Basler Aktiengesellschaft ($BSL)

Hello, everyone. Good afternoon. Ines and I are warmly welcoming you to our Q1 reporting and it's kind of a stellar reporting. But before we start, I have to hint you on our disclaimer that all the statements that we are making during this call are based on information we have at this time. There are forward-looking statements that by nature are subject to significant known and unknown risks and uncertainties. Let's start. We start, as usual, with an executive summary. I will after that hand over to Ines. She will do a deeper dive into our financials, our share development. And also the outlook that I will present at the end of the presentation. And then we have also enough time for hopefully lively Q&A session at the end of the call. Let's start with our executive summary and with the market environment. And first of all, it's worth to mention really that we are seeing a broader market recovery in many vertical markets. We see manufacturing PMIs increasing and they are in the major economies above 50 and we see a positive trend. The German industry for vision components grew in bookings by 20% and in billings by 9% in the first quarter, which is definitely a larger or a stronger growth than what was expected from the participants in this industry. We ourselves see as we have also high exposure to the Asian market especially a very strong development in semicon, consumer electronics, logistics and data center hardware production. And we also see obviously high competition intensity especially in China and Asia and we see also the U.S. tariff situation still unstable and also the geopolitical frictions rising. And so far, we see there was no impact on the vision industry especially of the Iran war so far, but I mean we will remain cautious for the second half of the year. On the FX side, the situation in Q1 was more pleasant than last year especially the dollar and also the Chinese RMB were a bit better on our side or were stronger against the euro. However, we still saw Korean won and Japanese yen pretty weak and further devaluating against the euro. We see a new phenomenon due to the strong demand. We also see starting bottlenecks in the supply chain and lead times become longer for many components and some of the components are short and already under allocation. How do we do in this market? Basically we are tripling what the German industry is showing; bookings 64% plus, billings 30% plus. So we clearly outperformed the industry with a very strong momentum and also this momentum has accelerated in Q1 and you have seen that we have a positive book-to-bill ratio. The highest growth area remains China, but we also see a more broader growth and also strong business momentum when we look at the order entries in all areas actually. Some financial highlights, but Ines will give you more insights. Gross profit margin significant improvement to 51.5%. Our EBIT almost tripled EUR 17.6 million, which equals a 22.7% EBIT margin. And the cash flow, I mean seasonal-wise is always a bit weaker and especially in the light of the strong growth and growing accounts receivables, at EUR 4.8 million. With regard to the organization, we see the company as projected. We more or less keep the organization stable. We here and there add some expertise. But in general you can expect from us and this is also what we have here now what you can see in Q1, we more or less keep the organization stable. Also the split is more or less stable. Compared to Q1 '25, there are some increase here in admin and decrease in sales and marketing. This is mainly based on or due to regrouping people in our sales organizations when they are working on the admin side. So what does it mean for the R&D quota? Actually it's going down so by and large 10%, but it's going down because the revenue is so strong. This means we are further also investing, investing roughly EUR 30 million also this year in new products and new technologies. Q1 is not, let's say, the most prominent quarter for new product introductions, but we have introduced couple of new innovations and products. On the GTC recently, we have shown our Basler Vision Simulator. This is an omniverse simulator of our products in order to enable our customers to save time when they are in the design phase and try to find the right collection of components to solve their problems. And also on the other shows, LogiMAT in Stuttgart and also the Vision Show in China in Shanghai, we demonstrated our new product or product systems; the TDI light scan system, Stereo mini and also a GMSL vision system or product system approach. With these innovations, we clearly move ahead or move further on our strategic journey from a single component company to a more product system-oriented company acting in different vertical markets. And we are also here making strong progress besides of the good results that we are demonstrating. This brings us to the financials. Ines, please take over.

