PVA TePla AG ($TPE)

Good morning, everyone, and welcome to PVA TePla AG's Earnings Call for the Full Year 2025. My name is Sebastian Gonsior, and I'll be moderating today's call. And in a second, CEO, Jalin Ketter; and CFO, Markus Groß, will walk you through the results for the fiscal year 2025 and share their outlook. After the presentation, we'll open the floor for your questions. A quick housekeeping note before we start. This call is being recorded, and a replay will be made available on our website within the day. And with that being said, let's get started. And Jalin, over to you.

Good morning, and thanks, Sebastian. 2025 was a challenging year for PVA TePla, operating in a very cautious market environment. But at the same time, we used that period to prepare the company for growth in both segments, Metrology and Material Solutions. Over the last 2 years, PVA has developed from supplying highly specialized solutions with small volumes to now significantly targeting global high-volume markets, which means that we are addressing the world's largest chip producers now. This transformation requires a fundamental transformation of our organization, and this is something that is still ongoing. Further to this, we have had a strong order momentum, which especially took place in the second half of 2025. Both product lines developed very positively. Aiming for growth also requires the right fundament to build on. We did set up an investment plan to support this, which was executed in 2025. This also caused higher operational expenses for investments in technology and sales and service infrastructure and our organization in general. And these investments also include some project costs, which are having short-term effects on our overhead costs, 2025 and 2026, but will not be recurring. Markus will explain a little bit deeper what it is about. Our gross margin development were stable with 32% and yes, also was coming with a lower revenue volume in a positive development. Efficiency projects, which we already have started, contribute to the gross margin development already starting from 2026 and onwards. And we started to focus our activities in the Industrial segment to new high-volume markets. With this, we already have started to increase our share in the energy market. For example, R&D projects with customers to produce advanced anode materials for battery technology. But also, we increased our share in aerospace in North America and Europe. Within 2025, we expected our portfolio with -- we extended our portfolio with cooperations and acquisitions. And we started with a vertical integration of a supplier of us. This was supporting a faster production increase in our Metrology business. And further, we strengthened our optical metrology with new patented technology that we took over and a strategic partnership. And the positive about that, I would like to mention is that there is already an outcome of that project. So we started to produce first R&D systems, which will be delivered to institutes in the first half of 2026. Most excitingly, we stepped into high-volume business with our acoustic metrology. But this is something that I would like to keep for a deep dive later. Let's first look to the financials with our CFO, Markus Groß.

