Knaus Tabbert AG (KTA) Earnings Call Transcript & Summary

Hello, and welcome to the Earnings Call of the H1 Results for 2026 from the Knaus Tabbert AG. I also warmly welcome the company's new CEO, Thomas Nickel; CSO, Matjaz Grm; and the CFO, Radim Sevcik, who will guide you through the figures in a moment, followed by a Q&A session. And with that, I hand over to you.

Thank you very much. Good morning, ladies and gentlemen, and thank you for joining us today for the presentation of Knaus Tabbert's results for the first half of 2026. Today is also the first results call with our newly constituted Management Board. Before I take you through the financial performance, current market environment and outlook, I would, therefore, like to give Matjaz and Thomas the opportunity to introduce themselves briefly. Thomas, perhaps you can start.

Thank you, Radim, and good morning, everyone. My name is Thomas Nickel, and I assumed the role of Chief Executive Officer of Knaus Tabbert on the 1st of July. I'm pleased to have the opportunity to introduce myself today. I've spent more than 2 decades leading industrial companies through periods of transformation, operational improvements and sustainable growth. Throughout my career, I have held leadership positions across manufacturing, supply chain management, purchasing, sales, quality management and commercial operations, with a strong focus on operational excellence, commercial performance and disciplined execution. Over the past months, the first of -- as Chief Transformation Officer and now as CEO, I have worked closely with the management team and gained a comprehensive understanding of both the strengths of our business and the challenges we are addressing. Knaus Tabbert has an excellent foundation: well-established brands, innovative products and dedicated employees. At the same time, we continue to operate in a demanding market environment that requires disciplined execution and a clear focus on operational and financial performance. Looking ahead, our priorities are clear. We will continue to improve efficiency across the value chain, further simplify our operations and product portfolio where appropriate, maintain our strong focus on product quality and innovation and manage working capital with discipline. Consistent execution and cash generation will remain key priorities as we continue to strengthen the business. While there is still work ahead of us, I'm convinced that Knaus Tabbert has all the ingredients to create sustainable value over the long term. Together with Radim, Matjaz and the entire management team, I'm fully committed to building a stronger, more resilient company for our customers, our employees and our shareholders. With that, let me hand over to Matjaz, who will introduce himself before we move on to our financial results.

Thank you, Thomas, and good morning to everyone. I hope you hear me well. I'm somewhere on the road, joining this call for 10 minutes to introduce myself. My name is Matjaz Grm, and I joined the Management Board team as the Chief Sales Officer on the 1st of August. I started to work with Knaus Tabbert as external consultant adviser on sales, marketing and product topics since January 2025. So went through 1.5 years of a hard transition and a quick restructuring and improvement of the position the company was facing with. And now I'm glad to be part -- official part of the Management Board as a CSO. I'm bringing extensive experiences from the recreation vehicles industry. I was working for 15 years with Adria, which was part of Trigano. So started in 2008 as external consultant and then 2010 took the sales and marketing position in the company and drove it through to the quite good success, including the transaction with Trigano and the post-merger integration. I stepped out 2023 and, in the beginning of 2025, I joined Knaus Tabbert as external adviser, as I said. My focus will be strengthening the commercial position of the product portfolio of Knaus Tabbert group, aligning the products and the production more closely with the actual consumer demand and supporting the dealer network and gradually broadening our international sales base outside Germany as well. The current market requires quite a high level of discipline. There is still an intense competition, price pressure, margin pressure versus the weakened demand in the last quarter. It's not about generating the wholesale units and pushing them to the retail with a big discount, but really to create a solid consumer demand, a retail demand, which will maintain a strong dealer relationship for us and a good margin position. And my role here is to really define the right products at the right price that will bring the right profitability to the company. And I guess the first half of the year 2026 shows some signs of recovery with that. So this is a short presentation from my side, and I give word back to Radim.

