SKAN Group AG (7VG.F) Earnings Call Transcript & Summary

I would like to welcome you to the half year figure presentation 2025. You can see the agenda on the screen. I will start with an overview. Burim Maraj, our CFO, will then talk about the financial results more in detail. I will then close with an outlook for the end of 2025 and maybe the upcoming '26 and future, and then we would be happy to answer some questions from you. Starting with the overview. I think we can positively mention that the order intake has really increased significantly, basically supporting the pharmaceutical market growth or basically the injectable drug market growth with 20% growth versus half year 1 and actually also versus half year 2 last year. We are here again on a very good -- on a very good level. At the same time, the order backlog is at a record high of CHF 386.4 million. On the net sales side, we are 17% behind plan. The reason for that is mainly the postponement of projects. Here, we see 2 major reasons. One is that we have many several filling line projects that were -- that are used actually are designed for syringes, for vaccine filling. Those lines were basically ordered after the COVID hype and are now at the site basically deprioritized waiting until the need for vaccines will go up again. On the other hand, we also have one big project postponement on the GLP-1 side, basically, which kind of, I would say, caught us by surprise in half year 1. If we look at the EBITDA, the EBITDA is, yes, a little bit positive. The EBITDA margin is very low as well, basically due to the missing top line. Obviously, logically, the EBITDA is not as good as it should be. On the investment side, we have continued to invest CHF 21.5 million, mainly into preapproved services. So this project continues to be on track. When we look more into details on the Equipment & Solutions side, here, we have a very strong order intake in the first half year of 28%. So you see a lot of projects that have not been decided last year, have now been decided. And I think I can say that the good order intake has continued also into July and will continue into August. So here, we are looking very positive into the future. The net sales -- the lower net sales, right, and the negative segment EBITDA, basically due to the postponement of those projects. We have invested. We continue to invest 8.9% of sales. Obviously, this number is now higher because of the low number of sales into R&D developments and also not into standardization. If you look at Service & Consumables, we have a steady order intake. Here, we have to say that the order intake in half year 1 '24 was very, very strong due to closed vial sales that we have not seen happening in such numbers in half year 1, '25. This is where actually the, let's say, the steady situation comes from. But the installed base is growing. And so also here, we have a very positive outlook that we can catch up. And the development of preapproved services, as I have mentioned, is still on track. We plan to be able to do media fill end of this year and go to regulatory approval in quarter 1, '26 and start the commercial production in the second half of next year. If we look at the SKAN landscape, you might recognize some new bubbles there. We have done or we have completed 2 acquisitions, ABC Transfer for BetaBags, Metronik for MES software and maybe not as easily to see, but if you look at aseptic technology, here we have the location in Chernobyl and new also in [Indiscernible]. [Indiscernible] is about 20 minutes from Chernobyl also in Belgium, where we have now integrated an injection molding company. The other sites are still, let's say, the same, I would say. We have the headquarter in Switzerland. We have the 2 manufacturing sites in Stein and in Görlitz, Germany. We have sales and service organizations in the U.S. and in Japan, also in Brazil. So basically, this footprint is continuously growing. I will focus more on the acquisitions on a later slide. So when we look at the acquisitions that we have done, Metronik and ABC Transfer, basically, we always said and we still say and we still do merger and acquisition by opportunistic M&A and opportunistic M&A strategy. We basically -- if we buy something, it has to match with our market, we want to stay within this niche. If you look at the 2 companies and if you look at our strategy slide that you can see on the screen at the moment. You see in Pillar 3, we want to increase exposure to aftermarket service consumable revenues. We also say we want to expand our offering to include software and digital integration. This is clearly met with Metronik and bullet point #3, further development of innovative consumables, closed vial transfer system filling kits with ABC Transfer. We bought a company that is big in beta bags, which is a consumable with a very big lock-on effect once in a validated process, you need those consumables to run the machine. In Pillar 4, also here, right, with the whole digital transformation with the MAS system, we now have a proprietary system, and that keeps us independent from other suppliers. Of course, we can still work with other suppliers, but we still have an option here. And the Vision Industry 4.0, this one button release, basically the paperless