Good morning, and welcome to today's earnings call. I'm happy to guide you now through our financials. And we're immediately starting with our group revenue. Q4 was our strongest quarter in 2025 with almost EUR 69 million. And for the Semiconductor Systems, it was a good quarter. And for the Industrial Systems segment, it was a quite strong quarter. Overall, we completed the year with a revenue of EUR 244 million. And here are 2 key takeaways. First of all, we are pretty close to the midpoint of our updated guidance from October between EUR 235 million and EUR 255 million, but we are also almost 10% below the previous year. When we started into 2025, we guided for EUR 260 million to EUR 280 million. And during H1, we had to realize that there are delays in the order intake, which led us to guide with H1 to the lower end of the bandwidth. In H2, project timing shifts affected our revenue recognition across several markets and product groups. And in this context, it's very important for us, there are no cancellations and projects were and are expected to convert in 2026. Looking at our product groups. Metrology is with 40% contributing to our revenue mix. And in revenues, high-volume customers have a growing share. Looking at the regional split, Europe is our strongest market in 2025 with 43%, closely followed by Asia. And there's always a back and forth between these 2 markets. We will see in 2 slides ahead that this is about to change here. Coming to the order intake. We see a very strong development over the year with an almost doubled order intake from Q1 with EUR 46 million, up to EUR 91 million in Q4, which also means that there is an average growth rate per quarter of more than 25%. Demand was supported by both product groups with especially strong contributions from Material Solutions in Q3 and even more in Q4. Here, semiconductor-related investments played an important role. Metrology showed normal quarterly volatility in Q4. And we're seeing already in 2026, a catch-up with a very strong order momentum with orders as of today around EUR 50 million, but some of these orders have agreed delivery for 2027. So more generally speaking, the Metrology order run rate is only expected to accelerate from late H2 2026 onwards. And we're also seeing an increasing demand in Material Solutions for crystal growth for high-end semi applications. Jalin will give you additional information here in a couple of minutes. The order intake for the full year increased by almost 78% from EUR 151 million to EUR 268 million. Demand was supported from both segments, especially in the Semiconductor Systems segment. And our book-to-bill ratio is now again above 1. Looking at the product groups, Metrology has also more than 41%, and it highlights the growing importance of our inspection technologies. Looking at the regional split, we can see that Asia is accounting for more or almost 50% of our order intake and that the U.S. or North America increased in comparison with the revenue from 15% to 20%. Both markets are driven by semiconductor investments. Coming to the group profit. And looking first at the gross margin, which developed quite stable, from 32.6% to 31.9%. So we're seeing a reduction of 0.7 percentage points. But this is despite a challenging environment with weak order intakes in 2024 and the first half of '25, which is a clear indication for us that there is no price pressure in our product mix and strength -- it shows the strength of our group's business model. Revenue was at the same time down by 10%, which means that also there are capacity underutilizations in comparison to 2024. This adds another pressure on the gross margin. So all in all, we are satisfied with the development of the gross margin in 2025. Looking at EBITDA and its margin, we're seeing a quite dramatic reduction of EUR 22.5 million, or 47%. I would like to break this down for you to give you a little bit better understanding here. Due to the lower sales volume, we lost around EUR 10 million in the gross profit. And the remaining EUR 12.5 million can be more or less broken down into the scaling up of our R&D, sales and service activities, with EUR 9 million as recurring costs and another EUR 4 million of nonrecurring strategy and related one-off items, both in the light of our strategic initiatives. So taking a closer look at our Semiconductor Systems segment. We already discussed the revenue development. And here, once again, the delayed projects are expected to convert into revenue in the coming periods. Looking at the EBITDA and the EBITDA margin. It's important here despite the effects I just explained that the gross profit margin developed positively from 37.3% to 37.7%. The R&D increase we're seeing in the P&L is especially attributable to the segment, Semiconductor Systems, and is around EUR 6 million, and the other operational expenditures increased by EUR 2 million, which translates to around 5 percentage points of margin. In the Industrial Systems segment, revenue and order intake both increased, order intake, especially. Both developments can be attributed to a stable demand coming from the energy and aerospace sector. Looking at the EBITDA in Q4, we see a quite dramatic reduction, which is related to consolidation-related one-off effects. So looking at the full year, it gives you the better picture. The gross margin developed from 23% to 25% during the year 2025. But at the same time, due to strategic initiatives, the operational expenditure increased by EUR 4 million, which is more or less the effect you see in the EBITDA. Coming to the cash development. Our operating cash flow was around EUR 12 million for the full year, but also for Q4. If you remember, in Q3, we were quite close to the -- near zero due to working capital effects, which reversed in Q4. The cash flow from investing activities was around EUR 30 million, and 50% of these can be attributed to strategic growth initiatives, EUR 5 million for the acquisition of desconpro and DIVE or PVA Vision as of today as investments in our Metrology business. Other investments were in technology and capacity expansions. With 2025, we're in the middle of an investment cycle, which started in 2024 and will continue at a comparable level in 2026. But then onwards, we will return to approximately 50% of what we are seeing today as at the normal level. So let me conclude the financials with a little bit more color on our guidance. We are guiding for revenue between EUR 255 million and EUR 275 million. And at the same time, the order intake was EUR 268 million, with especially strong contributions in Q3, but even more in Q4. And these were primarily driven by Material Solutions. Projects here often have lead times of 12 to 18 months. And especially in this case, a substantial part of the revenue will take place in 2027. At the same time, we have a very good view on '26 and also beyond. So roughly 50% of our guidance in '26 are already covered by the order backlog, and the rest will be coming from order intakes in H1 in Metrology and Material Solutions as well as our regular run rate from service and aftersales revenues. In 2026, the EBITDA has been guided for EUR 26 million to EUR 31 million. And here, around EUR 18 million are attributable to strategic initiatives, where EUR 13 million are from recurring scale-up costs, and EUR 5 million are related to one-off items, like IT projects or restructuring. That's it from my side here for the financials. I'm happy to answer your questions during the Q&A, and I'm handing back over to Jalin.

