PFISTERER Holding SE (PFSE) Earnings Call Transcript & Summary

Welcome to the PFISTERER Holding SE Publication of Half Year Report 2026 Call. The conference will be recorded. [Operator Instructions] Let me now turn the floor over to Johannes Lindento, CEO.

Hello. Good morning to our earnings call and a warm regard from the southwest of Germany, fortunately, not so warm any longer from a heat point of view than what it used to be a few days ago, but we think quite hot from the business performance point of view, and this is what we would like to talk to you about today. The presentation that we have prepared is structured into four different chapters. The structures are generally the same as in previous calls. In case you have participated, we will be giving a very brief introduction, in particular, for the ones who may be in the call for the first time. After that, we will be talking about the financial performance of quarter 2 and then also subsequently, this will be leading to information regarding half year 1 and the respective relative comparisons to the previous years. We're going to be sharing a few insights on our threefold growth strategy in Chapter 3, business highlights. And lastly, there should be remaining 20 minutes approximately for questions and answers that we will be very happy to answer to you. And if I kick it off and start with the introduction, Johannes Linden, my name. I'm the guy on the left. I am meanwhile, more than 30 years in the B2B industrial arena out of this more than 22 years, profit and loss responsible in a number of companies, amongst others, also listed companies. And I'm a co-CEO here in PFISTERER, and I'm taking care of the functional areas of finance and operations. And that gives me the chance to hand over to my colleague, who's sitting next to me.

Hello. Good morning, Konstantin Kurfiss -- everybody. I also have plus than 30 years in industry in various companies coming especially out of the, I would say, our industry we are working in electrical infrastructure. I'm more than 16 years here in PFISTERER, from 2005 to '13 and now from 2020 up to now. I'm also the co-CEO here and a Board member, and I'm responsible for sales and technology in the company. So welcome to our call.

