CEO Burkhardt Frick, CFO Dr. Cornelia Ballwiesser, and COO Dr. Thomas Rohe will speak in a moment and guide us through the presentation. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management. Having said this, I hand over to Sven Köpsel, Vice President, Investor Relations.
Many thanks, Judith, and welcome to our, yeah, kind of like a special conference call on our preliminary Q3 2025 results and the profit warning, which we have published yesterday evening. Thank you to everyone who is using that opportunity this morning and dialed in so early. As you probably know from earlier calls, this call is again being brought, 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. Now I hand over to our CEO for some opening remarks before we jump straight into Q&A. Burkhardt, please.
Thank you, Sven. Also, a very warm good morning, early good morning from my side. I'm dialing in from our Korea office, and Cornelia Ballwiesser is dialing in from our Taiwan office, where we are opening in two days our new Taiwan Zhubei site. Thomas Rohe is, of course, sitting with Sven in our headquarters in Munich. I'd like to quickly guide you through the information we distributed yesterday evening, and that, of course, concerns the Q3 preliminary results. There, I'd like to, of course, highlight that the volume has declined as expected also compared to previous quarters, and we are under a high margin pressure, which also triggered the ad hoc message which went out. We sum up the order intake at EUR 70 million, which is a gradual decline from the first two quarters.
Sales came in at EUR 118 million, also a decline compared to previous quarters, but an increase to last year's Q3 performance. Gross profit was disappointing at 33.1%, and that is, yeah, almost a 6% year-on-year drop. The resulting EBIT margin also dropped by 6 percentage points to the previous year to 10.5%. On the next page, you see the distribution over the quarters, and just now with the preliminary Q3 results inserted. There you see on the top left side the slow decline of the order intake along the three quarters, and also the sales figure, which dropped below the Q2 numbers and also the Q1 numbers. The concerning part is indeed the gross profit margin, which is at 33.1% in Q3, and that is, of course, what also triggers this call.
I'd like to step to the next slide where we are giving some rationale what triggered the results as we preliminarily reported them. Some were kind of expected events, and some are partially expected or even unexpected. That is related to the establishment of our new production site in Zhubei, Taiwan, where we are facing double rent costs and also relocation costs. We had the lower fixed cost coverage also due to the related decline in business volume compared to previous quarters, but also unforeseen expenses, which put extra weight on the margin. A very dominant part is the unfavorable product and customer mix, which was somewhat expected, but the actual result had a higher impact than initially foreseen. These are the three main reasons why we kind of came out with these results. I think the next slide is the first nine months' performance.
I just quickly run through this. The order intake is at EUR 236 million. Sales climbed to EUR 384 million, but the gross profit for the first nine months is at 35.9% and the EBIT at 14.1%. If you would expect an improvement in Q4, these results wouldn't be so concerning. We don't see any major changes in Q4, and that led us to the adjustment in our guidance. While we stay confident on our sales performance that we land within the range of EUR 470 million- EUR 510 million, we adjusted both the gross profit margin and the EBIT margin from a center point by 2%. The new gross profit expectation is 35%- 37%, and the EBIT margin ranges from 11%- 13%. That's based on the developments I just reported, but also that we don't see a major recovery possible in the very short term.
In the longer term, we do see potential to turn this around. With that, I'd like to open the floor for your questions.
Thank you very much for your presentation, Mr. Frick. Ladies and gentlemen, we are now open for your questions. For a dynamic conversation, we kindly ask you to ask questions in person via audio line. To do so, click on the raise your hand button. If you have dialed in by phone, please use the key combination star nine followed by star six. If you do not have the opportunity to speak freely today, you can also place your questions in our chat box, and I will read them out for you. We already have five hands up. Mr. Michael Kuhn, the stage is yours.
Yes, good morning, everyone. I hope you can hear me. First of all, on the gross margin in the third quarter, you went through the three main factors already. Would you be able to roughly quantify those factors?
