2024. I'm delighted to welcome the Management Board and Sven Köpsel from the Investor Relations Management team, who will start with a presentation shortly. After the presentation, we will move forward with the Q&A session. With this, let's start. Mr. Köpsel, please, the stage is yours.
Thank you, and welcome to our Q1 2024 conference call. As you probably know from earlier calls, this call is being recorded and considered as copyright material. It cannot be recorded or rebroadcast without permission, and participating in this call implies your consent to this procedure. Please be aware of our Safe Harbor statement on page two of the slide deck. It applies throughout the conference call. And now I hand over to our CEO, Burkhardt Frick, who will present the Q1 highlights, followed by our CFO, Cornelia Ballwießer, with a financial update. Burkhardt, it's your turn.
Hello. Also, from my side, welcome to all participants, also on behalf of our CFO, Cornelia Ballwießer, and COO, Thomas Rohe. All of us will be available for questions after our presentation. Let's start with a look at the key figures for the first quarter. We communicated all of these in advance in April, so there's no surprise here. Compared to last year's Q1, our order intake is up 3.6%, our sales plus 46% compared to Q1 2023, and our gross profit margin increased by 4.7 percentage points. EBIT margin is up by 10 percentage points. Apparently, sales of over EUR 90 million surprised many market participants. However, there's no substantial reason for seasonality at SUSS. Our production capacity in Q1 was not lower than in Q4 2023. It even increased.
Even though we are currently focusing a lot on executing existing orders, our order book has grown again slightly thanks to a book-to-bill ratio of just over 1. We have reached a new record level of almost EUR 457 million. This remains the basis for future targeted growth. We are pleased to execute Q1 with such a strong gross profit and EBIT margins due to a favorable product mix and the overall high sales volume. However, Q1 should not be used as a simple proxy for the following quarters, as the product and customer mix varies and costs are unevenly distributed. Clearly, we want to build on this strong performance in the coming months and quarters. We are on track to achieve our 2024 targets, but we should not forget that we are still undergoing a growth transformation, which also requires additional expenditure.
Now I'd like to have a closer look into our two business units. First, Advanced Backend Solutions, where I'd like to make some comments on order intake in the bonder business that contributed about EUR 34 million and more than 50% of segment order intake. Demand for temporary bonders, debonders, and cleaners for HBM capacity ramp-up continued, but as expected, slowed down compared to the second half of 2023. We are in a constant dialogue with our key customers and expect a forecast for future capacity expansion in 2025 in late Q2 or early Q3. We were able to win two new customers for temporary bonding equipment, thereof one customer processing 8 in silicon carbide wafers. Another good message from our hybrid bonding activities: we received one order for a wafer-to-wafer hybrid bonder.
As I can anticipate your question, it is not the foundry in Taiwan which is currently evaluating the solution as well. Bonding sales benefited from the strong order intake in the second half of 2023, and we were able to more than double versus Q1 2023. Imaging and coating business continues to be very slow. We still wait for a substantial recovery of order intake. Now a few words on our Photomask Solutions. Good order intake with a solid EUR 33.7 million. Momentum again improved versus Q3 and Q4 2023. The highlight surely was the strong execution of orders resulting in a significant sales increase of 61%. Please note, sales included revenue recognition of two tools which already have been produced and shipped in Q4 2023. Next, I'd like to hand over to Cornelia for more details on our financial results.
Thank you, Burkhardt. Now, you can see our first quarter financial results on this page. Burkhardt already mentioned the very solid development in order intake and sales. Gross profit margin with 39.1% and EBIT margin with 15.9% were strong and even outperformed our full year 2024 guidance. Product mix was quite positive, and we also benefited from a relatively high sales volume. In addition, we were able to realize production efficiencies in one of our product lines. This overview also includes the net profit. Net profit means the bottom line of our P&L and includes our continuing operations and the discontinued MicroOptics business. As a reminder, we received cash of EUR 75 million with closing the transaction in January. The result from discontinued operations recognized in the first quarter of 2024 included the gain from the MicroOptics sale and amounted to EUR 58.3 million.
