Q2 2026 Integrated Micro-Electronics Inc Earnings Call

August 12, 2026

Speaker #1: Okay. Perhaps you can start recording now, please.

Speaker #2: Okay.

Speaker #3: This meeting is being recorded.

Speaker #1: Awesome. Good day, everyone. Thank you for taking the time to join us today for the Q2 and first half briefing of Integrated Micro-Electronics Incorporated's financial results.

Brian Jalijali: Awesome. Good day, everyone. Thanks for taking the time to join us today for the Q2 and H1 briefing of Integrated Micro-Electronics, Inc. financial results. Our CEO, Louis Hughes, would like to relay his apologies for not being able to join today. Some travel complications got his flight delayed, and he is up in the air right now, but we are able to talk about it, and we will relay his messages throughout the presentation. I am going to go ahead and start. Let me start with the broader market environment. Despite the geopolitical uncertainty we continue to see globally, the overall economy remains relatively resilient. What is particularly encouraging for us is that technology-linked economies are continuing to outperform more traditional manufacturing markets. We are seeing this reflected in the continued investment in digital infrastructure, power electronics, and the broader AI ecosystem.

Brian Jalijali: Awesome. Good day, everyone. Thanks for taking the time to join us today for the Q2 and H1 briefing of Integrated Micro-Electronics, Inc. Financial Results. Our CEO, Louis Hughes, would like to relay his apologies for not being able to join today. Some travel complications got his flight delayed, and he is up in the air right now, but we are able to talk about it, and we will relay his messages throughout the presentation.

Speaker #1: Our CEO, Louis Hughes, would like to relay his apologies for not being able to join today. Some travel complications delayed his flight, so he's up in the air right now, but we were able to talk about it.

Speaker #1: And we'll relay his messages throughout the presentation. Okay. I'm going to go ahead and start. Let me begin with the broader market environment. Despite the geopolitical uncertainty, we continue to see, globally, that the overall economy remains relatively resilient.

Brian Jalijali: I am going to go ahead and start. Let me start with the broader market environment. Despite the geopolitical uncertainty we continue to see globally, the overall economy remains relatively resilient. What is particularly encouraging for us is that technology-linked economies are continuing to outperform more traditional manufacturing markets. We are seeing this reflected in the continued investment in digital infrastructure, power electronics, and the broader AI ecosystem. These areas are creating structural demand for electronics, and most importantly for IMI, is that they align well with the capabilities and market where we are positioned well today and for the future.

Speaker #1: What's particularly encouraging for us is that technology-linked economies are continuing to outperform more traditional manufacturing markets. We are seeing this reflected in the continued investment in digital infrastructure, power electronics, and the broader AI ecosystem.

Speaker #1: These areas are creating structural demand for electronics, and most importantly for IMI, they align well with the capabilities and markets where we are positioned well today and for the future.

Brian Jalijali: These areas are creating structural demand for electronics, and most importantly for IMI, is that they align well with the capabilities and market where we are positioned well today and for the future. What gives us confidence is that these are long-term secular trends and not just short-term market events. We took the time and the resources to invest and really embed ourselves into the supply chain and the ecosystem in these key market segments. While the macro environment is not without challenges, we believe that the underlying demand drivers for our business remain extremely healthy. Turning to mobility, we continue to see a very attractive long-term opportunity here, even though overall vehicle production remains relatively muted in some particular regions.

Speaker #1: What gives us confidence is that these are long-term secular trends, and not just short-term market events. We took the time and the resources to invest and really embed ourselves into the supply chain and the ecosystem in these key market segments.

Brian Jalijali: What gives us confidence is that these are long-term secular trends and not just short-term market events. We took the time and the resources to invest and really embed ourselves into the supply chain and the ecosystem in these key market segments. While the macro environment is not without challenges, we believe that the underlying demand drivers for our business remain extremely healthy.

Speaker #1: So, while the macro environment is not without challenges, we believe that the underlying demand drivers for our business remain extremely healthy. Turning to mobility, we continue to see a very attractive long-term opportunity here, even though overall vehicle production remains relatively muted in some particular regions.

Brian Jalijali: Turning to mobility, we continue to see a very attractive long-term opportunity here, even though overall vehicle production remains relatively muted in some particular regions. The amount of electronics that goes into vehicles, and we talk about this quite often in these briefings, the amount of electronics that goes into each vehicle continues to increase even further with the growth of automated driving platforms and EVs. We see this just continuing to grow even further. Camera-based safety systems in particular, automatic emergency braking, driver monitoring camera systems, and lane keeping assist systems are increasingly becoming standard features across more vehicle platforms. In some regions, particularly in Europe and other advanced economies, these are becoming mandatory checklist items for all vehicles being sold in those regions. Not just for high-end or more premium options, but even the base model vehicles being released in these countries are coming with these features, and again, that's where IMI shines.