GMP compliant documentation, definitely with Metronik, we have made a big step forward here as well. Looking at Metronik in detail. Metronik is a leading provider of software for digitalization, automation control of production and building management processes. The majority of the business is in the pharmaceutical industry. Compared to their competitors, they have a very modular proprietary system that allows much easier upgrades because it's modular and it does not need any special programming if you want to adapt some type of equipment. Imagine the MES system combines 70 to 100 single equipments in one facility to generate one big batch protocol out of the data from all those machines. Now those 100 machines will come or do come from potentially 100 different suppliers. So it's very important that this modular software is able to adapt to all this type of equipment. There is a proven expertise. There are more than 100 life science clients, including Novartis, Sandoz and STADA, which are basically the big ones in their portfolio, and they have more than 1,000 completed projects. They have an extensive expertise in their software, basically process automation, in IoT integration and energy management. The management is still involved, right? We have acquired the majority, but not 100%. So basically, the current management will continue to run the company. The company has been run very successfully. So there is no need for us to involve ourselves on a management level to think we can do it even better. They are headquartered in Ljubljana, Slovenia with about 150 people. They have a subsidiary in Zagreb in Croatia with a few people as well. And their main focus is really on the Eastern European markets. And this is where the synergy comes from within that we can open them the doors to the Western markets and basically have a win-win application for both of us. an MAS system, as I have already mentioned, right, combines all the machine data in a pharmaceutical production to -- in the end to a digital batch protocol, the batch, basically the paper record or the paper print out in the end that you need to release the batch. Metronik is several many years on the market. They have really an established footprint, and they have a lot of experience. The nice thing for us is also that they have won some very nice orders with key people, blue-chip companies, blue-chip pharma companies, mainly because of their modular approach and then the much easier, let's say, upgrade, software upgrade. So if they run on a Windows environment and the Windows comes with an upgrade, then Metronik can easily adapt versus other competitors have more struggles there. Now a few words about ABC Transfer. ABC Transfer is actually a company that was founded by the former CEO of Lakalen, our French competitor, isolated competitor and RTP manufacturer. ABC Transfer is specialized in transfer systems. So the port -- the stainless steel port that you see on the picture is actually a door that allows to bring material in and out of a sterile environment without breaking the sterility. So on one hand, we have this double door, this alpha beta port, as we call them, in the industry. On the other hand, we have the bag with, for example, stoppers in there that is sterilized -- steam sterilized or gamma sterilized that allows us to transfer sterile stoppers into the isolator without interrupting production. They have sold more than 200 Alpha ports. They have about -- they have sold more than 5,000 beta bags. The business is still in the ramp-up phase. The development has been completed. They have now already quite a good footprint, and they are already standard in other blue-chip companies like GSK, Sanofi, Lilly Merck, so significant customers of ours as well. Also, ABC Transfer will be continued to be run by the guys who founded the company, who have the know-how and it's headquartered in France. If you look at the details or the technical details they are offering. On one hand, there is the Alpha port. The Alpha port is the door that you see on the left side, which is actually built into the isolator wall. So on the inside, the Alpha port is on the clean side. On the outside, it's the dirty side. On the left side on this slide here, you see beta containers or beta bags. So basically, this is a closed containment, either stainless steel to be steam sterilized or a bag to be steam, gamma or heat sterilized. And basically, this beta container is then connected with the alpha container, allowing a sterile transfer of those goods. As I mentioned, for us, most interesting, the reason why this makes sense for us is because the business here is consumable based. Beta bags, if you are in an aseptic production, you need several bags per day or even per hour to feed to your machines, and this is a very nice consumable. Once validated in an application, there is actually -- yes, then you have a very good lock-on effect. So both these acquisitions match perfectly to our strategy. The reason why we closed both now is actually coincidence. It was a good opportunity on both sides. And I think with these acquisitions, we can bring SKAN closer to this total picture where we want to be in 2030. Now I would like to hand over to Burim to give you more details on the financials.

