Knaus Tabbert AG (KTA.DE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and a warm welcome to today's earnings call of Knaus Tabbert AG following the publication of the financial half year figures of 2025. We are delighted to welcome the CFO, Radim Sevcik, who will speak in a moment and guide us through the presentation and the results. [Operator Instructions] We're looking forward to the results. And having said this, Mr. Sevcik, the stage is yours.

Thank you very much, and good morning, ladies and gentlemen. As mentioned, I'd like to welcome you to the first half 2025 financial results call. My name is Radim Sevcik, and I'm the CFO of the company. I will now walk you through the presentation. And then as mentioned, we will follow up with a Q&A session as usual. Let me first update you where we stand with the program of strategic realignment that we've started at the end of last year. As you know, the program is, among other things, focused on our products and our sales efforts, on our cost structure and also on our balance sheet. In the past 6 months, the company has made very significant progress. And I would like to update you on the individual pieces of our focus. First, let's start with the topic closest to our customers, and that's our product portfolio and sales. As we promised in the model year 2026, we did, as outlined and reviewed and analyzed our portfolio. Our portfolio has then been decreased by about 30% from the prior models and layouts. And we also introduced selected new models. At the same time, we are focusing not only on 2026, but also on the future development of our portfolio. And we've also created a roadmap for ourselves internally, 2027 and beyond, where we are focusing very strongly on key customer segments, our brand differentiation and innovation of our products. Going to the second element of our realignment strategy, and that's the element of costs. The basic cost adjustment, as such has been largely concluded. As you know, across our fixed costs as well as across our personnel costs, we've taken quite significant steps that we reported about in our Q1 results call as well. But that does not stop there. We're making further cost adjustments and reviewing further cost items to then more selectively go and potentially cut costs or make adjustments in order to improve the efficiency of these cost items. These will all be implemented or are being implemented as we speak, and we'll keep on being implemented until the end of the year. When it comes to the costs related to our purchasing, the price negotiations with suppliers have been largely concluded for the model year 2026. What is now our key focus is making sure that within the portfolio review, that is ongoing and within the model year 2027 and beyond plan, we go ahead and develop products in such a way that will allow us to further review the portfolio of suppliers that we have with let's say, a strategy towards simplifying the supplier structure, simplifying the amount of variations that we buy from our suppliers, allowing us to potentially create additional synergies from better purchasing conditions. And thirdly, we do continue to review our processes in production and we're striving to achieve a higher level of productivity and efficiency in our production. And that should additionally lead also to certain cost savings, but these are more mid- to long-term gains. The last element I have on this slide touches the focus that we've had in the past months on our cash flow and our balance sheet. As you will have seen in the results or certainly on the upcoming slides, working capital has been a big focus of the management and the company as such. And we believe that the results, to some extent, show the efforts that have been made these spread across both inventories and receivables as well as working with our payables, which are relatively difficult to achieve, but we're also making progress there. Additionally, our CapEx program that has been mentioned already on a couple of our calls previously, has been cut down to making sure that the company does investments in things that are truly required either with a high ROI or simply replacement CapEx. The company is currently not expanding its production capacities. Now let's cover where we are with the market. I'm not going to dwell too much on these slides that follow this one and the next one. But I do believe that it's important for the overall context. As you can see, the market remains very strong. the registrations in Europe that you see on the left-hand side of the slide, split between -- on dark blue, you have the motorhomes and camper vans. In light blue, you have the caravans. The market as such of the registrations are slightly down by 2.1%, but if you then look into the segments individually, you see that the caravans are down by 