technotrans SE (TTR1) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to our webcast on the first 9 months of the 2025 financial year. My name is Frank Dernesch, and I'm Head of Investor Relations and Treasury at technotrans. Today with me are our CEO, Michael Finger; and our CFO, Natascha Sander. Today's agenda is as follows: Our CEO, Michael Finger, will begin with an overview and the highlights, followed by the performance in our focus markets. Then Natascha Sander will explain the financials in detail. After that, Michael will describe our new midterm strategy Ready for Growth 2030 and the forecast for 2025. After the prepared remarks, we will open the floor for your questions. Please note this presentation contains forward-looking statements. Actual results may differ due to risks and uncertainties. Now I'm pleased to hand over to our CEO, Michael Finger. Michael, the floor is yours.

Thank you, Frank, and a warm welcome from me as well. After a very strong first half, I'm pleased to present another strong quarter, and that despite a continued news flow of uncertainties, we continued our growth path, strengthened our position in key markets and significantly improved our profitability. Revenue grew by 4.6% to EUR 183.5 million. EBIT increased by 68% to EUR 12.8 million. Accordingly, EBIT margin improved to 7%. ROCE rose significantly from 10.8% to 16.3%. So ROCE is already above our guidance. Another strong point for me is the free cash flow. Free cash flow increased from EUR 0.2 million last year up to EUR 8 million in this quarter. This was great teamwork. Our positive momentum continued also in order -- to the order situation. The order backlog is at EUR 86 million, and we see a book-to-bill ratio of 1.1, another indicator for continued growth. In total, I'm pleased with the third quarter and with our performance in the first 9 months. We keep moving technotrans in a positive direction. We have improved all key financial parameters. Revenue is growing, EBIT margins improved, strong ROCE and a strong free cash flow. At this time, I want to give credit to our team to a job very well done. Before I will give you an overview of the revenue development in our markets, let me share 5 highlights. The first one is from Print. We signed an exclusive framework agreement with our customer, Windmöller & Hölscher. Windmöller & Hölscher is the global leader in flexo printing. We have acquired orders in the low double-digit million euro range for our Turboclean ink system. This partnership strengthened our position in packaging print, deepens our relationship to Windmöller & Hölscher and enhances the visibility of our technology as an industrial benchmark. Finally, it's worth to mention that this order creates a stable revenue corridor for our Print business for the upcoming years. The second one is really new and strategically important. We won a big order in space communication for liquid cooling systems. The systems are used in satellite ground communication, and this success demonstrates our capability in extremely high thermal stability, long duration reliability and mission-critical cooling. It positions us in a fast-growing high-value niche market with strong technical barriers. The third highlight comes from data centers. We received another follow-up order in the single-digit million euro range for CDUs, which stands for coolant distribution units. This order confirms our competitiveness in data center, [indiscernible] technology, our relevance in AI and cloud-driven infrastructure and our ability to build long-term customer relationships. Even more important, this provides access to a multiyear growth curve driven by AI and high-performance computing. The fourth highlight is coming from e-buses. We won a double-digit million euro follow-up order for battery thermal management systems from a leading European electrobus company. This is strategically important because e-bus segments are electrifying rapidly. Our [ BTS ] platform is scalable, and it opens doors for further platforms and markets. And finally, the fifth highlight comes from plastics. Our Plastics division delivered a highly successful presence at the K trade show taking place in October in Düsseldorf this year. At this worldwide leading trade fair for plastics, we showcased a live bioplastic production cell, energy-efficient cooling systems and natural refrigerant technology. The customer response was very positive and positions us well as a preferred partner for plastics industry. So to sum it up, these 5 highlights clearly show innovations turning into business. We are winning scalable volume orders, and we position technotrans for sustained profitable growth. Let's turn to the revenue performance of our markets in more detail, starting with Energy Management. This focus market remains the key growth engine for technotrans. Revenue increased to almost EUR 29 million, representing 11% growth year-over-year. This represents already 16% of our group revenue. The key drivers like BTMS for rail and road as well as CDUs for data centers and space communication, I've already mentioned. In Healthcare & Analytics, revenue jumped to EUR 15.1 million, and this is a growth rate of 40% year-over-year, representing 8% of consolidated revenue. The demand from our customers remained exceptionally high for analytical systems, laboratory cooling solutions, baggage scanner cooling and semiconductor manufacturing applications. This performance confirms the structural growth in these areas for high-precision cooling. With our production in our cleanroom facility, we are able to make the difference in this segment. Print continues its recovery and remains our largest market with 1/3 of our business. Revenue grew by 8% up to EUR 63.2 million. The Windmöller & Hölscher success story I've just mentioned was already one key driver for this. This success is based on our engineering expertise. We keep on working on innovations like this to hold our global market leader position in Print. In Plastics, we saw another weak quarter due to macroeconomic conditions. Revenue declined by 2% to EUR 37.4 million, representing 20% of our revenue. But as I outlined, the K trade show demonstrated strong customer engagement, reinforced the future market potential and our role as an innovator in that area. Laser is facing even stronger headwinds. We saw a 9% revenue decrease to EUR 29 million. This market conditions to be affected by macroeconomic pressure and increased global competition in standard applications coming especially from China. The EUV business remains strong on the other side. This demonstrates the potential for special Laser business. So there are, of course, difference between our focus markets. Some are very strong, like Energy Management, Print and Healthcare & Analytics and some are still challenging like Laser and Plastics. But it's good to see that our business model is working. We are much more resilient than in the past. We can more than compensate the challenges with stronger growth in other areas and all of that on a profitable base. And with that said, I will hand over to Natascha, and she will walk you through our financials.

