LPKF Laser & Electronics SE

Ladies and gentlemen, welcome to the LPKF Conference Call for the Financial Year 2021. My name is Bettina Schäfer, I'm Head of Investor Relations and your host today for this call.

At this time, all participants have been placed on a listen-only mode. The conference will be recorded and published for a period of two weeks on our website after the call.

What's on the agenda today, our new CEO, Klaus Fiedler; and Christian Witt, CFO will give you a quick overview of the business development in 2021 and an update on our current situation. After that, there will be time for your questions.

Before we start, I would like to point out that any forward-looking statements are based on estimates and on information currently available. These forward-looking statements are not to be understood as guarantees of future performance and results.

Ladies and gentlemen, I now give you Klaus Fiedler.

Thank you.

I think we can't hear you Klaus.

Okay. Is it working now?

Much better.

Okay, great. So, we got the IT issues out of the way.

So, thanks Bettina. Welcome, everybody.

Thanks for joining our conference call. I want to be started as a new guy on board with a quick introduction.

Bettina, if you could move to the next slide. So, I'm newly onboard with LPKF, started 1st of January.

My background is in technology, in physics. And during my career, I started in the medical device sector at Philips, then moved on to NXP Semiconductors working in the MEMS field, and after NXP, I move to Knowles Electronics, working also semiconductor transfuser field, a lot in the electronics and component sector.

And lately, the past years I spent at SCHOTT, material company, which most of you will know, basically in the field of identifying and then ramping up new business sectors. I spent a couple of years in the US, five years in China, always working very much on the customer market side, understanding where they truly have pain points and then linking it with the technology capabilities of the companies.

And I very much enjoy driving innovation, not in the sense of driving technology for the sake of technology, but really identifying where in a value chain do we see a need, a potential for disrupting, and then basically making a sustainable business out of it. That's my background.

I'm newly onboard at LPKF. I'm still in my first quarter.

So, I'm still very much drinking from the firehose. But I want to give you just a couple of first impressions I had in my first weeks at LPKF.

Bettina, if you could switch to the next slide. Here we go.

So, basically, what immediately basically came to my mind when I talked to the people here, I visited the site, I looked at the product portfolio and technology. It's very obvious and everybody in the company radiate there's a strong innovation DNA in the company.

Innovation in terms of identifying the market need, but then, being really proactive with getting out minimum viable products, a solution. And I find that in many areas, this is not just linked to corporate R&D or to a specific BU being ahead of the curve is part of the DNA, and that is something you don't find that often.

And I really like it. I'm impressed by that.

I see a broad product and application portfolio with all the pros and cons that come with it. But there are many markets and many different, let's say application fields that, LTKF address with its technology.

I see very good customer relations, when it comes to our core market and clearly, a challenge and a task of our, is to extend that now to new markets we are entering, as we speak. Christian will give you a lot more details on how 2021 went and how we see the future going towards 2022.

But what I saw is a really impressive order backlog. For me, proving yes, there were strong headwinds in 2021, but there is tangible interest in our product.

What I also saw, and I think that's not that untypical of technology companies. Yes, there's a strong focus on technology.

There's great competence in technology, but it needs to be balanced with good, let's say, market focus. So that's something I'm already driving as we speak now.

It's great to have a customer. But what you really need to address is a market.

And you have to put effort into fully understanding that market, especially if it's a new one you are entering. And last but not least, there's a really solid ESG strategy in place that I would really love to drive forward.

These are just some first impressions. I'm sure many of you want to know more details and would like to learn more.

I will suggest, we address this part in the Q&A. And with that, I hand over to Christian, who will give you more details about 2021 and our outlook 2022.

Thank you.

So thanks. Can you everyone see me, hope so.

So hello, everyone, also from my side, I'd like to give you some update on the key figures and some more color on key underlying developments or facts on that. Starting with the key group figures, we only made revenues of €93.6 million this year -- last year, sorry, in 2021.

We didn't meet our own expectations of what we wanted to reach. There's, a number of reasons behind that.

Those reasons include, the general macroeconomic and still COVID effective situation on the one hand, but also very strongly, especially towards year-end, logistics issues, which prevented us from invoicing goods produced and on the way to the customer in the end of the year, which then fell into delivery January 2022 of about €8 million. That's about €6 million from solar and about €2 million from other areas, mainly in the United States.

