Hello, and welcome to the presentation of Mycronic's Q4 report. My name is Sven Chetkovich. I'm the Director Investor Relations at Mycronic. With me today, I have Mycronic's CEO and President, Anders Lindqvist, and also Mycronic's new CFO and Senior Vice President Corporate Development, Pierre Brorsson, who will be presenting his first quarterly report for Mycronic today. With that, I hand over to Anders.
Thank you very much, Sven, and I will move the presentation here. What we will talk about today is the usual agenda. A little bit of snapshot, a short look on the Q4 , and then a little bit more details on the development within all the divisions. Pierre will then talk about the financials, some final remark, and then we will have some room also for question and answer session. In the material, there's also an appendix with the market update, which we will not present, but that is in the presentation that you can download after that, after this session. If we start to talk about the quarter, and all comparisons here are of course compared to the same quarter in 2020.
We saw a good order intake, which increased with 43% up to a very nice number of 1,234, so SEK 1.234 billion. Also an increase of net sales with 30% up to close to SEK 1.3 billion. At the same time, we saw also that the EBIT decreased to 104 million. The reason for that decrease, I will explain that a little bit more in detail, is the product mix in the Pattern Generators division. Then of course that EBIT margin ended at 16%. The order backlog is still very strong at close to SEK 2 billion. At the end of the quarter, we had 12 mask writers on the backlog.
We have also received, actually two more orders after the quarter. As it is right now, we have 14 mask writers in the backlog, and 10 of them will be delivered this year. We also completed and closed the acquisition in China of a company HC Xin, which is a company doing screen printers for the electronics industry and also have a little bit of business in the pick and place equipment. As I said, after the end of the quarter, this was during this year, we received two orders, and each order had one SLX mask writer for the semiconductor industry. We also completed and closed the divestment of AEi, which are now sold to ASMPT. That was closed in the beginning of February this year.
That was the quarter in short. If we take one look on the full year, and we are very happy and proud about that, is that we reached an EBIT margin of 11% in what was formerly the Assembly Solutions business area. We have kept tracking this number because we had to be put on a target, I think two years ago, that we would reach 10% EBIT in this business area for 2021, and we ended at 11. That is accomplished, and we're very happy about that. If I then move into the different divisions, starting with Pattern Generators, here we have seen a continuous, very strong demand from the semiconductor industry.
Everyone knows about the semiconductor shortage and that this industry is very busy right now. At the same time, we have also quite an installed base of equipment here for this industry when it comes to laser-based mask writers, which have created a very strong demand for our SLX mask writer that was quite recently introduced on the market. That strong demand has translated into an order intake where we had in the quarter orders for 4 SLX machines for the semiconductor industry. As a total, the order intake declined 5% to SEK 384. Also, sales were up 4% to SEK 399, and the EBIT ended at SEK 146 million.
This is less than the quarter the year before, and this is because we had a less favorable product mix where we didn't ship any advanced systems for the display industry. Backlog was at the end of the quarter, SEK 744, and at the end of the quarter, as I said, we had 12 mask writers in the backlog whereof 11 were SLX mask writers and one is a Prexision 800 Evo. We have received two more orders as said, which means that we have 13 SLX and one Prexision 800 in the backlog, and 10 of them will be delivered this year. Moving to the High Flex division in the Assembly Solutions business area. In the quarter, we had a very successful participation on a trade show called productronica.
Productronica is the largest and most important trade show globally for our kind of High Flex industry. It's held in Munich every second year, and despite pandemic and such things, it was quite good participation at the fair, both from exhibitors, but more important from potential customers, of course. We launched a lot of new products on that fair, and one of those launches was an upgraded inspection systems in that range, and also a broadening of our MYSmart series. The MYSmart series is dispensing equipment, and we offer products here for conformal coating and inline dispensing. The orders were up 6%, and we had orders all across the entire product portfolio. Sales were up 11% to SEK 368 million.
On the delivery side, we have been successful with most of deliveries, but we have, of course, negative effects from higher expenses, both from logistics, but also from components, and also more effort to manage deliveries because of the shortages, both on transportation and on components. We have mitigated also with price increases, and the gross margin has remained stable at 41%, which is good. EBIT is up to SEK 59 million, which means also 16%, which is quite a good number here if you look on the history. Backlog ended up at SEK 130 million for the quarter. Move to the High Volume division.
