SUSS MicroTec SE (SMHN) Earnings Call Transcript & Summary

[Audio Gap] In today's earnings call, we will delve into the financial figures of the first half year of 2024. I'm delighted to welcome the Management Board, and Sven Kopsel, VP from the Investor Relations Department who will start with the presentation shortly. After the presentation, we will move forward with a Q&A session. And with this, let's start Mr. Kopsel, please, the stage is yours.

Thank you so much, and welcome to our H1 2024 conference call. As you all probably know from earlier calls, this call is being recorded and considered as copyright material. It cannot be recorded or rebroadcast without permission and participating in this call implies your consent to this procedure. Please be aware of our safe harbor statement on Page 2 of the slide deck, it applies throughout the conference call. And now I hand over to CEO, Burkhardt Frick, who will present the H1 highlights, followed by our CFO, Cornelia Ballwießer with the financial update. Burkhardt, it's yours?

Yes. Thank you, Sven. Welcome to all participants also on behalf of our CFO, Cornelia Ballwießer; and our COO, Thomas Rohe. All of us will be available for questions after our presentation. No surprises today regarding our key figures for the first half of 2024. We already published these numbers as preliminary results when raising our guidance in July. The key changes versus the first half of 2023 are that the order intake is up 7.9%. Sales is up more than 45%, gross profit margin increased by 4.2 percentage points and EBIT is even up by 6.9 percentage points. Our key messages for this first half are that we managed to continue the strong order book execution in the first quarter of Q2. At EUR 99.3 million, quarterly sales were even higher than the EUR 93.5 million of Q1 2024. Quarterly gross profit margin was 40.5% and EBIT margin of 15.3% came in stronger than some analysts had expected, driven by the continued favorable customer and product mix. The strong performance in the first half of the year and the outlook to orders we tend to execute in the second half creates confidence that we will be able to keep up the positive sales and margin momentum. We have, therefore, raised our guidance for all 3 financial KPIs. The unchanged high order book level of around EUR 450 million continues to put high pressure on our operations team. Consequently, we push ahead with the expansion of flexible production capacity and measures to increase our operational efficiency. At a time when our customers are rapidly expanding their capacity, we are committed to be a strong partner for continued growth. By accelerating our ability to deliver from all our manufacturing sites, we want to show that we can do even more in the future. Now let's have a look into our 2 business units. First, the advanced back-end solutions. Our Bonder business again contributed strongly toward the segment order intake. We experienced continued demand for temporary bonders, debonders and cleaners for HBM capacity ramp up. We are in a constant dialogue with our key customers to determine demand and further capacity expansion for 2025 and beyond. Further good news from our hybrid bonding activities. We have received an order for our new die-to-wafer and wafer-to-wafer hybrid bonding all rounder, which we launched in May. The customer is our U.S. technology partner, Bridge based in Florida. Once the system is installed in 2025, our North American customers will be able to use this tool for demonstration and evaluation purposes. This unique hybrid bonding all rounder will allow research institutes and R&D teams of semiconductor manufacturers to explore all different hybrid bonding processes. For high-volume production, customers will then choose a dedicated die-to-wafer or wafer-to-wafer solution, which we can also offer. Bonding sales benefited from the strong order intake of the second half of 2023, and we were able to almost triple versus H1 2023. It is worth to mention that bonder sales in Q2 outperformed Q1 sales as some tools, which we already produced in Q1 were delivered to customers in Q2. Imaging and coating business continues to be slow. However, the number of customer inquiries increased towards the end of the first half. Let's see if that translates into an increased order intake in Q3. Now a few words on our Photomask Solutions segment. Order intake momentum was below Q1 2024, but the order book level of EUR 117 million is well above our annual production capacity. While we, of course, are eager to grow the order intake, we like to reduce the backlog to better serve our customers. Comparing our sales performance versus 2023, we are happy to see growth rates of 61% in Q1 and even 71% in Q2. And driven by a positive product and customer mix, our gross profit margin was above average at 37.6%. It's worthwhile to mention that sales in this segment represents low volume systems with relatively high selling prices. Therefore, the resulting margins are subject to greater fluctuations if product and customer mix changes. Next, I would like to hand over to Cornelia for more details on our financial results.

