Quest Holdings S.A. (QUEST) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Paulina, your Chorus Call operator. Welcome, and thank you for joining the Quest Holdings Conference Call and Live Webcast to present and discuss the first half 2026 financial results. At this time, I would like to turn the conference over to Quest Holdings management. Gentlemen, you may now proceed.

Welcome, ladies and gentlemen. My name is Alexandros Roustas, I'm the Investor Relations Officer of Quest Holdings. I'm joined today by Mr. Apostolos Georgantzis, our Group CEO, and by Mr. Markos Bitsakos, our Deputy CEO and CFO. Today, we are presenting the financial results of the first half of 2026, the 6-month period ended by the 30th of June 2026, and we'll be happy to answer your questions at the end of the call. I will now pass the microphone to Mr. Markos Bitsakos for his opening remarks.

Good afternoon, everyone, and thank you for joining us. The first half of 2026 was a solid and productive period for Quest Group. Consolidated revenue grew by 9.8% year-on-year. Earnings before tax increased by 19.2%, and earnings after tax and non-controlling interest rose by 25% to EUR 25.5 million. These results reflect the continued execution of our strategy and the resilience of our core business segments, and they came in ahead of our budgeted targets. Turning to the main drivers of the period. On the positive side, the Apple ecosystem, both wholesale and retail, IT services at Uni Systems, and ACS Postal Services were once again the principal engines of growth as in the first quarter. The trend, therefore, remains unchanged. On the side of challenges, I would highlight 2 areas. First, the renewable energy. As you know, following last year's divestment, the segment recorded only limited revenue and earnings before tax. Of course, this was anticipated and is fully reflected in our full year planning. The year-on-year comparison for this segment is, therefore, not a meaningful indicator of trend, and it simply reflects the completion of our repositioning in the energy sector. The second area is IQT Romania, which recorded a substantial decline in revenue and posted a loss for the period. That said, looking across the earnings before tax performance of all subgroups and segments, we are pleased to report that with the exception of the energy sector and the marginal 5% decline at IQT, every other subgroup delivered year-on-year growth ranging from moderate to substantial growth. Let me now turn to our financial performance in more detail. Consolidated revenue reached EUR 750 million, up by 9.8% year-on-year. Growth was broad-based, led by IT services by 21%, postal services, and commercial activities. Consolidated EBITDA amounted to EUR 52.8 million, is up by 11.2% year-on-year. The blended EBITDA margin stood at 7%, improved versus the last quarter, Q1 of this year. Consolidated earnings before tax reached EUR 39.1 million, an increase of 19.2% with the EBT margin rising to 5.2%. Earnings after tax amounted to EUR 28 million, up by 25.2%. And lastly, earnings after tax and non-controlling interest, the figure which is attributable to Quest Holdings shareholders, reached EUR 25.5 million, an increase of 25%. It should be noted that both EBT and earnings after tax grew faster than EBITDA due to lower interest expenses versus 2025, as well as dividend and extraordinary profits arising from capital gains mainly from our participations such as the one in Fourlis. Overall, the first half of 2026 demonstrates consistent top line growth, solid profitability across our main operating segments, and continued improvement in the bottom line for our shareholders. Now turning to the balance sheet. Quest Group closed the first half of the year with a net cash position of EUR 31.3 million, well above the corresponding level of last year. Relative to year-end of 2025, when net cash stood at approximately EUR 107 million, the reduction reflects 3 factors. First, the seasonal working capital buildup that typically occurs in the first half of the year, particularly in commercial activities. Second, the dividend distribution of EUR 42.3 million. And third, our investment of approximately EUR 28 million in Fourlis during the corresponding period. Excluding the new investments, we expect net cash to recover in the second half as working capital normalizes. Total available liquidity, cash plus undrawn committed credit facility, remains comfortably above EUR 200 million, providing ample capacity for both operational needs and strategic initiatives. The capital expenditure in the first half amounted to EUR 32.8 million, broadly in line with our phased annual plan. Full year CapEx is budgeted at approximately EUR 60 million with a meaningful portions reserved for potential acquisitions and new investments. With this overview of our performance and financial position, I will now hand over to Alexandros for the detailed segment review. Thank you.