Thanks, Markus. In our strategic update today, I would like to remind you about 2 important fields we are active in and give you some insights about actual developments of these areas. Let's start with Metrology. Within our midterm targets, scaling acoustic microscopy is one of our most important tasks. With this technology, we are addressing high-end semiconductor applications in a steady growing market environment. And until mid of 2025, we have been more active in R&D and near-line inspection with our tools. And this is addressing special applications at customer site. The systems we delivered have been more highly customized, but either manual or semi-automated, only in a very few cases, fully automated. The applications we addressed with this technology were mostly placed in the production of legacy node chips, which is more automotive and industrial electronic oriented. The number of customers in that field is high, but the number of systems used in such a fab is low. Based on our outstanding technology, focusing on high throughput and resolution, we took the opportunity to address now the world-leading chip manufacturers. Within that, we are bringing our tools now into R&D centers of these companies and production lines, which means that our systems are now used in line. And this brings different requirements for us. The number of customers in that area is small, but the volume of tools used in the production is significantly higher than in other fields. The tools have to be copied exactly, which means that once they are evaluated and set-up is fixed, R&D process with customers has ended, there are no changes anymore in the systems. And we have to support the customers into a 24/7 on-site support. Also, the quality requirements for tools and service are significantly higher than in other areas. And this causes also changes in our production processes, the tool setup and the qualification of our teams. It's a different world for us. Stepping into this market is only possible when we are participating in qualification processes and improve our technology on customer side. And these processes can take up to 12 months, sometimes a little bit longer. It's also depending on changes of the technology for special requirements of the customer. Sometimes there is an R&D phase, which we often have seen already where we are adjusting step-by-step the tool for the application of the customer. But -- with that development, we already made a very great progress stepping into that market. So when we just take 2024 compared to 2025, in 2025, more than 50% of our activities in acoustic metrology are already related to this high-volume business, which is significantly more than before. With new developments and production steps and the higher complexity of semiconductors, the need of 3D inspection in nondestructive ways becomes also more and more important. And our inspection method is relevant for both, memory and also advanced logic chips. With the technology that we are able to address, actual stack -- HBM stack levels, but we are also prepared for the next generation, which means that stacks are increasing, but also material concepts are different to before. And the layers which are builded up there are getting very thin now. And acoustic metrology is the only way to really nondestructive inspect with a high throughput and a high resolution. Also hybrid bonding is a very important technology for next-generation artificial intelligence and high-performance semiconductors. Its critical challenge are structural anomalies at the bond interface that pass undetected in electrical testing. So if there is a defect, it would only occur on the end customer side. Scanning acoustic microscopy is uniquely positioned at the only nondestructive technology, able to identify these kind of defects already at the process level, which is very important. And this gives PVA TePla's customers a significant quality advantage and positions us at the center of the most demanding quality control requirements in advanced packaging. Most of this most likely causes that the method becomes required for semiconductor production processes, which would be very supportive for our development. [indiscernible] that can come up. Having a look to the addressable market, we observe that it's steadily increasing. Since our Capital Markets Day in September 2025, market demand for 2028 increased to about $550 million, and we still aim to generate a market share of 30% to 40% of that market. And with all of that, our midterm targets are significantly underlined. For Material Solutions, I want to point out synthesis technology for semiconductors. Our strategic aim in this field is to diversify our activities and address a broader range of future materials with our technology. Also in this technology, we are coming from single-system approach, very customized systems, for special application at customer side. And also with the focus on silicon and silicon carbide for power electronics, where we still have... [Technical Difficulty] Let's start again with the Material Solutions area. I just heard that we had some problems with the connection. So I hope that I'm getting the right point to start again. Yes, for Material Solutions, I would like to point out synthesis technology for semiconductors, where our strategic aim is to further diversify our activities and address a broader range of future materials with the technology. And in this field, we are coming also from an area where we have been focusing on single-system approach, very customized systems for customers and special applications. And yes, we already stepped into kind of volume business with focusing on silicon and silicon carbide for power electronics, but we still had some