Thank you, Michael. Ladies and gentlemen, good morning, and a warm welcome also from my side. Let me start my part with a clear message. Technotrans delivered an outstanding financial performance in the first 9 months of '25. We achieved profitable growth, reinforced our financial position and improved all financial KPIs significantly. Let's start with the top line. After a very good first half year '25, we continued our positive development and accelerated revenue growth. Technotrans had a very strong third quarter. Consolidated revenue reached EUR 63 million, exceeding quarters 1 and 2. Respectively, revenue in the first 9 months increased by 4.6% compared to last year, reaching EUR 183.5 million. As Michael described, the excellent performance was driven by strong equipment sales in our focus markets, Energy Management, Healthcare & Analytics and Print. In Plastics and Laser, the market situation remained difficult. On the bottom line, our group profitability remains strong and shows a sustainable improvement. In Q3, EBIT remained robust at EUR 4.4 million with a margin of 7%. Accordingly, in the 9-month period, EBIT rose significantly by 68% to EUR 12.8 million compared to last year. The EBIT margin went up strongly from 4.3% to 7.0%, an outstanding performance with a plus of 270 basis points. This great improvement was driven by higher revenue in our growth markets and optimized product mix in technology, our strong cost discipline, efficiency improvement measures implemented in '25 and of course, the continued positive effects of ttSprint. Restructuring effects that burdened last year are no longer relevant in '25. Let's turn to our reporting segments. In Q3, revenue in Technology exceeded the last 2 quarters due to rising demand for our solutions. In the first 9 months, revenue in Technology increased strongly by 6.6% to EUR 138.6 million compared to last year. Main growth drivers were Energy Management, Healthcare & Analytics and Print. Segment EBIT in Technology reached a solid margin of 4% in Q3. Compared to Q2, the margin softened due to a temporary change in product mix. In the 9-month period, EBIT rose sharply from EUR 0.6 million to EUR 5.8 million, representing a very good margin of 4.2%. This represents a strong margin increase of 380 basis points. Key drivers for this notable improvement in profitability were scaling effects and improved product portfolio, operating efficiencies and the absence of last year's restructuring charges. Let's move on to the segment Services. Revenue in Services gained momentum in Q3. In the first 9 months, revenue of EUR 44.9 million was slightly below previous year due to an ongoing weaker service business in our focus market Plastics. This was partially offset by improving business in the other focus markets. Nevertheless, EBIT remained stable at EUR 7 million with a robust margin of 15.5%. The strong profitability fueled the return on capital employed. ROCE increased substantially from 10.8% to 16.3%. In the 9 months' period, ROCE has already exceeded our guided corridor for '25. This development is outstanding. Looking at the cash flow, we delivered what we projected and promised. Free cash flow increased from EUR 0.2 million last year to a very high level of EUR 8 million in the 9-month period, supported by a substantially increased operating cash flow, a normalization in working capital and disciplined investments. A great performance. Technotrans is on the right cash generation track. Let's turn to profitability in detail. Gross profit increased by 12.1% to EUR 53.6 million. Gross margin improved strongly from 27.3% to 29.2%, thanks to efficiency gains and an optimized product mix. EBITDA increased significantly to EUR 18 million with a notable margin of 9.8%. Net profit surged by 75% to EUR 8 million. Accordingly, earnings per share rose sharply to EUR 1.15 compared to EUR 0.66 in the previous year. Our strong performance has also a positive impact on the development of our financial position. Equity ratio remains strong and stable at 59.9%. Net debt declined to EUR 16.9 million, improving the net debt-EBITDA ratio enormously to 0.69. With this development, technotrans further improved its investment-grade financial profile, a substantial improvement compared to year-end '24. Let me close my chapter with a short summary. Across all main KPIs; revenue, EBIT margin, ROCE and free cash flow, technotrans is delivering profitable and sustainable growth. We are financially strong and robust. We are efficient. Our strong performance is a clear indicator of the success and resilience of our business model. Technotrans is ready for growth. With this said, please let me hand back to Michael for strategy and outlook.

