Earnings call transcript: Inficon Q4 2024 reports steady sales, stock dips

Inficon Holding, a $2.85 billion market cap company, presented its Q4 2024 earnings, revealing steady sales figures alongside record operating income. The market responded negatively, with the stock dropping 6.42% in pre-market trading. According to InvestingPro analysis, the company maintains a GOOD financial health score of 2.91, suggesting strong fundamental performance despite market reaction.

Key Takeaways

• Inficon’s total sales for 2024 remained nearly flat at $671 million.
• Operating income reached a record $136 million, reflecting a 20.3% margin.
• The company successfully launched the first commercial mass spectrometer on a lunar mission.
• Inficon’s stock fell by 6.42% following the earnings announcement.

Company Performance

Inficon Holding maintained a stable financial performance in 2024, with total sales amounting to $671 million, showing little change from the previous year. The company achieved a record operating income of $136 million, with a margin of 20.3%. InvestingPro data reveals impressive metrics, including a 37% return on equity and a healthy current ratio of 2.05, demonstrating strong operational efficiency. Notably, Inficon continued to invest in research and development, focusing on artificial intelligence, high-performance computing, and high-bandwidth memory technologies.

Financial Highlights

• Revenue: $671 million, nearly flat year-over-year
• Operating Income: $136 million, 20.3% margin
• Gross Margin: 47.1%, improved by 1.2 percentage points
• Net Profit: $112.8 million, 16.8% increase year-over-year
• Cash Flow: $116.5 million
• Equity Ratio: 72.4%

Earnings vs. Forecast

Inficon’s earnings per share (EPS) forecast was set at $25.24. However, the company experienced one downward revision in the past 90 days, indicating potential challenges in meeting expectations. The revenue forecast was $366.4 million, aligning with the company’s stable sales figures.

Market Reaction

Following the earnings announcement, Inficon’s stock price dropped by 6.42%, reflecting a $70 decrease from the previous close of $1,090. This decline positions the stock closer to its 52-week low, with InvestingPro showing the stock trading at a P/E ratio of 25.95. InvestingPro analysis indicates the stock is currently overvalued relative to its Fair Value, despite maintaining dividend payments for 19 consecutive years. Subscribers can access 8 additional ProTips and comprehensive valuation metrics through the Pro Research Report.

Outlook & Guidance

Looking forward, Inficon has set a sales guidance range of $660 to $710 million for 2025, with an operating income target of around 20%. The company remains moderately optimistic about market recovery, particularly in the semiconductor sector, which may see a ramp-up in the latter half of 2025.

Executive Commentary

CEO Oliver Wirsch expressed cautious optimism, stating, "We are moderately optimistic for the next quarters." He emphasized the company’s strategic focus, noting, "We focus much on are we winning business? And then when the market grows, we’ll go with the market." Wirsch also highlighted the company’s consistent strategy: "We have not changed the strategy."

Risks and Challenges

• Uncertainty in semiconductor market recovery could impact future growth.
• Slowing growth in the China market poses challenges for expansion.
• Potential supply chain disruptions may affect operational efficiency.
• Macroeconomic pressures, including inflation, could influence cost structures.
• Technological advancements by competitors may challenge market leadership.

Q&A

During the earnings call, analysts inquired about the semiconductor market’s recovery timeline, with Inficon acknowledging the uncertainty. Questions also focused on the importance of the China market and the potential of the space market, which Inficon sees as promising. The company assured its readiness for potential market expansions, particularly in the semiconductor sector.

Full transcript - Inficon Holding (IFCN) Q4 2024:

Lennart Schweitzer, Investor Relations Contact, Inficon: good morning and welcome everyone.

My name is Lennart Schweitzer, investor relations contact at Inficon. I have the pleasure to host this online Microsoft Teams webcast. Thank you for joining the Inficon conference on its fourth quarter and full year twenty twenty four results. With us today are Oliver Wirsch, CEO of Inficon and Mathias Strandle, CFO of Inficon. The management team will first present the results and then take questions.

During management’s prepared remarks, you are kindly asked to turn your microphones and cameras off. You should have received by now a press release on the q four and full year results together with the links to the accompanying visuals for this conference, a link to the annual report 2024, and the invitation to the annual general meeting of shareholders. All these documents are available for download in the investor section of the Inficon website www.inficon.com. During the q and a session, you can ask questions either in writing, use it using the chat function in MS Teams or you can add yourselves to the queue of people wishing to ask questions by clicking on the I Rise My Hand icon. I would like to inform you that we record this web conference to archive the audio file later on the Inficon website.

The oral statements made by Inficon during this MS Teams session may contain forward looking statements that do not relate solely to historical or current facts. These forward looking statements are based on the 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 like to hand over now to Oliver Reisch. Oliver,

Oliver Wirsch, CEO, Inficon: please. Thank you very much, Bernard. Welcome, everybody, to our earnings release conference Q4 twenty twenty four and full year 2024. Let me jump right in. The agenda today as usual, first me, Oliver Bierz, CEO of Inficom.

I will talk about key messages and figures for 2024, the target market business review and expectations for 2025. After me, I’ll hand over to our CFO, Matthias Strndle, for more details on the financials. Quickly about Inficon for those less familiar. Inficon has three main pillars among a couple of others that, make up the core of our competence. You see here intelligent sensor solutions, which is everything around advanced sensors.

This is a mass spectrometer, GCs. This is thin film sensors. A number of technologies where we are number one. This is located in Syracuse, New York. Then we have everything around measuring pressure and controlling pressure in, bolsters in Liechtenstein.

And the third one, leak detection tools in various applications in many different markets. Leak detection is located in Cologne, Germany. We are listed since the year February and over fifty years in the market. Important for us is that you know that our smart sensors have additional capabilities through data analytics. We call them process aware sensors.

