Basler Aktiengesellschaft ($BSL)

So it looks like that we are complete. Very warm welcome to the Annual Report 2025 of Basel. I'm very happy to present today our numbers of last year together with the new management team. And we are also proud to present you good numbers, also a sound outlook. And before we start the call, I have the obligation to bring to our disclaimer here that all statements that we are doing today are views and assumptions made by the Management Board using information available at this point in time. So the forward-looking statements we are doing, by nature are subject to significant known and unknown risks and uncertainties. And having this said, we start with the presentation. And the agenda is, like always, we start with an executive summary. We go then through the financials and the share price or the share development and also the dividend payout and at the end of the presentation, we come to the outlook before we have enough time for a good Q&A session. Let's start with the executive summary. So -- and start with the summary with the environment that we had in 2025, looking back and the best indicator we have at hand is the German vision components industry, so all the German manufacturers selling vision components worldwide and their bookings all in all, were 0. So flattish bookings and billings are -- have been at around 6% plus. So in a nutshell, what we have seen worldwide last year is a relatively weak demand. Also the PMIs, the manufacturing industrial manufacturing PMIs were flattish, around 50. The overall market was relatively weak, but we have seen some vertical market niches where the market picked up and was mainly semicon, everything around AI related and advanced notes related to production machinery, logistics and warehousing, especially in the U.S., consumer electronics, battery production for mobile devices. And last but not least, in the second half of the year, we saw a lot of pickup in the area of AI-related hardware production for data centers. So compared to previous years, we have also seen last year a relatively normal inventory situation at our clients. So we have not seen any muting effects. And we have also seen that the delivery times have come down to normal, relatively short, even in the second half of the year. So we talk about 2 to 3 weeks delivery times and that we have -- the ongoing high competition intensity is nothing new. We see it especially in the Asian region. And the news -- the Trump news kicking in last year in April with regard to U.S. tariffs, this situation that's caused some -- on top of the geopolitical stress some uncertainties, additional uncertainties. And last but not least, we had relatively strong headwinds due to the currencies, U.S. dollar, Chinese renminbi, Japanese yen and Korean won. They all devaluated against the euro. So this gave us quite a strong headwind last year. So our performance in this environment, clearly outperforming bookings 22% plus, billings 23% plus. And we have seen over the course of the year, we had a strong start, but then also the momentum in the second half of the year, especially with the booking increase again. So that the strong regions, U.S. and China over the full year. In addition, Europe kicked in, in the second half of the year gave us a good order momentum also in the fourth quarter. We also made not only on top line, but also on the gross profit margin, further progressed 47.4% against compared to 45.1% the year before. And this was negatively affected by FX without FX effect, this would have been much stronger hike, actually. The earnings before tax, EUR 16.2 million compared to last year, actually, where we made quite significant losses improvement sound profitability was 7.2%. It's not where we want to go, but we are proud that after 2 very stressful years and read numbers that we are back in black with those sound profitability. Not only profitability, we also made progress on the cash flow side, even though the billings rate significantly and therefore, also our receivables rate, we were able to realize a free cash flow of EUR 18.5 million, which is definitely quite a strong number. The reason behind is also lying in the inventory reduction. You can read carefully also our sustainability report. 2025, you can download it on the website. We have made good progress on our net 0 emission ambition for 2030. We have reduced our carbon footprint by 15% compared to the base year 2022 location base. And if we look at the market base, so the energy that we have bought we even reduced it by 63%. On top of it, we installed a solar panel system on the rooftop of our car park here and headquarters. We finished this project beginning of the year. So the anticipated reduction for this year is, by and large, 240 tons, so quite significant move and investment we did in that direction well and also the rating agencies have -- we have increased our ratings all in all, also here, very pleased about the progress. So having this said, I will hand over, as you know, Ines, you know myself, to give also Kai, our new members and the management team the opportunity to introduce himself, and he will also continue the executive summary presentation.