Thank you, Burkhardt. Also a warm welcome from my side to all of you. We already spoke about some key financial indicators, so I try not repeating our explanation so far, but summarize and add some more details. In terms of order intake, Burkhardt already mentioned the 7.9% growth in the first half compared to '23. If you compare the second quarter as a stand-alone quarter with the second quarter in '23, order intake was 12.7% growth, yes, please -- sorry, sales revenue went up 45.6% compared to the first half of '23. You can see here the impact of our capacity expansion quite impressively. Gross profit increased by 63.1% versus '23 and as a result, we achieved a very strong gross profit margin of 39.8% in the first half of '24. In Q2, we even achieved 40.5% after 39.1% in the first quarter '24. As we, again, had a favorable product mix, the positive gross profit development also supported the EBIT margin, which was at 15.6% in the first half of '24. This is 6.9 basis points from -- versus the last year. Net profit for the first half was EUR 80.8 million. The sharp increase is due to the sale of our MicroOptics business and due to a significant improvement in earnings from continuing operations. Earnings from discontinued operations after tax amounted to EUR 58.3 million and earnings from continuing operations after tax growth very significantly to EUR 22.5 million compared to EUR 9.5 million in the first half last year. Consequently, we were able to more than double our earnings per share from continuing operations. We also managed to convert the positive business development into a strong free cash flow from continuing operations amounting EUR 22.6 million in the first half of this year. We are expanding our workforce as well. Since June '23, our head count increased by 18.6%, as we welcome more than 200 new people at SÜSS. Most of our new employees work in production and R&D department. Now let's take a closer look on order intake. Please note that all the presented years are adjusted for the MicroOptics order intake, meaning they only include continuing operations. Overall, order intake in the first 6 months was up 7.9% compared to last year, leading to a book-to-bill ratio of 1. This is a very robust development after the extraordinary second half of '23. Our customers still plan the investment cycles for '25, which may lead to an increased order momentum in the second half of this year. At the right-hand side, you can see a breakdown of our order intake by region. Asia Pacific continues to be the strongest driver of our business with 76% share of global order intake. The majority of this share is divided fairly equally between Taiwan and China. The remainder is attributable to Korea and Japan. This overview shows the key figures for the segment in the first half of the year compared to the previous year. Our biggest segment, Advanced Backend Solutions contributed about 70% to group sales and around 75% of the group's gross profit. Sales revenue grew by 39.2%, gross profit plus 57.6% and EBIT 133%. Consequently, the margin improved significantly. As already mentioned, the Bonder sales revenue almost tripled and Q2 outperformed Q1. Segment Photomask solutions even grow more. Sales revenue, plus 64.3%, gross profit plus 83% and EBIT plus 152.5%. In this segment, sales growth in Q2 outperformed Q1 too. EBIT margin rose from 12.6% to 19.6%, stronger than in the segment Advanced Backend Solutions due to less operating expenses. So here, just a look at the balance sheet. Total assets increased by EUR 85.3 million. Noncurrent assets remained almost unchanged. The biggest change is in current assets, plus EUR 74.7 million. Inventories increased by EUR 30 million compared to the beginning of the year to serve the well-filled order book. Trade receivables and contractual assets decreased by EUR 10 million, EUR 5 million each. Due to the sale of our MicroOptic business as a term for sale in the amount of EUR 33.9 million were derecognized. Cash and cash equivalents increased by EUR 87.7 million. On the liability side, we see all the big impact from the divestment of our MicroOptics business. Equity rose by a gain of EUR 58.3 million related to this discontinued operation, but equity benefited also from our strong results from continuing operations in the amount of EUR 22.5 million. Considering other comprehensive income and dividend payments, equity increased by EUR 72.8 million in total. And equity ratio developed from 49.2% to 56%, which are 6.8 percentage points. Noncurrent liabilities are more or less stable, a slight increase relates to deferred taxes. The current liabilities are at roughly the same level at as the beginning of the year. However, there are higher trade payables of EUR 31.9 million compared to EUR 27.1 million at the end of the previous year. And contractual assets are also up to EUR 92.5 million in the previous -- end of last year, we had EUR 87 million. Provisions on the other hand, are down significantly by EUR 3.9 million. And the biggest factor is a derecognition of liabilities associated with assets held for sales with a volume of EUR 13 million. Burkhardt will now complete the presentation with the outlook for the complete year '24.

