Earnings Call: Q4 2020

Feb 10, 2021

Good morning and warm welcome to Micronik's Q4 2020. My name is Tobias Bolov, and I'm Head of Investor Relations. With me today here in Stockholm, I have the Micronik President and CEO, Anders Lindqvist as well as our CFO, Torbjorn Wingard. After the presentation, there will be time for questions. I would already now like you to ask you to limit your questions to 2 per person as a start at least. Our operator for today will guide you on how to ask questions. We will end at latest at 11 o'clock. And for your information, this session will also be uploaded as an on demand on the web. For this reason, we ask you to stick to English also during the Q and A. With that, I'll leave over to Anders. So thank you very much. So I will together with Torbjorn, our CFO, Present the Q4 result and some other things. So starting with the agenda, and it's almost a standard agenda. There is a little bit change Which you might have seen. So first, I will talk about the quarter 4 and also the outlook for this year, 2021. Otis new is that we will go deeper into the divisional development and the market view. As you know, we have Changed the organization with the new structure into 4 divisions. And as from now, we will also report According to that new structure, you will have some more details about our performance. Torbjorn will go Through the financial details, and I will end with some words on the platform we have for continuous growth. And then as Tobias said, we have a question and answer session. So first to tell you a little bit on What we actually are doing at Micronik, and we develop and sell products and solutions that make it possible for our customers in their turn to produce products for what we call the everyday life. And example of our customers' product could be switches that are used in data communication centers. It could be lifesaving devices such as heart starters and pacemakers. It could be all kind of entertainment equipment and Car Safety Equipment. So it's really supporting your everyday life, what we our customers are doing. Then moving over to quarter 4, and also I will make some comments on the full year And on our outlook. So during the year, quite early, I think in April, we changed our structure, our operating model into a much more decentralized model. And It was quite good timing because that really helped us to manage the effects of the pandemic during the year. So we were able to Manage our performance, our cost and also our local presence really to manage the effect of that. So the diversified setup as supported in that. If we look on the financial development in the quarter, We saw an increase of the EBIT of 5%, up to a 22% margin. Sales decreased With 11%, and this is based on a constant currency. And we had a quite sharp decline in orders So 49%. And the majority of the difference you can also see is a comparison to a very strong quarter in quarter 4 in 2019. We still have the target for what we call the Assembly Solutions. So that will be consists of the 3 divisions that were the Assembly Solutions, and there we had an EBIT margin of 5%. And we're still confident and it's still our target that we should be at least at the level of 10% for 2021. So this is this year. Backlog of almost SEK 2,000,000,000 going into the year, which is quite good. And long term, We see that the long term market is robust. We see that the electronic industry are showing some good growth number going forward. Then we have the outlook. So our outlook for 2021 is SEK 3,900,000,000. And I can imagine that, that looks flat because we have more or less the same result in 2020. And there are some reasons why we have chosen to have this outlook. One of them is currency. We have a headwind of From the currency, just to compare the kind of the outlook currency versus the 2020 currency, it's It's more than SEK 200,000,000 GAAP just of currency. Another factor is the backlog Going into the year, when we went from 2019 into 2020, we had almost SEK 200 more 1,000,000 in the backlog, Which is creating quite a gap. And then it's our time that we have between order and revenue. So we believe that 2021 will be a good year And visible of the order intake and the time to revenue is in our business a little bit later. So with the currency Headwind with the lesser backlog and the time between order and revenue, that is how we have Arrived at the number of SEK 3,900,000,000. So With that, I will go into the different divisions. So starting with the patent generators division, which are producing what we call mask writer equipment. The customer segment for this is the display industry, semiconductor industry, and we're also serving what we call the multipurpose industry. The drivers for this market is very much technology driven. So it's new display applications, which could be larger display, More advanced display like the shift from LCD displays to AMOLED display and higher resolution displays, so all that It's a drive for creating our market. And we are the global leader and the only supplier of mask