All right. So if we take a look at the product examples, this will be illustrated on the picture in front of you. Here, we would see a typical transition from an overhead line. This is the wire cable type of element that you see in the upper half of the picture. And these overhead lines would be connected to an earth cable and/or a transformer station. And that's why we chose the picture here. This time, you see different products of PFISTERER, for instance, insulators would be illustrated here, but also terminations. And in the front of the picture, you see the person applying safety equipment of PFISTERER with which this worker can safely check whether there is any juice on the line, so to speak, whether there is electricity in the system or whether it's safe to be working on the system. we have -- and this is illustrated by the picture. We have products and components that can be found in the electrical infrastructure. And there, we are connecting the grid and the mission of PFISTERER of the team of meanwhile 1,500 people here in our team is to be the preferred partner for innovative, reliable and also mission-critical electrical connection and insulation solutions. This is illustrated by the picture. And on the next slide, there is another illustration. Of course, this is a very condensed view of reality. It's a condensed view on the electrical landscape. And you see here different steps of the electrical infrastructure, for instance, starting with the generation of electricity. This is more in the top area of this slide, onshore wind, offshore wind, nuclear, energy could also be gas turbine or it could be a solar photovoltaic electrical generation field that is seen here in all of these generation situations, electricity needs to be connected, and that's where PFISTERER comes into the game. So we are connecting these generators with the transmission that can be taking place under the water or it could be overhead lines in the air, but it could also be cable -- underground cable systems. And again, PFISTERER is able to provide the connection and the insulation to all of these different elements. And after the transmission, then electricity needs to be distributed into the application arena. This could be a municipality or it could be radar mobility, it could be data centers, obviously growing very strongly, and it could also be e-mobility charging stations and so on and so forth. So PFISTERER is agnostic with regards to the individual application of our products. We provide the products for generation, for transmission and for distribution. We provide the products whether they are applied in the air, under the water line or in the earth, and we apply the products whether they are on a low voltage spectrum that would be anything below 1,000 volts, whether they are in the medium voltage that is between 1,000 and 53,000 volts or whether they are in the high-voltage arena, which is anything above 53,000 volts and up to 1 million volts. We are agnostic, and we think this gives our business development quite a robust profile. And speaking about that on the next slide, there is an illustration, again, of PFISTERER's footprint. This is demonstrated in the center area of this slide with the world map, PFISTERER being active through 19 different companies. 5 different production facilities in the U.S. and Germany and the largest one in Czech Republic. And in combination, in conjunction with our technical distributors, highly educated technical distributors, we are covering more than 90 countries from a sales point of view out of our 19 entities and 5 factories. The revenue of PFISTERER, this is illustrated on the left, split into business segments that we are reporting by geography. This is starting with the largest region, Europe and Africa with 50% -- I'm sorry, 55% revenue share in the first half of '26, followed by the second largest region, which was the Middle East and India region with a revenue share of 25%. The Americas, which is covering Continental Americas, meaning North and South America with 40% and Asia Pacific with 6%. To take a look at the share, maybe just a brief comment. Europe and Africa is the largest share, and that has also been the case in previous periods. If you compare the 55% of the first half of '26 with '25. Back then it was 54%; in '24, it was 58%. So the revenue share of the largest segment, Europe is more or less constant over the past years. If you take a look at the segments regarding our products, this is the pie chart at the bottom left. Here, starting with the largest segment, HVA, high-voltage cable accessories, so connectors that are connecting cables to equipment, be it a transformer or be it the gas insulated gear switch station or others is the largest segment, HVA with 42%. Overhead lines represent 25% of our revenues. And from a voltage point of view, overhead lines are also typically high voltage. Number three is the components business, low-voltage applications with 21%, and then there is a medium voltage application with 11%. If we add up overhead lines and HVA, both are high voltage, meaning above 53,000 volts, they are making up 70% from a segment share point of view. And that number has substantially increased over the past years. It was 62% and 63% in the past 2 years. Meanwhile, it has grown to 77%. And maybe I'm a little bit too early mentioning this, but we are happy about that for the time being because the higher the voltages, typically also the margins are the highest. On the right, you see also selected customers. Maybe I can mention here that we have a very broad range of customers from a customer characterization point of view. There are reputed utilities worldwide to name just a few. is the one here on the top left, but there is also Swiss Grid or there would be in the more southern regions, but it could also be Edison in the United States or the SEC in Arabia. We are working with cable manufacturers. The second group here, Hellenic Sterlite from India now, we added this illustration here because this wasn't mentioned in the past, but Sterlite India is also a good growth region for us. ZTT is also mentioned here newly. We've been working with ZTT already for a number of years. And we also want to illustrate there that we are working with Chinese cable manufacturers in China, but also in Asia and also to a growing extent outside of Asia. Softwire would be an American company, LS Cable is a Korean one. So you see the cable manufacturers across the globe are working and relying on Technical distributors I mentioned the most prominent business partners from a reputation point of view, I guess, are the OEMs such as GE, Lenova, ABB, Hitachi, Siemens Energy and -- as a fifth customer group, we are working with the contractors. This is also represented by a number of reputed companies you see there. The largest