Brockhaus Technologies AG

Good afternoon ladies and gentlemen and welcome to the Brockhaus Technologies investor update call regarding the quarterly statement Q1 2022. At this time you are on a listen-only mode. The floor will be open for your questions following the presentation. Now I hand over to Marco Brockhaus.

Yeah, thank you very much and good afternoon everyone. Welcome to Brockhaus Technologies earnings call for the first quarter of 2022. Before we begin, I would like to point out that the slides we are presenting will afterwards be published in the Investors Relations section of our website, brockhaus-technologies.com. After our presentation, we will be open the call to questions from your side. To be fair to everyone, please limit yourself to one question plus one follow-up. Thank you very much in advance. Before we present our results, I encourage all listeners to review the legal notice on page two of our presentation, which explains the understanding of forward-looking statements. Additionally, please refer to note seven of our annual report 2021 on page 86 for discussion on alternative performance measures, as well as reconciliations of non-GAAP figures, especially revenue before PPA and adjusted EBITDA. Please note that our EBITDA adjustments comprise only share-based compensation, cost of the acquisition of subsidiaries, cost of equity transactions, as well as accounting effects from purchase price allocations. For information on risk factors that could cause actual results to differ materially from forward-looking statements, we kindly refer you to the section on risk and opportunities in the Management Report 2021, page 56. Flipping over to page three and into the usual summary, after successfully expanding of our technology group end of last year by two additional subsidiaries, namely Bike Leasing and KVM Tech, the first full quarter after their consolidation was an absolute record quarter for Brockhaus Technologies with respect to all KPIs. The significant growth of our quarterly figures compared to the previous year's figures was also the reason for our ad hoc announcement last Friday afternoon. The regulatory need to do so is based on the market abuse regulation, MAR, and the German issuer guidelines, even if the development is in line with a company's annual guidance, as in our case. Broca's technologies generated 28.8 million Euro in Q1 of revenue and represents growth of 166% compared to Q1 2021. Adjusted EBITDA grew over proportionately by 844% to 7.6 million Euro. This corresponds to a continued high adjusted EBITDA margin of 26.3%. and a margin expansion by 18.9 percentage points. A deep dive into the individual segments will follow over the next slides. On the back of the record numbers achieved in Q1 2022, we hereby confirm the full year guidance with revenue between 140 to 150 million euro and a continued high adjusted EBITDA margin of 35%. We are also happy to announce that the integration of bike leasing was successfully concluded within the first quarter of this year and the Q1 performance was within our expectations, hence the confirmed guidance. With respect to M&A activity, our multi-channel deal sourcing approach is resulting in a continuously filled deal pipeline and we are currently in the early stages of analyzing three potentially interesting businesses that might fit into the focus of Brockhaus Technologies. With this brief summary and introduction, turning over to the next page and handing over to our Head of Finance, Harald.

