Jenoptik AG

Good morning, ladies and gentlemen, and welcome to the Unoptic conference call regarding the results of the first nine months, 2025. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Dr. Stefan Treger.

Thank you very much, and a very warm welcome to our Q3 earnings call. Our third quarter has been a quarter of light and shadows, as so many other companies report. We have some specialties that I was pointing out, and throughout the call, we are going to do that. With me today is, as usual, Priska Havane-Kozacek, our CFO. And I'll give some sort of color up front, and then Priska is going to lead us through the through the numbers. As I said, first quarter, a bit of a quarter of light and shadows. Revenue is down from prior year figures. If you take the third quarter 2025 versus third quarter 2024, our net sales are down by around minus 7%. And as a result, EBITDA or operating profit is also down versus prior year figures. That goes for the quarter as well as for the full year, year-to-date. On the other hand, though, free cash flow is very, very good. They have had a very good free cash flow, significantly improved versus prior year. And probably even more importantly, our auto intake pattern has developed as expected, but, yeah, very nicely. Our auto intake in the third quarter, is almost 14% higher than in the second quarter. And then the order intake in the third quarter of 2025 is 18% higher than in the third quarter of 2024. And as we always expected, order intake will strengthen in the second half of the year. And we do see that pattern emerging, which is great and obviously helps us going forward. Nevertheless, we have implemented a program to reduce personnel and material expenses. I guess that's just prudent. We all do that. That's, yeah, just good management practice. We expect to see a high single-digit number in terms of extra cost, one-time effects in our P&L this year. And let me just address that straightaway in our guidance that we are going to specify a bit more going forward. Those numbers, the one-time effect, the special costs for structural cost takeout is already included. So that's after the number that we are going to specify later is after those special costs. Overall, we do remain focused on our main growth opportunities. I'm very convinced that we have a good opportunity to further growth. Even this year is challenging for all of us, but given not at least our order intake pattern in the third quarter, but overall the macro trends that we have, we're very convinced that we will see further growth in the years to come. There's, you know, ever more AI-driven demand in semiconductors. There's optical communications for data centers, for defense applications, in particular at the moment in Europe. We do see success in expanding our SMS business, in particular in the United States. And at some point, and I'm really convinced about that, ARV applications are going to see an inflection point It's hard to say exactly when, but there will be smarter ways of human and data interaction than just telephones in the future. So if we take it all together, it's a bit of a mixed picture that we are going to report in detail now. A bit of disappointment in terms of net sales due to the time it takes for us always to convert all those into sales. We have a relatively long lead time with our relatively complex products. And as a result of that, operating profit for now is not where it should be. But more than just a bit of light at the end of the tunnel, there's a pretty strong auto intake pattern. And again, Q3 this year, very strong auto intake pointing to growth in future. and we're committed to that. Again, the restructuring project and program that we have implemented is ongoing. We have some of the numbers there already in our third quarter, but predominantly, the costs will become in the fourth quarter and are already included in our forecast, which we are going to specify at the end of the call. And with that said, I'll hand over to Priska

