Stratec SE

And welcome, everyone, to our Q1 2026 Financial Resource Conference Call. With me, as usual, is Markus Wolfinger, CEO of StarTech, as well as our CFO, Tanja Bichal. As usual, following the presentation, we will have our question and answer session. Be aware that this content is being webcast live, and you can download the presentation either from the webcast or from our website. And last but not least, please allow me to draw your attention to our Dev Harbor Statement which we have on page two of that presentation. And this is now my pleasure to hand over to Markus.

Good morning, good afternoon, ladies and gentlemen. Welcome to our Q1 disclosure call. Let me briefly walk you through the quarter at a glance. First of all, we had a soft start into the year. I hope we managed to not surprise you with that. We have mentioned that in a variety or during a variety of occasions. However, definitely worth discussing what happened here. First of all, we think this compares to strong comps in 2025. On the other hand side, we had a solid instrument business on the other side. And that was like we actually saw that like for more than three months now that the start in the year is going to be soft as far as revenues with development activities as well as particularly our service parts and consumables business, which tends to become more and more back-end loaded over a year. A reason is that – and actually we are trying to work against that over the last four or five years, and we are trying to pull things into the early months of the year. However, the observation is that over the past three, four years, it could actually weigh worse. And even this year, it gets worse, quote, unquote, of worse than it used to be the case in 2025 and 2024. We see that there are end-of-year budgets that our customers are actually planning for end-of-year business. On the positive side, we can disclose that we managed to put more customers away from a forecasting system giving us concrete orders, which makes the second half of the year, particularly the fourth quarter, more plannable. which means that we have already initiated logistical and manufacturing measures in order to cover that. And again, the transparency is fairly high. This is no longer a phase where forecasts can be materially changed or actual orders taken out of the system. Again, worth mentioning that the thing we have already guided for is starting to show traction is that our instrumentation business is getting better and better. We had a strong growth in the first quarter. Unfortunately, the product mix is not working for us at this moment in time, but again, if we are looking into the actual allocation of resources of the relevant products for the remainder of the year, In terms of margin, not just the product mix, but even the participation of the relevant revenue groups within this forecast and within that guidance given is showing good traction and is positively supporting the margin development over the year. I mentioned that we had that negative scale effect, obviously. I think that's quite common. We see that there is a minimum threshold when the company can operate with scalability. We went south of that threshold in the first quarter. However, we see the momentum coming back. On the other side, and that's the swap-over effect of the accounts receivable from 2025, and particularly the very strong December, is that the cash flow dynamic improved significantly and, again, as we see this year fairly back and loaded, we are expecting similar effects this year. Let me briefly talk you through this phase where we see a lot of transition happening between development project and serial production. We have given detailed information actually first time over the past 10 years about when will those products hit the market and what is the mechanics to be applied in terms of how steep is the ramp-up going to be? Is there a kind of normalized ramp-up with SA menu development happening in parallel through our customers or if the products are concrete drop-in replacement? I think we have nicely shown that there is a lineup of products which are coming in the next couple of quarters. into serious manufacturing and the relevant role in terms of that particular two, the two most actual products are direct drop-in replacements with market extension, which will lead to that forecasted growth. We confirmed our financial guidance for 2026 this morning. And obviously in a time where the entire industry had a fairly soft start into the year, we obviously got even more cautious and have performed several reviews over the last weeks and actually days. Went again through a solid bottom-up planning, so about likelihood is it and how solid is our guidance. We went through that, and with the relevant diligence, we confirmed our guidance this year. However, it is going to be fairly back-end loaded. Q2 should slightly pick up, but Q4 will definitely be the strongest quarter in 2026. With that, for details, I would like to hand over to Tanja.