So, when you look at the effect that has to on profitability, we see that there is still some EBIT. So we have a black zero, as we would call that.

However, that is not the type of profit we usually want to make. Looking at the comparison to 2020 or past years, there's basically three factors.

Number one is volume, which in comparison to 2020 is a smaller effect. We have less subsidies, which we still got significantly due to Corona conditions in 2020 from countries all over the world, including China, Siberia and to a not insignificant degree generally.

And then basically, there’s the biggest chunk, we continue to invest f in LIDE and ARRALYZE and teams we need to set up the equipment and also in the first year of our foundry operations, which we had in 2021, which of course, gives us some higher fixed costs, which we are investing not in the classic business, which has a good structural profitability, but we are investing into our new businesses for the years to come. Looking at the positive side, looking at order intake and orders in hand, that's a very positive effect we managed to achieve last year, a 15% increase in incoming orders to nearly €120 million last year and about €60 million in orders in hand.

About 58 or more will be delivered during 2022. That is also a strong base when we later on talk about the guidance for 2022.

Looking at revenue and EBIT by segment on the next slide. Electronics revenue is basically flat, especially due to the shortage on the semiconductor side, our customers were holding investments on the classic electronics industry, and that basically led to that flat development in sales in 2021.

Looking at the EBIT development, here you clearly see that we've invested additional money in LIDE, and you see some of the other effects I just mentioned, mostly here, the subsidies, lower subsidies and lower short-term work. So that is the key effects why this year, the Electronics segment made a negative result.

That is not common. We don't expect that to persist in the treatment.

But at the moment, it is basically driven by the investments we are doing in LIDE, building up our capabilities to serve larger customers in the future. In development, very similar.

Here, most of these €2 million US deferred revenue is hitting – hitting in 2021, benefit on the 2022 side. We have a flat revenue development.

Market is okay. That's clearly to be said.

That was, as I said, about a €2 million delivery issue at year-end. When you look at profitability, that is more or less the amount which we invest into ARRALYZE in 2021 in order to build up the organization, built up a biolab here in Garbsen and so on.

We will see first sales to better customers this year and low volume and expect first more significant sales in 2023 onwards. Welding was a very successful rebound in 2021 after a weak 2020.

Basically, on the sales side, there's two key aspects behind that. One is a medium-sized order from a large customer in the consumer electronics area, which we have once in a while.

That was between upgrades and a couple of new products we delivered -- that's about €5 million of the revenue growth. The other €5 million is building up business and business development would have explained a couple of times, started in 2020 with new applications and with rolling out existing applications to new markets and customers.

And we see quite a successful increase here in the medical industry and in some other general industries in new applications, for example, in the automotive side, batteries and battery welding, every pace for high-power units and a couple of other new applications in here. Profit is purely driven by volume, not purely but really, that's the main driver behind the improved profitability of €3 million in 2021.

Solar business, we had two revenue shifts here from 2021 to 2022, one which I just mentioned, which was the late shipping or the late ship. Our shipping was okay, but the ship was a bit late, which made revenue going to 2022.

That's about €6 million, and there's about a €5 million order, which has been postponed by the customer to Q2/Q3 next year. So altogether, the business of solar would have been relatively similar in 2021 versus 2020 without these shifts.

Given the shifts, what we also see is the impact on profits, which is basically volume-driven here that we are -- have been going into a loss situation in 2021. That will change immediately and directly once we start invoicing the orders on hand and the orders already produced.

Looking at the next slide with free cash flow. A couple of comments.

Working capital, we've made quite some progress there because we were able to even improve our working capital despite the fact that we've increased our inventory for about €89 million. And we've done most of that consciously in order to have enough stock of raw material, when we get into shorter situations.

We source our parts as early as we can, and we will continue to do that in order for some of our customers reliably on time as soon as the situation on the markets -- on the supply market persist like that. Our midterm target for net working capital remains at 10%.

That's not seeable however, in the current supply situation that is well feasible afterwards, and we've shown in 2019 that we have already been pretty close to that. Cash flow overall was neutral with about €700,000 negative FCF in 2021.