Speaker #1: The amount of electronics that goes into vehicles—and we talk about this quite often in these briefings—the amount of electronics that goes into each vehicle continues to increase, even further with the growth of automated driving platforms and EVs.

Brian Jalijali: The amount of electronics that goes into vehicles, and we talk about this quite often in these briefings, the amount of electronics that goes into each vehicle continues to increase even further with the growth of automated driving platforms and EVs. We see this just continuing to grow even further. Camera-based safety systems in particular, automatic emergency braking, driver monitoring camera systems, and lane keeping assist systems are increasingly becoming standard features across more vehicle platforms. In some regions, particularly in Europe and other advanced economies, these are becoming mandatory checklist items for all vehicles being sold in those regions. Not just for high-end or more premium options, but even the base model vehicles being released in these countries are coming with these features, and again, that's where IMI shines.

Speaker #1: We see this just continuing to grow even further. Camera-based safety systems—in particular, automatic emergency braking, driver monitoring camera systems, and lane-keeping assist systems—are increasingly becoming standard features across more vehicle platforms.

Speaker #1: In some regions, particularly in Europe and other advanced economies, these are becoming mandatory checklist items for all vehicles being sold in those regions. Not just for high-end or more premium options, but even the base model vehicles being released in these countries are coming with these features.

Speaker #1: And again, that's where IMI shines. As the industry moves from individual sensors towards more integrated vehicle platforms, we believe our engineering and manufacturing capabilities position us well to participate in that evolution and continue the adoption of technologies.

Brian Jalijali: As the industry moves from individual sensors towards more integrated vehicle platforms, we believe our engineering and manufacturing capabilities position us well to participate in that evolution and continued adoption of technologies. Beyond mobility, we are continuing to see strong opportunities in our non-mobility markets. One of the most attractive growth areas today is data centers, and it's a market that we've tried to enter pretty early on, like in the past 1 or 2 years. We began making inroads into this market, and it's starting to reap benefits for us today. Some projects that are data center AI-related are starting to go into NPIs, new product introductions, and some approaching startup production phase as well. The rapid growth of AI is driving substantial investment in power conversion and thermal management. Again, both markets that IMI is heavily invested in.

Speaker #1: Beyond mobility, we continue to see strong opportunities in our non-mobility markets. One of the most attractive growth areas today is data centers, and it's a market that we've tried to enter pretty early on—like in the past one or two years.

Speaker #1: We began making inroads into this market, and it's starting to reap benefits for us today. Some projects that are data center AI-related are starting to go into NPIs—new product introductions—and some are approaching the start of production phase as well.

Speaker #1: The rapid growth of AI is driving substantial investment in power conversion and thermal management—again, both markets that IMI is heavily invested in. This is creating opportunities for suppliers such as IMI that can support increasingly complex power and electronic requirements.

Brian Jalijali: This is creating opportunities for suppliers such as IMI that can support increasingly complex power and electronic requirements. The other segment that we're focusing on is the medical field. Medical electronics is another area where we're seeing good structural growth, particularly as monitoring and diagnostic devices become more integrated and sophisticated. Across these markets, customers are also looking for EMS partners who can do more than simply manufacture. They increasingly value engineering support, regulatory and compliance expertise, and supply chain resilience. Factors that we've built expertise on through our experience in the automotive segment. We've been in the top 10 automotive EMS for several years, and we've come to build a reputation for being world-class in these factors. Okay. At this point, I'll turn you over to Lau and Robert to go through the financials of the quarter and a half.

Speaker #1: The other segment that we're focusing on is the medical field. Medical electronics is another area where we're seeing good structural growth, particularly as monitoring and diagnostic devices become more integrated and sophisticated.

Speaker #1: Across these markets, customers are also looking for EMS partners who can do more than simply manufacture. They increasingly value engineering support, regulatory and compliance expertise, and supply chain resilience.

Speaker #1: Factors that we've built expertise on through our experience in the automotive segment. We've been in the top 10 automotive EMS for several years, and we've come to build a reputation for being world-class in these factors.

Speaker #1: Okay. At this point, I'll turn you over to Lau and Robert to go through the financials of the quarter and a half.

Speaker #2: Thanks, Brian. I'll do the first couple of slides, and then hand it over to Lau. Overall, for Q2, it was a very good quarter for us.

