shown on chart 16. As I said at the beginning of my remarks, one of our key focus areas was to ensure we are prepared for future growth. The cash flow is reflecting this priority as the lower EBITDA and heightened working capital requirements weighed in. We took the clear decision not to slow our investments in the Malaysia plant. Important to reiterate here, that having this plant in place will also provide a natural hedge going forward to lessen the FX impacts, as well as ensure supply chain resilience, which is important to our customers. At 28%, the cash conversion rate measured as free cash flow as a percentage of EBITDA, show both the seasonal level and the impact of the market conditions. We expect it to return to the target band of between 60%-65% of EBITDA. When it comes to leverage on chart 17, we can see the last focus point I mentioned at the start of this section. Net debt increased slightly to CHF 319 million, which includes the refinancing of the CHF 200 million bond through a term loan and some utilization of the CHF 250 million RCF. Our leverage of 0.6 times net debt to EBITDA as per June 30, 2023, has spiked due to the lower EBITDA results, but is comfortably below the target ratio of max 1 time. This reflects, again, our focus on a strong balance sheet that allows us to fund our growth initiatives and R&D in the years to come. When summarizing the first half year 2023 financial performance on Slide 18, we can state that the slowdown in semiconductor spending shows its expected impact on Q2 and H1 orders, sales, and profitability, which is also in line with what our customers and peers are seeing. At VAT, we believe that the market might have bottomed. Demand is expected to improve sequentially over the remainder of this year, but difficult to gauge how rapidly demand might return. Our established downturn protocols are applied and in full execution. They have been utilized in the past downturn to great effect. For the rest of 2023 and into 2024, the following financial priorities apply: Strong focus on cost management and operational excellence while maintaining maximum rebound capabilities into 2024. We need to be ready to grasp opportunities. Continue with preparations for seamless ERP introduction in Switzerland next year. We'll manage appropriate trade working capital to support the expected market recovery in 2024. Furthermore, we will maintain a disciplined approach to CapEx, expected around CHF 80 million-85 million, driven by second Malaysia plant and optimizations in Switzerland. On a final note, construction on our innovation center commenced in Haag. We are on track for the inauguration in early 2025. This concludes my financial remarks, and I look forward to any questions in our Q&A sessions. Let me now turn to another topic that we will talk to you about in a much more regular way than before, ESG. While we have not communicated a lot on this topic in the past, it is today one of our four strategic pillars, as we have showed you during the Capital Markets Day back in December. In July, VAT has published its second sustainability report, and I'd like to show you some of the highlights. Let's turn to slide 20 and look at them. During 2022, we have intensified not only the internal efforts to create a strong ESG structure, but we have also started implementing several initiatives to reduce our greenhouse gas footprint or increase our overall diversity, inclusion, and equity in VAT. For example, we have further reduced our CO2 emissions per CHF 1 million of revenue by 9%. We have received the advanced certificate for equal pay for equal work, and we have been able to reduce our Lost Time Injury Frequency Rate by 9% as well. With the addition of Petra Denk to our board of directors in May of this year, we have further increased the gender diversity in the board to 38%. Moving on to slide 21. In the latest report, we have now also published an inaugural set of ESG targets. For example, we committed to lower our Scope 1 and Scope 2 GHG emissions by 50% until 2025 compared to 2022. This is achieved by applying the most rigorous insulation measures in our new Malaysia factory, upgrade of the cooling system in Malaysia, and the switch to electricity that is generated by renewable sources and no longer by fossil fuel, despite these representing the majority of Malaysia's generation assets. Also diversity, both in the leadership team and in the general workforce, are at the center of our targets, as you can see from this slide. These are first tiny steps towards a more comprehensive set of targets or ambitions, Our target is not to please 1 particular stakeholder group above others, but to become an ESG leader in our industry, the way we are the technology leader today. With that, I close my remarks and hand it back to Mike. Thank you, Fabian. Going back to the agenda on slide 22, I'll wrap up the formal part, as I'm sure you have a lot of questions to ask. Bear with me for a few more minutes. Moving on to slide 23. I'd like, in this slide, to address a topic that's created quite some buzz in the last couple of weeks, artificial intelligence. A few weeks ago, we all saw the industry news about a large