Nabaltec AG ($NTG)

I start here. Yes, I hope everybody who joined us today has a good connection. I want to welcome everybody in the auditorium today for our earnings call on the Q4 figures and preliminaries on first quarter 2026. I also welcome my colleague, Gunther Spitzer, CFO; and [ Maxi Goodman ], who will then -- from U.S, who will then guide us through the Q&A session later on. Here, I have a short annotation. Please feel free to ask your questions after the presentation. We would recommend to do that and no chat because of coordination -- of an easiness of coordination here. Yes, then I will start with my introduction. For the ones who do not know Nabaltec, we are a midsized company in the chemical business in the chemical industry and one of the leading suppliers of environmental-friendly flame retardants, especially aluminas based on our 2 major raw materials of aluminum hydroxide and aluminum oxide. We are headquartered in the heart of Bavaria in Schwandorf. In addition to the main production sites, we have 2 production sites in U.S.A. with our Corpus Christi and Tennessee plant, Chattanooga. In 2025 financial year, the Group generated a revenue of EUR 197 million and an operating result of an EBIT of EUR 15.2 million. And this guides to an EBIT margin of 7.7%. With our 500 employees, we are active worldwide, and this reflects an export ratio in the year of 2025 of almost 77%. We are representative or represented with our sales department and distribution partners all around the world. We are operating the plant, as you can see since a long time starting in [ '77 ]. Now coming to the more crucial figures. As most of you know, we report in 2 product segments. Here, you can see the overview. It's Functional Fillers and Specialty Aluminas with corresponding revenue and EBIT margin. The growth drivers of the Nabaltec is primarily Functional Fillers, as you can see by the ratio of revenue with product areas of ground hydroxides, fine precipitates, hydroxides, which are applicable for the cable and wire industry as well as visco-optimized hydroxide and boehmites for major applications in lithium-ion batteries for e-mobility. In the specialty alumina, the smaller segment product segment, we have a product range of oxides, reactive aluminas and ceramic bodies, majorly developed for -- they further develop -- the development will initially be sideways due to the weak demand, as you can see from the refractory industry. If you come to the market segment Functional Fillers, you can see a very wide range of applications with examples where our products coming to. The biggest market with a revenue share of 56% in last year is, of course, the cable wire market, especially represented by data cables, communication and energy cables, which are currently the most important and show an increasing development in a tough market environment. The battery market segment in which our visco-optimized hydroxides and boehmites are used, we still see a differentiated picture. Demand for visco-optimized hydroxides continue with a strong rise, while the sales volumes for the boehmites remain low. If we go to the market segment, especially aluminas, here you can see our strongest field is the refractory industry and the second one is technical ceramics, which represent the major main markets, in the specialty alumina field. With a large number of applications for our products, we concentrate primarily on the European regions. In '25, the refractory segment, as I said, shares a total revenue of 46%. Demand for that comes from the steel industry and has stabilized at a lower level to last year. Now I want to switch to the highlights in the financial figures for Q4 2025. As you can see, the revenue in the fourth quarter amounted to EUR 41 million, which is a decline compared to the previous year's figures of 7.7%. Sales volumes decreased by 7.4%, and the average price per ton was almost at the same level as in the fourth quarter of the previous year. The operating result, EBIT decreased by 78.3% to EUR 1.2 million. EBIT margin was EUR 2.8 million in the fourth quarter of 2025 after 12.2% in the previous year, which was an exceptionally strong year. The sharp decline here in revenues and increase in energy and maintenance costs were the main reasons for the significant drop in the EBIT margin in Q4. Earnings per share amounted to EUR 0.05 compared to EUR 0.36 in the fourth quarter of 2024. Net debt as of December -- 31st of December last year shows liabilities to banks of EUR 19.8 million, which were offset by cash and cash equivalents of EUR 72.3 million as of the reporting date year-end. This brings the Group's net debt to EUR 18.5 million. I have to notate here, excluding the fixed terms deposit of EUR 15 million. Now coming to the next slide, which shows the segment of Functional Fillers with the Q4 figures. Let's start with the revenue. The revenue for this product segment decreased by 10.5% in the fourth quarter compared to the previous year's quarter. Sales volumes are 8.9% lower and the average price has fallen by 1.8% in comparison to last year, which was quite moderate. The sales -- the sharp decline on the revenue was unexpected and primarily reflects the short-term nature of our market and the market uncertainty in the moment. In December, in particular, I must say, orders placed by customers were canceled at short notice, which surprised us and hit us very strong at this moment in time. This was especially noticeable in our most important product area, the fine hydroxide, which is our cash cow. In addition to boehmite, which recorded a 26% decline in sales in the fourth quarter, the visco-optimized hydroxide product also saw a decline in sales after a very strong fourth quarter in the previous year. We come to the EBIT. The EBIT amounted in the fourth quarter at EUR 1.5 million compared to EUR 4.6 million -- which was EUR 4.6 million below the level of last year and significantly lower than the first 3 quarters of 2025. In addition to the significant decline in revenues, increased maintenance costs in the fourth quarter are weighing on EBIT in the product segment. Due to the persistently weak demand for boehmites, the product area was unable to make a positive contribution to EBIT at this moment. If you look at the CapEx, the CapEx expenditures in this segment amounts to EUR 5.2 million in the fourth quarter. Here, investments in increased capacity boehmite completed and capitalized at the end of 2025 as well as investments in expanding capacities of -- at our visco-optimized hydroxides were the 2 major project expenditure. If we come to the next segment here, this is our Q4 for the specialty aluminas. At 0.6%, revenues in the product segment, especially aluminas were slightly higher than in the same quarter of the previous year for the first time in 2025. However, we must point out overcapacities and weak demand continue to weigh on sales performance. Sales volumes decreased by 3.4% compared to the same quarter of the previous year. Due to an import -- improved product mix, the average price rose by 4.1% in the fourth quarter. The ceramic bodies area recorded a 6.3% increase in revenues compared to the previous year due to higher sales in the field, especially here catalysts and hydrogen applications. After the 2 quarters with the positive EBIT, the fourth quarter is negative again with an EBIT of minus EUR 0.3 million, but slightly improved compared to the same quarter of the previous year with EUR 0.6 million. We assume that hopefully, the bottom has been reached in this segment and expect a slight improve of the situation in the current year. Capital expenditures in this product segment amount to EUR 1.8 million in the fourth quarter. The largest part of this amount relates to expenditures for general overhaul of the rotary kiln, which now this cycle investment has been finished. As some of you might know, we had to revamp our 2 kilns in the plant, and we have finished this overhaul project. Now I want to hand over to Gunther Spitzer, who will guide you through the profit and loss statement, the balance sheet and the cash flow in the next minutes. Please, Gunther, go ahead.