dependencies on single market cycles. And with the strategy, we aim to fully reduce the dependencies on single markets and customers. In 2024, you might remember that at the beginning of the year, we announced that we opened our R&D center, PVA Technology Hub with a strong focus on future materials. And in the meantime, we made a lot of progress with this development team. So on the one hand side, we pushed the next generation of crystal growing technology in established market field. But on the other hand side, we also broadened our activities from single-element crystals to compound semiconductors. Last earnings call, I already mentioned the new developments in crystal growing technology for silicon carbide in 300-millimeter. And yes, I'm happy to announce today that this already brings a positive outcome as we are already discussing with different customers about R&D systems, to deliver. And in the meantime, we also [indiscernible] so-called vertical gradient freeze. Okay. Next to calcium fluoride, which is relevant for optics, and an established field for us already. Indium phosphide is a very promising material for photonic chips. And this is very important for the connection between data centers. So it's also coming with everything around artificial intelligence. Also for this technology, we already started first customer projects and will deliver a small number of systems used for R&D at the second half of 2026. And we expect to further contribute on the positive market development of this period. As mentioned right at the beginning, we used the year 2025 to start the change of our organization, which are needed to address the high-volume markets. And yes, Metrology in that is the most important growth area. And already 2025, we increased our production capacities with the vertical integration of the desconpro, but also additional cleanroom capacity. In 2026, we will finalize the increase of our production line for the optics for the systems and additional cleanroom capacity for that high-volume area. But we also gain more and more market share in Metrology worldwide, which means that we now start to bring our training concepts to the next level. This comes with, on the one hand side, additional floor capacity in Germany, which we invest. But more important, it's a combination with an international on-site approach, to be near at the people that we just hired in Taiwan and Korea. We already streamlined our organization, already in 2025 with the consolidation of our team in China. And beginning of 2026, we further decided to close our facility in Coburg, which provides metrology tools with less potential to scale. High scale potential and fast-growing markets. So closing that facility is in line with our strategy and also allocate more resources to Metrology projects, which are supportive for our midterm targets. So we further streamline the organization in that field. Yes, we steadily also work on the improvement of our operational excellence. This is something that we already started last year with a new shopfloor management that we implemented. And in 2026, there are some additional projects to optimize production flows and lead times, and that will be supportive for our gross margin development starting from 2026, but also ahead. We also reviewed our software landscape. We initiated a project for a new CRM system and HR system. This will be finalized in 2026 as well. And one last point that I would like to point out is our One PVA approach, which we initiated in 2025, which is also a cultural change to leverage synergies across the group and also avoiding silos and most important, present as one global team to our customers. And Markus already explained in detail our guidance, so I will not go too deep on that again. But we started with a very strong order momentum in Metrology during the first few months of the year. And I would like to really point out that parts of this order intake already relate to 2027, which finally shows that the technology has been adapted for HBM, and it underlines our expectation for significant growth starting from 2027. So please take that point with you from today. Also in the area of Material Solutions, we already see a diversification of activities in new market activities with growth potential. Examples for that are on the one hand side, battery technologies, but on the other hand side, materials like indium phosphide, which have a great potential in the market. Looking beyond 2026, we also focus on the expansion of our service and aftersales business, which will bring more recurring revenue level and of course, on the improvement of our profitability. And with that setup, we are very well prepared to -- and committed to our midterm targets. But before we close this presentation, I want to remind you about the most important points of today. The market for the use of acoustic microscopy grows significantly, and we are very well positioned as we already have been qualified with the technology at some major chip manufacturers. Our activities in the Industrial segment are strongly focusing on fast-growing markets such as aerospace and energy. And the expansion of our cost structure, which also includes nonrecurring cost effects in '25 and '26, is short term impacting our earnings development. But on the long run, it's an investment in the future of PVA TePla. The demand of both product lines, Metrology and Material Solutions remain unchanged, which is already reflected in that strong order momentum that we have seen over the last quarters. And our midterm target to achieve EUR 500 million in revenue remains unchanged. With having said that, I would like to close the presentation. Thanks for listening, and we are coming to your questions now.