Thank you, Thomas, and hello, everyone, also from my side to this half year 1 financial results presentation. Looking at the order intake already mentioned, so we had really a strong order intake with a 20.2% growth at EUR 213 million. It was strong. But even if we compare it with the second half year of 2024, we grew with around 17%, which shows really a nice growth. The main driver for this growth was -- were the demand on ADC filling lines which are dedicated for special cancer treatments. Of course, we had also some nice orders from GLP-1, but the main -- the vast majority of the order intake is the ADC filling lines. When we look at the book-to-bill ratio, 1.6 is -- gives us a very good visibility for the future development of net sales, meaning that the second half will be on a higher -- on a faster growth compared to the first half year. Also, the order pipeline here mentioned, it's continued to be on a high level. And we reached a win rate, which exceeds 40% compared -- yes, compared to in the past that we had around 30%. And when we look today, it's end of July or beginning of August, we are already at 50% win rate, which shows also our technology leadership in that niche in the market that we are in. When we look at the -- on a regional base, Europe increased with around 41%, which is a strong increase. The reason for this is mainly the capacity expansion of our customers here. Also U.S., it's slightly with 10% below previous half year. But here, we had -- at the beginning, as you all know, some -- the political or the geopolitical circumstances, the customers were a bit more cautious in decision-making. But looking at the order intake in May and June, which really boosted to this CHF 66 million, and we expect that the second half year will continue that we get more orders in the Americas. Asia, also here, we see a strong demand. It's on a low level with CHF 20.8 million. But here, the driver are single larger orders, which fluctuates from one half year to the other, but the development is really very, very nice also here. Now on the next slide, before we -- or before we are going through the remaining figures and providing further insights into SKAN's overall performance in H1, I would like to elaborate a little bit the dynamics of our project business and the associated financial fluctuations a bit in more detail. So on the left side, the graph shows an illustrative overview of a normal project progression in terms of revenue recognition, the financing of a project, but also the profit recognition, which is based on different milestones and project phases. The blue curve shows the revenue progression cumulatively across the different milestones. The green curves shows the cash in of a project and the gray area here highlighted shows the margin realization per project phase. We can clearly see that in the first 3 milestones, only about 10% of net sales and also margin is generated. In the middle phase, where we have the steel work and FAT, which is a factory acceptance stance where we deliver or predelivery of the machine, the sales and margin contribution is over proportionally with about 75% and then it flattens out again in the 2 final phases to approximately 15%. The reason for this effect is that we evaluate our projects using the cost-to-cost percentage of completion method. That means that the project does not contribute linearly to the sales and profit over the entire project or project life cycle. It generates as we book the cost to or allocate the cost to the project, but we recognize then the net sales and profit. Accordingly, the highest cost will -- or incurred in the milestone of steelwork and FAT, where we -- again, or where we booked the majority of the material and this increased also the net sales and margin realization as a result of this effect. That being said, in H1, we had a lot of projects in the completion phase in the -- where we generate only about 15% with low value generation, and we had an impact of postponements, as mentioned from Thomas at the beginning, mainly vaccine lines which were different reasons for the postponements. For example, the building of -- on the customer side was not ready, lack of resources or deprioritization driven by the currently general vaccine resistance. And therefore, about 20% of net sales and margin has been shifted. For H2, we are planning further progress on this shifted projects. And which is -- what is more important is that we plan in the second half that more projects will come in the high sales and high-margin production phase, which will lead to a faster growth in the second half of the year. And therefore, we are convinced from today's point of view that we can reach the guidance for 2025 in terms of sales growth, but also EBITDA margin. Thomas will elaborate at the end a little bit more on the guidance. On the next slide, when we look on the next slide or in the context of the explanation of our project business, on the left side, we have the decline of net sales from EUR 163.7 million to around EUR 175 million, so around 17.8%. Adjusted for currency effects, the decline was only -- or only was 16.9% -- and the main effects, as I mentioned, is the project postponements and also the low -- that we had a lot of projects in the low value creation phase at the completion phase. What is really positive is the order backlog, as you see, it's a record high. It was never that high in the SKAN history, so around CHF 390 million, a growth of 21%, which gives us a very good visibility for the rest of the year, but also beyond of the second half of this year. When we look on the next slide, of course, as mentioned, the EBITDA is also impacted due to the missing top line. You see a decline from CHF 21 million in the previous year to CHF 0.9 million -- this is mainly driven from the nonlinearity, as I explained before, of the value creation of our project business. On the left side, some cost elements, and we see clearly, as mentioned again, the material costs are below prior year levels, and this is driven by the timing of the projects. And we expect that as more projects will come in the second phase -- in the second half year in the value-intensive production phase, the material will increase, but also will drive the net sales growth and margin growth. In the middle, we -- the personnel costs, we have hired about -- or we have hired 33 employees. And when we look on the cost side, it's on a lower level compared to previous year. The main reason is that the requirements for provisions is not given based on our current result that we show on the half year. Other operating expenses rose from CHF 22 million to CHF 26.1 million, and this is mainly with higher travel activities, increased maintenance in IT-related costs, but also we continue to -- in our expansion of our operational activities. What is also really important to understand is -- or it has a significant impact on the EBITDA is that we continue -- nevertheless, that the top line is missing. We continue to invest in our strategic initiatives. The ratio is about 9.8%. And we always said that we will invest between 7% to 8% in the future, which means in our strategic initiatives. Looking on the next slide, on the segment, a little bit more in detail. Here, we show a very strong growth year-over-year of -- from CHF 124.9 million to CHF 160.4 million, which is a growth rate of 28.4%. And also compared to the strong half of 2024, it's a strong increase over 23%. Net sales, the impact already mentioned, driven by the lumpiness of our business or the phasing of our project business has an impact, as you see here, 24% decline in net sales. And of course, if the top line is missing, the cost base is given, that's why we have here a negative EBITDA margin. On the next slide, we have the Service and Consumables business. There is -- we have here a stable order intake, but also a stable net sales, which is mainly driven from a comparison to the previous half year 2024. There, we had the extraordinary performance in aseptic Technologies, but also strong orders or single orders in the spare parts business, which increased -- the baseline of 2024 -- on top for the net sales, we had also here the timing effect of maintenance contracts and retrofit projects. They have -- or they are scheduled to be completed in the second half year, and that's why we will have a faster growth also in the Service and Consumables segment and increase again also the EBITDA margin as currently is slightly declined from EUR 12 million -- CHF 12.6 million to CHF 10 million and will increase in the second half of the year. On the next slide, when we look at the cash situation, we are stable, more or less on the same level as previous year at CHF 53 million. And the moving parts here, as you see on the left graph is the operating cash flow. We were able to generate around CHF 23 million and the main driver for this cash generation is the structure or significantly negative net working capital, which is driven again with our nonlinear project business and with a strong order intake that we showed in the half year, which generates a high volume of advanced payments from customers. Investing cash flow is at CHF 13.4 million. The difference between the investment that we showed at the beginning is that we have a fixed term investment here about CHF 8 million, but the investment in [our plant and in] our assets is about CHF 21.5 million. And again, the difference is this CHF 8 million fixed-term investment here. The free cash flow increased. Last year, we had minus CHF 29.5 million, and it increased to CHF 9.2 million, which is again a positive effect as mentioned, driven by the strong order intake or cash generation. Financing cash flow is driven from the payout of the dividend in May that we did. On the next slide, when we look at our finance structure, our balance sheet, we -- it remains really solid. We have a net cash position of around CHF 43 million. Equity ratio is at 48.1%, which gives us a solid basis also for the future growth. And as we -- or as we have announced that we have done these acquisitions, even with these acquisitions, the financial structure post acquisition remains on a solid basis or remains strong also to support the future growth of SKAN.. I would like to hand over to Thomas to give you some outlook.

