PVA TePla AG (TPE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and a warm welcome to today's earnings call of the PVA TePla AG following the publication of the financial figures of 2024. We are delighted to welcome the CEO, Jalin Ketter; and CFO, Markus Groß, who will give us a presentation on the results in a moment. After the presentation, we will move on to a Q&A session in which you will be allowed to place your question directly via audio line. We are looking forward to the presentation. And having said this, Ms. Ketter, the stage is yours.

Good morning, and welcome to our earnings call for the full year 2024. I'm very delighted to introduce Markus Groß, our new CFO to you today. He will lead you through the financials later on. After already 3 quarters of very strong financial development, we even outperformed in the last quarter, especially in the quality of our operational business. As we moved into 2025, in the first quarter, we did not lose any speed, and we continue to execute on important projects and entered into orders which underline our strategy 2028. Let's take some time to look back and make a recap of 2024 before we will change to the forward-looking topics again. Despite the challenging macroeconomic situation around us, PVA TePla once again had a very strong year. A lot of industries and companies are still struggling with the weak environment, while we showed resilience, and we are very satisfied with this development. In 2024, we also did set up and sign off our strategy 2028, positioning our group for sustainable growth. As part of our strategy, we will significantly increase our high-margin maturity business, diversify our activities and material solutions to become increasingly independent from single market cycles and change our concept, addressing relevant markets and regions from a reactive to a proactive approach. These efforts will be underlined with a strong organizational structure bringing the right people with the right skills to the right place. A strong R&D road map focusing on bringing our technologies to the markets completes our strategy. To achieve our long-term growth target, we are driving transformation, especially in the financial year 2025. We will continue to focus on improving our foundation, optimizing processes and stepping up for further growth. As a result, growth opportunities have been limited in the short term, but we are positioning ourselves for sustainable success on the long run. One of the most important achievements of 2024 addressing our strategy is that the setup of our top management has been completed. We did build up the management of our subsidiaries with a strong operational focus and established a team of senior experts with a more strategic focus on the development of our product groups, material solutions and metrology as well as for our holistic R&D approach. Additionally, Markus Groß joined our Board team at the beginning of this year and has taken over my responsibilities as a CFO. In the field of metrology, we have further improved our market position with high precision quality control solutions. We have secured a new international high-volume customer and have initiated further qualification processes with other major players of the semiconductor industry. In our metrology technologies, we have further enhanced the system performance by improving throughput, detection accuracy and ultrasound lens technology. These advancements enable faster and more precise inspections, ensuring higher quality standards and greater efficiency for our customers. In the field of material solutions, we have received several prequalifying orders amongst others in the newly addressed energy sector. These developments confirm that our approach to broaden our customer base was already successful in 2024, and we are continuing to work intensively on this. In 2024, we also expanded our capacities at our headquarters here in Wettenberg and completed our new facility in Italy. We further improved our presence at trade fairs and for example, for the first time, participated at Semicon in Japan, an important step as we prepare to establish our own sales and service location in this country. And maybe some of you attended our first Capital Markets Day, which had a strong focus on technology. There we shared insights into our strategic goals and showcased our product portfolio. It was a great opportunity to engage in face-to-face discussions, provide deeper insights into our technologies and underline our road map for future growth. Let's take a look at our share buyback program that was launched in November 2024. It allows us to repurchase up to 10% of our share capital. These shares can be strategically used for acquisitions and to support our company's competitive position. Additionally, we have established the allocation of shares to Board members and executives as part of our new long-term compensation model. Concerning our ESG commitment, we made great progress. Looking at the field of environment, we fulfilled our net-zero goal in 2024 by becoming carbon neutral in Scope 1 and 2. Overall, we cut our CO2 emissions by over 60%. We reached these milestones with an energy mix that includes 85% electricity from renewable sources. To meet the needs of the focused but longer -- larger organization where our employees are the key successful factor, we initiated a project to renew our HR concept. As an example, we realized parts of this project, like our leadership development program already in the second half of 2024. Moreover, we have implemented a range of initiatives to increase employee satisfaction and foster diversity in several dimensions. In matters of governance, we made significant progress moving towards a transparent and compliant governance declaration. Additionally, we have advanced our ESG reporting to align with CSRD requirements. With that, I now will hand over to Markus, who will introduce himself and take you through the financial results.

