PVA TePla AG

Good morning, everyone, and welcome to the earnings call of PDA Teflon AG for Q1 2026. My name is Sebastian Gonzo, and I'll be moderating today's call. And as usual, CEO Janine Ketter and CFO Marcus Kohls will first walk you through the results for Q1 and share their outlook on the rest of the year before we will then open the floor for your questions. And a quick housekeeping note before we start, this call on our website within the day. And with that, let's get started. Angeline, over to you.

Thanks, Sebastian. And I have to say this time not good morning rather than good evening as I'm joining this call from the U.S. this time. Last week would have been more comfortable when I would have been able to join from Asia. But I hope the line will be stable. Otherwise, the colleagues in Bettenberg have to continue with the presentation. And you see... We are very busy to execute our strategy. With having said that, it is even more exciting for me, for the, how our office. With inspection tools for HVM, for advanced logic, we stepped into the next level of semiconductor industry and achieved an order volume of 60 million. And in material solutions, R&D related activities around compound semiconductor materials significantly start to contribute as well. With that, we achieved a record auto intake of 121.6 million during the first quarter. And what makes it important to say is that it's not one order that's related to that order intake. It's different customers, different technologies, which are included in that development. And so a broader base of orders that we are handling with now. As expected, We started the year with a lower level of revenue and also earnings caused by strategic investments in our sales and service infrastructure and the organization, but also a lower order momentum from 2025, which is now starting to run through our books. And this investment in our strategy will continue this year and also we will have included some further one-off effects during the year. which will phase out until year end, so we will have a fresh start into 2027. With the higher order momentum that we are seeing at the first quarter, we further underline our guidance that we gave to you at the beginning of the year, and we are very confident that we will achieve that guidance. Starting with the first quarter, we also changed our segment structure. So far, it was and industrial systems, and the very market-oriented approach that we have been running with that structure. So each entity in the group was assigned to a segment, and with the strategic development of our metrology business, which is more and more growing, we changed the focus from a very market-oriented approach to a technology-oriented approach. And this also finally reflects how we are managing the company today. So it's also, it's not only giving transparency to you, it's also how we are seeing the company and how we are managing the company that is showing in that second structure now. And the material solution side, our systems are used for the production of advanced materials in the aerospace market. for the production of high-performance components used to build up the grid infrastructure and most important today in the semiconductor market to produce bulk material such as indium phosphate, for example, which is important for the communication between data centers. It's also including the production of semi-grade graphite and plasma solutions for back-end-oriented applications such like On the metrology side, we provide a broad product portfolio to the semiconductor industry. And most important there is today tools for the inspection of 2.5 and 3D structures in advanced logic and memory. I wanted to bring everyone on the same level. So this earnings call is really focusing on the financials of the first quarter and our new segment structure. So I'm happy to hand over to Markus now, who will show you how these segments are reflecting in our numbers.