Thank you, Markos. Let me now take you through each of our reporting segments in more detail. First of all, the Commercial Activities segment, which includes the Apple Notebooks, companies iSquare and iStorm, the IQT Group, Info Quest Technologies subsidiaries. The Clima sector, which is [ GED ] and Quest Clima, Quest on Line, and Benrubi. So the Commercial Activities segment reported aggregate revenues of a little more than EUR 0.5 billion, EUR 507 million in the first half of 2026, compared to EUR 450 million in the first half of 2025, which is up by 7.8%. The EBITDA of the segment was EUR 20.8 million, which is up 10.8% year-over-year with an elevated EBITDA margin of 4.1%. EBT reached EUR 11.4 million, which is up by 15.4% versus the first half of 2025. Now within the segment, the key insights are the Apple network drove the majority of the segment revenue and growth and showed strong momentum across both product and geographic markets. iStorm's 20-store network, 15 stores are in Greece and 5 in Cyprus, continued to perform well, with Cyprus representing a strategically important and high-performing market. The Clima sector typically records a stable and slightly improving half 1, significantly outperforming the market. Benrubi, which we currently own 70% of this company at that point, contributed positively to the segment profitability, reflecting the growing and stable contribution of this acquisition. Now going to the IT services. And when we say IT services, we mainly mean the Uni Systems Group. So the segment, which also includes international subsidiaries and Greek company -- company based in Greece, which is Intelli, reported revenues of EUR 159 million in the first half of 2026, which is up by 21.1% versus the first half of the previous year. This is an exceptional growth rate and reflects the continued execution of a high backlog of complex IT contracts and the increasing demand for IT services. The segment's EBITDA reached EUR 15.4 million, an increase by 23.2% year-over-year with an elevated EBITDA margin by 9.7%. EBT grew by 32.9% to EUR 12.6 million with an EBT margin of 7.9%. Uni Systems continued to benefit from strong demand for digital transformation, cloud infrastructure, and large public and private sector IT integration projects. The pipeline remains robust, and we expect this to continue, supported also by the defense sector. Now going to the Postal Services, which is mainly ACS. The Postal Services segment reported revenues of EUR 83.1 million at the first half of 2026. And this performance is up by 8.4% versus last year -- last year's half, which was by then EUR 76.6 million. The segment's EBITDA reached EUR 15.9 million, which is an increase of 19% year-over-year, making ACS the segment with the highest absolute EBITDA contribution in the first half of 2026. EBITDA margin improved to 19.1%, up from 17.4% in the first half of 2025. It's a very big growth. And EBT grew by 13.4% -- sorry, EBT grew to 13.4%, which is EUR 12.3 million. Growth was driven by continued expansion in e-commerce parcel volumes and by network efficiency gains powered by recent investments. The fundamentals support ACS growth, rising e-commerce penetration, and the expansion of our local network remain intact. Now last, the renewable energy sector. The Renewable Energy segment reported minimal revenue of EUR 0.7 million in the first half compared to EUR 4.8 million in the first half of 2025. This sharp decline reflects the divestment of approximately 36.7 megawatts of photovoltaic parks completed in 2025 and is fully expected. Quest Energy currently retains approximately 8 megawatts of capacity and has a portfolio of greenfield renewable projects under development. The segment recorded a small positive EBT of nearly EUR 0.4 million, EUR 400,000 that is, in the first half of 2026. We remain selective on new investments in this segment given current market conditions. I will now pass the microphone to Mr. Apostolos Georgantzis for the outlook.