single customer of PFISTERER is in the area of 3% revenue share. We believe this gives us quite also some robust business exposure as we are not focused on one customer or one customer group, but it's well distributed across the groups, the customers and the segments. Okay. One last comment from a more holistic point of view. We believe that the electrical infrastructure continues to have a very positive and sustained tailwind. And that gives us confidence that we will see PFISTERER also continuing to grow sustainably for the future to come. First, we think this is supported by the fact that the global electricity demand continues to rise. If the growth in electricity in '25 was at 3%, it is projected to be 3.6% in this year and even more 3.8% in 2027. We think the underlying trends, e-vehicles, heat pumps, air condition are robust. And of course, data centers are being built. I believe the United States is investing $1,000 billion -- I'm mixing up billion -- yes, $1 billion next year into data centers. So there is a growth in electricity. The grid investments are obviously correlated to the electricity consumption and demand. this is growing just as well. In '25, the growth in the grid investments was calculated to have been at 11%. For this year, the global grid investment is expected to grow at around 17% relative to last year. So this is a very fertile solid ground we are working on. And maybe as a last example, speaking about Europe, we think that the political support in the European Union in accelerating permitting procedures is also worthwhile to mention. I don't want to talk too much about politics here. Everyone has its own opinion there. But if we look to the permitting procedures, we believe there is positive notice to be made. If you look, for instance, in Germany, the average approval time for onshore wind has reduced in the past 2 years from '23 to 17 months. And we immediately see that in an increased approval of capacities in '24, 14 gigawatts will be approved in '25, there was already 21 gigawatts. And maybe it's also worthwhile to put that into perspective. So in those 2 years, Germany approved 35 gigawatts on onshore wind mill capacity, but Germany only installed 8.4 gigawatts. So that means more than 4x the capacity has been approved than what has been installed. And I believe that gives us confidence that we expect also major growth to be taking place in the future ahead of us. And I think this has also been confirmed for the most recent statements from the windmill companies such as Vestas and GE who increased their guidances, but also [indiscernible] are working as per their expectations. And this would be leading me to Chapter 2, the financial performance of half year 1. But let's talk about the quarters first, and then we will be coming to the half year. If we look at the order book and the revenues of PFISTERER in the quarterly view, looking back over the past 5 quarters, I think we see a quite satisfactory picture. Our order book increased year-over-year by 8.9% to a new record number of EUR 340 million. If we take a look at the revenues, we see that the revenue in the second quarter with EUR 129.8 million, once again reached a new all-time high. It is an increase relative to the previous years, a quarter 2 of 14.4% and EUR 129.8 million has never been accomplished by PFISTERER before. If you look to the average quarterly revenue of '25, back then, it was EUR 112.5 million. So far, the first 2 quarters this year have an average of EUR 128.4 million, and we're going to be covering this later, but we have reason to believe that this number will continue to increase also in the second half of the year. If you look to the product segment and our individual regions that we see here, then it can be observed that all 4 product segments showed a growing revenue year-over-year, all four. We can also state that three out of four regions showed growing revenues year-over-year and the strongest increase we have seen were in HVA. If you look to the individual regions, we see that the strongest performance in the second quarter was in Europe and Africa. If we move on to the next page. and take a look at results. Information we are sharing on the presentation here. We have in the past and also we do it this time just the same as before. We are sharing gross margin and adjusted EBITDA data for the individual quarters. If we start with the gross margin, the second quarter is the second quarter in '26 with a gross margin above 40%. So we see a 4 as a first number, 40.4%. Gross margin is slightly down from the first quarter, 43.6%, which again was a record number on the gross margin in itself. The past 5 quarters have shown 4 quarters with 4% gross margin. We think this is quite an achievement. And if we then turn to the adjusted EBITDA, which is, of course, positively influenced by the good margin, but also by the good volume that we have seen then our EBITDA with EUR 24.7 million in the second quarter is an increase relative to the previous year's second quarter of 33.4%. And again, this is an achievement from our point of view that makes us look into the future quite positively. We move on to the individual breakdown of order intake and order book in our reporting geographical regional view. On the next page, we will be sharing the same on the product segment view, but let's start with the geographical regions. We have seen in the second quarter somewhat softened order intake relative to an extraordinary prior year. I think that is worthwhile to mention an extraordinary prior year. If we, at the same time, look at the order book, which is the basis for revenues to come, we see that based on the extraordinary prior year's order intakes, the order book has continued to show growth on a year-over-year comparison view. And that, again, is our -- yes, comfortable situation on which we are growing the business. If we look into the individual geographical regions, in the Americas, we have seen a decline in order intake, which is mainly attributable to a lower demand in Argentina. Nevertheless, the order book in itself is down less than what we see on the order intake. And the order book in the Americas is relatively low from a product segment characteristic point of view because the products that we are serving in the Americas have shorter lead times than in the other regions. So that is, I believe, also relevant to say. If we look to Europe and Africa, we see that the order intake in the first -- in the quarter went down in Germany in OHL, but the order book in itself went up relatively strong, 9% plus. And that is primarily driven by the product segment HVA, which is going to be seen on the next page. In the Middle East, we have seen an order intake that is down compared to quarter 2. That was a record number in quarter 2 last year, again, to be mentioned