revenue upside developing in GPUs from the AI-enabling infrastructure. AI has been around for a long time, with the recent commercialization of the first true products, we're starting to see the opportunities this sector will bring. We have been monitoring the news flow around AI very carefully. We agree that the proliferation of AI-enabled devices and infrastructure will require a massive amount of leading-edge advanced logic and advanced DRAM chip technologies. This acceleration of AI technology will likely drive acceleration of chip investment as we start to build out the new data center architectures needed to host this. What does this mean for VAT? Well, overall, it's expected that AI-related revenues will grow with 32% CAGR over the next five years. The majority of this growth will be in AI networks and AI hardware. This all needs leading-edge logic and memory chips. On the right-hand side of this slide, we tried to identify the areas where the AI push could benefit our business. Actually, it's pretty straightforward. Firstly, AI-related infrastructure investments will be supportive of the expected growth in WFE, way beyond the forecasted $110 billion by 2027. As overall vacuum content as a percentage of WFE is expected to increase over time, and VAT's market share is higher at the leading edge, this would have a direct positive impact on VAT as the market and technology leader. DRAM content and complexity of these chips will also increase, requiring further investments into deposition and etch tools. These development, in turn, will create opportunities for our adjacencies, and in that, further strength of the relationship we have with our key customers. Don't get me wrong, we are not implying that this trend will completely change the semi landscape, nor will it trigger a massive investment push in the short term. Medium to longer term, it will be a key growth driver towards the $1 trillion in semi sales forecast for 2030, and supporting the underlying WFE investment needed to be able to produce the required number of IC units. Moving on to slide 24, and look at the short-term expectation for our markets. The semiconductor story is rather well known at this point. This year, WFE is expected to be around $80 billion, maybe even a bit lower, and in 2024, market research indicates a return to growth in the order of magnitude of about 10%. Let's say $90 billion of WFE. For the industry to get to this growth in 2024, it would mean that they have to start replenishing their inventory towards the end of this year at the latest, hence our expectation that we may see the trough in orders and expect them to sequentially increase over the remainder of 2023. It is expected that trailing edge investment remains strong, driven by the Chinese investments and the investment in automotive sector. We also expect leading edge logic investments to remain intact to support AI and other leading-edge trends. For the semi market, we expect that gradually increasing capacity utilizations in the fab, combined with the normalized inventory levels of spares and consumables, will lead to higher orders and sales in this segment. For the full year, however, we do not expect sales to be below the. Sorry, we do expect sales to be below the 2022 level. In advanced industries, the solar business, as well as the scientific instruments or the research applications, are expected to remain strong. Moving on to slide 25. On this slide, you can see the latest growth estimates from the various sources and different segments of our markets, and I'll not elaborate too much on this as they speak for themselves. Overall, you can see that 2023 is expected to be a down year for all segments except solar. However, all segments are currently then expected to return to growth in 2024. The drivers that can move this 2024 market faster are probably in the NAND sector, and this could be driven by consumer and enterprise sectors rebounding faster by China GDP growth or faster reduction of inflationary pressures. It doesn't take much to impact this supply-demand balance. Moving on to slide 26. For VAT, the rest of 2023, we expect that the business conditions remain mixed. The semi-related activities involved in service will continue to see activity levels below the previous year. However, we expect a gradual improvement over the rest of 2023. Advanced industrials are the exception to the rule, and we expect this business to continue strongly. As a consequence, and as communicated earlier, VAT expects EBITDA, net income, and free cash flow to be below the record levels of 2022. We had, however, to make an adjustment to the EBITDA margin guidance as a result of the strong FX headwind that we've experienced, especially during the second quarter, and we do not believe that this is going to persist for the rest of the year. We now expect to achieve a full year margin that will be slightly below the 32%-37% margin band that we communicated to you at our capital markets day in December 2022. Remember that, at that time, we had said that the targets we've given you over the 2023-2027 period were calculated with a US dollar to Swiss franc ratio of 0.95. Today, we have this