technotrans SE ($TTR1)

Good morning, ladies and gentlemen, and a very warm welcome to our webcast on the results of the 2025 financial year of technotrans. My name is Frank Dernesch, and I'm Head of Investor Relations and Treasury. Today, I am pleased to introduce our CEO, Michael Finger; and our CFO, Natascha Sander, who will guide you through the group's performance during the period under review and provide an outlook for the current financial year. Over the course of this webcast, we will cover 4 main topics. First, the highlights of the 2025 financial year; second, the development in our focus markets; third, the financial performance of the group in detail; and fourth, our strategic road map and the outlook for 2026. After the presentation, the Board members are looking forward to answering your questions in a Q&A session. Before we begin, please note that the following presentation contains statements on the future development of technotrans Group. These statements reflect the current views of the Board of Management and are based on the corresponding plans, estimates and expectations. They are subject to certain risks and uncertainties, which could cause actual results to differ materially from those expressed or implied in such forward-looking statements. With that, I am pleased to hand over to our CEO. Michael, the floor is yours. Thank you.

Thank you, Frank, and a warm welcome from me as well. 2025 was a great year for technotrans, and it was a landmark year. We have successfully completed our strategy, which we have established in 2020. Now 5 years later, we are Future Ready. We've made our homework. We have developed into a specialist in thermal management, and we are well positioned in growing markets, and we have a strong, lean and market-driven organization in place. And we have delivered strong financial results. I want to thank everyone and give credit to the team who worked very hard to achieve this. Despite a still challenging macroeconomic environment, we improved our operational performance significantly. Group revenue increased to EUR 244 million. Key revenue drivers were again Energy Management, Healthcare & Analytics and Print. At the same time, the quality of our earnings improved substantially. EBIT increased by almost 40% to EUR 17.3 million, and the EBIT margin rose significantly to 7.1%. And important to highlight, we have generated now 5 quarters in a row, a stable EBIT margin on a level of plus/minus 7%, which underpins the positive development of our company. Another highlight is the strong development of our capital efficiency. ROCE, the return on capital employed increased to 16.8% and absolutely worth to highlight our all-time high in free cash flow. With EUR 16.6 million, we have nearly doubled this important parameter compared to last year. All this clearly demonstrates that technotrans is able to transform revenue growth into profitability and cash generation. Our business model creates operational leverage. This will further enhance profitability as revenue continue to grow. If we now look back to 2025, we saw different dynamics in the development of our markets. While some industries continue to face cyclical challenges, others benefit from a strong demand from the market. We saw another year of outperformance in Energy Management and in Healthcare Analytics as well. Energy Management could show 10% growth in 2025 and step up to the third largest focus market. And please keep in mind, we have developed this market almost from scratch in the last 5 years. Another outperformance we saw in Healthcare Analytics last year, 40% growth showing the huge potential in this market. Also Print developed well last year. With 4% growth rate, we could beat the market trend. At the same time, plastics and lasers remained under pressure due to challenging economic environment. Facing these developments, it once again demonstrates the importance of our diversified market portfolio. Let me briefly go through the highlights of 2025. Energy Management is clearly benefiting from megatrends. AI electrification, digitalization, they are the main drivers for future growth in this area. We have continued to expand our market position. We are in a market-leading position in Europe for battery thermal management systems for railway and for electric buses. In 2025, we saw a great order development. We announced major orders over the course of last year. And we have been successful in applications such as Space communication, where we have won a first big order. Another important growth driver is our data center business. With the rapid growth of artificial intelligence and high-performance computing, the demand for efficient thermal management solutions in data center continues to rise. Based on current discussions in the market, we estimate that only around 10% to 15% of data centers are equipped with liquid cooling technologies. However, this share is expected to increase significantly. The demand for liquid cooling is growing approximately 3x faster than for traditional air cooling. We currently assume an annual market growth rate of around 35% for liquid cooling in data centers in the coming years. We have established a strong position in this field, and we have a promising collaboration with a large customer in place. Our series production is running very well. We have doubled our capacity last year and more to come. And we are winning. We are getting constantly new orders. Last year, we could grow our data center business to a high single-digit million euro range. Considering the strong market growth, we see cooling for data center as an outstanding attractive opportunity for technotrans in the coming years. We believe that the phase of high growth is still ahead of us, but it is still not possible to predict the exact timing of the inflation point. Nevertheless, the positive trend, the number and the size of opportunities are growing. As a logical next step, we are preparing for future growth by adding a new factory in Sassenberg. This is important to be ready for production when volume kicks in. Healthcare Analytics is another promising focus market. The increasing demand for precise and reliable cooling solutions in laboratory, analytical and semiconductor applications create attractive growth opportunities. A growth rate of 40% in 2025 is underpinning this, as already mentioned. We are constantly working on new products such as the latest Peltier Chiller. This new product for laboratories works very silent without any refrigerants and vibrations. Our Cleanroom at our Baden-Baden factory is operating at full capacity. This high-tech area is making the difference when it comes to high precision in tolerances. And for this year, we expect another good year for Healthcare Analytics in a stable market environment. In Print, we were able to further strengthen our position in 2025. Main drivers are still Packaging, Flexo and Digital Printing. We have won new business with a Japanese customer for digital printing, just to mention one highlight here. With the new program, we increased revenue and our market presence in Japan. In addition, we could close a framework contract with our long-term customer, Windmöller & Hölscher, for an ink supply system. Looking into this year, our customers in Print are faced with consequences of a weak U.S. dollar and U.S. tariffs. We also saw insolvencies like Manroland or Multi-Color in the U.S. This will have an impact on our business in the first half. In the second half, we expect a stabilized situation in Print. For plastics, 2025 was another tough year. This market was still under pressure because of the challenging economic environment, particularly for larger cooling systems. Nevertheless, we have used the time and we have worked hard to improve our competitive position. We have developed new products and features such as intelligent process stabilizations in injection molding with new Fuzzy controllers. We are very well positioned in temperature control units as we have big cooling plants in place where energy efficiency and natural refrigerants are making the difference. We have got a great response from the K Show last year, where we have presented our newest products and also our systems. And once the investment activities are picking up, we expect plastics to contribute positively to future growth. First signs of a moderate recovery are already visible in the first 2 months of this year. And finally, Laser in Laser market, the market conditions remained challenging. The standard Laser market is facing competitive pressure from Chinese suppliers. In parallel, precise cooling is no longer the critical impact for these applications. Therefore, we are focusing on technological demanding applications such as cooling solutions for semiconductor products or other high-tech precision laser systems where cooling is the critical difference. These applications offer entry barriers and attractive long-term opportunities for the future. As presented on our Capital Market Day in October last year, Laser will no longer be a focus market for the financial year 2026 onwards. Sales will be allocated to the remaining focus markets on the basis of technological and on market criteria. The detailed reconciliation is presented in our annual report. Another highlight of the last year was definitively our Capital Market Day in October last year. We were honored to host more than 40 external guests. Main focus was a summary of our strategy, Future Ready 2025 and the presentation of our new strategy Ready For Growth. The new strategy builds on the process achieved and describes how strong we can grow until 2030. However, before I go into more detail about our future growth, I'd like to hand over to Natascha. She will guide you through our financial performance of last year in more detail. Natascha, please.

