Cicor Technologies Ltd.

Ladies and gentlemen, welcome to the Zico half-year report 2025 conference call and live webcast. I am Mathilde, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Alexander Hagemann, CEO. Please go ahead.

Thank you very much, Mathilde. Good afternoon, everybody on this call. Very happy that we have a very large number of participants here. Today, as most of you have participated already, we will again present our numbers And of course, some of the background information, the first half of this year, which will be done by Peter Neumann, our CFO and myself. So moving to the next slide, this year was so far clearly a year with marked great steps towards the planned European leadership in our chosen markets that we are looking for. Our chosen markets, as most of you know already, are those where we are talking about mission-critical electronics. Electronics where lives depend on, where the safe operation of important assets depends on. And these are the markets of aerospace, defense, industrial, healthcare technology. Now, if you are looking into these three markets, what they do really have in common is the extremely high demands to quality reliability of what we are doing. First and foremost, market for aerospace and defense, 28% of performer sales this year are in this market where SECOR is present on above sea, below sea ships, in the air and satellites, et cetera. The industrial market, still our largest market, where SICO drives miniaturization, automation, and very important application sensors, semiconductor equipment, and so on. And healthcare technology, 90% of performance sales, where SICO has leading position in medical variables like hearing aids, but also present in fast-growing markets like surgery, robots, implants, and so on. Going to the next slide, that is what SICO is really looking for. We are looking for pan-European leadership and we have made over the past six months major steps in expanding our position in the European market and I will discuss that later. So the vision for 2028 towards which we have made these important steps forward are to become the leading pan-European electronic design and manufacturing partner for the markets that we have chosen. And being pan-European for us means a very strong markets presence, but also presence in engineering and manufacturing wherever it is needed. That is a clear USP of SECOR that is extremely important, especially for the market of aerospace and defense, where domestic manufacturing is absolutely key. Now, when we are discussing the first half of this year, we need to understand that the numbers of CCOR that Peter will present in detail are impacted by a number of effects that need to be reconciled to understand the true and underlying performance of CCOR. First of all, what you will see, it is the timing of M&A. net sales growth of 21.4% year-on-year, which was driven mostly by acquisitions. Of course, this is very much impacted by the timing of our acquisitions, where in January we already consolidated Perfecta Solutions, then in April we took over Eolan France and Morocco, and in June one factory of Mercury Systems International. So you can see that the numbers are heavily impacted by the timing of those acquisitions. Additionally, what you will see is for a proper reconciliation of our segment profitability that we have started to allocate corporate costs in a more proper and transparent way to our segments and therefore you need to add 85 basis points to segment profitability to make them comparable to previous year. Now, talking about the business and looking how the EMS market in Europe looked like over the past year and also the first half of this year, we are especially satisfied with the fact that we are returning to growth. We are returning to organic growth. and record a positive book to bill rate for the full first half of this year, whereas last year was still marked by a significant contraction of the order book as the result of inventory reduction from our customers. And as the effect and as a result, you can see a positive organic growth in quarter two. So when the first half of the year was still a slight negative on organic growth, the second quarter really marked the turnaround back to growing business. Now, we are very satisfied with profitability of our business on a comparable level. That is when reconciling for the effects of the Iolana-France integration, about which Peter and also I will talk more about. So you saw an increase of 50 basis points in the operating margin, EBITDA margin to 11.2%. Peter will comment on the free cash flow. We continue to work very disciplined on networking capital to make our capital investments also very effectively. and thus can report significant free cash flow before acquisitions and also adjusting, of course, for the Elon France acquisition. And last but definitely not least, I will come to that at the end. As usual, we are able to increase our full-year guidance. Now, timing of acquisitions I've already mentioned. and especially important it is when we are looking at sales by industry. Here you see two charts today. On the left you are seeing the reported numbers from the first half and that is the consolidated numbers including the acquisitions as per the effective date of closing of the transaction. So again, for Eolan, that was in April. For Mercury Systems, this was in June only. And no contribution yet from the acquisition of Mades in Spain, which will be closed only in the very near future, so in Q3. So if we are looking at a pro forma basis, so with a full year contribution, which is theoretical, but it shows the proper run rate of the SECO group, you are seeing the following distribution. Industrial is still the most important market. It is diverse. It is many high-tech applications, as I mentioned already, being a bit over a third of the business, 36%. Aerospace defense, already the second largest market. more than a quarter of the business, almost 30% with 28%. That is an increase of three points over previous year and is driven obviously by acquisitions, but also organic growth. And healthcare technology as the third of our strategic markets with 19% of sales. Very attractive market for us. However, the share has been reduced because our acquired companies have a little contribution to healthcare technology markets. By regions, we see a continued move towards Europe, again, sales to Americas and Asia. Let me say one word about the Americas. Direct sales of Sequel that are affected by the US tariff regimes, whatever they will look like after August 1st, are only 0.5% of sales. So there is almost no direct impact of the US tariff regime on SECOR direct sales. Special importance for us is the expansion of our presence in the aerospace and defense market. This is to provide a platform for our customers that is capable of not only fulfilling demands of