Inficon Holding AG

SIX:IFCN

Earnings Call Transcript 2023-Q1

[Bernhard Schweizer, executive]

Good morning, and welcome everyone. My name is Bernhard Schweizer, Investor Relations contact at INFICON. I have the pleasure to host this Microsoft Teams webcast of our Q1 2023 Results Conference. With us today, and you can already see them, is Oliver Wyrsch, CEO of INFICON; and Matthias Troendle, CFO of INFICON.The management team will first present the results and then take questions. During the management's prepared remarks, online participants are requested to turn off their microphones and cameras, please. During the Q&A session, then participants are invited to turn their microphones and cameras on when asking questions. Online participants can add themselves to the queue of people wanting to ask questions by clicking on the I Raise my Hand icon. Alternatively, you can also use the chat function in MS teams.You should have received by now a press release on the Q1 results, together with a link to the accompanying visuals for this web conference. All documents are available for download in the Investor Section of the INFICON website at www.inficon.com. I would also like to inform you that we'll record this web conference to archive the audio file later on the INFICON website.The oral statements made by INFICON during this MS Teams session may contain forward-looking statements that do not solely relate to historical or current facts. These forward-looking statements are based on the current plans and expectations of our management and are subject to a number of uncertainties and risks that could significantly affect our current plans and expectations as well as future results of operations and financial condition. We undertake no obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events, or otherwise.Having said all that, I would now like to hand over to Oliver Wyrsch. Oliver, please.

[Oliver Wyrsch, executive]

Thank you very much, Bernhard. Welcome, everybody, to our call on the Q1 2023. I would like to first introduce myself in the agenda. So it's first, me, Oliver Wyrsch, CEO of INFICON, talking about the key messages and the target markets and the expectations 2023, and then I will hand over to our CFO, Matthias Troendle, for more in-depth financial information.First of all, the highlights of our 2023 Q1 results. We can show continued growth in the first quarter 2023, year-on-year growth in all end markets and all regions. Order intake higher than sales and despite improvements, supply chain still remains a bottleneck and still impacts our margins. So the sales grew 14% year-on-year to USD158 million across all regions and markets and are on a similar level as on the fourth quarter 2022. Organic growth, excluding the negative FX effects is 19% year-on-year, and we have a continued robust order intake with a book-to-bill above 1 also in Q1. And I believe this is around the 9th or 10th quarter now that we have this book-to-bill above 1 in sequence.Operating result, we have an improved operating income in first quarter year-on-year by 10%, reaching USD30 million. Gross profit margin is still impacted by cost inflation, particularly by the chip broker cost. Despite some improvement, the supply chain is still a bottleneck for us. We defended the profitability against headwinds in Q1 with 19%. And then in terms of organization, we continued our investments as before in R&D 8% of sales and also in production capacity. This is a timing topic that we currently have only shown USD3.6 million CapEx in Q1. We expect, as previously noted, around USD30 million for the full year.As you can see, the split in different markets, almost the same with some slight changes, certainly, Refrigeration, Air Conditioning and Automotive had some good dynamics. Let me go into more details in a minute on the markets. First, worldwide markets overview, you can see we have good growth in all regions year-on-year and particularly in Asia, good growth, 20%, and also in North America. And then in particularly, sequentially in Q1, good growth in Europe.Looking into the different end markets. Semi and Vacuum Coating, the market is softening short term. We see good growth opportunities mid-term. Very strong [ positivity ] long-term, also giving for our product pipeline. Q1 sales increase is 7% versus Q1. We maintain our #1 position in most of the markets and in pressure measurement further closing up to #1.We see a mixed picture for 2023. Different sub-markets have different dynamics, as previously noted. The one weakening the most that we also see is the one for memory chips. INFICON is participating there, but it's less relevant in the mix of all the other submarkets in this space. We see a recovery towards end of H2. Generally, we see some delay in logic projects, but it's a small amount. For the trailing edge, so far, we have seen no slowdown. On leading edge projects, in particular, also on EUV products market, we have seen no slowdown.In general, all the semi initiatives globally, the government-sponsored ones, we see as ongoing, which also supports our optimistic outlook into the mid-term and long-term. What we've seen is that China seems to be shifting the investment plans away from the leading edge, more into the trailing edge. Certainly, still a lot of dynamic, though, and also more as last year. I'll get to this in a minute.Looking at Automotive, Refrigeration, Airconditioning markets, we maintained our #1 position. Strong growth, 32% versus Q1 2022. We expect growth also for this year. The traditional auto still slowing, but in particular, battery/EV transition, battery storage is growing nicely, much as we expected. There is some other positive dynamic with automated industry 4.0 solutions also in RAC that support this growth. We also see here good opportunities for the future. The market is growing and we will have an interesting new set of products in the works.Looking at General Vacuum, the broad industrial market has many, many sub-markets, sub-applications, generally is not so disconnected from the general economic growth. However, since we're adding more applications and addressing more sub-markets, we have good growth there, too. In Q1, year-on-year, 15% growth. Some of this growth is driven by China, increasing their growth again in 2023 and also some reduction of our backlog, in particular, in our vacuum pressure gauge market.Then to the Security and Energy markets. As you know, this is a market driven by government initiatives and has its own dynamic, a bit disconnected from the general economic development. We have a very strong growth here of plus 37% year-on-year. There's fluctuations over time. There was fluctuation from Q4 to Q1. A lot has to do with this rollout program, but currently, also, we are still limited by the supply chain as these relatively complex products have a more complex supply chain. We are optimistic here for this year. We see growth. We have a strong opportunity pipeline. We saw good order intake also in Q1 in this, and [ they'll ] remain also positive for the mid-term on these products.The expectations, 2023 remain unchanged. We have a good backlog since we had a book-to-bill over 1 in Q1. Backlog increased while we shipped more year-on-year. We see growth in the selected markets as just discussed. So we remain mostly optimistic for 2023 even though there is a slower economic environment and we see still some risks from different areas, geopolitical, economical, and so on. And we also stay with our guidance for 2023. At this point, sales between USD570 million to USD610 million, with an operating income around 19%.And with this, I end my remarks, and I would like to hand over to our CFO, Matthias Troendle for more details on the financials. Thank you.

