Singulus Technologies AG (SNG) Earnings Call Transcript & Summary

Welcome to the Singulus Technologies' Analyst Conference hosted by Dr. Stefan Rinck, CEO of Singulus Technologies AG. [Operator Instructions] I would now like to hand over to Dr. Stefan Rinck to begin today's conference. Please go ahead.

Yes. Good morning, ladies and gentlemen. I would like to welcome you for our analyst conference for the full year 2019. I'm sitting here together with my colleague, Markus Ehret, CFO of our company; and the new colleague, Dr. Christian Strahberger, the COO of our company; Oliver Hunt, the Head of our Finance Department; and Bernhard Krause, in charge of Communications. So first of all, I would like to give you a short and brief overview about the company and our activities. And then my colleague, Markus Ehret, will start to give you an overview about our financial situation and the financials of last year. And then I will take over again, and we'll guide you through our segments and give you some information about our strategic outlook and also the forecast for this year. So first of all, let me summarize Singulus Technologies is a company which is focused on certain technologies, which is on one side, the thin film deposition, the wet chemistry, the surface engineering and thermal processing, and we are providing these technologies for certain markets, which are mainly and that's 2/3 -- round about 2/3 of our turnover in the solar market. And then we are active in the semiconductor market also with these deposition technologies and in different other areas like medical and optical disk and decorative coatings, what we summarized in Life Science technologies. So now I would like to hand over to Markus Ehret, who will guide you through the financials.