Thank you, Cornelia. I'm sure that all of you noted our ad hoc announcement in July, where we raised the forecast for all 3 financial figures, key financial figures quite significantly. If you compare the midpoint of our initial guidance with the new guidance, we upgraded our sales outlook by 11.3%. The gross margin by 2.5 percentage points and the EBIT margin by 4 percentage points. This adjusted forecast reflects our confidence that we will be able to continue in the first half year -- sorry, we will be able to continue the first half year performance into the second half. This will be all about executing the strong order book. You are probably all familiar with our medium-term forecast of EUR 400 million in sales and EBIT margin of 15%. And you also noticed that we might be able to reach the '25 targets already in '24, even without the divested MicroOptics business. At this point in time, we do not like to adjust our 2025 targets. This is not a lack of ambition. We want to continue to grow while we even further improve our margin profile. But first, we need to increase the visibility on our production planning and the order book level at the beginning of 2025. As said several times, our systems and high demand, especially Bonders and Photomask solution tools, we have a fairly high level of visibility until around mid-2025. We now want to fill the remaining production slots for 2025 in the coming months. You can expect to see our 2025 guidance latest by March 2025. And now Cornelia, Thomas and I are happy to answer your questions.

[Operator Instructions] And we received the first question from Florian Sager.

I got 2 questions and I'll take them one by one. The first one would be, what's your view on HBM and the risks of overcapacity. I mean, do you -- when you speak to your clients, what is your sentiment? I know you only have visibility onto some of '25, but just for us to better understand where you lean here. Do you see a risk of overcapacity high? Or -- what is your feeling here?

Florian, that's a good question, especially after the stock movements of the past days, we don't see any signals of our direct customers slowing down. They rather like to have our tools today than tomorrow. And we are really trying on a daily base to expedite shipments and install those machines as fast as we can. We have visibility as said, until mid-2025, and we are fully loaded with executing those orders we have received. So I'm not very concerned that there is an overcapacity at least that doesn't look from my perspective. We are in the midst of a ramp. And this ramp as many ramp scenarios you might be aware of always goes in phases. And we are still in the initial phase of a big HBM ramp.

Okay. That's good to hear. And the second question would be you mentioned an improvement in your customer sentiment at the end of Q2 for your lithography business or used to be lithography. Could you maybe quantify the improvement that you expect in orders for H2 versus H1? Or can you even say just for us to get a better grip on it?

Yes. As I said, in the first 2 quarters, it was rather flat, but also markets were pretty flat. We have -- we really see a much higher inquiry level and really leads we are close to execute. And of course, I don't want to comment on individual deals here, but I think in the next 1 or 2 months, we will have also better news to share. But we see a clear uptick in order momentum and potential additional order entry for our coating business, in particular.

We have another question from Michael Kuhn.

Also few questions from my side, and I'll also ask them one by one. Firstly, sorry -- can you hear me?

Yes.

Yes. Okay. Sorry. Starting with the product mix, I think a couple of positive factors coming together. And the second quarter still first half gross margin already at the upper end of the full year guidance. Should we expect maybe with somewhat higher Photomask share, modest temporary deterioration in the second half or, let's say, what is the reasoning behind the 38% to 40% -- was almost 40% already achieved in the first half?

Yes. I think I said it in the presentation that especially Photomask business is depending on relatively small unit sales at high prices and a different configuration and margin distribution. So depending on that mix, it has an impact on the margin. And therefore, we are a bit cautious not to overshoot here and really base the first half year performance, especially in Photomask business and project this until the second half. But -- so there's more variance in the margin distribution. That's the key message.

And then on Bonder sales. You mentioned in the release it almost tripled year-over-year. So looking at last year's numbers that would apply seems like a EUR 70 million number in the first half. Is that a level -- realistic level to think about? And would that be a run rate for the second half as well?

Yes. Well, it's always difficult to project run rate. We -- as said also a couple of times, the -- we are executing now the huge order intake of last year, especially the last half of the year. And that's really lifting the sales level to these levels. However, we are running at peak rate at full production capacity, which is in total, allowing us to produce and sell about EUR 150 million of AI-related equipment. So we can if we have the order coverage continue on that level. But that again depends on continuous order intake. And we first want to finalize especially in the second half of next year in terms of slot planning.