[Matthias Tröndle, executive]

Thank you very much, Oliver. Good morning. Good morning, everyone, and welcome to our first quarter conference call. I will cover the Q1 financials and will briefly comment also our 2023 guidance. My commentary starts on Slide -- with Slide 11.Let me first start with our highlights for Q1. Orders continued to be high with a book-to-bill above 1. Sales did grow by 14.4% and our gross margin is still somewhat under pressure. And we achieved a 9.9% operating income increase and achieved USD30 million. CapEx started relatively low in Q1, and as a quick comment on that number, our investment plans, as Oliver said, are unchanged and we will see higher numbers in the course of the year. Cash flow and net cash improved, and our equity ratio reached 65%.Now, let me go a little bit more into the details. As you've seen in our press release, we achieved revenue of $158.2 million in Q1, which is an increase of 14.4%. This is an increase of 14.4% without the currency impacts, which have been $5.7 million. It was even more. It was around 18%.Oliver did already comment the development of the different markets. We can point out the sales in all markets did grow and the biggest changes have been in Security and Energy with a plus of 37%; and in Refrigeration, Airconditioning, and Automotive with 32%. General Vacuum expanded by 15% and the Semi and Vacuum Coating market did grow by 7% compared to Q1 last year.With that, the first quarter sales, it nearly reached the record Q4 level and was our second best sales quarter in history. The regional distribution of sales shows growth in all regions, and we have the highest growth in Asia and North America. Europe did more or less developed stable with a slight increase.As already mentioned, gross profit margin increased by 11% in absolute numbers and reached 45.8% in Q1 but was down 127 basis points compared to last year Q1. Positive impact of higher volume and somewhat lower broker cost was partially compensated for by higher material prices, freight and duties.What happened with the operational cost, so we were surprised. What happened with the operational cost, we spent $12.1million on R&D in Q1, an increase of 5.2%. As a percentage of sales, expenses decreased from 8.3% to 7.7% of sales. Additional headcounts to support our development efforts partially compensated by slightly favorable foreign currency impacts to drive this increase.In SG&A, the cost level did increase quite clearly to $30.4 million or 15.6%. Personnel expense due to increased headcounts are the main drivers but also general cost increases, and [ factors ] like relaunching of trade shows, meetings, and travel are of some impact.The operating impact for the first quarter was $30 million as already mentioned or 19% of sales, after $27.3 million or 19.8% of sales in Q1 last year. This corresponds to an increase of 9.9%.The tax expense for the first quarter was at $6.5 million, which represents a tax rate of 22.7% due to the profit mix of our international entities slightly higher than last year's Q1 rate, which was at 19.8%. The net profit, therefore, reached $22.1 million or 14% in Q1. This compares to $21.2 million or 15.3% in prior year, a 4.2% increase in absolute numbers.Now let's move to the balance sheet highlights. Our net cash reached $11.5 million, which is $9 million higher than end of last year. The turns to our inventory decreased to [ 2.5 ] and the DSO ratio at with 52.9 days, respectively, slightly -- similar, respectively, a slightly better level than compared to Q4. Our working capital, which consists of inventory, accounts receivables minus accounts payables closed at $217.9 million or 34.5% of sales, and with that, ended about $9 million higher than end of last year. The increase was coming from $21 million increase in inventory, and a $11 million increase in accounts payables and a slight reduction of accounts receivables.The inventory change is a result and still a result of the higher business levels and order volumes as well as various supply chain issues with corresponding bottlenecks and availability problems. Our operating cash flow improved and reached a level of $15.3 million. This is relatively positive as our cash flow level typically in the first quarter is relatively low due to various performance-based payouts in the first quarter of the year. And at the end, the balance sheet shows a solid structure with a 65% equity ratio.Those were my comments on the balance sheet and the Q1 results. Now, finally, the outlook already commented by Oliver and based on our order book and order intake and the overall business situation, we are mostly optimistic for the start of the year. We confirm our guidance and expect sales between USD570 million and USD610 million and operating income margin of approximately 19%.With that, I would like to close the presentation. We are now ready to take your questions.

