Mutares SE & Co. KGaA

A very warm welcome to our Q3 earnings call today here in very exciting and also very challenging time. Let me guide you through the agenda, starting off with a repetition of our business model. Then I hand over to the Q3 financials to Mark. And then we have in the new format, a portfolio update. And today's guest is the president of EFASEC, Christian Klingler, who will join us then later in the presentation. And then I will give you an outlook to close the presentation of today. Let me remind you on our business model and our mission, values, vision and our goals. At the end, our mission is to transform distressed companies. And what we see today is that especially industry segments like construction, like chemical, also like auto, obviously, are really distressed segments, distressed sectors, which are really, really into at the moment and where we see great opportunities at the end of the day. Overall, our mission, our vision, our goals, as I described before, we are buying garbage companies and we are trying to look for the diamond, find the diamond, work on the diamond and sell the diamond for maximum shareholder value creation. Investment highlights, quick repetition, de-stress carve out situations. I think we have proven that over the past years and years. We want to look for turnaround de-stress assets. So with our operational workforce, with 160 people we have on the ground to make the company tomorrow a little bit better than it is today. We are operating in the four segments, which you're familiar. It's the outer segment, it's engineering technology, it's infrastructure and special industries and goods and services. And at the end of the day, we want to turn around the business and we want to buy cheap and sell expensive. But let me elaborate a little bit more on the geographical expansion, the latest one, which we have announced that we're going to Tokyo, that we're going to Japan. I'm coming just back from the notary on the establishment of the entity in Japan. We have found an office in Japan. We have found a leader of Japan who will start in Q1 2026. And our motivation for Japan was this is an industry which exactly represents the segments and sectors where we are in. So we will see a lot of opportunities in Japan, but also from Japanese corporate outside Japan, where we need to be in Tokyo in order to facilitate the deals. That's in the outdoor segment where the Japanese industry is strong. It's in the heavy equipment where they're strong. It's in the energy equipment, also around ONG. And finally, it's in the logistics segment. all these segments, all these industries where we as Mutaris performed very nicely and very well over the past years. That was our motivation to open up our Tokyo office and I'm super excited that in Q1 26 we're going to start our operation there. Let me describe quickly, and we stick a little bit longer here, on how we work on a day-to-day basis. So we take a decision of an acquisition. We take a decision based on, is it the right industry? Is it the right size? Do we know how to operationally turn around? And at the end, do we make 10 times cash over the holding period? So we have the acquisition part, and still for the remaining year, I do still expect 3%. at least three acquisitions on the buy side here. And then we speak on realignment. And realignment is the heavy restructuring part, which we are doing. We are going into the company with our operational team and we're trying to make the company better. It's not always going in and saving costs. It's also improving, for example, customer quality, improving the product we have, you know, going in the product portfolio. So we recently acquired a company from NBIX, where they have a plant in Romania, where one of our OEM customers, we produced the components for them there. And when we entered, we found a product line, which was the main product line of this facility, which more than 100% scrap rate. So 100% scrap rate, this is basically the debt of every business and of every plant. This is what we found. And Sebastian and the team over there did a fantastic job to reduce that further down and make the customer happy. So the customer is replacing the new model with us again and even extend their ordering here. So this is the effort, the operational effort we take on the realignment. In the optimization, we really create value. Realignment, we saved the company. Optimization, we create value. We grow the company. We grow the customer base. We try to improve the costs. We conduct potentially, if needed, social plans as well. And here is really the creation of the value. And then last but not least, we're harvesting, we exit. We exit the companies which we have done the heavy realignment, where we have done the value creation, we want to exit. And still this year, I do expect three exits at least on that side, regardless any capital market transaction which could happen. And maybe on the acquisition and harvesting side, let me add one comment. Apparently, it's very difficult to plan on a timing perspective, an acquisition, and plan on a timing perspective, an exit. However, there are so many different things which have an influence on this. And at the end of the day, a lot of transaction activities, it's like buying Christmas gifts. A lot of transaction activities happens in the last part of the year. It's like the 23rd of December when you still hunt for your Christmas gifts. And this is why we see a lot of transaction activity on acquisition and sell side as well in quarter four in November and still in December, what I said. Maybe the timeline is not what we can influence too much, but what we can influence is the transaction security. And we will deliver the deals by the end of the year. And coming to the Q3 financials, I will hand over to Mark for a deep dive here.