Thank you very much, Natascha. As Natascha said, we are ready for growth. We have made our homework. We have developed technotrans from a pure print company into a diversified group with a strong focus on thermal management in growing markets. We are on track to complete our strategy, Future Ready '25 by end of this year. This transformation strengthened our organization, simplified structures, increased efficiency and created a clear market focus. The results are visible in revenue, in margins, in ROCE and in resilience. Today, technotrans is more focused, more resilient and more diversified than ever before. We are very well positioned in growing markets. We are ready for the next phase. We are, as I said, ready for growth. Ready for growth means scaling what already works exceptionally well, leveraging our thermal management expertise across new applications, entering global future markets with strong tailwinds with a strong focus on profitable growth. The market environment for our business has [ really ] been attractive. According to Fortune Business Insights, the market for thermal management systems is growing by around 6% year-on-year. This is already a solid growth rate. Our strategy is based and supported on 5 strong megatrends. For all these megatrends, thermal management is essential, and we are already well positioned with our products. For example, artificial intelligence. There is a massive demand for liquid cooling in data centers. Electrification, we are already delivering battery thermal management systems and charging infrastructure. Digitalization, driven by increasing requirements in print and analytics. Decarbonization, plastics supports recycling lightweight materials and green cooling with temperature control units. Last but not least, medical progress, high-precision cooling for imaging and diagnostics. Driven and supported by these megatrends, we will grow faster than the market. Based on this great foundation, we have defined clear midterm ambitions for 2030, a revenue of over EUR 350 million and an EBIT margin between 9% and 12%. These targets are ambition, but realistic. Let's take a look at the key elements of the strategy. We have already prepared a solid foundation for all of the key elements of our strategy. We already spoke about the support of megatrends. This is clearly one of our main drivers. Our unique range in thermal management is constantly opening up new areas of business like hydrogen, like mining and space communication. Another key element of our new strategy is our new divisional structure for all our 4 divisions have already a full operative responsibility and a clear focus on their markets. This will strengthen our resilience. And finally, and most important, our focus on profitability and on our core business. We will continue to optimize our portfolio. We will continue to reduce complexity. We will generate scale effects from volume business, and we will improve our operational excellence. All of this and many more details we presented at our Capital Markets Day in October, which took place at our corporate headquarters in Sassenberg. And we did so with remarkably strong investor participation. The high resonance confirmed 2 things. First, the market clearly recognizes the progress technotrans has made during the future-ready transformation phase. And second, investors shared our view that the company is now entering a new growth phase, a phase that is driven by global megatrends and supported by our unique position in thermal management. With that said, let's get back to 2025 and the outlook for this year. In the first 9 months, we have realized great results. Despite a challenging economic environment, we remain confident to confirm our guidance. Revenue should come in between EUR 245 million and EUR 265 million with an EBIT margin between 7% and 9% and a ROCE of between 13% and 16%. And with that said, I hand back to Frank to open the Q&A. Thank you very much.

Thank you very much, Michael. Ladies and gentlemen, we now open the floor for your questions. [Operator Instructions] Are there any raised hands? Does anyone want to ask a question? Yes, Mr. Brach.

Can you hear me?

Yes, pretty well.

Okay. Two questions for me. The first one is on the guidance. There's still quite a wide range between the top and the bottom end of the guidance with EUR 20 million. Could you provide us with your view what needs to happen to reach the upper end, which seems quite ambitious? And yes, when would you expect the lower end of the guidance?

Yes. Good question and even a good question in those uncertain times we are in, as I said. So we've confirmed our guidance indeed. And if you look a little bit different on our key parameters, revenue and EBIT will be in line with market expectations for sure. And I think in times like this, we could end up in the lower half of the guidance for sure, if we look also to our consensus, this seems to be realistic. But you never know. And ROCE, we will end up in the upper half of the guidance. As Natascha outlined, we are already above our guidance of 16%.

Okay. Then the second one is on your capacity increase at Sassenberg. What is the current time line regarding start of construction and also maybe your current estimate for the production start and which cash outflow do you expect for next year, so 2026?

Let me start with the planning. So at the moment, we are in setting up the details for our future production plant. We are sorting out the right partner for this building. We are in the final stage. So the plan is to start with the building next year. And based on that, you need a construction plan of approximately a good year from starting. And after that, we directly start sourcing in logistics and production for sure. Regarding financial cash out, Natascha?

Yes. So regarding the cash out impact from the building, we expect a low double-digit million amount, and we expect that a part will be cash out at the end of '26 and another part in '27.