That means they understand what happens within a tool and try to make decisions and give feedback around this context that they have of the tool. Based on all these sensors that we have, there’s a number of technologies that support the sensor portfolio. We have a portfolio of software as well. One basis, all the sensor data of a tool. Among our sensors, there is also third party inputs, the tool data, the pumps, and so on, that we all aggregate together in a digital twin to understand what happens in the in the tool and with the wafer, the tool health and the wafer health.

And with that data, when we aggregate it, we can also build a digital twin and schedule a whole fab with data analytics and AI, which we do for over 60 fabs worldwide. But now let’s jump into the actual numbers of 2024. We are happy to report a strong result in a quite challenging environment. We were able to maintain our sales year on year. We made record sales full year in semiconductor, RSC auto and security and energy.

So meaning three of our end markets of four. The orders are still relatively slow. If you go into the numbers, so the overall number we achieved $671,000,000 US dollars of sales. And then when you look into the segments, we were able to grow the semiconductor business by 9%. So this is a record sales, a record year.

We were able to grow in a consolidation year of the RSC auto market, even a little bit with plus 2%, also a record year. And then the general vacuum after this extreme growth in 2023, it bounced back a little bit above the level of 2022. So there was a clear consolidation that is the broad industrial market. Many technology markets didn’t have such an easy year. And then the third, record sales market, end market that we report security and energy where we were able to grow plus 21%.

If you look at the operating result, we have been able to improve the operating income to US136 million dollars or a record high of 20.3%. Then with the gross margin, we were able, in spite of the sales, to increase it by plus 1.2 percentage point year on year and the operating cash flow stays at a very high level on a stable trajectory. If you look at the organization, we continue to invest in R and D with nearly 8% of our sales and also invest in the future with CapEx with 28,000,000 If you look in the worldwide markets, you can see that Asia and Americas showed a solid year. In a challenging environment, obviously, no doubt Europe was slower. So when you look at the numbers for the full year, you see Asia and Americas plus about one percent and Europe really a bit of a reduction with 5% with a lot of weakness in the market last year.

If you look at InVicon, it’s important to understand that we are quite diversified but are still quite selective about which markets we wanna address. You see here on the left side the semiconductor industry where we are quite diverse in different parts of the semiconductor industry. There’s leading logic, there’s ICAPS, there’s memory, there’s display, there’s also sub fab, and of course, OEMs. On the other hand, we have a number of technology industries where we see good growth, where we can make a difference with our leading measurement capabilities, and we we also see good profitability. One of these segments just recently made a big breakthrough.

It’s not such a big segment, but nonetheless, I would like to share that with you, which is the one in the middle on the right side, the space and robotics. We have actually been working with space agencies, in particular NASA and ESA, for many years. For nearly ten years, we’ve been working on instrumentation for space. This needs to be specifically ruggedized and also have different capabilities than some of our sensors on Earth. Nonetheless, the r and d is very synergetic.

What what is the big thing that I wanna tell you about? What happened, on February 26 is that we were able to launch the first commercial mass spec from Earth to the moon. So this is the first one that is, created by a commercial company. It’s now a standard product that you can go and build into your space ventures. You see here a couple of pictures from the launch where we went there and where we had the mission briefing.

There was also the acting administrator of NASA Janet Petrov there. You see her talking about this mission, the IM2 PrimeOne mission. I was holding the drill where we are trying to drill a hole into the moon to then sniff with our instrument what kind of minerals are there. Water is the most important, but also others are interesting resources. Water is important for energy, for food.

So and then you see pictures from the launch and how we left Earth and approached moon and then finally were landing on the moon. It was a non nominal landing. Not everything works always in space. However, our instrument worked beautifully. We fulfilled all the specs and it was tested multiple times and run very well.

Okay. But now we go into the real numbers of the big end markets that we are addressing. First of all, of course, semiconductor vacuum coating. We are in a strong position even though the current environment is quite challenging. We made record sales in Q4 both year on year and quarter on quarter.

The market, as you know, of course, is slower recovery slower recovering than expected. We don’t know the timing of this, but we do expect a ramp later in 2025. The shape and the timing is quite uncertain at this point. For us, it’s important to focus that we find new applications that we win market share. And I think when you look at this chart there of a CAGR of 15.7% over the last five years, you can clearly see that we have been very strong in the market gaining market share and finding new applications.

So the outlook for this year is flat to growth. It depends a lot on this timing. I think we are moderately optimistic, but we haven’t seen the broad dynamic yet. We see it selectively in some product lines. There is one ramp you could call it around AI investments, around HPC and HBM that we see with the respective customers.

But otherwise, there’s a lot of mixed signals. While there’s also relatively positive, but not so many that you could call it a trend. If you look at our R and D pipeline, I think the numbers tell it, but I want to reemphasize we have a very strong pipeline there, a lot of prototypes out there. Couple of notable latest releases was certainly the expansion and upgrade with the CPX line, that’s our mass spec system portfolio or the UL product lines or also a number of new sensor technologies that we bring to the market and of course, more pressure management products. With that, I would like to move to the next end market, automotive, refrigeration, air conditioning.

There, we actually were able in a consolidating market to still grow the market by 2%, grow our business by 2% in 2024. Currently, one of the main markets there, auto market, the EV market is in consolidation. I think this growth shows that we are also able here to expand our applications to gain market share. There’s other segments, sub segments in here that address other markets slightly, which is RSC. So, for instance, one example is the service tool, the handheld that you see on the picture.

This is a business that is steadily growing. A little bit of a different dynamic, for instance, there is around the new refrigerant regulations. Also here, I want to emphasize that we have a very strong product lineup. The ELT product line to test batteries is industry leading by quite a bit. I think we could be very proud of this achievements most recently, more to come.

Then, if I go into the next segment, General Vacuum, that’s a very broad bucket, if you will, with many submarkets in it. Half of this business we address through channel partners. It has shown quite a bit of weakness in 2024. Maybe to remember, 2023 was the opening up of China and a large backlog that we reduced. So that’s why this is an exceptional year.