rate at 0.86. Therefore, the negative impact on the margin is quite substantial. For the third quarter, we expect sales of between CHF 190 million to CHF 220 million, reflecting the current Swiss franc strength against other currencies. With that, I'd like to conclude our remarks and hand over to Michelle for the Q&A. Thank you. Thank you, Mike. We now start the Q&A session, and you have the possibility to either ask your questions via the operator over the phone or send your question directly to me via the webcast chat function. As a reminder, please limit your initial questions to two questions. Follow-up questions may be possible later in the Q&A. With that, I will start quickly with two or three questions from the webcast before going to the phone. The first question is from Stefan Schmid. He's with the St. Galler Tagblatt, and he would like to know what are the next steps with short-time work? Maybe, let me answer that question, Michel Gerber. The short-time work is one of the proven measures of our downside protocol. We have seen now the effect of 1 month in our half year results. Short-time work has been granted for 3 months initially, and we have there a possibility for an extension in case that we deem that required. Thank you, Fabian. The next question over the webcast is from Nejc, from Octavian AG. Probably for you, Mike. Can you provide us with an update on new fabs being built, e.g., TSMC, Arizona, as there are signals that the fab constructions are getting delayed due to the lack of worker skills in the West? Sure. I think the number of new fab constructions remains unchanged, and is actually at a very historical high level. There's some recent data by SEMI showing, I think it's around about 90 fabs in construction around the world. Now, you know, I've mentioned this before, that the CHIP Act money in the U.S. and Europe and other regions of the world, certainly stimulates capital to start the construction of fabs. Ultimately, these fabs are not gonna be filled with production equipment until the demand in the market is there. It's pretty common in any cycle that the top players in the industry, like TSMC, Samsung, Intel, et cetera, will be looking at the demand signals, and then just phasing the equipment spend for these fabs, you know, to meet that demand. You know, small changes to the schedules is very, very common. Getting skilled labor, for example, in Arizona is, of course, it's a new challenge. Ramping a fab in a new area of the world is always a challenge, but I personally think this is more of a demand adjustment than fully about labor content. I think we've, as an industry, we've always done very well to address the labor challenges. Thank you. Okay. We have another question from Dave, and he would like to know whether we can share some more light on the 41 spec wins that we had in the first half, namely which areas, whether they were in-house adjacencies, and whether this is more for the leading edge technology or also for more lagging edge businesses. Sure. Well, yeah, to start, our spec wins are typically around the leading edge. I would say, 80% to 90% of the platform development we do is on new platforms to address the next generation challenges of the industry. There is a little bit of work going on the mature tools, because some of these are quite, let's say aging platforms that maybe need a little bit of updates. That also gives us opportunity to penetrate some of the share that we lost previously on these older, mature platforms. In general, the focus is on the leading edge. On these platforms, we're doing extremely well. We're very focused. As I mentioned earlier, we're focused on innovation, but also on cycle time to ensure that VAT is always first to market. Obviously, SEMI is the leading area of spec wins. You know, we see good progress really across every sector of the business. Our adjacencies make up a solid part of that, around 25%. You know, we saw good spec wins in motion components and advanced modules. As I also mentioned, we saw some traction with the new ALD valve technology that we're developing. There's a lot of high interest in that product from all the actors in the ALD sector. I think on the technology front, we're doing extremely well. You know, the challenge is really all about managing the cycle and the operations area. Thank you. Yeah. Thank you, Mike. Before turning back to the phone, one last question now from the webcast. It's from Christoph Grau, he with AWP, he would like to know whether we could give him some update on the economic and political situation in China. How will the situation there affect our business in the medium and long term run? Sure. Yeah, things are stabilizing a little bit. You know, I think it's encouraging to see the dialogue at a high level between the U.S. and China. There's still talk about further sanctions. You can certainly see the European players benefiting somewhat from these challenges with American suppliers into China. I think the OEMs in China are quite optimistic for the next 12 months. Urs Gantner and I met with all the leading edge CEOs in the last month of all the China OEMs, and they seem positive for the growth in the