Understood. Then one on the cost side. Those credit increase in SG&A expenses in Q2 versus Q1, more than EUR 2 million increase is the Q2 number kind of a cost run rate? We should think about over the next few quarters? Or is there, let's say, any nonrecurring effects included in there?

If it is a run rate, I'm a little bit cautious. There are some extra costs, I would say, related to our growth. For example, higher costs for recruitment for interim workers. And yes, one bonus payment because of the inflation bonus in Germany, and this is definitely a nonrecurring item. And yes, we are also a little bit growing in SG&A with this growth.

There could be, let's say, some kind of modest normalization in the third quarter. Here you're talking about bonus payments and interim workers recruitment costs, et cetera.

Yes, recruitment costs will still go on because we are growing. We are looking for people. We are not at the point that our workforce is there that we need. And it was only 1 point with the nonreccurring item with the inflation bonus. It's around EUR 1 million. But yes, as I said, G&A will also go up a little bit with our growth.

Understood. And 2 more. One, that is obviously related to the question asked earlier on HBM. The delay of NVIDIA's Blackwell platform was a big topic over the past few days. What are your thoughts on that? And what would you think could be the impact, if at all, for your business?

Yes, Michael, you're talking about the customer of our customer and operating in that AI market space. So it's -- Firstly, I don't see any immediate impact for our business because the surrounding ecosystem is still being built, meaning that the high bandwidth memory capacity which was added infancy is being structurally increased. And so the number of increases needed for any AI chip, whether it's NVIDIA or the other players who are starting up now, will be tremendous. Therefore, I would not hinge on a single ship delay for NVIDIA because there's a big race going on really increasing DRAM and HBM memory capacity, and they will continue for years. And it's not linked to a single delay of one chip.

Last one. You spoke about filling the remaining production slots for 2025. Looking at your 2 segments what would be, let's say, kind of blue sky numbers if you were able to fill kind of most or all of your current production capacity just to get a rough idea here.

Yes, I have to ask you for some patience till early next year because we really don't want to speculate a potentially large range of numbers here. And it also depends which particular systems, we are filling those slots. We have quite some flexible capacity in the events of a high-value tool is occupying that slot or a lower value tool, which can have quite an impact on the sales you're generating. So that's why we are a bit cautious here. But rest assured, we will keep growing nicely.

And we have another question from Malte Schaumann.

First question is on the Bonders. Can you provide maybe a sales share of the bonder revenues, how is the split between temporary bonders and other bonder products in Q2 or the first half?

Yes. Malte, I think we stopped really reporting on individual product lines, and we also don't want to reintroduce that. But the majority is obviously a temporary bonders of the past sales, and that's also reflected in the order book.

Yes. Okay. Fair enough. Then on potential recovery in lithography you mentioned. You said that affecting both areas, imaging products and coaters -- or was it more geared towards one of these applications?

It's actually both. We see increased inquiries for both platforms.

Okay. And this would probably then come through as orders in the second half and then more or less affect revenues next year?

That's what we hope for too.

Okay. Then regarding Intel, I mean, there was a major announcement of Intel recently. I mean Intel is not a large client of SÜSS as far as I know. So just wanted to reassure that there are quite significant cut in their CapEx plans for this year, next year does not really affect you guys. Would that be the right assumption?

Malte, Yes. Also that is correct. We have some activities with Intel, but we are not heavily exposed there.

Okay. Good. And then on Manufacturer cleaning, you mentioned that you're in the process of developing the tool, et cetera, we can provide us with an update regarding when the tool will be ready for a pilot tool with the lead customer or when it will be ready for introduction. What's the current expectation here?

Yes. Malte, this is Thomas speaking. Thank you for the question. So the green tech, the wafer cleaning is on its way. We have the other tool right now in our demo lab, and we can really do some demonstrations also with customers, which we are doing. The interest is pretty high, and we are looking right now also for a partner for really developing and manufacturing now a better tool for our customers. So this is ongoing. And we are pretty optimistic that we get a good tool and the demand and the request from customers is pretty good.

