Drägerwerk AG & Co. KGaA

Ladies and gentlemen, welcome to the Draegerwerk Q1 2026 Earnings Call. I am Sandra, the course co-operator. I would like to remind you that all participants have been listed in only mode and the conference has been recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Stefan Dreger, CEO. Please go ahead, sir.

Hello, good afternoon, and thank you for joining our conference call on our financial results for the first three months of 2026. I have with me today Gerhard Michleto, CFO, as well as Tom Fischler and Nikolaus Hammerschmidt, both investor relations. We would like to take you through the results of the presentation that we made available on our webpage this morning. Following the presentation, we will open the floor to your questions. Let's get started on page 5 with the business highlights. With continued good demand for the TiffNet sales development and significantly improved profitability, we delivered a strong business performance in the first three months of 2026. Order intake rose to around 865 million, while net sales came back to growth at around 756 million. Thanks to the good operating business, improved gross margin, and lower expenses, our EBIT increased significantly to roughly 18 million euro, lifting our EBIT margin to 2.4% for the first quarter. As a result, Of the good earnings performance, our free cash flow rose considerably to more than 44 million euros. As communicated two weeks ago, we confirm our guidance. I will come back to this in our outlook at the end of the presentation. The next week, we are hosting our annual shareholders meeting and will propose a higher dividend to our shareholders. The third consecutive increase for three years. This shows the good progress we have achieved in our developing the business and improving our profitability. With that, I turn over to Gerd Happig for a review of the finances. Gerd Happig, please.

Thank you, Stefan, and welcome, everyone. Please turn to page 7 for a group overview. As usual, all growth rates are quoted on a currency-adjusted basis. As Stefan Dreger said, we continue to see good demand for our technology for life Thanks to the medical division, and Germany in particular, our order intake rose by more than 3%. Net sales increased by around 7%, driven by both divisions. The slight decline in APEC was clearly overcompensated by the positive development in the other regions, particularly the Americas. Our gross margin climbed by 0.5 percentage points to 46.3%, supported by the improvement in the medical division, which more than offset the slight decline in the safety division. Nominally, financial expenses fell by 0.8% due to the strengthening of the euro. At constant currency, expenses would have increased by 1.7%. The growth was also influenced by a one-time payment to employees in Germany under a collective agreement in the prior year. If we exclude this base effect, expenses would have increased nominally by some 2.4%, still below the growth rate of net sales. Due to the good top line and the low expenses, our EBIT rose significantly from 0.4 million euros to 17.9 million euros. Consequently, our EBIT margin increased from 0.1 to 2.4%. Finally, our rolling 12-month DBA improved considerably by roughly 68 million euros to around 106 million euros. Let us now take a closer look at the development of the medical division on paycheck. Order intake grew by more than 5% to around 480 million euros, thanks to a higher demand for nearly all product areas and services. In Germany, orders were significantly up, mainly due to stronger demand for therapy devices and hospital infrastructure systems. The other regions also developed pay-per-click. Looking forward, please keep in mind that there will be substantial base effects on order entry in QG, since last year in April we received a major order in the mid-double-digit million euro range from Mexico, which will not repeat. Net sales in the past quarter rose by more than 5% to around €480 million, particularly driven by strong growth in the Americas, which was mainly attributable to higher revenues from anesthesia machines and services. EMEA and Germany also contributed to growth, while APEC recorded slight decline. Our gross margin expanded by around 2 percentage points to roughly 44% due to a good product mix and higher capacity utilization and production, and despite the negative currency impact. Functional expenses rose by around 3%, mainly due to higher personal expenses driven by a higher headcount than the sales region. Our EBIT in the medical division increased significantly from minus 27.7 million euro to minus 18.5 million euro, lifting the EBIT margin from minus 6.7% to minus 4.4%. A rolling 12-month DBA improved significantly, from roughly 53 million euros to around minus 40 million euros. I will now turn to our safety division. We are on page 9. Order intake rose by 1.2% thanks to a high demand for occupational health and safety equipment, gas detection and services. In Germany, orders increased significantly, in addition to the reasons mentioned, was primarily attributable to strong demand for engineered solutions, mainly orders from defense customers. The Americas region also recorded growth, while volume in the EMEA and APEC regions declined. Net sales rose significantly by roughly 9%, driven by considerable growth in Germany, EMEA, and the Americas. Net sales in the APAC region were below the prior year level. Our gross margin fell by 1.4 percentage points to around 49%. The main reasons for this were the lower profitability due to the product mix and negative currency effects. Factual expenses were 0.2% below the prior year level, particularly due to lower R&D expenses. our EBIT in the safety division increased significantly from around 28 million euros to around 36 million euros, lifting margin from roughly 9% to around 11%. Rolling 12 months VBA improved by roughly 15 million to around 120 million euros. Let's move on to the development of our cash flow and other key figures on to slide 10. In the first three months, We significantly improved the operating cash flow by around 6 million to roughly 62 million euros. In addition to the increase in earnings, this was mainly due to effective work in capital management, especially better development of trade receivables. Higher operating cash flow as well as lower investment outflow led to an improved free cash flow by around 12 million euros. Going forward, we expect free cash flow to continue to develop positively. Looking at our net financial debt, we had a significant reduction by around 56 million euros to around 85 million euros. The reason for this was the increase in cash and cash equivalents due to the strong free cash flow. As a result, the already healthy ratio of our net financial debt to EBITDA further improved to 0.2. At the beginning of the first quarter, we repaid a maturing note loan in the amount of €15 million with our own liquidity. Our 12-month rolling return on capital in Florida rose from 11.5% to 15.2%. This was due to the higher EBIT in the past three quarters. At around €745 million, net working capital was around 7% higher than in the prior year. Our equity ratio as of March 31st stood at around 52%, slightly above the year-end level of 2025. Now, I hand back to Stefan Dreger for our outlook on page 12.

Ladies and gentlemen, Q1 was a strong quarter for Drieger. Our good order development makes us optimistic about the further course of business this year. Regarding the U.S. tariffs and the war against Iran, We continue to expect similar impacts from tariffs like in 2025, and we do not see any material impact on our business from the war so far. Therefore, we continue to expect net sales growth of 1% to 5%, and 2% to 6% net of currency effect, and an EBIT margin of 5% to 75%. With this, I would like to end the presentation and hand over to the operator to open the floor for your questions. Please.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Anyone with a question may press star and 1 at this time. Once again, to ask a question, please press star followed by 1. It seems that we have no questions. Back over to you, Mr. Drager, for any closing remarks.

Well, Let's wait just one more second if there is a question coming or last chance. Any questions? Please ask either now or join us next week at our annual general meeting for the shareholders.

Thank you. That's a good question, gentlemen.

Yeah, well, then thank you very much for joining us today for your interesting career, and have a pleasant afternoon and get in a good way into next month, into May, this coming weekend. Thank you, and bye-bye.

Ladies and gentlemen, the conference is now over. Thank you for choosing ColorSchool, and thank you for participating in the conference. You may now disconnect the lines. Goodbye.