Thank you very much, Burim. Let me give you a short outlook, what we are expecting for the rest of 2025 and for the future. When I look at the market development, we still operate in a growing market. Basically, our pharma customers are still growing. The underlying growth of the global pharmaceutical and biotech market is definitely there. We can see that in the order intake, and we also can see that in our order pipeline that again is continuing to grow. We are also seeing that this trend toward injectable drugs is continuing. We still see, specifically in Asia, the shift from clean rooms into isolation technology. So this is also helping us -- and the whole reshoring that the reshoring, let's say, from Asia to the West, maybe from Europe or from Asia to North America, it wasn't that strong in the first half year because of the political situation. But here, we see a strong catch-up taking place actually in these months and the months to come. So basically, as a consequence, we see that the need for aseptic filling is continuing to be there. And it looks like when I look at the order win rate that we are still able to defend many of those projects and win them for us. If I look at the business outlook or business development, yes, we have a cyclical nature of our business. It's this lumpy business that we always talk about. And because of the accumulation of postponements of projects, now the lumpiness is specifically strong in this first half year. As we mentioned, we are optimistic that we can catch up in the second half year, right? And basically, the reason why we think we can do that is, on one hand, that we have -- we had and we still have a very strong order intake that again fills our [book] backlog and that gives us more flexibility in filling gaps. On the other hand, these postponements that we had, right, they opened some gaps in the first half year, and we have used those gaps to go into pre-production of standard equipment. So from that point of view, we do have already pre-produced equipment that we are now able to deliver faster to the market, and that can generate significant revenue in the second half year. Together with Metronik, we can now offer our customers a more comprehensive solution along the whole value chain. So this is also definitely a very good signal and a very good driver for the future. The big question is always tariffs. How do tariffs impact SKAN and -- Yes. First of all, it's very important to understand again, right, we still do not have any local competition in the high-end segment of isolators. All our competitors are exclusively German. Thanks to the fact that we have our production site in [indiscernible] with more than 350 employees, we can actually produce 100% of the U.S., let's say, destination isolators that will go to the U.S. in Germany. So from that point of view, we will -- our customers will see a 15% tariff, at least for the moment, and that is absolutely on the same level like our competitors. So from that point of view, we do not have any disadvantage. Thanks to our service hub, sales and service hub with more than 150 people in the U.S., we are actually very well positioned, I would say, even better positioned than many of our competitors in the U.S. market from a service perspective. So from that point of view, I think we have a very good position. And to be frank, the last strong order intake that we have seen in June, July underlines that. If I look or let's say, the only point where actually we are, let's say, challenged is when we are selling spare parts to our customers through SKAN U.S. because then SKAN U.S. becomes the importer and actually is linked to the tariffs. Now this, we have to understand that spare parts are typically, for example, sensors or components that we do not make by ourselves, we acquire them. And actually, if the minority of those sensors really have a Swiss origin. So many of those sensors have Asian origin. So from that point of view, the taxation is even -- or the tariffs are even worse. And on the other hand, if we can have Swiss origin or even German origin spare parts, then obviously, they would be only under the current tariffs there. What we have done to compensate that, we have generally increased spare part prices. So we do not tell our customers now the price is X plus tariff, and this is your purchase price, we just say due to additional cost, we had to increase prices. And so far, we have not seen any negative feedback there. What is also very important to say due to those tariffs, actually, our equipment becomes more expensive in the U.S. So far, we have no signs from our customers that they would rethink their decisions or that they would try to invest into different equipment. And this is mainly due to the fact that there is no alternative from a local sourcing point of view. So from that point of view, we stay pretty much relaxed with the tariff situation. Is it 15% or 39% or whatever the future will bring. In the near future, we will not have local competition. I'm not saying this is not possible in 5 to 10 years from now. But -- and Yes. Very important is also that we are continuing our initiative to build up or to ramp up manufacturing in North America. You remember, we have this on our strategic planning already prior to the current administration in the U.S. there. But this is also to be clear, if we want to keep our quality level, the know-how transfer is actually the most challenging task in this. And therefore, this will be a slow ramp-up with small isolates in the beginning, so it will not have a significant impact in the near future. We also have to understand that Swiss origin or German origin can be achieved with about 60% value creation in the country. For U.S. origin, you need 90% value creation in the country. So therefore, it is very difficult to get U.S. origin also if you might assemble or qualify the machines in the U.S. And now to the last slide, the guidance. As you have read this morning, we are confirming our full year guidance to mid-teens and to 14% to 16% EBITDA margin. We still continue to guide that this -- that we will gradually increase this guidance. Now how is this possible with, let's say, a weak half year 1 that we have seen so far. I think here, again, it's very important to understand that we have used those gaps, those postponements, right, those unexpected postponements. They opened some production capacity slots in our company and rather than sending people home and doing nothing, we went into preproduction with equipment. Now this is not a new thing for us, right, as we have this lumpy business, our organization is actually designed in such a way. It's just that currently this half year 1, the accumulation of this vaccine and GLP-1 postponements was kind of more heavy than we are used to. So from that point of view, we think -- yes, to date, we see our planning says that we can reach the guidance. I also want to clearly say this will not be a walk in the park, and we cannot digest many more postponements, right? So far, we have no indication, but if many more projects would be postponed, then it would become challenging. The big question is also -- a big question for you might also be, will we be able to achieve the guidance on the organic -- with our organic growth? Or will it only be possible with the recent acquisitions? So far, I would say the scenarios as says it's possible with the organic growth, but there is not much room for failure anymore and the Metronik acquisition definitely gives us more comfort there. So that's the end of the presentation. Thank you very much for listening, and we are happy to answer your questions now.