Thanks, Johannes. So as always, I have the pleasure to run you through the key financials here today, Q3 here. And as always, starting with the overview page of the four main KPIs that we have guided for for the full year. And as already did the last time, we have also included here the relevant KPI that drives these financials that we guide for here below the financials. So starting with group revenues, we have compared to last year an increase of 20%, almost 5 billion. Main impact, obviously, as always, the acquisitions that we have done throughout the year. especially the big ones, Maggiros, Buderos, that contribute here quite a lot. EVTA also influenced heavily by this. We have reached more than 700 million added in Q3 here, another 100 million, a bit more than 100 million. due to the acquisitions closed in time can hear that we're done here. On the other hand, we also have normally in EBTA a positive impact also from the harvesting side. Here, we have done an exit of Terranor and the partial exit of Lokafarm. The adjusted EBTA, also the key financial that we guide for when it comes to the operational performance of our group, has improved in Q3, even though, since the majority of our business is still in continental Europe, It's normally a weaker period of the year with August in between or July also in between here, but still it improved more than 25 million in Q3 here, ending the full year or the year to date Q3 here with a bit more than 60 million in losses, which is quite normal due to the size of the acquisitions that we have done now in the last couple of months. Here, the adjusted EBITDA, I just want to repeat, is also influenced by the positive development, and we will hear that also from us later on in the portfolio update, but also in the following pages when looking at the different segments, by the progress of the existing portfolio that is in realignment and optimization, but also is negatively influenced by the acquisition since, as Johannes just said, we acquire loss-making entities. Finally, looking at the holding KPI, the net result, net income has, compared to half year, increased a bit more than 10 million due to the partial exit of Terranor Group and partial exit of Lokafarm. We have reached now more than 80 million. And like Johannes said, we want to progress here also towards the end of the year with delivering more exits. And compared to last year, you see that we have improved here now quite a lot. Looking at the new segmentation in the overview here, we see that automotive and mobility is doing actually quite okay, especially SFC Group has delivered also in Q3, quite a positive result here, reaching now 19 million, and this has improved just in Q3 by 12 million. The focus is clearly on optimizing the footprint, adding selectively still some entities that help to overcome the existing challenges of the portfolio, and on the other hand, the global footprint remains clearly critical. Also, we have to accept that pretty much everybody's strategy is to produce local for local. That means we also need to have a footprint in the US. We need to have something in Europe and in Asia. Then looking at engineering and technology, also a segment that has, when you look at the comparison to Q2 financials, improved quite significantly now in Q3 with adding approximately 25 million of adjusted EVTA in just Q3. And this was driven by pretty much almost every company that is in the segment, but here, especially also by the big ones, Airfasec, Dongres, and Guascua. In this segment, we also had Klesim that could finally be closed here in Q4, so it's left with a small purchase price, positive purchase price. We also communicated in the press release that we have here achieved our target of return on invested capital. Looking at infrastructure and special industry, that is pretty much the newly formed segment here, which is substantially negative, which is okay because here we have especially Maggiros and Buderos in, which are big, having annualized revenue of more than $300 million both, and by nature also then contribute substantially negative here. but you see also in comparison to last year that this segment has been boosted pretty much by the acquisition that we have executed here in the recent months. Then the final segment, goods and services, that is the segment where also we have here the highest negative EBITDA, mainly driven by the headwinds that we have still across Europe in consumer spending. Here, this is mainly driven by the majority of the retail and food companies that have been clustered into the segment. On the other hand, we also see some promising development at Alterga, Go Collective, and Palmier. In total, this ends up with the figures that you have seen on the page before. Then coming to the lifecycle end, you see that it's pretty much quite crowded at the top in the harvesting phase and at the bottom in the realignment phase, which are pretty much dominating the group. But in between, we have the big companies, Fair United, Amaneos. especially here together with Lapeer, so that's why you see a big revenue share in this bucket. But in the harvesting phase, we have here a substantial number of companies that are pretty much ready for exit. You see also here that we have reached a decent level of adjusted EBITDA, so of profitability here. On the other end of our value chain and realignment, we have quite a lot of companies here. In total, they sum up for more than 100 million of losses in adjusted EBITDA, which is okay, which is typical. It's approximately 10% of negative adjusted EBITDA. That's what we normally see also in the acquisitions, that this is the level that we acquire. With this, I already hand over back to Johannes for the portfolio update.