Net cash rose to more than EUR 100 million as a consequence of the disposal. Free cash flow increased significantly due to the solid MicroOptics business, sorry, but the free cash flow from continuing operations amounted to minus EUR 3.9 million, mainly caused by working capital increase in terms of inventory and less contractual liabilities. This means less down payments. Growth also means that we are constantly pushing ahead with the recruitment of new employees. Compared to the first quarter of 2023, the number of employees has increased significantly by 180 people, as you can see here. On this page, I'd like to present the order intake of the past three years in a more detailed overview. Please note that all presented years are adjusted for the MicroOptics order intake, meaning they only include continuing operations.
As said, the first quarter 2024 was a very strong quarter with an order intake amounting to EUR 98.3 million. The book-to-bill ratio amounted to 1.05. Looking at the right-hand side, you can see a breakdown of our order intake by region. Asia Pacific again strongly contributed to order intake with a share of more than 80%. This overview shows how our two segments developed in the first quarter 2024. Let me start with Advanced Backend Solutions. Burkhardt already explained the positive order and sales momentum in the bonder business and the more challenging situation in our coating and imaging business, so I will not repeat this here. The gross profit margin achieved a high level of 44.5%, and all product lines contributed to this result. EBIT margin came in strongly and amounted to 12.8%.
In the Photomask Solutions segment, the quarter-on-quarter growth of 60.6% was outstanding based on the execution of our strong order book. Gross profit margin improved to a level of 32.9% after 30.3% in the first quarter 2023 and 29.6% in full year 2023. We are still facing challenges with regard to onboarding and collaborating with external production partners and therefore cannot exclude quarterly volatility. Let us now move on the balance sheet. Here you can see non-current assets remained almost unchanged compared to year-end closing 2023. Current assets decreased by EUR 24.6 million with two counteracting effects. On the one hand, the de-recognition of the MicroOptics business led to a EUR 33.9 million decrease. On the other hand, inventories grew by EUR 12 million. Cash and cash equivalents increased by around EUR 70 million, mainly driven by the completion of the MicroOptics sale.
Total assets accordingly increased by EUR 45.8 million. On the equity and liability side, equity significantly increased by EUR 64.5 million as a result of our very high net income, which included the gain from the disposal of the MicroOptics business. Our equity ratio has therefore improved to a strong level of 58% despite the increase of total assets. Current liabilities reduced by EUR 23.2 million, mainly because of the derecognition of the balance sheet item Liabilities associated with assets held for sale and decreased contract liabilities. That means lower down payments of our customers. Non-current liabilities went up by EUR 4.5 million, mainly to increase deferred tax liabilities. With that, it's your turn again, Burkhardt.
Thank you, Cornelia. Despite a very strong start into 2024, we stay with our guided forecast for this entire year. Some of you may consider this as conservative, but we are fully focused on executing our transformation while managing profitability and growth. The coming quarters will show how well we will succeed in this. Now we are happy to take your questions.
Yeah, thank you so much for the insightful presentation. We will now move forward with the Q&A session. And to keep the conversation engaging, we kindly ask you to use the audio line. To do so, you can do this by pressing the raise your hand button. If you've joined via phone, please use the key combination star nine followed by star six. And if speaking freely directly is not possible for you today, you can also use the chat to pose your question. And we got a first question from Florian Sager. Mr. Sager, you could speak now.
Yes. Hello. Good afternoon. Thanks for taking my questions. I have a couple. The first one would be on the order intake for your lithography business. That's down significantly year-over-year. Do you expect this to bounce back over the coming quarters? Do you see here any indications from your customers? And the second one would be there were reports last week that SK hynix is fully booked for their HBMs for 2025 already. How much capacity do you still have for 2025 delivery for your temporary bonders? And then I have one more after that one. Thanks.