Our first question comes from Patrick [indiscernible], UBS.

I'm stepping in for Tanya. If I may, can I ask 3 questions? The first one would be a clarification on the guidance. Can you specify how much of M&A contribution from Metronik in particular, you expect for the remainder of the year and whether the guidance for the growth is including or excluding currencies, the way it stands?

Yes, I'm happy to do that. I think I just tried to explain that on my last slide. So basically, we think we can achieve the guidance with organic growth and Metronik -- acquisition of Metronik will give us more comfort on reaching the guidance. But we do not yet say how much and you can -- I mean, you can estimate based on the purchase price, not on the purchase price on the revenue that we have published, what would be the Metronik impact. But today, the plan says that it should also be possible to reach on a -- with organic growth. But as I mentioned, it will not be a walk in the park. So it will become a challenge, and there is not much room for more projects to shift.

And the currency is included or excluded in this?

We never disclosed or said that it will be in local currency, we said that currency has an impact as you see -- as you've seen in the first half year, but we were guiding on a general level and saying, okay, mid-teens is possible, mid-teens as a wide range. It's -- and that's what we were guiding at.

Yes. Okay. Understood. Still related to this, my second question would be on the standard isolators preproduction. How much of revenue contribution would you pencil in here for the second half, assuming you can sell all that you've pre-produced?

I mean we are not pre-producing isolators that we do not think we can sell in the first half year. So luckily, we have some types of isolators that are more standardized that we are selling dozens every year. And here, we went into pre-production basically with a very high, let's say, safety that we can also sell them. So I don't think that we took a big risk. I mean if the gaps would have been bigger, we would have probably had to decide if we want to take more risk. But if I look what we have now pre-produced, we should in a -- I mean, unless in a World War III scenario, I mean, it should be able to sell [indiscernible] -- and to be frank, actually, after seeing the activities, the sales activities in North America in June and July, I'm actually much more confident to confirm that.

And this will again help for the second half, if I may add to this overproportionate growth in -- to be able to achieve the guidance as mentioned.

Right. So those preproduction items currently are a cost, right, 0 revenue only cost, and they will turn into revenue and profit once we get the PO. So from that point of view, that's why we can catch up so quickly or where we can catch up so much in such a short time.

Okay. Okay. And then the last question would be on services and consumables. Any chance you can quantify that large closed vials order from last year?