Robert William Heese: Thanks, Brian. I'll do the first couple slides and then hand it over to Lau. Overall, for Q2, it was a very good quarter for us. Our revenue is up 11% quarter on quarter, and we're up 8% year on year for Q2. Particularly in the mobility segment, is up 10% quarter on quarter and 14% year on year. Growth is driven by our camera, lighting, active safety, and mechatronics programs. The growing electronic component per vehicle is offsetting muted volume growth from the OEMs in the selected regions. ADAS adoption, driver side monitoring, advanced lighting system are key drivers for long-term demand for us. On the non-mobility segment, also was a very good quarter for us. Q2 revenue is up 11% quarter on quarter and relatively flat year on year. We're starting production for new business in the medical segment.

Speaker #2: Our revenue is up 11% quarter on quarter, and we're up 8% year on year for Q2. Particularly in the mobility segment, that's up 10% quarter on quarter and 14% year on year.

Speaker #2: Growth is driven by our camera lighting, active safety, and mechatronics programs. The growing electronic content per vehicle is offsetting muted volume growth from the OEMs.

Speaker #2: In the selected regions, ADAS adoption, driver-side monitoring, and advanced lighting systems are key drivers for long-term demand for us. In the non-mobility segment, it was also a very good quarter for us.

Speaker #2: Q2 revenue is up 11%. Quarter on quarter and relatively flat year on year. The start of we're starting production for new business in the medical segment.

Speaker #2: Our power module revenues continue to scale and will be ramping up through the year as we progress through qualifications and ramp phases. Our sales efforts remain focused on data centers, industrial automation, smart infrastructure, medical applications, and power modules.

Robert William Heese: Our power module revenues continue to scale and will be ramping up through the year as we progress through qualifications and ramp phases. Our sales efforts remain focused on data centers, industrial automation, smart infrastructure, medical applications, and power modules. So a good quarter from a revenue perspective. Next slide. Strong revenue performance by the Philippines. We are up 14% quarter on quarter and up 21% year on year. That is driven by continued growth in our camera and power module programs, which highlights IMI Philippines' differentiated engineering and manufacturing capabilities. Both the camera and power modules are only done in the Philippines, so it is a big differentiator for us. Continued expansion of our plastic injection business that we have recently started up and machining business. These capabilities support higher value-added content and vertical integration for our facilities. Modest growth in China on our consolidated footprint.

Speaker #2: So good quarter from a revenue perspective. Next slide. Strong revenue performance by the Philippines. We're up 14% quarter on quarter and up 21% year on year.

Speaker #2: That's driven by continued growth in our camera and power module programs, which highlights IMI Philippines' differentiated engineering and manufacturing capabilities. Both the camera and power modules are only done in the Philippines, so it's a big differentiator for us.

Speaker #2: Continued expansion of our plastic injection business, which we've recently started up, and our machining business. These capabilities support higher value-added content and vertical integration for our facilities.

Speaker #2: We saw modest growth in China on our consolidated footprint. We continue to support improved profitability and asset utilization. Profitability remains strong, even on relatively flat revenue in China.

Robert William Heese: We continue to support improved profitability and asset utilization. Profitability is pretty good on relatively flat revenue in China. If you recall, in prior quarters, we had closed down our Chengdu facility, and we have consolidated our two Shenzhen facilities into one facility, and yet we are continuing to maintain a very profitable business on that smaller footprint. Europe is showing really decent growth quarter on quarter and year on year. Vehicle sales remain mixed across the region, but increasing electronic content is supporting the growth in the business. The expansion of our Serbia facility has started. We have broken ground. We did that in collaboration with the local government who is providing us some subsidy grants. So that is an exciting CapEx program that we have initiated to basically double the size of our Serbia facility.

Speaker #2: If you recall, in prior quarters, we closed down our Chengdu facility and consolidated our two Shenzhen facilities into one. And yet, we're continuing to maintain a very profitable business on that smaller footprint.

Speaker #2: Europe is showing really decent growth quarter on quarter and year on year. Vehicle sales remain mixed across the region, but increasing electronic content is supporting growth in the business.

Speaker #2: And the expansion of our Serbia facility has started. We've begun collaboration with the local government, who's providing us with some subsidy grants. So that's an exciting capital expenditures program that we've initiated to basically double the size of our Serbia facility.

Speaker #2: Mexico had a strong recovery as new product introductions started to ramp up. As we transition from lower-margin customers to higher-margin customers, the focus remains on improving the capacity utilization of Mexico, which still remains very low, but is starting to improve.