Thank you very much, Jaylen. And good morning from my side. Before we start with the financials as a regular, I would like to take the chance to point also out some specific characteristics of our new segments and how these are affecting our financials. In material solutions, the system lead time with 12 to 18 months are way longer of those in metrology with four to eight months. Reason being here is that in material solutions, our systems are tailored to the specific needs of our customers. And this means there is an engineering phase Then custom fabricated parts are ordered and received. The assembly can start afterwards. And finally, the installment on the customer's side happens. This whole process takes usually 12 to 18 months. On the other side, in metrology, the systems are way more standardized. So lead times are way shorter with four to eight months. This high degree of customization also reflects in the revenue recognition. A material solution often the revenue is recognized over time. And this is not happening in a linear fashion over the time. It's based on a cost to cost measurement, which means that the engineering and the assembly phase only contribute proportional less than when to phases where the parts are received. So it's usually an S curve we are seeing in the pattern how the revenue is recognized. On the other hand, in metrology, revenue is recognized at a specific point in time, which means when the system is delivered or when it's installed at the customer side. Payment terms are also different. In material solutions, we are receiving prepayments, usually in a structure of 30, 60, 10 or similar, But if it's a larger project, then the prepayments are tailored to the project to ensure we're always financed. And metrology, there are prepayments very uncommon, so it's usually not what we're seeing here. What both segments have in common is that the service revenue is around 15% of the total revenue. With this in mind, Let's start immediately with our group revenue. So we're seeing a slight overall decrease year over year of around 6.6%, or 6.7%, sorry, from 59 million to 55 million. And the picture in both segments is a little bit mixed. In material solutions, we're seeing a decrease of 10 million or 24%. And this is primarily caused by what I just explained. The order intake end of 24 and in the first half of 25 was rather low, which means we're currently with the order intake from Q3 and Q4 in the engineering phase, which is only contributing in a lower degree to the revenue, but this will change in the upcoming quarters. In metrology, revenue is up 6.4 million or almost 39%, This is driven especially by the acoustic metrology. Q1 will be the low point of our revenue in 2026. Looking at the order intake, we are very happy to report our second strongest quarter in company history. And what also makes us very proud is that it's not the pending on a single customer or technology, and we're seeing more or less a 50-50 split between the segments. In material solution, synthesis for compound materials played an important role, and in metrology, the order intake is acoustic-driven. Here, we're seeing some catch-up effects from Q4-25, but also first orders for HBM, but as we pointed out in the last call, Delivery here is agreed for 27, so the usual pattern of four to eight months, the metrology doesn't apply to these orders. Taking a look at the development of the order intake, we see the very strong increase from Q1 25 to Q1 26 with an average rate of 27.5%. And quarter over quarter, it's an increase of 33%. As we said, in metrology, there are some catch-up effects in 2027 deliveries. This is important to keep in mind. For Q2, in material solution, we already secured additional orders for compound materials in the semiconductor industry, which includes further orders for indium phosphide. But here, we would like to point out that material solution is a project business, which depends on They're important investment decisions and so it's more lumpy and doesn't show a regular run rate like we're expecting in metrology, which is also expected to return to a level of around 30 million within pickup in the orders in late H2 2026 onwards. Coming to the group profit, our gross profit decreased from 19.5 million to 15.6 million, which is primarily caused by the low level of revenue. And as we said, this is a temporary effect. And this also affected due to a lower absorption of our fixed costs, a slight decrease in the gross profit margin from 33% down to 28.5%. And due to the high degree of fixed costs in our overheads, this immediately affects our EBITDA, which reduced from 8.2 million down to 1.4 million. So the overhead levels were around what we have seen in Q3 and Q4, so there is no big change here, but with the reduction in the gross profit of 3.9 million, and additional 2 million in the sales and administrative costs, which makes the FTE buildup we've seen in 25 fully visible. We have an immediate impact here. And also included are one-off items. We explained those in the last call of around 1.3 million, where the largest portion is coming from the restructuring of due to the closure of our site in Coburg. Coming to the individual segments, material solutions, the revenue is especially affected by the order intake in late 24 and early 25. As we said, this is a temporary effect that is also affected based on the lower gross profit and an increase in the overheads, our EVTA, which reduced from 6.6 million down to 1 million. At the same time, the order intake more than doubled from 24.8 to 69 million, which gives us great confidence that we're here seeing only a temporary effect, and based on the order book coming from Q3, Q4, and also Q1, In metrology, we're seeing an increase in the revenue of 38.2% from 66 to 23 million. The EBTA decreased at the same time from 3.4 million down to 2.2 million. Here, the scale-up of the organization and especially one-offs from the restructuring played an important role. Looking at the order intake, we can see that this almost tripled from 21.3 million to 62.7 million. So I would like to close the financials with an outlook on Q2. Here we are expecting that the order intake in metrology will return to the regular run rate, roughly 30 million. In material solution, the order momentum will continue, but as I said, due to the characteristics of the segment, we're seeing a higher volatility here, which will be visible in the order intake. Group revenue is based on the conversion of our order book, expected to grow substantially quarter over quarter and year over year, and with the higher volume of revenues, profitability is expected to improve on all levels quarter over quarter. For the full year, we guided 255 to 275 million in revenue and then EBITDA between 26 and 31 million. We're confirming this guidance and based on the order intake we received in Q1, and as a side note, most of these orders were or projects were already discussed when we published our guidance, so they have been factored in. It gives us great confidence to achieve our goals for 26, but also gives us great visibility for 26, the alpha beyond 26. So that's from the financials, and we're happy to head into the Q&A together with you now.

Okay. Thank you, Markus and Jarlene. And so now we're going to the questions. And Konstantin Hess is first.