No, I cannot quantify it. But I mean, if you look at the closed vials, we still -- we are in this niche of cell and gene and in related areas where you need very cold even nitrogen cold trucks or [indiscernible] trucks. And the revenues there are still linked to some, let's say, single customers that buy a lot of vials. And then as -- I think we mentioned before, those vials unfortunately have a shelf life of 3 years. And so if they buy a lot and then they have enough for the next year. So that's Unfortunately, also it's a consumable, it's still kind of lumpy. We were lucky in the first half year last year that we had very big orders. And now this customer is working on the clinical data, and this takes time but doesn't need more while for the moment. So that's why we have this fluctuation there.

Our next question comes from [ Constatin Richard ] Baader-Helvea.

I probably would start to ask for a couple more details on the ABC acquisition, if possible. Maybe if you could give some indications what the revenues of the company are today and how you expect them to develop over the next years, maybe also in comparison to how you would have expected them to develop on a stand-alone basis? Maybe I'll take the questions one by one, [indiscernible].

So basically, ABC acquisition is still, from a revenue point of view, still a very small, let's say, nonrelevant acquisition. ABC is at the point where now they have the products. They have validated those products with major customers like GSK, as you have seen on the slide. And they are now at the point where they have to ramp up production. This is why they were looking for investments, and this is why we actually came into the game. We have some synergies there since we can produce those beta bags in our facilities in Belgium as we already do for closed vials. So there are some very nice synergies that we do not have to invest significantly. And literally, they did not have the money themselves to go for this next step, and this is why we are in the game here.

All right. Perfect. And then if I could come back to these postponed projects, 2 things that I would be interested in. First of all, just a clarification. Are those then still included in the backlog that you've shown right now? Or are they to a certain degree, discounted for the likelihood or something like that? And are there any further projects that you at least think could have a lower probability of being called in time? And what would be the sort of delay that you would accept until you would probably not show it in the backlog anymore?

Yes. So the rule we have is very clear. As long as the project is not canceled, it will be shown in the backlog. We have about 70 -- 60 projects, right? -- that has been postponed, 5 of which have been canceled. Those are no longer in the backlog, but 5 projects out of 270 projects that we are currently having is also kind of a normal rate. So that's not more than normal. And if a project is canceled, typically, we can charge cancellation costs. So from the financial impact of a canceled project is not made necessarily too negative. Now we postponed projects. And to be frank, we have never seen the accumulation in such an amount, project postponements always happen. but that all the vaccine projects that where we had a significant order intake back in 2021 or '22, they are literally all now at the customer sites, and they are all more or less at the same time, de-prioritized because the need for vaccines has been reduced significantly. So obviously, our customers are also not putting too much effort and manpower into finalizing those projects, and this is basically delaying the last 10% to 20% of the revenue, which is in the backlog and which we expect -- obviously, we talk to our customers. And obviously, there is a very -- in most of the projects, there is a very open and clear communication. So we expect about 1/3 of those delayed projects that are in the last stage of the project to come back in '26 and 2/3 in '27. So from that point of view, this backlog is kind of pulled into length, if I may call it like that. The other big postponement that in the end, I mean, yes, had a big impact because it was supposed to be in the revenue-intensive phase in production now in half year 1 is a big GLP-1 project, which is officially postponed into '27. So we have in the order backlog of this CHF 380 million, we have about CHF 40 million of backlog that is delayed due to those projects that we expect to happen in a portion of it in '26, most of it in '27.

Okay. I see. And just on a clarification because I think I've seen on your slide that you wrote on Slide 18, like I don't know if you also mentioned that approximately 20% of the sales was due to shifted revenues. Now I think you said rather EUR 40 million, this 20% would be rather something like EUR 22 million. So is it really the EUR 40 million? Or have you planned to not grow in the first half even without these postponements?

No. I mean, initially, in the beginning of the year, we were not knowing about these postponements, and we were planning that they would all happen and the growth has continued. This is also why we have continued to hire people to ramp up staff to be able to do that. So now these postponements actually, yes, they came in, in end of Q1 and until, I would say, June and have summed up to the situation where we are today.

Our next question comes from [Estelle Betriczia], Berenberg.

I just wanted to come back on the North American business. Just to hear a bit more what you are -- I think you're saying that you are looking a bit further or a bit more details on the project there. Is it now so more a greenfield project? Or have you maybe done something that is already built? Just if you can give us a bit more color there.