Good morning, and good morning. Before we start heading into the financials, please allow me to introduce myself. My name is Markus Groß, and I started January 1st as CFO being responsible for finance, IT and legal. But I know PVA for more than 15 years now from my former career. Before that, I was a partner and head of data science in one of the largest auditing companies in Germany and I bring 15 years of professional experience in auditing and accounting and led the national team, which developed data-driven solutions to boost productivity by automation and provide relevant information. I'm very happy to be working with so many talented and motivated people on the realization of the strategy 2028 here at PVA TePla. Looking at the key figures for 2024, let me start with an important statement. We met our 2024 forecast with sales at the lower end of the bandwidth of our guidance but with an EBITDA that shows an impressive development, it grew by almost 16% to EUR 47.8 million. And this development is one of the first visible results of our 2028 strategy. We are very proud on that. Order backlog is down by 44%, but we are not too concerned by it. Please allow me to give you some details here. In the previous years, order backlog included large semiconductor projects with lower order cycles, which have been then converted into sales revenues over years. With the 2028 strategy, it is one of our goals to reduce our dependency on those large-scale projects and their strong cyclicity. With an increasing share of sales coming from metrology, we have shorter lead times and accelerated order cycles. As a result, the importance of the order backlog is declining. For 2025, we have a solid visibility as we are covering more than 50% of our sales guidance from the order backlog. Order intake was also quite slow in challenging conditions but we will take a deeper look into that on the following slides. CapEx were at around EUR 25 million, which means we are more than doubled our investments. And this is not only an all-time high, it's also proof that we are committed to realize the investments necessary to reach our strategic goals. To give you some examples, we invested in increasing our capacity in Wettenberg and Italy, as Jalin already mentioned. We created a sophisticated R&D facility, and we support our sales with showrooms around the globe. And finally, we extended and set up service entities nearby to our customers to meet their needs. Sales were in rough market conditions increased by slight 2.5%. The split between the segments is relatively stable, 30% to 70%, but growth was primarily achieved in the Industrial segment. Both divisions benefited from the mega trends digitalization, decarbonization and mobility. And looking at regional sales, there are 2 key messages. First, if you compare it to the previous year, it might seem like there is a shift from Europe to Asia, but this is especially due to 2 large-scale semiconductor-related projects, which were first taking place in Europe and later in Asia. Secondly, sales in North America grew from 10% to 14%. And looking on the order intake later, we will see that this development continues which shows the first results to develop this important market further, which is, again, fully in line with our strategy 2028. Order intake is down by 32%. And in the past, customers placed very large bike orders and due to a higher uncertainty in the markets, we observed the developments towards split and thus smaller orders. It's our declared goal to grow in sectors which are less cyclic and have shorter lead times. And looking at the product group, we can observe that 52% of the order intake is in metrology, which is fully in line with that goal. And that's not only favorable because of shorter project durations, it's also for profitability reasons. So let's take a closer look at the semiconductor segment. At first sight, it seems like sales are on the same level as in the previous year. But under the hood, you can see a change in product mix from crystal growing to metrology. And the EBITDA margin improved impressively by more than 3 percentage points, which means we are seeing earnings of more than EUR 40 million, which is again an all-time high. High inventory leverage in the semiconductor industry have temporarily slowed investments into new production facilities, and the order intake declined from EUR 142 million to EUR 99 million. But this was primarily driven by the Metrology segment, which is, again, a change in product mix, which is fully in line with our strategy. Taking a closer look at the Industrial segment, we can see that sales grew by 6.7% to almost EUR 83 million. At the same time, the profits outgrew the sales by 7.6% and EBITDA margin has been kept stable at approximately 17%. The order intake was weak, but we can see an increasing demand coming from markets where -- which we started to address like the new energy sector, aerospace, medical and optical industries. Taking a closer look at the profits, we can see a very successful development on all profit-related KPIs, and we are very proud on the achieved margins and absolute results. Gross profit in an amount of EUR 88 million mean an increase by 13.5% or 3.2 percentage points. EBITDA and EBIT both grew by 15%, with margins of around 17.7% and 40.7%. Driven by a change in our product mix, but also by measures to improve our sourcing and production processes, which helped to increase our earnings. In summary, revenues grew slightly by 2.5% to EUR 270 million. All profit-related KPIs with a very positive development from gross profit to EBIT, which grew by 15% to almost EUR 40 million, especially driven by the Metrology business. And order intake and order backlog was below prior year, but we are seeing an increasing number of inquiries, which are expected to become orders in the near future. With that, I hand back over to Jalin for an update on strategy and an outlook.