mature technologies. They certainly see an opportunity to grow their share in the coming years. I would also say that a large percent of our spec wins in VAT, was actually in China in the last six months. We expect continued strength in there. On the mature nodes, we're not seeing much activity on the leading edge, as you would expect, because of the sanctions. I think it's mostly at the 20 nanometer plus nodes that the Chinese OEMs are focusing. Okay. Thank you, Mike. With that, I would now like to hand over to the operators for callers that have a question. The first question comes from the line of Timm Schulze-Melander with Redburn. Please go ahead. Thank you, guys, for taking my question. The first one was just on Semi segment orders. In rough numbers, they improved from CHF 60 million in Q1 to CHF 80 million in Q2. Could you maybe just give us a little bit of color? What was the contribution from, you know, a drop off in cancellation activity, and, you know, what would be the underlying improvement net of cancellations, please? I had a follow-up. Okay. I would say that the simple way to look at this is cancellations are now back to historical norms. I mean, there's always a little bit of pull in, push outs, and cancellations in our day-to-day business. I'd say they're now back at the levels we saw in 2022 and 2021. That's one of the reasons Fabian and I are quite convinced that we're at the bottom of this cycle. Yeah, the semi orders, obviously, there's different dynamics happening across the different OEMs, depending on what segments they play in. We're gradually seeing a normalization of the inventory levels back to more realistic levels. We expect that order intake to improve sequentially through Q3, Q4, as the inventories are burned down. Your follow-up question? Great. Thank you. The follow-up, I think it's more for Fabian. It's just to make sure I understood correctly. I think in your prepared remarks, you made two comments which relate to currency. I think you talked about the impact on profitability being 110 basis points year-on-year. I think you also talked about currency hedging, being reported under other income with a gain of, I think CHF 7.4 million. Did I understand both of those data points correctly? Thank you. Yes, thank you, Tim. That's correct. We do have at the comparable currencies, a drop of 110 basis points compared to prior year. The FX gains are reported in the prior year in our finance income, whereas this year, we have FX losses reported in the finance costs. That's below EBITDA. In the operational hedging, we do have gains that boost our other income to CHF 7.4 million, whereas in the prior year, that was an FX loss reported in other expenses. Great, thank you very much. The next question comes from the line of Sandeep Deshpande with JP Morgan. Please go ahead. Yeah, hi. Thanks for letting me on. Mike, I have a question about your comment on WFE into 2024. You mentioned that you think things are going to improve in the second half of this year. Is this primarily because you think that inventories of your parts at customers are at low levels, or is it because you believe that 2024, WFE is going to be up from 2023 levels? Given that, you know, for instance, ASML has been incredibly cautious on 2024, and, in fact, incredibly turned cautious more recently on 2024. Why is your view different from, say, an ASML view at this point? I don't think our view is dramatically different. I mean, I mentioned that we may see something around high single digit, 10% growth potential in WFE, and that is consensus across the market players. I do agree that in the last couple of weeks, things have become a little bit more bearish on that. What I was referring to in VAT's business, you know, we see a very sharp decline when the market turns. Inventory levels were especially high due to the supply chain challenges in 2022. That's gonna take a little bit of time to burn that down. We will see order improve, I think, in the second half and especially in Q4, back to support the run rate of the businesses in 2024. Yeah, at this point, I think it's too early to really comment on '24. You know, I think a high single digit number somewhere between 5% and 10% is maybe realistic at this point. You know, we'll see towards the second half of the year. Secondly, my question is: I mean, you mentioned earlier on your comments that solar is doing okay at this point. What about display, and what is display looking like through this year and potentially into 2024? Yeah, we see some signs of improvement in display, and we expect in our Q3, so this quarter, to see some stronger order intake from display. I think the CapEx investment in 2023 will probably be on a similar sort of level as we saw in 2022. We're hearing from some of the actors that we should expect some further investments in OLED into 2024 with some increases. I don't think it's gonna be a massive market recovery, you know, back to the strong days of 2015 and 2016. I think it will be above, 2024 should be above, 2022 and 2023. Thanks a lot. By the way, that's all about the transition of all the smartphones and PCs and tablets, et cetera, to OLED. There's a very fast