Okay. So no show stopper there thus far. So possibly is looking quite good.

No show stoppers right now.

Okay, good. Another question maybe for you, Thomas, I mean, last year, we all were pretty disappointed with the Q3 results. So now we're in the Q3 this year. So what's your take on the visibility you have? And when you compare maybe the status this year compared to last year, the assurance that you have the visibility on your production levels that things have sustainably improved and that's very unlikely that maybe things go wrong. And in general, how satisfied you are with the targets you had in your area for improving productivity, qualifying outsourcing partners, et cetera. So maybe a general update on these areas?

Well, I think the numbers speak for themselves. So right now, I'm pretty happy with the development over the last half year. We could really increase sales significantly. Supply chain has also changed, and we improved also our supply chain concerning with the suppliers to get into higher volumes so that we really get the tools out of the door. So this is pretty good or has been really changed significantly and in a very positive way. Concerning outsourcing. We are also making good progress here. We identified a few partners so that we really give complete modules out and get them in right now in the right quality. But for sure, I have to say, well, you never know it's not a given. There's no guarantee that this holds for the next half year. But right now, we see it pretty optimistic that we can continue on the path, which we went into over the last -- let's say, 2 years. And now I think also we see some fruits for these -- of these developments.

Sounds good. And then looking at your order backlog, I mean is there a particular reason why maybe second half gross margin levels should be meaningfully lower than what we have seen in the first half year or is the product mix, in general, more or less kind of similar?

Malte, I think this question came kind of already. And it's again a bit the margin variance we have in the Photomask business due to product mix and customer mix. That is really -- the key reason we're a bit more cautious. I think we did raise our expectations significantly more than most of you, I think, expected. So I think -- and that's, I think, what was the right thing to do.

Yes. Okay. Sorry for asking the same question again, I dropped out for a moment.

And we have another question from [ Jens Petrick ].

I would like to ask 3 questions. First of all, other operating expenses, they increased from EUR 1.1 million to EUR 1.9 million in Q2. Could you please explain what are the key drivers that caused this increase?

To make it short, people increased this in R&D as well as in SG&A, as I already mentioned and -- so in production and R&D, yes. And we have expenses for finding the people, training the new employees -- and also for -- I also mentioned for interim workers, interim management. It's driven or it's needed because of our growth. And yes, that are the main reasons.

Okay. Perfect. And the second question would be regarding your hybrid bonding solutions. Could you probably tell me what are your further sales expectations or probably, finally, if you're already in discussions with potential clients?

Yes. I mean, we launched a -- our kind of all-rounder solution in May. And as mentioned before, we have first orders for that tool. We have more also demo requests. We have also the same tool installed in our production center. And that's really a all-around tool where you can do distinct die-to-wafer bonding and wafer-to-wafer bonding for low volume and photomask production. That's kind of the starting point for many customers to get familiar with our solution and work on that. For high volume, then these customers will decide on high-volume versions of that tool, where the wafer-to-wafer tool is already available, and we see we had several orders for that tool. And the dedicated die-to-wafer high-volume tool, we plan to launch at the end of the year, also based on the traction we are getting out of this all-rounder tool, which is now available. So it's -- so we have -- I would say we are in an initial phase to gain traction. There are other players out, obviously. But I think we, so far, haven't missed the boat.

All right. Sounds great. And the last question would be regarding your HBM ships. There, we can see the Chinese tech companies already are increasing their purchases of them to safeguard against possible access restrictions under the new U.S. guidelines. And we can also see that Chinese ship producers appear to be in the early stages of manufacturing HBM ships. Could you probably explain if you see any potential business impacts or any possible threat?

I think -- obviously, Chinese semiconductor companies are trying to work on their independency to be self-sustained. They also started working on HBM, but they are far behind what the Korean and American players are currently working on. So I have no immediate concern nor midterm concern that this will create a big change.

And we have another question from someone from Apus Capital. [Operator Instructions] And we've got another question from Florian Sager.

Just one follow-up on your high backlog that you have in photomasks. I know that you improved sales this year significantly over last year, but there's still a lot of backlog left. Is that just because you don't have enough capacity here? And yes, just for me to better understand this. What's holding it back?