And the net financial position is basically slightly lower than 2020 because of the dividend paid. We have proposed to be -- or we will propose in the forthcoming publication of the AGM invitation to the AGM that no dividend shall be paid, because we shall invest the funds into the future growth and business at LPKF in the current situation.

Looking at ESG focus areas, ESG has been is an integral part of our strategy. And looking at two key aspects without going into too much detail, the key point is that our product help our customers either to produce most efficient solar modules, for green energy, or to be more efficient and safe energy and raw material by a more modern and more precise production process in welding, in electronics and in a similar way also in the development segment.

So what we are doing is contributing to those targets. And the way how we are set up as a company is as well, we treat our people well.

We are relatively low energy consumption and carbon intense business. However, trying to get better wherever you can, we've raised this – we've started the project in Q1 2021, key improvements, recycling rates, some of the CO2 emissions, some measures there.

We've made sure that we start to have a fully sustainability assessment of our suppliers. So we've started that process.

We will continue this year. And we've managed to get the environment management and application health and safety certifications, ISO 14001 and 45001, both certified last year.

That's a good progress. It was not too difficult for us, because worth-based processes were in place in world rather a matter of certification than a matter of introducing the procedures.

I think that's some of the key aspects in there, sustainability report we published at the end of April 2022 and available for everyone for consultation. Looking at the guidance 2022.

We've been quite cautious and conservative in our sales guidance, and we've been consciously conservative there and careful. We've given – we are giving a guidance of €110 million to €130 million turnover for group sales, with an EBIT margin of 2% to 7%.

And let me share you some – some additional light on that that you understand the context, but because that's a very broad range. Our budget is above the guidance.

And our budget is one we want to reach. However, we see two effects.

We see the macroeconomic turmoil due to the COVID in China. I think the Western world is basically – has left it mostly behind when it comes to economic impact for what we now know and variance in current situation.

However, in China, we still see lockdowns and nobody knows where it goes. Direct impact on us so far is very low, but we see what that brings.

It's just an uncertainty, and we've learned in past years that these uncertainties sometimes show up in spring, and then materialize. So we are careful there.

Same for the potential economic consequences of the horrible war in the Ukraine, nobody knows what the exact impact will be cable companies or cable manufacturers for automotive, all the automotive industry. Today, there was news that LEONI has restarted their factory in Ukraine.

Let's see how that goes. These facts and our absolute clear idea not to go below the guidance and not to have to correct that, these two facts have led us to be very conservative on the guidance and very broad and to have it from €110 million to €130 million.

We expect that we will narrow that guidance in the course of the year, maybe Q2, maybe Q3, that's our expectation at the moment in terms of sales. In terms of profitability, let me do a quick comparison.

Looking at 2% to 7% EBIT margin from €110 million to €130 million sales for us is low, when you look at history, at past years and so forth. However, the big structural difference, for example, to year 2019 is that on the classic business, we rather have a better structural profitability than three years ago, so comparing 2022 with 2019.

But we are investing about €9 million every year or at least in the year 2022 it’s increasing actually. In the structures we've created for Light and Airlie in fixed cost and the teams we need and in the equipment we need in operating the foundry in order to have the right foundations to serve fully professional customers in semiconductor, display and other industries in the years to come.

So taking that into account and doing the numbers, one easily find that the structural profitability in 2019 was even a bit below than what we expect for 2022. Looking briefly at Q1 2022 of this year, we expect group sales of €22 million to €26 million, very most of which profits is invoiced already.

We expect a balanced EBIT. And looking a bit into Q2 and Q3 we expect in Q4, just to give you a sense of how the distribution will be without giving any guidance yet, we expect relatively strong Q2 and Q3 this year versus last year and versus typical years for us, because we'll have a significant part of our solar deliveries in Q2 and Q3.

So that's it on the numbers. Thanks very much for your attention.

And now, I will hand over to Bettina, so Klaus and I can take your questions. Thanks very much.

Ladies and gentlemen, we are ready for your questions. Please click on your hand signal to show me if you want to ask a question, and then I can unmute you.

And Jonathan is asking the first question. I have unmuted you.

