Hello and welcome to the X-FAB Q1 2024 Results Conference Call. My name is Karen, and I will be your coordinator for today's event. Please note this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star 1 on your telephone keypad. If you require assistance at any point, please press star 0, and you will be connected to an operator. I will now hand you over to your host, Rudi De Winter, CEO of X-FAB, to begin today's conference. Thank you. Thank you, Karen. So we have here in the call as well Alba Morganti, CFO of X-FAB. So first of all, welcome to the X-FAB First Quarter 2024 Results Call. In the first quarter, we realized revenues of EUR 216.2 million, up 4% year-on-year and down 9% quarter-on-quarter. Excluding the impact from revenue recognized over time, which was minus EUR 2.6 million, first quarter sales was EUR 218.7 million. This is in line with the guidance of EUR 215 million-EUR 225 million. Revenues in our core markets, automotive, industrial, medical, amounted EUR 202.6 million, up 9% year-on-year and representing 93% share of total revenues. The first quarter was characterized by continued strong growth for X-FAB's 200 millimeter CMOS technologies, in particular the 180 nanometer process and microsystems technologies, resulting in a record quarterly bookings of EUR 271.1 million. These bookings were up 20% year-on-year. This is also reflected in the backlog, which amounted to EUR 521 million, up EUR 45 million compared to the previous quarter. In the first quarter, automotive revenue came in at EUR 136 million, up 12% year-on-year and down 11% compared to the strong previous quarter. Industrial revenues were EUR 153 million, which is an increase of 12% year-on-year. The industrial end market benefited from record silicon carbide revenues in the first quarter. The silicon carbide revenues totaled EUR 26.3 million. This is an increase of 100% year-on-year. On the other side, the customer actions to reduce high inventory levels resulted in a low quarterly silicon carbide bookings, with a book-to-bill of 0.38 for the silicon carbide in the first quarter. Despite this temporary weakness in silicon carbide, the outlook remains positive of our silicon carbide customers, who continue to be upbeat about a long-term perspective. We were able to sign another long-term agreement with one of our silicon carbide customers, and we have further negotiations with others ongoing. The long-term fundamentals for the automotive and industrial end markets remain strong. The megatrend of electrification of everything to mitigate climate change drives the structural demand of our specialty technologies that enable energy-efficient and climate-friendly solutions for a wide range of applications. Apart from the silicon carbide, our 180-nm high-voltage CMOS technology, with its differentiating features, is in high demand and one of the key technologies used. Its growth this year will be supported by the ongoing capacity conversion and debottlenecking of our factory in France. In the first quarter, the French site revenues, based on X-FAB technologies, recorded a year-on-year growth of 42%. The site that produced 150 millimeter CMOS technologies, meaning Erfurt in Germany and Lubbock in Texas, recorded lower utilization rates in line with the lower demand for these technologies. Both sites are focused on the transition to their respective new areas of business, being MEMS and microsystems in Erfurt and silicon carbide in Lubbock. In the first quarter, our capacity expansion program continued as planned. Key projects include the expansion of capacity for our popular 200 mm CMOS technologies at our factory in France and at our factory in Malaysia, as well as the silicon carbide business where we invest in Texas. The building construction at the Malaysian site to create additional clean room space is on schedule, and it is planned to start moving in equipment in the fourth quarter this year. Total capital expenditure in the first quarter came in at EUR 105 million, and this is in line with our plans. I would like now to pass the word to Alba for the financial update. Thanks, Rudi. Good evening, ladies and gentlemen. And now let's talk about the financial update. I would like to start this financial section by highlighting that the first quarter totaled $216.2 million sales, which was within the guidance of $215 million-$225 million and representing an increase of 4% year-over-year. Our EBITDA was of $51 million, with an EBITDA margin of 23.6%. If we exclude the impact from revenues recognized over time, the EBITDA margin of the first quarter would have been of 24%, at the lower end of the guided 24%-27%. The quarterly guidance does not take the impact related to IFRS 15 into account, as this cannot be reliably predicted. The first quarter profitability was negatively impacted by a combination of, on one hand, a lower production of the 150 mm CMOS line, and also from a lower SiC wafer start. But we expect a reversal in the second half of this year, mainly driven by the recovery of the SiC business and the positive effect of increased economies of scale, which will be possible thanks to the additional capacity becoming available on the 200 mm CMOS, thanks to all the CapEx expansion projects becoming operational and allowing us to increase the capacity in this field. In addition, we have initiated a certain number of measures to improve our cost structure, especially for the sites producing 150 mm CMOS wafers, while accelerating the transition to the silicon carbide in Lubbock and microsystems in Erfurt to replace the 150 mm CMOS business. A last word on the updates, as Rudi mentioned, is that we had, again, all-time high sales for the SiC business with $26.3 million