Brockhaus Technologies AG

of our website, brockhaus-technologies.com. After our presentation, we will open the call to questions from your side. To be fair to everyone, please limit yourselves 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 6 of our Annual Report 2022 on page 85 and page 19. Onwards of our Half-Year Financial Report 2023, for discussion on alternative performance measures, as well as the reconciliation of non-GAAP figures, especially adjusted EBITDA and adjusted EBIT. Please note that our EBITDA and EBIT adjustments only comprise share-based compensation, cost of the acquisition of subsidiaries, income from sale of real estate, 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 2020, starting on page 59. So, flipping over to page three to give you a brief summary of where we stand. As you can imagine, reporting on another record quarter for Brockhaus Technology is a real pleasure. And I have to say I'm proud of what our teams across the segments, bike leasing and IHSE, and ourselves, Brockhaus Technology, have achieved. We as a group once again delivered highly profitable top-line growth across all segments. The group generated revenue of €143 million in the first nine months of 2023, which represents organic growth of 31% compared to nine months of last year. Adjusted proforma EBITDA grew even stronger by 35% to €55 million, corresponding to a high margin of 39%. Adjusted proforma EBIT increased equally strong by 35% to €52 million, corresponding to a margin of 36%. Margins on group level are fast, broadly speaking, one percentage point higher than last year. Before any adjustments, EBITDA amounted to €53 million and EBIT to €39 million. Please have in mind, the unadjusted EBIT is especially influenced by purely consolidation-related issues. PPRs, so purchase price amortization. That's very important to know. On the back of this strong development so far, we expect full year 2023 to come out at the upper end of our revenue forecast of between 165 and 175 million euro, with a continuing high adjusted EBITDA margin of 35%. Even though I keep repeating myself, the operating development in the first nine months, as well as the growth forecast for the full year, as well as our medium-term outlook for 2025, clearly underline the resilience of our business model. And strict focus on technology and innovation leaders in a market environment with so many geopolitical and macroeconomic uncertainties as is currently the case and as I know in my career wasn't the case before. Our net leverage ratio within the group was further reduced on the back of strong organic cash generation and amounts to only 0.3 times adjusted LTM EBITDA as per end of September this year. And this despite the fact that we spend €8.5 million on the acquisition of two sales agents of bike diesel in Q2 this year. This conservative balance sheet composition equips us with significant non-dilutive financing capabilities and capacities for future acquisitions, but also for a potential share repurchase or such other acquisitions. With this brief summary, turning over to the next page and handing over to Harald, who heads our finance department.

Thank you very much, Marco. Welcome everyone from my side too. Let us jump right into the quarterly revenue analysis here on page four of our presentation. As you can see, we had an absolutely tremendous quarter. Both companies not only continued their growth trajectory, but even increased their momentum. On the top chart, you can see that bike leasing even outperformed the strongest quarter of last year, so Q3, by plus 35%. Also, IHSE on the bottom chart grew by 28% compared to last year's Q3. And with this development, I think I can say we are quite very, very happy. Jumping to the next page for the regional sales split. First to bike leasing, no surprise here, the company does business in Germany and Austria, and the year-to-date growth in revenue was 33%. At IHSE, the absolute material driver continued to be the very strong performance in the US. where revenue grew by almost 90%, so plus 88%. EMEA showed a very solid development and was essentially on last year's level. In the APAC region, revenue was still down by 46%, which is almost the exact same value as in the first half of the year. And as pointed out three months ago, again, this is due to the general trends of decoupling of the Chinese economy. Other factors also include the below average growth in economic output, coupled with the crises in the construction industry and the general reduction in investments of the local Chinese district governments. Turning to the next page with the P&L table or segment income table. In the first two columns, we see that Byte Leasing's gross profit margin increased from 62.6% to 64.5%. This is due to the fact that the company acquired two external sales agencies in the second quarter of this year. And as a result, sales provisions are no longer paid to these agencies, which decreases cost of bike leasing. And those costs are presented above gross profit in the P&L. So a margin increase from those acquisitions. On the level end of EBITDA and EBIT, the