Thanks, Hardy. So I'm pretty glad to be guiding you through the financials today. This even makes a finance smile a bit. So I'm reading through the lines here. So this is our distribution that we usually show and reading through the lines, you can see that EMEA and Asia held basically their share from the last quarter's distribution. That basically means that EMEA and Asia are growing with our average. You've seen the billings 30% up. So this is the story behind EMEA and Asia. You see also a shift between Americas and China. As Hardy already said, so China was our strongest growth region. In Americas, we had a slight decrease in the revenues compared to prior year. There's robust order entry looks a bit different. So we are also there in Americas and China really on the uptake. But here this is where the distribution comes from and we are expecting a little bit of a leverage out in the next quarter when we turn the orders. So this is basically the picture. I can remember when I was here 1 year ago so we guided you through and I said like don't expect the same picture in Q2. I may be repeating my story, but from a different angle. So what we've seen last year is that we came with a good order backlog from Q4 and we had a larger revenue than we had the order backlog. So this was also the story this year. So when you take a look at Q4 2025, we carried over around EUR 9 million into Q1 and we turned it around. But also especially in the last days of the quarter, we got a good order intake and here you can see even a higher order intake than the revenues coming in and helping us of course with Q2. So we see a little bit of a trend that the orders last us longer not by a big influence, but we also expect a good turn in Q2, but not exactly what we have seen in Q1 here. That was really a very good quarter for us. Coming to the gross profit and the gross profit margin. Top line is good, bottom line is better and it starts with gross margin. So here you see really the uplift from 28.2% in Q1 last year to now EUR 39 million and this is EUR 11.6 million that we just gained out of gross profit and we really passed through to our EBIT. Where does it come from? We said that the EUR 8 million to EUR 9 million was really coming from volume effect and we have about EUR 1 million to EUR 2 million is really leverage. So we did see our -- or you saw our employee number not rising. So we have had a good leverage also of our ops employees here. So this helped us. And we had also a little bit of an uplift from the revenue structure from ex rate impact. So it didn't get worse, it got a little bit better. So this is where we had really the impact here. And it's basically the same picture in EBIT because we made it. We passed from the EUR 11.6 million nearly everything through. So we have EUR 11.3 million more in our EBIT despite inflation going on et cetera, but we nearly have it. So that means we were losing a bit in the OpEx, but we wanted to hint you also that we are investing currently in automation and efficiency projects. So that's in the OpEx and will also be in the OpEx at least for this year and also basically next year. And we have selective hiring ongoing wherever required so that we don't further decrease our FTEs, but really have the positions wherever we really need them to generate the top line and our bottom line. So this is the overview. I think again hinting maybe to our EBIT margin stands at the revenue of EUR 17.7 million, which is 30% above what we had and now the EBIT margin of 22.7%, 12.2 points up. Also very good net income and the earnings per share of course up and also a good EBITDA. So I just it's above 27%, which is also in a range that we would like to see. So going to the cash flow. We have added to our KPI overview here the indicators for days in payables, receivables and inventory. Here something to add maybe for our days for the working capital. Our days of inventories are down to 82 days from nearly 100 days, right? This is now a direction where we don't want to have it lower, to be honest. but we decreased the inventory days here. We also had a little bit of a decrease in the days of receivables so we came from 59 days and now have 57 days. But you see of course the majority coming from the OCF from our operating results and a nearly steady ICF, which includes, by the way our acquisition in Alpha TechSys and the share price here that we had. And a very good free cash flow also for a first quarter where we usually have the outflows, of EUR 4.8 million. So this is the overview we talked you through. Maybe here to hint our net debt we were able to decrease. We have the net debt down to EUR 13.9 million. We are paying down our liability to banks while still keeping the cash steady in comparison to the quarter of last year. So overall, I think also from the balance sheet good overview. And this takes us to the share. So here no real news here, which is some bad news, but no real news here. This is pretty good news. We had the opening price EUR 15.32 on January 2 and we closed on May 6, EUR 23 so which is pretty much of an uplift. So really [indiscernible] I would say and gives us of course hope to reflect our picture. And with this, Hardy, back into the outlook.