Hi. Morning. Can you hear me? Yes. Perfect. Good morning, everyone. Thanks so much for taking my questions. The first one is just on the cadence of the order intake. So I think it's clear Q2 metrology returns to that level that we had spoken about before. And then as we go into Q3, Q4, should that be a sustainable acceleration or should the acceleration only really come in Q4? And then in material solutions, I'm just trying to piece together what exactly you mean by the momentum continues but expect volatility. So maybe you can comment a little bit about what the underlying momentum is just so I – Just for a better understanding of how to model order intake for material solutions going forward, right, just to basically try to understand that. That's the first question.

Thanks. Yeah. So, for material solutions, maybe just let's start with this. So, based on the discussions we're having with customers, et cetera, we are very confident that we'll stay here on an elevated level, but looking at Q4 and Q1, these were very good quarters, There is the higher volatility is coming from there are larger projects included, and these are here. It's difficult to guide will they be in Q2 or Q3, et cetera, and this makes it a little bit more volatile or lumpy, as we say. Make sense?

Okay, and this is so elevated levels basically below Q4, below Q1, but then higher than obviously Q2 last year.

Yeah, yeah, absolutely. Yeah, okay, fine.

And then just on metrology, it runs at about 30 million for Q2, Q3, and then the big acceleration in Q4, or should we already expect an acceleration in Q3?

Yeah, we're looking more at Q4 than Q3 for the accelerations.

Okay, understood. Then just lastly on the investments for growth, I mean, clearly those are still hindering profitability improvement this year. But looking into, and Jelena, I think you already commented on that on the last call, so just really a homework question. We should start seeing some proper operating leverage hitting the business in 27, right?

Yes, yes, absolutely.

Yeah, okay, perfect. All right, that's it for me. Thanks.

All right, thank you. Hartmut Merz is next.

Good morning, can you hear me now?

Yes, good morning.

Yes, good morning.

I would also like to start with the oil intake. Can you give us a feel of, I mean, you should have an order book by now if you didn't have any cancellation, which I don't expect, of around 245 million. How much of that roughly is related to the E27 and beyond?

We are very confident that we will achieve our guidance for 26 with 255 to 275 million and there are all orders we are seeing now will contribute more and more for our goals to 27 and this is also the case with the orders we received in Q1 that they will already give us great confidence for a good start into 2017.

Let me rephrase it probably a little bit. I mean, last quarter you gave an indication that roughly 50% of the high end of your guidance was already in the book. Can you give a similar indication this quarter as well?

Yes. It's increasing substantially with your order intake of Q1, and we're very confident here for our guidance.

Okay. Then let's probably come to the composition of the auto intake. So you're saying in mythology you're back to or you will come back to a normal run rate of 30 million next quarter. Is it fair to assume that you deem roughly 30 million of the auto intake that came in Q1 as, let's say, extraordinary and where would that come from or give us a feel for the additional volume that you now pick in that particular quarter?

Yeah, I wouldn't say it's extraordinary, so there are some catch-up effects coming from Q4, where the order intake was a bit lower. Then we have the orders with delivery in 27, and then the run rate of 30 million should be more seen than an average over the quarters than a hard value. So there are always some kind of fluctuations here, but it's nothing out of the ordinary.

And probably a final one with regard to the profitability. I was wondering a bit about the rather high impact you had on the gross margin side. You showed the 3.9 million year in, year down. You're roughly at 28 million. If we look at the divisional development, you had rather strong increase in the material solutions side, which I suppose has an even higher gross margin than the material solutions part. So you should have a positive mix effect from that on the gross margin side, which should have a compensatory effect. So could you please go a bit more into detail on that side?

Gross margin on the product side is very well intact and there is no issue. What we're seeing here is the combination of low volume and low fixed cost degradation or absorption. So it will be here at the low point and with the increase in the revenues, this will change. So for the moment, we're seeing underutilization The assembly part of the projects and material solutions, as I explained, were currently more in the engineering phase. And if we change it, then also the margins will improve here.

Yeah. And with regard to the metrology side, did you also experience a decline in cross-margin, or has cross-margin increased with a rather strong increase in sales?

So note the margins are on the regular level here. We are seeing that where we would expect them, there is no degradation or reduction at that point.