Thank you very much. Thank you, Thomas, and thank you, Matjaz. Let me now turn to the financial performance for the first half of 2026. The key message from the first half is that profitability improved materially compared with last year, and despite the lower revenue and the market environment that became more difficult during the second quarter. Revenue amounted to EUR 503.9 million, a decline of 11.9% compared with the first half of '25. Unit sales declined by 8%. This development reflects primarily that prior year period was supported by the sale of vehicles that had already been produced in earlier periods. As you can also see, the total output has increased by 2.5% to EUR 519.4 million. The difference between revenue and total output is explained primarily by the inventory development. In the first half of 2025, inventories were reduced by EUR 71.9 million. In the first half of 2026, the change in inventories was positive EUR 9.8 million. Production in the first half was higher than in the low final quarter of 2025. This resulted in an increase in finished and unfinished goods, and work in progress and supported the absorption of production costs. It is therefore fair to say that the development in total output contributed somewhat to the improvement in profitability. At the same time, the earnings improvement was not primarily an inventory effect. We benefited strongly from the measures taken to adjust our cost base, lower other operating expenses and significantly lower the adverse effects from dealer insolvencies and the remarketing of returned vehicles compared with the prior year period. Adjusted EBITDA increased from EUR 22.7 million to EUR 36 million, and the adjusted EBITDA margin improved from 4% to 7.1%. This is tangible progress, and it shows that the measures that we initiated are having an effect. It is, however, important not to extrapolate the first half margin directly into the second half. I will return to that when addressing the guidance. The order backlog, if we move back to that indicator, amounted to EUR 340 million at the end of June, and this is 15.5% above the prior year level of EUR 294 million. At the same time, the backlog was EUR 114 million below the level at the end of 2025. This reflects seasonal effects, but also the more cautious ordering behavior of dealers as market momentum has weakened during the second quarter. The order backlog continues to provide a degree of visibility, but the conversion into revenue depends on production schedules, dealer call-offs, requested delivery dates and also the developments in end customer demand. Let us now turn to cash flow and the balance sheet. The group generated operating cash flow of EUR 27.4 million in the first half of the year 2026. We started with net income of EUR 11.5 million, and the cash flow bridge then includes a negative movement of approximately EUR 3 million from working capital and other operating assets and liabilities as well as approximately EUR 18.9 million of noncash and other effects. Investing cash flow amounted to negative EUR 5.4 million. There, we continue very strongly to manage our investment expenditure carefully while maintaining that spending required for our products and operating capabilities. Overall, this resulted in free cash flow of EUR 22.1 million for the first half of the year 2026. The cash generated was largely used for interest payments and the reduction of financial liabilities. Let me explain one point on the slide, which otherwise may lead to confusion. The net working capital number of EUR 195 million shown at the bottom is a point-in-time comparison with June 2025. The negative EUR 3 million shown in the cash flow bridge represents the movement during the first half compared with December 2025. That's why these are different comparison periods. It is also important to note that inventories increased by around almost EUR 19 million compared with the end of 2025. This was also the main reason why cash conversion was weaker in the second quarter of the year. Operating cash flow in the second quarter alone was negative EUR 5.1 million, and the second quarter free cash flow was negative EUR 8.4 million. So while we are pleased with the positive cash generation for the full first half of the year, managing production against actual demand and avoiding a structural increase in inventories will remain an important priority during the second half of the year. Net financial debt stood at approximately EUR 296 million at the end of June, which was EUR 22 million above the June 2025 number, but below the approximately EUR 309 million that we reported at the end of 2025. Now before moving to the market development, let me briefly address financing. The financial covenants applicable at -- on the 30th of June 2026 were complied with. The refinancing of the instruments maturing in June 2027 is of critical importance for the company, and it's an absolute priority for the Management Board. We have already started the necessary preparations early, and we are actively working through the available options. Our objective is to put in place a sustainable financing structure that would be appropriate for the future operating and cash generation capacity of this business. As you will understand, we