Okay. Let's start with the outlook. Thank you, Ines. First with the assumptions so what do we expect for the remainder of the year. So after the numbers we are seeing and the macro trends, we expect the computer vision market to grow at least in the high single digits in 2026. For the first half year, most likely it will be in double-digit growth. We also believe and assume that there will be a broader industry recovery and the leading growth, however, comes from semicon consumer electronics, data center hardware and logistics applications. Definitely I mean we have to face that the trade and geopolitical conflicts will most likely rise. This is also concerning us even though we see no direct impact at the moment while the second half of the year becomes pretty difficult and harder to predict in the light of all these conflicts. So as we have a relatively short view of all the order books at hand for about 2 months, we can only project the second quarter, but the third and fourth quarter is harder to predict at the moment. We assume also currency volatility will be happening up and downs especially Korean won, Japanese yen, they are weak already; but we also need to keep an eye on U.S. dollar and on the RMB obviously. We also believe the supply chains over the course of the year will further tighten if the market stays that strong. So it will definitely be challenging and here and there we also will see bottlenecks that might constrain a certain revenue contribution in a certain quarter. And we also believe the competitive intensity will stay high especially in the Asian region. Under these assumptions, we recently -- 2 days ago we increased our former guidance and the former guidance was given out shortly after the Iran war has started or the conflict started. So we were pretty cautious. And then we had a good March. We had also a good semi April. So this is why we are confident to increase our revenue guidance from formerly EUR 232 million to EUR 257 million formerly and now we increased it to EUR 247 million to EUR 270 million. And this also means as we keep the organization size more or less stable making this happen, this would mean on the EBIT margin side also an increase from 6.5% to 10% EBIT margin before now to 9.5% up to 13%. So this is a significant step, we feel confident to get there and this would also bring us a much closer step obviously to our midterm guidance where we projected 1.5 years ago to realize roughly EUR 275 million and at least 13% EBIT margin by 2028. So let's see how this year will go. We will concentrate first of all on this year; but we are well on track obviously to our midterm guidance. You have seen the China exposure. So this midterm guidance is given in the light that the China market will stay open to us. But the recovery that we were anticipating in this midterm guidance is starting to happen now in 2026. With this outlook, we come to the end of the presentation and we are very happy to enter our Q&A session. And our operator and colleague, [ Jan ], will give some information how to do it.

As always, you can ask your questions in 2 ways. You can raise your hand with the Webinar channel and I will hand you through in that case. The second option is that you just simply send your question via the chat, I will read it out. So I think I have the first question from Lasse.

A few questions. The first one is one of the markets you mentioned that's doing better is consumer electronics. Could you shed some -- I understand the whole the semicon and AI hardware business I think the trends are clear. But in consumer electronics, I mean what is driving the better growth there? Is this sort of customers upgrading some of the production infrastructure that they built 3 or 4 years ago and haven't touched since COVID or is there anything else that's going on there, changing form factors in devices or anything else? Maybe we take them one by one. Maybe that's easier.

Okay. Makes it easier for us. So the consumer electronics sector is mainly driven by what we are seeing about 2 factor. One factor is new devices, but this is not only new phones, but it's also about new devices in earpods for example or other wearables. And the other topic that we are seeing is that after the backlash in COVID, we come out into a situation where more people start to buy into these consumer electronic goods again and the demand is rising. So this is also what you can see in the annual reports of the consumer electronic companies. And this is causing some further investment in capacity and also causing willingness to invest also in new devices and production capacity of new devices.

Okay. Understood. And then the second question is on you referenced supply chains a few times. Is that also -- can you explain sort of which components specifically you're starting to see shortages or tightness in? And this question to some extent relates to the outlook as well because when we now look at the outlook, assuming you have good conversion of order intake in Q1 into revenues in the second quarter which you do typically have, it does mean you're still guiding for quite a bit of a revenue and margin slowdown in the second half. So is that largely related to the supply chain or is there anything else going on?

Yes. So with regard to the materials that are shown or the situation on the supply market, I mean in most of the cases at the moment we only see longer lead times on the supply chain and also our lead times increase a bit towards the customers. So this is why also customers start to enter their orders a bit earlier and we have also to order a bit earlier the material. However, there are also some short materials. I mean there is obviously the memory market. I mean it's in the press all over. And we also see shortages on PCBs at the moment because the PCB manufacturers are also trying to allocate the capacity where the big business is and this is AI at the moment, AI-related hardware. And last, but not least, we also see specifically for the vision market also as the demand is pretty good, shortages on the imager sensor side. And altogether, this means for us much more intense management on the supply side. I mean we are in a premium position especially when it comes to specialized material for vision products that we have a leading position and that we are on the top list of the suppliers. But it's definitely a situation with such a growth that we are demonstrating here where we come to the limits of what is easily realized. This also brings us to the margin topic. Maybe Ines, you can add later some comments as well. But connected to the material, we definitely at the moment at least anticipate a bit of higher input prices due to these shortages that we are seeing and also our, let's say, progress of improving gross profit margins by renegotiating materials. It's also not the easiest time at the moment to get back to our suppliers and have a strong negotiation level. This is 1 point from the margin and maybe you have some more, Ines.