Okay. Thank you very much. You're welcome.

All right. Bastian Dach is next.

So thank you for taking the questions. It's one for me, and it's about the North American market and development there. We had order intake at 10% in Q1 in 2025, a little bit over 10%. In the past, you talked about increasing the share of the U.S. business in Europe. group, expand partnerships, etc. How do you see the current development there and going forward also into 2027?

Yeah, so that's a good question, because I'm already, I'm actually on site, yeah. This is the reason why, so we want to further strategically open the market for us, and we already made a lot of progress on semiconductor markets to increase activities on the metrology side, on the material solution side. And we are working also on other fields. So that takes time to further identify the customers, to open the doors at customers and get qualified with our technology. But we are awaiting a steady increase in that market, which will contribute to the order book. Also in 2026, we will see a higher portion from the U.S. already.

Okay. Thank you very much.

All right. Thank you. Edwin de Jong, please. All right.

Can you hear me? Yes, morning Ed.

Good morning.

Thank you for taking my questions. Maybe on the metrology side, we talked a lot about qualification and first orders in metrology for you guys. And how is the situation at the moment? You're qualified in the US, you're qualified in Taiwan, I guess, and also in Korea. The orders that are coming now, are they more for the pilot production? And when would you really expect the high-volume orders? Are they already in there?

And in the first quarter, we already had orders which are not on the pilot production anymore. So this is already reaching into that inline inspection where we are moving into the FAP, especially on the HPM side where we had some nice orders in the first quarter, which are reaching into 2027. And also in the logic side, we are starting to get orders which are also in the Fed.

Okay.

And in Korea, we are making further progress with bringing systems in. So first system has been finally delivered to customer and is moved into the Fed. So steady positive contribution on that level as well.

I guess that's acceleration is continuing in that part right? In metrology, yeah. Okay, then on the material solutions side, maybe starting with the order intake, really strong Q1, of course, can you give a little bit of an idea of what the composition is? What part is, let's say, really the synthesis of silicon carbide, silicon, and what part is more the diffusion, bondage, brazing business, that kind of stuff? Can you give a little bit of color on that?

Yeah, most activities are coming from material synthesis and compounds in semiconductor solutions. Okay. And it's a mixture between them.

Yeah, and then the silicon carbide silicon is within the synthesis is more or less 50-50 or is it more silicon carbide at the moment?

So, it's compound semiconductors, which means the compound semiconductors, silicon carbide, indium phosphide, calcium fluoride, these are the activities where we are in.

Great to see that you have already one order for indium phosphide. I guess that that's really a market that should pick up. The orders that you would have, are they for delivery already in 2026 or is it 2027?

Both, so a small portion in 2026 and most of it 2027.

Okay, great. That's really good here. And finally on the material side, I guess the Q4 acceleration war in the expected order intake, does that have something to do with your largest customer there in silicon? Or should I see that in a different way?

You mean 2026?

Yeah, exactly. Q4 2026.

So what we expect in Q4 2026 is a larger contribution on the metrology side as the investment phase that we are accepting and that we are getting forecasted from our customers is starting. to support the developments and the movements in 2020.

And then finally, I'll leave it for two other questions. I'm seeing at the moment a big movement also into power chips. Of course, for you guys, that's also a big business, especially with the gallium nitride in the silicon carbide. can get a little bit of an idea of how your interactions are with, let's say, the data center side versus the automotive side in that developments.

the activities that we lately get into the that get into the books from silicon carbide sites have been more related to that already established markets but what we are in discussion with different customers and different locations is that new applications which are also going into the relation that you mentioned yeah okay so it's Nothing there yet, but it's something that we are in discussion with.

You've seen a lot of freshening work, I guess, so in that part. Okay. All right.

Thank you very much.

Thank you.

Thank you. Marisa Kaskas, please.

Can you hear me?

Yes. Good morning.

Yeah, good morning. Thank you for taking my question. Good morning. So, based on the discussion that you have with your customers so far, do you still expect some orders that will be recorded in Q2 and Q3 in metrology will be delivered in 27? I mean, do you still expect customers to further secure capacity for 27 in the upcoming quarters?