Good morning, ladies and gentlemen, a warm welcome from my side. Let me run you briefly to our financial figures for the financial year 2019. As you might see on Page 5, we have EUR 79.4 million in revenues achieved in 2019. This is significantly lower than 2018. And of course, as you are all aware, it's lower than we expected. When we started into the year 2019, actually we thought that 2019 will be as good or even better than in 2018. '18 was a pretty good year. So then we learned over the course of the year that we are facing some delays in major projects, and that led us, of course, then in the middle of the year that we have to -- had to rearrange and rechange our prognosis for the full financial year 2019. So we have seen that the delays in the projects have been basically in the solar segment. But as you are all aware also is that we have signed one of the large contracts which was delayed or postponed in 2019 has now been signed in January 15 with our big partner in China, CNBM China National Building Material. You will hear more of that soon. So you can see that we are still moving forward, and this is why we think that 2020 will be a good year. Of course, we will be facing some uncertainty due to the corona crisis, but we will discuss that later on in the presentation. So now let's get back to the key figures, EUR 79.4 million in 2019 is significantly lower than 2018 than '17. EUR 79.4 million split up into solar with EUR 45 million in Life Science with EUR 28.3 million, and semiconductor was EUR 6.1 million. If we have a look at the order intake, this is what I just described, the postponement of major projects, especially in the solar segment hit us. So the order intake in 2019 was only EUR 9.3 million in solar, which is way below what we expected. And we have now already achieved more than EUR 50 million in the first quarter, as you are aware of with our project Sub-6 for Xuzhou. Good figure in the order intake is Life Science last year. It was EUR 26.2 million order intake. So we like that one. Of course, you can see that we are building up a new segment here, which can grow to a significant strength and profitability. And this is, I think, one of the good messages in our 2019 figures. Semiconductor was a little bit below our expectations with an all entry of EUR 4.2 million. But with our new colleague and the Executive Board member, Dr. Strahberger, work here and I think we will be growing this segment which has a very high potential significantly over the time coming, and Dr. Strahberger will give you a perspective on what we want to do in this area. Order backlog, of course, it's also kind of lowish too low, EUR 26.3 million, and 80% roughly of that is solar. So the order backlog in solar is still big. So we are working through this. And the next big position, of course, is Life Science. So we have some projects left in there. We are working on it right now, and also preparing to give you a perspective on those projects later on. EBIT is minus EUR 8.2 million. And so we will perhaps move on to the next page with our P&L. And I explained the EUR 8.2 million. You see the EUR 79.4 million, I just explained, that's split up for you into the segment. Although we've seen rather low revenues, we still have a good margin with the 28.8% roughly calculating to EUR 22.4 million in gross profit. Considering the low utilization, I think this is a good message. So you can see if we are growing our revenues in 2020, we will be very profitable, and we will be back on track. So once we overcome the top line crisis, we will be on a very good path to profitability. Let's have a look at the OpEx and total OpEx is about EUR 30 million. Of course, one thing we didn't expect is the impairment expense. As many of you are aware, we've been working with big Chinese customer, Hanergy Group. And Hanergy has a German outlet called Solibro, and we've been, over the years, making significant double-digit million revenues and projects with Hanergy and its subsidiaries, very profitable projects, and we like that. So but now the Hanergy Group was struggling in China, and we had to write off some of our POC revenues and this added up to EUR 3.3 million. And that was -- we hurt our, of course, our P&L last year significantly. That's a one-off. So -- but the other areas you can see R&D is a little bit down, but this is due to the fact that we capitalized some of our development costs due to the fact that we have serial machines in our pipeline, you will hear more of that when we walk you through the strategy and to the product that's in customer service. That was a little high in 2018. So we're back on a normal level, I guess. And 2018, please remember, we've been building up our China outlet, a service group in Shanghai, and that cost us some money. So we are coming down a little bit there. Also in G&A and SG&A covers some of the expenses, which are driven by the stock performance and cover the salary of -- the bonuses of the executive board members and the leading employees of the company. So of course, due to the fact that we had a significant drop in our share value. You can also see that our bonuses have been going down, and this is also covered here with our PSP final stock program, which has significant lower impact in 2019 compared to 2018. That's the P&L. We can discuss that later on. I think you will have some questions on that. Have a look at the balance sheet. I think most important, and many of you are looking at that, you see that our available cash at year-end was about EUR 14.8 million. And due to the fact that we have seen some significant entry of prepayments from our friends in China, which add up to more around EUR 12.4 million for the project in Xuzhou already. So we still have a very significant and healthy cash position as we speak right now. So year-end was EUR 14.8 million. Also good, you can see that restricted cash loss is reduced due to the fact that we've been working on the projects. I think that's okay for the balance sheet. Let's move on and can discuss that later on. You see the cash flow -- operational cash flow, slightly minus EUR 3.2 million. Remember, we haven't seen that many prepayments, of course, due to the fact that we haven't seen the big order entry. Cash flow from financing activities just explained, we turned around restricted cash. So you see, as I mentioned, liquid funds at the year-end, EUR 14.8 million. We are quite healthy, and we're quite stable, and we like that one. Now look at the employees. Page 9, we've been building up our employee base in 2018. As I explained, that was, of course, due to the fact in China, we've been moving our focus in the business more and more to China, as you all are aware over the last years. We've kept the employee base stable, although we've seen lower revenues. Why is that? Because we expect that we are seeing those revenues in the course of this year, and we do need our employees, which are highly skilled employees, highly skilled workers, engineers, technicians, mathematicians, and we're very happy to have these skilled people on board. So this is why our employee base is very stable, and we have no fluctuation, and this is very good for the company. Well, of course, Sales Split by segments, Asia playing a major role -- sorry, on next page, since this is the segment of areas, semiconductor, the smallest, but Life Science growing 1/3 and 2/3 of the revenues about 60% roughly, is solar, of course, growing in 2020. That's becoming more and more important. Sales Split by region on the next page, Page 11, you can see Asia, the most important area of China, we will get an impression when we speak about the strategy and the products. Next, Page 12. Shareholder structure, we can very rely very good on our strong partner in China, China National Building Materials, CNBM, is our anchor shareholder with close to 17% of our shares. And of course, one of our most important partners and customers. You will hear more of that. So shareholder structure hasn't really changed over time. I would now thank you and hand back to my colleague, Dr. Stefan Rinck, and I look very much forward to receiving your questions later on. Okay. Bye.