Yeah, we're still in the deep dive analyzing those factors. Next week, when we have our official Q3 call, we can provide some more detail. We had, as mentioned before, product mix events. For example, we had a very high concentration of four photomask tools, which were recognized within Q3. Not all those tools were initially planned for that quarter. As you know, especially photomask tools for TSMC have a low margin, and that puts an extra weight on it. We also have a different distribution of products. We have projection scanners shipped in larger quantities, which also affected higher production costs than initially anticipated, as we are also, as previously reported, in a ramp phase. There were some unforeseen costs related to the ramp that also waited for the backend business.
Compared to last year, of course, we had much less bonded sales, which we also were able to recognize previously at higher margins.
Understood. Thank you. One on the OpEx. I think OpEx run rate was actually a bit better than what I expected for the third quarter. Maybe some insight on what you faced in terms of ramp costs for Taiwan in the third quarter, what is still remaining in the fourth quarter, and what would you regard as a kind of OpEx run rate figure that we should currently assume on a per quarter basis?
Yeah, who likes to take that question? I mean, as you know, we are in the phase where we have double exposure because we have the old facility still running. We are opening the new facility at the end of this week. We are in a moving transfer phase where we have double cost and also transporting the lines. That has started that process. It will continue in Q4. I think it's, I cannot out of my head now quote an OpEx run rate, but maybe Cornelia can comment on that.
Hello. Here's Cornelia speaking. OpEx in total for the third quarter, EUR 26.5 million. In the previous year, we had EUR 22.7 million.
This helps. Let's say the EUR 26.5 million, this is a level that we could, let's say, expect similarly for the upcoming quarters as well? Or this was, let's say, like massively inflated by running two facilities simultaneously?
We are working on our cost structure, and we have also cost-saving programs in place. It could be a run rate. Yeah, but keep in mind that the selling expenses are variant costs because a part of these are not fixed costs. It is linked to our output, our sales. I would say more or less, yes, it's the run rate.
I think I'd like to add there that, of course, the moment we have returned the premises of our first place in Taiwan and also did some reconstruction, which is always customary when you return an object, this double rent will cease. I think it's within the next two quarters, this number at least will be greatly reduced, the double rent.
Understood. Thank you. Third and last question, your FY 2025 guidance implies quite a further margin deterioration in the fourth quarter, pretty much into single-digit EBIT margin territory. What is the reason behind that? What is the sequential deterioration in Q4 versus Q3 that triggers that guidance?
I think we didn't say that there will be a strong deterioration. There will be just not an improvement on short notice. One reason is that the expected sales volume will probably be a bit lower, although we are still confident that we meet our sales guidance. Therefore, the top line is reduced. We have a similar product mix as we also saw in Q3. On top of that, we had some push-outs and some pull-ins of customer projects. The projects which have been pushed out into Q1 were actually quite profitable projects, and the pull-ins were not so profitable. It's an unfortunate mix. Basically, similar effects don't give us the confidence that we can strongly improve the margin within the running quarter.
Understood. Thank you. I would still say that, let's say, 11%- 13% versus 14% in a nine-month period would lead you into single-digit territory, but that is more like a data. Okay. Thank you very much.
Thank you for your questions, Mr. Kuhn. We will move on with [Gennadan Menon]. You should be able to speak now.
Hi. Good morning. Thanks for taking the question. Can you hear me?
Yes.
Yeah, thanks. I just want to touch on the sentence that you put that you will discuss appropriate measures to sustainably reduce the cost base in the future. Can you elaborate a little bit on what those measures might involve? I'm more trying to find a path to what your margin could be in 2026 and beyond. If your revenues don't noticeably improve in the short to medium term, would some of these cost measures help you improve margins as you go into next year? Secondly, on the order trajectory, can I take your comments to imply that you don't expect any meaningful improvement in orders in Q4 either, or is that something that could improve?