I believe now we are back to the normalized level and from here on out, we feel that we will see some positive growth. But a lot is related, of course. Macro develops, how the different industries develop. One big industry here that gave us a lot of dynamic also in 2023 was solar. Solar will probably have the second consolidation year this year as well.

We believe next year there will be more dynamics. We have already good product development there to be ready for the next technology nodes there as well. And with this, I go to the last. End market, security and energy. Also here, a very strong year, 21% growth.

Full year, we have a very strong position also here. To remind those that are not so familiar with this segment, this is one that is driven by government investment programs. The timing of those are a bit separate from the rest of the industries. We were just going through a couple of these investment phases. There is more coming, but the timing of the next one is not entirely clear.

I would remain though very positive about this segment with this unfortunate security situation. This, however, also drives security investments. We see tailwind in general, plus we have a number of new applications with this new product that we still are addressing. However, for this year, we’ll not be able to go and reach that level of 2024. And with that, a few more points.

Sustainability achievements, we continue to work on this and push forward. I think the key point on this slide and in general on CO2 emissions is that we were able to reduce the absolute greenhouse gas emissions over the last five years despite the massive growth of 68. And we continue to work on this and push forward. With that, I get to the expectations for 2025. We are moderately optimistic for the next quarters.

We believe that the markets could have quite a bit of upside, but there’s so much uncertainty through geopolitics and trade wars that we also see downside potential and weaknesses as risks. Overall, as you’ve seen by each of the end markets we see rather a positive in summary potential. One thing is probably the biggest factor here is when we come from a recovery in a real ramp in the semiconductor business. If that timing is and that shape is favorable and it starts in the mid of the year, then this could have a real positive impact. We don’t know exactly right now.

In this uncertainty also, many CapEx projects can move. So we’ll have to monitor the situation closely. For the guidance for 2025, we said that sales $6.60 to $710,000,000 US dollars and the operating income at around approximately 20%. Few product highlights, I spoke about those already. On the upper right side, you see we’re ready for the next solar ramp.

Then you see the products, LDS and ELD. We’re continuously developing new upgrades to them. A lot of software and analytics also going in there for battery detect leak detection. And then you see upper left, the UL portfolio with the smart spray that is very positively received in the market or one of our flagship products, the CPX mass spec system that hits all the new segments where we have the latest tech nodes in semiconductors. And, of course, software is continuously expanding.

We have given this a boost. As you know, we’re forming a global AI center. We have been doing AI for twenty five years, but we gave this another push. And there’s a lot of things happening there, a lot of things in the pipeline, more to come at the later stage. And with that, I get to the last slide.

You know, you can follow us online. We try to show you what’s going on at Inficon. A couple of interesting things. Most recently, we have been able to win a big project in China for earthquake forecasting. Yes, you do that also with gas analysis and smart software.

One thing that you know from recent months is we won the Lam Research Award. We’re very proud of that. But also since then, we have been able to win another award from one of our customers, the Kokusai Electric Award that you see in the upper right corner. Just a few of the latest news for you. Follow us online, and you’ll be up to date.

And with that, I get to the second part of our prepared notes today. And I would like to hand over to Matthias Strandli, our CFO, for more financial details.

Mathias Strandle, CFO, Inficon: Thank you, Oliver. And also welcome from my side. Good morning, everyone, and welcome to the call. Today, my my agenda is even longer than Oliver’s. One time a year.

So I have, covered the financial for q four for the full fiscal year of the comment little bit, the guidance. And then, we, we quickly talk about the dividend and the share split we announced today and, I have also the corporate calendar on the on the screen. So now let me first start with the highlights for q four. Orders ended, in q four at a similar level as in q three. Book to bill was below one.

Our sales reached a new record level with $177,500,000 and the gross margin ended slightly below slightly lower and we achieved the operating income of $36,100,000 or 20.3%. From a balance sheet point of view, the equity ratio improved, reached above 70%, again after I think four years, seventy two point four percent exactly, which is good and very healthy. The cash flow reached a solid 29,100,000 level and the net cash also developed well because we had during the year a good cash flow and a solid cash flow performance. So net cash ended close to $75,000,000 and the CapEx at a similar level as last year. Similar highlights for for the for the full fiscal year.

For the full fiscal year, the the balance sheet or the excuse me, the, the book to bill was was below one. We reached, with $671,000,000 nearly the same level as, as last year. And we could improve the gross margin to 47.1% which is 1.2% or 118 basis points compared to last year and the operating income reached a record level both in absolute values and as a percentage of sales with 20.3. CapEx was lower was higher excuse me was higher than last year by 5,000,000 mainly driven by land building but also machinery and equipment. Cash flow as I said reached more or less last year’s level and from a sustainability point of view we can point out that CO2 emissions could be reduced by another 9% and in the meantime we have 96% of electricity is really certified green which is good.

Now let me go more into the details as communicated this morning and mentioned before we achieved revenue of $177,500,000 in Q4, which is an increase of 1.7%. If we take out the acquisition impacts and negative currency impacts, the organic growth was plus 2%. Oliver already commended the development of the end markets. Strong growth can be seen in two markets: Semi vacuum coating improved by 22% and refrigeration, air conditioning, automotive did grow by 5% while general vacuum dropped against the strong previous year by 30% and security and energy was also weaker and dropped by 8%. With that, the fourth quarter ended at this $177,500,000 and, as a poor quality figure as a record high figure.

Oh, I need to go back. Sorry. Regional distribution on the right hand side, you can see it here. Okay. We had we had, growth in all regions.

The highest growth was in Asia with about 5%, while Europe and Americas showed both a minor and minor plus. Now comes the next slide. The gross profit margin increased slightly by 1% in absolute numbers and reached 46.3% in Q4 slightly down by 30 basis points compared to Q4 last year. The positive impact of slightly higher volume was partially compensated by some inventory related costs we had in Q4 as well as some unfavorable mix impacts. From the cost side, we spent $12,400,000 on R and D, which is an increase of 9.2% and the result of our continued development efforts and respective investments.