Yeah, thanks, Florian, for your question. The litho business, as said, especially the coating business, is lower than initially expected. And this goes hand in hand with the market, which is pretty low and also some sluggish customer activity there. So we do expect it to bounce back. But luckily, we can compensate with other business. So right now, it doesn't hurt us. But definitely, we'd like to see this to recover, and we are actively working on it. On your second question on SK hynix, yes, that message was clear. Of course, we are working with all three parties there, and we are engaged in two out of three. So this year, we are sold out. Next year, we probably have some slots available. And we are, as said, eagerly expecting the forecast of our existing memory customers, how they plan the coming year.
We expect that later this quarter to come in or early Q3.
Okay. Perfect. Thank you. The last one is on your exposure to China for Q1. Is that about 30%? Is that right? Or is that less? In terms of order intake, I mean.
So Florian, thanks for your question. It's Sven here. So regarding the geographical mix of order intake, it was, let's say, in line with earlier quarters. So that was not a specific situation which we saw in Q1. So in terms of share of order entry, it was in China, more than one-third. But this is a normal number for ourselves.
Okay. Very clear. Thank you. And good quarter.
Thanks.
Thank you so much, Mr. Sager. We have another question from Mr. Vooyan. You should be able to speak now.
Yes. Thank you for taking my question, and congratulations to a good quarter. Maybe just following up on the HBM question. First of all, Samsung, I believe, said that they will triple terabit supply in HBM in 2024 and double it again in 2025. So the first question there would be, this doubling in 2025, would any of that already show up in your order book now, theoretically? And secondly, it seems as if all of the memory producers are expecting their profitability to increase massively over the next quarters because this DRAM problem is now more or less solved. Would that mean that you can also be a little bit more well, or could you adjust your pricing if your customers are more profitable, or are these prices more or less fixed for the temporary bonders in 2024 and 2025?
Let me see, Mr. Vooyan. Thanks for your question. Let me answer your second question first. Yes, of course, after the memory downturn and slump, all memory players are benefiting from the very high-priced HBM memory. That's a nice recovery they can do. And of course, if you deal with customers, it's not easy just to increase prices on existing tools unless you can offer higher throughput or other benefits towards the customer. We already have fairly good prices for those temporary bonders, as it's also reflected in our results, what we see incoming. But I don't see this as a possibility to raise prices unless, as said, we can offer additional benefits. Some of these benefits, I think we discussed earlier, and that's the throughput increase for those machines which we offer, and then, of course, we will price it in.
The first question on doubling the output, again, is a mix of how many new machines are really needed and how many throughput-increasing measures can we offer because if you get twice as many wafers out of the same machine, then you don't need that many new machines. But as said before, we are waiting for the equipment forecast of those companies so that we can also plan our coming year better.
Okay. Thank you. And maybe a second question, if I may. Could you just comment on why the advance payment received were lower while your order backlog was up?
Because we have a change in the customer mix, and yeah, it's different quarter by quarter. There are some customers who do prepayments and some who do not. That's the simple answer. Thank you for your question.
Okay. Thank you for your answer.
Thank you so much, Mr. Vooyan. We have another question from Malte Schaumann. You should be able to speak now.
Solutions business with more than 40% quite at a pretty favorable level. Do you expect that margin to be kind of sustainable owing to the current mix? I mean, obviously, you have a significant shift in the product mix towards more temporary bonders, especially. So once that mix kind of proves to remain stable, would you then expect kind of more or less similar margin levels in the upcoming quarters in that area?
Yeah. I think we didn't catch the beginning of your question, but I think you referred to the Advanced Backend Solutions business, right?
Right. Right.
Yeah. So as I said before, we're a bit cautious not to use the first quarter as a proxy for following quarters. That's simply because there are different mixes which have to be taken into account, also different cost impacts we have to deal with. I would not use this as a proxy, but of course, on the temporary bonding business there, if you just isolate that, there I would expect similar margins, at least for the remainder of the year.
Okay. So would it then be fair to say the lithography part, imaging part, had been a bit better than average in the first quarter, or cannot one make that statement as well?
No, I don't think so.
Okay. Okay. Fair enough.