6%, but the motorhomes and camper vans are actually up by 1%. And the position on the right-hand side, position of Knaus Tabbert on the market remains relatively stable. You see that we've gained market share when it comes to our caravan products and we have slightly lost market share in motorhomes and camper vans, but that's down to particular segments. And we believe that's pretty consistent with us holding a stable market position. If we move to the next slide, it shows a very similar picture. This slide is focused on the German market. And you can see that the development is equally -- a slight decrease in caravans, pretty much flat motorhomes and camper vans and a Knaus Tabbert market position that remains pretty stable. Now moving on to how that then reflects in our financial results. The company in the first half of 2025 has achieved a revenue of EUR 571.7 million. That can be split between the premium and luxury segment in the following way. The premium segment has achieved revenues of EUR 476.2 million and the luxury segment of EUR 95.6 million. EUR 71.9 million of that number of the EUR 571.7 million is actually inventory change, which I think you will have seen and you will certainly see on the following slide. As of the 30th of June, the company has had an order book of EUR 294 million worth. Moving on to profitability. The adjusted EBITDA achieved in the first half of 2025 was EUR 22.7 million, which represents an adjusted EBITDA margin of 4%. The relatively lower level of margin compared to historical figures, is down to 1 certain ongoing restructuring costs to a level of operating leverage in the sense that a decreased revenue has a certain accelerated effect on margin. And then thirdly, on -- related to inventory sales, which are done at a lower margin level. One more point I would like to comment on, on this slide is the adjustment itself because we're referring to adjusted EBITDA. The adjustment that we've made in this -- in the second quarter, i.e., in the first half of 2025 is of EUR 3.1 million related to an increase in provisions linked to the ongoing proceedings related to the vehicle weights. We can probably cover that in more detail in the Q&A if that's of interest. Now moving to the next slide and how our P&L results translate into our cash flow. You see that the company, as such, has generated EUR 70.1 million of free cash flow. That can be split between the operating cash flow starting at net income level, negative EUR 4.8 million, but then change in working capital of -- in aggregate, EUR 55.5 million and other effects which are predominantly noncash items, like depreciation and amortization, et cetera, of EUR 23.4 million. So overall, the operating cash flow of the company in the first half year 2025 has been EUR 74.1 million. EUR 4 million has then been to "spend" in our investing cash flow. And as such, the free cash flow generated was as mentioned, EUR 70.1 million. That is then being clearly used partially to pay our interest fees or our interest to our financing partners, and to a large extent, a predominant focus of ours, which is making sure that we decrease our level of leverage and the change in financial liabilities has reached EUR 60.9 million in the first 6 months of the year. Now let's look more in detail at the working capital and net debt numbers. You see that net debt wise, the company has ended the June 2025 at the level of EUR 274.1 million, that is a significant decrease to the level at the end of 2024. At the same time, you see the development in net working capital, which largely corresponds to the move in net debt. That is, I think, relatively clear also from the prior slide, but let's look more in detail on the right-hand side of the slide, you see the split between inventories, trade receivables and trade payables. Inventories have decreased very significantly by EUR 94 million. That can be further split, and you'll see it in the report, ultimately, that our raw materials and supplies have gone down from EUR 104 million to EUR 88 million. Our unfinished goods are relatively flat, EUR 12 million to EUR 13 million. What has made a lot of change was the movement in finished goods, which have moved from EUR 169 million at the end of the prior year to EUR 89 million at the end of the second quarter. Let's then probably move on to the last slide, and I guess then we'll open it up to a discussion. The company has repeated its guidance for 2025 when it comes to our revenues. And there, we're expecting to achieve around EUR 1 billion in revenue for the full year. And we have further refined and narrowed down our adjusted EBITDA margin range to a range from 5% to 5.5% that we expect to achieve until the end of 2025. I think that concludes the presentation side of things, and I look forward to receiving your questions and the discussion.