today, but also to that is able to scale up with the customer demand. And very honestly, the significant and most significant growth is only happening now and in the years to come. Our Earth-based defense programs take very significant timing from the decision of a program until we see the realization And therefore, we are the one company, the one partner that has the most scalable, robust and secure platform for aerospace and defense electronics manufacturing throughout Europe. If you look at the map on the right, the pan-European presence of SECOR is a reality. You are seeing presence in the most important markets for aerospace and defense, which is Great Britain and France. Germany is a very fast emerging market for aerospace and defense. We are able to offer scalability and attractive cost in Romania, obviously also NATO member and very important for us is also our presence in Spain. SECOR is more of a true one-stop shop than anybody else in the industry. because SECO is able to offer all the services across the value chain from systems engineering, critical components from our advanced substrates division, assembly and also the service that is required. So what you are seeing in SECO, a clear USP in the industry and also in the numbers that you are seeing leadership in the European market of aerospace and defense. Overall, the division recorded a 26.2% increase in net sales, which was obviously driven by acquisitions. Underlying profitability could be increased again to 11.1%. And again, this number, which is adjusted for the Iolan Front integration, to which I will come in the next slides, has been an increase over the last year when also considering the allocation of corporate costs to the segment. So when looking at these numbers, we see roughly a 30 basis point increase in the operating margin. The integration of Perfecto Solutions in January and Mercury International in June have worked very well. We're very satisfied with the status where we are. The Eolan France integration, I'll come to that, has been marking a very, very important step and we are on target to achieve our objectives for this acquisition. Again, the Spanish market entry with the acquisition of Mades, a highly successful business with a seasoned management team and margins slightly above group average has proceeded very well closing is subject to regulatory approvals as it's usual in the aerospace and defense market it takes a little bit more time but we expect to be able to report very soon progress in that area so all this together leads to very satisfying progress towards pan-European leadership in our chosen markets. I've mentioned Erlan France. We need to look at France as being the second largest market for electronics in Europe overall behind Germany and being the second most important market in Europe for aerospace and defense behind UK. So it is extremely significant and important for us to be in that market. Now, establishing this strong position in France, therefore, was absolutely strategic. And we were very satisfied that as an effect of a restructuring of Eolan, we were able to work very closely with the Ministries of Defense and the Ministry of Finance of France to secure this business. Securing the business is important for many of the leading aerospace and defense integrators and other French customers. And therefore, it was very major importance to have a smooth transition, which we managed. So all the sites remained operational. The social climate was very positive. We were able to do the integration of the businesses mostly. You also see Morocco, two manufacturing sites in Morocco that we are now operating in SICOR. And Morocco is a highly competitive and logistically attractive, politically stable manufacturing location for electronics in Europe. So you really have to see Morocco as a country that has very favorable trading terms with many countries in the world, including the US, including the EU and Asian countries. You see Morocco being logistically obviously extremely close to Europe and labor rates being comparable with Southeast Asian nations. So Morocco also very, very attractive addition to SECOR. Now, looking at that acquisition, it has been an acquisition out of a regulated bankruptcy proceeding. And that has the consequence that you will need a bit of interpretation of the SECO results in the first half to understand what it really is. That is the nature of this transition. Purchase price in this case is less than half of the cash investment that we did. for a business with 120 million Swiss Francs annual business, of course, very low purchase price of 7.3 million Euro plus the transaction cost of 2.5 million. And we acquired 3.7 million Euro cash, which came with the business. But now as out of the seven sites, we have acquired five sites in good standing. That is as... as shared transactions, we have acquired two sites out of bankruptcy. So these were asset transactions. Here we were investing 9.1 million euro to pay off certain debts and also to rebuild networking capital. And you have to consider the overall investment of 15.3 million, including all these effects. Now, €15.3 million, that is the investment for a business of roughly €130 million annually. So you are seeing that is about 12% of annual sales that were invested. I would say a very unique value creation opportunity as we are now progressing towards making this a good and profitable business. When understanding the annual numbers or the half year numbers, we also have to see that 2.5 million of these cash investment has been recorded as negative EBITDA, which is integration cost and business continuity. So please look at these numbers in a holistic way and then it will be easily possible to understand the performance of SECOR. Now, our other division, the AS division, it is a more and more robust business. It is a business where we have made significant progress by consolidating the Bucknang site, a small site that we have acquired a few years back. And we are progressing now in consolidating our own Germany site into our main site in Switzerland in Vangst. So at the same time, our PCB site in Budry, Switzerland has finalized very important operational excellence programs and is now very robust in their business. Therefore, even through a reduction of reported sales, which was significant, 19.2% reduction of sales, caused by very sharp inventory reduction of the two largest healthcare technology customers, has still seen an almost stable operating margin when considering the shift of corporate allocations with 13.3%. So now when the inventory reduction is over, which we believe is pretty much the case now, then we can expect a very interesting uptick in margins in the future, as that is a business that is very highly volume dependent. So with that, I'm very happy to hand over to Peter to report in more detail on our financial results.