Let's see whether you need to unmute yourself. Jona?

Right. Can you hear me?

Yes.

Perfect. First of all, thank you for taking my question.

So basically, I've got two questions. My first question is, you have basically given us the outlook on 2022.

However, with this -- your mid-term guidance looks increasingly ambitious. Can you just elaborate a little bit on how you try to achieve your mid-term guidance?

And my second question is, you mentioned in your earnings news today that you found an agreement with a leading semiconductor firm also on this month. Could you just give us some color on that as well?

Thank you.

Thank you. I'm happy to take those questions.

So let's first start, where do I stand? I think my first three months basically getting to know the company, getting to know the business units, getting to know our markets and putting all that information into the 2022 guidance.

I have not gotten yet into a deep dive into the mid-term outlook. But I want to give you some flavor of what I found specifically regarding our high-growth businesses and where we stand right now, which will also cover your second question.

So basically, what I see technology-wise, checkmark. We are ahead of the curve.

We can serve what the market needs. That's a good precondition.

So happy with what I found. When I look at market interaction, what I like is that we are established broad.

So we have customers which we interact with in several applications, two of which we make already public, so we can talk about it, there’s the semiconductor field, specifically the back end and there’s the display sector. And you saw already the talks, that was published about the JDA with the large display manufacturer.

Broadness, there's a third application, which could become quite attractive, also addressable market-wise. We cannot share it yet due to customer confidentiality.

That is good. And then, we look at addressable markets in these applications, very much in line what was given out as the mid-term guidance and where are we with these customers.

So we have customers, as you know, where we are already in operations, where we sell asset. That's good, but that's on a smaller scale, where you can also basically get used to and get certain tweaks out of the equipment.

I see that in the display sector, yes, we are in a normal phase of business development, which is highly credible with a very, very large account. And, right now, we also made that part of our publication.

Yes, we now have an umbrella contractual agreement with a very large and credible semiconductor account, which I happen to know and it means something that you have that umbrella account. What I want to focus on in the coming months is now, go one level deeper and basically translate what I found on where we stand into market entry plans.

I definitely want to visit these customers and talk to them face-to-face. I hope COVID makes it possible, but it should be possible.

And then, of course, reach out to you with, this is what we see. At the moment, I see no information I or we here have to make a change to any guidance we gave.

Jonah, does it answer your question?

Yes, it does. Perfect.

Thank you.

Thanks so much.

So the next question comes from Johannes . I have unmated you.

Let's see whether we can hear you. Johannes, maybe you have to unmute yourself.

No, we can’t hear you yet.

Maybe, we can use chat, Bettina?

Yes. You can also put your questions into the chat.

Maybe, if there are any further questions, we can come back to Johannes later. But at the moment, let's see whether there are some further questions here.

Yes. There's another question from Richard Schrum .

I have unmuted you, Mr. Schrum.

Mr. Schrum?

So let’s give it a try.. Can you hear me?

Yes. But it's a very bad line.

Yes. All right.

Sorry for that. Okay.

I hope it works. Two questions, if I may, on concerning the investments and also the head count.

You mentioned your headcount increased by about 8% year-on-year. Why this very strong investment here, you mentioned that you have to be prepared for the expected projects and growth in the years ahead.

But on the other side, I think in light of the current environment, this looks a bit aggressive. So can you elaborate a bit why you think this is absolutely necessary and that this is only a temporary pressure on your margin development?

That would be my first question.

Okay. Happy to take it.

Looking into where are we investing and where did the head count go? Where did we put additional people into the company?

Let's say about 80% -- 70% of that is for the Light, about 20% is Airlie and about 10% is other key growth areas. What are we doing in Light and in Airlie.

In Airlie, we are building up to take base capabilities to not only develop a machine, but also test the machine and lamp do what the customer needs to do and to be able to work with our customers in this new field. In Light, it's a bit different.

In light, we are building up the organization in R&D, in production and in sales or business-related fields in order to serve fully professional customers. And maybe, Klaus, you elaborate a little bit further on what that means?

What we need there? And why do we do that?

And then I'll get back on your profitability question.

Okay. Just to elaborate a bit more.

