Bystronic AG (BYS) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Bystronic AG Half Year 2026 Results Conference Call and Live Webcast, followed by a Q&A session. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Domenico Iacovelli, CEO; and Javier Perez, CFO. Please go ahead, gentlemen.

So, hello, everybody. Even from our side, a warm welcome to our half year results for the year 2026. Javier Perez, our CFO, and myself will lead you through the presentation. I hope you all can see the presentation. I think everything should work. So, we will start with a business review and which will be presented by myself. Javier will present the financial review, and then I will give an outlook on how we see the year, and then we will start the Q&A session. Before we start with the business review, please take a minute to go to the disclaimer. I will read it in parallel, and I'm a slow reader. But once I'm done, I will go to the business review. Okay. Let's start. What are the key figures for 2026? We had an order intake of CHF 337.7 million, which at constant exchange rates is 15.7% more than the previous year, which is, of course, good. But it includes, of course, even the new acquired business, which we call Bystronic Rofin for the micro machining area. That's why we even the organic growth. So the organic growth is basically our core business without our Rofin business. But even there at constant exchange rates, we had an increase of 3.8%. What was very disappointing, definitively, was the net sales, even though we had an increase of 5.4%, again, it includes Rofin, our core business shrunk by nearly 7% in the first 6 months of the year. And of course, this resulted in a negative EBIT of CHF 23.4 million, which is, of course, much lower than what we had in 2025, even though we have a positive contribution from our Rofin business. I'm sure Javier will elaborate much more on the numbers. But after the first read this morning and feedback, I want to shortly elaborate a little bit on what were the reasons for the very low EBIT. I mean, of course, as recognized by many analysts, some of the margins were under pressure, but this is not the main reason for this result in the first half year. I want to remind that especially in Q1, we had only a net sales of CHF 128 million with Rofin and on our core business, only of CHF 116 million. So it is definitely a topic of volume and this was mainly the reason why we made a warning a few weeks ago. The second one, which pays into the margin, we should not underestimate that we are ramping up our full or let's call it, our flexible manufacturing lines with more automation. And there, we have much lower margins because we have basically new products coming up. So this lower margin had an impact, especially in the first half of the year. And all of them together are ending up in this negative EBIT, which there are no excuses. It is bad, but there are reasons behind. And again, volume is definitively too low, especially in Q1 to catch it up. Okay. With that to, I would say, a positive sign, it's the order intake. As you can see here on this slide, it is the best order intake since back in 2023. So I think last time it was in Q4 2023 that we had this order intake. Even if I deduct the Rofin business, we're still around about on the level of Q1 -- Q4 in 2023. So it's a slight recovery. It's a positive sign. What are the drivers behind? There are many drivers, as mentioned already many times over the last few meetings we had and presentations. Of course, we are going more and more from a machine manufacturer towards a system manufacturer. So the lead to get the bookings is just taking longer, right? So you have more preparation time. Customers, they need more time to raise the money because if you have to make a down payment for CHF 300,000 for a single machine, it's easy to find the money. If you have to make a CHF 2 million to CHF 3 million down payment for a system, of course, even on the customer side, it takes a while to get the money funded. So -- but nevertheless, it's a very nice development. Americas had a very strong demand for both for single machines, but even for fully automated lines after even a weak Q1. Other regions had even a solid demand across product categories in Q2, but was very encouraging, of course, it's our Rofin business which is slightly ahead of the plan. And we see a very strong recovery, especially in semiconductor. All of that ends up in a backlog in a very strong backlog, which I do not remember the last time I have seen it. It's CHF 308 million of backlog after the first 6 months of 2026, which, of course, will support our higher net sales in H2. Last but not least, please take in consideration that Q1 was still impacted by a lot of geopolitical impacts, whether it was the Iranian war, a certain