Thanks a lot, Alexander. Let me lead you through some more details of the half-year financials. If we go to the first slide, the key figures. Here you can see that we are achieving a record revenue EBITDA in absolute terms as we're successfully implementing our growth strategy. You see the book to bill of 1.02 clearly indicating future growth momentum. And as Alexander said, we're back to organic growth in Q2. Although if you look at the entire half year, the majority of revenue growth with 25% year over year is driven by the acquisitions. If you look at EBITDA profitability, we should look at the base profitability progression at SECOR that is very healthy with 50 basis points improvement versus 2024. We acquired EOLON in Q2 and this had a negative impact on the profitability. This is in line with our business plan and the negative Q2 EOLON results are non-recurring in nature and we expect a positive contribution for the second half of 2025. On the base, we have a strong free cash flow performance with a free cash flow to EBITDA conversion of 64%. We remain extremely disciplined as a solid and reliable free cash flow generation is the engine of our growth strategy. You can see this as well in our cutbacks that is below 2%. We have a strong base net earnings performance. FX and EOLON are non-structural impacts that I will explain later that distort the underlying performance. Quick step back on the long term. As you can see, excluding EOLAN, first half is a record in revenue, EBITDA, and margin progression. Over the past year, SECOR has proven that it's able to grow profitable with a balanced organic and inorganic growth. Objective is clearly to continue this progression as we announced in our 2028 strategy to reach more than a billion Swiss franc revenue. Half year, 2025. Report growth of 21.4% on revenue. M&A contributed 24.8. Sales growth, FX, as the CIS rank has strengthened mainly against the US dollar, but also against the pound, is negative 1.4%. And organic sales is minus 2.1%. But the decline, as Alexander said, is by, as shared in the Q1 results, by the exceptional STS material sales in the base and the destructing of two medical customers in the AS division. Excluding these two effects, we are back to organic growth with momentum picking up. On EBITDA, we had a one-time impact, and you see this always. I show this on the white, the elements excluding AOLAN, so that you transparently see the performance on the base, excluding the EOLAN non-recurrent effect and the all-in numbers. On EBITDA, we had a one-time impact from EOLAN of negative 2.5 million and you can see how the base business is progressing from 10.7 to 11.2%. Net profit is on the base progressing solid. FX, we saw a big swing. Last year, we had in the first half FX helps. This year, we saw the opposite effect as the Swiss franc was strengthening. On a free cash flow, Alexander already explained the Swiss franc 9 million investment in EOLAN, which would rather be looked at in the context of the M&A business case. Base business free cash flow conversion really strong. Recall our objective is to remain above a 50% conversion. And in this case, we are at 64%. Now, if you look at the P&L statement in detail, I mentioned already the key drivers up to EBITDA. I want to draw your attention on if you look into EBITDA to EBIT, two elements. One is clearly the depreciation of property plant equipment of 2.5%. On top, we see also an amortization of 1.4% that is driven by the intangible assets that we acquired through our acquisitions. On the financial income, we continue to see low and reduced interest expenses as the CIRON reduced, and even more importantly, and this is that we have a smaller overall financial liability, but I think it's really exciting if you look into the number of acquisitions we have made, and the free cash is showing also the impacts of the free cash flow delivery in the last year. On NetFX results, we had a help in the first half of 24, but we see the negative in 2025, creating a significant swing with this non-cash impact that comes from our intercompany financing. The tax rate is impacted by this. You should look at the tax rate excluding this net ethics result as this is not having an impact on the tax in absolute. Sales contribution, you can see M&A, their TT Electronics that we only closed in April 1st, 2024, and EOLON are the two major material impacts. You can see that EMS is growing, taking out the one-time STS impact, we would have been growing even 5 million AS impacted by the two medical customer destocking as Alexander previously shared. Now moving on to the balance sheet, SECO continues to maintain a really strong balance sheet. Our balance sheet also shows the focus of SECO to optimize our invested capital in delivering free cash flow. Net debt increased to 73 million through the executed acquisitions, leverage we are at this point in time at 1.16, giving us significant headroom for