writers for Advanced Photomask for the display industry. So if we look on the performance, So we introduced that was late in 2019, but we introduced a new product some time ago, which is the SLX mask right there, which is aimed for the semiconductor industry. And we had a fantastic year. We had Four orders in quarter 4. And for the full year, we have 8 orders. So that really confirms that we had a Very good timing of the introduction of this product, and the product really hit the market with its features and benefits. And also you can see that we had quite a few orders of display writers, and it's kind of there's normal very big deviations between In this business, so you really need to look at this at a very long perspective. The sales For the quarter ended at SEK 385,000,000 compared to SEK405,000,000 previous the year before and for the full year, SEK 1,500,000,000 about, which was a little bit higher in the year before. We have delivered the first SLX Mask writer to a customer in Asia. We had also delivery of a Praxision 8 EVO and one major upgrade. We also had one delay, and that is an FPS 6,100 that should have been delayed should have been shipped at the end of the quarter That has now moved into the first half of this year, and this is all due to the pandemic situation. Currency effect has quite a big impact in the quarter with SEK 16,000,000 and the full year with an impact of SEK 39,000,000. EBITDA up to 14% in the quarter and on the full year decreased 18% and the margin 48% for the quarter and 54%. For the year, backlog is good. We have 11 systems to deliver in 2021, and we have two This terms an order that is for delivery in 2022. The pandemic situation has increased the time line uncertainty It is uncertain. And it's mainly due to logistical challenges due to traveling customers coming to factory for signing of the machine and so on, which we are always working around and find different solutions for. On the HyFlex division, so what we do in the HyFlex division is that we develop and sell Very flexible full line solutions consisting of different type of technology, pick and place machinery, solder yet, Solder paste jet printers, inspection equipment, storage and material handling equipment. The market drivers is really here And the market is really the high flex market, high flex low volume market where just in time production, automation, Yield and cost efficiency and so are really the drivers for that. And here we have a leading position in this Hi, Flex segment with the low and medium volumes. Performance. So we saw almost a U shaped year. We've had a quite low activity level From April to August, and we have seen an increased market activity from that low level in the quarter. So we have seen that investments that have been on hold start to materialize. We have seen examples of large orders in Western Europe and the United States. The uncertainty is still there, and it's an increase from a low level. The sales decreased in the quarter with 23% and 21% in the quarter and 23% for the full year. And also here in this division, we have a very challenging comparison with a very strong quarter 4 in 2019. Currency is also affecting this division. And in the quarter, we had a SEK 24,000,000 Effect of that, which is the same for the full year. A decline in EBIT of 25% In the quarter, 65% for the full year, margin was 8% in the quarter and 3%. And order intake had more or less the same decrease, so 25% in the quarter 4 and for the full year 2020. Moving over to the High Volume division. So what we do here is we're selling into the high volume market segment in the electronic industry. And the high volume segment is mainly consumer electronics, such as mobile phone is a big application for A large segment in this market. The market drivers as well here, automation, cost effectiveness And the need for robust electronics. The main application that we have here is dispensing and dispensing equipment into this Segment, the high volume segment is large in China, and we have a leading position in China with this technology. And we are number 4 globally in this technology. If we look on the Performance of high volumes. We had a very strong ending of the year 2020. We had majority of our sales is in China, And our position in China has improved and strengthened during the year. We have a stable and healthy market. We had a dip, Of course, during the pandemic situation, that was quite early in China and the full close down in February last year. But since then, we have seen a great recovery of the market. We're also growing outside China with orders. And as I said, the COVID-nineteen impact has been limited for the full year. For the quarter, we had a sales increase of 8%, and for the full year, very strong 46% increase of orders of sales. Currency effect is NOK 9,000,000 in the quarter and for the full year NOK 22,000,000 negatively. EBIT improved in the quarter with 3%, and for the full year, we had a 75% increase of EBIT. So the margin in the quarter was 15% and 21% for the full year. Order intake, also here