Robert William Heese: Mexico had a strong recovery as NPIs start to ramp, as we transition from lower margin customers to higher margin customers. The focus remains improving the capacity utilization of Mexico. It still remains very low, but starting to improve. The near-term opportunities remain very strong given Mexico's strategic position within the North American supply chain. Yeah, next slide. I will hand it over to Lao.

Speaker #2: In the near term, opportunities remain very strong given Mexico's strategic position within the North American supply chain. Yeah, next slide. I'll hand it over to Lau.

Speaker #3: Yes. Thanks, Robert. Good morning, everyone. So I'll be providing more details about the Q2 performance of the company. To begin with, the core revenues.

[Company Representative] (Integrated Micro-Electronics): Yes, thanks, Robert. Good morning, everyone. I will be providing more details about the Q2 performance of the company. To begin with, the core revenues. As mentioned by Robert, this is a good quarter in terms of the revenues. Our revenues increased PHP 18 million or 8% versus last year, and this is primarily driven by the mobility business through the ramp-up of the new automotive programs we have in Serbia and also in Mexico, and as well as the new camera programs in the Philippines. Growth was also further supported by the higher volumes from the major European customers, particularly in the lighting programs, active safety, and mechatronics, as mentioned earlier. The power module business also remained a key growth contributor, while industrial revenues were broadly in line with last year's levels.

Laurice Dela Cruz: Yes, thanks, Robert. Good morning, everyone. I will be providing more details about the Q2 performance of the company. To begin with, the core revenues. As mentioned by Robert, this is a good quarter in terms of the revenues. Our revenues increased PHP 18 million or 8% versus last year, and this is primarily driven by the mobility business through the ramp-up of the new automotive programs we have in Serbia and also in Mexico, and as well as the new camera programs in the Philippines. Growth was also further supported by the higher volumes from the major European customers, particularly in the lighting programs, active safety, and mechatronics, as mentioned earlier. The power module business also remained a key growth contributor, while industrial revenues were broadly in line with last year's levels.

Speaker #3: So, as mentioned by Robert, this is a good quarter in terms of revenues. Our revenues increased by $18 million, or 8%, versus last year, and this was primarily driven by the mobility business through the ramp-up of new automotive programs we have in Serbia and also in Mexico.

Speaker #3: And as well as the new camera programs in the Philippines, growth was also further supported by the higher volumes from the major European customers, particularly in the lighting programs, active safety, and mechatronics, as mentioned earlier.

Speaker #3: And then the power module business also remained a key growth contributor, while industrial revenues were broadly in line with last year's levels. Compared to the previous quarter, mobility and camera businesses contributed nearly $18 million of incremental revenue growth, while the power module business continued to ramp up, increasing $6 million quarter over quarter.

[Company Representative] (Integrated Micro-Electronics): Compared to the previous quarter, mobility and camera businesses contributed nearly PHP 18 million of incremental revenue growth, while the power module business continued to ramp up, increasing PHP 6 million quarter-over-quarter. The industrial and the other non-mobility customers started the year at lower levels due to push out of some demands in Q1, but it was able to recover in Q2. On the gross profit, we have reported gross profit margin at 11.2%, outperforming both the prior year and the previous quarter. This improvement was driven by material cost reduction initiatives, yield enhancement, and better labor productivity. The higher revenue levels also improved our factory utilization. This enabled us to realize the benefits of the site consolidation initiatives that we have implemented in 2025.

Laurice Dela Cruz: Compared to the previous quarter, mobility and camera businesses contributed nearly PHP 18 million of incremental revenue growth, while the power module business continued to ramp up, increasing PHP 6 million quarter-over-quarter. The industrial and the other non-mobility customers started the year at lower levels due to push out of some demands in Q1, but it was able to recover in Q2. On the gross profit, we have reported gross profit margin at 11.2%, outperforming both the prior year and the previous quarter. This improvement was driven by material cost reduction initiatives, yield enhancement, and better labor productivity. The higher revenue levels also improved our factory utilization. This enabled us to realize the benefits of the site consolidation initiatives that we have implemented in 2025.

Speaker #3: While the industrial and the other non-mobility customers started the year at lower levels, due to push-out of some demands in the first quarter, it was able to recover in the second quarter.

Speaker #3: And then, on the gross profit, we have reported a gross profit margin at 11.2%, outperforming both the prior year and the previous quarter. This improvement was driven by material cost reduction initiatives, yield enhancement, and better labor productivity.

Speaker #3: And the higher revenue levels also improved our factory utilization, so this enabled us to realize the benefits of the site consolidation initiatives that we have implemented in 2025.

Speaker #3: Operating income continues to improve, primarily driven by the lower direct cost and stronger margins. Operating expenses increased slightly from the previous quarter due to just.