Thank you very much, Jalin. So we will now move to the Q&A section and open the floor for your questions. We kindly ask you that you limit yourselves to two or three questions at a time so that we can give everyone a chance to participate. And remember that you have to raise your hand, so you can post questions via audio and not over the chat. So Maissa Keskes is first.

Maissa, can you hear us?

Maissa? Okay. Apparently, there are some connection issues. Let's -- Michael Kuhn is next.

I think there's always a tiny time delay with the unmuting. So starting with the first question on the very strong order intake in Metrology year-to-date. Can you provide us with a rough split what was for HBM already? And maybe also an idea why this HBM order came so early despite the obviously quite short lead times in that business. That will be the first one, yes.

It's the first double-digit order for 2027, to save also capacities on PVA side as you're seeing that we are getting more and more orders also in the actual time line, so for the actual year. And there are customers who already want to save capacity for 2027 to be prepared for the investments. And from the Metrology side, yes, the majority of the orders that we are having or that we are seeing in the first quarter are for high-volume business. So it's a split between HBM and logic.

Understood. And then, I mean, HBM players, there are only 3. Are you in contact with the other 2 as well?

Yes, we are in contact with everyone.

Fantastic. Then one on the Material Solutions and crystal growth, which was pretty strong in Q4. Obviously, Siltronic isn't placing any orders right now. Could you provide us with, let's say, a few more details or indications on what's the background of that order in the fourth quarter?

Yes, it's also synthesis technology for semiconductor applications, but we cannot disclose exactly which area is behind that.

All right. And then last question, the third one. In the context of silicon carbide, you mentioned 300-millimeter again and discussions about R&D tools. Maybe some indications on who are the potential customers here, maybe location? And what could be the time line of that project, let's say, once it converts into volume orders?

We are talking about R&D projects at the moment. And this is a different area of application. So in the past, it was more power electronics, so automotive and energy related. And now we are talking about areas which are also supporting developments on the artificial intelligence side. So this is a different use for the material, and this is also something where locations are diverse. So it's Europe and it's also Asia.

So that will be more like SiC interposers.

Yes.

All right. Let's -- Maissa, let's try again with your questions.

Hello? Can you hear me?

Yes.

Okay. So the guidance '26 came in well below the consensus, and it's just 8% increase at the midpoint of the range, despite all the good news in the industry and your new customer win, which raises some concern on '28 targets as it will imply around 37% CAGR, meaning still a huge order intake needed. What are you hearing from your customers? And what gives you confidence that '28 targets are still in place and that there are no risk that it will be pushed maybe into 2030?

Yes. So as just mentioned in the presentation, especially the developments on the Metrology side are giving us very well confident that starting from 2027, we will see a significant growth in that area as we are getting more and more qualification processes closed, already orders received for 2027 to serve -- to save production capacity. So very good signs from that area. And on the materials side, that diversification, which I wanted to point out in the presentation also, is very supportive or underlines very well that we are on the well track to achieve that target. So we are very confident for midterm revenue volume. Timing with 2028, we just see that there can be some shifts in months, but it's not a shift -- a significant shift that we would foresee for that.

Okay. And there has been an increasing industry momentum around the silicon photonic, which you have already highlighted. Given your exposure to this market through the metrology for advanced packaging and for crystal growing system for indium phosphide, could you clarify whether you have already started to see order intake related to silicon photonic for crystal growing systems? And are any of these applications already included in your recent orders? And what kind of customers that you are addressing in this field?

Yes. So we are already having a small number of systems that we will deliver on the crystal growing side in the second half of 2026, which are for that material. So we are active in that field. We are having first activities. We expect that, that will further grow over the time.

Okay. And maybe the last question, can you provide some updates about the remaining qualification for the potential new customers? And when are you expecting to get it?

Yes. On the qualification side, so we are very well progressed with that. As you know, each production line needs a qualification of tools. So that means that there will be a continuous process. So we will never end with that as we always have to qualify again, which doesn't mean that there is a long qualification process anymore when we're stepping in new production lines because the first is always the most intense as tool setup has to be aligned with the parts that have to be detected. We are making progress. So we see already a nice order intake from -- coming from Taiwan. We sold the first system to Korea. So nice development on that side.