we had a very challenging We have a challenging comparison with quarter 4 2019. So the order intake saw a decrease of 33% in the quarter. For the full year, we had a 6% increase. Moving over to the last one, Global Technologies. Here we have two lines of business, and one is dye bonding, Which is a high precision placement technology and camera module assembly, which is mainly for the automotive market. Assembly and alignment of active cameras for the automotive market, these two lines of business. The market drivers is for the die bonding is really the data center applications, everything that has to do with data communication. And the 5 gs rollout really supports this market in a strong way. For the camera module assembly side of the line of the business, The driver here is the in car advanced cameras for automotives. And we have a leading position in both of these Businesses. If you look on the performance, we have a very mixed development, what we call optoelectronics, and this is The die bonding or the die bonding technology supports data communication. So we have seen a strong very strong performance, and is driven by the increased number of data centers and communication and also the increased need of high speed communication. Chinese market has been a little bit slower. We had very high levels earlier. We see that going down. And Quite a lot driven by an accumulation of inventory. And that accumulation of inventory was because of the Belief in an increased uncertainty because of the U. S.-China trade wars. The other line of business, camera module assembly, has seen that automotive industry has been extremely affected by the pandemic situation and already was in decline before that. And here we've seen a much quite low activity and less good performance. So there's really this mixed development inside this division. And the summary of that is that the sales declined with 46% in the quarter And with 16% for the full year, currency effect is negative in the quarter with SEK 11,000,000 and it's the same currency effect for the full year. EBIT was minus 8% in quarter 4 and minus 87% and margin minus 9% and minus 21 And here you may remember that in the quarter 3, we had a write down of intangibles that has Quite some effect on the full year EBIT. Order intake decreased with 52% in the quarter and 27% in the full year. So coming over to long term performance. So I already said on the first page, I think, that our outlook for this year is SEK 3,900,000,000 still see very positive on the year. And that positive attitude also It's the reason why we confirm our target of SEK 5,000,000,000 by latest 2023. No change on the other financial targets. We still want to be above 15% EBIT margin over a business cycle. The Assembly Solution business area, we want to be at or preferably above 10% for this year. And patent generators should continue on a healthy level as it does. Capital structure, that should Not to be higher than 3 times average EBITDA, and that is calculated over 3 years. All right. So that was that part. Now I hand over to Torbjorn to present the financials a little bit more in-depth. Thank you very much, Anders. So please, if we look at Our order intake and revenue slide. So we entered the year of 2021 with a robust Order backlog. We had an order intake decrease in quarter 4 with 49% To SEK 865,000,000. We had a strong order intake from Pattern Generators with 4 SLX Systems and 1 Praxision Lite 8 Elo. While in Assembly Solutions, the decrease was 34%. So we've seen in terms of patent generators, it was a good number of systems Coming in even though the value was lower than the corresponding quarter in previous year. Just like Anders said, we entered 2021 with a strong order backlog at almost SEK 2,000,000,000, It was a little bit above SEK 2,000,000,000 corresponding time last year. In terms of Assembly Solutions, there was a slight increase in the order backlog, while for Patent Generators, The decrease was to SEK 1,156,000,000, which is approximately SEK 200,000,000 less, which Anders also mentioned was a difference in backlog going into this year. For Quarter 1 2021, we have 3 mask crisis scheduled for delivery. And if you look at the rolling file number, The group is at SEK 3,700,000,000. And then we are ready to go into the next slide, So looking at the next slide, we see the net sales, Where we had a decrease of 16% to a little bit less than SEK 1,000,000,000. The decrease in constant currency was 11%. So that decrease was less. We had within Center Solutions, a mixed performance, which led to a 22% decrease to approximately SEK 600,000,000. And for Patent Generators, the decrease was 5% To SEK 385,000,000. And in connection with that, we think it's important to point out that a scheduled PS 6,100 delivery has been moved into first half of twenty twenty one, Connected to circumstances during the pandemic, which complicates this aspect. We also note that in quarter 4, the first FX was delivered, which we consider to be a very important event. We also delivered a Preposition 8 EVO and also a major