Thank you, Mark. And let me give you a little deep dive on the portfolio update. As we speak, and prior to the acquisitions and sell side, what I have just said before, we hold five companies in the automotive mobility segment, ten companies in engineering technology, infrastructure and special industries, six companies where still Buderus is in, where we have conducted the exit officially in October. We're closing, that happened. And then goods and services with 13 companies, which is the consolidation of goods and services from retail and food, as Mark just said. taking the deep dive on the first one and maybe let me basically the harvesting optimization and realignment repeat again. So everything you find in harvesting is either in preparation for exit or in execution for exit. Everything you find in optimization is the value creation after having restructured the company. Everything you find in realignment is to stabilize the company and make them survive. So those are the three phases we have it in. But at the end of the day, this is what we go through. Quick snapshot on each of them in the segments. So Amaneos, plastic injection molding business, interior, exterior. I think we have done just recently a very, very nice order intake from a large truck maker here in Europe. It's a lifetime project of three digit million in turnover. And it's for one reason very important, because it was the largest entry ticket to the truck market. So Amaneos was really focusing on passengers cars. And this was the first significant order on the truck we have received in the truck segment. And so our strategy of diversifying from passenger to truck really paid off here very, very nicely. Overall, you saw the Q3 figures. It's a challenging environment, but we believe we are very nicely set here. And we have on one or the other plant and one or the other product line, we have a lot of challenges. But on the other hand, I think overall, we can be quite okay-ish happy with the automotive mobility. When we come to engineering technology, and later on you will hear Christian Klingler on the EFESEC portion, let me point out here the Dongus Group, where at the moment, Dongus Group is a combination of Dongus Steeltech, which are making steel structures predominantly in the infrastructure environment, and then a building material company for walls and roofs, which is called SIP. And what we see is we see the largest order book in history. Infrastructure projects are coming in. International development are coming in. Middle East super strong here, US super strong here, but also the German and Austrian market on infrastructure project when it comes to bridges and when it comes to other infrastructure, buildings are really pushing the order intake here. The management around Wolf and Andrew, I think, have conducted here a very, very nice job so far in the year 2025. When we look at infrastructure and special industries, we have heard last time a lot about Magirus when Fantmeer Weselai, the CEO, was here. Let me focus quickly a bit on Terrano. Terrano just announced the Q3 numbers. We still hold more than 70% of the shares. We have IPO'd that. In Q3 last year, which you see in the numbers, we still hold the shares. We have a very large order book, very nice tender season coming around in Sweden, where we have very promising order intake ahead of us. And then last but not least, the first signals from benefiting from the governmental spend based on that they entered the NATO in the Nordics in Sweden and Finland and that they obliged to invest into the infrastructure. We see the first signals also that that turns into revenue, order intake and profitability for the company. so we are quite happy with the development q4 is always by far the strongest quarter signals are good to achieve the guidance signals are good to achieve the order intake and signals are very good for the months and years to come so we're very happy of having that obviously as a financial investor we are opportunistically in in selling further down our 73 of the shares And last but not least, goods and services, as Mike was saying. Here we speak about the goods and service and the retail and food part. Let me pick out there Alterga, which you find on the very bottom. Alterga is a network infrastructure company in Poland. I think we have done a very nice restructuring there. So Tim Thibault and the team has done a tremendous job on Alterga. We used the tailwind of the market quite nicely. So Alterga is, for example, one of the companies where our original business plan was over exceeded by far compared to what we thought when we acquired a company and will certainly move in 2026 closer to the harvesting phase. And with that, I think the deep dive of this quarterly earnings call is the FFSEC Group and would very lovely welcome Christian Klingler, president and friend. Thank you very much. And Christian will take over now for the FFSEC Group.

Thank you very much, Johannes. It's a pleasure to be here. So my name is Christian Klingler. I'm a managing director at Mutaris and I also have the privilege to serve as chairman of EFASEC. Over the last two years, I have spent my time in Porto with our in-house consulting team, and we have done a very successful restructuring. We found a situation where the cost was too high and we had to tailor this cost base to the revenue core. Secondly, we also have seen that the company needed a streamlining of its product strategy, which we have done. And also, thirdly, we have completely de-risked the company, which meant that we exited very risky EPC businesses also in geographies which were risky in the past. Now the company has completely changed. It's much stronger. It's much more innovative and it's also most importantly generating profits. With this said, empowering the future is FSX slogan. And you'll now see a short video that gives you a better insight into what that means. And I hope you get inspired by this video as much as we do every day. Thank you very much.

Thank you, Chris.