Yeah, that's good questions. Let me start with the second question. The order intake, we do expect an improvement in Q4. Of course, it's a bit early to say, but we expect a run rate clearly higher than the previous quarters in Q4. You also saw probably in the slide that often we have this spike in order intake in the fourth quarter, and we expect a similar distribution, not in absolute terms, but in relative terms in the running Q4. That is, I think, you know, that kind of keeps us mildly positive. The measures you referred to in your first question, we have measures already in place, which are measures where we control our fixed labor, which we started to reduce significantly. We had about 20% in fixed labor.
Sorry. Further up to your book, a flexible labor form.
Sorry, flexible labor. Yeah.
Sorry.
We had flex labor components, which we gradually reduced over the past months. Once you reduce them to the maximum level, you cannot turn that knob further. You have to come up with other means in cost reductions. We also stopped hiring already a quarter ago to countersteer the increased fixed cost we were anticipating. If that is not enough, which it seems to be, we have to consider other structural measures. I need to consult with my colleagues, and we have to discuss the options. We do not want to wait long before we can also disclose what we have in mind.
Understood. Thank you.
Thank you very much for your question, Mr. [Menon]. We will move on to APUS Capital. The stage is yours.
Yes. Good morning to you. Johannes Reis here. Maybe some follow-ons to the questions before. Maybe regarding the mix and margin effects, had there also some other things maybe you don't mention, like currency, pricing, warranties, that you maybe have some quality issues in the one or other product range, which also is maybe partly a reason that some margins so heavily deteriorated in Q3?
Yeah, I mean, that's what I meant with other expenses when I touched that point earlier, Johannes. We had quite high cost in supporting running customers, providing extra support because many of our customers are in a peak ramp period. We also had to double up resources on-site to assure that systems and machines are running at maximum machine utilization. That was quite resource-intensive. We had also some other project costs we still had to book in Q3, but nothing extraordinary. The main impact was really the product mix and the high concentration of structurally low-margin tools, which then also, in the end, you know, when you do the math in calculating all the hours to assemble those machines, had a high weight on the gross margin.
Maybe on the margin, you mentioned you had push-outs with high-margin projects, and you also have two projects which are coming next year, new versions of products with the scanner and the mask cleaning solution, which has better margins because they are new constructed and have a better cost position. For maybe how could next year work? You have maybe most likely lower revenues. Therefore, you have lower fixed cost coverage on the other side. Maybe this positive effect also this double cost will fall away. How could this balance out from today's view?
Yeah, that's a very good question, Johannes. It's, of course, we need to manage this tightly. Next year, I think also the analyst consensus is there will be a drop in revenue. Therefore, we have to really get the fixed costs under control, and that's what we are working on. Some of these shifted projects will help us benefit next year because then they will deliver the higher margin, which we anticipated actually in Q4. It will be a mix and match, and we will have less double cost because after Q1, there's only one factory in Taiwan, which we have to fund. Once we get through this transition phase and all these transitional measures, things should turn to normal.
One thing we don't want to do is we don't want to reduce our investments in R&D because we are working on all these new launches and all these new projects. We don't want to impact our future growth. On the short term, the next one or two quarters, of course, we have to hit the brakes a bit to keep things running smoothly. We anticipate quite a nice growth from the latest 2027 onwards.
Maybe follow on to this. Everybody talks about, yeah, interesting growth rates we've seen ahead in advanced packaging. We hear a lot maybe that the standard business is recovering in the backend space. We talk that maybe there is a better, yeah, higher CapEx maybe in the semi-equipment than originally thought because of higher AI demand. There are a lot of signs that maybe things are recovering, especially in HBM, where it looks like the demand is better than maybe feared from some people. Especially one of your most important customers has recovered and is coming back into the space. For not maybe to get some positive point or a note in this call, do you also see these signs of maybe that the demand could recover and you could benefit from this.
We see the same thing. I mean, I'm in Korea today. I was visiting one of those memory customers. Indeed, the activity level is stepping up. As you also know, they were having highly underutilized tools because they took a long time to qualify for NVIDIA. Now I think they're also trying to gear up for HBM4, and they are making sure that the existing fleet of machines is maximizing the output. Gradually, we do expect, of course, follow-up orders. We expected those before, and they were so far not coming. That's also why we needed to hit the brakes.