Thank you, Markus, for this great run through the financials. As mentioned at the beginning, PVA TePla is currently in a phase of transformation. Let me explain what that means. We see significant growth potential for our business, driven by mega trends such as digitalization, decarbonization and mobility. To fully capture these opportunities, we have to prepare our group accordingly. That's why we are actively improving our organizational structure and processes by expanding our team and capacities. This is particularly important in the area of sales and service as we have started addressing new markets in Asia and North America. One focus is on building up our service capacities to meet market demands. We are enabling our offerings in this field, including 24/7 support, which opens further potential. At the same time, we are broadening our R&D activities. In 2024, we established our new technology hub as a central platform for innovation and research on future materials. The team works on holistic solutions to bring technologies quickly to market readiness. One initial project deals with silicon carbide, a highly demanded material for high-tech applications. The first successful results are already visible. We will continue to drive this transformation forward to unlock the full potential of our portfolio across various industries and local markets. Geographically, North America and Asia offer us great growth opportunities. In North America, we have initiated numerous activities, which include the identification of key customers and the expansion of our sales and service organization. The aim is to quickly improve our market presence and secure medium and long-term growth. Asia has been our largest sales market for years and still offers considerable growth potential. We are currently represented in China, Taiwan, Korea and Singapore. Additionally, we made the decision to establish also an office in Japan. The setup is already underway. Looking ahead, India will likely be our next step as we continue expanding our global presence. In both North America and Asia, we see strong potential, especially for metrology. The demand for our inspection solutions is increasing, not only in the semiconductor industry, which has to deal with increasingly complex microchips designs. At the same time, we recently significantly expanded our customer base in other key sectors like energy and aerospace for material solutions products. In 2024, we made investments to grow our metrology capacities. We prepared the integration of our long-term supplier desconpro engineering, which came into force on the 1st of January 2025. With this integration, we have enhanced our manufacturing capacities for fully automated metrology systems and secured critical automation expertise in our group. In 2024, we have also entered a partnership with a Swiss provider of solutions for quality control, Scientific Visual. With this partnership, we have added further expertise in quality control and defect detection for silicon carbide crystals in order to improve the quality of the crystals and the production output. On our growth path, we are considering further opportunities to improve our position with selective acquisitions. Transformation was also the objective for the realignment of our Supervisory Board. We have started the renewal process with the election of Myriam Jahn in 2023. In 2024, Christoph von Seidel joined the Board and took over the lead of the Audit Committee from Gernot Hebestreit who will leave the Board with the AGM 2025. And there will be 2 new members to step in, who are going to expand the Board's expertise in key areas. Ingrid De Wolf, who is a fellow at IMEC, the world's leading independent R&D center for semiconductors. She is not only a leading scientist in the field of metrology, but also brings expertise in core operating with industry partners to the Board. Rudolf Weichert, CFO at INDUS Holding, brings extensive expertise in M&A, capital markets, IFRS and risk management to the Board. Now let me explain what the transition phase means for our further growth and our guidance in numbers. And let me briefly summarize our operational focus for 2025. We are expanding our metrology product group with its highly demanded solutions. Our technology hub is driving forward the development activities in silicon carbide technologies, bringing them to market readiness. To broaden our presence, we are expanding our sales and service organizations in Asia and North America. And last but not least, scaling our production and optimizing our processes will enhance efficiency and support future growth. With these major tasks in mind, we have set our financial targets for 2025 as follows. We expect stable sales revenues roughly at the previous year's level in a range between EUR 260 million and EUR 280 million and an EBITDA of EUR 34 million to EUR 39 million. While short-term costs from our strategic measures will impact EBITDA, these investments are already driving structural improvements of our business for the long term. The expected rise in gross margin reflects these positive effects and demonstrates that our business remains strong and continues to develop in the right direction. We expect the growth to pick up in 2026. Our midterm target remains unchanged, reaching EUR 500 million in sales by 2028. Ladies and gentlemen, as you have seen, PVA TePla is in a highly exciting phase and we, the whole PVA TePla team, are all working with great commitment to achieve our goals. Before we will answer your questions, please note, in 2025, our Capital Markets Day will be held in London in early September. So thanks now for your attention. Let's now come to your questions.

Yes. Thank you very much for your presentation, Ms. Ketter and Mr. Groß, and we will now move on to the Q&A session. For a dynamic conversation, we kindly ask you to ask questions in person via the audio line. [Operator Instructions] Questions via chat cannot be submitted today. So we have some questions, Mr. Hesse, you should be ablke to speak now.