upgrade. Currency tax has had a negative impact of SEK 60,000,000. And if we look at the rolling 12 month net sales, we are at SEK 3,900,000,000. So we are then ready to look at the next slide, please. In terms of margin development, We are very happy about the good levels that we continue to be at. And in quarter 4, gross margin actually strengthened to a little bit more than 52% Compared to a little bit more than 49% in the corresponding period previous year. At the Semi Solutions, we had a slightly lower margin. And at Patent Generators, we had a stronger margin at 73.5%. And the Assembly Solutions Gross margin continued to be close to 40%, which we feel is good. In terms of EBIT margin, we had a strengthening from 17.2% Up to 21.5%. And Assembly Solutions performed at 4.6%, slightly lower than the previous year. And in terms of the Semic Solutions, Anders reiterated the target level for 2021 being above 10%. He will also present the corresponding number for underlying, which is then taking away The acquisition related costs, and there we was at 5.6%, also a little bit lower than corresponding period Last year. And passenger rate has continued at the strong level of 48.5% EBITDA margin. And Here we have benefited from a favorable product mix. Now we're ready to look at the next slide, please. So in terms of investing for the future, Our R and D for Innovation and Growth was lower in quarter 4 compared to the Corresponding period last year. In this, we had fully capitalizations of SEK 85,000,000 And there was also amortization and impairment of SEK 37,000,000 relating to the full year. Our level of R and D cost to sales ratio Was at 13.2%, which is basically the same level as it was during the corresponding period last year. We're ready to switch to the next slide, please. And we are, of course, very satisfied of ending The year with a very strong cash position, and it is more than SEK 1,300,000,000. And for the full year change in working capital, that is mainly explained by advances from customers. And in terms of financing activities, this includes, of course, the dividend to shareholders of almost SEK 200,000,000. And I think it's important then again to mention our very strong balance sheet and also our readiness To pursue growth in the future. And that, of course, includes, as we have said many times before, activities within M and A. And with that, I would like to give the word back to Anders Lindqvist. Okay. Thank you very much, Torbjorn. And I think we have now a very strong platform to grow further in this business. We implemented The new operating model during last year here, already seeing effects of that with a scalable structure with the new organization in place where we have a decentralized way of working with clear leadership and accountability for managing Performance throughout the different divisions. On the product side, we have in all the Segments that we are active in, we have a leading position or we are in the top layer of market leaders, And that's where we want to be. And so we continue to invest in the next generation solutions all the time. Torbjorn just showed you that we have a very strong balance sheet. And in our growth strategy, there are M and A activities Included. We haven't done an acquisition in quite some time, but we are constantly evaluating and scanning For opportunities and now with the support of the divisional structure, we also have a very clear target profile on What technology and what markets and what areas do we want to find those companies and targets to grow with? We have also increased because of change and other things, our market and customer focus. I would say that we have customer obsession in the organization. And what we're doing and our view on the market remains intact. So we Reconfirm or we confirm our long term financial outlook. All right. So that was the End of the presentation, so hand over to Tobias. Okay. Thank you, Anders and Torbjorn. With that, we conclude the presentation And move over to the Q and A session. So operator, please go ahead. Thank There will be a brief pause while the questions are being registered. And our first Question comes from the line of Daniel Djerberg of Handelsbanken. Please go ahead. Your line is now open. Thank you very much, and thank you, Anders and Hogben, for taking my question. I was first question would be on your AES margin target for 2021, despite you have a quite hefty currency headwind, currently at least. And can you give us the key triggers to for you to meet this target in Central Revale? And my second question would be on you could take care a little bit, yes, why not Yes. Component shortage. We see component shortage in many segments, automotive, ICT that a lot of companies are talking about. Have you seen any impact on your business or customers? And then will this impact you negatively in 'twenty one, you think? Thank you. All right. So I can Anders here I can answer on the On both of them, I think. So on the Assembly Solution target, so yes, first of all, when we set the target of 10%, Remember I