Yes. Thank you, Johannes. Let's continue with the profit and loss statement of the Group for the fiscal year 2025. Our revenue in 2025 decreased by 3.2% year-on-year to EUR 197 million. Sales volumes declined by 2.7% compared to the previous year and the average price fell by 0.5% due to a change in the product mix and currency effects. The largest negative deviation in revenues in '25 was recorded in the boehmite product area with a decline of 37.1% or EUR 4.6 million. Overall, we slightly missed our sales forecast with an expected decline of up to 2%. Total performance decreased by 4.6% to EUR 197.4 million, while finished goods inventories increased by EUR 1.9 million in the same period of the previous year, they decreased by EUR 1.1 million in 2025. Capitalized own work increased total performance by EUR 1.4 million after EUR 1.3 million in the previous year. Gross profit amounted to EUR 103.6 million and was down EUR 3.5 million or 3.3% on the year before. Gross profit margin improved from 51.8% to 52.5%. The main reason for this were lower material costs compared to the previous year. EBITDA decreased by EUR 7.4 million year-on-year to EUR 26.8 million, which corresponds to an EBITDA margin of 13.6% after 16.5% in '24. The decline in EBITDA is attributable to a lower gross profit combined with an increase in personnel costs of EUR 1.2 million and higher other operating expenses of EUR 2.8 million. Other operating expenses include currency losses of EUR 2.1 million compared to EUR 0.9 million in the previous year and higher costs for third-party services, including maintenance of EUR 1.6 million compared to '24. Depreciation and amortization expenses decreased from EUR 11.9 million in the previous year to EUR 11.6 million in the reporting period. Accordingly, the EBIT margin amounted to 7.7% in the fiscal year 2025 compared to 10.8% in the year before. Functional Fillers continue with a double-digit EBIT margin of 10.4%, while the Specialty Aluminas achieved only a slightly positive EBIT margin of 0.3%. Earnings per share amounted to EUR 1.10. We proposed paying a dividend of EUR 0.29 for the 2025 financial year, the same as in the previous year. Now I come to the balance sheet at the end of December 2025. Total assets increased by EUR 2.4 million to EUR 300.7 million compared to the end of 2024. This was primarily due to an increase in property, plant and equipment of EUR 10.5 million to EUR 150.5 million, including assets under construction of EUR 28.9 million, reflecting our investment program in '25. Other non-current assets decreased by EUR 15.3 million due to the reclassification of fixed term deposits of EUR 50 million to other current assets. Inventories increased by EUR 3 million to EUR 50.9 million. This is a result of building up stocks of raw materials in the amount of EUR 4.3 million and a decline of finished and unfinished goods of EUR 1.3 million. Compared to the end of 2024, cash decreased from EUR 86.5 million to EUR 72.3 million at the end of December '25. On the liability side, equity amounted to EUR 158.3 million, an increase of EUR 5.1 million compared to the end of last year. The equity ratio is 52.6%. Noncurrent liabilities of EUR 123.5 million include provisions for pensions of EUR 30.3 million and bank liabilities of EUR 90 million. The average interest rate for bank liabilities was 2.5% in '25. Current liabilities decreased by EUR 0.3 million and include higher trade payables of EUR 1.8 million and lower tax and other liabilities of EUR 2 million compared to the end of 2024. A brief look at the cash flow statement. Cash flow from operating activity of EUR 15.8 million decreased by EUR 19.3 million compared to the previous year. In addition to the lower operating income of EUR 7.4 million, changes in working capital, in particular, reduced operating cash flow by EUR 4.9 million in 2025. By comparison, changes in working capital increased operating cash flow by EUR 5.8 million in the same period of the previous year. After deducting payments for investments of EUR 24.8 million, free cash flow amounted to minus EUR 9 million. The cash flow from financing activity of minus EUR 3.5 million includes a dividend payment of EUR 2.6 million. Cash amounted to EUR 72.3 million at the end of 2025. For the next slide, the preliminary figures for the first quarter and the outlook for 2026, I will give the word back to Johannes.