[Operator Instructions] And we will move on to our hands up from Ellis Acklin.

A couple of topics I have for you this morning. I'd like to start out with maybe understanding a little bit better between the change in the EBITDA margin guidance towards the lower end of the range, if there are any particular factors involved in that or if you're just wanting to be conservative there. I'd also be interested in hearing a little bit about what's going on with the order intake this summer, how that's progressing. And then also maybe some insights on your upcoming engagement and the messaging to the market at the CARAVAN SALON in Dusseldorf. So I'll leave it at that for now.

Thank you. Thanks for the questions. You're touching on what I thought were the most important points in any case. So well expected. Point 1, the guidance. As you know or as has been the case for us, we've done a lot of internal planning to come out with the guidance at the beginning of the year. That guidance was 5% to 6.5%. At the same time, now we are in August. We effectively have 4 months to go in the year. We see our results for the first 6 months. We see the market feedback. We are planning our production until the end of the year et cetera, et cetera. And as such, we do understand where we're roughly moving or at this point where we believe we're roughly moving and we've visibly felt it was appropriate to make sure that we communicate to the market relatively openly what we believe is the updated guidance for the full year. The effect or the reason why the guidance stays, but it's narrowed down to a more narrow band at the lower 1/3 of the initial guidance, is down to the effects that I've just mentioned, which is we do see the market behaving quite well when it comes to end customer demand. We also see that our dealers are cutting down their inventories. We are cutting out inventories -- our inventories, liquidity is being generated. And so we're moving in a healthy direction. But at the same time, we work in a competitive market. Our competitors, while we don't have their direct numbers, they also have a certain level of inventories that they're trying to place into the market. That does have an impact on us. We also had certain ideas about our cost planning when we were putting together the initial guidance. Some of the costs we've overachieved and we were able to cut or to save more costs others. We didn't achieve quite as much. One of the topics that we've been very focused on recently is the level of productivity that we have in our production, which then translates into slightly higher personnel costs than we would have preferred. And as such, the end result is an updated guidance that we've now provided, which confirms the general numbers that we've given out at the beginning of the year, but narrows down the EBITDA guidance. So that's a little bit the -- on that front. When it comes to the order intake. So the number you see there is the number at the end of June. We have had a very successful -- certainly, based on the feedback we've received from the dealers, dealer days at the beginning of July here in Jandelsbrunn, it was part of our initiative to make sure that also our dealers understand that we're truly going back to the roots, and we also don't go crazy about spending marketing costs and other costs to entertain while we focus on our products and making sure we deliver for our customers. So they all came to Jandelsbrunn, they saw factory, and we had very, very good discussions with them. Right now, we're collecting orders. We've been relatively successful in collecting orders for what we call [indiscernible], which are the vehicles that the dealers then have in their showrooms. And now we're collecting further orders. The -- you will have seen it in the report -- in the risk section of the report, we do see that the market in general is relatively careful because I think the effects of the past 2 years, also on the dealers have been relatively tough and many of them are more focused on being careful in committing for a very long term. At the same time, Knaus Tabbert has signaled very clearly to the market and also to our dealers that we are not going to go in the direction of producing on stock. And as a result, right now, we are progressing with collecting orders. What has also transpired in our discussion with dealers, and that links a little bit to your third point is that some of the dealers are indicating that they would be very keen to see how the Dusseldorf messe or the trade fair goes. And I think there, we will have another update, certainly for us internally of where the appetite of dealers stands when it comes to stocking themselves potentially up for what could be a continuation of a strong market also next year. And that, again, ties to our third point messaging to the market at the CARAVAN SALON. That will really depend on how the CARAVAN SALON goes. We're making sure that we are well prepared. We believe that the products, the changes that we've made will be successfully received by the market. At the same time, the proof will only come during the CARAVAN SALON. And then after that, we'll be able to potentially update the market.

And we will move on to questions from the chat box. What cost adjustments will be implemented in the coming months? Will this affect the staff? If so, to what extent? And do the cost-cutting measures include the continuation of short-time working? If so, to what extent?

Thank you. Thanks for the question. So if the question is directed in sort of is there a wave 2 coming or something of that sort, the answer certainly at this point is no. We are now focused much more on selective measures, which are, let's say, as an example, right, we're not changing our company car policy, right? I mean it is a small example, but it's just to make sure that you understand that we're focusing not only on the big things, but we're now truly going much more in detail to really go cost item by cost item and using more scalpel rather than a hammer. And so that's a little bit what I was referring to when I was saying that we're reviewing the whole cost structure to make sure that the company becomes a bit more or quite significantly more lean than it maybe was before. Short-time work will still continue, but the extent to which we will use it will depend on our production planning, which is probably a rather obvious statement, but it's actually quite important because, as I mentioned, we're really focused on producing on order. And we will be adjusting our production planning based on the orders that come in. We do see a reasonably healthy development. At the same time, as I also mentioned, the CARAVAN SALON will be an important indicator for us, but also for our dealers. And as a result, if we need to be more careful in the production volumes, we will be using the tool of short-time work. If it transpires that the demand of the market is much stronger, we are -- it gives us the flexibility to then not use it and produce at full speed. That would not be my expectation, to be clear until the end of the year. But I'm just indicating that we very much find this particular tool is very useful for us to be able to steer the company through the restructuring that we're now going through.