Yes. Thomas speaking here. So you're absolutely right. This is mainly driven by capacity, which we have to increase. We are continuously looking for people also and hiring, as we already mentioned a few times. So this continues, and then we have to train them. And as those tools are also pretty complicated, others -- training of people takes more time than on other tools. So this is the simple reason for that.

We're going to try again with Apus Capital.

Johannes Ries from Apus Capital. So now maybe also some follow-on question. Maybe first on the customer structure in the -- in HBM. It looks like your 2 most important customers maybe are not qualified by the most important customer in video we all know. Therefore, would it be, let's say, win market share and it's also a driver for you because they need more capacity because they could maybe growing faster than tier market leaders of hybrid [indiscernible]?

Johannes, I don't know if I completely understand the question. So I mean, obviously, we are involved in 2 out of 3 players, and they are ramping as we speak. And we have no information that they are not qualified. So they -- at least towards us, they are acting that they are part of the game. Otherwise, they wouldn't deploy machines in that volume.

And the question was it what -- in the past, they have been not qualified on video on every regard, and now they seem to definitely come back in the game more and more, especially Samsung. And so that's the question. How fast is the positive for you that 2 of the 3 maybe seem to hurry up or speed up that?

Yes. They're indeed in catch-up mode. And -- but of course, maybe they reacted a bit later, but also the other company you mentioned has been in HBM for quite some time and, therefore, had a head start. But especially companies like Samsung, when they really are eager to get in, then they have the means and the muscle.

And with 2 of them, especially also Samsung, we have good relationships.

Yes, I think so.

Maybe on Photomask Equipment. First question regarding maybe it's the mix you have in the backlog and maybe the growth you have seen maybe from customers outside Taiwan, maybe from China. Has this mix maybe changed a lot in the last 12 months, that maybe higher-margin products has -- customers has grown? Only a feeling, we know that one customer has maybe special prices and lower margins. And how much maybe the mix has changed and maybe will develop going forward?

Yes. Well, of course, since the entire sales and order level is at this high level, you can safely assume that we have -- other than this one customer you're alluding to. So -- and of course, there's also a China portion in that. As you know, China is really scaling up their own infrastructure when it comes to mask making and mask cleaning. So -- and then of course, that is a significant portion also on the sales. It is always will stay like this, Johannes, has to be seen. I mean, I cannot predict the future. Otherwise, we will be rich.

Maybe next year, all forecasts will be a strong year for semi equipment, especially strong year for new lithos systems. ASML is very optimistic to grow strongly, especially in the OE next year. How much this could be also a driver for new orders for photomask? How much this depends [indiscernible]?

Especially our high-end masks like Pro, benefits from that and also the next generations we are working on, the [ Mask x Smart ], will gear to those single-digit nanometer nodes, so absolutely correct. So we have the highest market share in -- with the highest litho tool available.

Great. And this new generation when it will be available, photomask cleaning generation?

Yes. I think next year is at least the rollout plan and the different versions from bake and develop and the cleaner. So there are different time lines.

And the sales impact will be in '26.

Late '26, more '27, I will say, yes.

Okay. In hybrid bonding, some delays, especially in the use, maybe, in HBMs. Again, maybe we ask it in part for how much -- is it good for you that maybe the market would start later so if you have more your chance maybe to establish yourself as a second source.

Yes. Time is in our favor because, I said before, we are a little bit behind. So of course, we can use that time to really get our solutions settled, to get more customer traction and to get more hardware out because that's key, that our key customers and their engineers get familiar with our technology. And so far, the feedback we get is very positive.

Great. And I believe we have mentioned some systems are already sold. Have a little bit of feeling that more and more application by use cases for wafer-and-wafer hybrid bonding are coming on the market. Also, wafer-to-wafer had a huge advantage that you have maybe less problems with the -- such as some contamination on the wafers. So for -- do your shares of future wafer-to-wafer maybe can get more traction going forward and maybe a larger number of use cases than originally thought?

Johannes, as you said, it's highly use case-dependent. I mean, there are some spots for both bonding technologies. Water-to-wafer is cleaner because it doesn't have the somewhat messy die-to-wafer placement in there. But an integrated machine where you focus on managing the contamination, as we are offering it, is a nice workaround. So depending on the application field, you need both. And that's also why we are driving both technologies ahead.