Yes. Thank you, Mr. Ehret. I will now come to our technologies and business segment. Around about 2/3, as Mr. Ehret already explained, is Solar, and this will remain the biggest area for our company also in the future, even when we are working very hard to grow the Semiconductor and the Life Science business. And the main part of all our R&D and development resources we allocated and we allocate at Solar. Why is that so? That's what you see on Page 14 where we show market survey and market growth estimation about solar done by Shell. This is an analysis for the future. And you really see that we are just at the beginning of the growth of the solar industry and the PV produced electricity. So the Shell company sees a very, very big growth for solar mainly, of course, also for biomass and wind, and oil, coal and natural gas will decrease significantly in the years to come. On Page 15, you see market survey from EIA, which is the International Energy Association. They see a growth of round about 50% in between 2019 and 2024 for the renewable energies. And summarizing the whole renewable area is bioenergy, offshore, hydropower and onshore wind and solar. But because of less and less possibilities to build onshore and also offshore windmills, solar will become the major energy source for the future and we will see a strong growth in the future, and we expect that this will grow in this year and next year very strongly because just looking on Germany, we will step out of nuclear power very soon. We are discussing strongly the exit of coal fire power plants. And the only possibility to replace this energy is solar and wind, mainly. And also looking on the electricity cars and talking about hydropower for the future, this is not an energy producer. This is only something where there is a possibility to store energy in batteries and with hydrogen. But this is still relying on some energy sources, which only can be done with renewables in the future to reduce the CO2 production. So that's why we are so confident in the growth expectation for that area. And it's not just the growth expectation, it's also looking on the price level, which you see on Page 16. So this is a page which we show now since some years already. So this is the forecast from Lazard's Levelized Cost of Energy for 2019. And there, you can really see that now solar, together with wind is the most cost-effective energy production source available, much more cost effective and cheaper than coal or nuclear or all other energy sources. And that's the main driving force beside the CO2 emission, which will grow the solar and wind drastically in the years to come. Singulus is active. That's what you see on Page 17 in the silicon crystalline business and also thin film. Thin film is with around about 10%. The minor part of the PV modules and the technology, but the investment for machinery is round about 10x higher than for the crystalline market. So for a machine supplier, as Singulus is, it's a very attractive and interesting market and we could achieve the leading position in the remaining years in that CIGS market, and we are well positioned there and still developing new machines to further grow that market. But we also see the crystalline market and in the remaining 2 years, we also developed new machineries for that silicon crystalline market, and I will show a little bit later, and we are just now starting to market and to start the implementation and marketing of these new technologies. So first of all, coming to our CIGS market. and our big customers CNBM, which is, at the same time, our biggest shareholder. So they announced already a couple of years ago that they want to build up 6 gigawatt production capacity for CIGS in 4 different cities from Bengbu to Weihai. They all already acquired these 4 production sites. And in the first 3, they already started with the buildings. In Bengbu, we have delivered the first 300-megawatt production capacity and we are -- could sign an LOI for the next 300-megawatt. For the city of Meishan. We have delivered the first set of 5 machines for 300-megawatt which are, let me say, move -- will be moved in and installed during the course of this year. The machines are already on site, and we are now waiting for the building to be ready so that we can move in with our machines. And beginning of January, we could sign the order for -- the first order for Xuzhou, the first 150 megawatts, which was a very important order for us beginning of this year, and we already could realize and get the first big down payment in the range of EUR 12 million to EUR 13 million as a major step to start with the building of these machines. CNBM announced the 6 gigawatts, as I explained, and they are following this path as they promised in the beginning. The only issue at the moment is that they are slowing down their activities because of certain reasons and also corona situation now, but we expect that they are fulfilling their plan going up to 6 gigawatts, which means it's a huge growth opportunity for Singulus. But looking on the next pages, you see the machines, some samples of the -- examples of the machines we already delivered. On Page 19, you see our vertical sputtering machine, VISTARIS, which is at the moment running in Bengbu. And even after this corona situation, Bengbu production plants already started again. So they are, again, in production since 2 weeks now. And we also delivered the remaining machines to ramp up to 300 megawatts. So these machines are already exampled on site, and we are expecting during the course of Q1 and Q2, that we will sign the outstanding FATs also for this second expansion step. On Page 20, you see our CISARIS machine, which is the heart of the whole production line. So this is the machine where we ramp up the modules up to 600, around about 600 C to diffuse the selenium in the absorber. We have delivered already 10 of these machines to Bengbu, 5 machines to Meishan, which will be ramped up as I explained. And we could sign an LOI for another 5 machines for Bengbu. And again, we also have 5 machines now on order for Xuzhou. On Page 21, you see our very well accepted evaporation machine for the selenium. We have delivered 2 machines already to Bengbu, 2 to Meishan and have now 2 -- another 2 on order. This machine is perfectly designed and has an outstanding performance, what our customer is always explaining to us. So overall, we have great opportunities there with our customer, CNBM, and we are not delivering only the machines, which I just showed. We have now also orders from CNBM on hand for some R&D activities and also for the development of new machines, which will further increase the efficiency and also increase productivity to drive down the cost and to make them more competitive. So this is something where we are focused on at the moment, and we are expecting that we can introduce some of our new developments already in 2021. Looking now on the crystalline market. Singulus focused on the development of new production machines for PERC technology for heterojunction and TOPCon. So on Page 23, you see some examples of the machines we can provide. These are the red boxes. We can provide for PERC technology, which is the main part of the production technology today, which is able to go up to 22% efficiency. On Page 24, you see production line or production follow-up line for Heterojunction cells, which is the new technology going up to 24%, 25%, maybe 26% efficiency in the future and has less production steps. So it's a much leaner production technology. And Singulus has now delivered a couple of wet chemistry machines, which you see on Page 25. And we have now also delivered the first PVD machine, which could lead to a efficiency above 24%. So this machine has outstanding -- shown outstanding performance on the first customer side with a fantastic efficiencies. The customer is very happy about that machine, and we are expecting to get more orders now from the Asian market. And with this big success of these both machines now showing more than 24% efficiency, Singulus is now also in the situation that we can offer complete production lines and for complete production fabs together with a partner, if there's any new customer to come here in Europe or in the U.S., which would like to step into the solar business, and being -- or asking for a complete production line, I don't want to say 20 line, but similar to that. Last but not least, to go into the cell technology. There is a new cell design developed from the Fraunhofer Institute in cyborg. Singulus has done a lot of research programs together with the Fraunhofer Institute and some other research -- solar research institutes in Germany, where this new TOPCon cell design was developed, which is, let me say, further possibility for the PERC lines to increase efficiency and also up to maybe 23.5% or 24%, which is requiring a certain additional layer stack on the rear side and Singulus now developed a new in-line machine for the in-line alkaline texturization, single-site texturization and also a new PECVD machine for deposition of polysilicon layers, aluminum oxide and silicon nitride on the rear side. One example of the new machine, you can see on Page 27. So this is a new in-line alkaline texturization machine, which can go up to 8,200 wafers per hour, the first machine, we already delivered and showing good performance, and we expect more orders to get more orders during the course of this year now for this new machine. So that was a brief overview about our solar activity. So to summarize, we are focusing on further developing machines for the CIGS market, for our big customers, CNBM, and we are now also develop new dedicated machines for high-efficiency crystalline solar cells and being also able now to deliver complete production lines for the heterojunction market. Now coming to the semiconductor market. Christian Strahberger will give you a brief overview about our activities in that area.