said that we don't need an increase in revenue to reach this target. This is all done by efficiency measures in the organization and the efficiency measures We're very much around how we spend our OpEx. So it was R and D efficiency, sales efficiency, Margin expansion and so on. Now we have seen that the revenue have declined quite a lot, But we still maintain the margins. So it's clear that we have implemented a lot of efficiency measures As we can keep, I haven't dropped in the margin significantly. And the leverage that we have created and the scalability in that The organization is really good right now. So that's why we believe that we have a good position to reach this target. But the The efficiency measures or what we have done is really to work with R and D efficiency, sales efficiency and cost efficiency On all places without jeopardizing anything on our innovation capability and or customer coverage or anything else like that. So You say it's your current pipeline Both the target then, I guess. Yes. The visibility. Yes, that's correct. On the component charges, so this is interesting because it can have an impact both ways in a way. So Component charges is very much because of stocking in the supply chain and inventory buildup, especially On the IC, the semiconductor part of things. The shortage, of course, do that there is a lack Both components, especially for automotive industry and so on. So the production volumes are lower and that can, of course, Affect us negatively. But our customers our direct customers are doing really good, and we believe that long term this is a good thing if they make money And so on. However, we need to have a look, of course, on this inventory situation as this can create swings in the market when it equalizes. Okay. Thank you. Our next question comes from the line of Fredrik Lissow of Danske Bank. Please go ahead. Your line is now open. Thank you. Hello, everybody. Hope you are all well. Thanks for the presentation. I had two questions on the PG division. First, You are sort of talking about some time line uncertainties. If you could sort of maybe expand a little bit on that, if that has Sort of a background on financials at your clients or if it's just a COVID-nineteen, it's difficult to travel, they want to visit you in order To calibrate before it is shipped and so on, please elaborate a little bit on that one. And then on the drivers PG, we've talked about that for many years now. But could you reflect on the latest a little bit on what you see and what you heard from CES, even though it was digital? There was still a lot of presentations and trends on the panel sizes. So could you reflect on the drivers what you feel are different or new or has changed? Thank you. Okay. Yes. So on the time line, so This is just to say that there is an uncertainty in the time. It's not at all due to any technical On the supply side, we managed quite well. It's a little bit of lead time The uncertainty, obviously, because of the transportation modes are there are less choices actually or less available. But that side we manage very well. So I think all the machines that we have supplied and are to supply it, we know that we Can make them in time. So it's really more on the there is normally what we call a factor acceptance test before we deliver a machine where the customers Spent quite some time together with us. We run the machines and verify that it will work in their environment as expected and so on. And We have during the year invented other ways of doing this with remote monitoring, virtual Factor Acceptance Visits and so on. So I think we have managed the situation in a very good way, but it is more it takes more time to do it the other way. And some customers are want to do it this way and maybe some are less winning. So It's nothing to do with the customer situation on the finance side. It's nothing to do with our ability to build, but it's more around this kind of handover process that is more complicated but manageable. So we just want to flag for that uncertainty in that on that side. On the drivers, yes, yes, we had visitors there, but virtual visitors, I think and I think that the trends that we have talked about are confirmed. We see larger screens coming. We see higher resolution screens coming In large sizes and so on. But I think maybe what was most really is the Foldable and curved and the shapes of screens, which hasn't that has also that's a positive driver us as well, the curved screens require more advanced layers and so on. So that is a positive effect of our Maast Krausz. And we also see and this is what we talked about a long time already that we see displays in much more applications and also high resolution displays. On the change from LCD to AMOLED, so right now the LCD panel display manufacturer is doing So the increase of displays have boomed during the year very much from this working from home trend and everyone Now at least 2 or 3 computers because they have different workplaces and so on. So that is doing that the production rates of the LCD is very