revenue, which represents an increase of 100% year-on-year. The quarter closed with a record global all-time high bookings of $271.5 million, up 20% year-on-year, which was another record. Thanks to the natural hedging of our business in terms of currency exposure, our profitability is not affected by exchange rate fluctuations. At a constant U.S. dollar/euro exchange rate of 1.07, as experienced in the previous year quarter, the EBITDA margin would have been 0.1 percentage point lower. Cash and cash equivalents at the end of the first quarter amounted to $351.5 million. To conclude this financial section, I would like to share our guidance for next quarter and full year. For the second quarter, we forecast our revenue to be in the range of $200 million-$210 million, with an EBITDA margin in the range of 20%-23%. This guidance is based on an average exchange rate of 1.08 U.S. dollar to euro. The full year 2024 guidance gets reiterated with revenue in a range of $900 million-$970 million and an EBITDA margin in the range of 25%-29%. This means at the midpoint, a year-on-year increase of 5%. Now I would like to give the word back to Rudi. Thank you, Alba. Let me summarize. So in the first quarter, we continue to see very strong demand for our popular 200 millimeter CMOS and microsystems technologies, resulting in an all-time high quarterly booking. On the other hand, our silicon carbide business was impacted, at least the bookings in general for the silicon carbide, reflected by a decline in the orders. Supported by our silicon carbide's customers' confidence in their future business development, we see this as a temporary dip. We are confident in X-FAB's positioning in the semiconductor market, and the overall high level of bookings underscores the importance of our ongoing capacity expansion programs to ensure reliable supply for our customers. With more capacity coming online and the recovery of the SiC business, we expect a strong growth in the second half of this year versus the first half. With this, I would like to end the introduction and open for questions, Karen. Karen, operator, can we open for questions? Ladies and gentlemen, if you would like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. Our first question comes from Michael Roeg from Degroof Petercam. Your line is open. Please go ahead. Yes. Good evening. First of all, there were some technical problems on the line during the introduction, so I'm not sure whether everybody is still on and whether that could affect people being able to ask questions or not. So that out of the way, first question I have. In your Q1 PowerPoint presentation, there are a couple of slides on your 110- nm technology that you introduced at the end of last year, and it includes a lot of customer interest. Can you give us an update on where you stand, whether you're already receiving orders for that, and where do you see the 180 nm transitioning to 110 in terms of share in, say, five years from now? Okay. Thank you for that question. So we introduced this 110 nm. I mean that we launched the design kit and it is, end of last year, open for customers to start designing products. And so this is progressing well. But you know that this takes time, so we're planning to do first general customer prototypings this year. In parallel, we worked with a few lead customers early on during the development, and they have started production. And so first deliveries of volume production deliveries will also happen in the second quarter, third quarter, so it will be gradually increasing. Yeah. And say in five years from now, how much of 180 today can be moved to 110 by then? What is sort of your projection? Well, I expect that the 180-nm technology will continue to have a very long life. The 110 will come on top for customers who really see the benefit for their applications. We expect, well, it also depends on how much capacity we want to put in place for those technologies. But for now, we have planned capacity in the timeframe 2026. So that is two years from now to have a capacity of around 50,000 wafers in this node per year. 50,000 in 2026. Okay. In a previous session, you indicated that manufacturing on 110 nanometers is more expensive than 180. Should we think of, say, 10% more expensive, or is it much bigger, say, 40% more expensive? And how will this affect gross margins? So yeah, the cost in semiconductor all depends on how much depreciation or how much capacity you put in line. So if you produce on depreciated equipment, the costs are not so much higher. It's less than 10%. Depends on the complexity and the product mix that also on the products that the customers want to do. If you build capacity, then that's, of course, a different story. Suppose that I would have the same design, but one on 180 and one on 110 are both on depreciated machines. Would there be a major cost difference for you? Probably not. Not so much, no. Okay. Good. Then a second question on a different topic, China. It's probably a question you get a lot. All the wafer fab manufacturers are getting tons of demand and sales from Chinese customers, and it's typically for mature equipment. What do you see happening? What do you hear from customers or other parts in the value chain about Chinese companies rapidly expanding their mature capacity? Well, what I can see for X-FAB customer base is that in the first quarter, we recorded a year-on-year growth of 22% of our Chinese customers. China was 12% of sales in the first quarter. We see a good interest for our innovative technologies from Chinese customers. But yeah, they come to X-FAB for differentiating features and things that they cannot find in China. Well, on the one hand, that's reassuring because, well, it's