Thank you, Michael. Good morning, and a warm welcome also from my side. Before diving into the details of our financial performance in the year '25, I would like to highlight the following. '25 was a successful year for technotrans. All main financial KPIs improved significantly. We achieved great results, a strong increase in profitability and a record level of free cash flow generation. Let's have a look at the details now. In the financial year '25, technotrans generated group revenue of EUR 244 million. This corresponds to a moderate increase by 2.5% compared to the previous year's revenues of EUR 238.1 million. This development reflects the differentiated demand situation across our markets and the importance of diversification. As Michael outlined, our focus markets, Energy Management, Healthcare Analytics and Print developed strongly and overcompensated the weaknesses of plastics and laser. Turning to profitability. EBIT increased by 40% to EUR 17.3 million compared to EUR 12.3 million in the previous year. Accordingly, the EBIT margin rose significantly from 5.2% to 7.1%. Looking at the quarterly development, we closed the year with a strong EBIT margin of 7.4% in Q4. The substantial improvement in profitability reflects the increasing efficiency of our operational setup, our focus on attractive product portfolio and the improved scalability of our business. Restructuring costs that burdened last year were not relevant in '25. Let's take a look at the performance of our segments. The Technology segment generated an increase in revenue by 3.9% to EUR 184.6 million. Main growth drivers were Energy Management, Healthcare Analytics and Print. EBIT of Technology more than doubled to EUR 8.2 million. The EBIT margin of Technology rose strongly to 4.4% from 2% in the previous year as a result of scaling effects and optimized product mix and efficiency improvements. The Services segment generated revenue of EUR 59.4 million. Compared to last year, the top line declined slightly by 1.7% due to the weak service business in our focus markets, Plastics. EBIT in Services segment increased to EUR 9.3 million. Accordingly, the EBIT margin went up from 14.7% to 15.6% and once again demonstrated the strong profitability and resilience of our service business. Let's turn to capital efficiency and cash flow now. ROCE improved strongly by 5 percentage points to 16.8%, clearly above previous year and above our guided corridor, which was in a range between 13% and 16%. At the same time, free cash flow almost doubled from EUR 8.5 million to EUR 16.6 million in '25. With this result, free cash flow reached a new all-time high. This outstanding performance is driven by a substantial increase in our profitability as well as consequent and efficient working capital management. These results confirm the increasing efficiency and capital discipline of our business model. Let me add some further details regarding the development of profitability. On the back of efficiency improvement and an optimized product mix, gross profit increased by 10.5% to EUR 70.3 million (sic) [ EUR 71.3 million ] compared to EUR 64.5 million in previous year. Consequently, the gross margin improved sharply to 29.2% coming from 27.1%. EBITDA rose strongly by 26% to EUR 24.2 million, resulting in a remarkable EBITDA margin of 9.9%. Net profit also increased by 57%, reaching EUR 11.5 million versus EUR 7.3 million in the previous year. As a result, earnings per share improved significantly and amounted EUR 1.66 compared to EUR 1.06 in the previous year. Based on our strong financial performance and in accordance with our long-standing dividend policy, the Board of Management and the Supervisory Board will propose to the Annual General Meeting a dividend of EUR 0.83 per share for the financial year '25. This corresponds to an increase of around 57% compared to the previous year's dividend of EUR 0.53. In addition, the proposed dividend is the highest since 2020 and reflects an increase of 130% over time. This is a clear result of the successful implementation of our Future Ready 2025 strategy. With this proposal, we continue our reliable and shareholder-oriented dividend policy while maintaining sufficient financial flexibility for further growth investments. Finally, let's move to our balance sheet and capital structure. Technotrans continues to maintain a very solid financial position. Our equity ratio further improved from 60.5% to 65.1%, underlining the strong financial stability and the resilience of the group. Due to strong cash generation, combined with high debt repayments, we continued to reduce our net debt significantly to EUR 8.3 million at the end of the financial year coming from EUR 18.5 million. Consequently, our leverage expressed as net debt to EBITDA improved substantially from 0.97 to 0.34. The outstanding development of these figures demonstrates the strong balance sheet structure of technotrans and provides financial flexibility to continue investing in growth opportunities while maintaining a stable dividend policy. To sum it up from a financial perspective, in '25, technotrans significantly improved profitability, strengthened capital efficiency and achieved a record free cash flow despite the ongoing challenging geopolitical and economic environment. Overall, the company is on a very solid financial foundation, which is also reflected in the strong equity ratio and a very low leverage. Supported by our solid financial position, we are well positioned to continue our profitable growth. The focused execution of our Ready for Growth 2030 strategy remains our key priority. With that said, I would now like to hand back to Michael.