In SG and A, the cost level did increase by 6.1% to $33,800,000 here personal expense and personal expense and higher compensation related expense have been the main drivers for that increase. Operating income as a result reached $36,100,000 or 20.3% after $38,200,000 or 21.9% in the record quarter Q4 last year. This corresponds to a slight decrease of 5.5%. The income tax next page the income tax for the fourth quarter was at $3,100,000 stable and represents a tax rate of 8.4% comparable to the 8.8% last year. The net profit, thanks to the favorable tax rate and lower foreign currency related expenses, the net profit did grow by 5.6% and reached a strong $34,300,000 level or 19.3% for Q4.

This compares to a $32,500,000 or 18.6% in the prior year. Now we go to the balance sheet. Net cash as already mentioned reached nearly $75,000,000 which is about $30,000,000 higher than end of last year and $23,000,000 higher than in the third quarter. The churns reached 2.4 and the DSO ratio improved again and reached 47.2 days. Our working capital reached the $215,000,000 or 30.3% of sales, a clearly better ratio than last year and also last quarter three.

The majority of that decrease is driven by, is driven by inventory reduction and reductions in accounts receivables. Our operating cash flow which you can see on the right side developed balance we reached $29,100,000 but we could not reach the very high and record high level in Q4 last year but still I believe it’s a solid number and pretty good. So those were my comment on the balance sheet now let’s let us go a little bit to the to the full year result here. I must say there is a little link error in this chart. The some of you might have seen it so the the biggest portion the the light blue is not security energy would be nice if it would be but we are working on that The blue blue one is semi and vacuum coating so we had a little bit mix here.

The yellow is security energy, the green is refrigeration and and the orange is channel vacuum. Sorry for that we will correct this. So for the full year we reached $671,000,000 nearly last year’s level which corresponds to a decrease compared to last year which corresponds to a decrease of 0.4% excluding currency effects and acquisition effects the sales were really flat. As you can see in the chart we were able to grow in all end markets except general vacuum. From a regional point of view the largest sales region is Asia they did grow by 1.2% reaching $330,000,000 and about 49% of global sales.

The increase here in Asia was mainly driven by strong sales in semi vacuum coating, partially compensated by a good channel vacuum performance channel vacuum sales. North America is a 27% share and it increased by 1% and Europe has now a share of 24% and it dropped by 5%. Here we had weaknesses in most of the markets actually. Now to the PNEM, the gross profit clearly improved as mentioned before 47.1% in fiscal year twenty twenty four, so an increase of 1.2% compared to previous year. This is best gross margin since 2021 after we had many different negative impacts over the last two, three years including the broker cost thing and other aspects.

So here we made some progress. Now from the cost side we spent $51,500,000 on R and D for the full year an increase of 6.2% and in SG and A the cost did increase moderately by 2.2% Here again the main drivers of course the personal expense but also several initiatives we started and continued in the last year in IT and digitalization service and also some organizational adjustments we did. The operating profit then for the full year reached record high $136,000,000 20 point 3 percent after one hundred and thirty five point two percent last year and 20.1% a slight plus of 0.6% and the second year above the 20 mark from a profitability point of view. Year on year next page the tax expense increased by roughly 2% to 236%. This gave us a tax rate of 17.3% on average compared to 17.9% in the last year.

The net profit reached $112,800,000 or 16.8%. This is an increase of 6.7% also here a few balance sheet balance sheet items cash flow as I said before solid $116,500,000 nearly reached the previous year’s level, capital expenditure increased by 21% to $28,400,000, working capital I already commended, reduction mainly driven by accounts receivables and inventory reductions and the equity ratio solid at 72%. On the next page is the guidance and the outlook for Oliver did already commended. There is some positive momentum in certain markets but also some global uncertainties and some risk around that But based on the expected upturn in the semi market in the second half and our assessment of the other end markets we are still moderately optimistic but also as we said there were also some risk in there. And therefore our guidance is in the range of $660 to $710,000,000 with an operating profit of around 20%.

Now we come to the distribution or the dividend and the stock split following the good performance or strong performance in 2024 the Board of Directors has decided to propose to the shareholders at the AGM on April 8 the distribution of a dividend of CHF 21. This is a 5% increase compared to last year and represents a 51% payout approximately. This also means that we return around $57,000,000 to our shareholders the payout is expected to take place on April 14. On top of that, the board also proposes to the shareholders a share split of one to 10 this is to align our stock price better with the price levels on the six Swiss Exchange and comparable companies as well as to enhance the liquidity and tradability. The split is also expected for April, the exact date is April 16.

With that I would like to close the presentation here are the remaining remaining uh-uh dates and events on our calendar April is still busy or very busy we have the we also have release of Q1 release q1 numbers and then continue in July for the rest of it. So with that I would like to close the presentation and we are ready to take the questions.

Lennart Schweitzer, Investor Relations Contact, Inficon: Thank you Oliver, thank you Matthias. We have a first question from George Samuel Brown.

George Samuel Brown, Analyst: Yeah. Hi, guys. Thanks for taking my questions. I have two, if I may.

Oliver Wirsch, CEO, Inficon: So just firstly, on

George Samuel Brown, Analyst: on the operating margin guidance for around 20% in 2025, If we just take a step back and look at 2021 or 2022, your sales in 2025, even at the lower end, are still significantly higher than 2021 or 2022 levels. But you’re not expecting any sort of margin expansion from those levels. So can you help us understand why you’re not seeing any operating leverage? I know you’re investing in new products and new platforms, etcetera, but what’s what’s holding you back there? And then just secondly, on China, specifically in your semi business, firstly, how big is China as a percentage of your sales in semi semiconductor and vacuum coating, and how has this changed over the years?

And then do you expect China semi sales to grow in 2025? Thanks, guys.

Oliver Wirsch, CEO, Inficon: Okay. Thank you, George. I will start. Yeah. Quickly on the first question, the Opink.