[Bernhard Schweizer, executive]

Thank you, both. We already have a queue of people wanting to ask questions. May I ask Jorn to turn his microphone and camera on and start.

[Joern Iffert, analyst]

I would have 3 questions, and if it's okay, I would take that one by one. And the first question would be pleased about your Semi end markets. Can you tell us what your customers, what you hear from your customers, more concrete already for 2024 in terms of productivity optimization programs, also CapEx plans, so really what you hear from your customers? And also, as you mentioned, I mean, shall we expect that there is a kind of summer hole in Semi that your sales are sequentially declining from the strong Q1? So it will be the first question, please.

[Oliver Wyrsch, executive]

Yes, thank you very much, Jorn, for your question. So first about next year, we hear positive outlook. [Technical Difficulty] Okay. Thank you. So about next year 2024, the general expectation, but many of you are watching the space as we are, so you might have similar information or similar level of insights, there is optimism for next year. There is expectation that in H2, the trend will turn around, in particular, also in memory, which is the most affected by this cyclical downturn.We hear about new projects for next year, but what we also have is quite substantial amount of R&D projects that you normally can do in these slower years with customers. This R&D project is new products, new applications, which are not too long-term in these specific ones, so they could already affect also the revenue of 2024. So generally, across all the different sectors in Semi, we see on here optimism for next year.On your second part of the question regarding summer. Yes, we have seen the expected slowdown in orders, particularly, as I mentioned in memory and we see it in Q1. And we will expect that this trend will continue. And in summer, probably be most pronounced. Again, then we believe in the second half of the year that there will be again an improvement. The timing of this is difficult to say at this point. There's various statements, there's mixed signals. So is it going to be end of Q3? That will probably be very optimistic. Is it end of Q1 next year? That would probably be rather pessimistic. But we do not know exactly how this develops. I hope this answers your question.

[Joern Iffert, analyst]

And then the second question and if I may, and then I'll go back to the queue. On your gross profit margin, a bit surprised that you still highlight rising raw material costs, higher freight costs, brokerage fees, it seems to ease up. This is more company-specific? And, when you have some issues, and I mean, how do you want to tackle this and then you really think the gross profit margin to start to accelerate quite significantly?

[Oliver Wyrsch, executive]

I will make some general statements and then Matthias can flush it out in more detail. So, what unfortunately didn't happen is a real strong improvement of the supply chain for us in terms of parts availability and also in terms of cost. And our biggest cost impact has been last year. These chips for the sensor products and this remains the same. I would say this is still about 2/3 on the level of the last year's average. You need to know last year, there was different fluctuations depending on the products and depending on the chip. So, this hasn't fully subsided. That's impacting us still today.And then the other thing is, of course, that we tried to stock up on chips last year. This is still in the inventory at somewhat higher price depending on the respective chip and we're still now eating from this inventory, because, as you know, we tried to have a constant supply to not stop our lines because of chip supply and hence also have, of course, a significant amount of inventories still on this chip.Maybe, Matthias, if you have a few more things to flush this out?