high. And By that, the time or willingness to change over time, Ola, is Momentarily a little bit lower. So producers are very busy to produce and make money right now. So I think long term, this is positive. It's very good if the display industry makes Money, because that means that they will and can invest in new technology. So long term, I think this is positive for us. Can I just add a question there on the variations? And just to be clear here then, so I'm not wrong, that the MicroLEDs or the MiniLEDs or OLEDs or AMOLEDs, the variations are basically the same in the bottom, and it's all They need you in every instance of whatever variation that is, right? That's correct. And that's a good point because we can see more variations. We talked very much about AMOLED and MICULADNA, but we also see other technologies. And the more, the better for us actually. So that is That is all. That's perfect. I go back into the line. Thank you. Thank you. Our next question comes from the line of Mikael Larsson of Carnegie. Please go ahead. Your line is now open. Okay, great. Thanks. A follow-up on that last question about PG Uncertainties. Is that also the fact for order intake that it takes longer to Taking new orders at the sales cycle for longer, not only is Slovenia Handover process, but also the order intake process might take longer. Is that also the case? I could imagine because, of course, with no ability to meet and demonstrate, that's that shouldn't have an impact. But On that side, the customers on this have an extremely long horizon because we are 2 steps away from the display industry. So our customers are mask Right there, producers and then into their products are used in the display industry. And the investment Logic for them is they need to think 5 years ahead. So they are far, far away From hopefully this temporary pandemic situation, so investment decisions and so on. But of course, The whole negotiation process, which is very much in our case, a technical negotiation and demonstrating of capabilities and so on, It's more complicated. We haven't really seen that it has had a large impact. So I think the variation we see now is quite natural despite that. Okay, great. Thanks for the clarity. And the second question is about the new Division reporting structure. We can see margin differences in the high volume, high flex and Global Tech segments, And some are at lower margins and high volume is quite profitable. Can you say something, elaborate on the margin profile for these 3 divisions, Just to give you give us a backdrop on how they should perform and maybe explain a bit How 2020 developed from a quarterly perspective? We only have 1 quarter and then the full year. Yes. And that's the only quarter. Where it gives the upside potential to improve Significantly and have all segments possibility to go to 10% mostly in Global Tech? So more insight on that, please? Right. So I think the different divisions have different ability to reach different levels because they are and that's also the reason why we made a split to really give every division the best chance. It's not really a democratic target that is equally distributed or the division, but the total should be definitely above 10%. And The way the ability to reach that we believe is higher by creating this visibility and the push For that and the different recipes, the only comparison we have is to that we have right now. And there will be more comparison, of course, as we go To the quarters coming in this year, of course. But as you can see, the high volume division has a very good profitability. We are very happy with the About 20% EBIT margin in that division. So they really look for increasing revenue. That will be the recipe for further We had very good growth in that business. The growth has been very much driven by the mobile phone market, which continue to grow. But our strategy is to expand into adjacent and other segments in the electronic industry there as well, such Just the semicon industry and especially the electrical vehicle side of automotive. So that's the expansion Plan with maintaining profitability, obviously, and also to expand outside China. So we're growing actually Triple digit rate, I think, outside China, but from a low level. So there are opportunities to expand on that side as well. On the HyFlex, this is a niche market, HyFlex and low volume, aerospace, medtech, Some automotive industrial applications are here. And the Scenic Recovery, this is where we have worked quite a lot with efficiency and scalability. So I think we believe have good effects here. And here we want to be about 10% And even when we're at 10, we will most likely put the target higher than that. On Global Technologies, here we have this Really, and the good performance in the dye bonding, which is driven by data communication centers and so on. And But on the other side of the business with the camera module assembly, this is we have several factors. We have the production rates In the automotive industry, which has declined quite a lot, we have the adoption