further acquisitions. After assuming, as we expect, the modest acquisition that is pending right to clearance to be closed in Q3, we would expect that we have afterwards another 100 million for further M&A available. Equity ratio at healthy 30%. Free cash flow excluding an A and EO and M&A impact is at 18.1%. mainly due to the strong operation performance and networking capital improvements you can also see that we had a total net cash outflow of 18 million for the free acquisitions of perfectors here on the cover for macro international generating sustainable free cash flow is a critical priority and a key pillar of our growth strategy some words on operating networking capital we continue to focus on improvement in reducing networking capital as percentage of revenue versus last year. The absolute increase is obviously driven by the acquisitions. We're now at 25% in line with what we had at year-end levels in 2024. This is driven by an operational improvement on the base to 23.6% and the new acquisitions that came at a higher operating networking capital level. I personally always like this one because as acquisitions come in with higher operating network and capital levels, we are able, and this is a significant opportunity, to deliver free cash flow as we are implementing our operation excellence program in the acquired company, as we have done in the past as well. Return on value. Capital remains our focus. It is really clear grow in absolute, improve profitability and manage invested capital that is in our business to a large extent operating network and capital. DUNE impacted by EOLAN non-recurring effects and M&A coming in at higher operating network and capital levels. Overall, we remain at excellent momentum on ROIC and the elements mentioned are rather an opportunity to further improve going forward. We reconfirm our commitment to deliver ROIC above 15% as per our strategic 2028 midterm goals. Here you see some more perspective on the impact driving net earnings decline that are important to understand. You see that the base performance in absolute net earnings is strong year over year. You see the 2FX impact The negative, so the help, the one-time help we saw last year, that is obviously non-recurring in structure. And one-time hurt we had this year driving this big swing year over year. And then you see also the EOLAN impact that on a net earnings is close to 3.5 million, 3.4 million of negative. These are the drivers, but I think it's important to understand that excluding, and we really look at including FX, we have a very strong continuous progression. That is also what you see on earnings per share. Here you can see the longer-term earnings per share development and the recent positive development as SECOR is executing its growth strategy. Blue are the reported numbers that include the FX variability. From our view, you should look at the red line that excludes the foreign exchange impacts, driving a certain variability. The red line for 2025 includes also the negative EOLAN impact. Our focus is to drive earnings per share longer term in line with our growth strategy and drive shareholder value. On the capital structure, good news is at this point in time 99% of our mandatory convertible bonds are converted during the optional conversion period and we are back to a very easy to understand capital structure as the number of outstanding registered shares is also the one pretty much the same as the number of outstanding and conditional mcn shares total number second point market capitalization is above 700 million in even higher looking at current share prices um but i think is is also excellent news now um you see in the half year report um we we really integrated for a free acquisitions The most material one and probably also the most important to understand is EOLAN. And I think here you see the purchase price allocation of EOLAN a bit more in detail. The purchase consideration is 10 million as mentioned, including transaction costs and the acquired cash worth of 3.7 million. The deal structure was partially an asset deal for two sides and a share deal for the remaining five sides. The asset deals brought clearly some complexity, but came with benefits regarding organizational restructuring and past liabilities. On the share deals, we had similar complexity as French Chapter 11 process led to operational disruption. We have now in June normalized most of operational relationships with customers and suppliers. We have now a solid baseline to drive from gradual improvements as we have done in all our acquisitions and I see Alexander also elaborate on. Overall, we booked a negative goodwill of 12.9 for EOLON. Now, if you take the three transactions together, you see this here, a total net cash outflow of 18 million and a total negative goodwill of 8.7 million. if you take into account Perfectus as well as Mercury acquisitions. With this, I hand over back to Alexander.