Thank you Stefan and good morning to all of you on the call also from my side. As always, I would like to now cover our performance in the first three quarters of 2025 in greater detail, starting with order intake on page six. Looking at order intake on group level, we are pleased to report that overall demand has continued to pick up over the course of the year. with orders now in the third quarter being some 50% higher compared to the first quarter figure. And up, as Stefan has mentioned, approximately 18% year-on-year. If we take the first three quarters together, order intake was at €777 million, and that's only marginally below prior year level. However, dynamics have been very different between our four strategic business units. So, starting with semiconductor and advanced manufacturing, As you know, development has been impacted by certain supply chain fluctuations in our lithography business, as well as an order cancellation in Q1, as we highlighted on our previous call. Thus, order intake for the first nine-month period was down by around 18% year on year. From all we can judge, we believe this supply chain or inventory impact, if you will, was most pronounced in Q1. On the inspection side, however, demand from our key customers remained strong, including in Q3. Turning to our biophotonics business, order intake has been very strong for the first nine months, and particularly in the third quarter. While we saw positive momentum in both life sciences and net tech applications, order dynamics in our optical defense products was particularly strong. So with overall biophotonics order, intake by up by around 34% year on year, which of course is very good. I would like to also note that there is a certain lumpiness in the order pattern of this business, particularly in the defense related part. So let me explain. While major orders in this area were recognized last year in the fourth quarter, we saw them this year in Q3 already. Therefore, we currently expect some sort of normalization for the fourth quarter. Moving on to metrology, for our metrology and production solution business, as well as for smart mobility solutions, order intake was also strong overall, up at high single digit rates, with MPS benefiting from higher orders, especially in the optical test and measurements arena. As a result of all this, our book to bill ratio on the group level returned to above one, or 1.03 to be precise, and reached 1.2 when just looking at the third quarter. Our order backlog reduced slightly compared to prior year end to around 659 million euros. We anticipate turning approximately 35 to 40% of this backlog into revenue this year 25. Now please follow me onto page seven. Revenue in the first nine months declined, as Stefan has already mentioned, by close to 8% year-on-year to around €753 million. This reflects generally weaker order intake trends at the beginning of the year. I think we've talked about that, especially in the semi-space. It also includes about 1%, which points to 100 bps negative impact from FX fluctuations, especially relating to the Euro-US dollar exchange rate. Now, if we look into the businesses, with regards to the semi-business, revenue was down 15% year-on-year. This was a result of what we already discussed several times in earlier calls, meaning softer demand in the lithography business, which, as you know, makes up for a big chunk of our business. On the contrary, however, revenue with customers in the semi-inspection area developed very well in the first three quarters. Now looking at biophotonics, here the revenue was up by 13% driven by a strong demand performance in our defense business as well in our medtech business. For metrology and production solutions, revenue development is lagging a bit behind the order intake dynamics that we just discussed before. So revenue overall was down by around 11% in the first three quarters of the year. due on the one hand to the unchanged difficult market environment that we are facing in automotive, on the other hand, influenced by some revenue shifts into the fourth quarter. Now finally, revenue of our smart mobility solutions business was up almost 14% in the January to September timeframe, particularly as our efforts in the important US market are gaining traction, in addition to some good momentum in the Middle East Africa region. Before moving to profits, I would like to also note that negative FX impacts on revenues in the fourth quarter, I expect it to represent more of a headwind compared to what we have seen in the January to September time frame. Moving on to profits on page eight. As you can see on the left hand of this slide, the group EBITDA reached almost 132 million Euro, down by around 18% compared to last year. Absolute EBITDA as well as EBITDA margins improve sequentially every quarter this year. However, for the first three quarters in total, our EBITDA margin contracted by around 220 BIPs year-on-year, including an about 40 BIPs impact relating to the one-time move cost to our new pet interest, as you know, in the first quarter. On business unit level, influenced by the just-mentioned one-off costs as well as lower utilizations, and product mix effect, EBITDA in our semi-business units dropped by almost 30% year-on-year. However, I'm pleased to report that while third quarter EBITDA margin in semi was still down somewhat year-on-year on the lower revenues, but it was also at almost 28% at a very good level in our view. In our biophotonics business, strong top-line growth drove better utilization of our capacity. In combination with positive product mix effects, even the margin substantially improved from 10.3% to 21.3%. As I've mentioned before, we continue to believe that this business is currently shifting a bit above the normal profitability level. When looking at our metrology and production solutions business, lower overall revenues impacted profitability with lower fixed cost absorption. As said before, Considering our order intake and also our order backlog, we expect revenue development to improve in the fourth quarter. And as a result, we also believe that margins will move back to better trajectories. Finally, for our smart mobility business, we saw very good margin improvement of more than 400 bps to 12.1%. In the first three quarters, and this is based on the strong top line development, and the associated leverage of the functional cost. Moving on to page nine. Here, I would like to give you a little more color on the drivers behind the evolution of our margins. First of all, I would like to stress, as Stefan has also mentioned before, strict cost management remains a key priority for us at the moment, considering the lower revenue levels that we have alluded to before. We've started early on working on this subject, and as a result of that, we've been able to reduce material costs to some extent, and our headcount measured in FTE is down by almost 4% compared to the same time last year. So now, looking at margin development of our P&L in detail, in the first three quarters, we saw gross margin approximately 200 bps down year on year, which was primarily influenced by the lack of fixed cost absorption and product mix effect. And on a business unit level, of course, our semi-business had the biggest impact here. On the functional expense side, as I said before, I think we remained very disciplined at those expenses. They declined by about 3% year-on-year, despite some general labor concentration impact. Moving on to the EBIT line, You see a more pronounced decrease in both absolute terms as well as margin-wise, as compared to the EBITDA, since depreciation and amortization was, as we had expected, slightly up here and there. Further down the line, as you may recall from our Q2 call, we have recognized an income of a little more than 2.5 million Euro, resulting from a settlement agreement regarding the sale of Incorion. That was our previous mechanical defense activities. Bottom line, our earnings per share reached 80 euro cents versus 1.15 euro last year. Now turning finally to page 10, looking at cash flow and balance sheet data. Stefan has mentioned it before. I think we are pleased with the development here, particularly considering the difficult trading environment some of our businesses are facing at the moment. So despite a decline in earnings, as you can see here, our operating cash flow pre-tax improves considerably year over year on lower cash inflows into our working capital. However, working capital intensity has increased somewhat year over year, reaching 30.3%. Moving on to capex, as you know, in the beginning of the year, we stated very clearly our intention was to bring down capex. compared to the somewhat elevated levels that we had during our investment phase in Dresden last year. Overall capex in the first three quarters was down by almost 20%, basically in line with our expectations. Finally, our net debt position was down versus year end at 366 million Euro, reflecting improved operating and free cash flow performance. Finally, our leverage was at 1.9 times at the end of the third quarter. And with this, let me turn back to Stefan to cover our outlook.