The first one would be primarily really on the significant pressure that we are seeing on the profitability this year due to the structural cost. So I mean, looking at those, I was quite surprised to see how much it's going to be down by, but just to have a feeling. So I mean, your EBIT margin target historically used to be 15%. This year, we're probably going to be at around little bit above 10%. So looking at the structural increase and looking at the next few years, when do you expect to be back at that 15% EBIT margin level? That would be my first question.

Okay. So here, as we already said, 2025 is a transformation year for us, where we are investing, but giving an outlook for '26, we believe that this will be a year of growth and '24 is kind of the jumping off point or the benchmark in terms of the margins. So we'll see an increase there due to the growth in sales and also for improvement in the gross margin we're also expecting.

Sorry, I don't think I got that. So in terms of the margin moving back to the 15% EBIT margin, is that something that you would expect only by 2028? Or...

Direction of 2028. So '25 is clearly a year of transition where we will invest in infrastructure, especially in sales and service. And as we launched our new R&D center in 2024, this is running to full capacity in 2025. So there will be an increasing cost amount for R&D as well that we have to carry. And heading to 2028 with that further growth steps that we will see over the years, the margin level will come back to a normal level. And with the higher volume that we will achieve in 2028, there is additionally no reason to step into further growth of EBIT margin, again, after this growth path.

Okay. Understood. And then just following to orders a little bit in 2025. Clearly, the guidance implies that momentum continues to be good. So if you could give us a little bit of an update here or elaborate a little bit on where you're seeing most of your orders, potentially even order growth this year. I think last time we spoke, you were expecting certification for metrology equipment over the summer. So any updates here will be great, especially also given the fact that if I look at Siltronic's numbers, it looks like it might take a little bit longer for them to invest in the next CapEx cycle. So just to -- paint a little bit of a picture in terms of the order dynamic, that would be great.

We still see a very strong dynamic on Metrology business. So the progress in increasing that business activities is stepping forward, and we still see very strong orders already in the first 2 months of 2025 in this field of operation and qualification processes are running quite well. So this is something where we see or where we expect further positive development in 2025 already. And we stepped into new areas with our material solutions technology in the energy sector. This is also something that is running quite well as well as the aerospace sector, which is growing steadily. So there is a compensation of the semiconductor business in the front-end area with stepping further into the back end of the semiconductor industry with our technologies as well as in different sectors and markets with aerospace and energy.

Okay. That makes sense. And then maybe just last one. Just to elaborate a little bit on the building blocks to the EUR 500 million, right? I mean, clearly, M&A is going to be a driver here. Metrology is going to be a driver. Is there any reason why the slower demand for crystal growing equipment could potentially risk that guidance?

So our clear goal is to diversify our product portfolio and the markets or to diversify us into different markets and into the -- in the product portfolio. So this is something that's very clear. It will not impact our goals as this is the clear goal to not be independent from single cycles and customers anymore in the future.

Great. That makes sense. And then just a quick update on cash for '25, if I may. With these margins guidance currently running at around, I think, is it around EUR 30 million CapEx this year roughly. So in terms of cash, what are you expecting here?

So here, we are roughly expecting the number you already mentioned. Our declared goal is to invest EUR 50 million in 2024 and 2025. And we are prepared to finance this coming from the renewed credit lines, which has a dedicated CapEx line to support these investments.

Thanks for the questions. And we move on to Mr. Brach. Mr. Brach, you should be able to place your question.

My question is also on the cost structure. So you are stepping up the OpEx investments in the sales department, especially this year. Should we expect a further step-up in the same dimension in 2026? Or will you be done with most of the structural increases this year with only some minor adjustments and increases in the next year?

Yes. So we will be done with the major investment in 2025. Maybe some additional improvements will come in 2026, but not a major amount.

Okay. Thank you for your question. And we move on to Mr. Moers. Mr. Moers, you should be able to speak now. So -- therefore, we move on to someone else, Mr. Kemper. Mr. Kemper, you should be able to speak now.

So a lot of the questions I had in mind have already been asked, but I would be wondering if you could elaborate on the key criteria, guiding your M&A strategy moving forward. For instance, what types of technologies or market segments you're targeting to strengthening your product portfolio and also balance the cyclical exposure? And the second question I would have is that what is your strategy moving forward to capitalize on metrology tailwinds, while at the same time, defending the niche of your company also against larger competitors and even customers in-house solutions. What I want to know is that how do your technological offerings differentiate the company really to ensure that it remains a critical supplier within this field, would be great if you have an answer for this.