margins decreased a tiny bit. And this is because in Q3, by pleasing terminated the contractual relationships with a third sales agency. The company expects that it will have to pay a compensation for that termination and accrued a one-off expense of 1.8 million euros accordingly. Proceeding to the next two columns to the right, segment security technologies or IHSE. And here the gross profit margin was higher than last year. However, such deviation is nothing out of the ordinary for the company. What is more interesting is the development of the EBITDA and EBIT margins, which are both up four percentage points compared to last year. As you might recall in the first two quarters, margins were significantly lower. That's because trade fair activity was somewhat front loaded in this year, and that was reflected in the operating expenses in H1. And what we see now is that when you don't have that many really, really large events and revenue comes in nicely, IJSE's margins are more than well on track. If you look at the third quarter only, IHSE had an EBITDA margin of 36.2%. Going to the right two further columns. In the central functions, expenses increased a bit, which was caused by higher consulting fees, as well as marketing expenses with the goal of raising the brand awareness and popularity of Brockhaus technologies. In conclusion, and summing up on the consolidated group level, so very far right columns, revenue was 143 million, showing a substantial increase of 31%. Growth profit margin was at 67%, and adjusted EBTA margin was 39%, bringing our group to an adjusted EBTA of 55 million euros. The group's adjusted EBIT of 52 million euros corresponds to a margin of 36%. On a technical note, I repeat myself now, but it's still important if you have other values in your model. When you compare the last year figure, so 9M 2022, to numbers which you might have in your analysis, please bear in mind that following the sale of Pallas and of 2022, the P&L items need to be reclassified retrospectively. So according to IFRS 5, all revenue and cost contributions of PALAS must be excluded from the respective line items of the P&L and are shown at the bottom of the P&L in the line item income from discontinued operations. Therefore, you have a nice like-for-like presentation of the results, but a difference to our historical reports. Last but not least, our cash balance as per end of September amounted to 74 million euros, which is almost 16, more than one quarter before in June 2023. Hopping to the next page with a summary of our financial leverage. The debt from loans amounted to 89 million euros. Subtracting cash leaves you with a net debt from loans of 14.5 million, adding another 14 million from other financial liabilities. and subtracting 8 million euros of net financial assets from leases brings us to 20 million euros in total net debt. If you compare that to the current last 12 months or LTM EBITDA, this corresponds to a leverage, as Markus said in the beginning, of 0.3 times. Quick reminder, Three months before, so in summer, the leverage ratio was 0.7 times. So leverage has come down quite a bit or quite substantially. And this was driven, of course, by both. First, a strong or very strong cash flow in Q3 and also a continued growth in EBITDA. This would conclude the financial update. I'm happy to answer your questions later on and hand back over to Marco.

Thank you, Harald. Yeah, thank you very much for this financial deep dive. Let me provide you with a quick deep dive on our two business segments over the next couple of pages, starting with the significantly larger one, bike using. Bike using achieved another record nine months in 2023. in terms of both financial as well as operating KPI. As mentioned earlier by Harald, bikes not only grew their revenue by 33% to some 113 million Euro, but also the numbers of bicycles that were facilitated through a digital platform, which grew by 32% year over year to a total of 131,000. This also means that bike leasing already surpassed the full year numbers of 2022, in which bike leasing brokered around 118,000 leasing contracts, with one full quarter still to go in 2023. Those facilitated bicycles on the other hand, are only a function of the customers onboarded to Bike Leasing's digital platform. After a strong start into the year, Bike Leasing continued its onboarding speed into Q3, and as per end of September, stood at around 56,000 corporate customers, B2B customers, up from around 45,000 end of 2022. Those corporations employ more than 3.2 million people that subsequently have access to our solutions. Keep in mind that when we signed the acquisition of Bike Living in June 2021, the number of corporations on the platform stood at around 25,000. So we more than doubled that number since the acquisition. Lastly, cash and cash equivalents of bike leasing significantly grew to 32 million after a level of 19 million euros per end of June 2023. This is especially driven by the reduction of a seasonality-related high refinancing backlog that we faced end of Q2 and which has been normalized again, leading to immediate cash inflow. Please