Okay. Warm welcome also from my side. Short introduction. My name is Kai Stroder. I have some 15 years experience in deep tech businesses, especially optics driven businesses. The focus was always to establish new innovative business models. And that is basically what I do here today at Basler, I focus on the team. I focus on the processes to enable and establish new business models and new technologies to broaden our portfolio to deepen our tech expertise and to scale the business. What we have done in the -- last year, it was not under my responsibility -- next slide sorry, is also a responsibility. However, also very important. So the measures of the former Board are visible now. So we reduced the headcount, the FTE. So we are in the target setup. Maybe to highlight, we have reduced a little bit the R&D costs in the FTE. This is not due to the fact that we lower our investment in the R&D, but we have to refocus on different capabilities. That is still an ongoing process since technologies change, and yes, we still have to focus also on the new technologies, new parts, more software-driven maybe. So we have got ongoing processes to adjust also this administration. Sometimes a pain point has just risen a little bit. However, there's also due to the fact that we do and we will centralize some fractions, which have been localized, and we can bring them back into the corporate center, and that's maybe also an indicator where it has risen. But overall, we are on good track and in good shape, and it shows that it is also possible due to the EBIT margin to have potential on the FTE side, and we will still leverage these potentials also in the next future. Good to the interesting part of our product portfolio. Overall, the message is that we have got a very broad and still very robust product portfolio. So we had invented the testers, which was a logical let's say, extension to the existing product portfolio. We have very good numbers on this 3D business already in the first and in the -- first year. It shows that we are able to fill the gaps in the portfolio. We are working hard on this that we are also ready for the next evolution of this product portfolio. We cannot disclose anything right now. The numbers clearly show that we have got a very, very strong basis where we can leverage potential and get required, let's say, cash to invest in a very, very strong and innovative product portfolio in the near future. On the market exits side, on too far there was the acquisition of the Alpha TechSys entity in India, which was a very smooth process. We are very happy to have the team on board. The post merger integration process was very successful. We have integrated it into our go-to-market unit, EMEA, and they are working very closely already. team is highly motivated, very young, very experienced. Also, on the other hand, so we think that was a really good strategic move. And the first discussions numbers and impulses from this market are very promising. And I think we will still have an open eye on other opportunities. So we will keep you posted. But as of today. That is the story. Jumping a little -- it's a bit sensitive, sorry for the group here. Yes. So the Board has picked up or the new Board has picked up the transition to this target where we want to have -- want to be this full range system or solution provider. So we are focusing not only on our core on our camera systems, but also on the accessories on the adjacent parts we are working still to find some really good scalable business cases in our pillar markets, which are on this scale However, we cannot disclose too much, but there are dedicated resources working on this. that we don't only have a broader portfolio, but also a deeper portfolio in some focus areas and the latest numbers show that we are right in this approach that we have identified the real sweet spots of technology where we can leverage our potential and we will really focus on this and continue this effort during the whole year with some initiatives, which we will disclose later. Okay. So this brings us to the financial part. Ines, over the last here.