Good afternoon from me too as well. I'm Apostolos Georgantzis, and for those who just joined, I'm the Managing Director of Quest Holdings. As Markos and Alexandros have outlined, the first half of 2026 presented a positive course across our principal operating segments. Revenue grew by about 10%, while EBT grew faster, and earnings attributable to shareholders grew by nearly 25% year-over-year. Both ACS and Uni Systems delivered standout performances, and the commercial activity segments remain on a solid growth trajectory, altogether outpacing the drop of our profitability in the renewable energy sector caused by the sale of most of this business. We entered the second half with a clear momentum, a healthy balance sheet, and a well-defined strategic agenda. The second half is historically stronger than the first, accounting for approximately 53% of the full year revenue and a slightly higher part of the profitability and the current trading trend support [indiscernible]. Let me now provide you our current view by segment for the remaining of the year. Regarding the first segment, which is the commercial activities for the full year 2026. We expect commercial activities to continue growing. The Apple ecosystem remains a multiyear structural growth driver, and we are well positioned across both wholesale through iSquare as well as retail through iStorm. Benrubi is also expected to make a meaningful contribution to our full year performance. Following the expected seasonal uptake, the Clima sector should [ decrease ] its profitability during the whole of the year. Our focus remains on improving EBITDA margins, while with the gradual gains expected as we optimize the cost structure, was expected to get even further improved within 2027. That was regarding the Clima sector. Regarding IT services and Uni Systems, Uni Systems continues to benefit from a strong contracted backlog and a solid pipeline of new opportunities. We expect double-digit revenue growth for the full year with profitability growing broadly in line. Demand for complex IT integration and digital transformation projects remain strong in Greece and abroad, and we continue to invest to sustain our competitive position. Going to the third sector, which regards ACS and the Postal Services. For the whole year 2026, we expect ACS to deliver accelerated revenue and EBITDA growth versus 2025, supported by higher commercial volumes and ongoing network efficiency gains. At the corporate level, GLS holds a call option over the remaining 80% of ACS, with the final decision resting solely with GLS to be decided at the end of October. Regarding renewable energy, following the park divestments, Quest Energy revenue contribution is expected to remain limited for the rest of 2026. The segment which focus on developing its greenfield renewable energy portfolio while maintaining a disciplined and careful, and selective approach to new investments. Current estimates indicate approximately EUR 1 million revenue and an EBT margin above 15%. Now going on the full picture or the whole group. On a consolidated basis, our full year 2026 guidance remains for a slight revenue growth versus 2025 and EBITDA slightly higher compared to last year. 2025 divestment from the energy sector is expected to affect 2026 EBITDA by approximately EUR 8 million. However, even include this impact, both EBITDA and EBT are expected to grow. The actual progress on continuous operation is much higher. The strong growth of the first half performance, particularly in the IT and postal sector, reinforces our confidence for this outlook. Our 2026 estimates assume, however, no prolonged adverse impacts on energy prices, basic goods, or consumption arising from the situation in the Middle East. Our financial position remains strong, allowing us to pursue any selective growth -- inorganic growth investments. That's all for me for now, and I will hand back to Alexandros to continue the discussion.

Thank you, Apostolos. That concludes our prepared remarks for the first half of 2026 results for Quest Holdings. We are now happy to open the floor for your questions. Please feel free to ask about any aspect of our financial performance, our segments, our balance sheet, or our outlook for the remainder of the 2026.

The first question is from the line of Natalia Svyriadi with Eurobank Equities.

Congratulations on the very strong H1 results. I have 2 questions to start with. I was wondering if we could discuss a bit on the IT segment. Now that the RRF is officially closed and okay, you have a very big backlog. How long would this backlog take to be implemented? And what we should be expecting going ahead from here? It officially closed in August. So I assume H1 numbers are very strong. And maybe is there any chance we will see a slowdown in H2 on this respect, or because of the very big backlog we wouldn't expect something there, especially in the margins, which were really good. This is one question on the IT. And I would like also an update on the CapEx you discussed on the budgeted CapEx. Maybe we could take this later.

Natalia, I didn't quite understand the question about the CapEx. Can you repeat it?

Yes. About the CapEx, I would like an update. You said you have a budgeted CapEx of EUR 60 million, which I assume includes Fourlis almost EUR 30 million. And you have already done less than EUR 5 million CapEx if you exclude Fourlis in H1. So what should we expect? I would like an update what we should expect in 2026 or in H2, if you prefer?

Okay. I can start -- this is Markos Bitsakos speaking. I can start with the second question, Natalia, about the CapEx. As you said, we have done already -- almost EUR 33 million. Out of the EUR 28 million (sic) [ EUR 33 million ], around EUR 28 million refers to Fourlis investment and EUR 3.5 million is attributable to ACS. Now about the rest of the year, I can only guess that we're going to be lower than the EUR 60 million that we have projected in our budget. And I would say that I'm expecting the overall CapEx to range between EUR 40 million and EUR 50 million. And why is that? Because ACS is deploying its budgeted CapEx on a slightly lower pace, let's say, than anticipated. And about Fourlis, I'm not sure we are not today in a position to tell you if we're going to proceed with a new investment or not. Let me say that the EUR 60 million budgeted CapEx was at first containing not only the investment in Fourlis, but also some smaller M&As that we had in plan. This is still in the process. It could be done, but I'm not in the position to tell you that there is something definite on this CapEx side. So, all in all, we expect something in the range of EUR 40 million to EUR 50 million.