I think two factors are relevant. One you already mentioned. Yes. Of course, this is the time to invest. This is the time when there’s two time available with customers, OEMs and also end users.

So we’re working on a lot of new product innovations for the next TechNodes. The technology roadmap actually hasn’t slowed down anywhere. So it’s a perfect time to, really boost that effort. So there’s quite some investment in that. The other thing is that we were ready for the ramp since about q three last year.

So we, of course, haven’t activated all the CapEx and fully staffed all the production lines. But there’s a little bit of extra cost structure there to be able to fulfill the ramp deliveries when it comes. We do not want to miss that. This is not something you generally want to do in semiconductor. And of course, also, after this not easy time after the pandemic, we tried to improve and solidify also our ability to scale up quickly.

So this is the two main factors, honestly. I don’t think that the core ability for profit to generate profit and also to scale it up has gone away at all. But we would always go first after new applications, new technologies. And honestly, there is a very long list of organic growth potential right now. So you could get negative if you look out in the market in general or geopolitics these days.

But when we look into the innovation pipeline that we have, we are very optimistic. So that’s more about when is it gonna materialize and what are we gonna do. Maybe on the second topic, China. China has typically been about a quarter of our overall sales. It fluctuates.

I think last year one notable factor was that solar slowdown, solar is mostly in China. EV batteries also slowed down last year, it will both stay slow for this year. So these were negative factors. At the same time, Semi has been surprisingly resilient in China with a little bit of a peak, mid last year where we already thought, hey, maybe this could be an indicator for the ramp. But that was a little bit of an independent development.

There was another or a few other factors that drove this peak in Q2, Q3 in orders and then deliveries. But part of it was in China. But this has slowed down again. So part of that could be that maybe there was some over ordering there. We have to see how this year developed.

In general, we look actually at China relatively optimistic. It’s not the 5% to 10% growth anymore. We all know that. But around the key technologies and in this year specifically around semi, there is reason for moderate optimism really. Hope that helps, George.

George Samuel Brown, Analyst: Yeah. Thank you so much, guys.

Lennart Schweitzer, Investor Relations Contact, Inficon: The next question is from Michael Fuerd. Michael?

Michael Fuerd, Analyst: Yes, sir. Can you hear me?

Lennart Schweitzer, Investor Relations Contact, Inficon: Yes, we do. Michael?

Michael Fuerd, Analyst: Good morning, everyone. Good morning, Oliver and Matthias. Two questions for me. The first one is looking at semi, you were expecting or you’re hoping for a ramp in the second half of the year. My question is what will trigger that ramp?

Is it really OEMs or is it end users? Is it memory or logic? What are you looking for? What should we be looking for? And then tying into that, maybe you can comment on what you’re currently seeing in the first and second quarter when you talk to your customers.

Is everybody in sort of a wait and see mode? Or you know, there’s a lot of noise from obviously macro and politics around, so I’m trying to figure out what’s actually going on in the market. And then I have a follow-up. Thank you.

Oliver Wirsch, CEO, Inficon: Okay. Thanks, Michael. I will take these two questions first. Yeah. If only we knew exactly, right?

So this has been, some time now that it was unclear how this shape of this recovery and then the ramp looks like. Again, like I mentioned earlier with George, we were trying to be ready earlier. So we have been preparing for it while the signals are really quite mixed. So when I say mixed, I mean with that, when you think about the slide I showed earlier of the different submarkets that we have in semi, or you could actually almost look at maybe the top customers that we have in there, top ten, twenty. Each one almost has a different story.

If you look at the very big ones, you could break it down even from product line to product line, how they react. If you look at the OEMs or at the chipmakers, some of their product lines, they really accelerated. And you could say this gives reason for a lot of optimism. Some are slowing or they’re speeding up and slowing down. So we have this kind of picture when I say mixed signals.

Overall, I would say, except for this Q2, Q3 peak last year that had probably a little bit other reasons, we have seen a steady improvement over the quarters for a year now. So I would see step by step we’re increasing and that is probably in line with other companies that you’re looking at. But the acceleration hasn’t really happened yet. When we talk with them for some product lines, yes, there’s projects and there’s preparation for scaling it up, but it is not broad enough to to really pull up, right, in in a shape or form as we had it in the past. And this is pretty much to your second half of the question.

This is pretty much also the same for the first quarter. It kind of continues from last year. Every month, every quarter, a little bit improvement. However, there’s some seasonality also, right, obviously. Q4 is always quite big for different reasons.

And Q1 has been, especially in the recent years, quite slow normally for that. I hope that helps you with a little additional color. I can tell you, we talk about this daily with customers and internally and partners and suppliers, And it’s not so easy to really find a better answer or more details. Unfortunately, we’ll have to go and stay optimistic and then be ready for the ramp. And for us, again, the key is really that we push our innovation.

We win new design with OEMs or we we win new projects with IDMs. And when we know we are at the forefront there, whenever this happens, we will also go go with everybody else on the right. And

Michael Fuerd, Analyst: most probably Perfect.

Mathias Strandle, CFO, Inficon: It’s just that most probably also helps that we serve both parties, right, so OEMs and end users. And we are on the software business, so we have a broad spectrum and a broad basis. And and we can we can then benefit, right, from from upstream. And we are not so much, focused only on on one kind of one technology or one market. Yeah.

Oliver Wirsch, CEO, Inficon: And maybe on that, to be very specific on MAMIX signals to stress that, we see OEMs that have good dynamic. We also see chipmakers that have good dynamic. But we do see also the opposite in both spaces, interestingly enough. Nothing that really would further slow down, not that, but just that it doesn’t accelerate or release dynamic enough to be a trend. Hope that helps, Michael.

Michael Fuerd, Analyst: Yes. Thank you. And then just a very short follow-up on a different topic. You talked about that success in Moon and Space launch. Obviously, very prestigious projects.