will not comment on individual discussions with financing partners, specific structures or any intermediate process milestones. We will, however, communicate further when there is concrete information that is appropriate to disclose. For now, the key point is this is being addressed with the necessary focus and urgency. Let me now move to the market environment. The charts show, and we try to provide sufficient details so that the messages come out relatively clear. The charts show both the cumulative development for the current model year from September until June, but also the most recent development during the second quarter. This distinction is important. For the model year-to-date, the European motorhome market remained 3.7% above the prior year level. However, registrations in the second quarter were 14.6% lower year-on-year. European caravan registrations were 2.7% lower for the model year, while Q2 was broadly stable. In Germany, motorhome registrations were still 2% above the prior year model year level, but declined by 24.4% in the second quarter. German caravan registrations were 8.3% lower for the model year and broadly stable during Q2. The cumulative model year figures were supported by the stronger earlier months and by pull-forward effects connected with the introduction of the Euro 6e emissions standard that we reported in the last quarter call. The second quarter figures, therefore, provide a more cautious picture of the current underlying momentum. June, however, showed some signs of stabilization in selected categories. Dealers continue operating with shorter planning horizons and are more selective about the vehicles and delivery dates to which they commit. What is helping us is that the dealer inventory of Knaus Tabbert products has declined very materially from the peak levels of '24 and '25, and we continue to remain very disciplined. We do not intend to pursue, as mentioned by Matjaz, market share or wholesale volume at any price. Production and deliveries must remain aligned with actual retail demand, while targeted commercial measures can be used where they make economic sense. Now moving on to the outlook slide. Based on the performance in the first half of the year and our updated assessment of the market environment, we have refined our guidance for 2026. We continue to expect group revenue of around EUR 950 million. We now expect the adjusted EBITDA range to be within a narrower range of 5% to 6% compared with the previous wider range of 5% to 7%. The unchanged revenue expectation reflects the existing order backlog, our current view of order intake and dealer call-offs, and the production and product mix that we're currently planning for the second half of the year. The narrowing of the margin range reflects the weaker market momentum observed since the spring and the resulting need to manage production more cautiously. There are several reasons why the 7.1% margin achieved in the first half of the year should not be regarded as a run rate for the remainder of the year. First, we expect lower production volumes, which will result in lower capacity utilization and weaker fixed cost absorption. Second, the number of available production days is seasonally lower in the second half, including due to scheduled plant holidays, which we currently have, for example, now in our factories. Third, we intend to continue to align production closely with demand, and we aim to also work through the first half inventory increase. The range also reflects uncertainty around product mix, pricing, targeted promotional measures, and the timing of the full benefits from the ongoing operating improvement measures. We are not assuming a rapid market recovery in our forecast. It assumes that demand, pricing and competition as well as the broader macro and geopolitical environment do not deteriorate materially compared with our current assumptions. Our priorities for the second half of the year are, therefore, clear: disciplined implementation of the cost and productivity measures, flexible and demand-driven production, tight control of working capital and liquidity, a strong commercial focus on attractive products and sustainable dealer relationships and continued progress with the refinancing process. This brings me to the end of the presentation. Let me summarize the principal messages. We achieved a material improvement in adjusted EBITDA during the first half of the year, and the operating measures initiated are beginning to produce results. At the same time, the market environment remains challenging. This requires a cautious approach to production, inventory and commercial activity during the remainder of the year and going forward. The positive free cash flow generated during the first half is an important contribution, but the development in Q2 also demonstrates why working capital discipline remains essential. Finally, the refinancing process is of critical importance to Knaus Tabbert and is receiving the full attention of the Management Board. We have made progress, but the transformation is not complete. Our focus remains on disciplined execution and delivering the refined full year guidance. With that, I'd like to thank you for your attention, and we're now ready to take questions.