So you've seen our gross margin now being at 51.5%, right? But we forecasted or we did a scenario where it's easily possible to be even at 46% or even a little bit lower. So depending on the input prices, also depending on lower volume that we are seeing. So you have quite already from the gross margin a big lever. Of course we would also try to hold with OpEx investment against that, but it's definitely possible when the top line slows down that we also have a hit from the gross margin. So you see, I would say, a cautious or a more cautious approach to H2 and we are of course looking forward to manage also the expectation that we are internally having and combining it with the challenges that we see.

Okay. Understood. And then final question, I guess going on from what you're saying about H2. How is I guess the momentum been coming out of the first quarter? Have you noticed sort of a 1 big order intake quarter and then you expect it to kind of soften through the year? I know your visibility is somewhat limited, but just to give a feeling of is this 1 big quarter and then we kind of normalize or do you think this is a sustained kind of cyclical upswing because I guess generally PMIs are okay, but they're still not fantastic. So if those do come back, you should see a broader recovery. So I'm just trying to get a feeling of your view on that.

Yes. So Lasse, what we have seen is definitely if we look at the different months of the first 4 months of the year, we see definitely kind of an acceleration trend towards throughout these first 4 months. So we had pretty good order entries in March and also in April. So this means for us that we are definitely under the assumption that this is a broader trend. However, to this extent at the moment, I think it also starts to heat up a bit because there are rumors of supply chain constraints. Our lead times are increasing at the moment. So our customers buy a bit earlier. So there are certain, let's say, amount of extraordinary bookings inside. But in general, we believe the trends can continue depending a bit on the iron situation and the follow-up effects, but the market itself seem to be strong.

Okay. The next question, Malte Schaumann is raising his hand.

Just following up on the last discussion. Would you say that given the current positive trends early in Q2 that another quarter with more than EUR 80 million in orders might be possible or would you say that there was an accumulation of several positive effects that led to this high figure in the first quarter so that this appears to be very unlikely??

I think another quarter to this extent is possible, but not likely.

Okay. Then on the gross margin, would you at this point in time -- I mean you laid out that several scenarios exist. But at the current point in time, would you more or less confirm -- and we have seen the strong first quarter margin. Would you confirm more or less that full year gross margins are more or less expected at the level of 2025 or any deviation from that forecast already visible?

You mean on 2025 or the first quarter of 2026.

Full year '26 versus '25, I think in the last call you more or less said that gross margins should largely remain flat in the year.

So that also unfortunately depends on H2, right? So currently we're trending better. We had a good expectation for Q1, but we are a little bit better than also our internal expectation. But then again so that depends a little bit on the mix that we are having. So we had a very good order intake from Americas. When that's turning, that's usually helping just on the mix with the gross margin. But really it depends on H2. So if the volumes are down for the supply chain or market reasons. So that doesn't help because then we can't leverage anymore. If we have pressure from input prices, that doesn't help. So I would still say the expectation holds, I currently can't say that I would expect it way better than we had forecasted by the end of 2025.

Malte, we need to consider that we had a high turnover from China and the RMB was much better than what we expected. I mean the RMB was stronger against the euro. And also due to the high revenue, we had significant degression of our fixed costs in operations. Those 2 effects have helped us a lot also to significantly improve. And I mean the 1 effect is depending on the revenue side and the other effect I mean it's not really in our hands of the RMB situation. But I mean we have 1 quarter that was much stronger than what we expected so it gives us a good chance to improve the gross margin this year compared to last year definitely.

Okay. Understood. And is there 1 segment in the market that runs below expectations? I mean everything seems to be great, but is there something that is a bit weaker than this year?

Not on the vertical side. What we are seeing is -- I mean from the market trends, we are seeing definitely that the German market is below other regions and it's obvious it's because of the weak automotive and also automation industry. Fortunately, we have in Europe quite some business also outside Germany and within Germany, our business is not so highly exposed to automotive. This helps us that this headwind that other companies are seeing much stronger that you can't see it so much in our numbers.

Okay. Then on OpEx remained pretty stable in comparison to the quarters you have seen last year at around EUR 22 million in Q1. So what's your expectation then? You're adding some costs obviously here and there to cater for the higher growth for the next few quarters so progression throughout the year?