So good morning from my side. This is Christian Schaberger. Briefly, going over the semiconductor business. The portfolio basically split into 2 segments. One is Vacuum Deposition technology. The other is Wet Chemical. For the Vacuum Deposition technology, we can serve basically all common standard in the industry, whether it's wafer size, typically 200 or 300 millimeters also the interface standard in the past semi-standard. And I think what is special is we have a very good control of layer thickness down to our thin layers. We also can provide very wide range of cutouts at the same time in the vacuum chamber to grow very competitively to a structure. That has brought us in the past to a very good technological position for magnetic layer structures. This is a focus area of the business up to now. And we have good references for MRAM. We also have the magnetic sensors and now working on integrated inductors, which I believe is a very promising area for the future. As they are growing integration of circuits in the PCB, we also, at some point, move the injected coils onto a chip. We can see also that we have the necessary technology in-house to step into adjacent deals. The background is that so far, we more or less limited us on the magnetic structures, which is good, but we need to grow, and we haven't executed on that one in the past. So we need to widen our scope and we want to go into adjacencies like MEMS, packaging, RF electric, power electronics. However, using the same technology and staying with plasma tools. So we don't want to step into entirely new technologies, but rather use the knowledge that we have and apply it to other teams. What we come there and what we aim for is going more to the production environment. So far, we have been mostly active in R&D environment and start-ups. And of course, production of R&D is a completely new game. So this will cost us some challenges. So the that was processed moving that. I don't expect things to come overnight. It will be a multiyear process. The other side of the business is the wet chemical side. we do have an existing portfolio. We do have references, which are mainly taking some years back. That segment has been a little bit neglected to the low-hanging fruits in the solar industry, and we're now looking at reactivating our service activity in that area again, in the overall strategic diversify the company. There we have knowledge on how to do these systems, and we have portfolio elements. However, we need to refresh our content into the industry, which is the same as for the vacuum side. So this was the outlook for semiconductors in a nutshell, and I hand back to Stefan Rinck.