Bastian Brach is next.

Can you hear me?

Yes.

So 2 questions for me. The first one is if you could break down the EUR 18 million additional costs you guided for in 2026? Of which are EUR 13 million for business scale-up, is that mostly R&D or your service centers? So maybe a little breakdown there. And the EUR 5 million one-off items, is that related to the ERP project? Or what is included in that?

Yes. The scale-up is especially in the R&D sector, but also for our sales and service infrastructure. Jalin mentioned it already, and we did in the last calls that this is a requirement in terms of the nonrecurring strategic initiatives, but also it's from the restructuring in Coburg we mentioned. And there are IT projects going on. Jalin mentioned the CRM system. We're rolling out a new ERP system with some of our entities, and these are the most important projects there.

Okay. And then the second one is on the headcount growth, which you mentioned is largely completed apart from some, yes, special hires. Does it mean there's also no significant headcount growth necessary to reach your midterm targets? So even in '27, '28, we only see a moderate headcount growth? Or was that related to 2026 with another increase in '27, '28?

No, we expect not a significant increase anymore. So that will be more related then to further buildup of activities and future-oriented when we see that the business is getting stronger than we originally planned. So it's only moderate development that we are foreseeing now.

All right. Thank you. Hartmut Moers, please.

Can you hear me?

Yes.

I will start with the cash flow. Probably you could guide us a bit through your thinking for the coming 2 years. So with CapEx still being high in '26 and also some decent growth, working capital should increase. So would it be fair to assume that free cash flow would still be negative in 2026? And with CapEx coming down in 2027, you should be back to somewhere around positive breakeven, something like that. Is that a fair assumption? Or am I missing something here?

I think I got most of your questions. So we're thinking about the cash flow for 2026 that looking at the EBITDA level and the CapEx we are planning, they are more or less -- you mentioned the working capital development. Yes, we're seeing there a growth in Metrology, but at the same time, we're receiving larger orders in Material Solutions, where the majority will take place in 2027. So prepayments will support here the business. This is what we are often explaining how helpful both business lines here are in financing. So we're seeing that the cash flow here will be supported by Material Solutions. And I guess you didn't have yet the time, but we added some sections here in our business report where you can find also some views in this topic.

Okay. But you can confirm that 2027 should be in positive territory on the free cash flow side, yes?

Yes. That's our expectation, yes.

Yes. Great. The second one was your statement with regarding to Q1 order momentum remaining strong again. And on a previous slide, you had mentioned that you are currently at a 25% growth rate in order intake. Shall we make the connection and add 25% for Q1 to the EUR 90 million we had, well knowing that Q4 included some build orders? Is that what you're saying or...

No, no. We meant that the strong order momentum from Q4 is continuing in Q1 '26, not that the growth rate of 25% will continue at this level in 2026.

The growth rate compared to what? Are you saying we're looking at the same level?

Yes. We are looking for Q1 at a comparable level to Q4.

Okay. That's clear now. Last one would be with regard to your medium-term guidance. I mean everything you're saying now relates to your sales target. Originally, you also had a margin target. Are you modifying that in any way? Or are you still keeping to the 15% once you've reached the EUR 500 million?

So as we're going to combine the revenue target with the margin target, the margin target is meant for after growth, and this is also staying like that for now.

Constantin Hesse, please.

Can you hear me okay?

Yes.

I've only got a few questions left. Can we start maybe with the commentary around Q1 capacity reservations? I think that is definitely something quite interesting and that you probably haven't seen before, at least not from other players compared to what we had from Siltronic before. So if we look at capacity reservations, and you basically mentioned that you're talking to every HBM player out there, do you think that these capacity reservations could continue into the year? Could we see more of that? Or do you think this was more of a one-off? That's the first question. Let's start with that one.

Yes. So it's depending on how the customers are acting. There are some who are reservating and putting final orders in place, and there are some who are just forecasting and putting the orders in place how -- like we agreed. So it will be diverse over the year. We will see some more reservations, but we also will see orders that are coming with the... [Technical Difficulty]

Sorry, you cut off there a little bit at the end. But fair enough. So it's fair to assume that reservations, you expect reservations to continue into the year.