Okay, thanks a lot.
Thank you very much, Mr. Reis. I will move over to a question in our chat box, of which portions have already been answered. Because AI is growing, why are temporary bonders not growing? Sales to Micron and Samsung is expected to grow. How was the growth in Q3, and is there any growth in Q4? It seems like this growth is slower. If that is the case, why is that?
Yeah, as you said, I think partially this was answered. We are still installing systems which were ordered in the last quarters. We are still delivering and installing systems from the last 9 months or 12 months' order backlog, which are running . Once they're up and running, that's when the moment is when you also could anticipate future orders. Our customers know that our lead times improved greatly, so they also wait. I wouldn't be surprised if we also get fairly short notice some follow-up orders. I want to have them first before we can celebrate.
Thank you very much for your question. We will go on to Madeleine Jenkins. The stage is yours.
Hi, guys. Thanks for having me on. I just had a question on, I guess, this quarter's current order intake. Were there any kind of end markets that were better or worse? What drove the EUR 70 million you guys got this quarter? Thank you.
We had a fairly large portion of orders from existing long-term customers, which placed large volume orders for our coating systems. That was a very positive effect. Only partially, it could offset what we experienced in previous quarters, and especially last year in bond orders. That was developing quite some momentum, and we haven't seen the end of that yet. We did not receive large orders for our photomask equipment, but also there, we expect some larger orders coming in in the next quarter.
Perfect. Thank you. Do you have an idea of what the backlog is now looking for 2026 specifically at this stage? If you can't share, that's fine.
I can't share right now, but you mean the order book at the end of the year?
Sorry. Just like the orders in your backlogs that are to be delivered for 2026.
Do you mean the ratio of which orders are for? All orders we, of course, are collecting in Q3 are for 2026 delivery.
Got it.
Because you know our shortest lead times are around five months, unless we already started building something and a customer locks in a last-minute order, but that's rarely the case. Everything we are booking now is for 2026 revenue.
Okay. Thank you. Just the last question, a bit left field. I apologize. ASML announced a new advanced packaging tool, a kind of a lithography scanner. I was just wondering, does that compete with your UV projection scanner at all, or is it sort of a separate application? Thank you.
I'm very aware of that tool. That's a separate application. It doesn't compete really with our solution because our solution is a full-field scanner. With that scanner, we outperform another competitor of ASML, who has to use stitching technology to expose the entire field or the entire wafer. We don't see any competition by the ASML tool. Of course, you know this tool was designed to compete head-on with Canon and other kind of more mature machine manufacturers, but primarily Canon. That's more in the front-end market, not in the backend.
Got it. Thank you so much.
Thank you for your questions, Ms. Jenkins. We move on to Nicole Winkler. You should be able to speak now.
Yes. Thank you. Good morning. I have a follow-up question on the push-outs you mentioned. I want to understand which kind of project or which kinds of end market pushed out their projects into 2026. In the end, what is the net impact? Did more projects be pushed out than pulled in?
No, it's, you know, if more were pushed out, we wouldn't have kept the sales guidance, Nicole. It was a wash, pretty much. The bigger projects which were pushed out, you know, was one large MaskTrack Pro mask cleaner, a fully equipped one, which was not for TSMC, was for a large European customer. That one landed, and that was pushed out because some special features were required and their site was not ready. They asked us to deliver at the end of the first or in the second quarter. That was the biggest project which was pushed out. Some smaller ones were pulled in, but they were not the most profitable ones.
All right. Understood. I have one question regarding operating cash flow. What should we expect here for Q3? Any kind of improvement or the same run rate as in Q2?
There, I'd like to hand over to Cornelia because she's probably better suited to answer that question.
Just a moment. You asked for operating cash flow?
Yes.
For Q3? Sorry. I do not have the Q3 figures right now. I will come back in a minute.
Okay, thank you.