Yes. I mean, in the beginning of the year, we have seen hesitation on the U.S. market. We had a lot of, let's say, projects ready to decide, but there was no decision taken. And we basically referred that to the political situation to the uncertainty that was coming up from the current administration in the U.S. We have now seen this, let's say, this jam to be opened again as of June, June, July. Those projects are all greenfield projects, fairly big projects, mainly ADC-related projects. investments that have been planned and that were, I don't know, delayed for a few months. And -- but now we see that the activity is going on. When I look at what our customers, our global customers announced what they're going to invest in the U.S., if I just take the Swiss companies, but if I take other companies as well, there is supposed to happen a huge investment wave in North America to basically meet those promises that at least those companies currently announced. And therefore, we expect a huge growth in the U.S. in the coming, let's say, order intake in the coming months and revenue in the coming years. This is, in my opinion, also driven by the pressure that President Trump puts on medication prices or the tariffs that he wants to put on drugs. So actually, if you don't produce in the U.S., it will be very hard to compete. And therefore, we see the demand to invest in the U.S. is quite significant. I'm not saying everything will happen this year on the order intake side. I'm sure this will be spread out over the next 1, 2 or 3 years, maybe, but it should actually fuel the business again.

Okay. And what about the facility you were looking to invest there? Have you [indiscernible].

Yes, the facility, we have looked at different opportunities. We have actually not yet decided which ones are none of the existing facilities that we are -- you remember -- you might remember right, we were looking -- we were actually at the point to buy a piece of land very close to where we are today in Raleigh. And then we found PCB contamination in the ground. So actually, this opportunity was then deleted from our landscape again. We were looking into existing facilities, nothing was really matching. And actually, at this very moment, some of my colleagues are in the U.S. to look into other opportunities. The goal there is to ramp up slowly. We want to rent a small facility ideally where we can start to assemble small isolators to transfer [know-how] and then slowly get into bigger isolators. And please be aware that this is a process that will take years and not weeks to happen to meet our quality needs, right? We have this reputation of being a high-quality supplier, and we cannot afford to base this reputation due to a quick ramp-up.

Ladies and gentlemen, that was the last phone question. I would now like to turn the conference back over to Mr. Huber to proceed with written questions.

We would like to maybe group them a bit, continue with the questions about project postponement. There is one from [indiscernible] who is asking how big is the risk that some of the vaccine projects will be further postponed or even canceled. He's arguing that maybe demand for vaccines is not picking up again. Yes. I mean that's a very good question, right? And yes, maybe our customers bought too much and now they don't need it anymore. The good thing is, let's say, when I look at filling suites in general, you either have an aseptic drug or you have an aseptic toxic drug. If you have an aseptic drug like a vaccine, which is not toxic to the operator, you can do vaccines, you can do GLP-1s, you can do any drug on that machine that is not toxic, right? As soon as you go, for example, into cytotoxics or into ADCs, which are highly toxic for the operator, then you need a different setup of machines. Now vaccine lines are typically for nontoxic applications. They are typically designed for pre-sterilized syringes. A few of them are designed for vial filling and they could be used for other types of drugs, which are nontoxic and which need to go into similar containers. So from that point of view, I cannot exclude that some of these projects, and we talk about 30 projects here that have -- that are on hold that some of them might be canceled to be frank, if they are canceled, then we can charge cancellation fees. So from that point of view, it might not be attractive to our customers to cancel them. On the other hand, it's not just a machine sitting in a warehouse, it's a machine sitting in an aseptic manufacturing building, right? And the machine is just one little cornerstone or one little piece of the whole investment. So those customers have typically invested 200 million into an aseptic filling suit and all equips there. And that's why they de-prioritize it, right? Imagine if you want to commission such a line, you need probably 50 people, highly skilled experts on the customer side to make this happen. And now they bought typically, they would buy 1 line at a time. Now they bought 3 line at a time, and they would have to triple their staff, which they would have done if COVID would have continued, but which they have now not done. So in my opinion, those customers, they have now acquired lines and they probably don't need to buy another syringe line in the next 1 or 2 years. The good thing for us is that the trend to ADCs is picking up so strong. So actually aseptic toxic lines. This is also the majority of our order intake this year, where, first of all, we are an expert, and we are -- yes, we are quite good against our competitors as well. So that's why the order win rate is also very good there. And we are kind of independent from the vaccine market. So how big is the risk? Yes, of course, there is always a risk that they will be canceled, but will it have a big impact? Not too much, right, because we are shifting revenue into the future. And if this never happens, currently, the order intake is big enough to compensate that.

We have a question from Dave Robertson from Asset Management. He's asking about this GLP-1 postponement. If we could give some more context about that.

Yes. I mean I have to be careful not to give any confidential information here, right? But we know that there are companies out there that struggle with the GLP-1, let's say, production ramp-up. And one of our customers or our customer is such a customer. Studies show that other GLP-1 drugs have a higher efficiency answed that -- and therefore, this company basically also, they bought a lot of equipment. They bought mainly from our competition in the beginning, and they only bought from us actually last year when competition was kind of already sold out. And now everything is kind of slowed down there, and that basically includes the lines. It caught us by surprise because, I mean, they told us everything is postponed by 2 years. We haven't planned for that. But yes, then you need to act and react and be creative to make sure that this is not having a huge impact on the results.