uncertainty because of the tariffs. So all of that had an impact in Q1 in order intake as well. Okay. So we continue with Rofin. I already mentioned, we had a very good contribution. It definitely meets our growth expectations. It exceeds a little bit the contribution in margin in a positive way. It is definitely aligned with long-term trends, especially in semiconductor and medtech. So especially semiconductor in Southeast Asia is really picking up. We see this in order intake, in the quality of the order intake. So we are very happy. It's CHF 35.5 million after 5 months. As you remember, it was a USD 100 million business, around about CHF 80 million business. So 11 months, we have to be above CHF 70 million to be basically on track. Net sales, the same. So we are very happy with this development. And what we have to say that the integration is on track despite some challenges, which Javier will explain later on when he shows the balance sheet, but nothing which cannot be solved. So even here, we really do believe that we are on track, and we can strongly feel that we have the same DNA, and we see already synergies coming up and huge opportunities. So what is very, very important, I mentioned before that our order intake in Q1 was weak. Q2, it was much better. And due to some reasons, one of which definitely our system business, our integrated lines or flexible manufacturing lines, which are definitely paying into megatrends. You know all of them, whether it's data centers. And when it comes to data centers, it's not the classic job shop, which was in the past, customer of Bystronic delivering high volumes. That's why highly automated lines are much more of interest for the customers here. And here, we were able to win some orders who are supplying into these trends. Semiconductors, which still have a huge CAGR of around about 9% over the next year, year-over-year is semiconductors. I mean here, we are now in with Rofin and all the others, which we still see a growth, right? So we are really trying to get a little bit away from the dependency we had in the past from agriculture, which is still down. And I think we see a lot of growth opportunities and the growth opportunities are coming with high-end machines, and I still believe that we have best-in-class machines, but combined with fully automated line. And the growth drivers behind it is clear. I mean, increasing pressure on manufacturing costs on our customer side. We're doing a lot of business in the U.S. skilled people, impossible to find. So we need fully automated line and this we see as a really driver for our business. We have to catch the opportunities and bring the right offering to participate on these megatrends. So we have to admit that our transformation, we started already 1.5 years ago, went quite well, but we have to accelerate it, right? We still have to further integrate our -- the manufacturing solution, increase customer productivity. So right now, the productivity doesn't depends anymore from a single machines but it depends from the end-to-end process a customer has. Expanding software and digital capabilities, I mean, this is anyway a key. I think even here, we are quite good on track. We still have some holes we have to close, but I think we are on the right track. And then, again, differentiate beyond stand-alone machines without keeping in mind that the single machines still can make the difference. But if you cannot feed a single machine, which is the best one, the customer does not have the benefit out of it. Then we have to win in growth markets. As I mentioned before, there are growth markets. So we cannot talk about the PMIs being positive over the last few months. It's driven by megatrends. We have to participate on this one. And further, we have to strengthen our vertical market approach, which we are doing. New applications and opportunities. I think here, we are really profiting a lot even from our Rofin business, which those develop applications together with the end customer, which at the end turns into solutions and new machines. Next, I mean, we cannot stop to expand our technology portfolio. We all know that we still have some missing products in our product portfolio. We have to work on this one by own developments, by acquisitions, by strategic partnerships and then we have to further transform how we operate. Again, we are coming from a single machine supplier, highly specialized, and we are going more and more into a project-oriented company. So you need a project management organization, you need process optimization. And what we want to further do even to reduce our cost base is centralized functional excellences with transversal vertical teams. So with that, I'm done with the business review, and I would hand over to Javier for the financial review.