Okay. I'd like to start with the M&A question. So M&A for us is always like a buy decision. We have a clear plan for strategic development, which is going in market development on an international base and which is coming with setting up a product portfolio, which is beneficial for us in terms of synergies between our technology lines and for our customers. And when we are deciding on acquisitions, this is always supportive for our developments in these markets and in the technologies which are beneficial for that portfolio. So metrology is something that is clearly a focus, but also the market development in an international base. And there can be some M&A supporting our strategy. But we are not heading to significant big M&A transitions, which have a transformation character for the company. Coming to metrology and our R&D road map, our R&D road map is very, very close to the road map of the semiconductor industry. And this is something where we're having a very close look on and in cooperation with institutes like IMEC, like Fraunhofer institutes in Germany. We are following this road map very closely and also the road maps of the customers where we already developed ourselves to be a major supplier. So we know what are the needs of the future. And this is exactly how we are also developing our metrology concepts to a major point is a high throughput and topics like high resolution rates, which we achieved, for example, especially in the ultrasound area already in a very high amount so that we are, let's say, the market leader for throughput and resolution. And our aim is to stay on that path and quality of our technology. Also when we extend our portfolio, this will be technologies, which will be beneficial for that road map and address future needs of that road map.

Great. Thank you very much. And we switch back to Mr. Moers. Mr. Moers, you should be able to speak now.

Hello, can you hear me now?

Yes.

Yes.

Well, I would like to follow up on the first questions we heard once with regard to order development and the order backlog. Can you give us an indication, is there anything in your order backlog of EUR 155 million dedicated for 2026? Or is the entire amount become -- does it becomes -- or does it transfer into sales in the current year?

Yes. So we have a few orders, which are expected to be revenues in 2026, but the majority will be converted into sales revenues in 2025.

Okay. Would you be a bit more specific? So are we talking 10% or 5% or 20%? Just to give us a broad range, just to give us an indication of how much order intake you need in the current year in order to reach your guidance? This is the aim of the question.

Okay. So I think you could probably say that for 2026, it's really not a significant amount we're having in the order backlog.

Okay. Then -- you should then obviously be fine with regard to your guidance 2025, if order intake remains on the same level that we're currently seeing. So let's say, EUR 30 million to EUR 40 million. But as a consequence, you would need to materially increase order intake in the current year or in the second half, at the end of the current year in order to generate growth in 2025, which you have indicated. So we're talking about the doubling of order intake. Is this part of your planning?

Look, as the cycles, how orders are running through our books are getting shorter and shorter, especially with the higher portion of metrology business, the in and out portion during a year will be significantly higher in the future as it was in the past. So the backlog at the beginning of the year will lose importance every year in the direction of 2028.

Okay. And my second question would be with regard to -- with regards to your guidance. The indication you gave or the reason for the decline in EBITDA in the current year is basically strategic measures. But to me, this does not appear to be a onetime investment. So all of this is structural investments as far as I have understood it. So it's a cost base that you increase and which might not go down in 2026. So the potential margin increase in 2026 can only come from an increase or material increase in sales. Is this the right way of looking at it? Or are there indeed some onetime investment -- onetime costs that would go away in 2026?

Yes, this is probably like you could see it, but we're also expecting an improvement in the gross margin, which will also help us to grow in the earnings. But in general, yes, we are investing in our sales structure to support future sales with very attractive gross margins.

And look, we are coming from a reactive sales approach and developing into a proactive sales approach. And that needs significant more capacity to reach out to the market than we have had before.

Okay. I mean, last point is with regard to your long-term or your medium-term target of EUR 500 million. You have never officially given a margin target with that. But as -- we already heard that 15% was basically the benchmark. Are you still committed to this 15%? And do you indeed want to return to this 15%, just to be sure on that side.

Of course, the years between are growth years. So we have to invest in that higher volume. And when we achieve that higher volume, definitely, our goal is to increase our margin level again. And also on the way through, we are working on that margin level already to achieve a higher margin afterwards or on the way to that already.

Thank you. And we now move on to one participant who dialed in via telephone. So I guess, we try a bit later, and move on to [ Mr. Wagner. ] [ Mr. Wagner, ] you should be able to speak now.

On your lead times, how have they developed? So I mean the background of this question is how quickly can you react when across your product portfolio, order activities by clients pick up significantly?

Lead times for the metrology business are between 4 and 6 months. And I think that makes also the significant difference in how that order book is turning. In Material Solutions, we still have longer lead times for bigger system technologies up to 18 months, but this is something that is also in development with the higher focus on the operational business on our GmbH, there is already an improvement in these lead times that we can achieve and that we will achieve further in the future.