Thank you very much, Natascha. And that was the year 2025. We saw a strong financial performance. With the strategy, Future Ready, we've made our homework, and that was hard work. And just a final short recap. Future Ready was a complete transformation of our company. We went through a 4x post-merger integration process by integrating all the acquisitions from the past. We have set a focus on thermal management and growing markets following by implementing a strong and market-driven organization. We have invested in new products and in new technologies, and we have established technotrans as a strong brand. This transformation strengthened our organization, simplified structures, increased efficiency and created a clear market focus. Now 5 years later, we are future-ready. The results are visible, as you could see in last year's numbers. We are ready for the next phase. We are now ready for growth. With our core technology, thermal management, we are well positioned in growth markets. Growth is the title of our strategy and it is the direction of the upcoming years. And as Natascha said, now we need to execute on the new strategy. Our objective is to position technotrans as a leading global technology partner for intelligent thermal management systems in attractive growth markets. Our growth will be accelerated by global megatrends like AI, digitalization or electrification. In 2030, we are aiming for a revenue of more than EUR 350 million with an EBIT margin between 9% and 12%. This is our midterm goal. And we have a clear and detailed road map for every year until 2030. Let's start with the running year 2026. Having said, we have a clear plan for every year, we still need to take the current development of the geopolitical and economical situation into account. The unexpected escalation in the Middle East, the challenging environment in Print and other developments, which we have outlined before, will still have a short-term impact on our business. However, we expect that the overall economic situation will stabilize in the second half of this year. And we have reflected these realities in our forecast. In parallel, the positive momentum, especially in Energy Management and Healthcare Analytics continues. The pipeline for new business is encouraging. That looks promising for the rest of the year and even beyond. For 2026, we expect a revenue between EUR 240 million and EUR 260 million with an EBIT margin of between 6.5% and 8.5%. Beginning with this year, free cash flow replaces ROCE as a primary KPI. Free cash flow is expected to be slightly above EUR 10 million. It reflects upfront investments at the end of this year in material to support the strong ramp-up for series production in Energy Management, and it excludes investment for the new factory for energy management here in Sassenberg. So to sum it up, we finished a great year 2025. Times are tough and unpredictable at the moment. This may have a short-term impact, but we are much more resilient than in the past. The general direction remains the same. We will grow driven by megatrends. Therefore, we are investing. We are investing in our people, in our products and our production footprint. And with this said, I would like to hand over to Frank to open the Q&A. Thank you very much.