your specialties, and you still get good growth from there. But in the end, somebody must be cannibalized by all that equipment there. So do you have any visibility what kind of end markets are served by all that capacity expansion? Is that something very different from what you're doing? Well, there is, for instance, yeah, if you go into chips for mobile phone, power management ICs, I think display drivers for consumer products, but also simple discrete transistors, power electronics are areas where more and more is being produced in China. Okay. That's indeed quite a different business. Actually, the business here, you've been downsizing, consumer electronics and so on. Good. Then the final question, sort of a technicality. I noticed in the cash flow statement, now, EUR 32 million income from a sale and lease back. Correct. Could you tell us what you sold and leased back? No, no, no. Actually, we didn't sell anything. It's just a financial instrument we used from one of the banks of our syndication to finance tools that we already bought. Okay. That's it. It was in France. There was a cash inflow. Is this something that will reverse in due time? No. So in the sense that we bought the tools, and then as they were already the property of the company, we could not do a financial lease per se. Therefore, we used a sale and lease back. Quite common. Good. That's clear. Good. Thank you. You're welcome. Our next question comes from David O'Connor from BNP Paribas. You're up. Please go ahead. Great. Good afternoon. Thanks for taking my questions. Maybe, Rudi, firstly, just on your side, just looking at the bookings, quite very strong record bookings as you outlined in your opening remarks. Could you just talk a bit about within those bookings, where is the strength coming from, from a maybe geographical standpoint? Which end markets are you seeing those strengths? Is it across the board in automotive and the industrial side of things? And also just while they're talking about that visibility, you reiterate the full year guidance. You talked about Q2 being the trough. Just can you talk around that level of confidence that you have that you can call out Q2 as the trough here? Thanks. Thank you. Yeah. So the bookings were very strong in the 200 mm CMOS for also our 180 nm technologies and microsystems for also products that were running already and also some new products that are launched. I was mentioning the micro-LED headlamp type of applications. And so it's all concentrated very much on the 200 mm lines and the microsystems, a lot mainly automotive. And so it shows that we're investing in the right technologies. And now you could say, "Okay. If such a strong booking, why is the second quarter down?" Well, yeah, first of all, these bookings came in, and it takes a bit of time to convert that into sales to load the fabs. But also, we are limited in capacity on the 200 mm, so we are expanding there. The expansion primarily is happening within 2024 in our factory in France, which is month after month ramping up. More and more of that will come in the third and the fourth quarter. Then, in the dip in the second quarter, is the very weak silicon carbide bookings that we expect is really the low in Q1 on bookings and resulting in Q2 very low revenues. That will gradually also improve in the second half of the year. Therefore, we expect also that will then from there on also continue to drive the growth. Got it. Got it. Understood. Thanks for that, Rudi. And maybe just on your kind of electrification bookings or EV bookings, previously, you talked about that they were kind of numbers this year had come down looking back versus a year ago for 2024. Is it fair to say now with these bookings that EV bookings have started to kind of a bit of an upswing, or the trough is behind us on the EV side of things? And I have a follow-up on silicon carbide. Well, I think that the weakness in silicon carbide is also driven somewhat by this weakness in the EVs. We're a multitude of products, and sometimes it's kind of difficult to see what exactly driving what. I think that the inventories in general are indeed getting at a lower level. We definitely, in our 200 mm, because we have been allocation for a while, we're working very closely with our customers to make sure there is a sufficient supply. But we know that there is throughout a very low inventory level there. So any uptake there will also immediately mean additional orders. Okay. Understood. So how do I reconcile that? You're talking very low inventories that your customers get you guys looking at your balance sheet there have record inventories. Just wondering how we should reconcile that. Maybe if you can talk about the trajectory for those inventories through the second half, given the strong ramp-up. You're referring to X-FAB inventories, or? Well, I'm just trying to reconcile your comments on very low inventories that your customers versus looking at X-FAB inventories, which are quite elevated at the moment. If you can just kind of reconcile those pieces of information and also the trajectory or your plans for X-FAB inventories through the second half of the year. Well, the X-FAB inventories are very much related to the WIP. So that's the products in process. We generally do not have finished product inventory. As soon as the wafers are finished, we tend to ship them immediately to our customers. And yeah, what I hear in general from our customers is that the WIP levels or the inventories are decreasing. So I expect also in the industrial that we're coming to improve bookings gradually in the second quarter and so also feeding then the third and fourth quarter. Understood. Great. Thank you, Rudi. Our next question