rate of number Of advanced cameras in cars not increasing as the outlook was a few years ago. So here we have some market headwind, I would say, and we need to work Both with cost and market expansion. We have a very strong position in the market, so it's very much related to the market on that side. So altogether, that makes us Forterbelt to reach the above 10%, but it's not 10% flat all over. So More margin sustained margin on the high volume business with more revenue and about SEK 10 in the HF and Quite an improvement on the GT, obviously. Okay, great. Thank you very much. Thank you. Our next question comes from the line of Victor Westman of Redeye. Please go ahead. Your line is now open. Thank you. I wanted to touch on the headwinds Tiv in Global Technologies there. Can you say something how long the Sales cycles are here because there is a rather large volumes down the road here From regulation, etcetera, I mean, cameras and cars. But when does the customer need To order your machinery to be able to deliver on this? Yes. So the market is driven by volume. It's one key factor and the other is technology. So The more advanced cameras, I mean, there's a difference between parking camera and safety pedestrian brake Equipment, camera and so on. And we are more targeted to the advanced side. So that's the adoption rate That is there. But right now, the volume is the biggest. And there is Also the utilization is, of course, a factor on when do customers need to invest in volume or capacity Improvement. And our customers is mainly the Tier 1 companies in the automotive industry. And I would say that 12 months ahead of Start of production, they should have been there should be firm discussions on this kind of equipment About and that's very it could differ very much between manufacturers and how far they are in their own kind of process And so on. But it's quite a lot of uniqueness in this business, especially on the advanced cameras. So it's rather long, the cycle. Yes, I can imagine. And another question on the optoelectronics. You mentioned that this was Previously been driven a lot by the inventory buildup from the trade war. Can you say something how large the effect This had and what's anything about the normalized level here? Yes. So we had we saw a lot of activity in the early of last year, and that was Customers being a little bit uncertain where the trade war would be going, so the ordered machinery now it's more normalized and I think the visibility It's better on that. So it's difficult to have an idea, opinion on how which way that will turn going forward. But I think right now we have a more normalized market level and also more comfort, I think, around customers to know what they can invest in and what they cannot Investing, the trade war have had not really a material impact on our business so far. So if things don't change, I think this is as it is right now. But there is, of course, a positive drive for the 5 gs rollout It's only in its beginning. And then the consequential effect of the 5 gs, which means that because the 5 gs data center connected to data centers is a direct effect, But then all the other applications that will be possible or enabled by the 5 gs technology will in turn also require data communication That's also I think there will be a secondary effect here. So we believe that this market will be good. Yes, that's a great point. And just to Follow-up quickly to clarify there. Is that hyperscale data centers or any kind of data centers? Sorry, can you explain what that is? I mean, they're really, really big data centers with lots of The servers from the FAANG companies, the world's largest tech companies, are those the kind of data sensors or You're referring to? Yes. And that's one part, and that's very big. What I referred to is a secondary effect that The computing will be done closer to the applications or on the close distance of applications And but not in the application. If you take self driving cars, it might be that the intelligence is not in the car, but in a device close along the road or anything like that. And that Require communication and so on. So our benefit is mainly on the high speed communication side. When the speed increases, That's where we see a need of our equipment. Thank you. And sorry for the third question in the end there. I'll get back in line. Thank you. Thank you. Our next question comes from the line of Daniel Durburg of Handelsbanken, please go ahead. Your line is now open. Yes, thank you very much. I have 2 more questions, if I may. The first one would be on the PG side, and we are talking about the triggers, the And my lead and curved screens and different sizes. And then we see a lot of You mean use cases for displays and so on. But on the multipurpose side, I think you took your Lars, perhaps only FPS 81100 order in December 'eighteen. So I was wondering what has happened since this is like internal competition in the other machines in Precision Light. And I also know, of course, that you have this FPS-six thousand one hundred for parts to