And we have 1 more hand up from the person with the phone number ending 2809, you should be able to speak now.

This is Miro speaking. Can you hear me?

Yes, we can, Miro.

I have a couple of questions, if I may. And the first one is regarding the provision for the overweight issue, which you described in the report said you took another provision. May I ask in which line it had been booked and how much it was?

So it was EUR 3.1 million. That was the additional provision that we booked. The basis of that was maybe because I presume that would be your follow-up question to that was that we received some additional information from our legal counsel who is representing us in this particular topic. And on that basis, we made an additional provision. You will also have seen that we've adjusted the -- in the risk section, the risk in that particular element from significant down to moderate because based on certainly the feedback we currently have, we believe that the level of provisions that we have there right now is probably -- is the most appropriate. And we, at this point, do not envisage this to be moving too much anymore. But obviously, it's an ongoing investigation. So we will see. And then...

Was it booked in the other operating expenses because this line went up quite significantly?

It's into the other operating expenses.

The next question would be regarding the EBITDA seasonality because I mean given the fact that the EBITDA year-to-date is what it is. And usually, the seasonality is skewed towards the first half in terms of profitability. It seems to be hard to model even the lower end of the guidance, like the 5%. Can you please comment on the seasonality, what you expect from Q3 because I think it's also the holiday season and maybe also in terms of from which P&L lines, the improvement comes, is it truly gross profit in terms of material costs? Or are there additional effects to be expected from personnel and other operating expenses? Just to help me model, you know...

No, clear, clear. Well, first of all, we would not have been able to come out with the guidance that we did if we did not have sufficient backup for what we're guiding towards. But I do understand where you're coming from with your question. But again, you can rest assured that there is a robust analysis behind the guidance that we're now providing. When it comes to the seasonality this year, and I know it provides a bit of a difficulty to everyone. This year is a bit different in the sense that, as you remember, we closed down production until the end of January in our biggest factories. At the same time, we had to consume quite a bit of costs, some of them not provisioned for all of the various investigations that we had running in the company, et cetera, which impacted our results in Q1. Also some of the cost measures that we took resulted in a level of unproductiveness in our production, which is improving only over time, and that will have impacted our Q1 and Q2 results. You're absolutely right. Q3 tends to be relatively weaker. That's also driven by the fact that in August, we have a company holiday, so we're not producing. And then Q4 would then be the quarter where we would then aim to catch up some of the performance that might not necessarily be that strong in Q3. But the overall seasonality, unfortunately, right now is very much distorted by the effects of all that we've been trying to achieve here in the company in the past 7, 8 months. And as a result, the guidance that we're providing has a robust analysis behind it. And hopefully, we can go back to a more standard seasonality as of 2026.

Okay. And maybe another one, if I may. The personnel costs in Q2, was there any special provisioning, any special effect? Because costs went up. However, the number of employees went down. Was there anything special to report? I don't know some additional provisions or maybe you...

No, not really -- yes, I mean, it's also -- again, partially it's also -- and that's the question that was asked by the previous person was about the short-time work. right? I mean, that provides us with a certain level of benefit. So even though you see the amount of FTEs in the company at a certain amount, if we use less hours per worker, the cost items or the euro item will be impacted. And so it's really -- I mean, I would need to go 2 levels deeper, which is probably not the format of this call. to then explain to you all of the various effects. But no, there has been no particular provisions, no extraordinary items unless you consider kurzarbeit, so the short-time work, as an extraordinary item, which, to some extent, obviously, it is, which does have an impact on our personnel costs. But no, there has been no charges, no impairments, no provisions for further cuts or anything of that sort that would be material, right? I mean one person here or there, of course, but nothing material.

Okay. And another one, if I may. You did an excellent job on the net working capital management, the destocking, is there further room to do more of the destocking? Or will there, at some point, be needs to also restock again the level of operations ongoing?