Jenoptik AG

This conference will be recorded. Good morning, ladies and gentlemen, and welcome to the GenOptic conference call regarding the financial results of 2025. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation within the conference call. Let me now turn the floor over to your host, Dr. Priska Havranek.

Thank you very much. Good morning everyone and welcome to our fiscal year 2025 results call. Today I'm here with Andreas Theissen, our Head of Investor Relations. I will lead you through the presentation and then, as always, Andreas and I will be open for your questions. As you know, our preliminary headline 2025 results have already been published mid of February. we will cover the full set of audited financial figures, including key business unit results, as well as our outlook for the year 2026. Now let me start with an overview on page four of our slide deck. From a management perspective, 2025 was a very busy year. First of all, let me briefly comment on our progress on executing our strategic goals. Number one, We implemented a new organizational structure, making our company somewhat leaner, increased accountability within our businesses, and with our new reporting structure, also increased transparency for our investors. Secondly, we brought our biggest single investment, I mean our new Micro-Optics Fab in Dresden online, and we are now in a position to further grow this business going forward. Thirdly, again in our semi-business, we delivered on our strategy to go share of wallet in our inspection business. So overall, I think we made substantial progress in making YenOptik stronger yet again, and in delivering on our strategic agenda. Now looking at business development. From a market perspective, in particular, semi-lithography was somewhat difficult in 2025. We focused on what we can control, and thus our focus throughout the year was on executing and accelerating our efficiency program. This has paid off in terms of margin protection and cash generation. As we enter 2026, we have seen signals of a rebound, in particular in the semi-market, and overall a more positive trading environment across most of our verticals. In 2026, we will keep our near-term focus on addressing and further developing our growth opportunities, particular in areas like AI-driven semi-demand, optical communication for data centers, defense application, SMS expansion in the US, and also ARVR. As a consequence, We expect to return to profitable growth this year, and I will cover the details of our guidance here at the end of my presentation. Lastly, I'm very excited that our management team will be complete soon again with Dominic Dorfer joining us as our new CEO, as you have seen from yesterday's release. Now turning to Pitch 5. Looking at order intake in detail on group levels, we reported a decline of approximately 3% year on year. However, the dynamics have been fairly divergent 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 calls. While we saw a stabilization of demand in the lithography business in the second half of 2025, order intake for the full year was down by around 11% year on year. Customer activity in our inspection business was strong throughout the year, with us executing on our strategic roadmap of increasing our share of wallets. Turning to our biophotonics business, order intake was very strong last year, being up by around 19%. we saw positive momentum in particular for our defense product offerings, but also a positive development in our life science applications. In MedTech, we have seen lower momentum in the second half, post the launch of a new generation product in our dentistry business. I would like to remind you here that quarterly volatility of order intake in this business has become more pronounced, given our customers' order behavior in the defense business. Here, customers tend to place few, but partly very sizable orders, sometimes for multi-year delivery. Overall, given the nature of this industry, we do expect fluctuations between single quarters to remain high also going forward. Now moving on to our solutions businesses. In metrology and production solutions, orders are slightly down year on year on an ongoing weakness in the automotive market. whereas smart mobility solutions recorded robust mid-single-digit order integrals last year. Our book-to-bill ratio was slightly below 1, or at 0.95, to be precise. Our order backlog reduced compared to prior year end to around 591 million. Overall, we anticipate turning more than 80% of this backlog into revenue in 2026. Please follow me now to page six. So revenue in 2025 declined by approximately 6% year on year to around a billion zero five. This reflects generally weaker order intake trends at the beginning of the year, especially in the semi space. As I've mentioned before, it also includes and one percentage point negative impact from Euro USD exchange rate fluctuations. With regards to our semi-business, revenue was down 12% 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 volume. On the contrary, revenue with our customers in the semi-inspection arena developed very well last year. Now, looking at biophotonics, here revenue was up by 10%. driven by a strong performance primarily of our defense as well as our medtech businesses. For metrology and production solutions, revenue development reflects what I've mentioned before on order intake. So an unchanged difficult market environment in the particularly European automotive industry was primarily weighing down on our revenue performance. Now finally, revenue of our smart mobility solutions business was up by almost 9% in 2025, particularly as our efforts in the important US markets are gaining traction, following our strategic decision to enter the smart mobility market in the US with our own sales and our own service force. Please follow me onto page seven, where we look at our regional revenue distribution. First of all, I would like to note that given the size of our key account businesses, and I'm talking about our semi and our biophotonics businesses here, the meaning of regional performance is somewhat limited. Year-over-year decline in revenues in Europe, including Germany, was very much triggered by issues we had in our semi business, or to be more precise, our lithography business. In the Americas, we saw a positive development driven by biophotonics, and of course, the now well-advanced go-to-market transition of smart mobility solutions in the US. Looking at revenue share, we realized with our top seven customers, unsurprisingly, this has dropped from 48% to now 43% in 2025, reflecting the somewhat special situation in lithography. Looking forward, of course, we expect that the share of our top customers to grow again. Now on page eight, I would like to cover our profit performance by business. As you can see on the left hand of this chart, the group's EBITDA reached almost 193 million, down by around 13% compared to last year. Our absolute EBITDA improved sequentially every quarter last year, and margins in the second half improved to the above 20% levels. However, The full