[Operator Instructions] And we already have 2 raised hands. Ellis Acklin you should be able to ask your question.

Okay. Can you hear me?

We can.

Yes, before I jump into questions, thanks, everyone, for jumping on the call and allowing us to ask some questions. And also, congratulations to Mr. Nickel, Mr. Grm on their appointments. Obviously, wish them all the success in their new roles. So 2 questions I'll start with. Just want to unpack a little bit further the change in inventories we saw in Q2. It was quite a positive swing after a couple of quarters of destocking. If you could maybe just provide a little bit deeper color on what drove the build as it relates to model year preparation versus maybe sell-through levels, and how much of that inventory you expect to be able to unwind in the second half of the year? And then as a second topic for now, I know you don't guide on this, but maybe just some indication on where you see the travel of direction for the net debt level by the end of the year. Obviously, that's going to be important in your ongoing discussions regarding the refinancing. So maybe just some comments on the net debt level would be helpful as well. So I will leave it at those 2 questions for right now.

Thank you. Thanks much. You're absolutely right. One of them will be an extensive answer, the other one will probably be, unfortunately, relatively short. But let me go with the more extensive one first, which is regarding the inventories. I think what should not be underestimated is that it's always what you compare to. Ultimately, this business has a certain level of seasonality. When one compares the numbers at the end of June to the numbers at the end of December, there is always -- one should consider that at the end of December, we don't have a fully running production. We also collect quite a bit of our receivables, quite a bit of our production has been stopped for a couple of weeks at that point, et cetera, et cetera. So there are effectively effects which are seasonal, which then result in the developments and movements. When it comes to the things that I believe make sense to explain and address, first of all, we have slightly higher level of material on stock for our production. That is driven by multiple considerations. Some of them are related to making sure that we do not end up with similar shortages that we ended up last year. So we have increased certain stocks of material for our production. But it's -- secondly, we also have a relatively higher level of unfinished goods. That is driven by effectively the same reason that leads us to increase some of our stocks of material because with some of our smaller suppliers, in this case, this does not concern the big ones, but it concerns some of our smaller suppliers. In particular, it does actually concern the luxury segment. We have higher unfinished goods inventories because of missing relatively small pieces that, however, prevent us from finalizing the goods. Now there are solutions. This is not one big amount of stock sitting there for months. It's a rolling stock. At the same time, it does increase a little bit the level of unfinished products that we have. And thirdly, we should also mention that Knaus Tabbert, as such, we are a producer, but we also own 3 dealers. And clearly, the dealer inventory is also something that is moving. We're consolidating those dealers. So a level of finished goods on the dealer balance sheet is also reflected on our balance sheet. What I should, however, address very clearly is the movement is not a reflection of any change of our strategy in terms of producing on stock or not producing on order. That has not changed. We will remain very focused on making sure that this strategy and this approach remains the guiding principle of our operation. So this particular development is largely seasonal with couple of effects that I will now mention as being a little bit more extraordinary. But at this point, something that we're actually quite actively managing and relatively comfortable with going forward. When it comes to the other question, net debt, you're right. We don't guide on net debt until the end of the year. At the end of the day, I think one can, however, say, from also what I mentioned about working capital, we are very carefully managing it. The seasonality you've seen in some of the prior years when one takes away the effect of corona or the whole situation that we had at the end of '24 and quarter of '25, the seasonality is a given. So one can take that into account. We're extremely careful with our CapEx, so we're limiting cash outflow in that direction. And when it comes to our profitability, the guidance that we provided until the end of the year is the one that you can take into account in calculating where we could end up by the end of the year. So I don't -- we don't plan for any changes in strategy or exceptional items that would strongly impact this approach to estimating where we could land.

There is another raised hand by Ingo Schmidt.

A warm welcome and best wishes to the new Board members in their roles. I would like to start with your product lineup. With the Caravan Salon coming up soon, what early feedback or customer interest are you seeing for your new models? And moving on to your operational margins, your adjusted EBITDA margin improved in the first half. Which cost-cutting steps are currently working best to help protect your profits for the long term?

Ingo, thank you for the questions. So when it comes to the general feedback on our product range, so far, we can mostly judge from the feedback from the dealers themselves. Because the way we introduce the product range, we have dealer days where we introduce them, and we gather feedback, and we also gather the orders from the dealers. That feedback has been largely very positive. And as such, it gives us some level of confidence when it comes to the model year that comes ahead. When it comes to end customer demand, there, right now, it would be too early to actually answer that question. We really need to wait until after the Duesseldorf show, which would be a key anchor for us to see how our products are being received by the end customers. So for that, it's a bit too early. But certainly, the feedback from the dealers and also the reaction of the dealers, when it comes to their orders, have indicated that when it comes to the new developments, the company is moving in what we believe is the right direction. When it comes to our EBITDA and what are the most important measures that would be improving our profitability, ultimately, I wouldn't want to really focus it on 1 or 2. It's always a combination of things. You need to work hard on managing your costs on the purchasing side. You need to improve your efficiency. Unfortunately, in our case, we also had to take relatively painful measures when it comes to reducing our head count and overall capacity. I mean all of those measures ultimately come into play. And at the same time, on the other hand, you need to very carefully manage your revenues and your pricing policy, making sure that you can generate the margin that you've built into your modeling. So it's really a combination of factors, many of which have a very, very high swing effect on our EBITDA. Right now, we believe we're on the right course, both on the pricing side, product side as well as cost side. But that's just the internal side of things. Then one needs to react to what's happening outside in the market, which is both the overall end customer environment and customer demand as well as the competitive situation, and that is something you can't really predict. So that we need to work with. And depending on how that develops, we might then need to further look into our measures internally, cost structures, et cetera. So there, we want to remain very nimble and very flexible in steering this company in the right direction.