The customers, especially the very large Tier 1 customers we are targeting in the light field. This is the big leads.

And I happen to have some experience what it takes to get a qualified supplier at these customers. And you have to go in basically with a team that can check all the boxes they require to get you in.

We made great steps in that direction and getting on the -- getting an umbrella agreement, which is a highly credible signal that they want to use us as an asset supplier is a big step there. We are operating cost conscious, but we either play to win there and then it takes a team to get into such a large Tier 1 or we don't play at all.

There's no in between in the semiconductor market. So we are watching head count.

We are watching costs very closely. But our clear ambition, and I see us on a good track there is to get into these large Tier 1 accounts, and that's where the investments into personnel and others are going.

Yes. And when you look now into profitability, and we've looked a bit deeper into our 2020 perspective on profitability.

As I mentioned before, about €9 million plus/minus is what we are spending this year, 2022. An additional costs, we didn't have three years ago for Light and Airlie.

Yes, as Klaus said, either you play the game that you really play it or you can't. And the structural profitability of our classic business, we don't call it legacy, because it's classic, because it's good business and it's not the runoff.

It's a good business where we also develop new stuff all the time, and that's good. That's our way of working.

In this classic business, we've improved our structured profitability. And in 2022, we will see that again.

If you look at the mid-part of the guidance, which is the aspiration is above that very clearly. But even in those parts, you clearly see that we have profitable operations despite the €9 million we invest into new business.

And that is the way strategically how we go forward.

Okay. Thank you.

Just a quick one more technical to the cash flow statement. At the end of the day, the improvement we have seen on the operating side was from other debt of €20 million, but I have not found at once what is behind this position?

Can you shed a bit light on this one?

The cash flow guidance. Okay.

The 19.081, is that your question?

Yeah.

Yeah, that is very mostly advanced payments received. As advanced payments we receive from our customers.

So this is mostly solar, and this is much higher than it was last year. Why?

Because we have not only two solar orders, which we couldn't deliver last year, so we still have the down payments on the books. These down payments are plus/minus €5 million, €5 million, €6 million.

The rest and the major part is down payments for other solar orders we have received last year and we will deliver in 2022. Does that answer your question?

Yeah. Okay.

Many thanks.

You're welcome.

Then we will go on. And we've received a couple of questions on the chat.

I will start with Johannes. And this question is directed at you Klaus.

So Johannes is asking, as you work for a leading smartphone glass producer, especially in the screen. How much can you confirm the advantage of the leader technology based on your background?

Well, I don't think I can state any information I should, or could have from my previous employer in my new function as CEO of LPKF. I consider that a moral hazard, and I want to stay on the very safe side here.

So I can only state it not in a comparative way but in an absolute way. In an absolute way, I see light enabling the key functions that are expected and that specifically regarding to quality reliability in a foldable phone.

And now I have to be careful with what I say, in combination with using more established technologies of coverglass. So, sorry, guys, I need to stay on the safe side here.

But what I can clearly say is that I see a very credible USP here.

Okay.

Maybe expand a bit…

No, I don't want to expand.

Maybe you want to expand a bit on the part. What's your impression of the different markets on light, which you've gained in the first month here?

Well, it wasn't a question, but I'm happy to give the answer.

I think I know what Johannes really wants to know.

Okay. So basically, I see several application fields that are really large, where the addressable market is clearly in the nine figure and that's what we are interested in.

First of all, there is, of course, the semiconductor back end. So that's the packaging market, where you basically replace a substrate that could be rockers material that could be FR4, what you currently use with a glass substrate, and then you have your metallization layers and so on.

This is a very strong market. And there, I see us very well interlinked with the relevant players.

Then there is basically filter applications, where we are also in telling. I need to track, and I'm doing that as we speak.

Is there more did we cover all relevant key accounts possible in that field, but that's on a smaller scale, but still attractive business that I see. You have the whole display sector, where basically the like technology is used to, how shall I say, perforate glass in a very smart and high-tech way that you can fold it while still withstanding the standard reliability criteria of the smartphone industry, but there are significantly more application.

I cannot state them yet due to NDAs we have in place, but I hope I can share them there, but also I want to say we are in an early business development phase, while display and semiconductors is already very advanced. We are already in contractual phase.