[Company Representative] (Integrated Micro-Electronics): Operating income continues to improve, primarily driven by the lower direct costs and the stronger margins. Operating expenses increased slightly from the previous quarter due to just one-time professional fees related to the sale transactions we did last year. Of course, the G&A is on a controllable level. Finally, on the net income, it rose to PHP 10 million in Q2, supported by the higher revenues, the improved margins, and we also have lower interest expense as we continue to reduce the debt levels. During the H1 of the year, we have paid down additional PHP 17.6 million in bank loans, further strengthening our balance sheet. Later on, Robert will show the balance sheet. I'll turn you back to Robert to discuss the EBITDA performance. Thank you.

Laurice Dela Cruz: Operating income continues to improve, primarily driven by the lower direct costs and the stronger margins. Operating expenses increased slightly from the previous quarter due to just one-time professional fees related to the sale transactions we did last year. Of course, the G&A is on a controllable level. Finally, on the net income, it rose to PHP 10 million in Q2, supported by the higher revenues, the improved margins, and we also have lower interest expense as we continue to reduce the debt levels. During the H1 of the year, we have paid down additional PHP 17.6 million in bank loans, further strengthening our balance sheet. Later on, Robert will show the balance sheet. I'll turn you back to Robert to discuss the EBITDA performance. Thank you.

Speaker #3: One-time professional fees related to the sales transactions we did last year, but the JE is on a controllable level. And then finally, on the net income—it rose to $10 million in Q2, supported by the higher revenues, the improved margins, and we also have lower interest expense as we continue to reduce the debt levels.

Speaker #3: And during the first half of the year, we have paid down an additional $17.6 million in bank loans, further strengthening our balance sheet. So later on, Robert will show the balance sheet.

Speaker #3: I'll turn you back to Robert to discuss the performance. Thank you.

Speaker #2: Yeah. So, EBITDA—again, a very strong quarter. On the stronger revenue and margin improvements, EBITDA is at $21.3 million, its highest level since 2020.

Robert William Heese: Yeah. So EBITDA, again, a very strong quarter on the stronger revenue and margin improvements. EBITDA is at $21.3 million, its highest level since 2020. In fact, we're actually approaching record EBITDA levels for the group. So we're pleased with our progress. The core Q2 EBITDA is up 37% quarter-on-quarter and 18% year-on-year. This is clearly the benefits of our factory footprint consolidation, our various sourcing initiatives and productivity improvements, some of which Lao had mentioned on the previous slide. New program growth is focused on programs with attractive long-term profitability and strategic value to the group. Our improved margin profile is achieved alongside revenue growth and demonstrating scalability in the current operating model. We're still at modest levels of capacity utilization in our facilities.

Speaker #2: And in fact, we're actually approaching record EBITDA levels for the group, so we're pleased with our progress. The core Q2 EBITDA is up 37% quarter-on-quarter and 18% year-on-year.

Speaker #2: This was clearly the benefit of our factory footprint consolidation, our various sourcing initiatives, and productivity improvements, some of which I mentioned on the previous slide.

Speaker #2: New program growth is focused on programs with attractive long-term profitability and strategic value to the group. Our improved margin profile is achieved alongside revenue growth, demonstrating scalability in the current operating model.

Speaker #2: We're still at modest levels of capacity utilization in our facilities, so as we layer on additional revenue, we're expecting margin improvements as we go forward.

Robert William Heese: As we layer on additional revenue, we're expecting margin improvements as we go forward on the basis of not having to increase our overhead costs a lot as we layer on additional revenue. Next slide. Yeah, so this is my favorite chart. Our balance sheet, we've continued to delever the business. Net debt remains below PHP 100 million. Lower leverage continues to reduce our financing costs and improve financial flexibility. The balance sheet remains positioned to support strategic investments should they come up, and future growth initiatives. All of our key financial ratios are within our target ranges. Our book value per share is at PHP 7.36, which coincidentally is around where our share price is right now.

Speaker #2: On the basis of not having to increase our overhead costs a lot as we layer on additional revenue. Next slide. Yeah, so this is my favorite chart.

Speaker #2: On our balance sheet, we've continued to deliver in the business. Net debt remains below $100 million. Lower leverage continues to reduce our financing costs and improve our financial flexibility.

Speaker #2: The balance sheet remains positioned to support strategic investment should they come up, and future growth initiatives. And all of our key financial ratios are within our target ranges.

Speaker #2: Our book value per share is at 736, which coincidentally is around where our share price is right now, so that's nice to see.