Yes. Thanks, Gunther, for your presentation and the financial figures from last year. I just want to jump in now with the preliminaries of Q1 2026. As you can see on this chart, we had compared to the last quarter of 2025, a quite good start. The revenue for the first quarter amounted at EUR 53.2 million, still representing a decline of 2.7% compared to the previous year's figures. Both product segments, Functional Fillers as well as Special Aluminas reported lower revenue in the first quarter compared to the prior year. The EBIT margin here was at 5.2% in the first quarter of 2026 impacted by the EBIT margin. EBIT was impacted especially by higher energy costs, particularly for gas, as you're all aware, with the situation of the Iran war as well as a rising depreciation and amortization due to the capitalization of assets. We still are in a high investment cycle at this point in time due to the construction of our major projects, fine hydroxides -- visco-optimized hydroxides and the [ finish ] of boehmites. These both had a negative impact on our EBIT in the first quarter of 2026. The detailed figures on the first quarter will be released or published May 21 in 2026. Now coming to the last slide, we still -- even we had slower start compared to last year, we will confirm our forecast for 2026. Despite the economic situation, we expect the revenue growth in the range of 4% to 6% for the year 2026 as well as on the earnings side, we expect an EBIT margin in the range of 5% to 7%. The lower EBIT margin in 2026 compared to last year with 27.7% is primarily due, as I said, to the higher cost of materials here in corporate with especially the higher raw materials and energy. In addition, due to the significant increase in depreciation and amortization, we were burdened due to this capitalization of various projects. Still, if we look into the order situation in '26 we see still a short-term order intake by customers and a high volatility because the markets are still very unsecure as the situation hasn't improved in Iran. But if we look at the customer feedback in the moment in time, there is optimism in the order demand, which gives us a good feeling for the next months to come in the second half of the year. That's why we also confirm our revenue and EBIT margin as just shown. Yes. Then we are just done with our presentation. And I would now go into the Q&A session.