Yes. Okay. Thank you, Mr. Strahberger. Coming now to the Life Science area. So on Page 33, you see our new Medline machine, which we developed 2 years ago. We have now produced 4 of these medical machines to produce contact lenses. The machines are running 24/7 in Singapore very successfully, and they are already in mass production now with an excellent performance and producing contact lenses mainly for the Asian market there. And during the course of last of 2018, we could also get another order now from a new customer also for contact lenses with a different technology and different chemistry. This machine is at the moment here, being produced on our shop floor and will be delivered very soon directly after overcoming this corona situation, and we are expecting also to get more orders for contact lens production machineries during the course of this year. And besides that very interesting market for contact lenses, we are also focusing ourselves on the cleaning and etching of different parts for the medical industry like teeth and other spare parts for humans and also on surface conditioning modifications, megasonic cleaning and also coating for the future. That's an interesting area that was completely new for our company to introduce the GMP procedure to be able to deliver into the medical market, but we could achieve that very successfully, and we are now a welcome supplier for that industry, and we are looking forward also to get more orders in that area. Coming to our DECOLINE machinery for the surface coating, which you see on Page 34. This is a complete DECOLINE where we can coat plastic parts for the cosmetic industry and also more and more for the automotive industry. So here, we are coating very cost-effective plastic parts with a metal surface so that the parts get an awareness and a feeling of a metal part, golden or silver. And at the same time, after -- in the same machine after coating these metals, we also coat the parts with a certain lacquer and the machine is also working with integrated automation. So a full turnkey line, so to say, to make these parts ready. On Page 35, you see the heart of that machine, which is the POLYCOATER, the metallizing machine, which we are also selling independently from a complete DECOLINE. So last year, we could sell 2 of these POLYCOATERs and one complete DECOLINE, and we are expecting to get more orders this year for DECOLINE and also POLYCOATERs. The big advantage, what we see now more and more from our customers that they could generate cost savings with this machine and also could replace existing production technologies like Galvanic coating and lacquer coatings with solvents. And with this machine, we can replace more or less 80% to 90% of the solvent, which is not very environmentally friendly. Coming now to the strategy and the forecast for 2022. Let me summarize our strategy for solar is to extend the leadership in CIGS and to establish further production steps for TOPCon part and heterojunction solar cells. The semiconductor market, Mr. Strahberger explained that we want to expand our leading position for magnetic sensors and MRAMs. We want to expand the presence in production environment and also grow into new applications like inductors, MEMS, RF-Filters, LEDs, Power Electronics and so on. Coming to Life Science. The Medical Technology, we now already achieved this GMP approval. We are looking for more customers in the contact lenses market, and we are also looking into new applications in that area, keys and other parts for example. Decorative Coating, our machine technology. The Decorative Coating, POLYCOATER is now well accepted in the market, and we are now expanding the machine platform for also bigger parts and going more and more also in the area of the automotive market. And we are also looking for new applications in sputtering and wet processing for the display industry, for glass industry and other interesting applications. So the outlook for 2020, of course, it's very much influenced now by this coronavirus situation. In China, we are now seeing that they -- I don't want to say more or less overcome the situation, but China is now coming back to production. As I said, since 2 weeks already, now our biggest customer, CNBM, has started the production, again, our service and people are now back on site and further moving in the delivered machines. So this is now starting to come back to normal, more or less normal business. We expect that we also can come back in the next coming weeks to other construction sites and to other customers in China. So again, China is waking up again, but now we are seeing the ways to come here in Europe. And at the moment, it's for all companies, for all production companies, it's not easy, let me say, it's difficult. So we see some problems in getting parts. So our production is very much influenced. And of course, we also have to think about the situation, how to overcome here in Germany, but we are still very positive. We are still working on the -- in our R&D department and design department to work on the projects we have in-house to be able to restart very fast after the overcome of the situation here in Germany and Europe, and our target is to achieve EUR 120 million to EUR 140 million. So more or less the same level than 2018. And also to come back to profitable earnings in the single-digit million area. So that's -- to summarize, thank you very much for listening to us, and we are now happy to get your questions.