Robert William Heese: So that's nice to see that the market's starting to recognize the value in the company and ascribing a value in the shares that are at least equal to the book value per share. CapEx is probably a little ahead of where we were last year at the same time. We are expecting CapEx in the H2 of the year to increase significantly as we build out the Serbia facility. We've approved a few other revenue-generating projects, particularly in the Philippines, which will add to that in the H2 as well. So we'll have a very more increased CapEx spending in 2026 compared to what we've had in 2024 and 2025. It's basically to start growing the business now. We're in growth mode now as opposed to cost-cutting mode and managing our P&L to the revenue that we have.

Speaker #2: That the market's starting to recognize the value in the company and ascribing a value to the shares that is at least equal to the book value per share.

Speaker #2: Next, CapEx is probably a little ahead of where we were last year at the same time. We are expecting CapEx in the second half of the year to increase significantly as we build out the Serbia facility.

Speaker #2: And we've approved a few other revenue-generating projects, particularly in the Philippines, which will add to that in the second half as well. So we'll have increased CapEx spending in 2026 compared to what we've had in '24 and '25.

Speaker #2: And it's basically to start growing the business now. We're in growth mode now, as opposed to cost-cutting mode. And managing our P&L to the revenue that we have, now we're trying to situate the company more into a growth mode, and we're spending money accordingly.

Robert William Heese: Now we're trying to situate the company more into a growth mode, and we're spending money accordingly. Brian, I'll let you wrap it up.

Speaker #2: So, Brian, I'll let you wrap it up.

Speaker #1: All right. Thanks, Robert. Thanks, Lyle. Again, Lou would like to extend his apologies for not being able to join today, but he did want to leave a few key messages for us.

Brian Jalijali: All right. Thanks, Robert. Thanks, Lao. Again, Lou would like to extend his apologies for not being able to join today, but he did want to leave a few key messages for us. IMI's transformation continues to translate into stronger revenue, improved margins, and a more focused and resilient business. The company is now in the early stages of a strong growth trajectory, as Robert mentioned, and it's supported by the operational improvements we've made over the last 24 months. In Q2, core revenue increased to 244 million, up 11% quarter on quarter and 8% year on year. It's a reflection of stronger demand and improved operating scale. More importantly, profitability continued to improve faster than revenue. Core gross margin reached 11.2%, a level that we haven't seen for several years. Operating income increased to $16.2 million, a 6.6% margin.

Speaker #1: IMI’s transformation continues to translate into stronger revenue, improved margins, and a more focused and resilient business. The company is now in the early stages of a strong growth trajectory, as Robert mentioned.

Speaker #1: And it's supported by the operational improvements we've made over the last 24 months. In Q2, core revenue increased to $244 million, up 11% quarter-on-quarter and 8% year-on-year.

Speaker #1: And it's a reflection of stronger demand and improved operating scale. More importantly, profitability continued to improve faster than revenue. Core gross margin reached 11.2%, a level that we haven't seen in several years.

Speaker #1: And operating income increased to $16.2 million, a 6.6% margin. Core net income improved to $10 million, or a 4.1% margin—right there where we've been targeting.

Brian Jalijali: Core net income improved to 10 million or a 4.1% margin, right there where we've been targeting and planning to exceed. Core adjusted EBITDA reached 21.3 million, the highest quarterly EBITDA since maybe 2020, right around the pandemic. As we grow through 2027, we expect to further utilize existing underutilized capacity, which should allow us to continue positively leveraging both factory overhead and SG&A expenses. This growth is being supported by the right market exposures. Mobility core revenue was up 10% sequentially and 14% year on year. It was driven mostly by active safety camera modules, exterior LED lighting, and mechatronics programs. Non-mobility core revenue was also up. It was up 11% sequentially. That segment was supported by the start of production for new medical business and continued progress in power module programs moving through the qualification and ramp phases.

Speaker #1: And planning to exceed. Core adjusted EBITDA reached 21.3 million, the highest quarterly EBITDA since maybe 2020 before right around the pandemic. As we go through as we grow through 2027, we expect to further utilize existing underutilized capacity, which should allow to which should allow us to continue positively leveraging both factory overhead and SG&A expenses.

Speaker #1: This growth is being supported by the right market exposures. Mobility core revenue was up 10% sequentially and 14% year on year. It was driven mostly by active safety camera modules, exterior LED lighting, and mechatronics programs.

Speaker #1: Non-mobility core revenue was also up; it increased 11% sequentially. That segment was supported by the start of production for new medical business and continued progress in power module programs moving through the qualification and ramp phases.

Speaker #1: We're also making meaningful progress in the regional transformation of the business. Mexico, in particular—the headline numbers show why this transformation is so important for the company.