and the order book went up still in the second quarter relative to the second quarter last year by plus 6%. And lastly, in the Asia Pacific, we have seen a steep increase in the order intake, plus 94% and we also see a positive development in the order book with plus 42%. Overall, the order book went up by EUR 28 million, which is a plus of 8.9%, which is the basis for future revenues. If we move on to the product segment breakdown here, there, we see that the order intake as such, of course, the sum is the same. So there is also a lower order intake in total relative to the super quarter 2 last year. And we see, in particular, now the breakdown in the individual product groups. That's the order intake had the strongest reduction in OHL. At the same time, we maintained a very strong order intake in HVA, and that results then in the order book overview with growth in HVA, in MVA as well as in overhead lines and a constant order book in components. If we go more details into the individual elements, we see that in HVA, we had growth in Asia Pacific and in the Middle East. And at the same time, there was lower activities in America and Europe in the second quarter in itself. The order book increased, therefore, mostly in the Middle East, but also in the European region. In medium voltage applications, we see that the order intake improved, and that is reflected by high demand in Europe and Africa. And the order book nowadays is mainly consisting out of Europe. In components, we see that the order intake declined slightly, which is connected to the Argentina effect. I was mentioning that on the previous page already. We see a very stable trend in the order book in the Americas and also in Europe. And if you look at the overhead line business, the order intake moderated that has been also shown on the previous page in the Middle East and there in Saudi Arabia. We all know that in the second quarter, in the Middle Eastern countries, people had also other things to think about. And we recognize that some projects, the placement of projects with regard to order intake has been a little bit more hesitant. These projects have not been canceled, but they haven't been awarded at the speed that they used to be awarded. We believe this is a temporary effect, which will be washing out over the quarters to come. And that leads me to the profit and loss or the KPIs in the second quarter of this year, the comparison quarter 2 '26 to the comparison quarter 2 '25. Starting with the order book at the top line, order book is standing at EUR 340 million here at PFISTERER, which is an increase compared to the second quarter of plus 8.9%. Our order intake with EUR 139.4 million is below the second quarter, which was a record number of EUR 146 million. Nevertheless, our order intake is positive in the sense of a book-to-bill ratio larger than 1, since we are showing revenues of EUR 129.8 million in the second quarter, and that is an increase of 14.4% relative to the second quarter in the previous year. With our gross result increasing by 9.4% to EUR 52.4 million in the second quarter, we are achieving a gross margin of 40.4% in the second quarter, and this then leads to an EBITDA increase of 42.8% mainly -- I'm sorry, EUR 24 million on EBITDA. The adjusted EBITDA, EUR 24.7 million. This is shown a few lines further down as we are typically referring to the adjusted figure. As you may remember, the adjustment in itself is related to our virtual stock option program, which is a one-off based incentive program to more than 35 managers in the company. And as we do not intend to have another IPO anytime soon in PFISTERER, this program will be running out next year. And then the adjustment of the virtual stock option program will be history. So our adjusted EBITDA was EUR 24.7 million, represents an EBITDA margin of 19%. And this translates into a positive EBIT development increase of 45% and even more into a super result for the period in the second quarter of EUR 19.8 million, which is an increase of 97.1%. Maybe here, it should be mentioned that EBITDA, EBIT, all of this is true business performance. On the results for the period, there is also a taxation element included, which goes back to the treatment of the virtual stock option program as on local GAAP, these elements are reducing tax. And at the same time, on IFRS group account, they are not reducing our profit. And therefore, we have a positive impact there on the taxation results on the group level. Our net debt is at EUR 4 million and the net working capital was 24.7%, well below our guided 27% to 28%. So if I summarize this, PFISTERER managed with 9.6% more employees to generate 14% more revenues in the second quarter, 45% higher EBIT and 97% higher results for the period. And this leads me then to the overview for the first half of the year, illustrated on the table again in the same structure as before, half year 1 relative to -- half year 1 '26 relative to half year 1 '25. We see a revenue increase -- I'm sorry, we see an order book increase of 8.9%. We see the order intake with EUR 262 million at minus 9.4% relative to the previous year. We see the revenue growth meanwhile, in the first half of the year at plus 20%, 20.2%. And based on this revenue growth and the strong gross profit, we see an adjusted EBITDA going up by 32.7%. We see EBIT going up by [ 43 ], and we see the result for the period going up by 75.9%. PFISTERER in the first half of the year managed to have an adjusted EBITDA margin of 20.4%. This is almost 2% higher than a year ago. And I think this is quite a good intermediate result that we are showing here for the first half of the year. Our adjusted operating cash flow, maybe this is also worthwhile to mention, amounted to EUR 29.1 million. We believe also there EBITDA -- adjusted EBITDA is well converted into cash. And that gives us the room to maneuver and to continue to invest into the consecutive growth in the company as based on our growing order intake, of course -- I'm sorry, order book. Of course, we have to invest and increase our capacities in order to continue to grow also the revenues and also to show consecutive order intake growth in the future. On the next page, our results for the period translates into earnings per share. And in the second quarter of this year 2026, we are seeing a significant positive development of EPS despite the fact that the number of shares on a quarterly basis in a relative comparison keeps on going up. There has also been a small capital increase in the second quarter, which is more a statistical effect. It doesn't show a big impact here on the figure, but should be mentioned just for reasons of total information. But with EUR 1.11 earnings per share in one quarter, we are seeing a year-over-year comparison, an increase of 73%, and this despite the fact that the