OHB SE (OHB) Earnings Call Transcript & Summary

Yes. Good morning here from Bremen. This is the Q1 earnings call of OHB. We present the 3 months results 2025. I'm very happy that you joined us. I hope that you have been able to download the data and the presentation and the 3 months report. I'm here with Marcel Dietz and Kurt is just joining us. He's coming in any minute. He's in the building, but -- well, maybe just in the hallway. And we have also Markus Moeller on the line, who is busy all around Europe, getting new contracts. So he is also on the line with us. I'll just, as always, walk you quickly through the slides, and then we have time for Q&A session. So maybe to start with a quick overview of OHB business segment overview. We did establish a new company, OHB Space U.K. in Bristol. That's a small company that we created, has already contracts as we speak today, it has 5 people working there, but it will grow in the next weeks and months and years. So U.K. is an important market for us. Other than that, you see that the overall division is very similar than it was before. The only notable change that we have implemented recently is that we have moved OHB Austria to the Space Systems division, which was part previously in digital, but the majority of work has now been more and more tilting to space and now our team in part is part of the Space Systems division. Just a quick overview of what has happened in the last 3 months. Most significant new order intake was the third CO2M satellite from ESA. We are working on 2 already since a couple of years, there was a third one acquired that's very important. This is the system that will enable Europe to monitor global emissions faster and better. There's Kurt coming. I just started a minute ago... So we're very happy about the third satellite there. Another very much strategic relevant contract was about EUR 36 million for the optical technologies for the next, let's say, generations of satellite navigation OpSTAR definition phase that we have signed. So that's very much promising. And obviously, we're working towards an implementation of an in-orbit demonstrator that we pursue. So we are very active also in navigation. Then we have the first data of our Arctic weather satellites that was launched some time ago, which was from OHB Sweden. Very important because we are planning to sign this year so-called EPS Sterna constellation based on the OHB Sweden platform. Data confirms that the quality is very good, and we're very happy about that. Another small satellite that we have launched this quarter in January is the GARAI-A satellite. It's a small satellite, also based on the OHB Sweden’'s InnoSat platform. So our product line of satellites in this category, 100 to 200 kilo is moving very fast. And again, Sterna would be the big step with about 20 satellites to come. In the other 2 segments, MT Aerospace had its second successful launch on March 6. Ariane 6 obviously launched first last year. Now this one was the first so-called, let's say, in the commercial operations, as they call it, it marks the start of commercial operations. We have a little expansion of our work share in French Guiana. So everybody is ramping up for the time to come that we will ramp up Ariane 6. So we're very happy to do this. And of course, the whole Ariane cluster, Ariane Group and all the subcontractors, including, of course, MT Aerospace are ramping up production because there is a significant demand, especially also institutional significant demand in Europe for Ariane 6. Rocket Factory had a busy first quarter. Everything has been completed in terms of regulatory preparations for the first flight later this year. We're working -- we have -- by the way, also, we had a management change at RFA as a new CEO since a couple of weeks. Professor Indulis Kalnins has joined us, and we're moving ahead quite fast there. In terms of digital, a lot of progress has been done there as well, observation, downstream products, but I don't want to go into detail on that. There's a nice report on that in our Q1 printed or not printed, but in the long version of our Q1 report that I just saw last night before it was put online. The development of order backlog, you see here at the end of Q1, we were at EUR 2.3 billion. I believe it's even higher now because in April, we have signed significant contracts. So I guess, good is nodding and maybe I don't want to take it away. But currently, as we speak today, I guess we're at a EUR 3 billion threshold. So order intake is very good, but we'll talk about that later. So we're quite satisfied that Markus and his team have been able in the last months and quarters to ramp up the backlog. Here are the numbers of the first quarter. So as of the end of March, you see obviously the backlog I just talked about it. Total revenues have been up to EUR 242 million. The reported EBITDA is at the same level as last year with EUR 19 million. Adjusted EBITDA is 10% up EUR 22 million. And you see the other numbers going down. So a slightly increase in net profit and earnings per share, but also a slight increase in headcount over the last year, another 5% increase of the team altogether. I think now as we speak of today, we even have 3,600 I saw in the most recent presentation from HR that they are now putting [indiscernible] . So we must have been a very busy hiring in April going on, but that's normal because I think a lot of people started at April 1. So this is moving upwards aggressively. Key figures here. You see the comparison of the last 5 years, the financial key figures in revenues is an increase. The reported EBIT and EBITDA is flat, but we saw the adjusted EBITDA, which obviously is still a difference from EUR 19 million to EUR 22 million. So we have EUR 3 million of one-offs still related to the improvement program, up to [indiscernible] program and stuff like that, but we can go into this later as well. Here, you see the reconciliation of last year from the EUR 19.3 million up to EUR 20 million adjusted EBITDA. There was just transformation cost of EUR 700,000. And this year, we have a total of EUR 3 million from EUR 19.1 million to EUR 22.1 million. That's a 10% increase compared to last year. Our outlook, we just confirm what we have said since quite some time. This is the same set of numbers that we had at our Capital Markets Day in January. We expect EUR 1.2 billion total revenues this year with a margin of EBITDA 9% and EBIT 6%. And then you see the increases in '26 and '27. So we're very optimistic. I'll talk about that briefly when I looked at the other chart, order intake over EUR 2 billion. Group order intake is going quite well. The areas where we are strongly looking for in the future, as you can see is in the past years, but also in the future years is the dark blue observation we see very strongly, especially next year, but also then '27, we had a significant order intake in science this year already. Then we are expecting SatCom and navigation to be significantly up next year. So this is a very strong, let's say, growth over the years. If you look back to 2021, all the way up to now where we are. For '27, we are not sure. This is just the number we plan, might even be more coming. And I don't want to go through all the points on the right side, but obviously, observation, SatCom, Science also launches. And the digital business is strong, and we're benefiting from growth in all these areas. So this already concludes a quick run through the slides. We have -- our next big event that is coming up is our Annual General Meeting on June 12. This will be a digital annual meeting as we had it in the last years. And the next quarterly result will be on August 7 with the Q2 results. And then, of course, November 13. We'll conclude the numbers within this year with Q3. So this was very fast. I think maybe I was a bit too quick, but Marcel is nodding and he's happy. So we're opening up the Q&A session. And as I said, we have Markus on the line. He's not on the -- in this meeting room, but don't forget also to ask him about the future. And of course, Kurt is ready to explain in more detail the numbers we have just seen. Thank you very much.