Here also we see a continued strong demand from the industry, and it's mainly in the consumer electronics industry, which is the kind of traditional industry for our High Volume segment, but also quite a very strong demand from electric vehicles placing orders for production equipment here. We also have broadened our offering focusing more on complete solutions, and we see some good effect from that. We had an order intake increase of 102%. This is of course it's also compared to a not so good quarter before, but the order intake ended in absolute numbers at SEK 328 million, which is still a very good number for us. Sales increased almost 40% to SEK 283 million.
We had some pressure on the EBIT, so we ended on 17%, and it's a mix between that we had a little bit lower than normal gross margin and also that we have made quite some investment in commercial resources for the quarter. Also here we have a comparison effect where Q4 in 2020 had lower than average selling cost, so the comparable effect is bigger. The backlog ended very strong at SEK 809 million, and here we closed the acquisition we made in China of a company HC Xin, which I mentioned before, and that was closed in November 2021. We go to the Global Technologies. Now we offer two lines of business, we have here.
One is electrical testing of PCBs, and then we have die bonding equipment for very precise placement of components. In the quarter, we also had the camera module assembly technology in this, but I'll talk about that in a second. Starting a little bit with the market. We saw a very good demand driven by investments in 5G and data center, and that translated into purchases of equipment from us. We also see good activity in the electrical testing for PCBs in that market. Order increased quite a lot, but it's a little bit an unfair comparison because we didn't have the electrical test equipment in the same quarter in 2020.
Nevertheless, the order intake ended at SEK 245 million and the sales at SEK 252 million. Also here we have managed to deliver products according to schedule, although the circumstances are a little bit challenging, and EBIT ended at 8% or SEK 21 million. After the period, after the quarter, we closed the transaction or the sales of AEi, and that happened in the beginning of February this year. We have also, as usual in this quarter, updated the outlook for this year, 2022. We see that we project and aim to reach sales of SEK 5 billion, which is actually equal to our long-term financial target. That financial target was supposed to be reached latest 2023, and now we believe that we will reach that this year.
Our outlook for the sales is SEK 5 billion. The product mix that I mentioned that we had in the Q4 will continue throughout the year, and this is quite visible if you look in the backlog of pattern generators, where there is no super advanced display mask writer in. Therefore we believe, and we also wanted to give this information that we believe that the EBIT will be slightly above our long-term target of being above 15%. This is all because of this effect from the product mix. I mentioned already the reaching of the financial target of sales that we believe we will reach it this year. It's about time that we update that, and this will happen later this year.
We will update our financial targets during the year for the coming long-term period. The current target is, as mentioned, then to stay with the profitability above 15% over a business cycle, which we do, and not having a debt which is larger than three times EBITDA. This is also an average number, so this is over a period of time. With that, I will hand over to Pierre here, who will go a little bit deeper in the financials.
Happy to do so, and happy to join Mycronic with the first webcast. If we look at the development rolling 12 months, we have now reached a point of SEK 4.6 billion, and this is just slightly above the outlook that we've had for the year lately. We reached a similar EBIT margin as the previous year, around 23%. We can also conclude that the after market constitutes a stable base for our revenue going forward. Looking at it quarter by quarter, however, you can see that the EBIT margin is a little bit more volatile. I think this is an important thing to note when we present the numbers for the quarter, and also looking ahead.
If we compare quarter-over-quarter, we have a decline in EBIT margin despite a higher sales number. As Anders already mentioned, this is related to the product mix and primarily then the sales within the Pattern Generators. You can also see that, as we are moving up and growing, aftermarket in amount is also continuing to grow and this is a very important metric for us in developing the business further. Looking at the bridge quarter-over-quarter, we had, as mentioned, a net sales increase, and multiplying that with the margin of last year, you would have a volume effect that is expected to increase the EBIT with SEK 158 million.
However, with the margins in the product mix that we have, and this is as if you analyze it, you can see that it's totally attributable to the PG division, had a negative impact of SEK 125 million. R&D on relatively similar levels. Sales costs were higher in several of the underlying divisions. This was partly driven by the high activity level where you have sales commissions, the productronica, and so on. Also adding sales resources in particular in the High Volume division and of course the acquisitions that has been made during the year. That said, we had also a very low comparative number in Q4 last year, where Q4 sales numbers only constituted 17% of the annual sales costs.