My question is, are they also profitable? Just directionally, is it is it above or below the company average?

Oliver Wirsch, CEO, Inficon: Yeah. It’s above. The it’s, of course, small right now. Right? This is a couple of millions, maybe a bit more because we also supply different product lines, not only this prestigious instrument.

Vacuum is everywhere in space. Right? So leak detection and pressure control is key there. I think one thing is noteworthy. Today, the space economy has grown quite a bit already.

It’s actually the same size as the same industry. Of course, our penetration is much slower. I mean, there’s not so much sophisticated measurement required. But we are at the tipping point there when you look at the number of lounges we have per year. This exponentially grew.

So now we have a couple of fountains a year before. It was a handful a year, maybe a decade ago. And why? Because it became so cheap. Bring something from Earth to orbit is a factor of 50 to a hundred cheaper now with the new rockets or the ones that are about to come online.

So when you talk with these different companies that are developing there, this is really very early days and a very hot period. I believe the market will grow faster than the semiconductor. So that is more 7% to 12% growth, something like that. But of course, for us on a very small basis, but it’s a synergetic technology. It’s full of vacuum measuring.

It’s a challenge. And yes, it’s of course also inspiring. So we are excited about it. But for the next couple of years, I think the the usual suspects of flagship products and flagship market segments will drive our growth. Right?

But you should always look to the next and the one after and the one after segment to be there when you need to be because you win now your position in the market and it scales up later. So maybe to put to calibrate that. But again, it is a positive contribution to our profitability.

Michael Fuerd, Analyst: Thank you very much.

Lennart Schweitzer, Investor Relations Contact, Inficon: Thank you. Thank you, Michael. The next question comes from Jernifert.

Jernifert, Analyst: Hi, Oliver. Hi, Mattias. Thanks for taking my questions. I would take them one by one if it’s okay.

Lennart Schweitzer, Investor Relations Contact, Inficon: The first one is to follow-up

Jernifert, Analyst: on the semi end markets. Can you give us a little more indication what was driving the very strong sales in Q4? Was it really analog? Was it memory? Was it logic and foundry or even is it within this very mixed?

And then also when you give the signal for 2025, I understood semi end users, OEMs, different dynamics, some positive negatives. But is there any skew you can say this is memory, analog or logic and foundry, which you identify already well as better or even weaker? To start with this one, please.

Oliver Wirsch, CEO, Inficon: Okay. Sure. Yes. So around Q4, I think, part of the factor that there was the the peak in orders that we got in q two, q ’3, and then that’s when we delivered it. Some of the more sophisticated sensors have about this kind of delivery time.

And you think from ordering, specifying, building the package, delivering it and installing it and get it up and running. So that is probably one of the larger factor. The underlying current though is also that product lines are the other extreme which really saw the dip. You remember last year, obviously, that the year before in 2023, we had this 20 to 30% dip in some, segments of the market, memory, for instance. There is a continuous recovery there.

So the base lifts up step by step, I would say, on a broader basis. That that would be two factors that I can think of for Q4. There was a couple of additional wins of new products as well. How big that is in numbers? I think it’s probably not as material as the other two factors, I would say.

Now for 2025, we are like, we put into the notes I mean, mainly we see the positive dynamic around this AI investments. So of this hyperscaler investments where this new AI runs on. This is investments in HPC and HBM, meaning there is leading logic in there and there is also, high bandwidth memory in there. And there’s a few players in there that are very well positioned and really profit from this, but also mainly around this, I would say. Not in other areas.

So when you also listen out in the markets, it’s a similar thing that they tell us. This is not the ramp. This is something that is a little bit independent. It is probably also not the full breadth of what eventually will come when this truly comes online, this AI technology. I mean, as we all know, we we all try try out stuff.

We already launched three products also with LLMs. We all find new applications all the time, but I believe the true impact is just about to come still. So this for me is early days, early investments. I wouldn’t call it pilots. That would be also making it too small.

But it isn’t broad enough. But also there should be because of the normalized inventories just a broad recovery and ramp also in the chip industry coming. I think, unfortunately, it is, especially the last couple of weeks, geopolitics injected a lot of uncertainty. And what happens then with CapEx projects, they get put on hold for a little bit. And I think this is also why we, are a little bit more cautious now of how this year is gonna turn out versus maybe a couple of months ago where we felt, this dynamic will probably be a bit more positive.

Is that helpful? That’s a more general statement, of course, but semi conductor projects are big CapEx projects. So they’re very affected by this kind of dynamic.

Lennart Schweitzer, Investor Relations Contact, Inficon: Thanks for this. And then the second question, please, on General Markham. It has stabilized in

Jernifert, Analyst: the last two, three quarters on a certain revenue level. You said flat to mildly up. Can you give us the positives in the end markets, Jernwacom, and where you see the negatives in 2025, have you a better feeling on the contributions of the end markets?

Oliver Wirsch, CEO, Inficon: Yeah. I mean, one big chunk there, the solar consolidation is ongoing. It might take into 2026. It might need the next techno to really materializing even, Periscite. We’re certainly ready for it, but this is not going to help this year.

I think what we’re seeing on the positive side there is that these channel partners where we really cover more broader the industry have been steadily improving but small steps. And that’s also how we started out into this year. So there is this moderate optimistic feeling, right? The flat plus kind of feeling that we have there. We certainly went through the rock bottom.

But I mean, yeah, what I just said earlier is the same there, right? The uncertainty, the uncertainty increased. Even the last week’s a bit more. So projects get delayed. So it’s hard to say.

Visibility is they’re particularly low in that segment for us.

Jernifert, Analyst: Understand. Okay. Thanks. And then the last question I go back in the queue. Just a quick technical one.

When you say order intake is hesitant, uncertain has increased, book to bill below one, which was a big surprise, gives you seasonality in q four. How bad, or how skewed to the second half is your financial performance? Can we assume that you’re falling back in Q1, for example, to the similar revenue level that you had last year around 155,000,000 plus minus or is it even below this? Just a rough feeling how we shape 02/2025 will be in your financial guidance.