And these 18 months, how low can they go in theory?

It's too early to comment on that.

But especially in the Material Solutions, it's possible to have revenues over time. So it's not always the case that there is a gap between order intake and sales revenues of 18 months.

Well, thank you, and we move on to the participant on the telephone line. You should be able to speak now.

Hello? Can you hear me?

Yes, yes, now, we can hear you. You can place your question.

Apologies, issues with the mute button. Hi. It's Gustav from Berenberg. I just have 3 questions. I will do them one by one just because there's a lot. First one on the extra investments for '25, could you help us quantify how much is going into sales and service? And how much do you expect to be going into R&D, either in euro million terms or in percentage terms? That would be my first question.

Yes, I think we can only discuss at the current point that we're seeing major investments there, but we're not disclosing actual numbers or percentages here. But the aim is to grow the R&D investments into a direction of up to 10% of the sales revenues.

Great. That's helpful. And then a question on metrology. Could you give us more details about the progress that you're making here in terms of winning new customers and what are the tools being used for at your customer site? And I'm hoping for an answer which is not just the back end, but -- are they going into the memory side of the chip market? Are they going into logic to displays, et cetera? And then how far along in the ramp-up process are these customers with you?

So systems are going in all of these areas. Major points for us in qualification are more the area of the development of the bonding solutions, which are bringing a higher demand for inspection technology with it as every bonded solution has to be inspected in a 3D format, and ultrasound technology is the only nondestructive testing method that can be used in that area. Our qualification processes are making progress. And so we already developed ourselves into a new account in 2024. We extended our contract with existing accounts again in 2024. And we stepped into qualification processes with Asian -- or 2 Asian accounts over the year of 2025, which are still running. So this is just -- it's a matter of time when this volume is going to be scaling.

Great. And last question is on the growth pickup expected for 2026. What exactly gives you the confidence that this will come through? And can you help us understand if you have any orders written on paper, but where you have not received the prepayment and therefore, it is not in your order intake as of yet?

Of course, we always have a package of orders where we not received the prepayments yet because we are only showing the orders to the market when we receive the prepayments. And this is already the case. And some of these are also already related to 2026. For 2026, we see, on the one hand side, a pickup of market situation again in total. So general economic situation around us is still very weak. And over the time, we expect a positive development on that side in general. And especially in the semiconductor market, there are certain things in the production process that support for our technologies, especially in the field of metrology, which we see in a stronger phase in 2026 happening in the demand of the market.

Thank you very much. And we now move on to Mr. de Jong. Mr. de Jong, you should be able to place your question.

Can you hear me?

Yes, we can.

Yes.

Great. Okay. Most of the questions have been answered, but I still have a few on the gross margin side. So we should see some improvement in the coming years with the business mix shifting towards more metrology. Can you give maybe an indication of how big this improvement could be? Is it 100 basis points or is it 200? Or just to have a sense for us.

Yes. I think we could say that we are aiming at improving the gross margin at a level, which is common in the semiconductor industry, but with some industrial in the mix. So -- but you will see a significant improvement there...

Over the time, yes.

Yes, over the time.

So we should be thinking around 40%, 50%-ish kinds of things for, let's say, for the semi part and maybe 30% around-ish for the industrial parts?

Not already in 2025, but on the way through, yes.

Okay. Yes. Of course, not. Okay. On metrology, I think most of the questions have been answered. Markus indicated that there were some more inquiries and there had been more inquiries in 2024. Is that going to be lead to more qualification processes again in 2025? Or are there customers stepping up?

I think, what I mentioned was that we're seeing a positive trend in the order intake, but also in the projects we are discussing with current or future customers. So the activities are picking up, but there are not yet concrete orders, but the activity is we're seeing an upward trend here.

Yes. So both order book and also the discussions with customers are steadily increasing, yes. So there is quite a lot of activity in the market, which -- yes, reflects further need of technology and an increasing amount of orders for the future. And in terms of qualification processes, yes, we stepped into several qualification processes additionally over the time, yes. So this is always depending on several production lines of customers. So we are not involved only in one production line and the qualification process. This already extended. So there are several qualifications running.

Yes. So that could be a major driver. All right. And on the silicon carbide part, I think we've seen the U.S. producer really struggling with their yields. And I think with you whether the technology you are attempting to make better yields on the silicon carbide part. Can you maybe give a little bit of an overview of how the progress is going there?