[Matthias Tröndle, executive]

Actually, there's not a lot to add to that. So a good coverage of the question, I think. But maybe let me add you ask is a company-specific or general trend? I would say the freight side is -- might be a little bit more company-specific because we see it in the market lowering freight rates. So that's maybe more INFICON and what Oliver said, yeah, we see lower growth and also commended. We see lower growths, but it didn't disappear, right? It's lower. But it's not away and it's still a substantial amount and hitting our margins still in the range between, let me say, 1.5% to 2%, right? That's still the impact. It's not gone, and we assume that there will be a continued relief right on the margin due to the availability and also the broader cost [ structure ].

[Joern Iffert, analyst]

So to follow up, I mean, do you expect that the gross profit margin is really where you're recovering from here and reaching maybe then 48 point something and by end of the year? Or how should we think about these important metrics?

[Matthias Tröndle, executive]

I would say, yes, we assume certain recovery, whether it's at the end of 48%, we will see, because we also have so many different businesses with different margins that we cannot completely predict, but we see a certain relief, I would agree.

[Oliver Wyrsch, executive]

We can say here that we would have expected this to ease up. The reason is probably the market [Technical Difficulty] our sensors is still going really well. It's growing strong. You'll see that in our respective end market. And this has slowed down this trend to improve the margins for us. So it's a bit hard to predict. We are optimistic for the future for sure because this has to succeed eventually. The timing of it is the next question. It's a little bit related also with what the Semi dynamic is and the sub-market for Semi automotive chips. So we'll stay optimistic. We will continue to work on our cost optimization, but can't exactly give you an estimate on the timing.

[Bernhard Schweizer, executive]

Thank you, Jorn. Michael, may I invite you to ask your questions, hoping we have a better acoustic line to your computer.

[Unknown Analyst]

So my first question is just adding onto Jorn. Basically, your EBIT margin was 19%. Your guidance is 19% for the year, but you expect gross margins to improve throughout the year. So I'm a bit confused, how should we read this? Shouldn't the EBIT margin also increase during the year if your gross margin increases? That's the first question.

[Oliver Wyrsch, executive]

That's good. It's a fair question. We asked us that ourselves. The volatility of this profitability depending on product line, even in Q1 that we've seen and also in Q4 is quite significant. So at this point, it's a bit -- a little bit hard to determine how this year will go. Also, with this order trend that I described earlier. And eventually, there will also be some sales impact when we aid through our backlog. So that's where we have still the feeling some cautiousness is required specifically in the second half of the year. It will very much depend on this recovery and how fast this CapEx projects pickup in the different sub-markets. There could be a slowdown first that is larger before it picks back up or smaller. So we have a couple of unexpected items that hit the margin, and we had them also in Q1. And this is a little bit where we get cautious. Maybe, Matthias, if you have...

[Matthias Tröndle, executive]

I only can add, there are couple of uncertainties, of course, globally and in our business as we discussed and some positive things, where we assume there will be some relief like also the pricing topic we discussed a couple of times. We've changed some prices and they will kick in during the course of the year. On the other hand, we also see inflation impacts. We see also cost impacts, as I commented. We added quite substantial number of people in various areas, mostly in sales-oriented areas, I would say, like sales, customer service or customer support and marketing areas where we invested. And we'll continue to invest in R&D. So it's a lot of different factors, which are driving this. And as Oliver said, yes, we are still somehow cautious, and we -- there was some uncertainty in the market and we will see how things develop from the order side, pricing side, business side.

[Oliver Wyrsch, executive]

If you zoom out and look at the big picture, you will also see that we try to continuously invest in the future. One is R&D, one is this sales footprint. And then it's also about the CapEx. As you see, we don't have a real slowdown there after our 2-year investment program. So we will continue this but the exact dynamic of the market, this timing is where are our uncertainty mostly lies.

[Unknown Analyst]

My second question would be around the General Vacuum business. You saw very good growth there. Could you elaborate a bit more on the effects of your geographic and application expansion there? What is driving the growth? And how should we -- what should we expect going forward there?

[Oliver Wyrsch, executive]

Yes. So we actually, as you might have seen, changed the outlook for this year slightly, we went from flat softening to flat. First of all, the general economic outlook changed in Europe and in US when we still talked a quarter ago about recessions. Now, there is a bit more optimism there. That's certainly one factor. But also what we have seen is that there is good dynamic in China. This is an important market for our General Vacuum. General industrial applications are very broad in China for us and there is a good dynamic there.What comes on top of this is that, finally now, our capacity coming online, the parts are available. We were able to ship a lot from the backlog, above the market, right, in some areas and can catch up there as well. And there's a couple of large accounts in there also, our private label accounts that where we really got a good momentum.I believe we have also added a few more applications there, be it in R&D, some other places. It's a very fragmented market. So it's piece by piece that we tried to address new segments, which we can -- we could grow above the market. The outlook for the year is a bit uncertain because the dynamic in the economy did change a bit and is now optimistic. How it exactly will continue together with the inflation is not entirely clicker to us. I would still stay optimistic but not as optimistic as maybe Q1 showed now.