Thank you. So let's see and let me pick up the financial here. So here, you have the total sales in the distribution of the region. We ended up in the end at EUR 224.5 million. So really upper right side of our guidance. So that was a good one for us. And for the first time, you're also seeing region split up also displaying China now. So you might recognize before and we always have Asia, including [indiscernible]. So now for us, China is growing bigger. So you see the increase to 26% of our revenue and from the 23% of last year. Also pretty good improvement we see in Americas in the split of our revenues because when you're losing a bit of gross margin in China because of the regional mix, we are gaining a bit through the Americas. So that's a good level for us. All right. So then here you can see from 2024 and now also 2025, the whole year by quarter, our bookings and our billings. Let's focus on the Q4 and also in comparison to what we've seen in 2024. So we ended the year with bookings of EUR 65 million that was a pretty good outcome for us because it was not only with the expected regions, but also EMEA picking up in the end. So we had a pretty good mix and pretty good increase from China, Americas and EMEA. And Revenue being more or less equal to Q3 with EUR 56.5 million and a very good increase for the Q4 of the year before. So with this one, we are picking up more or less EUR 10 million to carry over in addition to Q1 to give you a little bit of an expectation what you will hear from the outlook in the later slides. So here we go with the gross margin. So overall, I would say we had a good result. I couldn't feel better, of course, but a good result 47.4% overall. So last 2 quarters above our target of the 48%. So as you've seen, the currencies definitely gave us a headwind there. So that caused us some basis points there in the margin. But overall, we ended at a good one. So you will see also in the outlook that we are expecting pressure on the gross marine as we still have the currency ongoing. So currencies are not so bad as they were at the end of Q4 last year, but also not coming back enough to help us currently. But being a good move depending on the regions where we are in to have a positive contribution, of course, also in the leverage of our resources. EBIT and EBIT margin. So you're still seeing the EBIT. I'm just talking to that in a second. So here, we ended up at the 7.2% also on the right-hand side of our guidance. But in the guidance, mix, as you can see, throughout the year, right? So we still -- we started with a very good one. The currency being strong in the beginning and then weakening overall and revenue helping in the end. Q4 was influenced also by increase in OpEx due to variable salaries but still above the 5 lines, so that we had 7.2%. To give you a little bit of an idea. So this means an EBIT margin. So with interest 7.9%, so it was 0.7% in between. So from next year onwards, you will see us presenting the EBIT as our KPI in order to be able to better drive the operational results in a moment way, I would call it. So here we have an overview. I think we talked about that already. Let me point out the gross margin again. So pretty good work even despite the weak currencies with the 47.4%. That was also due to a lot of negotiations with suppliers and material savings we had in there. We -- yes, so we are keeping the pressure on the OpEx, right? So really, you've seen the FTE coming in, in relation to '24, so not increasing the workforce to margin really leveraging who we have in order to scale and the EBIT, again, was a 7.2% being targeted to hopefully up next year. And in earnings per share, by the way, we will see that for the dividend of EUR 0.38 in comparison to what we had last year. Here, the cash flow. The cash flow lacks a bit of a comparison with the ICF because we had our acquisition of the subsidiaries in Q3. So that's a bit skewed. And Q2 and Q3, so we had in 2024, around EUR 4.2-ish million of one-offs, let's call that. So pretty stable 1 year. You see in Q1, still in 2025 to recap here. We had an increase in receivables so that we didn't have the push-through connected throughout the year. So to have a nice OCF ongoing and also around EUR 18.5 million in free cash flow that was impacted still by the increase in receivables, but good outcome and above the target. Yes. here again. So same more or less. I think this is also important to see the coverage that we have here, cash flow from operations. As you've seen in the graph, from investing. You see here the exchange rate effects on the cash holdings. So that's a hit to us with EUR 1.5 million. Otherwise, in comparison to last year, we would even been at near EUR 20 million. Cash flow for financing being down. Also here, you see in the liabilities to banks, we are paying off our debt currently and have, therefore, a lower basis to our banks. So next one, let me pick some of the numbers. So the first number that I want to highlight is goodwill. You see that the goodwill is down, but there is no impairment. So this is really also an exchange rate effect as we have some of our goodwill positions not in euros. And then maybe let me take out the inventory balance here. So this is really down from the EUR 38.8 million, which was 140 days in inventories in 2024. We really worked through that and to reduce the risk and be faster with the customers. So we ended up at around 100 days, 101. This is more or less also our target as we don't want to drive that too much down in order to be able to deliver on time. But downside here a little bit is the receivables -- but the days and receivables went up from about 54 days into 64 days. That's mainly due to China and that will also influence our business in 2026 to give a little bit of expectation here. as with China being increasing and also delivering good performance in orders and revenue, we are unfortunately also seeing higher days in China here. So that's the major impact that we are seeing here. Yes. Going to the -- to the liability side. Again, you have long-term liabilities to banks which are decreasing as we are paying off. You also see change in leasing liabilities, and you might have also recognized also in our report that we have 2024 adjusted. Our adjustment has no cash flow impact, but it's related to our leasing assets and our leasing liabilities, which have had to be stated differently. So you see a changed balance for the leasing liabilities short term and long term. And maybe again, to the trade payables, they were up a bit, also helping with our cash flow, but probably being managed a little bit down in terms of days throughout this year again. With that, I would be done at EUR 6.09, and we ended up at EUR 15.30, not exactly where we want to be, but a good direction. Also, of course, in relation to the techtax performance. And share dividend, we are now back to our dividend policy, dividend policy, the normal one would be 30% of the net results, which we also did. This is from the EUR 0.38. This is a EUR 0.11 that we are going to pay out as a dividend as an adjusted for an 1.5 million shares. With that, I'll hand over to Hardy.