Yes, of course. So our silicon carbide project reflects the whole value chain. So it starts with the powder, which is already impacting the quality of the crystal very significantly. With that powder, we already made progress to develop a process to produce a high-quality powder and designed a system around this production process, which is going to market in 2025 and introduced to customers already. And then we are taking care about the crystal growing process and everything around that. So we are -- we have made very much progress in the 6-inch crystal growing process. There is a high-quality crystal that we already got out of that process and we stepped into the 8-inch development, which will be finalized in 2025. Major and significant component around that crystal growing process is the [indiscernible] which is out of graphite. So this is something or a field of operation where we are also very experienced in the case of our technologies, which are going into the graphite industry. We have significant know-how about their processes and close contact to the customers in that field as well, which are beneficial for that project and the development around that. And then the last part is the metrology concept around the qualification of the material before it's getting to be used at the customer site. And there, we are working on a setup for metrology concepts, which is either addressing the crystal growing companies, which are producing the material and the ones who are at the end using the material, and we are in discussions in close contact with all of them.

Yes, that could become a driver it's looking up. It has been a difficult market last year. But...

Yes, it's different. So we are addressing different areas of the market, not only the crystal growing part anymore rather than also the things around that. So this makes for us a potential to also come into discussion with customers who are not using our crystal growing technology right now to talk about powder production or the qualification of the material as well as with the ones who are getting the material out of several sources at the moment. So this is making progress. The market in total is a little bit slower than we all expected in the very beginning, but yes, we believe on a pickup of that market also over a certain time frame. And we are not only talking about the e-mobility market, yes. So this is maybe the one that we are which we are seeing as the most weak one, but the energy sector is also using a significant amount of that material and this is running quite well. And there are future solutions which can also impact the demand or need on silicon carbide in high-performance areas where we are taking care about.

Okay. Great. And then maybe finally, more or less from a macro perspective.

Maybe let me add something. So when we're talking about a technology hub, it's not only about silicon carbide. This R&D center is taking care about all future materials, which are important for the market. So this is just the process of crystal growing the PVT process, which is driven there, and this also can -- yes, be used for different material areas like aluminum nitride and so on. And all materials of the area of wide band gap materials are important for this development center, and we are focusing on the megatrends that we are announced to the market, which we are addressing also within this R&D center, taking care about the processes around that future materials.

But this is the first commercial...

The first initial project, which we are -- has a significant impact on the cost structure and also on the resources here.

Okay. And then on the macro side, so we've seen a new U.S. President with import tariffs going all around. And we have also seen a new German now, new German, I don't know, but government, at least, with a big spending plans. Can you give a little idea for how that could impact you, both the U.S. part and the German part?

Yes. Yes. So coming to the tariffs there, we actually see not an impact on our activities right now, but it's something that we are closely following. And yes, evaluating for us and our activities. In total, we have a significant approach to enter into the North American market, where we have a concept behind that, which might get -- come within higher investment phase than we originally in the beginning of 2024 were are driving to, yes. So we will be maybe a little bit faster in things that we are pushing rather than we expected in the past. Coming to the local situation investments that have been announced investments that are coming with the political situation and yes, the things which are needed to get Europe into a position and it is suitable are also a positive impact on our activities as also our technologies are going somehow to the defense sector, and are used in that field. Also silicon carbide, for example, is a material, which is very relevant for the defense sector. So this can have a positive impact on our activities as well.

Especially the industrial, I would think.

Yes.

Okay. So we have 3 more participants with questions. So I would move on to a user who has dialed in and you should be able to speak now.

This is Matias [indiscernible]. I have a question. Regarding your transformation, you do some very courageous and bold steps to transform this organization and have also a very long-term perspective. You put a lot on your plate. Also financially, you invest in growth, you buy back shares, you have doubled your CapEx, you target M&A. So all this is very ambitious. My question is, with no anchor or a strategic investor in TePla, wouldn't it be also in the perspective of if hits fin -- financially to have a backstop to have a strategic investor? And do we have a process to find one? And what's the -- or is there an update on this?

We are still steadily having a capital markets presence and steadily in touch with our investors and in the year of 2024, we already made a lot of progress to find long-term oriented investors, which are going with our strategy. So this is something where we are well prepared to achieve our targets on the long-term run and having supportive investors in our books.

But you're not like looking for a significant strategic investment?

As I said, we are steadily in contact with our investors and our potential investors and we are having a very great setup of investors supporting our long-term strategy. We are in discussions with these investors, and this is positively supporting our strategy.