Thank you. As always, feel free to raise your hand digitally and then I will connect you as a panelist to ask your question or otherwise just post it to the chat, and I will read it out loud. Maybe we just give everyone some time.

Yes, let's just wait a little bit. I can only say that we are -- maybe some big picture things while you are thinking about your question or raising your questions. So don't feel that it's not welcome to ask. We're very welcome for you to ask questions. But obviously, now 2 days into the new government, obviously, we, as OHB, but the whole space industry in Germany is very happy about the fact that we now have a space Ministry, Dorothee Bar took over 2 days ago. She's in charge for science, technology and space. So this is a very significant, let's say, upgrading of space affairs in Germany. And we are very happy that we achieved this. Just keep in mind that a couple of months ago, early December, the European Commission for the first time, created a commission portfolio for Defense and Space. So space overall has been significantly increased for our main institutional customers. And of course, this year, in half a year, in November, we will have here in Bremen, the ESA Ministerial Conference 2025, Germany, of course, being the host new government, of course, at that time, being, let's say, well prepared to implement the new strategy. We're very optimistic. What we saw in the coalition agreement is that there is the plan articulated that Germany will increase the investment also in ESA. So overall, let's say, all around, we're very optimistic. We see, of course, also defense as a very important part. So there are many, many initiatives, many small companies, big companies, new entrants, companies from other areas, companies from other countries. I think what we see is a very active space industry because there is significant demand, institutional demand from space, let's say, interested users. That is very good news for OHB, and we are welcoming, of course, all the new companies, all the start-ups, the new space companies, we are welcoming all the other companies and players to build this marketplace up as we see it, for example, in the United States, where the space is a very, very significant big growing industry. And yes, of course, we are optimistic. But also Europe and Germany, especially in the next years, will clearly have a growth path in their space activities.

In the meantime, I added Henry Wendisch from NuWays as a panelist to ask his question.

And it was -- the answer was already given by Marco just now because I wanted to ask how the politic change is seen by you. So you already gave that answer. So my question has already been answered. Yes, that I think I can mute off again.