Thank you very much, Peter. So it is important to understand, looking at Seeker, and we tried our best to make it as transparent as possible to you, that we have seen a first half year with a very strong progression of underlying operational performance. And on top of that, the integration of Aeroland France and Morocco, where we paid, again, roughly 12% of annualized sales as a complete cash outflow, has an enormous opportunity for value creation once the margins are coming closer to the SQL levels, which we expect to happen in the next 18 months. Now, that is exciting. These are truly the two elements to look at, the strong underlying business plus the value creation opportunity from Erlan. It is also important for us to continue on our growth strategy as we have done in the first half and at the same time being very disciplined as far as cash outflows are concerned and as far as the leverage of the overall balance sheet is concerned. So looking at our expectation for the rest of the year and the total year, we are seeing very clear signs of return to organic growth already happening in Q2 and looking at the larger the EMS division even for the full first half. We discussed progress in integrating the recently acquired businesses, very positive on Mercury. and continuing according to our playbook, according to our playbook for Erlan France. And therefore, we are able to increase our guidance on the sales. So on top line and also bottom line, talking about our top line, we are seeing now sales of 620 to 650 million Swiss francs And these are not pro forma sales, these are reported sales. You're looking at pro forma sales, you are seeing a number which is roughly at 700 million Swiss francs or higher. But on reported numbers, you can expect 620 to 650 million Swiss franc sales, which is significantly more than the 520 to 560 million in our formal guidance. And an operating result when we are reconciling for the one-off effects from the EO9 integration, we are looking at 64 to 72 million Swiss francs in EBITDA that we expect for the year previous guidance for 60 to 70. And if you are including the roughly two and a half million negative EBITDA from the EO9 integration, you're looking for 62 to 70 million Swiss francs EBITDA. So we are specifically glad that we are able to increase our guidance both on top and bottom line, especially because the significant strengthening of the Swiss franc over the past few months against the Euro and of course especially against the US dollar has provided us very very considerable headwinds slowing down obviously our growth. So which tells you that underlying and adjusted for Forex we are very positive about our business. So with that I want to thank you very much for your interest and we are happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their 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. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and 1 at this time. As a reminder, if you wish to register for questions, please press star and one on your telephone. The first question comes from the line of Lea Sess from AWP Finanznachrichten AG. Please go ahead.