Okay. Already outlook. Yes. Maybe before we come to the outlook, also a quick summary. I mean, we are pretty proud to have achieved this come back being [indiscernible] like and sound profitability, also growing top line far above market having a strong free cash flow is our debt and also our net debt position. So everything goes in the right direction. And we have rightsize the company, we now concentrate on growing top line, hopefully also being able to improve further margin points. Gross margin points with the same organization so step by step employing also profitability. So -- and the outlook, let's come to that, what we see for 2026. So we see an environment and the first [indiscernible] about the environment where we believe the computer vision market can grow mid- to high single digit in the first half year. To be honest, with this current environment around us, we are in problems to predict the second half of the year. And I guess you know why, with all the geopolitical projects and now also combined since the recent week with the Middle East conflict the second half at this point in time is pretty unpredictable, but we are positive for the first half. The currency volatility, we -- I mean, we estimate that the volatility will be high. There will open down at this point in time the main currencies that are important for us against the euro appreciated a bit against -- or compared to last year, at least most of them, Korean or not, but the rest. However, the volatility increasing will stay high. What we believe is that the industrial manufacturing PMIs will improve a bit, will be slightly above 50 for at least the first half of the year. And our own position, we -- I mean, in our assumptions, we will be able to defend and win larger project opportunities also in 2026. You might remember that we have one of the growth drivers last year was winning larger projects with key accounts that we have and especially in the field of electronics, battery logistics and data center hardware production. Also, yes, we assume that intensity of competition will stay high. I mean as we have a high exposure to Asia, we are working in this environment. We show that we can be successful in this environment by far. So there is some noise in the line here, but I continue with the forecast. So the guidance that we do give under these assumptions and also under the assumption that we had to increase salary in -- around the world because of cost of living adjustments from 2025 to 2026. And as we are highly personnel-intense, this lowered a bit or increased, let's say, our breakeven point or lower our EBIT margin. But taking this all into account market environment, our position and the cost of living, we believe we can be in the corridor between EUR 232 million up to EUR 257 million in terms of revenue. And this would give us a gross an EBIT margin of 6.5% to 10%. For those of you who follow us for a longer time, they will recognize we switched from EBT to EBIT margin in our guidance. And we have made this change because we believe it's giving a better indication of our operational business. There is nothing behind in terms of that we have -- want to increase that by something with just that we believe it's a better parameter to measure the operational business of the company. Looking into Q1 and setting expectations here, we believe we will have a strong start into Q1. Obviously, as we have already seen certain weeks, we have, as Ines has mentioned, had a good momentum at the end of 2025. So we give here the indication that the numbers for Q1 will be at or above what you see here on the right hand of the -- right side of the guidance. So this also brings us to the midterm outlook, which remains unchanged. In 2028, we are striving to achieve EUR 275 million. And an EBIT margin, we just changed here also from ET 12% to EBIT 13% margin by the way that I mentioned already, we want to focus now with the right size of our organization to our top line growth, gross margin improvement in order to get there and also continue to have strong cash conversion rates. Obviously, this depends on certain market conditions and the main assumptions -- the 2 main assumptions here are that we have or the access to the Chinese market will remain and that we will see a 2026 with market recovery, which I believe in the first quarter, it looks good. But as we -- as I have mentioned, there are still uncertainties in the world that we all know of Yes. So we are committed to get there. We are passionate about it and closing our presentation a lot opening the Q&A session for you, for us. And Yon, our colleague in the background here will moderate the session, so you can either jump in by audio or you can also use the chat function and Yan would moderate.

All right. Hi, everyone. [Operator Instructions] So I have a question in the chat. The question is, what is the portion of revenue with new products? This is coming from Frank Hill.

So the question is always when you talk about new, what is new. So it's always a definition. So what we measure is an indicator where we take products that have been launched or have been to the market 4, 5 years or younger. This might be long -- sound long to you, but you need to anticipate that we were in a design and mechanism where our customers designing the product and to their machines, then they need to finalize the lease and then ramp up. This portion is, by and large, 20%. It depends also a lot on the seasons but this should give you a good indication. And normally, our product life cycles are 10, 12, 13 years.

So we have additional questions. One is coming from Lasse Stueben. I would try to unmute you, Lasse, so maybe you should do it on your own, right?