keep in mind that this comfortable cash cushion is already after the payment of around €8.5 million on the acquisition of these two external sales agencies in Q2. The comfortable liquidity situation is also the reason why Bikeleasing did another voluntary early repayment on a senior acquisition loan in October that was taken up as part of the acquisition in 2021. and has now repaid this loan in full. This means that just 23 months after acquisition, two out of three debt tranches taken up for the financing have already been paid by Bike Leasing. In addition, the full repayment also means that the customary restrictions on a possible distribution of dividends by Bike Leasing to its shareholders as part of the original loan agreement were lifted as well. Moving on to the next page for a similar update on IHSE. After already strong Q1 and H1, IHSE further accelerated its organic growth into nine months. The plus in its top line of 22%. As seen earlier by the regional splits presented by Harald, this was mainly due to a continued very strong development in the Americas, while EMEA was broadly on the same level as last year. Only the APEC region, especially driven by China, remains more difficult given the decoupling tendencies from the rest. but also the still below average growth in economic output paired with crisis in the construction industry and the general reduction of investments by the local Chinese district governments. Important to highlight is that nine months 2023 represents the strongest nine months since 2020, which at that time still included the last pre-COVID quarter of Q1 2020. This is especially impressive when considering the currently difficult situation in Asia, where IHSE did significant revenue pre-COVID. This underlines that the demand for IHSE as a global technology leader in KVM technology and the growth tailwind in its market remain intact, and the rebound is continuing. The adjusted EBITDA margin of 26% extended by 4 percentage points as compared to the previous year's level of 22%, despite planned expenditures for trade shows and a group-wide IT project in Q1. This is mainly due to the strong top-line development and resulting fixed cost regressions, as Harald mentioned earlier. Lastly, we remain confident optimistic for the year as well as months to come on the back of a continued high-order backlog of around €10 million. Flipping over to the last two pages of today's presentation. Our forecast for fiscal year 2023 as well as our medium-term outlook for 2025. As already briefly mentioned in my opening remarks, on the basis of the strong development within the first nine months of the year, we expect the full year to come out at the upper end of our forecast range with revenue between 165 to 175 million euros. The upper end of this range would correspond to an organic growth of some 23% as compared to the €143 million of revenue in 2022. We continue to expect the adjusted EBITDA margin to remain at a higher level of 35% for this year. At the upper end of our revenue range, this would correspond to an adjusted EBITDA of around €61 million this year. Please note that this forecast assumes that there will be no further change in scope of consolidation within Brockhaus Technologies. The reason for this approach is the difficulties, as mentioned before, in predicting the nature and scope of our future acquisitions. We do not believe that any estimates in this respect are sufficiently reliable. Coming to our medium-term outlook 2025, In order to provide additional transparency for our investors on the expected medium-term developments at bike leasing, IHSE and thus our whole group, we published a medium-term outlook 2025 in June this year, additionally to the annual guidance. By 2025, we target revenue to increase to a level between 290 to 320 million euros. This compares to revenue of 143 million euros last year, and at the upper end of the forecast, 175 million euros for the current fiscal year 2023. I think this underlines our growth ambitions with both bike-using and IHSE projects. Profitability is also supposed to continuously increase due to operational leverage, and we aim for an adjusted EBITDA margin of around 40% for the 2025 fiscal year. In 2022, this margin was almost 35%, a value that is also targeted for this year. This would increase the adjusted EBITDA from €50 million last year to a value of approximately 120 million Euro or more by 2025. As for our annual forecast 2023, this medium term outlook refers to the group as it stands. So again, we are assuming that there will be no change in the scope of consolidation. All in all, I have to say we are very happy about this strong development, 2023 so far, especially when considering the challenging world geopolitically and macro-community environment. We are convinced by the resilience of our business model and our ability to source, acquire, and successfully develop innovation and technology champions within the German Mittelstand. That concludes our presentation, and we are now happy to answer your questions. For that, I would like to hand over to the operator. Thank you very much.