Yeah. Otherwise, Nicole, we can answer that question next week when we have our regular call. This is, of course, more a very short-notice call. Please accept that we cannot answer all questions, not because we don't want to, but we need to have the detailed information in front of us. Also, we are scattered over three countries right now. That doesn't make it that easy.
No worries. Thank you.
Thank you very much, Ms. Winkler. We move on to Malte Schaumann.
Yes. Good morning. First question, again, is on the Q4 margin progression your new guidance implies. I mean, if I take the midpoint of your top line and the midpoint of your gross margin guidance, then I would end up with OpEx shooting up to mid-30% levels to come to the midpoint of your full-year EBIT margin guidance, implying kind of a 4% EBIT guidance. Are you aware of any push-outs in OpEx costs from Q3, which had been a pretty favorable level at 26% to the fourth quarter? Do you not have yet the full picture on the cost development, which might be the case why you more or less leave your OpEx budget unchanged for the full year, which would imply a pretty significant increase in the fourth quarter?
I don't think we have that data available yet, unless Cornelia can answer that question.
Mr. Schaumann, do you have any follow-up questions?
Okay. We should discuss that next week again, I think. It doesn't add up. I think, yeah. The next question is on the cost savings you initiated. Were these initiated rather by the maybe more muted, I mean, the sales will go down next year. I think that is kind of a condensed expectation. This is basically nothing new. The additional cost savings, have these been initiated, triggered by an even more muted outlook from your side that you see orders do not really come in at the expected level, or are these rather a reaction to offset the disappointing gross margin development to keep EBIT profitability at a better level than without them?
More the latter. We want to reverse the trend, especially knowing that next year will be a bit more muted anyway regarding top line. We need to reduce the, for various reasons, increased fixed cost.
Some of the fixed cost increases are temporary. We know that, of course. The overall fixed cost burn rate is too high. If we don't take countermeasures, and that's what we are discussing now, what are the most effective measures we can take to also have a more secure 2026? Any measures we are taking now will anyway have only effect in the course of 2026. To be clear about that, there are no quick wins.
Okay. Good. On the order backlog, if you look at the order backlog today and the margin structure, we have talked about some additional one-off kind of ramp-up related one-off costs, some pull-forward, pull-in effects. Would you say that you structurally see kind of a miscalculation of the order backlog? We had that in the past where actual margin development turned out to be worse than expected. Is that kind of the same pattern?
Maybe it's too early to ask that question. In terms of recovery in gross margin next year, would you say that everything is more or less unchanged in comparison to the numbers you had in front of you three to four months ago when you look at the order backlog, or has anything changed here?
There are no significant changes, Malte, but the backlog, we broke through the backlog. We really managed to execute and produce more. That's also why we have a below one book-to-bill ratio. We really executed faster that we could bring new orders, new business in. That is a situation we now have to see. We also have to see at which order level, you know, intake level, this whole picture stabilizes because then you can also define at the point, you know, what can you afford in fixed cost.
We are adjusting to the lower order entry level because hoping that the next quarter will be better alone is, of course, obviously not good enough.
Yeah. Okay. Great. Thanks.
Thank you for your questions, Mr. Schaumann. We have one last question in our chat box. You mentioned that you expect a higher order intake in Q4. Can you please give a little bit of color on that? Will we come closer to EUR 100 million again or even above this mark?
Right now, from the perspective, it's very speculative, but we think we can have a significant increase in Q4. The number above EUR 100 million is not impossible.
Thank you very much. In the meantime, we have received no further questions. We therefore come to the end of today's call. Thank you, everyone, for joining on such short notice and all your questions. Should further questions arise at a later time, please feel free to contact Investor Relations. A big thank you also to the Management Board around the world for your time to answer the questions. I would also like to extend a warm invitation to the SUSS MicroTec SE Q3 call on the 6th of November at 2:00 P.M. Central European Time. With this, I hand over to Vice President, Investor Relations, Mr. Köpsel, for some final remarks.
Yes. Thank you. Also, from my side, you know where to find us. Please do not hesitate to get in touch again if any further questions arise. Take good care and have a good day.