Thank you so much, Domenico. And also from my side, a very warm welcome. Let me give you a couple of more insights on the different financial KPIs. As said, we are quite happy with the order intake of CHF 338 million in the first half. CHF 36 million out of this CHF 338 million refers to Bystronic Rofin, CHF 302 million to our core business, which, in fact, is also growth year-over-year by 3.8%. So also our core business was much better, especially in Q2. As said, Q2 was CHF 109 million, also much stronger than the Q1 with CHF 148 million. In summary, as the order intake is exceeding our net sales, our backlog is also higher compared to Q1, but also especially compared to the year-end, and it amounts to CHF 308 million. At Q1, we did report a backlog of CHF 291 million. This gives us also the confidence that the half year 2 net sales will exceed half year 1 net sales. So when analyzing, obviously, the full year, we can expect higher sales than calculating 2x the first half. Net sales was at CHF 303 million, CHF 36 million out of this referring to Rofin. And as we heard already, we were really disappointed about the net sales in Q1 with CHF 128 million, and this did cause the biggest portion of the EBIT losses that we did report with half year 1. Q2 was much better. Sales amounted to CHF 175 million overall, still organically a decline of roughly 7%, while including Rofin, we did report a growth of 5%. What was actually running quite well over the first half was overall in sales, our bending machines. We did recover quite a bit with automation and also our laser machines in Q2. So that also there, we expect a higher utilization going forward. Especially EMEA and China were strong overall in half year 1. And then also in Q2, we did see that especially Americas did gain some momentum in order intake, and it will be followed by net sales as well. EBIT was disappointing at CHF 23.4 million. And again, most of this related to Q1 with Q2 being much better following the higher sales. And overall, our bottom line net result ended at minus CHF 25.4 million. Our financial result was negative with CHF 0.6 million and the income taxes amounted to CHF 1.4 million. Then we got already a question from Torsten from Kepler asking the question whether we had non-recurring expenses in the first half. We call it one-off items, meaning costs that we did not plan nor expect and there were a couple of smaller items in different areas of CHF 1.9 million. Going forward, what do we expect for the second half? It depends on the single transformation initiatives that Domenico just mentioned, and we are evaluating different options how to realize also this transformation going forward. If we go to the cash flow and also in this round, Yes. The overall operating free cash flow looks ugly. There are some very good reasons why this was a little bit worse than expected, one of it being the inventories within those inventories, we do report all customer systems, which are almost finished, but not yet installed. So this did increase significantly versus last year. And also on the other side, we had receivables which were abnormal high, having a negative cash impact of minus CHF 31.4 million. And most of this relates to payments from the previous owner of Bystronic Rofin, which are committed but not yet released. On the positive side, there is from the higher order intake, we have also some compensating items, which are the advanced payments from our customers amounting to a positive impact of roughly CHF 12 million. Overall, our operating free cash flow ended with minus CHF 56.6 million. We are expecting -- going forward, we are expecting an improvement in half year 2. So we should not expect that receivables will stay on this level. So we can expect an improvement over the half year 2. If we go to the balance sheet on the next slide, we continue to have a solid cash position with CHF 257 million, a reduction versus the year-end of CHF 331 million. To consider is apart from the negative free cash flow, we did issue the purchase price for Bystronic Rofin amounting to the CHF 48.3 million. And we did get the full repayment of the Mammut loan, which had a positive impact of CHF 32.4 million. Related to the purchase of Bystronic Rofin, we had the goodwill amount, which we report also in our half year report of CHF 4.2 million impacting with the same amount our equity. Coming to this equity, the equity ratio is 66% at the end of June this year, coming down from 70% at the end of 2025. And with this, I would hand over back to Domenico for the outlook.