Good morning, or good afternoon, actually. Can you hear me?

Good afternoon.

Yes, very well. Okay, perfect. Thank you for the presentation. I was wondering, looking at this graph of your markets, can you say in what direction you want to steer these percentages in terms of maybe new acquisitions or where do you want to land?

Very good question. Thank you very much for that. Seeing clearly that we are having significant growth in aerospace defense, it has been our strategic objective to build that European leadership, which we have now achieved. Aerospace and defense will continue to grow organically. I expect in the next few years faster than other markets. At the same time, we want to specifically grow the medical, so healthcare technology markets. So for me, the perfect scenario are each of the three core markets, roughly 30% of sales each and 10% for the rest.

Okay, very interesting. And what about the regions? Would you also like to go even more into Europe or maybe a bit more balanced?

We have been very clear that we are focusing on the European market. It has served us very well and we have always said that being a leader in Europe is better than being a follower everywhere. We have to understand that also our Asia sales are mostly driven by companies with their headquarters in Europe. The one region where over time you will see more works to grow in that market is North America. So I would expect that medium term you will see the American share of sales growing a bit.

Okay, thank you very much.

Thank you.

We now have a question from the line of Alexander Zinkovic from NVP Research. Please go ahead.

Hello, good afternoon. I have a question on the acquisitions. Over what time frame do you expect to realize the full operational and strategic synergies, especially in regard to EOLAN and perhaps also for MADIS? And when do you expect meaningful contributions in the P&L and also in terms of capital returns? Thank you.

Thank you for the question. If I start with the last acquisition, which has not yet been closed, which is Mardes. This is a very robust business with profits above the SECOR average. profit margins above the secret average. So that will be accretive from day number one. We don't expect any significant integration costs here. So it's very much a business like our first acquisition that we had done, which was XS Electronics three and a half years back. With Mardes and Eolan France and Morocco, we are looking at roughly 18 months. So until the end of next year, to realize the full synergies and operational improvements that we want to see.

Okay, great. Thanks.

The next question comes from the line of Bernd Loh from ZKB. Please go ahead.

Thank you. Good afternoon, Alexander and Peter. I have two questions. The first one is also related to EOLAN. You reported that 2.5 million APTA loss for the first half of the year and at the same time 2.5 million transaction costs. Does it mean that the underlying business of EOLAN would have been break-even in the first half of the year? And is it also true for EOLAN that As is usual in aerospace and defense, the second half of the year is typically seasonally stronger than the first half of the year so that profitability should improve and there will be no further one-offs at EOLAN in the second half.

Let me maybe take the first question on the 2.5 million. The 2.5 million transaction cost cash outflow has been before requisition and is part of our purchase process. allocation on the balance sheet, and it's not impacting at all the 2.5 million. The 2.5 million that you see in the P&L in Q2 are really linked to, let's say, after the 22nd of April. It took time for the asset deals, for example, to start up, start shipping again, start invoicing again, and so on. So there are delays. that are driving it in terms of the ramp up operationally. The amounts are the same, but it's a pure coincidence. The purchase price allocation captures the transaction costs in the opening balance sheet.

Thank you.

And to let you, to maybe provide a bit more background on everything that Peter said. So we took over the business 22nd of April. So we have 10 weeks off. costs of the business. But due to the restart of the business, we roughly had maybe six to seven weeks of full revenue. So reduced revenues as suppliers had to restart their deliveries. We had to get systems up and running again, as Peter has just mentioned. But the cost, of course, was continuing. So that is the reason for the losses in the first 10 weeks.

Thank you very much. That's very helpful. And my second question is related to the other sales segment. It has, on a performance basis, even slightly increased year-on-year to approximately 17% of total. Can you shed some light in what's inside the other sales and what's growing there?