Okay. On the more day-to-day basis, on a 3-year basis from '26 to '28, you would need like a north of 20% CAGR on your sales to reach the midterm target. Can you give us -- not numbers, but the ballpark? You also said that you won't do transformative M&A. So what is like a ballpark number for the organic part of that growth?

This is something which we did not disclose on as this is always coming with a make-or-buy decision. So there are certain areas of technologies which we see as relevant for our path. And there might be a potential to go by ourselves in an R&D investment to support this area as we have to now on board or there might be a cooperation or a acquisition behind that. So this is something that you will see developing over this time frame.

So no fixed quantitative target on that. And last question. If you see the delta in your margins on the EBITDA level, '24 to '25. You also mentioned some gross margin improvement. So let's say, ballpark wise 450 basis points. Is that all strategic investments? Or is there also a component of underutilization or slower growth?

Not sure if we got your questions on the right way. But also in gross margin, we see a positive development already in 2025. Further positive development, you already have seen some in 2024. In the area of overhead costs, we see significant investments because of our strategy and addressing our strategy.

What I wanted to know is that the difference from '24 margin to '25 margin, ballpark-wise is like, I don't know, 450 basis points. So if you put some gross margin improvement on top of that, so it's the, let's say, then 500 basis points, is that all strategic investments? Or is there also a component of the growth of underutilization that hurts your margin?

The development on gross margin is coming from a positive development of our operations and our actual business activities and the improvements in our orders that we are seeing because we are stepping into different markets, yes. So this is maybe we don't understand the question in the right way.

Basically, the underlying question.

Yes, it's not under capacity, which we are covering. We said margin. It's a development in different market segments, which is supportive for the gross margin level.

Yes, it's just an attempt to quantify your strategic investments, but you don't want to give the number. That's fine. It's all right.

Okay. We are slightly over time, but we'll maybe take some short questions. We have [ Mr. Friedman. ] [ Mr. Friedman, ] you should be able to speak now. Okay. So then we move on to [ Mr. Spang. ] [ Mr. Spang, ] you should be able to speak now.

I have just one question left. You already indicated a strong order momentum in the first month in metrology. But can you give us for the whole PVA Group some insights into the order intake in the first month in 2025 to get a feeling of the current trading?

As we already said that the positive trend from 2024 is continuing, and we're having a lot of inquiries, but we're expecting them to become orders in the near future, but we are already heading to the end of the first quarter. So we're not eager to disclose an actual number today here.

But just from a more qualitative side, would you say that...

There's no reduction compared to 2024.

So can we expect a higher order intake in Q1 than in Q4?

That's depending on the prepayments and when we are receiving the prepayments. This is something that's maybe a little bit -- yes, complicated to disclose on today, yes, because there is a high significant activity that we are seeing on the market. We are steadily closing orders. Orders are on a healthy level. This is -- trend of 2024 is continuing, but the exact amount, we will see when we know how many prepayments we got in on the end of the first quarter. But you have our guidance, so maybe you are counting with the guidance that makes it easier.

Thank you very much. We have one last question. [ Mr. Friedman, ] you should be able to speak now and place your question.

Now it's 2 questions from my side. First one is on working capital. And well, given that the sales mix is going to change in the run-up to 2028. I wonder whether working capital as a ratio to sales is going to go down coming from the level of 2024 or up? And second question is on the after service sales, there has been a year-long level of EUR 30 million per year. Now this went up to EUR 40 million last year. Question is whether there's something extraordinary here or whether this is a new level?

Okay. So addressing your first question with the working capital. So I think we're in a phase where we are growing in sales. And this obviously also means that we're growing in the working capital. But we're addressing markets with a faster rotating order book which also means that the raise up in the working capital will slow down a bit here. So it's kind of a mixture. But in general, you could say we have a growing company, the working capital is also increasing.

And in terms of after sales, so after sales is something that will steadily increase over the long run as well as this is also something where we are not actively addressing the market and solving the installed base or serving the installed base in an active format. So -- in the short term, we will not see a significant increase on that after sales portion. But on the long run, there is no reason why after sales shouldn't be in line with what we are seeing in the benchmark.

Okay. Thank you. And ladies and gentlemen, as this was the last virtual end, we therefore, come to the end of today's earnings call. Thank you for your shown interest in PVA TePla and the lively conversation. And should further questions arise at a later time, you can contact Dr. Fisahn from Investor Relations at any time. Thank you to Ms. Ketter and Mr. Groß for your presentation and the time you took to answer the questions. We wish you all a lovely and hopefully, sunny remaining weak. Take care and bye-bye.