[Operator Instructions] Let's proceed with the first question from Christian Sandherr.

Christian Sandherr from NuWays. First question is on the fourth quarter. Mr. Heckmann, you mentioned a lot of unexpected cancellations. Do you have any color on why that was the case?

Frankly speaking, it's really hard to say. Some people, I think, made a rigorous cash management and they just were destocking. Some others were just unsecure what happens in the next couple of months. And I think this is a mixture for the sharp decline. But a clear picture is not taken. These were just some sounding of some customers.

But were they cancelled or were they pushed out?

No, they were pushed out. Cancellation, as I said, a strong cancellation within was not seen. It was just the orders were not taken. There were no order incomes at end of November normally. You saw that it was just a weaker demand.

Has this changed in Q1 or do you still see short-term cancellations for no reason?

Not so strong as we saw in the last quarters. I think the order book increased again as you -- and I think there's more stabilization through the first quarter. So cancellations are not that high. Now of course, in the first, as I said, if you have a destocking effect in December, you have a stocking effect in the consecutive months. But I think when we look at the various -- the 2 product segments and also with various customers, there is a big improvement. Of course, it's not at the level of Q1 '25, but improvement is there, the trend is there. If you look at the sounding as well in the refractory, especially alumina sector as well in the Functional Fillers, especially visco-optimized as well as the cable and wire industry, we get quite a good response in terms of what the people expect. This gives us a lot of optimism, but still the order intake is still of a shorter range. Now we are at 6 weeks approximately, but we have a rebound definitely.

And then I have a question on the Cable & Wire business. So first one, Nexans, they reported their Q1 figures, and they were cautiously optimistic on improving demand from France, Italy and Spain, but they also highlighted data centers being a key driver. So there's 2 questions. Do you also see this increased demand from further European countries in Europe? And secondly, I'm also aware that data centers, you keep highlighting it as one driver. Is it possible for you to quantify how this demand has developed? So I don't know, does end applications data centers have growth in the double digits or is there a way of kind of putting a number on to this?

To answer your last question, frankly speaking, no, there is not -- we cannot exactly say if this grows by 10%, we grow by 8% or 15%. No, we don't have this visibility or we don't have this transparency, I must say, in the market. We see what you say the customers reflect to us that they are getting prepared to increase their volumes for this situation. As you must know in the audience, we have 2 kinds of customers. We have the compounders who sit before the cable wire manufacturers like Nexans. And we have Nexans who are also vertically integrated and buy directly from us and make their own compounds. So of course, if you talk to them, they can give you more transparency, but they are more -- don't disclose. They are just sometimes don't give you -- they give an orientation of what they publish, but not internal information. On the compounder, don't have a clear visibility because they always tell us, yes, we sell to the big [ lake ] were a lot of cables, but we see, of course, AI is very important in terms of building up infrastructure by all the server farms and so on. This is reflected, but clear figures, I cannot give you.

Okay. And then a question also on margins. So for the full year, you guide 5% to 7%. Q1, you had above 5%. And usually, the first and the fourth quarter are the seasonally weaker quarters in terms of margins. So what is baked in for the second and third quarter so that you have the 5% at the lower end?