drive to move them all onto OLED. Thank you. The next question comes from the line of Robert Sanders with Deutsche Bank. Please go ahead. Yeah, hi. I was just wondering if you could talk about how the outlook into 2024 has changed in the last kind of 2 or 3 months. Would you say it's meaningfully improved? Some people have been suggesting that the outlook has meaningfully improved. I was just interested to get your take. You know, I don't think we've seen such a tremendous change across our customers. At this point, there's still quite a bit of guesswork into the second half, especially of 2024. You know, we're hearing fairly flat between the second half of 2023 into the first half of 2024. I think the second half of 2024, at this point, is really hard to call. It depends on so many factors, you know, like the ones I mentioned in the prepared remarks, inflation, China, GDP, et cetera. I think, though, a lot of people underestimate the technology refresh that's required, that quite often bites us in the negative part of the cycle. As we start to come out, there's gonna be quite a lot of technology investment required to upgrade DRAM and flash, you know, to support the leading edge nodes and the leading edge products. Quite often, we forget the CapEx impact of that. Very rarely does semi stay flat. If you look back in history, it tends to, you know, be high growth one way or shrinking in the other direction. I think the important thing for VAT is we're ready to ramp quickly. We've been very disciplined in our supply chain. We've been very disciplined in our staffing. You know, we haven't actually eaten into full-time employees. We have made adjustments in our temp pool, as we've mentioned, and we have implemented short-term work. We're doing all the right things to be ready to ramp faster if the industry does pop back in the second half of 2024. I think at this point, it really is too early to call anything like that. Just as a follow-up, I'd be interested to get your perspective on AMEC and NAURA in the etch and dep industry within the domestic Chinese semiconductor industry. You know, clearly the Chinese are under pressure to drop Applied and Lam, your two largest customers. China seems to believe that those companies will be on par technologically with AMEC and Lam in the next 3-5 years. Are you supplying those companies? Do you see big threats at the mature nodes from those companies to your largest customers, or would you see it more like the Korean equipment industry that didn't really have a huge amount of success? Thanks. Yeah. I mean, VAT don't comment on any specific customer. You know, we hold confidentiality very high. I, I think that we are supporting the Chinese OEMs. You know, we're also complying with any international regulations that are out there. We certainly do a lot more technology development with our U.S., and Japanese, OEM customers for sure. I'll let you decide there on how you wanna perceive that from a technology standpoint. I think it's very Haag to come into this market on, you know, developing solutions for a high-tech market. As you rightly mentioned, the Korean OEMs have been trying for many years to become bigger players in dep and etch in other areas, but it's very, very challenging. I think the strength of the top 10 OEMs is not gonna change. I think these guys have got tremendous technological capabilities, and I'm sure they all have business plans to address these mature markets. It's not just about cost, it's also about productivity. I think, you know, there's a lot of innovation in the Western OEMs in terms of bringing the right solutions to market. I think this is a tough one to comment any more than that. Got it. Thanks a lot. The next question comes from the line of Jörn Iffert with UBS. Please go ahead. Yeah, thank you, and hello, everybody. Just to double check, can you hear me? Yes. Yes. Thank you. The first question would be, please, on the order run rate. According to my calculations, when the semi-WFE equipment CapEx is around $80 billion, your order intake should mirror around $800 million, so $200 million per quarter. Q3 is likely the third quarter in a row where you're not meeting the $200 million order intake. Here's the question: Do you expect Q4 to be already significantly above the $200 million, or is the low order intake run rate we are seeing right now, not a supply chain preparation that 2024 can really be tougher? This will be the first question, please. Yeah, it's a good question. I think you've seen the order intake is gradually increasing, and I think it's in transition mode. Exactly which quarter it pops back to CHF 200 million is, we've yet to see. I think as we head towards the end of the year, you know, to support the OEMs, at that CHF 80 billion, you know, we're gonna have to see that level of order intake. At this point, we're forecasting Q4 should be at or above that number. That's our current plan, but as we know, you know, things change pretty quickly in the industry. Okay. Thank you. The second question, on your medium-term outlook. You mentioned $110 billion semi-WFE group and CapEx plus by 2027. I thought the underlying assumption for your 2027 