I have a question on China. I think if I saw the numbers correctly, you're roughly -- you almost did EUR 60 million in China in '25. I think from memory, that number sort of in sort of past peak cycle times somewhere around EUR 80 million or EUR 90 million. So it seems like you've made really good progress there with good growth year-on-year. I'm just thinking for '26, I mean, [indiscernible] how has activity been since Chinese New Year in China because that's typically a stronger period for order intake. And then also generally more broadly across the regions in Q1, what is driving the -- seems like order intake has been very strong in the first quarter as well. So what's kind of driving that strength? Is that the market you saw drive strength last year? And then the final question is on the EBIT guidance. It seems that just given the revenue outlook that there's probably room for that guidance to have been a bit higher, but I guess you're factoring in a bit of conservatism. So I guess my question is how much conservatism is in that EBIT margin guidance?

Should we share Ines, China and growth driver when you do EBIT?

Yes.

So let's start with China, as. So you're correct. In high times, we were at around EUR 80 million, almost EUR 80 million couple of years back. So we were then -- business was declining and then successfully coming back last year -- last year and also that right now are mainly around AI production, hardware production for data centers. consumer electronics, especially on batteries for consumer electronics. These are the main drivers actually what we are seeing in the first quarter, actually, that is that the momentum keeps strong even a bit stronger than last year. From a market perspective, we recently had also our Shanghai show last week. So what are the main trade shows. There's a lot of traction at the moment. And that seems to be also more consumer electronics kicking in after Chinese New Year. What does it mean for the long run. To be honest, I mean, it's very, very volatile. We are, let's say, positive for this year, but going beyond this, I think it's front make sure that we -- this is also why we are so at in keeping the organization as it is. because we know that China is a very volatile market. But for now, we are running a good business. We have also transferred successful sites to grow further in the business and it looks good for the short term. Growth driver in general. There is still some noise in the room here.

Yes, I hear it too. Maybe someone in the background.

Okay? Good.

It sounds better.

Yes. So growth drivers in general. From a vertical market perspective, we see still logistics for 2026. We see consumer electronics also smartphone assembly coming in and also definitely data for hardware production for data centers. And on top of this, we see in Europe, maybe also some traffic projects kicking in. I mean it's not a worldwide phenomenon. But these are still also the main verticals kicking in.

All right. Then I would be picking the EBIT guidance question. So I would like to give you a hint on 4 topics that we have figured in there. So the first one is currency, right? So this is figured in our forecasted rate and currently currency helps a bit. So that could influence, but we still didn't increase the guidance especially in -- it's really tough for us to foresee, and we didn't want it to change that. Then the second one is tariffs. So that might also give -- so that last year, it was in our numbers for about 7 months, right? But this time, we have the full year, and we are passing it through but it's also giving a hit to our -- to the margin in the end, not to the euros, but to the margin. And I would also like to call out that we are seeing price pressure from China and of course, currently an increasing yes or a good market in China and good numbers from China. So the regional mix also had an impact on us. Is that conservative? Might be the case. If we have a change in especially these 3 parameters, it could look better in the end. But currently, we have the assumptions in for these 3 parameters that lead us to the guidance.

We have a second question from Malte Schaumann.

Yes. I think you should hear me. Also on profitability, the factors you just mentioned, in fact, most only affect the gross margin. So maybe you can share your expectation for the gross margin which stood slightly below 49% last year. So what's then the expectation for the current year, given the factors you just alluded to?

Yes. So we basically want to hold the gross margin. So there are defects that I named that have pressure on it. But of course, we have economy of scale effect. So we are not planning to increase our workforce, larger than would be reasonable here. So we have a good leverage on there. So this is going against it. And -- but with these negative effects that we are seeing, so plus/minus what we last year.

Maybe one additional aspect besides -- beyond the gross margin topic, the -- as mentioned earlier, we also increased cost of living by and large, 4.8%. And as we have a relatively high cost position on personnel costs, this also needs to be digested and needs to be also considered when doing the math. .

Yes, exactly. That will help me on the next question. So below the gross margin at OpEx level, is that around 5%.

Correct.

Slightly more increase something you baked into your forecast until budget?