So -- but the third application from an addressable market point of view is also solid eight figures, so very interesting.

Okay. Then we move on to the next question from the chat.

I will read them out for all of those who cannot watch the screen here. The first one comes from , the two leading customers in the semiconductor area, are they both addressing the same package application?

Do you expect further chipmakers to follow those two LPKF lead customers?

First of all, we are interacting with more than two, but there are two very prominent ones you're referring to. No, this is not the same packaging application that is one is a filter application and the other one is a classic packaging application, but we are addressing the market broad.

From my view, when I did the first, let's say, discussions, show me your market, showing your customers, you're interacting with and so on. I am confident that we are addressing the packaging market broadly and not leaving any large key accounts, by the way.

But sometimes it doesn't work directly with the OEM, but through the supply chain. So sometimes the interaction is not directly to OEM, if they are more working on a design house business model.

But that's normal in the industry.

Okay. And the follow-up on that is, can you please also comment on market traction of LPKF A&P active mode packaging technology?

Can we expect meaningful A&P revenues already for 2022?

I expect revenues in 2022 that are still in the seven figures. So it's not moving the needle in a dramatic way.

We are well interlinked with customers in that field, but we saw that these customers are not really putting the foot on the pedal at the moment in speed, but the projects are alive and kicking, which is good.. So I expect that we gained good traction in 2022, but as a preparation for more business in 2023 and following.

That's how I see the picture now. I haven't talked to these customers yet, and I will know a lot more after face-to-face discussions with them.

And then a follow-up from Johanna. I'm a little bit late on the call, but is the assumption correct that no large LIDE order is included in your 2022 guidance, but this does not include that you could get one this year.

That is fully correct.

There is LIDE in the 2022 guidance.

But not what we consider a large order.

Not what you consider now 50% of our revenue is LIDE.

No.

So LIDE is in an advanced, but still, I would say, in a business development phase, when you look at the large accounts. But we are selling LIDE already, which is great, because you don't want your first customer to be one with extreme volumes that carries high risk.

And just to add that like on current developments, we've delivered the production machine to the semiconductor customer, which has placed the order mid last year, which is the first series production customer. Machines are there.

Machines are being installed, ramp-up is probably in Q2. So, ramp-up of the customer.

So I think Q2, Q3, we'll be able to show others you and whoever what's being done with the LIDE technology, and so everyone else can draw the conclusions that's going on as planned.

The next question comes from Robert-Jan van der Horst. I have unmuted you, Mr.

Jan van der Horst.

Thanks, and thanks for taking the questions. Most questions have already been answered.

So I'll have two boring ones, if I may. So one of them is, there were LIDE applications in the display field, that didn’t recall folding displays like pencil cut.

Has there been any progress there when talking to customers? And how fast could these orders come in since they are just aimed at a much broader product base?

The second question would be on LTP. And I would say, it's not really poor to your mid-term target, but just a quick update where we are, and if there's some feasible timeline when this technology might actually generate some revenue?

Thanks.

Under the pencil cut plus LTP. So on the pencil cut, let's not only talk pencil cut, let's talk about wherever we cut glass pieces for doing an outline cut of glass pieces for display or similar applications could be displays of smartphones, could be displays of smaller mobile devices, you wear or something like that.

So in that field, we have a number of projects and let's put it that way, there is a number of projects which is in the face of being pre-industrialization phase, I would call it, where the first -- in one case, we are working on the contract manufacturer of our customer to get the first machining process into this building. And in one, we are -- we are still in the development area rather, where we have good opportunities to make business there.

So we can't be any more specific, but that is basically, as we see the situation at the moment, we are doing good progress there on these -- on the first one I mentioned, it's a bit slower than we would like that to be. On the second one, it might actually be accelerating.

But that's something we don't know -- on our side, it's good progress.

Okay. And on LTP, where do we stand there?

So LTP is now at the stage where we can actually qualify customers, we sell applications. We are doing that at the moment, as we speak, we selected lead customers in our two main application areas we identified, that's progressing well, and I expect it to be finished in the first half of the year.

In parallel, we are working with the team on a broad go-to-market plan for LTP because we have identified the application fields. Lead customers are good.