Brian Jalijali: We're also making meaningful progress in the regional transformation of the business, Mexico in particular. The headline numbers show why this transformation is so important for the company. Mexico revenue was up to USD 33.9 million in the Q2. That's up 37% quarter on quarter, but still down 8% year on year. Mexico's share of core revenue also moved from 14% in 2025 down to 12% in 2026. What we want to emphasize and really make clear is that this is not a demand issue. This reflects an intentional customer mix transformation that has been underway for the past 18 months. Approximately 40% of IMI Mexico's 2024 revenue has been transitioned away from programs and customers that were not a core or strategic fit for IMI and rather reallocated to programs and customers that are better aligned with our long-term strategy.

Speaker #1: Mexico revenue was up to $33.9 million in the second quarter. That's up 37% quarter-on-quarter, but still down 8% year-on-year. Mexico's share of core revenue also moved from 14% in 2025 down to 12% in 2026.

Speaker #1: What we want to emphasize and really make clear is that this is not a demand issue. This reflects an intentional customer mix transformation that has been underway for the past 18 months.

Speaker #1: Approximately 40% of IMI Mexico's 2024 revenue has been transitioned away from programs and customers that were not a core or strategic fit for IMI.

Speaker #1: And rather, reallocated to programs and customers that are better aligned with our long-term strategy. To support this transition, IMI Mexico has been working through more than 20 new customer program NPIs.

Brian Jalijali: To support this transition, IMI Mexico has been working through more than 20 new customer program NPIs, again, new program introductions, during the first six months of this year. This has placed real near-term strain on the facility, but it helps explain the year on year softness even as the business appears to have gone through and is beginning to recover sequentially. We expect the majority of these NPIs to be completed by the end of 2026, positioning IMI Mexico to become a strong growth and financial contributor to the company beginning in early 2027. The other region in China, the reported revenue picture was more modest, but still strategically encouraging. China revenue was up to USD 41.7 million in the Q2. That's up 3% quarter on quarter and 1% year on year.

Speaker #1: Again, there have been new program introductions during the first six months of this year. This has placed real near-term strain on the facility, but it helps explain the year-on-year softness, even as the business appears to have gone through that and is beginning to recover sequentially.

Speaker #1: We expect the majority of these NPIs to be completed by the end of 2026, positioning IMI Mexico to become a strong growth and financial contributor to the company beginning in early 2027.

Speaker #1: In the other region, China, the reported revenue picture was more modest but still strategically encouraging. China revenue was up to $41.7 million in the second quarter.

Speaker #1: That's up 3% quarter-on-quarter and 1% year-on-year. This reflects a strategy shift that is still in its early stages. And again, it's not a demand problem.

Brian Jalijali: This reflects a strategy shift that is still in its early stages, and again, not a demand problem. Historically, IMI China was primarily focused on supporting existing global multinational customers operating in China. We have now expanded that strategy and are actively competing for local Chinese businesses, supported by a dedicated sales team built and managed all within the IMI China organization. That investment is beginning to pay off. We are winning new business with several strong customers in China, and we look forward to sharing more specific details on the next quarterly call as we continue to close these businesses. This will be an important data point to watch as it should provide the first visible read-through of our local market strategy into China's future growth rate.

Speaker #1: Historically, IMI China was primarily focused on supporting existing global multinational customers operating in China. We have now expanded that strategy and are actively competing for local Chinese businesses.

Speaker #1: Supported by a dedicated sales team, built and managed all within the IMI China organization, that investment is beginning to pay off. We are winning new business with several strong customers in China.

Speaker #1: And we look forward to sharing more specific details on the next quarterly call as we continue to close these businesses. This will be an important data point to watch, as it should provide the first visible read-through of our local market strategy into China’s future growth rate.

Brian Jalijali: The first slide I showed about market updates, China has consistently been outpacing the more established markets, and that's a region we really want to tap into. At the same time, the streamlined China footprint continues to support improved profitability and asset utilization. Strategically, IMI remains focused on growth platforms where we believe the company has true technical and operational differentiation. Active safety camera modules, automotive LED exterior lighting, mechatronics, power module packaging, medical technologies, industrial automation, smart infrastructure, and I guess really important for us now is data center-related power applications. These are high-growth markets where our specific technology, quality, and operational experience and know-how is delivering our customers great value, which is creating deeper and stronger customer relationships. Finally, IMI is becoming a simpler and more financially resilient business. As Robert mentioned, net debt remains below USD 100 million.

Speaker #1: The first slide I showed was about market updates. China has consistently been outpacing the more established markets, and that's a region we really want to tap into.