We had also finally a very big positive effect quarter-on-quarter what is characterized as other here, and this is mainly one-time events such as currency fluctuations and the like. It was somewhat positive this year and strongly negative last year. That takes us to SEK 204 million of EBIT that we report for Q4. Division by division, you can see that we had a decline in Pattern Generators and mainly an improvement in High Flex and Global Technologies, which has been a bit difficult for us over the years and now improving with slight negative contribution in the High Volume and the group functions.
Actually in the Q4 for the two months we had HC Xin, this contributed slightly negatively on the results, but not substantially on a group level. I then added this picture to show that the reliance on the Pattern Generators division, which has been extremely big for the group, is declining if we look at 2021 versus the two prior years, and this is also what we see a bit in the outlook for 2022. It's important contribution and important improvements in all divisions. If we look at the annual cash flow, we have a strong cash flow from the operations. We have actually improved the metrics, in particular on the receivables, when it comes to working capital during the year.
Less days of sales tied up there. In relation to the net profit or you can say that this cash conversion is very good overall. On the investing side, this has mainly been driven by the acquisitions that we made, and then of course, the big one in the middle of the year, ATG Luther & Maelzer accounted for most of that. As expected, we have paid some dividends to the shareholders. As you may have noted, the proposal from the board is also to keep the dividend on the similar level for the next year. With that, I hand the microphone back to Anders.
All right. Thank you very much. I will end the presentation to talk a little bit about our platform for growth and also the sustainability work that we're doing at Mycronic. I think we believe that we have a strong position for sustainable, profitable growth. I think the profitable word here you can see from Pierre's graph that we believe now that all divisions are a meaningful contributor to the business and get a more even distribution there and also have a very strong position to continue that growth position.
When it comes to sustainability, I think we have during the year taken several good steps in a very good direction here, especially in the last quarter of last year, where we have broken down the overall sustainability targets that we have put in place for the year 2030 now broken down into the different divisions and translated into different activities. The targets we have will create a focus on innovation for sustainability, 'cause our largest impact on the environment is through our products, and we believe that through innovation, we can do a good difference here. We also employ a great number of engineers, and we will employ a big number of future engineers. Here we want to drive a diversity focus for future engineers.
Of course, then our own environmental footprint, which is not enormous, but everyone can always do something. We also have activities in place to reduce that to the target levels, earlier communicated. The overall group's goal is now broken down into specific goals and or targets and challenges and opportunities in different divisions to make them as concrete as ever possible. We are very happy with that. That, in fact, concludes the presentation part of today. Now we have quite good time for questions and some answers also.
Great. Thank you, Anders and Pierre. Now we're moving over to our Q&A session.
Thank you, sir.
Operator, we are ready to take questions.
Thank you, sir. We have our first question from Mr. Mikael Laséen from Carnegie. Sir, please go ahead.
Yes, good morning. Thanks. I have a few questions, and I thought take them one by one. Start with one on the PG side, Pattern Generators side. Can you talk about the market activity, the order funnel for 2022 and product categories, maybe how they are developing in terms of order activity and interest?
I can give a part of the answer, at least. I think if you look on the market, we could say that on the photomask market, that has returned to good levels, 'cause there was a decline in that earlier in last year. We believe that the underlying demand or the demand for photomask is quite high, and that should translate, of course, into use of equipment. Will not comment really how our funnel looks like, but I think long term, we have seen no difference really in demand or technology change that is not in our favor, I would say. I think we still see the same trend in the AMOLED display, which is a more advanced display.
It's requiring more advanced and more photomask. We see also the shapes and forms of displays. It's also continue to develop, also creating the need of photomask and so on. I think for the display side, really long term, no difference, and more recently, a pickup on the mask market. We definitely hope for orders, of course. On the semiconductor side, I think I mentioned a little bit earlier, the demand is very strong, and I think we have a kind of an underlying demand because of the aging of the installed base, which was one of the reasons actually that we went back into this market with the SLX. But also, of course, the more recent increase on the semiconductor market in general.