Yes. Thank you very much, Michael. And ladies and gentlemen, that concludes our presentation. We will now open the floor for your questions. [Operator Instructions] So the first one is Mr. Brach. You've raised your hand. Please go ahead.

So my question is on the outlook and especially the guided acceleration in growth in the second half, also in the focus markets, print and plastic. Is that also based on current customer orders or maybe statements from customers? Or is it like only based on an overall economic improvement in the second half?

Yes. Thank you, Mr. Brach for the question. The outlook is mainly based on the current situation and on the general trend we have highlighted, for example, in the print area. If we look to insolvencies like Manroland out of a sudden or Multi-Color in the U.S., another print company, this has, of course, an impact of our short-term print business and will be reflected in the first half. In the second half, as we said, we see a relaxing situation. So that this was part of our guidance process. And for the other areas, as mentioned in the presentation, we still see a very stable market in Healthcare Analytics, and we still see strong growth in Energy Management, which will also grow in times of uncertainty. .

Okay. My second one is on the Service segment, which decreased slightly in the last year due to, I think plastic was the main segment you highlighted. Will this trend continue on the back of lower plastics revenue also in '26? Or was there any one-off we should be aware, which drove down revenue in the Services segment?

Well, service shows a positive momentum in the last months, and we hope to keep this positive momentum up and running also despite the situation we have outlined last year. So at the moment, we are fine with Service and the development in this area.

Okay. And my last one, you flagged an increasing inventory for Energy Management into late 2026. Does this imply that you already see a further acceleration of segment growth into 2027?

Yes. If we look to our order pipeline or on our quoting pipeline in that area, it looks like that we see an increase in volume in the upcoming year and beyond. And therefore, we need to invest in space and capacity. And that is back to the point with the inflation point I've mentioned in my speech. We can't predict it 100%, but this inflation point means the kick in of high volumes. And we know that it will come. We did not know exactly by when, but we see already that positive momentum has kicked into the market. And even if we don't see it directly at the beginning of next year, it will come over the last -- over the next couple of years. And therefore, we need space to be ready to deliver. If we would not invest, we are not able to support our customers with volume. And that is the reason why we are adding a new factory, and that is the reason why we're also planning for material to put into our logistics and activate the supply chain to be ready to production when it comes to reality.

Yes. Thank you, Mr Brach. I see another raised hand by Stefan Augustin. Mr. Augustin, please.

Thank you very much for taking the question. Actually, first, a little bit back to the big dinosaur in the room. So it is fair to state that you would consider yourself in the quotings in more advanced stages on the Energy Management and the data center cooling parts?

Yes.

Nice to hear. And also, is it fair to assume that if we look at the working capital ramp-up you imply in the second half in '26, I mean that this is more or less very much up to completely driven by your projected Energy Management ramp-ups as, I mean, print, laser, plastics probably don't grow that much and Healthcare is quite quick and not demanding that much working capital probably. Is that also a fair conclusion?

Yes. That's another fair conclusion as well as we have also outlined this in our presentation. It's mainly due to the growth in Energy Management.

Yes. And then maybe a housekeeping thing. How much CapEx have you -- or do you expect for the Sassenberg expansion in '26? Is that still a high single-digit million amount?

At the moment, we are still in the planning phase for the new facility, and we expect to start the construction at the beginning of next year. So the CapEx this year will be in a, yes, low 1-digit million amount. And we expect the main CapEx volume in '26 and in the year '27. So for this year, just a small volume.