[Operator Instructions] The question comes from Malte Schaumann for Warburg Research.

Malte Schaumann, Warburg. I didn't get the name. So a couple of questions for me to start with. Maybe you can -- what's the situation with CNBM? I mean in terms of communication? You've had tangible schedule plan and the sort of projects are being planned today. Is it over the next few months? Is it -- and have you already started then, the works on the CISARIS machines for -- to take one as you receive the initial down payments?

Yes. So Mr. Schaumann, thank you very much for your first questions. So again, the situation in China was very difficult, also the communication with that customer. Looking on the construction side in Bengbu, we are -- they started again the production. We are back again on site with our people in China with our Chinese colleagues to ramp up the machines, which we delivered in the second lot. And we are expecting to get the FATs in Q1 or latest Q2 for all the outstanding machines we delivered there. Looking on the construction side in Meishan, at the moment, we have no visibility when we can move in there with our machines because what the Chinese colleagues told us that some companies, of course, started production again. But these workers, which are traveling a lot in China for Chinese New Year are still at home, they are still with -- together with their families in the villages and not back to start the construction again. So this is still the case. So we don't know exactly when we can move in there, but we expect maybe in June, July, so that we can then move in our machines into that Meishan factory. And the order we could get in 15th of January, where we have the down payment now and the value of in between EUR 12 to EUR 13 million, this is very nice. So our cash position is now much better. And we are now starting with all our negotiations with the sub-suppliers to be ready to start directly or limited, and we could also see that our sub-suppliers have difficulties. So they are not able now to deliver the parts as we expected, but we see now that we are limited with the corona situation. And as soon as this is over, we can hopefully start then with the building and assembly of these machines. But the target is to do it as fast as possible so that we can achieve a, hopefully, big part of the turnover during the course of this year out of that order. I'm answering your question?

Yes. And with respect to your supply chain, is there some kind of visibility? Are your suppliers have fully stopped working? Or do they at least deliver partial? I mean the situation will probably not improve over the next couple of weeks in Germany. So how secure are you that you can actually start maybe then the works on the tools within the next 2, 3 months? Or is there a serious risk that everything will be delayed into the second half. So how is the visibility on the supply chain in that respect?

So Mr. Schaumann, I can only talk at the moment about my wishful thinking. My wishful thinking is that during the course of May, we overcome the coronavirus situation, hopefully, here in Germany so that our suppliers start again. So that we then directly could start placing orders with them and getting then the path as soon as possible. But that is kind of a glass bowl at the moment. And again, wishful thinking from my side. At the moment, we are getting on a daily base informations from sub-suppliers that they are closing down, that they're shortcutting the work, and we are also in negotiations with our workers force. So at the moment, it's not so easy to get transparency. Every day, when you read in the newspaper, there are new messages, positive or negative. So wishful thinking, that's at the moment in May.

Okay. And from CNBM, regarding the next fab in Weihai, any indications when they might plan to place orders for that one still in this year? Or is that a project rather than for maybe early next year?

So we expect that we get order during the course of this year also for the Fab 7. What we understood that they want to have for the Fab 7 already, the new developments, which we did for the cost savings. And we have really had some very, very good ideas so that we can drastically more than double or double digit, yes, the costs for their production in the area we are in charge for. So that's a drastic cost reduction and they want to have that for the Fab 7. We are -- we feel at the moment that we have this technology available so that this order for Fab 7 will come in 2020.