But now we want to address the market in a broad way. And this is a rollout we are preparing.

I expect it to be launched to the market early second half. And there is a little bit of LTP revenue already in this year.

But I would say it's like AMP. It's at the stage where we try it out, but we expect it to be a nice growth driver for the coming years.

Perfect. Thank you very much.

Yes. Hi.

Good afternoon, gentlemen. My first question is on the joint development agreement.

Can you maybe give us a little bit more insight? I know you cannot talk too much about this.

But in terms of the milestones, you go with a cooperation partner in the next month, what can we expect there? And when could there be first revenues from this cooperation, if this cooperation will be a positive development?

Due to confidentiality agreements, ILF and I apologize for that need to stay very superficial there. In this JDA, we are addressing very large total market which splits into several applications.

Some has a more accelerated timeline, some have a more extended timeline, and we expect to reach important milestones there within this year, and we are tracking them very diligently due to sign confidentiality agreements, but absolutely need to stay on the safe side here.

Okay. And then on the Q1 revenue guidance, I understood that you are cautious on the revenue side for the complete year.

But if I take into account the shift from Q4, I would be more in the range of €30 million of revenue in Q1. So are there also revenues or shifts which are more in Q2 or in Q3 that we don't see in Q1, or what is behind the more or less lower revenue guidance for Q1 compared to my calculation?

Let me briefly explain. I think the major factor and our seasonality as a company is that the seasonality Q1, Q4, it's more when certain solar orders will be delivered because if we have somewhere between €30 million and €40 million in revenue in solar revenue in the year, the relevant quarters there will get the relevant share of the revenue.

And in solar revenue in Q1, what we have is €6 million, which were shifted from 2021 to 2022. They are invoiced, they are at the customer site, so that's all okay.

But that is what we have in solar revenue. The large solar projects for 2022 regulated degree will be invoiced to a large degree in Q2 and Q3.

So, that is basically the reason why the, call it, clean Q1 is a relatively weak quarter one. That's the key reason.

And then Mr. Ries already mentioned it a little bit the bigger lead order last year in the outlook you already touched this that there is a possibility to reach a bigger leader order.

So, what is about this order? What was within the last year with this order?

And is this still on the table or what happened with this possible order?

I think the -- nothing happened. And specifically, we are working on that with the customer on the respective project.

As mentioned, we are bound by confidentiality on very -- most things of what we are doing. We are very happy with the progress we are doing, no roadblocks or anything we are seeing and timing -- and the endless timing of the customer.

So, that is the key part there. The customer will decide which speed we will go with them.

Okay. Thanks.

You're welcome Luka.

And the next question comes from Richard Sung . Mr.

Sung, I think you should be --. Mr.

Sung can you say something?

Sorry, my questions were already answered.

Okay. No problem.

And I have a look in the chat, I think we've got something in the chat, again from Johannes probably. How much has your expectation for the ARRALYZE technology changed improved after the first positive customer feedback?

I would say it's pretty much on par with our expectation. The business development, we took here the approach with a tried and trusted minimum viable product approach.

So, we identified a market need. We have a truly disruptive solution for that market need.

We've got a minimum viable product together and showed it to the world. That happened only a couple of weeks ago in Boston.

We got good leads and high interest, that's great. And we are now in the phase of selecting two, three, four beta customers for a true cooperation.

That cooperation will also fine-tune our product to the true need of the one who uses it in the market. And based on that, we will then go for a broader market rollout.

I was happy with what I got out of Boston, and I was very curious when those guys came back and pretty much on par with what I expected. It's all right.

It's a highly attractive business opportunity. And again, a completely new market for us, but I lost this bold approach.

It takes some right people, as we mentioned, we have experience in that market. And yes, we got the phone calls and people want to work with us.

So we didn't produce something that's totally away from what the market really needs. All on par is my assessment.

And I think the big advantage of the approach we were taking to do this early, call it, launch, pre-launch presentation to the market is that we've also learned where the interest in the market is. And I think these learnings are rather promising because whenever we had time to go somewhat deeper with the customer, there was very high interest.