It depends now on various components. Certainly, of course, if we -- and we expect growth in revenue, which means a growth in output, we will strongly grow by quantity than by price, definitely. We will improve our specific costs. We have a rigorous cost program internally, of course. By pricing, I think we have to very cautiously watch the market. I heard that in some industries, if the energy prices continue to rise that people will adjust it by pricing. Momentarily, we do not see that in the market or if the market is receptive. Our goal is more volume-driven, momentarily and improve specific costs as well as have a rigorous internal cost management so we can improve the margin. Of course, as I outlined already in the presentation, energy prices, especially gas hits us. We have 50% secured until the end of third quarter and with 50% we float, which hurts us in the moment a little bit. But all the other internal costs, we try to improve over the time now. And we saw some onetime effects in the first quarter on OpEx, which should be not appearing in the next quarters to follow. So there is the variance in also in the margin improvement.

5%, it's fair to say that it's a conservative approach, the 5%, the low end of the guidance range.

Yes.

Okay. And then I have one final question. This is on the visco-optimized products. Do you have -- I mean, you built up capacities now or you're still in the process of finalizing this. But do you have kind of a visibility on what customers are needing over the next 1 or 2 years? I mean it's kind of a similar story for now with boehmite, right? You basically started from close to 0. It's been growing quite some time. Boehmites, the demand has fallen off a cliff. So it's kind of insignificant in the overall sales mix now. And the question would be, do you have like a kind of a contractual visibility or anything like this that the visco-optimized products are in demand for the foreseeable future.

Before I answer your question, I would just give one more background information. The major difference between the boehmites and the visco-optimized lays where they are consumed as geographic reason where they are produced. As you recall, the boehmite went or goes specifically or is tailor-made for this separator. The separator manufacturing was always concentrated in Asia. It started in Korea and then it moved into China. And the separator is then going into the cells and the cells are sold to the OEM. So there are 3 steps from -- which we had to overcome. And everything was concentrated in China. And China, of course, put its hands on the vertical integration of all goods related to electromobility. Now with the visco-optimized, we go into the thermal interface modules, which is majorly gap fillers and the adhesives. The adhesives are produced directly at the source where the OEMs need it. So we are talking to the adhesive to the gap filler manufacturers and they go directly to the OEMs, OEMs are the assemblers. So we do not have this competition first out of China because the adhesive gap fillers are sitting in Europe. They are sitting in United States, they are sitting in China and in Asia. What we see momentarily, the major producers, and I don't want to name them, but roll out their capacities all over the centers of e-mobility in the world. That's why we have a quite strong growth momentum. Of course, we are one of the first movers with this particular products again in the market. And we will have a softening effect because we will not be alone in this world. But as I said, in the centers of consumption, especially in Europe, we see it now rolling out in the United States, and we see also we grow with the people in China. This is a different story because we do not compete within the supply chain, this vertical supply chain where the separator has to go to the cell manufacturer and the cell manufacturer practically demands what separator you want to buy where and then they go to the OEMs. Here, we are much closer to the OEM. and this is a big advantage. Of course, now coming to your question, we have a clear picture what the development will be as it reflects what the customers tells us. But at the end of the day, it always depends how many electrical batteries for each car are assembled because for each assembled battery, you need all these components for the thermal interface module. That's what we call TIM where we are applied to. It's a 2 digit -- a strong 2-digit rising market in terms of what we see on our dynamics. It will be a very big market in terms of overall needs because this is momentarily the best goods to apply for thermal management in batteries. So this is what we can see in the next 3 to 5 years. And of course, there will be always turn ways. But as I said, with all the introductory I gave you, I don't see it as we felt with boehmite. With boehmite, we had to really like compete into a market into China, which closed, really closed down its doors for people coming from the West. I have to tell so strongly, they protected their own market. This is not the case here because we are closer to the OEM and the OEM in the final stage judges which [ kilns ], which products I want. And so we are closer to the end manufacturing market. I think we are in a good position that the capacity will build up. We are just in the process by year-end, around year-end this year, we will commission the plant for these new products where we have then capacities of 20,000 tonnes to 30,000 tonnes plus extra where we can then really maneuver very well in this market. And the first mover has always an advantage in this market to quickly continue. And what makes me very confident and I cannot tell more that now we roll out also in other geographic regions simultaneously. We see that now that there is a multiplier happening. This was not the case with boehmites. With boehmites, we're always dependent in the geographic region. First, it was the Asia periphery and then it started more and more concentrated into China and the policy of the Chinese government then made the market to go in a different direction where we practically were kind of, I wouldn't say cut off, but limited in our actions. And that's the situation and the difference between the visco-optimized and the boehmites at this point. Any other questions?