year, our EBITDA margin contracted by 150 basis points year on year, including an about one percentage point impact from our cost reduction program. On business unit level now, influenced by lower utilization and changes in the product mix, EBITDA in our semi-business unit dropped by almost 18% year on year. Importantly, we were able to retain a strong margin level of around 26% on a four-year basis, and even around 29% when looking just at Q3 and Q4 together. So I believe this clearly shows the resilience we have in this business. In our biophotonics business, the strong top-line growth shows better utilization of our capacities in combination with positive product mix effects, EBITDA margin substantially improved to more than 20% last year. Looking forward, though, broadly keeping this strong margin level is what we're aiming at. And let me reiterate that semi-tight margins are not realistically in the cards from today's perspective. When looking at our metrology and production solutions business, Lower overall revenues impacted profitability on the basis of lower fixed cost absorption. But for sure, our cost reduction program will also help us to get our fixed cost base lower going forward. Finally, smart mobility. We saw good margin progression of more than 200 bps to 13.6% based on strong top line development and the associated leverage of functional cost. Now, turning to page nine, looking at key aspects of our P&L. I think we've said several times already, strict cost management was a key priority to us in 2025, considering the lower revenue levels that we alluded to before. Overall, we have reduced our headcount measured by FTE by almost 5% compared to the prior year. So now looking at the main developments of our P&L in detail, gross margin was down by 130 pips year-on-year, which was primarily influenced by lower fixed cost absorption and product mix effects. On a business unit level, our semi-business saw the biggest impact here. On the functional expense side, I think we remained very disciplined. as those expenses declined by 1% year-on-year, despite some general labor cost inflation impact, as well as the already mentioned cost reduction expenses. Moving on to the EBIT line, you see a more pronounced decrease in both absolute terms and, of course, margin compared to EBITDA, since depreciation and amortization were, as expected, slightly up year-on-year. Further down the line, as you may recall from our Q2 call, we have recognized an income of a little above 3 million, residing from a settlement agreement regarding the sale of Inquilion, our previous mechanical defense activity. Bottom line, our earnings per share reached 1,26 Euro versus 1,62 Euro in 2004. And as you have may read in our communication this morning, The Executive Board and the Supervisory Board proposed a dividend of 40 Eurocents for fiscal 2025 compared to 38 Eurocents for the year before. Finally, on ROSI, not unexpected given our earnings development last year, ROSI was at 8.4%, quite below our ambition level. We continue to see ROSI as a core metric in steering our company, and remained committed to getting back to more satisfactory levels. Now turning to page 10 and looking at cash flow and balance sheet data. Here let me say that we are very pleased with the development, particularly considering the difficult trading environment for some of our businesses. So despite decline in earnings, as you can see, our operating cash flow pre-tax improved considerably, mainly on lower inflows into our working capital. And with additional support from the normalization of our CapEx, free cash flow was up by nearly 50 million euros, enabling significant debt and leverage reduction. Finally, please follow me to page 12 to cover our guidance for 2026. When looking into 2026, I think it's clear there's still high market uncertainty persisting, driven by both macroeconomic but also geopolitical developments that are generally difficult to predict. With regards to the semiconductor equipment industry, that by far biggest end market for Unoptic, recent news flow has been positive, given, amongst others, announcement of massive data center investments and the associated need for computing capacity. Based on these trends and as well customer order activity, we expect positive momentum for our business in this phase. Overall, for the Yenoptic Group, we expect revenue in 2026 to be up in the single digit percentage rate versus prior year. On profitability, We expect our EBITDA margin to be in the range of 19 to 21% in fiscal 2026. We do expect our capex to be slightly below last year's level. With that level, we are delivering what we promised and will be trending towards our maintenance capex level. Now, before I close my presentation and we go into the Q&A, let me give you some extra color in sense of model assumptions which some of you may find helpful. On revenue, we estimate a similar FX headwind of approximately one percentage point as we saw in 2025. Regarding profits, for sure, we may have some benefits from our cost saving program and the omission of the associated one-time expenses from the restructuring as we are moving into 26, but general cost inflation expected FX headwinds should also be drawn in mind. On the contrary, rising energy prices may not influence the equation significantly, at least as far as we know from today's perspective. On our financial results, we are in the process of refinancing some of our German debitor bonds and overall expect our financial results to be broadly in line with previous year. And very importantly, from a phasing perspective, we do expect revenue in the first quarter of 2026 to be below last year's first quarter, given our current order book structure and capacity availability. So in summary, as we move into 2026, we see an improved demand picture as of now, supporting positive expectations especially in our semi and defense businesses. Therefore, operational execution is our main focus at the moment. Moreover, we believe we have ample growth opportunities ahead of us, which we aim to realize. And those include, as I've mentioned in the very beginning, firstly, digital data communication with our high-performance micro lenses used in transceivers. Secondly, defense, where we have established We have an established product offering and a strong international customer base. And lastly, further leveraging our infrastructure investment in the US market for our SMS business. So as I see it, we have everything in our hands to be successful in 2026. And with that, I would like to thank you and hand back to our moderator to start the Q&A session.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press 9 and the star key on your telephone keypad. If you would like to cancel your question, please press 3 and the star key. Please press 9 and the star key if you would like to ask a question. And if you are just dialing in with a laptop and not with the telephone, then please dial in with telephone to press 9 and the star key. And we have the first questions. So the first comes from Craig Abbott from Kepler-Chevreul. The floor is yours.