And then we have a question about the guidance from Larsen from SEB. He's wondering if we would have kept the guidance if we hadn't acquired Metronik.

I think as I already said during the presentation and in the first question [indiscernible] we will be able to meet the guidance with the organic growth from today's point of view. There is not a lot of room for further postponements and Metronik gives us more comfort to achieve the guidance, the range of the guidance that we are guiding today.

There are no more questions in the webcast. So please, operator, we hand back to you for a last round of conference questions.

We have a follow-up question from Constantin [indiscernible].

Thomas, you already touched a bit on the pricing pressure you currently see in the U.S. markets on drugs. If you look a bit more on, I mean, the very expensive cell and gene drugs, how do you expect the pricing pressure on those to kind of affect maybe order intake in your equipment business, but maybe more importantly, is that, in your view, having any impact on your closed vials in, let's say, maybe if we look down 1 to 2 years, looking at maybe also funding cuts that we see on the Medicaid, Medicare, probably that's not where you're looking for in these kind of drugs, but in general, just your thoughts about that would be interesting.

Yes, I'm happy to give you my thoughts, right? I can only give you my thoughts. In the end, I don't know. So I mean, what we all see, right, that Mr. Kennedy is not too much a fan of cell and gene therapy. So is he going to continue BARDA funding and so on for those companies, that's probably become a little bit more tough. That means probably in the U.S., less new drugs, let's say, new molecules will come into, let's say, interesting phases where they would buy closed vials. On the other hand, we see a lot of -- actually a ramp-up in China, to be frank, the need of closed vials because China is in my opinion, also making big progress on cell and gene. Our vial has a disadvantage that is uncompeted, if I say, there is not really a competition for that vial. And it's not that this vial is specifically designed for cell and gene, it's specifically designed for cryogenic storage and cell and gene happens to meet that, right? And therefore, we are in this market. And if I look at the drugs that are developed in our vials, if I look at the vials that we're selling, right, we had this peak last year, which we do not have this year, this one customer peak last year, which we do not have this year. Obviously, the vial is a very attractive margin product. But if I look at the total numbers of customers that are buying little quantities of vials, that still looks very promising.

As you talked about these -- I mean, this customer apparently has purchased the vials last year while being in the clinical stage. I mean a few of your products or a few products that use your vial are really in the commercial stage right now. How is sort of the share of revenues in the consumables part of the business that you generate with clinical trials versus with commercial products? And how do you expect that to change over the next few years?

I mean, currently, we sell more vials into clinical stages than into commercial phases because there are only a few, let's say, commercialized drugs out there, and there are still many in clinical stages. And now it very much depends if you talk about autologous drugs or allergenic drugs, right? Is it one drug, one patient or is it one drug, many, many patients? And currently, the autologous drugs are kind of -- we have more autologous drugs in our let's say -- not we, but our customers have more autologous drugs in our vial, but we only need 1 or 2 allergenic customers to change that, how do you say that help ratio. So from that point of view, again, we are not communicating those numbers, not because we don't want to talk about or because it's a secret. It's just lumpy, still lumpy, and we don't want to generate too much excitement or too little excitement on your side by giving you these lumpy figures.

All right. Understood. And maybe a last one, just also to get a bit more sense of what you expect in terms of order intake in the second half. Given that you expect your revenues to ramp up significantly in the second half again, should we expect your backlog to remain broadly stable or even declining again in the second half? What is sort of your thoughts around that?

If I may answer it like this. So from today's point of view, we have a book-to-bill ratio of 1.6. And our target for a healthy growth was always to have it between 1.1 to 1.2 to be able also to support the future growth. Currently, as we are growing on a higher level with 20%, we do not see, obviously, signs that it will go drastically down, but we are expecting to keep this book-to-bill ratio in that range what we are guiding or what we are seeing for us for the future healthy growth of SKAN without compromising the quality that we are or which is needed. So between a book-to-bill ratio between 1.1 and 1.2 is a target.

Ladies and gentlemen, that was the last question, and this concludes today's Q&A session. I would now like to turn the conference back over to Thomas Huber for closing remarks.

Okay. Thank you very much. Thank you very much for listening in. Thanks for your questions. Yes, I think we will see probably one or the other one of you guys tomorrow and after tomorrow in the one-to-one calls, and we are happy to answer further questions. As we said, we are in a lumpy business, right? Now the business is lumpy. So this is project business. And we still -- as I said, we are confident that this is our daily business. This is what our company is designed for and how we -- we challenge the situation, and it looks quite promising. Okay. Thank you very much, and have a nice day.