We can continue with the next question from [indiscernible].

Just 2 questions from me. How much of the guided revenue growth next year is visible in the current order book versus how much from demand recovery? So what's the split between visible in the order book versus demand recovery? And then a second question, just on the slightly longer outlook. Do you expect your EBIT margin to go back to that sort of 7% to 9% range from '27, '28 onwards?

In terms of mostly will be -- growth will be coming from demand. And of course, some will come from more rigorous strategy that we grow our volume into certain markets. But it will be volume driven. On the EBIT margin, of course, we are now momentarily hit by certain factors which we have not -- we cannot influence, but we work on it. And if the price or the portfolio mixture is right where we say we grow stronger in the visco-optimized, perhaps we gain some momentum with boehmites again and especially the flame retardant fillers stay at a price level with a stronger gross volume, we will definitely improve our EBIT margin into that direction you recommended. '26 will be definitely a tougher year. We will see how long this conflict in Iran will last and if the markets ease, especially on the energy side. But for the years to come, as you recall, we have an objective to keep a 2-digit EBIT margin in the long run. This is our goal, and we want to push that in the right direction. Of course, we need a good product mixture with higher value-added products, but our portfolio is there and with a strong growth demand, especially for the Functional Fillers where we just outlined AI, cable and wire has a very good baseline here and even the consumers like Nexans indicate there a quite good scenario. I'm optimistic that the EBIT margin improves again over the next years to come.

I quickly follow up with a potential other one. You mentioned in the report that you saw pricing from China due to overcapacity, specifically in Turkey. Do you think that this is sort of going to go broader across Europe or do you think it will -- are you hoping it will stay more localized to Turkey?

It's a good question. As I said, I'm not a prophet. I cannot say this will not happen [ potentially ]. We see that people come here and there into Europe and Turkey is Europe. Europe was a play field. You have to look at the quality demands, certainly, which goods they attack, which level they attack. There are, of course, differentiations in quality and price on the one side. What we saw also and got feedback that they offer here and there, but then all of a sudden, they are not reliable on certain logistics on confirmations of pricing, they switch quickly. And this is not a policy the consumers in Europe or elsewhere like so much. It might work for really like the low-end quality products in various application fields. But for the higher end, you cannot afford to switch around. But as I said, it does -- I have not a clear no, they will not. Momentarily in Europe, we see them besides Turkey, nowhere else. Functionally, as I said, one customer, there was a call for Chinese, but that was not really happening. That's what I can say in the moment. Any other questions from the audience?

It doesn't seem like it. There are no further questions in the line. I think we can wrap up this call. Mr. Heckmann. Would you like to share any closing remarks?

Yes. Okay. As I said at the beginning, we had a good rebound compared of Q4 in Q1. We were not quite satisfied in terms of what we have expected for the first quarter, but it makes us optimistic and all the feedback what we get momentarily even in a tough situation, in the tough environment with all the geopolitical challenges we face, but I'm optimistic for the next 2 quarters to come. And we will see here that we are moving along our outlook or forecast what we have just given to you. But we have to do our internal homeworks, of course, and we have to stay close to the situation. Overall, as I said, with the troubled waters, we look quite optimistic into the near future. At this point, I would want to thank you also in the name of Gunther and you -- for this earnings call for the first quarter of 2026 and with our annual wrap-up for last year's report. And I hope we see you in the next publication then after we did our Q1 report. Thanks for the audience. Thanks for listening and still have a nice weekend for the Germans, a nice and longer weekend. Thank you.

Thank you very much. Goodbye.

Thank you. Bye. Goodbye.