Is this a delay versus the prior plans? And what caused that?

No, we are on track. We've kicked the process off on time. And we need some planning for logistics and for material flow and also to set up the right framework for the -- in German [Foreign Language]. And everything is on track. And we may start a little bit earlier, but guiding conservatively, we can't influence the local authorities who need to release it finally, but we are fully on track with our assumptions at the moment.

Okay. The next is then on the tax rate. tax rate has been below 30% this year. Is that fair to assume that we will stay below the 30% if we go forward?

So for '26, we expect a little increase, but for the years afterwards, we expect another decrease in the tax rate. So this year, we had some special impacts. Our deferred tax income reduced due to the German [indiscernible] reform, the update of the income tax. And yes, for next year, we expect a little increase.

Okay. And maybe finally...

The tax rate is also depending on the tax rates of the different countries where we generate our income. And this year, we had higher income in countries with lower tax rate compared to the average. Those are the main drivers.

And lastly, maybe with that higher free cash flow, you won't have a debt problem going forward. But if -- just to understand your thinking here, if you make the investments for Sassenberg going forward, could that ever have an impact on your dividend payout ratio? Or would you be willing to increase the leverage temporarily again if -- on the back of the expected CapEx and keep the payout ratio stable?

Yes. So looking at the payout ratio last year in the Capital Markets Day in October here in Sassenberg, we also announced our dividend policy, and we want to keep the dividend policy stable with a rate of 50% dividend payment to our shareholders.

All right. Thank you, Mr. Augustin. Currently, I do not see other raised hands. So let's turn to some written questions. The first one was submitted by Mr. [ Gebert ], and I would -- will read it now. Regarding your activities in the semiconductor market, how is technotrans positioning its cooling solutions to meet the increasing thermal management demands of the next generation of the high-NA EUV lithography and related wafer testing systems? Could you quantify the revenue potential you see in EUV and semiconductor testing segment over the next 2 to 3 years, please?

Thank you very much, Mr. Gebert. A very interesting and broad question. Let's start with what we are doing. We are producing since years the cooling, the critical cooling for the laser source in EUV applications itself. And on top of that, in our Cleanroom production in Baden-Baden, the cooling systems for the mirrors for the EUV business under vacuum conditions as well. So what are we doing for meeting the test specification? That is a really good question, and we have worked a lot on this. We have won 2 new customers in this area across all the divisions to -- which are supplying critical systems for testing semiconductor business under various conditions. And it depends on the cooling capacity, on the tolerances and on the temperature in both directions. And this is, for us, a new area to grow, and we expect growth rates -- yes, we haven't disclosed that yet, but we expect decent growth rates in the next 2, 3 years. We may come up with a more precise number once we can see when the business is industrialized and is kicking into production. But of course, this is a growing area of business for us.

Yes. Thank you very much, Michael. We have received 2 additional questions by Stefan Maichl. The first question is, what possible direct implications does the war in Iran have for your sales expectations and the stability of your supply chain?

Yes. First of all, this is a crystal ball question for sure. The direct impact for sales is quite low as we have no business -- no significant business in the area of Middle East. The supply chain potentially directly is also quite low, the direct impact. But what we don't can forecast at the moment, same than taxes and tariffs in April last year is the indirect impact of our customers in that regard. What we see is that this war has created a high level of uncertainty. And even areas like energy demanding industries are struggling at the moment with their forecast. And with that, it may impact also technotrans. And that was the reason why we have highlighted that also in our presentation and baked it with some uncertainties also in our further and future projection.

Okay. Thank you very much, Michael. Then the second question from Mr. Maichl is, what position has technotrans adopted in relation to the defense business?

In one of our last calls, we stated that as long as we have no significant stake in defense, we are not disclosing anything. At the moment, we have no activities which are fair to disclose.

Okay. Thank you very much. So are there any further questions? I do not see any more raised hands. Are there any further questions? So this is not the case right now. And yes, so please let me hand back to our CEO, Michael Finger.

Yes. Thanks for your questions today. As you know, our next reporting date will be May 12, where we present the figures of the first quarter of this year. And on May 29, we have our AGM in Munster in the Halle Münsterland as usual, and we would be very happy to welcome you there again. And in case of any further questions, please come back to us as usual and also in the name of -- on behalf of my colleague, Natascha. I want to thank you for your continued support and interest in technotrans. And for today, we are closing the call. Thank you for joining us, and take care, and goodbye.

Thank you. Bye-bye.