Thanks, Markus. Also, a warm welcome from my side. So, as Markus has mentioned, Overall, Q1 2026 was a quarter that was largely in line with our expectations. So we had already indicated that 2026 will be a significantly second half-year loaded year, and this is actually precisely the trend that we are seeing in our current business. The trends in revenue and profitability are also mirroring the markets that we are seeing in the last week. When we look at the financial figures at a glance, we first see the expected decline in revenue and earnings compared to last year's quarter one. The revenue stood at 53.4 million euros, means below prior year figures, and both the adjusted EBITDA and the adjusted EBIT also declined. The main drivers behind this development are the already mentioned timing shift to the second half of the year and the unfavorable product mix. Especially when we compare to the strong prior year quarter, the baseline is actually quite challenging. A very positive trend that we have actually already mentioned in our 2025 call two weeks ago is the cash development. So the pre-cash flow has improved significantly to 18.6 million euro due to the back-end load of December 2025. So let's have a closer look into the EBIT. So this slide shows you, again, the reconciliation to adjusted earnings. This, rather, is very important from a transparency perspective because, as you know, the IFRS figures reflect PPA amortization and other non-operating one-time items. So we see on the adjusted EBIT 700K positives, where PPA amortization and other non-operating effects are deducted. This effect is actually similarly visible in the consolidated net income that you see on the right side of this page. For our internal operational management and for our comparison across the periods, we therefore continue to focus on these adjusted metrics. In our view, these best reflect the current business situation and the comparison and the deviation analysis. So what is causing the drop in the adjusted EBIT? As mentioned, the main driver are the volume mix effects. Therefore, I would like to go to the next slide where we have a deeper look into the sales figures. In terms of revenue, we see the decline of 8.8% at a constant currency rate and 11.5% on a nominal base in the first quarter. And this trend is mainly driven by two factors. The first one is the decline in our high margin service parts and consumables business. Here we face again, as we saw it already in Q4 last year, this temporary working capital optimization measures at our customers. Nevertheless, we see a stabilization in the second half of the year, or we could call it more a coming back to the run rate of the first half year 2025 in that business segment area. The second main driver is a difficult, let's call it that way, year-over-year comparison in the development and service segment, which gives us a hit. Nevertheless, despite these two factors, we see an ongoing positive trend in the system. Here we continue to see the double-digit growth, which is particularly important to us because this confirms that the overall demand remains stable in our business and that we are well positioned in the market with our system. And at the end, with that trend, we are securing our future service and parts in consumables business. All in all, as I mentioned, the revenue trend is a reflection of the expected annual top-line development And this year, it's helping us also to deal with that second half year in a much better way. Coming now to the adjusted EBIT for the first quarter, as mentioned before, it stands at 700K, corresponding to a margin of 1.3%, and this for sure represents a significant decline compared to the prior year. Out of these lower revenues that I explained to you, especially with the high margin service parts and consumables, we face the lower capacity utilization, negative scaling effects, and the smaller share, especially on the service part consumables, but also on the development and services. As we have informed you in our annual call 2025, we are actively working on our cost base and structure. Therefore, let's move Again, the very positive aspect in here is the cash flow performance. So the operating cash flow stood at 21.5 million euros, resulting in a free cash flow of 18.6. This represents a significant improvement over the same quarter last year. The key driver is the reduction in our accounts receivable balance that has built up by the end of 2025 due to the very back-end loaded, especially December loaded business development. But you see it also reflected in the working capital on the right side of that chart. The trade receivables have declined. At the same time, the inventories and liabilities remain stable overall. We also see an improvement on the balance sheet side. So the net financial debt has decreased compared to the prior year and at the end of last year. And this is what you're seeing also in the leverage. leverage means the ratio of the net debt to the EBITDA LPM stands at 3.1, while at last year, at the end of 2025, we stood at 3.3%. What you also see on that chart is our capital expenditure ratio, which stands at 5.4% of revenue, so it's slightly below the planned range. but also in line with our expectations. And I would call it more an aligned phasing into the upcoming quarters. So all in all, the message here is very clear. Despite the weaker earnings quarter, our cash generating is developing positively. And with that, we are strengthening actually our financial flexibility. And with that positive note, I would like to hand over back to Markus.