We expect selective hires as we mentioned and we also -- and this is considered in our guidance. If we are depending on where we are in this guidance, we also will have higher variable income. So this will increase OpEx and this is considered in our guidance already.

So the investments for the automation project, right? So you've seen from all the quarters, we expect or we had in Q1 the lowest share of OpEx from the automation project going on. So of course if we see the market cool down, there's always a way to stop something or to delay, but there will also be some increased kind of OpEx in the next quarters coming. But overall, it's not that we are jumping majorly I would call it. But of course we have to take care of the variable salaries that we have in there.

I'm also checking the chat and I see 2 questions from Bruno [indiscernible]. So one, I'm not totally sure what I get, but I just read it out. So since several quarters we had restocking, but now you speak about the electronic industry. Can you give product examples country by country so concrete examples of new demand for your products?

Bruno, maybe you need to add you mean our new products or consumer electronics products.

Okay. Maybe in the meantime, we give some time to in consumer electronics.

So in consumer electronics, let's say, as I mentioned earlier, what we are seeing is we see an increased offering from the consumer electronics companies in accessories, wearables around the smart devices. And we also see this being -- or the production capacity for those devices are increased. We also believe that new devices on the mobile side are being tested, but it's very secretive. So we have no insight, but we just see that we see more and more projects kicking in. On the demand of our products, what we are mainly seeing. I mean in this market, we sell mostly mainstream products. And in this mainstream product, there is a combination of Sony sensors with pretty high sensitivity and also the 5 gigabit Ethernet connectivity. And these products are already launched or we have launched them 2 years ago and the customer have started testing and building up systems and now these systems are deployed and this is why the revenue is ramping up.

So the next question from Bruno is can you give an EBIT margin guidance for 2026 and after?

'26, we have in the presentation so 9.5% to 13% I mean this is for 2026. And after, I mean so far we stay with 13% like our midterm guidance and we will see over the course of this year what we will do with our midterm guidance and keep you posted, but this will be at the end of this year or beginning of next year, not now actually. We definitely don't want to go below 13%. We want to keep 13% or increase. But to what level we need to see this is kind of the balance of our growth investments compared to profitability.

Okay. Perfect. I had a positive sign from Bruno so the question seems to be replied to. I am seeking for additional questions, but it doesn't seem so. So there are no additional questions at this point. So as always, you can send out your questions of course via the website if you have additional questions, but seems to be fine at this point.

Could I ask 1 follow-up? This is Lasse from Berenberg. One final question. Do you think are we already at the stage of sort of overordering? I mean you mentioned that there's maybe some extraordinary order intake. Are we -- I'm just thinking back to the last sort of upcycle where we ended up with a lot of over ordering and the whole supply chain became bloated, if you will. Do you think is it too early for that or I mean it's obviously hard to say, but generally your feeling on whether orders are genuine or not?

So I think with regard to the Q1 publication, I think there are very, very limited over-ordering if not even none in it. However, starting from April, we believe we are seeing overordering because there are some unusual patterns in the order behavior of certain customers so that we believe now with entering Q2, we are starting to see this phenomena and we definitely need to keep you posted when we report second quarter to what extent we believe there are those kind of overordering or exaggerations inside. In Q1, more or less fine.

And then just on the supply chain things side, how do you now -- I guess having learned from the past, how do you deal with that differently than you did? Are you accepting that you might lose some orders because your lead times are longer because you don't want to overorder from your own suppliers? Like how do you deal with those potential overordering?

We have more and more -- I mean it all starts with challenging the demand of the customer and flattening out in case we believe it's kind of overordering or pulling in to an extent where in some cases, we might even need to get kind of prepayment to know whether it's serious or not especially in the Asian region. And from the supply chain perspective, I mean we did this already last time. We are very close to our suppliers and we have to make choices. And I mean having seen the situation last time and being in charge of the operations still, I would be definitely a bit more careful this time in just ordering and try to do everything we can for our clients because I have seen that at the end, not all clients are valuing this at the end of the day if the markets are turning.

Yes. No additional questions popping up in the meantime. So I think we are good at this point.

Okay. Then we are at the end of the call. If there are more questions, don't hesitate to contact us. Ines and I are happy to meet you again 3 months from now. And we wish all of you a nice afternoon. Thank you. Bye-bye.

Thank you.

Thanks. Bye.