Okay. So basically, as you have seen, we will confirm our outlook. It is still a challenging market. Yes, it's true. We see some signs of recovery, honestly speaking. You've seen it even in Q2, especially in terms of order intake. But I don't want to be too enthusiastic on this. I just want to have a confirmation over the last quarters that it is not just a peak. I think we have the right products and the right strategy to enter in megatrends. And if we will be able to catch it, I see a slight chance that we can continue like this. So we confirm what we said in June. So basically, unfortunately, the hit in Q1 2026 was a bit too high to catch it up over the year. But as already mentioned by Javier, of course, we expect a much higher net sales already supported by our backlog. So basically, our H2 is already covered by the backlog. So it's on us, right, to catch the net sales. And yes, our conclusion, Bystronic expects net sales to exceed prior year level, of course, because of Bystronic Rofin, but even supported by our strong backlog. But our target to improve, and I think we said the statement was a step towards profitability based on the result of last year. I think this is difficult to achieve, and that's why we don't expect to improve compared to previous year on bottom line on a full year. So, and I think with that, we are coming to the Q&A session. I think facilitator will drive you through the questions, and we will try to answer whatever is possible.

[Operator Instructions] Our first question comes from Aurelien Sivignon from ODDO BHF.

First question on my side on the order intake on the legacy business. I mean, if we exclude the Rofin scope, order intake in Q2 were broadly flattish year-on-year. And based on what you have seen so far in Q3, do you see a gradual recovery in H2 or a trend, let's say, broadly in line with Q2 for the remainder of the year?

Yes. I mean, of course, that's our target. That's what I mentioned before. So far, we don't see a decline. Again, Q1 was extraordinary. A lot of uncertainty, and I'm talking about our core business, right? I mean, Iran had a direct impact, just orders were not placed, right? And I would say on our Q3 and Q4, we expect round about to be in line with that one, which would bring us on the order intake side we had anticipated for the year, right? Again, whether we can catch up what we lost in Q1, difficult, but not impossible. So for me, as long the book-to-bill ratio is positive, we are showing growth. And what we see now for the next quarter, of course, it's even a little bit holiday season, especially end of July and August. But even here, we see a stable activity like we had now over the last few months. So our project funnel is good and is much better than 1 year ago.

And a follow-up one, if I may, given the -- if we can call it, let's say the softer recovery, but could you consider more cost savings than you initially expected at the beginning of the year?

I mean, we are working on it. The fact is that our cost base is still too high for the volume we have. And as you might remember, when we did the restructuring, just as a comparison, right? I mean, I think in 2024, we had a net sales of CHF 331 million after the half year, and we had a minus of CHF 23 million in EBIT, right? And if I take 2026, -- and I take only the organic net sales, I think we are around about CHF 270 million with more or less the same EBIT. So what I want to say is the cost reduction we did on fixed costs in the last restructuring were extremely helpful because basically with more than CHF 60 million, we are more or less on the same level. If I take out the Rofin profit, a little bit higher, but still on the same level. But it is a fact, right? I mean we have to further work on our cost base. You have seen before this bullet point, the more towards project organization. We see a potential there to reorganize in a leaner way in how we execute. So we see there a potential. And then I will later on elaborate on the service question, which already popped up because even there, we can gain efficiency and we will definitely work on further cost savings on permanent cost savings for sure, but we are even already working on temporary cost savings such as short work and so on to further support the profitability in the second half of year.

Okay. Got it. And last one, if I may, on the working cap and the receivables that remain outstanding from Coherent. Can we expect this amount, I think it's roughly CHF 10 million, CHF 20 million to be collected in over, let's say, Q3 or Q4?

Yes. And we are talking about a much higher amount. I will let it to Javier whether we can mention this amount or not, but...

No, it's an amount which is above CHF 20 million. So also there is a question online what the cash situation can be.

Let's go -- so we have more than CHF 20 million outstanding already, but this is just given from the system. So we have transfer service agreements with Coherent, which is the seller. And so basically, they are collecting the money for us, I would say, till the end of September when we make the switch in systems but the cash flow from this legal entity is not coming to us. So this is committed money. We don't see that risk at all, but it impacts our cash flow. And yes, we see that in Q2, we will collect it. So maybe already in a few weeks, the situation will look completely different because we have already some flow over the last few days. So the problem seems to be resolved. It's a purely system-related problem.

The next question comes from Walter Bamert from ZKB.

Can you hear me?

Yes.

Perfect. So in Q2, you got close to breakeven at EBIT level. Now you were still missing the profits from those orders which take longer to complete. shouldn't come in a lot more EBIT also in the second half that you clearly get the second half positive EBIT?

I mean, Walter, you bring it a little bit to a point. In our business and with our revenue recognition, we have completed all the contract and in Bystronic even a little bit worse. Unfortunately, we have this shift of costs the second half of the year, which will be dramatically better on the bottom line. Will it be enough to basically close the gap? No, definitively not, right? But that's -- it's definitely our aim. So if the net sales comes, which we have in the backlog, then your assumption is going in the right direction. Whether we will be, let's say, already positive, it's difficult to say because, again, we have some new projects. We have even some prototypes in there, but the direction is definitively right, correct.

But not secure to close the gap from H1 or to close the gap to get to a breakeven in the second half?