Yes, there is a different approach between the customers. So several we are getting reliable forecasts where we are working with and orders when we are adding to move in the systems. And on other sites, we are working with already orders that we are receiving. So this is a very diverse field. where customers are handling the situation differently. Okay. Of course, there can be more orders in 2026 which are related to 2027 again, yeah.

Okay. And regarding the engine facade, how many equipment have been recorded in the orders in Q126 and do you still expect more orders to come in the course of the year?

And we already have a smaller amount of orders for indium phosphate, which is related in Q1, and we expect further traction in the order books during the year.

Okay. And what kind of customer are you addressing in the indium phosphate?

So it's related to the activities due to the communication of data centers, between data centers. But we cannot disclose on single customers in that case.

Okay. And regarding the OPEX, how do you see the OPEX development going forward? Still some restructuring costs expected for the upcoming quarter. Do you see maybe the EBIT that will be another time negative in Q2 before the gradual increase in H2?

So in general, we're seeing that our OPEX are now at the level we deem as given for the year, so there will be no sharp increases or anything further, and we don't expect negative EBITDAs in the upcoming quarters. We're seeing that we are well on track to fulfill our guidance of 26 to 31 million in EBITDA, and this will become visible in the next quarters.

Okay, nice. Thank you so much.

You're welcome. All right. Thank you. Then we have a question from Apus Capital, which I assume is Johannes Wies, correct?

Yes, that's right, Johannes Wies. Good morning. Good morning. Good morning. Three questions from my side. If you're looking to the news of the latest months, your potential customers and semiconductors clearly maybe raised their expectation because their customers, especially from the AI side, has heavily raised their CapEx plans. especially as advanced packaging take but also Intel with a solution increasing heavily the forecast and investments. And at HPM on the other side, at the memory side, it's the same. I think this expectation had not been maybe the base for your original plan. If all these things are happening and you are coming with your metrology solutions in these new taps and new lines, could it be maybe that the demand could be even higher than you originally thought as you built this plan with the 500 million?

Okay. So we already mentioned in the first quarter that we see that the market is bigger than we originally expected, but we will stay with that expectation of a market share of 30 to 40% in that regard. Of course, we did not include yet that further announcements of capacity needs, which is not included in that yet. be higher than we expect, but we for now stay with the targets that we set.

As you always said in the past, the year 28 is not the final point, there could be further growth beyond this year.

Yeah, so we want to participate on that market on a long run, and not only until that date. So we are happy when the market is steadily increasing, and we also can move in our system after 2028, of course.

Yeah. Maybe, I think I asked it, but I have not in my head. Your solution is independent, or is it used for level-based or panel-level-based advanced packaging?

Yeah, it's both, it's front end related, it's waiver level related, and it's also panel level related. So we are active in all the three areas.

Okay, also not in the back end only, also in the front end space? Yeah. With ultrasonic, okay. Although you have two other smaller solutions, one is optical for maybe very early to make the inspection for the wafer, and you're also working on a new radiology solution, then we could expect maybe a ramp up of these two solutions, and they are also maybe eyes on the cake compared to your expectations, your practitioners, that's right?

Yeah, on the optical side, we are on an earlier stage than on the ultrasound side. So this is something where we will this year already see first contracts with customers. We are at the moment moving in systems to R&D centers and are getting first signs on reflection from the markets. And we expect that they will contribute then more significant in 2027.

Finally, on the iridium phosphide, can you give us a feeling, one solution or one machine, how you call it, what is the average price? Is it higher than maybe a solution for possibly some carbide?

Yes, it's more in the range of silicon.

Okay, so that means around 10 million or what?

That's too high. Okay. A one-digit million, a low one-digit million.

Okay, thanks a lot.

Thank you. All right, and then we have Michael Kuhn.

Good morning. Thank you for my question. Essentially, one follow-up. Do you have any silicon crystal growth order in the backlog currently?

Of course, we are still executing silicon crystal orders.

All right. That was already a question. Thank you.

All right. Thank you so much, everyone, for joining. And before we close the call, I would now still like to hand over to Celine for some closing remarks.

Thanks, everyone, for your questions and for participating in that call. And as you saw with these orders we received, we are achieving a new milestone again. And this is the result of the effort of the strategic development over the last two years that we have done with the company and which was caused by the work of the whole team and the whole team will further continue with that execution. So thanks for listening today and your interest in PVA. I'm looking forward for the next call and I can say now good night.