On the [indiscernible] partnerships [ reels ] , any update on this? Is it in plan? Will it primarily starting to get a revenue driver in the year '26 you originally said?

Well, the project -- Thomas speaking here, Johannes. The project is on track. We are discussing with [indiscernible] about the first tool next year, also for evaluation of the process. So this is on track. And concerning really volume, this is not clear yet, probably end of next year or beginning of 2026 or something.

Great. Now more financial question. You have started a lot of efficiency measures. You have start to outsourcing, which was create some pressure even on the margin. You see the first positive impact already in this year. Will we see further steps of efficiency increasement next year by also some leverage effects? Or it's maybe -- I think the gross margin even -- it's very positive, yet we are able to increase your cost margin so much. It's not the final target, as I understand it or understood it always.

Yes, maybe I start and then I hand over to Cornelia, Johannes. The -- we have lots of measures kicked off in October last year, and we see some -- some are already showing traction. But the main reason why the margins have improved in the last 2 quarters is, again, the nice product mix and also the type of products that we are selling to a selected set of customers. Now if all these operational improvement measures are gripping on top of that, we should be able to stabilize those margins or even improve further, or we are more safe against when the product mix changes, which we didn't have in the past. So this is an incremental benefit we are still working on harvesting.

There is nothing to add. Everything you said, I would say. Yes. But please keep also in mind we are -- we have a lot of measures, and I would say it's a long -- we are on a good track. It's a long journey. And some measures in the first place will cost some money, but then we will have the efficiency effects. And we are on a good track.

Final question, also to you, Cornelia, regarding cash flow. That was one of the positive surprises, mainly the new things we heard today. That cash flow was needed on the level of net result. Any indication -- was there a special effect in the first half? Any implications maybe how working capital could develop in the second half and if you will be able also to achieve positive cash flow in the second half of the year?

For operating cash flow, we are working...

Free cash flow.

Free cash flow. Yes, this depends on our spend for CapEx. And there is some uncertainties if it is in '24 or if it's plus other '25. But we are working on improving our operating cash flow, and this is all not that easy to project because of the down payment. And as you see in the first quarter, we had less than we have in the second quarter. That is also hard to predict because it depends on the customer mix.

We have another question from Nicole Winkler.

Yes. I have a follow-up question on capacities around bonders for Advanced Backend Solutions in general. And I remembered correctly, you were able to shift capacities from coater production to bonder production, now both coater, imaging demand recovers. With this cannibalize capacities for temporary bonders? And what are your expectations for the second half and especially 2025 here?

So we see that the coater demand will take up again in the second half of this year. So we prepare for this. We still continue with the increase of capacity also in Taiwan, where we produce the bonder since the end of -- beginning of this year. So this is ongoing. We are pretty optimistic that we can really catch up. We are also introducing 2 shift work, and we are also looking for more clean room capacity right now, where we are also in negotiations to get a larger space here. So I'm not too much hesitated that we cannot really put further the demand which is coming up.

[Operator Instructions] And there's no question coming, and it looks like that there is no further. There is another question from Apus Capital. You should be able to speak now.

Sorry, one last thing. Scanners, so scanners also used in high volume, which are also used in the [indiscernible] of TSMC. Can you give us a short update as this business develops? And how much is maybe in competition for production capacity at your Taiwan facility?

So pertaining scanner, we -- as you know, we are also working on new generation, and we also really keep up with increasing the capacity to produce more scanners. It's -- the demand is there. It's also really pretty optimistic for us how we look into the future. And we are preparing also on the scanner to really catch up that demand, which is in the market from one big customer, as you know. So yes, it's looking pretty optimistic, I would say, pretty good.

Yes, as no further questions have come in, we draw today's conference call as it close. A heartfelt thank you to the leadership team. Thank you so much for your presentation and also to you for your time and participating. Should any additional questions arise in the future, please do not hesitate to contact us or Mr. Kopsel. And with this, thank you so much on my behalf, and I give the last words to Mr. Sven Kopsel.

Yes. Thanks for hosting ourselves today. And I think everything is said. Please let us know if any additional questions arise, please just contact us. Take care. Have a great afternoon and a great evening. Bye-bye.