number of shares went up by 25% approximately. So we think that the results in the first half of the year, but also in the second quarter are very satisfactory. We believe this is a very solid basis for us to continue to develop our company. And we also believe this gives us the confidence not only on our midterm targets that we have expressed before, be it for revenues, EUR 800 million to EUR 900 million in revenues, be it from an EBITDA margin of 20-plus percent. This we have already seen in the second -- I'm sorry, in the first half of this year and in the first and second quarter of this year. We believe this also gives us the confidence that we will be hitting our revenue target for this year, which was a growth of 12% to 17%. We have seen 20% growth in the first half of the year. And this also -- and even more based on the order intake of the past 6 weeks. So this is not what you see in the first half of the year. We are very confident that we're going to be also meeting our guidance on the order intake for the full year, which has been the order intake that we have seen last year with EUR 550 million. So now I want to touch our -- a few business highlights. In Chapter 3, the business highlights are structured according to the 3 pillars of growth strategy of PFISTERER, starting with our technological milestone development project where we are really and truly driving technological innovation in our industry. This is related to our HVDC market launch, which is knocking at the door. We have, this year, in the first half, earned a patent for our HVDC connector technology. As you know, we are continuing to build our HVDC laboratory here in Winbach, which is the basis for starting production based on the qualified products. We have shared with you previously that we have meanwhile successful 320 kV tests with customer cable -- tests with customer cables, and we will be applying our patented technology in various applications up to 525 kilovolts. And this patent that I'm putting here prominently into the window, it's the latest one, and we are -- I think it's fair to say a little bit proud on it, but it's only one of 166 active patents that PFISTERER have today. If we move on to the second pillar of our growth strategy beyond the technological disruption we are working on, we also have a number of innovations already in the market, recently introduced or on the way of being introduced, where we are expanding our business boundaries. This is an example here of a product called -- we call it OCA. This is an -- is a little bit of a technical term. Innovation projects. PFISTERER has recently introduced this into the market. It's an application that you will find in wind turbines where PFISTERER now can also deliver a full system from the generator down to the bottom of the wind where then the transmission is starting. We are applying in these products, our mechanical connector technology that we also apply in other connectors. So we think this is from a core competency point of view, quite a smart approach as we apply the core competencies of PFISTERER into new product applications, and this is why this development is qualifying as a business expansion activity. We have already successfully introduced this in the United States, and we are seeing further opportunities, in particular in Asia, where the wind market in Japan and South Korea is very bullish and robust. And then I would like to share with you a third slide that is also the third column of our growth strategy, where we are pushing our core businesses in our core markets where we see the biggest immediate effect when it comes to figures, order intake, order book and also revenues as these are introduced products. The way we are doing business, if I start on the top left, is, of course, meanwhile influenced by IT. And PFISTERER is, I think it's fair to say, is very dynamic when it comes to automation of individual steps in our business activities. And this is also reflected, of course, in efficiency gains. But we want to share with you here that approximately 5% of our revenues are investments into the IT and digitization into the group. We think this is a relatively high number if I compare it with peers. I think we are here quite progressive. And we are doing this in order to spend money, but we are doing this because we are counting on further efficiency gains due to these investments in future periods to come. If I look to the bottom left, there, I want to share with you that we have invested into machine capacities, but also into working time models in operations and efficiency gains through automation on the shop floor. So tangible automation via robots and other elements. And by doing so, we have achieved to grow our output on the mechanical connectors, we call it -- in the two manufacturing facilities of PFISTERER in Rochester by prominent plus 46% within 1 year. I think this is quite an accomplishment, and we aren't hesitant there. We will continue in a similar way also for the years to come. On the top right, you see the new HVDC qualification center, already mentioned before. The construction is absolutely on schedule and will be finished and started up in the first quarter -- I'm sorry, in the first half of next year. And then on the bottom right, the -- we were touching the operating cash flow earlier. Operating cash flow in the case of PFISTERER is used in order to increase our CapEx. And in the second quarter of this year also to pay dividends to our humble shareholders. But if we look to the CapEx expenditures into machineries and also real estate in the production sites of PFISTERER, we have invested close to EUR 40 million since the IPO, and we are doing this because we see that PFISTERER has the right products in the right markets, has the right teams and is continuing to show positive development for the years to come. And with this, it's exactly 40 minutes. I'm happy from a timing point of view, doing pretty well. The very last slide is upcoming events and conferences where you can be meeting -- please push for the next slide. There we go. Where you can meet our Investor Relations team and also Executive Board members. We are present on a number of conferences in the remaining rest of 2026, August, September, November, December. We will be presenting our Q3 figures on November 18. And we will be publishing our Q4 figures on the 21 -- sorry, 24th of March 2027. This is 3 weeks earlier than this year. So there, you see also efficiency gains amongst other things in our admin team and the year-end results next year will be presented on the 12th of May, which is also 4 weeks earlier than this year. And -- yes, thank you for your attention, listening to the presentation, and we are happy to receive any questions, and we will do our best to give you precise, honest and good answers. Thank you.

