Alzchem Group Ag New

Good morning and a warm welcome to the earnings call of Alskam Group AG. I would like to introduce the company CEO Andreas Niedermaier and CFO Andreas Losle, who will guide us through the presentation in a moment, followed by a Q&A session via audio line and chat. And with that, I hand over to you, Mr. Niedermaier.

Thank you, good morning everyone and thank you for joining us. It's great to have you with us for our Q3 analyst call today. So we will begin with the key highlights and developments of the quarter and then as always leave plenty of time hopefully for your interesting questions. So let's get straight to the business and turn the slide to page 5. Here, let me start with the key highlights in the first nine months. We continued on our profitable growth path here with revenue increasing by 4% to almost $444 million. Even more importantly, EBITDA grew by 8% to more than $93 million. Dr. Andreas Niedermaier At the same time, we continue to make good progress with our strategic growth project. In Germany, our expanded nitrogen capacities have now entered into the commissioning phase, bringing us another important step closer to full operation. For our US project we have completed basic engineering here and are now focusing on optimizing the concept. Initial cost estimates came in significantly above our original expectations, so we are carefully reviewing the design and the overall investment required. At the same time, Discussions with our customer, the US Army, are ongoing. The future implementation of the project will also be dependent on securing an appropriate funding framework, and this is therefore an important part of the discussion currently under a positive way. So our creatine expansion meanwhile remains well on track. We expect to start commissioning the new capacities in the second half of 27, providing us with significant additional capacity and opening up further growth potential from there as well. So the carbide furnace is back in operation after the complete renovation. So from that point of view, thank you to all our employees. They did a great job here. We have also successfully completed our previous share buyback program and decided to launch a new program of up to 20 million euros, as already communicated a few days ago. So overall, we are pleased with our development in the first nine months. Our operation performance remains strong. Our key growth projects are moving forward. And on this basis, we confirm our outlook for 2026. While the revenue target will require a really strong finish in the year, We remain confident about our earnings outlook and expect to deliver within our guidance. Later on, Andreas will give you a good overview and a good feeling about that. So with that, let's take a closer look at what is driving the performance and how our business development over the first nine months within the segments. Let's turn to Paige. Basic and Intermediates. And let's start with them. As expected, the segment showed a weaker development in the first nine months of the year. Revenue declined by around, let's say, 10% to $109.5 million, mainly due to lower volumes. Demand in agriculture remains subdued while our pharmaceutical-related business continues to face strong competition and price pressure from Asian suppliers. On the positive side, our metallurgical business continued to develop well, supported by the improved situation in the European steel industry. EBITDA for the first nine months came in at 2 million Euro compared with 5.1 million in the previous year. In addition to the lower volumes, high electricity and raw material prices had a negative impact on profitability. If you look at quarter three separately, however, we see a clear improvement compared with the second quarter. Following the completion of the carpet furnace refurbishment, EBITDA returned to a positive 2 million Euro in quarter three after a slight negative result in quarter two. We also continued to reduce inventories following the plant stock build up ahead of the furnace refurbishment. So overall, the development in basic intermediates is in line with what we expected. There are still some weaker areas, particularly agriculture and pharmaceuticals, while metallurgically is developing quite positively. And with that, let us move to the specialty chemicals where we see a very different and much stronger development. So turning to the specialty chemicals, we continue to see a very solid development across our key growth areas. In the first nine months, revenue increased by 11% to 312.7 million, driven by both higher volumes and positive pricing effects. The main contributions came as expected from human nutrition and defense, complemented by a continued positive development in our custom manufacturing business. Human Nutrition continued to perform very well. Demand for our premium creatine products CreaPure and CreaVitalis remained quite high and we benefited from the additional capacity that became available in the third quarter of last year. Beyond sports nutrition, we continue to see additional market potential for creatine in other applications. Defense was another important contributor to the growth, supported by continued strong demand for Nitrogenidine. At the same time, the new production facilities in Germany have now been commissioned and are currently being ramped up. and our custom manufacturing business also continued its positive development with high and stable utilization of our multipurpose production facilities there. So this positive sales development also translated well into earnings. EBITDA increased by 17% to 91.5 million with the EBITDA margin improving from 27.7 to 29.3% here. And importantly, this momentum was also visible in the third quarter itself. Q3 sales increased by 13% year on year to 98.5 million, while EBITDA rose by 14% to 27.5 million. The EBITDA margin remained at a strong level of 27.9% here. So overall, specialty chemicals continues to develop very well and remains the main driver of our growth and of our burnings performance. With that, let us briefly complete the segment view over with others and holding here. on the next slide. Revenue for the first nine months remained broadly stable, with 21.6 million almost unchanged from the previous year. A slight decline mainly reflects lower electricity grid fee pass-throughs to our chemical parks customer. Looking at the third quarter, revenue increased slightly year on year. to 7.3 million. This was mainly driven by catch-up effects from electricity grid fees as well as higher demand from customers at our chemical parks. On the earnings side, EBITDA for the nine-month period amounted to 0.1 million while Q3 contributed around 0.5 million. Compared with the previous year, earnings were affected by higher expenses. Thank you.