Yes, I can only confirm that I find this very significant. Over the last decades, we were always, obviously, with new governments coming in fighting. And obviously, this has to do with geopolitics. Obviously, it has to do with the consequences and the reaction to the war in Ukraine. Obviously, it has to do with the changing attitude of the new U.S. government and some of these security-related aspects with regard to Europe. So yes, I see that Germany is investing heavily. I see that Germany clearly looks at space as an absolutely necessary infrastructure. So -- and as you all know, Germany has changed -- still the old parliament has changed its constitution that defense spending is not above 1% is not accounted against the debt rules anymore. So there is also money potentially available. So these are good times. We are growing. We're hiring people. We have lots of meetings internally to see where we can see people, where we can find people, how we can build up teams, how we can expand teams. And I'm sure what I'm saying is true for everybody in the German and European space industry. So I think these are very good times for us. This will be a very good year 2025.

I can't see any further questions. So...

There was a comment maybe from -- this was just...

No further...

I don't know if there are any comments from Kurt or Markus because you also are in the call, and it feels a bit strange if you don't say anything. So I don't know if Kurt or Markus have anything to add.

I can only confirm that we are on the growth path again, really back on the growth path, and we will have a good year in terms of order intake and also hopefully in terms of profitability. And we really have an extremely good outlook concerning future order intakes in the next -- upcoming this year and also in the next year, obviously. And so the perspective of our company is pretty good.

So Markus, now we talked already your order intake rep. So now you have to say a few words strategically how you look at the industry, how the industry might reshape. I don't know if you can add anything on that, Markus.

Sure, sure. Happy to do this. So obviously, there is a base demand that is increasing. What we see is like the demand on the military side that actually picks up, and that has a reflection in our numbers, too, as we anticipate that in the numbers that Marco has shown, we have at least 1/3 of this for customers in the military, specifically, the German military. And the outlook is that with the oncoming projects that the share will certainly also increase just because we are -- with the technologies that you've seen in Earth observation in particular, which is our strongest domain set for the dual use, civil and military. So I think we've been well positioned on that one. And hence, the investments that we will do in technology to enhance the instruments on earth observation, but also the treatment of data coming from those instruments in our digital unit will be one of the investment focuses that we're making in the future. And that's in line with the strategy that we've presented in '23 and reiterated in 2024. So one of the pillars where we always have said we will increase the share of military. Two things. This is an important year also because we're heading into the new budget cycle of the European Space Agency, obviously, still the most important customer that we have given also the affiliates in the countries that we are in Europe. So on that side, we also see some very positive movement that there will be a significant subscription specifically from our home country in Germany, reinforcing the positions that you have seen. And we will have also a, I would say, strategic roundup with the national agency here in Germany on how some of the national budget can complement the general investments that are being made on European level. So we see that strategically, actually, the customers have a much better view and alignment on what they want to do and how to better use the funds that they will ink by end of this year for the coming 3 years. And that's one of the reasons why you've seen the EUR 2.3 billion in 2027. There's a certain uncertainty, not because there's no business, but because we're waiting actually for those decisions to materialize and then update what it will mean for us. We've been in a long-term dialogue with those customers since November 2023, by the way, also to shape those discussions and the investment areas that will help us. Last point because we shouldn't forget what is happening also beyond 2030. So we have to prepare this company also for larger markets that we believe will have significant returns in the 30s of this year, the century. And that's where we're looking strongly into exploration. And we have, I would say, 2 areas of focus. The one is LEO infrastructure, transportation and refueling one, which is for us a step then to the bigger picture, which is the moon. And we have developed and are developing a an OHB vision on what Europe can do on the moon, good dialogues are ongoing. We have signed already the pre-contract for the moon lander, Argonaut last year, and we will sign this contract actually in H1. So we're part of the infrastructure portfolio that is being built to be able to go to the moon. And what will add to this is a discussion what will we do first on the moon, and that goes into 2 directions. It goes certainly on humanoid missions, so robotic missions on the moon because we believe that is very efficient. And the second one is resource detection on the moon. That's a little further out. That's not yet in the figures, though the lander is already included, and that's a large contract of EUR 130 million. But that's the strategic outlook that we need to build to set the company for stronger growth beyond 2029.

Thanks, Markus. I just look again to Marcel. Any further questions at this point? If that's not the case, obviously, you're all invited to contact Marcel or Kurt or myself or Markus directly, if there are further questions to discuss because space is the place to be. And if not, I hope to see you all again then at our Annual General Meeting on June 12. So I conclude this call. And again, thanks for your interest in OHB and the interest in space. And we will put this call, I think, also, let's say, online. And again, thank you for your support. Have a good day here from Bremen. Bye-bye.