[Operator Instructions] And we have first questions coming in. First question comes from Yasmin Steilen from Berenberg.

I have three, if I may, and I will take them one by one. Just before I start, just please allow me one general comment. In my humble view, it would be very helpful to get more time on the Q&A while you might reduce the time for the general remarks. So on my first question on high-voltage AC. We have seen a rock solid development in terms of 29% sales growth in Q2, but the order intake was only up 1%, implying a book-to-bill of 1.1. So could you provide more color on the high-voltage A order intake? What was the reasons for the slower development? And what are your early indications from customer discussions on the second half also with the implied acceleration on your order intake guidance?

I think the speakers are maybe on mute.

I was muted -- there are two constant factors here. PFISTERER is a great company, that's one. And the second is you are the first person asking questions for I'm happy about this. The order intake in HD, yes, I agree, has been robust on a year-over-year comparison. But you need to see, if you go a little bit further back in the history, last year has been a tremendous increase in order intake. So this year, we are repeating this increase. If we look to the order book, in HVA, the order book a year ago was at EUR 155 million. Meanwhile, we are at EUR 182 million, and the order book needs to be digested before we will see further tremendous increases on the order intake. So the order book will be carrying us into continued growth on revenues. In the HVA segment, we have seen this on a year-over-year comparison. Quarter 2 this year was EUR 59 million. It was EUR 46 million last year. Half year 1 this year, EUR 109 million from the figures now. Last year, EUR 86 million. We will see a continued growth on HVA revenues based on the order book, and we will also see continued order intake growth. So that was the first question. Could you repeat the second one, please? Sorry for this.

Sorry, I have -- so the second one is on high-voltage DC. So you have not reported any order intake so far. However, your customer, Hellenic Cable has been awarded for high-voltage electrical interconnection. So is it fair to assume first order intake on high-voltage DC for you also in the second half of the year?

Okay. I think we have finally completed several type tests with cable manufacturers also in Europe, also mentioning Hellenic cable. There are other cable manufacturers. And I think there will be an official publication even from one of our partners quite soon about the successful type test and the successful type test means now the system is ready to be ordered or to be executed for the market. That means then a PQ test can follow. And the PQ test will have the basis that there also will be an order coming up for PQ test because there is a project behind. So our ambition, and like we said, is '27 to have an order intake there. Whatever comes earlier, we are happy to publish. But I think for the HVDC projects, especially with the Europeans, but not only with the European cable manufacturers, I think we are on a good way. So I see a good perspective, I would say, end of this year or beginning of '27.