And also good morning from my side and thank you, Andreas, for the insights in our segment development over the first three quarters in 26. As always, I start my analysis by looking at our P&L. First of all, I would like to highlight that our financial performance has developed largely in line with our expectations. Our group sales within the first nine months of 26 reached €444 million. This represents an increase of €19 million or 4% compared to last year. As anticipated and communicated, the third quarter came in a bit lower in terms of sales as Q1 and Q2 of 26, but with a growth compared to last year's Q3. The main reason was revenue brought forward to the first half of the year. My colleague Andreas has already mentioned and discussed that both operating segments developed again differently. On a regional basis, the major sales increases could be achieved in Europe and the US once again and can be allocated to the specialty chemical segment. The sales portion of our segment specialty chemicals could be increased again and contributed 70% to our group sales after 66% within the comparative period. The continued shift in the revenue mix towards specialty chemical ingredients combined with our ongoing focus on cost discipline enabled us to further increase EVTA. While we were also affected by a higher electricity and raw material costs, we have so far been able to partly offset these increases, either by price increases or the usage of hedging contracts. Accordingly, we continued our positive earnings performance in the first nine months of fiscal 26, increasing EBITDA by 8% or 7 million Euro to more than 93 million Euro. At the same time, our EBITDA margin on the Group improved from 20.3 to 21%. Our continued investment in future growth is resulting in a corresponding increase in depreciation. In this quarter, the impact of the commissioning of the new plant is reflected in the depreciation for the first time. We started depreciation after successful commissioning and this is the main reason for the increase in our depreciation by 4 million Euro. As we entered into new loan agreements in Q226 to finance our growth, we have to report higher interest charges with an impact on our finance result, which came in 1.3 million Euro lower than last year. All put together, we could increase our net result up to 48 million Euro. This represents a growth of 3% compared to last year, and the same applies to our earnings per share. That was the big picture of our P&L. Now let's move on to the balance sheet and cash flow figures. Our balance sheet and cash flows are still very healthy and developed as expected. Our balance sheet total has increased by 56 million euros since our last reporting day. On the asset side of the balance sheet, the main impact is still coming from our ongoing investment activity, followed by an increase in our fixed assets. On the other hand, we largely reduced our stock level during the period of our furnace refurbishment. Based on our precise planning, we were always able to deliver and had enough carbide stock available. Our equity increased by 22 million euros since December 25 and our equity ratio has been almost stable since then. The increase in equity was primarily driven by our strong net income and reduced by our dividend payment and the impact of our share buyback program. For our last share buyback program, we spent 10 million Euro in cash and bought approximately 62,000 shares back, which we will now use partly for our very successful employee share ownership program with an increase in impact on equity and cash. The current interest rate development also had a decrease in impact on our pension obligations by approximately 6 million Euro, which on the other hand, also increased our equity. Within the second quarter, we have strengthened our financing structure, which can be seen in increased bank loans, high cash positions, and within our financing cash flow. We discussed this new financing structure in our Q2 results and call already, which I am referring to. A closer look at our cash flow also reveals a very solid foundation for future growth. Operating cash flow amounted to 97 million Euro in the first month of fiscal year 26. On the first view, this is a decrease compared to last year. However, a closer look reveals that customer contributions were significantly lower than in the prior year period. Excluding this effect, operating cash flow showed a strong improvement year on year. Altschem continues to invest substantially in future growth. Capital expenditures increased to almost €118 million in the reporting period, €50 million above the previous year's level. This increase primarily reflects our growth in defense and human nutrition, as well as the modernization of the Carbide Furnace. Reflecting this significant investment in future growth, free cash flow amounted to minus 20 million, significantly lower than last year. It is worth noting again, however, that the prior year free cash flow benefited from approximately 44 million Euro higher customer contributions. As you can see, Eilscom is in a very healthy capital and cash position and ready for future growth. Future is a good keyword. Let's now discuss our outlook for the remaining few months of financial year 26. As already mentioned by my colleague, we confirm our guidance as set out at the beginning of the year and we still see further growth for the remaining period of the year. The expected temporary slowdown in sales and earnings in Q3 26 materialized as anticipated and was fully in line with our full year guidance. Sales are still expected to grow to approximately 600 million and EBITDA is still expected to grow to approximately 126 million euro. This represents a sales increase of approximately 7%, while EBITDA is expected to grow by approximately 8%. From today's point of view and considering the short working period in December, reaching 600 million Euro sales might be challenging, but we will end up within our expected range. However, we are strongly confident for our EBITDA guidance. The planned sales growth should continue to be achieved organically. The fundamental growth drivers are expected to be volume effects using the segment specialty chemicals. As already outlined, we do expect such volume growth in the area of human nutrition and defense. Based on the current development within the agriculture and pharmaceutical industry, we do not expect growth in our segment basics and intermediates. For this segment, we do expect overall sales to be slightly lower than previous year's level. We continue to operate in a volatile geopolitical environment. Based on the current assessment, however, recent geopolitical developments, particularly the conflict in Iran, are not expected to materially affect the Group's guidance for fiscal year 26. Our outlook is based on the assumption that further increase in raw material and energy costs and our segment specialty chemicals. And this also applies to our ABTA margin. The industrial to have only a minor positive impact on AltScan's cost structure from 27 onwards and has therefore not been included in the 26 guidance. As you can see, we have interesting times ahead of us. At this point, we would like to thank you for your appreciated attention and we are now at your disposal for possible questions.