Here we're quite happy with how that has translated into orders for us. Is there something to add there?
Okay. Yeah. Thanks. Yeah. That's helpful. Can you also explain maybe how your delivery possibilities look like? Give an update on that?
Yeah, that depends a little bit. The backlog right now is 14 machines, and now I should remember, I think 13 SLX and one Prexision in that, and 10 of them will be delivered during this year. This is quite busy. That's quite a lot for us. That's quite a high production number. In general, I would say that. But it depends on customer needs and the type of machines and so on. But in general, most deliveries, orders taken now will be for 2023. But that's a very general direction of the question. It depends on the order and equipment the customer need and our ability to prioritize.
I was also wondering here if you can explain what the revenue and margin guidance for 2022 means for your segment. Does it imply that the PG segment will have lower revenue in 2022? It looks like that given the order backlog.
We will not guide on specific revenues by division. So, I mean, it o bviously, it will not be a record year for the PG division, given that we are informing that we expect a somewhat lower EBIT than we have had the last couple of years.
Okay.
I think you can look on the backlog and then the communicated value in the press releases, and you will get a good picture if you add back. (crosstalk) Yeah, exactly. I've done that add back the aftermarket.
If I do that, it means that including service revenue, and including what you have said about 2023 deliveries, revenue will decline by maybe, what, 15% if you take a few more orders with the shorter lead times. That also implies that Assembly Solutions segments, the three other segments, have to grow by 20% in order to get to SEK 5 billion. Is that a fair description of roughly what it looks like, roughly how we should think about it?
Unfortunately, we will have to ask you to do the math. I reiterate that we have seen this year a larger dependency on the other divisions than on the PG delivering the profit, and that will continue also in 2022.
Okay. It means very strong growth for Assembly Solutions. You don't have any acquisitions that you don't have already done, sort of, in that guidance figure?
This is correct. This is for what we have today, including the already closed acquisitions and the divestment which was now concluded there, beginning February.
Okay, got it. My final one, for now, is on ATG that you acquired last year. If you can say something about the organic growth and margins the company had in Q4 and maybe talk a bit about the outlook for 2022.
No, we will not be specific on that level. We've seen it has been according to expectations, I would say. I think we announced at the acquisition some historical numbers, and we have been very satisfied with the development since that. We have also seen good development both from product launches but also good from the market has a good momentum in that business. We have a very quite high share of aftermarket also in that giving some kind of baseline or stability to that business as well. So far we are very happy with that one.
Okay, thanks.
Thank you.
Thank you, sir. Next question is from Mr. Fredrik Lithell from Handelsbanken. Sir, please go ahead.
Thank you very much. Thank you for taking my question as well. I think I take two questions, and then I go back into the line and see if there are other ones to ask questions as well. Just a housekeeping on the acquisition-related costs. You state that you had SEK 11 million of those in Global Technologies. Is the rest and on the group level, you had SEK 24 million. So is the rest then attributed to High Volume segment and the HC Xin acquisition? That's the first one. Maybe if you could elaborate a little bit on High Volume segment where you had a bit of a spike in OpEx.
It might not be a surprise to you, of course, but could you describe what you have been doing there that is taking a toll on the EBIT in the quarter? It's a very uneven type of EBIT performance throughout the quarter, so it would be very interesting to hear. Thank you.
Okay. If we start with acquisition-related costs, we consider acquisition-related costs both the amortization of the intangibles as well as the transaction costs. There was a little bit of transaction costs closing for the HC Xin in the quarter, but the majority is amortization of intangibles. As you mentioned, the largest portion of that is related to Global Technologies or rather ATG.
I think that probably explains that one. The second question was?
The OpEx in High Volume.
The OpEx in High Volume. Yes. We have continued to invest in the growth in Axxon. We have seen very good development on both orders and net sales. We have a little bit decided to front load on the commercial resources. This in combination with a little bit lower costs in Q4 last year may make it look dramatic. It's not as dramatic for us. I think it is an uneven EBIT performance throughout the year. I think from our side, I think it's important that we are able to keep up the gross margin.
I think that is, even if the comparison there is somewhat more favorable, I think that is a critical item, and that we can only do by having good commercial resources.