Thank you very much, Marco, and welcome from my side to everyone. Let's jump right into the quarterly top line analysis on page four of the presentation, starting at the top with Weiklesing, indicated here in the light green bar. So revenue before PPA was 17.5 million euros. in Q1 of this year. The last year figure of Q1 2021 is not available, unfortunately, since bike leasing only generated financial information according to German GAAP until when we obtained control over the business in the acquisition end of November last year. But of course, we will give you a picture on the underlying growth of operating KPIs on the next page. Proceeding to IHSE in the middle of the page, so the orange bar, here we are happy to report that revenue continued picking up with the revocation of many COVID-19 related travel restrictions, social distancing, and so on. The increasing customer demand, especially in the Western Hemisphere, resulted in a revenue increase of 20% to 7.2 million euros. Revenue of Pallas in the bottom chart was down 15% on the very strong last year Q1. Back then, top line was boosted by sales of test rigs for face masks. But also on that, we have some more background for you over the next slides. Clipping to page five. So before we obtained control over bike leasing, in the acquisition end of last November. Beikleasing was a typical private mid-cap company. As you might be aware, both monthly accounting and IFRS books, in addition to the already mandatory German GAP books, can not reasonably be expected in such a situation. This makes it sometimes challenging to generate all historical comparables from before the acquisition. As mentioned before, we drew up the essential operating KPIs of bike leasing and hope this still gives you a feeling for the very, very strong growth momentum of the business that we see. In terms of customer base, bike leasing increased the number of corporate customers connected to its platform to a total of 34.5 thousand. 2.6 thousand of those corporate customers were onboarded in this year's Q1. So that corresponds to an increase of customer base by some 8% in only three months. Those corporate customers with access to Bike Leasing's digital platform employ a total of 1.8 million people. On that basis, bike leasing facilitated the leasing of 20,000 new bikes in Q1 of this year. For comparison, that is 65% more than in the first three months of last year. As we mentioned in our call earlier, and can also be taken from our public reports, bike leasing's new business volume is subject to significant seasonality. where most sales are generated in the warm second and third quarters, with temperatures and weather conditions in Q1 and Q4 apparently seem to be less appealing for people to think of a new bike. In order to put that seasonality into numbers, we have plotted on the right-hand side of this page the number of new bike leases facilitated by the company in the last two years, so 2020 and 2021. Highlighted at the bottom of the bar, so this dark blue section, you can see the fraction that each respective Q1 accounted for. Looking at the last two years, only some 14% and 15% respectively of new bikes were facilitated in Q1. This might give you a feeling for the further potential development. On the next page, we conducted a somewhat longer-term analysis of Q1 revenue for PALAS. Starting in 2017, the business has shown continuous strong growth fueled by their superior certified measuring technology for fine dust. Beginning of March 2020, the market encountered substantial delays, especially in public procurement projects, when the first COVID lockdowns emerged back then. Shortly after that, Pallas came to market with its test rigs for face masks. The revenue of those still substantially affected Topline in the first quarter of 2021. So revenue now in Q1 2022 came down a bit lower than that, but when looking at the long-term development and bearing in mind the COVID distortions explained, I think we are looking at a solid high growth development. Flipping to page seven for the regional split. As you might know until now, BiPleasing has been focusing on Germany only with first steps of expansion into Austria having been made. So all revenue here apparently relates to EMEA region. IHSE in the chart below saw a very positive market development in EMEA, where revenue increased by 19% to 4.1 million euros. The most significant pickup of demand was reported for the Americas, where COVID did hit hard during the last two years, and sales grew by 75.6% to 1.9 million euros, showing that the market is opening up further. APEC was the only challenging region where new lockdowns, of course, hampered business, with revenue decreasing from 1.5 to 1.2 million euros. The effects described on the page before had the most significant impact on the EMEA region, and that is simply because most mask test rig business in 2021 was in EMEA. Americas saw strong growth of more than 50%, however, still on a yeah, relatively low absolute level of some 600,000 euros. Turning to the segment table, I think we covered revenue conclusively on the last slide, so let's go straight to profitability. Bike leasing had a gross profit margin before PPA of 52.5% and an adjusted EBITDA margin of 33.6%. Both values are clearly lower than the full year numbers, which we disclosed for the past years. Bearing in mind, however, the seasonality pattern that we elaborated on earlier, I think this should not come as a surprise. In addition, the major part of new business in Q1 2022 was financed through securitization in the form of a green bond. This structure allows bike leasing to refinance much cheaper, quicker, and more flexible, and therefore that promotes the company's strong growth. With unchanged cash inflows at point of selling the securitized lease receivable, this source of financing does however not meet the requirements for derecognition from the balance sheet of those securitized lease receivables. which therefore remain on our balance sheet. Income from those leases is therefore recognized over their term, which is generally 36 months. Even though this process is identical from a liquidity point of view, in the accounting perspective, this is in contrast to a forfeiting transaction with a derecognition of the release receivable. which involves the realization of nearly all income from the corresponding lease at the time of the respective forfeiting, so in T0. Therefore, in the current period, lower income is realized in favor of higher income in the future. At IGSE, growth profit margin was 78.8% and that's substantially above last year's 64.7%. In the prior years, quarter one, there were several unfavorable shifts in the product and customer mix. In addition to currency related effects, those all worked against us last year. And apparently, these effects did not reoccur this year, so that the margin developed very nicely. At 28.7%, the adjusted EBTA margin was also significantly up compared to 2021 as well. This was primarily due to the increasing growth profit margin, of course, and the substantially higher top line level. A Pallas growth profit margin of 78.1% turned out somewhat lower. This is primarily a result of a lower change in finished goods and work in progress, as well as a lower number in own work capitalized compared to last year. With 23%, the adjusted EBITDA margin was also lower in addition to the reduced growth profit margin as just explained. This was mainly due to the interaction between lower top line and the existing fixed costs. Lastly, in the central functions, costs were somewhat lower, which was essentially due to decreased expenses for external due diligence provider, which saw a bit less activity in Q1 of this year. In conclusion and summing up on the consolidated group level, pro forma revenue before PPA was 28.8 million euros, up 166% compared to last year. Gross profit margin was 63% and adjusted EBITDA margin 26, bringing up the group to an adjusted EBITDA of 7.8 million euros. As per end of March, the group had a cash and cash equivalents of 26 million euros. And this concludes the financial update. I'm handing over to Paul, our head of the acquisition team, and I'm happy to answer your questions later on.