And when you have the right thing, the right value proposition, it's easier to adjust the marketing than to adjust the value proposition. So I think that's one of the learnings we took.

And we'll go the path, as we said. No change.

We have another question from Ben Block in the chat. I'll read it out.

In case you will eventually get a very large LIDE owner, how long will it take LPKF to switch output from close to zero to max capacity. Can you comment on your capacity maximum in LIDE units planned for 2023, 2024 per annum?

Yes, no problem to comment. Doing this business with these customers, we have to be able to provide a very high number of pieces of equipment in a very short time.

That's their requirement. And if you can't do the reserving requirements, you can serve the customer.

So to build up a production capacity, which allows us to invoice -- sorry to say it this way, about €50 million, €67 million per month takes us about five to six months because we have the plan in the draw on how we do that. That is extreme and the most extreme scenario, but that is something -- that is the maximum we can do.

I wouldn't call that in a per year figure, because if the customer wants to run this product in January. He doesn't want to get the product somewhere between March and December.

He wants to get them between November and December. And that is why that type of scenario, we've developed a type of scenario, including all the necessary things we do.

And that is more or less in parallel to the lead time we would need for such orders. So take five to six months, that's about right in order to get – to be ready for that in terms of equipment, location and people.

If I may add some flavor to that. These are normal lead times in the semiconductor capital goods market, much more important than the lead time is that you absolutely deliver on time.

That is what we need to focus our energy on, because your asset could block a factory that's worth €10 billion, and you never want to do that. So punctuality, being able to commit on an exact date and the machine is there on exactly that date.

That is one that we need to focus on. And that's what we are preparing for and where our customer is also assessing our core capabilities.

Okay. We've got two more questions in the chat.

I read the first one. Mr.

Fiedler, is there anything you intend to change at LPKF?

Yes, there is. Again, I'm not even three months.

I am still drinking from the pressure house. But what I see is basically the classic setup of a technology company.

Great technology foundations, also very good in interacting with customers, but we can do more in working market-driven and truly saying, I understand value chains in our key market. Where we step in the value chain, I know exactly who the top 10 and 20 key players are.

I have a proactive marketing approach to fix what I can do for them, to these 10 or 20 players. And then, I diligently follow that through the whole sales funnel from early lead to conversion that is something, I find that this is done here.

And I find also, specifically when we come to leader that this is a very presentable result, but we can do more. And that's where I come from.

And that's where automatically my energy flows where we already made first changes, and where I definitely plan together with Christian to do more. Because the greatest technology is worthless, if you can't make the rubber hits the road of the market.

That is the one thing I think, yes, we can do better. And we will do better.

Great. Another question from Robin Maxwell , can I ask to what extent share or options feature in Klaus Fiedler contract, did you purchase any shares since joining?

So first of all, I have a long-term incentive component in my contract, which also includes shares, not options. We don't have an option model in place.

And as of yet, I did not buy shares, because I first got to learn all the restrictions on when I can buy and sell and whatever when you are a Board member, I'm on it, but it's definitely on my list. I have to watch my cash flow a bit at the moment because, of course, I'm moving my family up North, close to LPKF now.

As you all know, what apartments cost these days. But I definitely believe in the company, and this will also show in how I manage my private assets.

Right, I can see subsea the hand signal from Lucas Swank . I am not sure...

You can find. You could also extend.

Mr. van der, do you have another question or did you just have your hand up still?

No, I would have one quick, follow-up, if I may.

Okay. Yes, go ahead, fine.

You both mentioned that there's the part of leader revenue in the guidance. So can you give us an indication, how much do you expect in your guidance from leader?

High-single digits.

1 million, digit.

Yeah, 1 million of course, yeah.

Yeah.

High-single digit is what we expect this year.

Okay. Thanks.

Great, at the moment, I can't see any further questions.

I see one hand signal that's Lucas.

Okay. That's sets already.

Okay.

And that's it. I think we've covered everything.

I just double check that there are no new hand signals here? No.

So in that case, we are really good on timing as well. And I thank you all very much for joining this call.

Our next regular conference call will take place already next month on the 28th of April, at the release of our three-month figures. So thank you very much, and goodbye.

Thank you everybody.

Thank you. Bye-bye.

Bye-bye.