be delivered. But a little bit I had expected some more of this multipurpose machines given the more use cases. So is that yet to be seen? And we'll go for the first question. All right. So we don't see a difference in demand. So there's no overlap between the technology. So You cannot do the same or you can do the same, but that will be an overkill to buy a precision machine for a multipurpose use By far, if you just look on the price points, it's extremely different. And the SLX also is very different. So there should not be any logical overlap or cannibalization internally on our range. So on the multipurpose segment, we I mean, we have On the display side, we are the only supplier to the advanced photomasks. On the SLX side, we're by far the best supplier into the semicon industry For laser writers and so on, but on the multipurpose and on the multipurpose, we have more competition. We haven't seen that we have lost more orders than normal, I would say. So I It's there's no really performance explanation on the if you see the fewer orders and so on. So it's just How the market is working right now? I guess to focus more on selling Precision and Perhaps that selects as well rather than or is it I cannot be any incentivized The thing that it's better to sell the position. So we're happy to sell any kind of machine, of course. And there's no We haven't come to a situation where we need to choose where to focus on the ad. But if we would, I think you're right in your priorities There, if you look at the Okay. Another question, if I may, and that would be on SLX. We delivered machinery in the quarter and so on. Can you comment a bit on the aftermarket, if it differs To the previous side or to the Precision side, if it's similar or to the Display side, I should say, if it's similar. So if you say potential versus price of a system, it's similar Or the relative value of the aftermarket will be same. But of course, the installed base has to be built up. So there's a delay, of course, time wise in that. But over a lot of years, of course, the revenue potential is in It's not more, but it's, I would say, in the range of being very close to the same. So the need of aftermarket, I mean, if you say the importance of uptime is at least as high as in the display industry of such machinery. Perfect. I would like to ask about M and A, but I guess someone else will do that afterwards. So I will give it back to the queue, okay? Thank you. Thank you. Our next question comes from the line of Fredrik Littel of Danske Bank. Please go ahead. Your line is now open. Thank you. Thank you. I will leave that for Daniel Taske later on. I had a question on SLX. You have had great success on that line of product. Do you can you See, are you evaluating variations of the SLX in any Odd way that I can't really come to think about, but can you sort of create do you see that you can increase your total addressable market by saying that We are selling the SLX to this specific solution today. But if we tweak it like this, we have an adjacent Small niche market that we can also address and thereby building out the scope of this machine. That's if you could expand on that. And then also For Torbjorn then, you had the negative SEK 31,000,000 in the P and L other income and expenses. Is that purely sort of revaluation FX effects So from assets and liabilities or is there anything else in there? Thank you. Okay. So, yes, commenting on the SLX and of course, we are looking for the what's beyond that. So The Select itself, what we have launched now is already a series of variants and which will cover quite a lot of the laser written applications in semiconductor. The expansion, as I see it, will be Within the same application in semiconductor, but possibly taking a larger share of that of those applications and so on. The laser technology has some limitations. And after limitation is electro beam Technology and there is no laser we won't go into that technology. But even within the laser driven Applications, which there could be expansion opportunities. Of course, we are looking into that and that is in the strategic plan to be, but no firm Ideas that we can communicate about here. But there is space to grow, that is for sure. Okay. Yes. And thank you for the question, Fredrik. On that line, We have in terms of the other income and expenses, which you're referring to, We have currency effects, but we also in this quarter, we have a A reservation for restructuring costs included in part of the organization. So that impacts That's right. Okay, perfect. Thank you very much. Our next question comes from the line of Adolphe Bahadri of Danske Bank. Please go ahead. Your line is now open. Hello, no, I have no questions. Thank you. We currently then have no further questions at this point. I will hand back to the speakers for any final remarks. Okay. Thank you a lot. As there seems to be no questions left, we will end the call now. Thanks a lot for joining us today, and thanks for good questions, and we'll come back next quarter. Thank you very much, everyone.