Yes, but not for all of the customers that we are targeting for. So they are working different. Some are doing reservations and some don't.

Okay. Great. On the -- look, we've been talking a lot about the momentum and the outlook for Metrology with an acceleration anticipated in the second half. Could you maybe just give us a little bit of an idea of how you're thinking about Material Solutions? Because from what I understand, if we're looking at a similar level in Q1 relative to Q4, that implies, again, quite a significant decline again quarter-on-quarter from a Material Solutions perspective. So looking at Material Solutions, do you expect a bit more of a sustainable growth over the year? Or is it still going to be quite volatile quarter-over-quarter?

Material Solutions has one special effect that always comes, again, as sometimes we are talking about higher order volumes that are getting placed and that also is combined sometimes depending from where order comes from with prepayments that we are waiting for until we are disclosing the orders. So there are some of these effects included. And on the other hand side, as there are significant investment packages that are placed that in relation to each quarter can be a little diverse. So yes, there will be some volatility in that as that counting on quarters for Material Solutions is something that's not really sufficient.

Okay. So just thinking about the stepping stones from '26 to '27 because you guided us during your prelims to a number significantly above EUR 300 million for '27. So thinking about the math around that, it would be fair to assume that we probably have to see a bit of an improvement in orders, a bit more sustainable recovery and material -- not even recovery, just sustainable growth really in Material Solutions. Is that something that you see from a pipeline perspective?

Yes.

Yes. Okay. Cool. And then just lastly, could you tell us a little bit more about the indium phosphide market there? I do understand the exposure to the end markets. But I'd just like to get a bit more color around the potential that you see there. You mentioned that you are about to deliver a few machines in the second half of '26. So I'm just trying to get a better sense of -- because you also mentioned -- well, it will probably grow further beyond '26 -- beyond the second half of '26, obviously. So just thinking about the EUR 500 million target. Is this technology already a good chunk of that EUR 500 million? Or is it still negligible? And if you could just give us a bit more color as well on the competitive environment there, that would be quite interesting.

So this technology is something that underlines our development to our midterm growth. We see the first systems that we are having final in our books now. But looking at the market and the dynamic in that material, which is, as said, for photonic chips used for the connection between data centers, there is a significant increase in that development in the market that we are observing from the announcements that have been placed in the market and the reviews of the reports that we are seeing. So we expect that, that will also come into our books. We are prepared for that. As crystal growing method is developed, so systems are in place, and it's just about a matter of time.

And just on the competitive environment, who else is supplying these machines?

So it's more an in-house thing rather than an external. So free available systems are limited.

Understood. Are there any players out there that actually already developed crystal growing equipment in indium phosphide that you know of?

We are very well positioned in that market, I would say.

Gustav Froberg is next.

Can you hear me?

Yes.

I just have one actually. Could you give us a bit more color on the regional split of the order intake in Metrology? I know you've mentioned it sort of in piecemeal throughout the call, but any further color on regional split in Metrology and how you also expect this regional split to evolve as we progress through 2026?

Yes, I think it's fair to assume that the picture we are seeing in the revenues and in the order intake, it's a combination which can be applied to Metrology in the order intake. So it's strong contributions coming from the U.S., but also from Asia.

Okay. Great. And just actually a quick follow-up, if I like -- or if I may, just on prepayments. So with this order intake that you are seeing at the moment, are you also seeing a commensurate amount of prepayments for these and sort of -- to firm up the orders, if you like? And I'm particularly interested in what you've seen so far in Q1.

You're referring to Metrology or to Material Solutions or in general?

It would be nice to have a general comment, but yes, maybe in particular on Metrology.

Thank you. In Metrology, prepayments are more unusual. So we're here financing the working capital ourselves when we're building the orders. But in general, we are expecting quite good inflow from prepayments in Q1.

All right. Thank you. Edwin de Jong is next.

Edwin, can you hear us?

I think you're still muted.

Is this better?

Yes, now.