Natalia, this is Apostolos. We come to the first question. As we explained, about -- it was about the IT services sector and Uni Systems, I understood. As explained, the first quarter -- first half was particularly strong, partly due to the timing of the project milestone deliveries. However, the underlying growth driver is structural as Uni Systems operates in a high contracted backlog, strong pipeline visibility, which is -- and is well positioned in a market where the demand for large-scale IT infrastructure and digital transformation continues to grow. Therefore, we expect double-digit revenue to growth for the full year and the trend of the first half to continue more or less the second half. Additionally, regarding the question about the RRF, we expect that the trend for demand of IT projects will continue for Uni Systems even in the RRF -- after RRF, let's say, era. And the 3 areas of growth, which will affect Uni Systems' growth is, first of all, the first regards to the public IT public sector project tail regarding the maintenance of the projects executed until 2026. The second is -- comes from new public project from the Greek government to continue the digital transformation of the public sector, which have been announced. And the third, which is also very significant, from new projects in defense, where the company started to participate and in which we expect as of next year gradually to have revenues also from this sector as well.

Great. So the backlog will continue rising and declining at the same time. How long would it take for this like EUR 650 million backlog you have now currently to be implemented? I like to see it in the numbers. Would that be like a 5-year or a 10-year period or something like that? I'm trying to understand the magnitude.

For sure, it's not 1 year, but it's also not 10 years. I would say we're somewhere in the middle. It's between 3 and 4, maybe in some particular cases, even 5 years, but it's within this range, 3 to 5 years, I would say. But again, it's not -- the backlog is ongoing. It's not something that's static. As you know, you have new projects coming in and others going out. So when you see that even after the RRF, the backlog stands at a very high level, it seems that several projects are coming in, which means that there is a continuation for the growth.

The next question is from the line of Yiannis Kalogeropoulos with Beta Securities.

Can you hear me?

Hi, Yiannis.

I have a question regarding the margins in all operating segments of your businesses. We saw particular strong EBITDA margin during Q2 in all segments. That is both in the retail business, in the IT services business, and the courier business. Should you guide that these especially elevated margins are sustainable for the remaining quarters of 2026 as well? And if you could elaborate a bit on each segment, where is that attributed? And the second question regards the potentiality of sale in the courier business. I reckon that the option lies solely to the German side. If they come up with a decision of taking the remaining -- of buying the remaining 80% and providing that you did not alter -- on the contrary, you diminished a bit your CapEx guidance. Is there a possibility or a better -- a higher chance that should the transaction materialize, you would feel more confident in providing that there are not other opportunities of buying some other businesses or companies to remunerate shareholders with an extra amount by the end of the year?

This is Markos. To answer the first question about the EBITDA margins and the improvement that, as you correctly said, it's quite improved in the second quarter and whether this is sustainable or not. I would say that the business segments that provide the biggest enhancements in EBITDA margin was IT services and the courier business. We believe that both for IT services and courier, we are very optimistic that we can sustain this improved EBITDA margins also in the second half of the year and not only that, for the IT services is largely depends on the quality of the projects that we obtain and the way that we execute them. As far as the Courier and Postal Services, this is a more concrete, let's say, reason of EBITDA improvement, which is based on the efficiency that ACS has with the new investments made over the last years, mainly in the central hub. So yes, the answer is we are very optimistic that we can obtain the improved EBITDA margins.

And if I may add, Markos -- Yiannis, you may have seen that the margin of the commercial activities on the second half -- sorry, on the first half is better than the first 3 months. And the reason for that is the fact that the Clima sector kicks in during the half due to seasonality. And this is an activity that has nice gross margins, so they add up. So this is something that you -- normally, you will see every year. So the first quarter will be a bit weak in terms of margins. But after summer comes, so during the first half or the first 3 quarters, the Clima sector will kick in, hopefully, and this will improve the margins of the commercial sector.

So Alex, the Clima implies -- you mean that the Clima segment will sustain its -- will sustain commercial activities EBITDA margin even in Q3 at the level we saw in Q2, and then it will most probably decelerate a bit in Q4, correct?