[Bernhard Schweizer, executive]

Thank you, Michael. The next question comes then from Marta Bruska. Marta, please.

[Marta Bruska, analyst]

Congratulations on the great results. I have a couple, if I may, I will take it on one by one, please. So first on the demand in the automotive and EV batteries, is that the level to continue throughout the year? Or were there any one-offs in Q1?

[Oliver Wyrsch, executive]

All right. So the EV market is still forming. So there's a lot of dynamic there on what type of battery, what type of manufacturing process, what kind of quality check regulations. We push for the standards, higher standards than today that we believe are needed for the safety of the drivers. This is not fully established all. Why am I explaining this? There's a lot of fluctuation between the different accounts. So we did win new accounts. We did also win in Europe, new accounts. It is not necessarily the reason for this jump. It is generally the market that grows fast in this space. Each of the regions has a bit of a different dynamic. Certainly, Europe has shown a good dynamic. China as well. There is also a bit of currency effect in there if you compare it year-on-year. Maybe if you have any additions, Matthias.

[Matthias Tröndle, executive]

Not so much. No, I just would support. I think the automotive is going well. The classic RAC is more stable and according the normal business GDP development, and more or less saturated what we also mentioned in the release and in the PowerPoint, right. So, yes, nothing to add from my side.

[Oliver Wyrsch, executive]

Maybe to be specific, Marta, I believe on your question is, we estimate the growth in the 20s in this space. So it is a bit above market, right? That is probably a little bit outside of the typical corridor that would you expect this market to grow. So for these effects described earlier, we believe this was a very good year-on-year quarter result.

[Marta Bruska, analyst]

And then following up on that. You mentioned that the Refrigeration was kind of stable. So a bit, so to say, a bit behind this fantastic growth, the automotive part. But to my understanding, a big part of your Refrigeration, please correct me if I'm wrong, but it's still in China? And perhaps could that be linked to the fact that the Chinese recovery from the COVID zero policies was a little bit slower in Q1, so therefore, would be a catch-up effect still in following quarters sequentially on the Refrigeration part of it?

[Oliver Wyrsch, executive]

Yes. I understand where you're coming from. I mean, generally, this market, as you know, splits down also in different segments. Some of them have shown good growth and weren't actually really slowed down even by the general economic slowdown. That's for one. And the other thing is, in China, we actually had a good start into the year right away with orders and with sales. So I know that there is a general discussion around how slow the start was and how fast will China grow the rest of the year. We didn't necessarily see that. We had a good start in China, much like expected and also noted in prior calls.

[Marta Bruska, analyst]

That's very helpful. If I may have another one. On the food applications, in General Vacuum, could you update us how much of the total sales in General Vacuum now account for or come from the food applications, please?

[Oliver Wyrsch, executive]

Yes. So there is, of course, different products going into food is also that just a general pressure gauge going into food, but what you probably talked about is our Contura product that inspects packaging. This is single-digit million. It's growing but it is not necessarily material now in our growth. It's one of these smaller good segments, if you want to call it like that. So we'll take it the big steps we make in the markets that we've described earlier.

[Marta Bruska, analyst]

And the very last one, if I may, please. So -- and excuse me for picking up on the exact wording, but it would be helpful if you could please clarify 2 statements. So you mentioned in the very last part on when you spoke about the outlook that the backlog still increased. Is that so? And how long is your order book today in terms of months of sales of the current -- of the current rising rate? So if the new orders stop today, how long could you still deliver?

[Oliver Wyrsch, executive]

Yes. Our backlog increased in Q1. We had good orders, while though the mix of orders shifted a little bit, right? Certainly, as I mentioned, memory slowed down and some delay in logic and so on like I described it earlier. That's what you can see in the mix of the backlog or the mix of the order entry. We do not, as you know, show the backlog itself, but it has, for some product lines, gives us the ability to go through a large part of the year, but not for all. And the dynamic is a little bit changed.You need to know also that we really have a number of our upgraded product lines -- production lines coming online now and the capacity increases and our delivery time really drops much like what we aspire towards this year. We want to go back to our industry-leading delivery times. So it's a mix there, right? So we will have some areas there. Suddenly, if the order entry comes late in semiconductor space, let's say, it comes only next year, there will be a gap, not a substantial gap, but there is going to be a little bit of a transition period. And other places, we will be able to power through.