Sorry for that. Forgot to push the button. A couple of questions for Markus. In the EBITDA, there are some extra costs this year, the EUR 18 million, the EUR 5 million and the EUR 30 million. Should -- if we add that to the guidance for this year, for the EBITDA guidance, should we take like EUR 62 million to EUR 67 million more or less EBITDA as a base number to compare to 2027? Or am I completely wrong there?

So I mean, if you take the numbers from the Capital Markets Day, we guided there for ratios in distribution, admin and R&D. And I think we're here on the good track there. So you can expect that the relatively share of distribution and admin will reduce and that we're seeing a slight increase in R&D on our way to '28.

Okay. And the EUR 18 million, the first part, what was it, additional costs in -- yes. I forgot what it was. Is that also expected to continue in 2027? Or should we also see a diminishment there?

So from the EUR 18 million, EUR 13 million are recurring costs from the scale up, and these will kind of slowly increase with the revenue, because the cost base would slightly increase. But the one-off of EUR 5 million, these are nonrecurring, and we expect them to reduce in 2027.

Okay. Okay. Okay. Clear. And then on silicon carbide, so I have to say, in the last call, you were finished with the -- you said that you're finishing the project, the 8-inch process for this year. And now we're going obviously for the 12-inch process. But is it expected that you already get some revenues from the 8-inch part as well this year? Or how should we see that development?

We lost you for a short time, but I think I got your question. That process development is not meant as that we are selling material afterwards. That process development is supporting the system development and improving the system for getting better yield, for a higher level of automation, for better process stability. And that process development activities that we have done over the last months have been [indiscernible] what we were working on. So with that outcome that we are providing now, 300-millimeter technology to the market and discussing first R&D project with customers, we already have that success from the development work that we invested. On the other hand side, the step into that process technology for silicon carbide brought us also to new materials like aluminum nitride that was also something that we start because it's the same technology setup. So physical data transport is also the system technology, which is behind that, and it's a similar -- not a similar process, but for us, it's important to invest in that and to improve the technology and prepare the technology to be ready for market entry. It's more about the systems and improvement of the systems rather than on the material side.

Yes. Yes, clear. And is there already, let's say, a material contribution to revenues from these 2 developments on both aluminum nitride and the 300-millimeter?

So 300-millimeter technology, as I said, is in discussion with -- for R&D projects with customers. So we expect to receive orders for first systems within 2026. And aluminum nitride is early-stage material. So it's a development that we are doing together with institutes to get the material developed. And so we are providing system technology and improving system technology and together develop the process for that with our industrial partners.

Okay. And then the other material where we talked about a lot this call is indium phosphide, of course. So I think, in the Netherlands, we now have a foundry doing indium phosphide wafers or processing indium phosphide wafers. Are you connected to that party, SMART Photonics?

We are connected to institutes for R&D on the process side. So this is normally our concept that we are working with partners and institutes. And we are having the system technology available for that material.

Okay. Okay. And then lastly, I saw that there's obviously a lot of uncertainty at the moment in the world, but also in the markets. And there are all kinds of material shortages popping up, I guess, in semis, it's especially helium at the moment. Is there anything that affects you in the disruption of those supply chains? Or are you completely fine?

This is something where we are having a close look to, and this is exactly what we are aiming for with the diversification of our activities to identify the materials that are important for future applications and start R&D work and system technology development on that material. So this is the aim for our technology hub, to have a close look on that development. It's also, for example, in indium phosphide, it's not about only the crystal growing. It's also about the cleanings of indium that's important for us. So technology for cleaning indium is also part of that.

Clear, clear. And maybe if there's room for one more question.

Just one, Edwin.

Okay. That is on the qualification process of Metrology. So the Taiwanese part is finished now, the American part is finished. How are we going in Korea?

Yes, I said we delivered the first system to a customer in Korea. Finally delivered, which means that one process is closed.

And that's one for the HBMs, I would guess, for HBM memory?

On the memory side.

All right. Thank you so much, everyone, and we would like to apologize for the network connection problems that we experienced today. We will make sure that this won't happen again. And if you have any further questions, please do not hesitate to contact us. But with that, we would like to close today's call, and thank you very much for attending. Have a great day.