Thank you. growing and what i would consider personally as a highly interesting market is rail technology mostly railway infrastructure where we are have gained significant new customer relationship so that is a market that from all of its characteristics i would even consider strategic And this is several percent of sales now. It has been a very small percentage before, maybe roughly two percent. Now it has grown to three to four percent of overall sales. So that is the biggest impact that we have seen.

Thank you.

As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Lucas Spang from Tigris Capital GmbH. Please go ahead.

Yes. Hi, good afternoon, gentlemen. I would like to start with the aerospace and defense segment, or the industry segment of aerospace and defense. It was just 7% up in the first half, so I would be interested if you have already some visibility that this will accelerate in the second half of 2025, or what is your expectation for aerospace and defense for the next month and quarters?

The biggest impact, as we have said already, is of course the timing of the acquisition. This is why we have provided the two views. Reported sales were, yes, we saw a reduction of percentage as those businesses with high aerospace and defense exposure were only joining later. Now, moving forward, we clearly see that increase towards the range, as we mentioned, roughly 28%. And we expect organic growth above the average of all the businesses. So you can expect year over year a double-digit organic growth of the market. It is not as massive as some might expect because many programs are only starting to lead to high sales numbers in 2026, 2027.

Okay, and then if we talk about, I know it's just some weeks, but if you talk about the start into Q3 and the auto momentum, does the positive auto momentum continue so far?

It is very difficult to make any statement here because as you said, we are only three weeks into Q3. We are in a period that in Europe at least, where of course our biggest market is, It's typically a bit softer due to the summer period. So I would not be able to draw any conclusion from the last three weeks to the second half.

Yeah, okay. And then last question regarding the cash outflow in the second half of 2025 for M&As. So if the closing of MADES has not been finalized yet, is it right to expect that this is the only purchase price you still have to pay this year? I'll leave this to Peter.

Look, I think it's fair to assume that the majority of cash outflow has happened in the first quarter. There may be some amount still in the second half, but they're clearly significantly lower than what you've seen in Q2.

So you already have paid the purchase price for Mardis?

Sorry, no, I was referring to Eolong.

No, no.

Mardis, sorry, Mardis. MADES, we are awaiting regulatory clearance. You would expect for a business that is more than half in aerospace defense and has margin above CEQA margin, probably the higher end of our guidance, that is a 4 to 7 EBITDA multiple. So if you do the math, then you would come to a net cash outflow of around 30 million Swiss francs.

But this is the last, from today's perspective, the only cash outflow for M&A in 2025, right? Everything else is already paid.

Exactly. That's all you can expect for everything that is announced today. Yeah, exactly. Perfect. Thanks.

Once again, to ask a question, please press star and one on your telephone. We now have a follow-up question from the line of Alexander Tinkovic from NVB Research. Please go ahead.

Thank you. A follow-up on railway actually. Given the recurring nature and long design cycles, do you see this as an area of strategic expansion going forward or Is this already baked in your planning?

It is a very, very good question. It's actually a question we are asking ourselves. And the reality is that from all the characteristics of this market, which is really the closeness to the customers, the difficulty to replace, so really the clear USP that you have in that market by being an entrenched supplier, It has all the characteristics of being a strategic market. Of course, at 3% to 4%, it is a relatively minor part of our overall business, but we will work to strengthen that market. It is a clear interest that we have. Okay, thanks.

Ladies and gentlemen, That was the last question. I would now like to turn the conference back over to Alexander Hagemann, CEO, for any closing remarks.

Thank you very much for your interest and for your questions in our company and to our investors for your trust in our business. It clearly has been a very exciting first half year. we have made these very major steps towards pan-European leadership, on which we can now build in many ways, both in expanding organically our market presence in the markets and countries where we operate, and also in driving operating margins to create value. We were trying to explain that to you, as some of the numbers that you are reading have to be reconciled and i apologize for the work that we are causing to you for that but it is important that we are reporting our numbers in a way that is transparent and it can be understood well so thank you again for your trust and your interest i wish you all a wonderful afternoon and say goodbye for now thank you ladies and gentlemen the conference is now over

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