Oliver Wirsch, CEO, Inficon: Yeah. You can we probably could say it’s comparable. Right? What would you say, Matthias? Could be

Mathias Strandle, CFO, Inficon: a similar picture. Yeah. Actually, it could be like, or in the range where what we had in the last year, Q1. Yeah. Sure.

Oliver Wirsch, CEO, Inficon: Also, how the shape is of the year, I think it’s interesting, right, because many things have changed. So the underlying drivers are not the same. The assumptions have changed. Many things have changed. But But we would see a could work out quite comparable.

But there is, of course, again, as I said earlier, when we have the ramp, when a couple of macro data move more into the positive, then there’s reason to be more optimistic.

Jernifert, Analyst: Okay. Great. Thank you very much.

Mathias Strandle, CFO, Inficon: Sure. You’re welcome.

Lennart Schweitzer, Investor Relations Contact, Inficon: Thank you, Jorn. Next question comes from Doron Landry.

Doron Landry, Analyst: Doron? Hi. Thank you for taking my questions. The first one, I want to focus a bit on the security and energy end market. I I know that it’s, it’s a rather minor, contribution to sales, I think five percent or something like that.

With the dynamic of all those public sector contracts, how, and how this works with the timing? Is, like, is this just a nice to have business or can we expect this to grow into a dedicated market? How should we look at that? And also when we talk about those increased defense spending that is now the talk of the town a little bit, How does HAP site fare against fighter jets and ships and tankers and so

Oliver Wirsch, CEO, Inficon: on? Yeah. So for us, it is a key technology. This GC and the MS technology that goes, for instance, into the HAP site is something that is core to, our capabilities, mass spectrometry in particular. So what we flew to the moon, what is now on the moon is, a mass spectrometer that also goes in the HAP site, and it also goes onto the chipmakers tool or the toolmakers tool.

So we are committed to this from a technology perspective. Of course, the segment is a bit further away from where we are. However, you need to look at Inficrom large as a key count based business. So when we focus on large accounts there, the US Department of Defense, the behavior and how we sell is not dissimilar to how we sell into other segments. So for for for for the current security situation, yes, of course, defense business increased and we have seen much more interest recently.

The biggest spender at this point is still The U. S. And then there is also a few other projects outside of security that drove this. We haven’t yet seen from the most recent announcements in Europe or the NATO outside of U. S.

A dramatic increase beyond what we had before. It was actually the last couple of years already quite dynamic. But, I think even though it’s kind of hard for me to say in all this negativity of what happens to your politics, but it of course has positive upside, for for the hub side business. And and there is another business in there that is notable, which is energy, which is a bit slow down. Right?

This is also related with some of the energy transition. It’s still growing but that’s at the slower state. It has been a little bit losing its priority in a sense. We are pushing on there. We are actually also there optimistic that this will continuously grow, but it’s a smaller number there.

It’s a bit more steady.

Mathias Strandle, CFO, Inficon: And maybe to add it’s still it’s still a more project based business, right? It’s where you have a discontinuous order inflow and and you work on on increasing it. You you are dependent on a few big players, right, and the development there and, and this drives a little bit the business. So it’s a little bit slumby and going up and down and project based and focused on a on a few few key key account customers, not driving the success in in that, end market space.

Oliver Wirsch, CEO, Inficon: Maybe one thing to note, Doron, is also the day you see how the hub side business behaves, it is quite lumpy. It’s quite volatile. Actually, when you look at Inticon under the hood, you could say maybe there’s twenty, thirty such businesses that are actually quite volatile. The diversification gives us this steadiness. So for us, this is not something that particularly concerns us, how security and energy goes up and down.

Much more, this is actually how we generally work. It’s sometimes very positively surprising what kind of a steadiness there is. If you also look at the year ’24 over ’23, it’s basically flat. But under the hood, so many things have changed. So that this is this is a bit how the mechanics are.

So maybe that is an explanation how we would categorize the security business that is that volatile. We still believe in it. We invest in it. And we are number one in that market and it’s energetic R and D wise.

Doron Landry, Analyst: Okay. I might, I expected that. And if I can just connect on on this one maybe on a bit of a broader sense. I mean, you all all partially answered it already. But when I look at the guidance and especially, like, how this kind of sales plateaued again with the, like, different dynamics within it.

But, at the end of the day, we look at the group level sales of over around 670, 6 hundred 80 now for the past two years and next year. From diff from other presentations, I remember that you, posted about the CAGR of 10% since 2016. Would you still hold on to that? Or or have we kind of reached a limit in a kind of a pessimistic expression?

Oliver Wirsch, CEO, Inficon: I mean, if you look through our CAGRs here, overall, I think we have 11% the last five years. I think it’s pretty much still in this range. We our goal is look, I mean, with so much uncertainty, how can we project this, right? That is hard. Again, we focus much on are we winning business?

And then when the market grows, we’ll go with the market. So this is a bit our leading metric. But overall, yes, we have this aspiration to grow five to 10%. And I believe we have delivered on this also including the market here. If you look at the different markets, of course, it’s a big mix.

I understand. Right? You you range from GenVAC, to semi, with the 9% and the minus 20. Right? So but if you look at at the long term CAGR, I believe I believe again this is a lot based on choosing good markets that have growth and profitability potential and then be diversified in them.

And then overall, you get this steady growth. I would think it’s valid what we said before. We have not changed the strategy. If it’s gonna be another boring year, I’m saying it boring. If it’s more flat, right, lateral, it’s okay.

And then we spend more time on R and D. If all hell breaks loose in semi ramp in the second half, then we’ll go and ship what we can. So we’ll have to stay adaptable. Right? That’s the only way nowadays.

Doron Landry, Analyst: Okay. Final question. I remember, right in the last, last year’s press release, that you increased or doubled the capacity. Just wondering what the current with the current order situation is, like, what is your utilization and, where where where is actually the potential there? If you can remind us.