Okay. And these cost reductions refer to the new CISARIS generation or for the sputtering systems?

This, for the sputtering and CISARIS, mainly for the CISARIS, and it's a cost saving of more than 20%. And for the sputtering machine as well, it's not as big, but also double-digit because we could really find new technologies, new deposition technologies, which brings down the cost. So that is not that we reduced the price for the machine. It's really that we worked on better process technologies, which is driving down the cost.

Okay. Okay. And then also for CNBM, any update on cadmium telluride. I mean earlier in the year, there were some new announcements regarding cadmium telluride products. And then on potential value increase, So the delivery of another sputter system for the upcoming 6 fab, any change or any indication here?

So, of course, we are very careful here because we have a strong competition in that area, but we are working hard, and it's our family, and we have to be competitive. And we are, let me say, also hoping to get more orders to replace some of our competitors in that area. And the signs we got from CNBM is also that they are, let me say, very open to take our machines instead of competitor machines. So we have a certain chance there for CIGS and also for cadmium telluride.

Okay. Good. And then internal measures that could potentially -- are you thinking about implementation of overtime work? What options do you have to the cost savings it requires throughout the year?

So at the moment, we are driving down the overtime hours, the positive hours there drastically. We are pushing the people to take their holidays. And we are in contact with our workers force also for short time working. And this is the plan to reduce our costs at the moment because it doesn't make sense that we are here in the company when we cannot get parts from our sub-suppliers. So we are really trying to cut down the costs as much as possible. And this is a daily work at the moment. And so that -- but that's drastically.

Okay. And are you -- I mean it's pretty early on, are you able to quantify the potential impact out of that? So what's the potential savings amount in realigning overtime work?

At the moment, it's not possible, Mr. Schaumann, to quantify that because we are just ramping up to take these measures, yes? At the moment, it's the overtime. So that's still the cash flow, but -- and people taking their holidays. But beginning of April, I think we will start also with short-term working.

Okay. So my last question is regarding the sales guidance for this year, if I take the expected contribution from Fab 6 and then from service revenues and the existing order backlog, then you probably need some further EUR 30 million to EUR 50 million in orders to come up to the EUR 120 million to EUR 140 million sales target. Can you split that up? So which areas contribute to that amount that another larger solar product is that more split into smaller projects across different applications, so maybe a pretty rough overview where the additional EUR 30 million to EUR 50 million should come from?

Yes. This is Markus Ehret. Malte, basically, of course, we are expecting some more entry and this will be some, of course, solar projects. We just mentioned, Dr. Rinck explained that we are in the process of sending out our proposals for machines and projects. And of course, we expect we're working on a very large life science projects with new customers, and we expect a significant broader entry in that area. It's one of the key areas we're looking forward to receive big orders. So we look very much forward to that one. It's -- this is crucial to achieve what we have seen. But right now, we're still very optimistic. And frankly, we do see that China's overcoming the -- this corona crisis pretty fast. And I think we can even learn how they did this and our social and medical systems are better than theirs. So I think we will get back on track just put it within a few weeks. And then we see that our Asian partners already are coming back on track so the rest of the year will be playing out as we see this. Life science, solar, we have some opportunities in semiconductor, which are also coming due in the second quarter. So we do think that 2020 will be a good year. And actually, we also are very -- I answered a question you didn't -- you didn't have so far, but I know you're thinking about that. And we're very stable right now. We have the prepayments. We just mentioned the EUR 12.4 million received for Fab 6. Now we do look forward but we'll be refinancing our bonds outstanding. We refinanced and prolonged our loan, EUR 4 million super senior. So from the financial side, we are doing our homework. We are well on track. We expect some order entry. Yes, we will look forward.