[Matthias Tröndle, executive]

Maybe, I don't know [Technical Difficulty] Maybe just to add there, yes, Marta, you're right. Our book-to-bill and what Oliver has also mentioned, our book-to-bill is now in the 11th quarter above 1. So of course, this is a substantial amount. And what we also see, what Oliver said, we are -- and as you know, we are broad-based in terms of our end markets and all our products and some markets have gained a lot of backlog and momentum in the last 6 months, I would say, and this is not Semi. It's a little hint, right? So there are other markets where we made good progress and where we will have some benefits in the next 6 to 9 months or until the end of the year and being able to ship, right? So that's -- the other part of the 50% Semi where we have different cycles and sometimes also different impacts right on that one.

[Bernhard Schweizer, executive]

Thank you, Marta, for your questions. Is anyone else? Yes, I see, Emrah Basic. You have a next question for us. Emrah, please?

[Emrah Basic, analyst]

Just a quick one on memory and apologies if this question has come up a couple of times in the past. But when you talk about memory chips rest -- being less relevant for you, are you able to somewhat quantify that in terms of proportion of your Semi segment?

[Oliver Wyrsch, executive]

Thanks for the question, Emrah. Not an easy question to answer because we don't actually break our businesses down into sub-segments of Semi. I mean, we mainly stress that because we get compared to our peer group and then the big question comes, why is the impact on this bit with you as with the others. I just believe INFICON has the strength to be diversified and also being diversified in the semiconductor industry. So we are at the OEM. We are at the chip maker. We also had other parties in the mix. We have products for the [indiscernible], we have products for the airconditioning and of course, there is also software.So for us, it's just, I'd say 5 to 10 different dynamics that mix together. Hence, we tried to stress for us memory. Yes, we saw the reduction 20%, 30%, but in the mix of this, it doesn't change as much our overall dynamic as in other places. So to make an estimate, I would say it's 1 of 8 markets, if you chop it into similar bits, but this is now a very rough assumption again. We do not have this number. We cannot exactly look at it. We don't exactly know where it goes. And you don't work with the OEM. I know exactly what tool you're going on. It's a bit hard to know as you might imagine. But I hope this gives you a little bit of a corridor and a [ feeling ] that impact.

[Emrah Basic, analyst]

The second one also regarding your Semi business. A bit -- it's a bit of an open question, but could you -- or how are you positioned today in this segment versus 3, 4 years ago in 2019 when we had the last kind of like downturn?

[Oliver Wyrsch, executive]

How we are positioned in the semiconductor market today versus 2019? You're right. I mean, first of all, I believe the cycle was a slightly different one in terms of what markets got affected, how and the timing. It's not a radical different cycle. So there is some of that, but the other part is, I believe, we are fairly diversified. I mean, one of the examples could be the softer revenue really increased in these 3, 4 years. You remember 2018, we made this acquisition of Final Phase Systems. This has grown since. This has grown together with our current or existing FTC software portfolio and really gave us a leap forward. That's one factor, then thinking about our business in lithography that piece grew. That was at the time, different. At the time, we also ramped up a lot of that capacity. Our partnership grew a lot more together with that specific OEM customer. And as you know, in this space, there is no slowdown.So, there's a couple [Technical Difficulty] sorry, there's a couple of these changes that I believe gives us a sounder footing in general in the market. Do I know exactly how we go through the next cycle and do I know how the second half of this cycle is going to go? It's still hard to say, right? So but we see a couple of these positive signs where INFICON has built out a better foundation over the time with more diversification around, let's say, around the wafer, around the chamber, around the semiconductor manufacturing. I hope this is helpful.

[Bernhard Schweizer, executive]

Thank you, Emrah. Any further questions from the audience? I see no one rising his or her hand. So Oliver, Matthias, up for you for closing remarks. Thank you.

[Oliver Wyrsch, executive]

Yes. So I want to thank everybody for joining today. We were happy to present strong results for Q1. We are mostly optimistic for the year as you know. And, yes, we're looking forward to see you again, July 27, for Q2 second half-year remarks in our next earnings conference call. Thank you very much.

[Matthias Tröndle, executive]

Thank you.