target was a wafer fab equipment CapEx of $140 billion-$150 billion. Has this changed somewhat, the medium-term outlook? I think, we're still thinking that 2025 could be in the range of, you know, $100+ billion. How high the industry pops back in 2025 is still to be understood. You know, I think when we see DRAM, NAND, and Advanced Logic all heading at the same time, then it's not impossible that it could be back to, or at that sort of $110 billion level in 2025. Too early to tell. In our Capital Markets Day, we talked about $135 billion by 2027. I think that's still realistic. You know, I think potentially $110 billion in 2025 is realistic as well. All right, thank you. The next question comes from the line of Michael Foeth with Vontobel. Please go ahead. Yes, thank you. Good morning, everyone. My questions around inventory and then cycle have been answered. I have one regarding your margin rebound in the second half of the year. You're guiding for the full year to just below 32%. This implies a pretty significant bounce back in the second half in EBITDA margin. Can you just walk us through the sort of the ingredients of what is driving that bounce back? Is it more on the gross margin side, or is it more on the OpEx savings? Thank you. Thanks for the question, Michael. As I mentioned in my remarks, all our operational cost saving measures have been put into place a couple of months ago, and they're now in full swing. Therefore, we expect quite some considerable upside in the second half, and the measures are, I would say, a composition of OpEx and employee cost related measures, in combination also with some further etching gains that we do expect. The gross profit margin, I expect to be on a comparable level. What we do see there is certainly from the continued inventory reductions, we will have a bit of a correction there. What you can assume is that the second half is certainly gonna be at the lower end of the previously communicated margin band. Okay. Would you expect that the FX impact on the margin is stronger in the second half than in the first half? You know, I'm not a FX strategist, certainly don't have the ambition to become one. Our current planning assumption is on the June 30th FX rates, on that basis, I have commented before. What we definitely do not expect at this point, is that we have again this huge revaluation effect coming from the balance sheet that we have seen due to the sharp corrections in the first half. On the other hand, I do expect if we see a continued, let's say flattish FX environment, that we have also further FX gains, as I have already explained in some of the earlier questions. Yeah, sure. Okay, that's clear. Thank you. The last question for today comes from the line of Jürgen Wagner, with Stifel. Please go ahead. Thank you for letting me on. You talked a bit about China. What is your view on local Chinese demand going into 2024? Can you share, please, the utilization rate you have in Switzerland and Malaysia at the moment? Thank you. Yeah, I don't have any specific comments on local China demand. I mean, we tend to look at our markets on total demand by segment. You know, China today is certainly ramping in the mature sector, which is in general, pretty buoyant. You know, strong momentum in the automotive area and also in certain areas in the consumer and telecoms area. There still is some challenges getting hold of chips. You know, we've had some challenges getting microcontrollers. I think the mature sector in general is pretty solid, and, you know, that's generally good for China. China also invested last cycle in flash fabs, and obviously that must be extremely challenging for them because they're not in the leading edge. You know, the price declines we've seen across flash are very significant, but much more on the trailing edge rather than the leading edge. I think the China fabs will have a tough time recovering in that flash business. In terms of utilization rates, I think Yeah. You wanna comment, Fabian, on that one? I can comment on that, Mike, yes. Without any surprise, our utilization rates have come significantly. If I compare it to the previous run rate in Malaysia, currently, we're somewhere between 50% and 60%, and Switzerland is hovering around the 50% level at the moment. Okay, thank you. Okay. Well, thank you, everybody, for joining. Just to summarize, first of all, I'd just like to welcome Urs again to the new position, and you can be assured that him and I will work very diligently on the transition plan towards the end of the year. We're also very heavily focused on cost and ensuring we get as close to the margin target that we set out at the Capital Markets Day, that's fully in our focus. That we continue building our capacity, getting that ready for whatever comes in 2024 or 2025. Finally, the continued focus on innovation and getting our next generation products to market. We're actually increasing our R&D spend year-on-year, and putting huge focus on getting leading-edge technology to market to support our customers. With that, I'd thank the team, and I'll speak to you all in October, where we have our trading update for the Q3 results. Thank you very much!