Yes, and Mr. Schaumann, also beside all these activities, what Mr. Ehret just explained. We have done a lot of work in the development of machines for crystalline solar in the remaining years. So it took us 3 to 4 years for the development. And we have now successfully developed single machines which could show on different customer sites, very, very high efficiencies, and we are now also able to deliver a complete factory production attractor for heterojunction. And we have some interesting customer here in Europe, which is located in Croatia and is already showing on their website that they want to, let me say, have Singulus as a complete turnkey provider for their production line. And so we teamed up with another supplier, which can provide the machines we don't have in our portfolio. And this would also be a very big order for our company during the course of this year. And hopefully, this coronavirus situation is not, let me say, blocking that. But if this is coming, then we have a lot of work inside our companies, and we are -- we can really then achieve our targets.

Okay. So that project is probably part of the planning?

This is...

It's not really -- it's an upside. It's actually, if we look at our guidance of the EUR 120 million and EUR 140 million, it's not even part of that.

We currently have 3 further questions in the queue. The next question comes from the line of Veysel Taze from Bankhaus Lampe.

Yes. The first one will be on your outlook, the EUR 120 million to EUR 140 million. Can you a little bit give a rough split how that is going to look like a solar and non-solar?

Basically, when it gets down to, of course, we do not give split to the segments or how we plan the financial year 2020. But the biggest area is, of course, solar, as we just put, and solar will be most important. You have seen the structure in 2019. It will be the same structure in 2020.

And then, let's say, if we have the solar part, somewhere between EUR 70 million to EUR 90 million, that's in your current expectation, is the CNBM order fully recognized sales for 2020?

No. Basically, what we do see is we expect that we're going to deliver the biggest part of the machines in this year. And just remember, at the point of when exports and the machines leave our premises, we're at about 80%, 85% of revenues.

Okay. And then on CNBM, most questions have been already addressed. But taking together all the different fabs you have now in your -- or you delivered the tools. What percentage of the -- or what amount of down payment is still outstanding?

Well, basically, we don't go into the details of our individual customer contracts.

Yes. But roughly?

I understand due to the magnitude of this and importance of this contract. So as you are aware, we have -- we're always trying to receive 40% of down payments when we start work and from the 40%, we have received more than half already. And the next is to come in April and May. So the full 40% of -- it's several contracts behind that. You have to be aware, as we mentioned, not just 1 contract, but several contracts. And so we're right now receiving all the down payments. And it's more than 50% we received already from the 40%. So it's 20% of the contract.

Okay. And...

And April and May is some, as I said.

April and May. Okay. The next months to look for.

The other payments are due in April and May.

Okay. And then to understand your cash flow statement, I don't know if the annual report is already out. I have not seen it on the home page. But if I look at the summary of the cash flow statement, in the financing cash flow. So basically, you don't have to give a custody now with the down payment. So usually, you received the down payments, but you need to get that into a custody account that the customer has kind of insurance, that's not going to happen anymore? Or how should we see the financing cash flow improvement there?

You cannot see it on the actual cash flow because the down payments are coming right now in the first quarter. But yes, it's -- the fact is that we do not give guarantees for the down payments of CNBM. This is because of CNBM is one of our big partners and 70% shareholders. And they can rely on us and we can rely on them. So we do not...

But that's new, right? So that's?

Well, we had several arrangements with them on other occasions where we didn't have to guarantee or we guaranteed in a particular noncash order, but this is -- at this stage, it's just the fact that we don't have to guarantee for the down payment as well.

Okay. Okay. And then I understand from your previous statements that you expect in a business to be back or your component suppliers to be back. So what time in the year do you need to be back already to make your expectations for 2020?

Well, let's see, of course, we are monitoring the situation very closely. And we're already -- as Dr. Rinck just put it our team is ready to get back on 100% or even more, if needed. Right now, we're monitoring the situation, and we will give guidance if we see that we cannot reach it as long as you don't hear from us, you can expect that we are going to meet our guidance we've just given. So right now, we're pretty confident due to the fact that you are now, Mr. Taze, you are very well aware that we can scale up our operations pretty fast. And so -- and the machines are -- it's repeat machines right now. Most of the machines we are selling right now are repeat machines. And Stefan Rinck just put it in, we have been investing over years and years into our machinery equipment base, and now this is paying off from our side. We look forward to it.

Okay. And then one question regarding this Croatia potential. Any delays due to the recent earthquake there? Or is it not really having any impact on the roadmap?