Okay. Very clear. And then finally, and then I step back into the line is just a housekeeping question. You mentioned on your tax rate that the treatment of the stock program had a positive impact. So how should we think about the full year tax rate? And also assuming the stock option program should phase out, is it fair to assume a normalization of the tax rate to mid-20s midterm?

Okay. So the effect on the tax rate in the second quarter is in the area of EUR 4 million. If it wouldn't have been for this, the tax rate would have been in the area of 20%. And that is also the range that we are on a, let's say, on a non-VSOP year, we would -- under the given conditions, we would see as a normal tax rate in our case. Now since the thing took place in the second quarter, maybe this gives us the opportunity to have -- on a full year basis to have a lower tax rate than the 20% as the other 4. In the next year, there will be -- probably there are -- the VSOP program from a guideline point of view, from a program point of view, leaves us certain freedom how we can reward the money value of the options, whether we do full equity, whether we do full cash or we do a mix. Now this year, it was a mix. assuming we would be doing the same and then this year, which was 50-50 and assuming we would have the same share price next year, we would see another EUR 4 million tax effect next year. And then that's it as the PFISTERER program will be finished after the third and last, installment. Is that good for vocabulary, third and last reward period.

And the next question comes from Cosmin Filker from

I also have three questions. If it's okay for you, I would ask them one by one. The first one is regarding the plans of the site expansion in You already communicated in the last call that there is an option to buy more land next to the production site now. What are the plans? When will the expansion will be finished? And is the target of EUR 65 million for '26 CapEx still in place now?

All right. So I would be taking this. We have, meanwhile, like you said, in two steps, we have acquired real estate. The one step was last year roughly 50,000 square meters. This year, roughly 45,000 square meters. This year's acquisition is also comprising warehouse and office buildings. Last year, it was only ground. Both of these acquisitions took place in the same industrial park where our today's rented facility is. And at the same time, we have also expanded the rented lease space. This year, it used to be 19,000. We have added another 12,000. So 19,000 went up to 31,000, and we have now the real estate of approximately 95,000 square meters acquired. The building start of constructing a new factory on the acquired ground due to the fact that on the second acquisition, there is already buildings there. There is less pressure on executing this. But the building start is intended to be in '28. Now we are making up our mind how the design of the factory is going to be like, how the value stream, the material flows, et cetera, how this is going to look like, then we need to go into a building permission procedure. This is, to my knowledge, in Czech Republic, not really quicker than it is in Germany. Therefore, we should -- as we talk, we should believe that breaking ground, is that right, breaking ground will be in '28. Regarding the investments for this year, we have in the first half of the year, invested. I need to look at that figure now. Full last year was -- we have invested EUR 20 million. We have in our optical quite a relevant amount of monies for finishing and continuing our HVDC laboratory, but also a number of machines, capacity expansions in manufacturing machines that we are -- will be adding in the second half of the year. And we are foreseeing an investment to be in the area of EUR 60 million to EUR 70 million CapEx this year.

Okay. So no change there. The second question regards the insurance payments. In the first half year, they sum up at around EUR 2 million, EUR 1.9 million. In the last call, you already explained us that there are two parts. The one is the and the other one, the [indiscernible] So are there still payments expected in the third quarter?

Let's say, in the second half of the year, absolutely, yes. Whether it's going to be in the third quarter, I would say this is like being on fee. You never know what happens, how long the experts take in order to get the final evaluation. I think there is a good chance of seeing more in Q3, whether it's going to be finished in Q3 or that there's going to be two more installments that needs to be seen.

And the last to be on the same side...

I would expect November to be finished in November to be on the same side. But it could happen also already in Q3, but this is -- would be to determine.

Volume-wise, would it be the same amount that was paid in the first half year?

Well, I wouldn't be against it, yes.

Okay. So we will be asking for more?

Yes, we are asking for more.

Okay. And the last question is regarding the EBITDA in the region, North and South America. Compared to the first quarter '26, it fell down to EUR 1.4 million, yes. And in the first quarter, it was EUR 4.1 million despite a slight increase in revenue. Can you just explain what led to this development?