To close the gap of the first half year. But I would say that for the second half of the year, we definitely should go towards, let's call it that here, let's be a little bit cautious towards breakeven.

Can you say how close you were to breakeven in Q2?

I can just say, listen, I think we have to be -- yes, I would say, listen, the big portion, which was more than 2/3, 3/5, 4/5, if you want to call it like this, came in Q1 and the rest came in Q2.

Next question comes from Remo Rosenau from Helvetische Bank.

The organic growth without Rofin was minus 7% roughly in sales. If I take the CHF 304.5 million from last year, this would result in CHF 21 million lower sales from the organization ex Rofin. And this is a difference of CHF 21 million, which resulted in a negative EBITDA contribution of CHF 16.6 million. And Rofin contributed positively. So that means that every CHF 1 million sales you lost created a loss of CHF 1 million EBITDA. Almost this seems like a very high negative operating leverage and does not indicate that there were any additional cost savings between H1 '25 and H1 '26. All the cost savings were before? Or do I miss something?

Domenico, I can take this, Remo. One additional information is probably that the minus 7% is at constant rates. If you take the amount in Swiss franc, actually, we are much lower with minus 12%. So if you compare apples with apples, it's CHF 205 million last year versus CHF 267 million this year. And then with an unequal distribution Q1 and Q2, I think this helps potentially a little bit to soften your message. Yes.

Okay. Understood. And then about the pricing situation. I mean, the competitive landscape has changed, right, the last few years and since COVID. So what is the competitive situation in particular concerning new players coming up from China, making your life a bit more difficult also outside of China. And what are the consequences on the pricing?

So maybe I know that we talked a lot about margins under pressure and so on. I think this is overestimated. Sorry for being very straight forward. Of course, prices are under pressure. We see a Western world where I would say prices are quite stable. I'm not saying not under pressure. It's a regional discussion. So when it comes to Americas, especially North America, I think we have very stable prices and we can even somehow mitigate the tariffs. So it's a good evolution. When it comes to EMEA, we see a strong aggressivity from our direct competitors, which are not Chinese. So I'm talking about our big competitors out of Europe, especially out of Germany being very, very aggressive. Do we go always with this aggressivity? No, we don't. So it's not that we fight for every deal and for every price because prices are usually not coming. So there, we see a pressure. Where we see a price deterioration, a further price deterioration, which in my eyes is somehow dramatic, it's really in the Asian market, especially in China, main market, the price drop is massive. This is something which in overall pushes down our margins. That's -- it's really something we see. And of course, I mean, we are talking about in overall, I would say, in EMEA, 2 or 3 percentage points. It's not that we have the big steps, but you have to imagine that in China, main competitors are dropping the prices by 20%. So far, we were able to mitigate it, and we did not have seen the necessity so far to go with this drop. But again, China Mainland, definitely extremely, extremely competitive. When it comes to competitiveness to -- from Chinese, we start to see a kind of a consolidation. So we don't see an increase of Chinese competition. So countries which became over the years, Chinese, like Brazil, they are Chinese. So there, we don't compete anymore with the Bystronic product, but we compete with our Chinese products and brands, right? So we see a kind of a consolidation, and we even see that some of the customers coming back from Chinese product to rather premium product and especially which is, in my eyes, a positive trend so far, fully automated lines are not in the focus of Chinese machine manufacturers or our competition. Even in China Mainland, basically, if we analyze our order intake, whenever it is a fully automated line, a smart factory, you name it. And basically, we are very competitive even with a strong China product. When it comes to a single machine, manually loaded and manually unloaded, Chinese are unbeatable.

Okay. How much sales approximately do you do in China compared to overall?

I have to calculate it one second.

Well, it's around CHF 40 million to CHF 50 million.

Usually, it's CHF 50 million in Mainland China, right? And around about CHF 50 million export from China to the rest of the world, but mainly APAC and so on.

Okay. And if you look at your geographical sales split and your geographical cost split, how much is the overhang still from costs in Switzerland versus sales? I mean you still have a cost overhang, right?

Yes.