Speaker #1: At the same time, the streamlined China footprint continues to support improved profitability and asset utilization. Strategically, IMI remains focused on growth platforms where we believe the company has true technical and operational differentiation.

Speaker #1: Active safety camera modules, automotive LED exterior lighting, mechatronics, power module packaging, medical technologies, industrial automation, smart infrastructure, and I guess what's really important for us now is data center-related power applications.

Speaker #1: These are high-growth markets where our specific technology, quality, operational experience, and know-how are delivering our customers great value, which is creating deeper and stronger customer relationships.

Speaker #1: Finally, IMI is becoming a simpler and more financially resilient business. As Robert mentioned, net debt remains below $100 million. Total bank debt declined from $196 million to now $178.5 million.

Brian Jalijali: Total bank debt declined from PHP 196 million to now PHP 178.5 million, and cash has increased to PHP 79.6 million, almost PHP 80 million. Key leverage ratios also improved. Net debt to total equity is now at 0.37x, and that's a great number for us, well within our target range. We believe that this gives IMI greater flexibility to support future growth, including power and camera module capacity expansion and the aforementioned Serbia site extension. To wrap up, overall, Q2 shows that the operational initiatives are working. Revenue is growing, margins are expanding, and the customer portfolio is becoming more strategic, and the balance sheet is stronger than ever. While transformation work remains ongoing, particularly in Mexico and China, we believe that the business is now much better positioned to deliver sustainable growth and improve profitability for the whole group. Thank you all for your continued support of the IMI group.

Speaker #1: And cash has increased to $79.6 million, almost $80 million. Key leverage ratios also improved. Net debt to total equity is now at 0.37x, and that's a great number for us—well within our target range.

Speaker #1: We believe that this gives IMI greater flexibility to support future growth, including power and camera module capacity expansion, and the aforementioned Serbia site extension.

Speaker #1: Okay. To wrap up, overall, Q2 shows that the operational initiatives are working, are expanding, and the customer portfolio is becoming more strategic. The balance sheet is stronger than ever.

Speaker #1: While transformation work remains ongoing, particularly in Mexico and China, we believe the business is now much better positioned to deliver sustainable growth and improve profitability for the whole group.

Speaker #1: Thank you all for your continued support of the IMI group. Thank you.

Brian Jalijali: Thank you.

Speaker #2: Yeah, sorry, Brian. We have some technical problems, and the call might be cut off. So I sent a new link in the chat for everyone. If we get cut off, we can join the new link.

[Company Representative] (Integrated Micro-Electronics): Yeah. Sorry, Brian. We have some technical problem, and the call might be cut off.

Laurice Dela Cruz: Yeah. Sorry, Brian. We have some technical problem, and the call might be cut off.

[Company Representative] (Integrated Micro-Electronics): I sent a new link in the chat for everyone. If we get cut off, we can join the new link.

Laurice Dela Cruz: I sent a new link in the chat for everyone. If we get cut off, we can join the new link.

Speaker #1: Sure.

Speaker #2: Sorry about that. Shall we continue in case there are questions? Otherwise, everyone, if you can, please copy the new link. Sorry. Sorry about that again.

Brian Jalijali: Sure.

[Company Representative] (Integrated Micro-Electronics): Sorry about that. Okay. Shall we continue in case there are questions? Otherwise, everyone, if you can please copy the new link. Sorry about that again.

Laurice Dela Cruz: Sorry about that. Okay. Shall we continue in case there are questions? Otherwise, everyone, if you can please copy the new link. Sorry about that again.

Speaker #1: Okay, I see it. Yeah. Perhaps we can start—do you have a net income before this ends? Do you have a net income target for 2026?

Brian Jalijali: Okay, I see it. Yeah. Perhaps we can start. Do you have a net income, before this ends, do you have a net income target for 2026? We do, but it is not a number we share externally. But we are happy with the progress we have shown in the first two quarters, and we continue to see that moving forward. I think this meeting might close in a few seconds. We will take the next questions in that link that Lao sent in the chat box. Thanks, everyone. We will see you in that new meeting room. Thank you.

Speaker #1: We do, but it's not a number we share externally. But we're happy with the progress we've shown in the first two quarters, and we continue to see that moving forward.

Speaker #1: I think this meeting might close in a few seconds. We'll take the next questions from the link that Lao sent in the chat box.

Speaker #1: Thanks, everyone. We'll see you in that new meeting room. Thank you.

[Company Representative] (Integrated Micro-Electronics): The recording has stopped.

Browse all earnings call transcripts

Q2 2026 Integrated Micro-Electronics Inc Earnings Call

Request TrialDemo

Integrated Micro-Electronics

Earnings