Oliver Wirsch, CEO, Inficon: Yeah. It depends, of course, a lot. Right? So so for for RC Auto, we would have less, buffer capacity and also for GenVAC than for semi. Semi, we are ready for a ramp, especially with the flagship product lines and where we have strong customer commitments and plans.

But we have not activated and staffed all of this production. So we can go and absorb a ramp of 20% to 30% today in relatively short notice. I mean, we still need a couple months. But that’s normally what you would definitely have, right, when it’s accelerating. We had a little bit of that in selected submarkets already and delivered on them.

So what I just mentioned, this orders on that was advanced sensors, a lot of mass specs that came in Q2, Q3 last year and then we delivered it by Q4. That was exactly that infrastructure that did that. The strange thing there is it’s slowed down again. Now we’ll probably accelerate again. So this is a bit of a different shaped ramp really.

So that’s how we deal with it, roughly, if that helped.

Doron Landry, Analyst: Yes, for sure. Thank you very much.

Oliver Wirsch, CEO, Inficon: Thank you.

Lennart Schweitzer, Investor Relations Contact, Inficon: Thank you, Doron, for your questions. Next questions come from Felix Remmers.

Felix Remmers, Analyst: Yes. Hello. Two questions from my side on semi. First question would be, what is your best guess on the end market split within semi, by like memory and logic? And the second question is, we are ahead of a technological transition to nanometers, gate all around is a big topic in the industry.

How well are you prepared to benefit from this expected technological transition?

George Samuel Brown, Analyst: All

Oliver Wirsch, CEO, Inficon: right. So the split of memory and logic. So, when you look at our slides again or when you remember them, on the left side there, for for us, semiconductor is we don’t look at it only logic and memory. So so for us, there is leading logic. Yes.

That is, has always been a strong, a strong driver for us for for market growth and also for innovation. And memory has historically been much smaller. Right? There was much less use of sensorization there. But now, specifically, those that enter this AI investment area, meaning for memory that will be HPM, there is much more sophistication needed.

But of course, also when we go to smaller technology, now the soonest you start using EUV, which is a little bit starting now with the adoption. There, the sensor radiation really increases quickly. And we deliver similar packages as for leading logic, but it’s very selective. Right? So so there’s couple of leading companies that do that.

So if you go more in the ICAPS range, there is a bit but much more broader mix. There is also a lot of software, ways of optimizing your yield or your throughput. So if you look at the whole second tier, auto and power and these players, this is all mixed for us. So we would not make this split there. We wouldn’t have these details when we go and for instance, imagine we install a fab management software that goes across several fabs and all the chips technically are affected by it.

And they have mixed chips, they have logic chips, they have power chips. Where do you put them? It’s hard for us to put them into these buckets. What I can assure you is that we grow our memory segment, but it’s probably not yet as big as the logic one. But it is in terms of growth, meaning getting into new applications, it’s it’s probably growing faster.

It must be. Right? Because it is really becoming substantial for us. Now I hope I can give you this much of the information. I don’t know.

Matthias, if you’ve been

Mathias Strandle, CFO, Inficon: Nothing to add. I I I still also would confirm that, logic might be the majority of of the business and now is a little bit less. And so they are not equal. That’s what I would would say. Yeah.

Oliver Wirsch, CEO, Inficon: Yeah. And so in semi, we also report, though, display. So so and and then the the whole sub fab, how do you attribute that? Right? So yeah.

It’s just for us a bit more difficult to say that. Right? Also, then we have two channels. We have 50% going through OEMs, 50% going to chipmakers. So these are all complicated a little bit, unfortunately.

And then you talked about the next techno, the gate all around. Samsung did this step, and I think they struggled a bit. They they have no problem with that. They will double their efforts and and and and jump to the next tech note. I think, for us, it’s important to stay close with this development of the new tech nodes.

We try to focus to work with the customers on their next product line, on the next step or the or even the one after when it comes more to research. So yes, we have been working on sensors specifically for these new requirements. So there’s new chemistry that are needed. The processes change. So we need to understand these.

And actually, typically, we make sensor variants for this, either if it’s for the OEM for a specific tool that will go and use certain chemistry or for the chipmakers we will have dedicated sensors that will then be able to look at these new chemistries. It’s also about lifetime, but it’s also about sensitivity to find specific types of chemistries to be able then to understand the process better. So this is an ongoing project. It does drive sales for sure. Every techno does.

That’s when the CapEx push comes. For us, it’s not necessarily a huge big hurdle, but it it is a couple of steps that we needed to take. So for instance, the CPX, I talked about the mass spec, system. This is now the second generation for this advanced tech nodes with this much harsher, gases also and the higher sensitivity. So we continuously, as you can see from that, upgrading and delivering them to the market and have very positive feedback actually.

So this is a little bit how we look at it. I hope that helps. We’re certainly ready. Okay. Thank you.

It’s a little bit too technical an answer. We are at the forefront. We are the number one, for instance, in the mass spectrometry. So if you need one and you need the latest technology, you call us. Yeah.

I

Felix Remmers, Analyst: will. Okay. Thank you.

Oliver Wirsch, CEO, Inficon: Very good. Thanks, Felix.

Lennart Schweitzer, Investor Relations Contact, Inficon: Thank you, Felix, for your question. I don’t see anyone else in the queue right now. If there are no further questions, may I invite management for a closing remark at this time?

Oliver Wirsch, CEO, Inficon: Yes, thank you very much everybody for taking part in our, earnings release today, full year 2024 and the quarter four of twenty twenty four. We are happy to report good numbers in a difficult environment. Thanks for your interest, for all your questions, for your support. We’re looking forward to continuously exchange with you. We have a couple of upcoming events and we’ll meet for sure also, in the next earnings release of Q1 twenty twenty five.

With that, thank you very much and have a wonderful day.

Mathias Strandle, CFO, Inficon: Thank you.

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