Yes. This is reflected in the guidance, yes, roughly 5% possible.

Okay. Okay. Then let me ask with respect to the 2028 guidance. I mean, at the high end of this year's guidance, you expect maybe EUR 30 million more in sales but only 2 percentage points more in profitability. Looking at your '28 targets, you would need an additional EUR 20 million in sales, but -- which should then lead to a 3 percentage point hike towards 13%, where you can elaborate a bit on that what then needs to happen to really make that jump from assuming maybe 10% this year at the high end to then 13% with less sales on top.

Yes. You want to...

You want me to pick that? Okay. So a pretty good question that you're raising here. I think what doesn't help us again a currency change? So currency needs to stay as is. also price pressure in China and the regional mix staying basically the same. We are currently also having a share of cost, our OpEx and for some portion also on the gross margin to have structural, how do you say, structural projects ongoing that are making scaling possibility. So that is not going to keep but really into processes to bear as effective in scaling. So -- and from our expectation, after costing EBIT and having a bit of cost that will really enable us with more or less the same workforce to grow into that revenue.

Now also with regard to the gross margin, as Ines has mentioned at the moment, from time wise, we are planning by large to keep the gross margin. Our ambition is a different one. But the one our ambition is to grow the gross margin step-by-step further towards 50%. However, one need to be careful, obviously, in our guidance, what we promised to the market. But over a long period -- longer period of time until 2028, we also -- I mean, we work hard, and we also believe we can grow the gross margin step by step. Not in the same highs and steps we did in the last 2 years. This is by far too much. But step by step to also in the area to 49% to 50%. We believe it's possible, but it's a continuous work to get there.

Okay. Understood. And then in terms of data center hardware revenues, can you maybe share a number? What's the actual revenue of revenue share of that application?

We want not 100% disclose it, but it's in the area, let's say, of higher single-digit percent points.

Okay. And that was not linked to China. Is that it?

High linked to China.

That's linked into China?

Yes. Definitely.

Okay. I'm scanning for additional questions, but no one raised the hand so far, and I don't see any additional questions in the chat. So maybe we just wait some additional seconds. So this is the right moment I see one question. Maybe I will try to unmute you, Claudio. You just also rolled it into the tap, but maybe you can speak out.

Can you hear me?

Yes, I can hear. Yes.

Okay. I have a couple of questions for you. The first one is the -- for the current 2026 guidance factoring to somehow the current situation and were in Iran? Or it is based on the original budget done before they were started? And linking to this, have you seen a change in the bookings pattern in March compared to January and February? And the second question is related, let's say, to the to the memory shortage issue? I mean, is this something that could affect Basler and to what extent?

Yes. So maybe coming to these points. So the Iran conflict at least for now is in our guidance. This is why the range is relatively high. And maybe for some of the people, they might see the lower end of the guidance being low but this is exactly the reason the unknowns of the Iran war at this point in time and especially what this means for the second half of the year. So it's included -- so from the bookings, January, February, we haven't seen also in February, March, we haven't seen impacts -- negative impacts due to the war situation so far. And last but not least, the memory questions, yes, everyone is talking about it. For sure, the memory question has -- can have a potential direct impact and the potential indirect. So if our clients, for example, do not have enough memories independent of what industry they are in, they might slow down the production and that need a lower amount of production capacity. This can have lower demand impact which we don't see today, but we are watching out if things are happening. And the other one is how are we affected by these memory shortage and as our products use also memories. So the situation is that in the range of the guidance, we see a high likelihood that we are able to achieve this even knowing the shortage of the memories, which means we are in constant context for months already with our suppliers maneuvering through this situation. For us, it's not a new thing. We already work on this topic for a couple of months. And this means we are relatively sure that we can deliver in the range of the guidance that we have given out. Does it answer your question, Claudio?

Yes. Thank you.

Okay. Checking again for additional questions, none so far, but giving a last shot out. Okay. It doesn't seem so. But in any case, you can always reach out to us through the website and the traditional contact forms. So I see no additional questions right now.

Okay. Good. Perfect. So in case there are no further questions, we thank you very much for your attention today. We're definitely looking forward to see you again in 6 weeks from now for the Q1 results and wish you a nice afternoon. Thank you. Bye-bye.

Thank you.