Again, I'd just like to highlight to make proxies is very difficult based on this. Of course, we sell in the backend solution business more than temporary bonders. It's always a product and customer mix. This quarter we are discussing here, we had a favorable mix, but we also had quarters where we had an unfavorable mix. Therefore, we are a bit cautious here.
Yep. Sure. Okay. Then on the temporary bonder HBM side, I mean, you indicated that customers will make a decision for next year's demand then in Q2 or Q3. Would you nevertheless say that the opportunities or what you see in the pipeline is that should we expect kind of similar order levels in the second quarter for the bonder division, or will there be kind of an investment pause until then customers have made up their mind and second-quarter orders for these tools might come in a bit lower than what we have seen in the first quarter?
Yeah. I think, again, I would like to wait the forecast first. And we already got some additional orders, but they come kind of sporadically. I think it also highly depends on our ability to deliver and to really meet our commitments. If we can meet all those commitments we've given throughout the year, then the anticipation is high that we receive more orders. If we don't do so well, then, of course, it also motivates customers to look for alternative solutions.
Yeah. Okay. So that, yeah, would have been more or less my next question. What do you expect then with the next investment phase next year, starting maybe the end of this year, that your market share that you can maintain your market share, potentially even extend that in the temporary bonding equipment area for HBM?
Yeah. As you know, we are solidly designed and in two out of those three memory players. So if we can hold that share, then I would expect it remains stable. But of course, this is a new market developing. So I think a year ago, nobody talked about temporary bonders in this application space. So we have to see. But I think our goal is to maintain and defend the share we have.
Okay. In terms of silicon carbide, which you mentioned, was this kind of a multi-tool order, or was that one tool for a new customer?
Well, that order we received was for a single tool, but we happily will accept more.
Okay. And do you have any visibility when that specific customer or when maybe general order activity I mean, silicon carbide had been a bit slowed down this year due to the mixed shift in EV markets? But do you have any visibility on expected demand? How's the pipeline for silicon carbide-related tools developing at the moment?
I mean, this is a market which moves a bit slower compared to the AI markets. As you rightly say, there were some slowdowns in the EV market segments. Of course, I already established with some of the silicon carbide players where we, of course, are in a ramp-up phase, and we would expect more follow-up business once that market recovers.
Yep. Okay. Then on hybrid bonding, you mentioned to have received an order for the wafer-to-wafer hybrid bonding system. Was that kind of a single event, or do you see kind of a pickup in activity, interest in hybrid bonding in general?
Well, right now, in the hybrid bonding space, right now, you only discuss single events. I think there is no huge market yet. Of course, we are getting ready for more volumes, but this was a single event. But in the second half, of course, we would have more expectations, second half of this year.
Okay. More thanks.
You're welcome.
Thank you so much, Mr. Schaumann. This is also a reminder, if you would like to ask a question, you can use the audio line. Just press the button, raise your hand, or you can use the key combination star nine followed by star six if you dialed in via phone, or you can use our chats. And we do not have a question at the very moment, so we're going to give it a couple of seconds. As no further question. Oh, no. There is a question. Wonderful. Thank you so much, Mr. Reiss. You should be able to speak now.
Yes. Hello. I have just one last question regarding the overhead costs. In the first quarter, if my calculations are right, you have around about EUR 570,000 overhead costs or central costs. Will that be the run rate for the next quarters, or is it going to go higher a little bit? Did you hear me?
Yes, we did.
Yes. Thank you for your question. Yeah. We expect more or less this as a run rate for the rest of this year.
Okay. Thanks a lot.
Thank you so much for your question, Mr. Reiss. As no further questions have come in, we draw today's earnings call to a close. A heartfelt thank you to the leadership team, Mrs. Ballwießer, Mr. Frick, Mr. Rohe, and also Mr. Köpsel. And with that, I would like to hand over to Mr. Köpsel for some final remarks. Thank you so much on behalf of Montega, and have a great day.
Yes. Thank you. And if any more questions pop up, please let us know. We are always happy to answer, as you know. And I wish you a happy afternoon and take care, and see you next time. Bye-bye.