comes from Robert Sanders from Deutsche Bank. Your line is open. Please go ahead. Yeah. Good evening. Yeah. To be honest with you, I haven't really been able to hear most of the answers or the opening remarks. So I'm probably asking a question you've already answered either in the Q&A or in the beginning. But could you just outline the utilization of the Erfurt site? You might have seen Siltronic have exited 150 millimeter wafers. They seem to be suggesting there's no kind of long-term loading opportunity in 150. So I'd be interested to know what your thoughts are around the future of that site. I remember it being 56% loaded in the middle of the last decade. I'm just wondering where it is relative to 200. Thanks. Yeah. So the 150 mm lines, CMOS lines, are relatively I think the loading is in the range of 50%. So it's really low. We do expect this to recover. Many of those products are, yeah, small volume industrial type of applications, very fragmented. And with respect to the supply of 150 mm wafers, there are multiple. There's not only Siltronic. So there are multiple suppliers. So we don't see an issue with the security of supply and then continue to run as long as it makes sense. But well, we already explained that as well the site in Erfurt as the one in Lubbock, there is a transition plan to new technologies being silicon carbide and the microsystems. The microsystems in Erfurt in the future will also be on 200 millimeter. So I don't see this as a fundamental problem in the long term. On silicon carbide, how would you assess the quality of the merchant 200 mm suppliers? I know you've been quite public saying the Chinese are comparable with the Western suppliers on 150. But do you think there's going to be a transition? And does that put you at a disadvantage in your Lubbock site? I cannot comment on the quality of 200 mm substrates as we are not buying them. I know that they are expensive. But yeah. And yeah, I hear that, yeah, still also several of our competitors sign long-term agreements for 150 mm wafers. So I presume that definitely the supply is not there yet. Got it. And sorry, just circling back to the 200 mm, if it's 50% loaded in 150, what's your loading in 200? 100. 100%. Okay. Got you. Is that right? Is there an acoustical problem? Robert, I mentioned that the loading was 100%. Maybe we can move to the next question. Did you hear my question, Rudi? No, I didn't hear your follow-up question. Okay. No, it was just about so the 150 demand so the industrial demand in 200 has been weak for a while, right? But you have backfilled the way you have got to 100% utilization in 200 is by backfilling that capacity with automotive. Is that correct? Yes. Well, automotive, but also medical, everything. Well, the total demand. So also, yeah, if there are products that are maybe somewhat weaker because they serve the EV market, that's also compensated by capacities or needs for applications serving the combustion engines. So we have sufficient demand for the 200 mm. Got it. Just last question. I remember the $1 billion CapEx expansion you outlined. I think it was in June last year or the year before. I'm not sure. But clearly, the market has changed, and you're not going to achieve your $1.5 billion goal for revenue. So why are you still spending so much CapEx? You're the only company I covered that is spending more CapEx this year than last in your end market. Is it just because you have specific customers that are very tight, whereas everyone else in automotive is suffering from too much capacity and too much inventory? Is that what it comes down to? Yes. So we are not suffering from too much capacity. So we are short on capacity. And the LTAs that we're signed for the 2023, 2024, 2025, and the forecasts and the demand that we see short-term and the forecasts that our customers give us for the near future, they all indicate that the capacities we have and we're additionally building, they will all be fully utilized. Rob? Hello? Rob? You have again? Yeah. I was just saying that just can you outline your CapEx in 2024 and 2025 just from my model? Thanks. So from the amount, so we have our CapEx for 2023 was EUR 350 million. And for 2025, it will be around well, we reported around EUR 550 million. And 2024 will be EUR 550 million, and 2025 will drop again to something like EUR 300 million. Got it. Thanks a lot, guys. Our next question comes from Guy Sips from KBC Securities. Your line is open. Please go ahead. Yes. Thank you. My question is on the France side, where the revenues now based on X-FAB Technologies is nearly doubled year-on-year, and it's now over 90% of the site's revenues. What is the capacity over there, and how close are you to the boundaries? Well, we are still ramping up. So the conversion from the old technologies happened to a large extent, meaning that the older products and technologies are now mostly out. We are in the phase of converting the machines and adapting it for the future business. In In the actual output, so today, we're somewhat below 10,000 wafers a month, and that should go by end of beginning next year in the range more than double. All my other questions are answered. Thank you. Thank you. We have no further questions in the queue. If you would like to ask a question, please press star one now. There are no further questions in the queue, so I will hand you back over to your host. Thank you. No problem. Thank you. Yeah. Thank you very much. As there are no more questions, I would like to close the call here. Thank you very much for your participation, and I invite you again for our conference call on the Second Quarter Results in July 2025. Thank you. Thank you. Thank you for joining today's call. You may now disconnect.