Yeah. Can I have a follow-up on High Volume there? You have had a very good run when it comes to order intake, but some of it has also sort of stayed in the order backlog, which is now quite big. Is that due to that there's a lot of larger system-type of orders that you deliver a big system for the customer and then you sort of revenue recognize that as a lump sum and when you pass some, you know? Yeah. Is that part of revenues here and order intake?
We have a rather cautious point of recognizing revenues in HV. That is one key parameter.
Is it system sales or is it machine for machine that you deliver? Because also when you look at net sales, I mean, Q1 2021, you had SEK 368 million revenues, and now it's SEK 283 million. So it goes also up and down. I mean, the order backlog is signaling that you have a very high activity. Is it lumpy in that sense when you deliver?
I can say that the character of orders differs a little bit year from year, depending on the customer type and the project type. Sometimes it's more solutions and lines rather than machine by machine. You're right in saying that we, Pierre, are very cautious on how we recognize the revenue. Typically, there are conditions also from when the product is considered to be delivered from with installation and functionality and all that. That can differ a little bit back and forth. Then we have had quite large orders, complex orders, and so on recently. That's definitely one of the reasons, but not everything.
There will always be a mix between that, depending a little bit on customer type and project type.
Okay. Perfect. Thank you very much. I will go back into the line.
Thank you, sir. We have no other questions, ladies and gentlemen. If you wish to ask a question, please press zero-one on your telephone keypad. It's zero-one on your telephone keypad. We have another question from Mr. Fredrik Lithell from Handelsbanken. Sir, please go ahead.
Hi. I came back earlier than I thought. Can we come back a little bit on Pattern Generators and your the long-term trends and what you see there? It would be interesting to have you put some more flavor on it. You talk about increased activity that you've seen lately. We looked at Samsung had an investor day where they were very positive on the OLED penetration on the laptop side, for example, and so on, and maybe also big screens and a little bit on the news from CES, transparent solutions and everything. What's your view on how sort of the different applications for your machines?
Is that growing quicker than you think or do you see that it will start to grow quicker or anything that could put some more light on the trends in the display industry would be interesting to hear? Thank you.
I think there is some material also in the backup slides here that you can look at where we kind of. It's third party analysis all of that looking at the display market and how that will grow. I think we have the same view as those external analysis. But you're right that the driver for that growth is very much the technology change, which is AMOLED is one of them. You also have the other Mini-LED, Micro-LED coming a little bit stronger, although still not very big on that one, and the different shapes and transparency, and also more equipment.
I think we have seen there has been a good push from smart watches and health devices and all kinds of devices with screens inside, also from the automotive side and so on and so on. I think we have said that for some time now, but there is no reason for us to change that statement. Long-term, we have seen there is a shift a little bit. I think last year there was a big push on ramping the LCD actually grew a little bit faster than expected last year because of the computer display market was extremely strong. Very much driven by home office and several more working locations.
That push is a little bit gone right now, but now we see other segments growing faster, like you said, the AMOLED for laptops and so on. I think other than that, the LCD maybe last year lasted a little bit longer than we thought. We see no other change in the market dynamics going forward from now.
Just to follow up on where you stand on your technology on the PG side. I mean, we heard a lot about the metaverse and everything and that VR and AR is turning true and your Prexision 800 machine might be optimized for a 4K smartphone screen in terms of write time and productivity, but where do you stand in terms of the next. If you need a next generation technology in order to push forward in productivity and so on. Any light you can shed on that would be interesting.
Yeah. We need to go hand in hand with the rest of the technology needed to make displays. Even if you would invent a mask writer that is better than the aligners and the other equipment in that supply chain has to also follow in that. That's kind of the whole industry needs to move in that direction. I think that's what has happened in the past, and I think we don't see any reason why it should not happen going forward as well. It's not us alone. It's kind of a lot of other
Right.
Global Technologies as well, of course, that needs to follow.
Yeah. You are well prepared for that. If there would be a shift, a step up in technology, you are well prepared for that?
I think, yeah, we are very flexible on the R&D side, so we will definitely take the challenge.
Okay. Perfect. Thank you very much.
Thank you, sir. We have no other questions. Back to you for the conclusion.
Okay. Thank you. Well, with that, we've reached the end of today's presentation. Thank you for attending.