FASEC is a Portuguese company located in Porto. Founded in 1948, FASEC has run into one of Europe's leading technology providers and transformers, switchgear, automation, substation, electric mobility solutions, and transportation systems. My name is Michael Silva, and I'm the CEO of EFASEC. I have been with the company for the last 26 years, and I had the privilege to witness fantastic developments during the last years. Today, we are around 1,600 employees across multiple geographies, and 75% of our business comes from international markets. We operate across the entire value chain, from technology development to products manufacturing, system integration, and customer services.

My name is Christian Klingler. I'm a managing director in the Mutaris operations team and at the same time I serve as chairman of EFASEC. In November 2023 Mutaris acquired EFASEC from the Portuguese state. This time the company was heavily loss making at a negative EBITDA of nearly 73 million euros. We saw AlphaSac's potential already at the time of the acquisition. Firstly, demand in electric energy and electrification is increasing and with that follows the need for investments in energy infrastructure. With the company's product offering, in particular the transformer and switchgear business, EFASEC was right in the center of this booming market. Secondly, what we have seen was that the company needed restructuring, which is exactly what we know how to do best. we'd worked out a holistic turnaround plan. As a joint effort, the Motaris and EFASEC team implemented a new strategy combined with operational excellence, and we managed to unlock its full potential.

Our largest production site is the transformers manufacturing facility, where we produce power and distribution transformers, mobile substations, and provide maintenance services. These operations serve domestic and international markets. Our team is highly skilled and well prepared to deliver complex solutions that meet highest standards of quality, reliability and performance. Watching a transformer leave the factory is more than a technical milestone. It represents the culmination of months of teamwork.

Our switchgear facility designs and manufactures medium voltage solutions that play a critical role in energy distribution systems. Our products are used in substations, industrial plants and infrastructure projects in multiple geographies. We have implemented lean manufacture principles to enhance operational efficiency and ensure consistent quality. Beyond switchgear, we host the production of automation, railway and metro solutions and EV chargers. Together, these areas create impact across the grid in order to provide efficiency, energy and mobility solutions to add value to our clients and society.

In the coming months, we will continue our successful journey with AFNASEC.

Our focus is clear. to reinforce our marketing positioning and drive profitability and sustainable growth by delivering value to our customers, our people and all our stakeholders. A truly Portuguese company with global impact, empowering the future.

Thank you, Chris, for sharing that with us. Having gotten, I think, a very good insight here, maybe you give the audience a quick outlook also on how it's going, how you see the performance of the company 26, 27, after overtaking this heavy restructuring.

That's a very good question. In the infrastructure market, energy infrastructure is at the moment super hot. This year, we have seen an order intake of 430 million. Our backlog stands at about 700 million, which is great. We predict for next year to increase our revenues to approximately 350 million. with an EBITDA of 42 million. And for the year after, we expect to get even better. We hope to also be able to enter the US market, which for us is a key market. So I'm expecting to reach hopefully around 450 million revenues with more than 60 million EBITDA, hopefully. So very promising. Thanks a lot. And I can confirm, Porto is not the worst place to work. Absolutely. Fantastic.

Thanks so much, Chris. And let me bring you to the outlook before we close the session today. On the transaction activity, we have conducted already five sell-side transactions year to date. As I said before, in total, I expect six more transactions to come. I think especially... My teams in Spain, in Milan, Munich, Nordics, and also Dominic in Warsaw, Poland, they know exactly what I was talking about. And there's more to come, as I said in the last, you know, finishing of that year. On holding level, we can confirm and we confirm our guidance of the 130 to 160 million of net holding profitability. As we do on the group level, the revenue of six and a half billion and above, clearly positive on the EBITDA side. And the adjusted EBITDA mark has just shown the Q3 results and we expect to continue in that direction. so when you look at the segments the four we have we have experienced significant growth this year and this will continue with more buy side acquisitions this year and obviously also in the future where i said before we also see outside these segments for example in the chemical and materials sector we see great opportunities for us to further grow the business and further take the opportunities which are out there in the market Automotive, we have grown significantly by half a billion. Infrastructure, special industries, especially through Magirus, we have grown there this portion. Engineering technology is the sell side, is an exit segment at the moment because the market is so hot. partially overheated so we love to sell in that market and then goods and services as i said before and mark repeated this as well is the melting pot of goods and services and retail and food the retail and food is challenging the industrial service the logistics services the altergas in the network services those are very very nice developments we have seen there So overall, there's a lot more to come in the next weeks. And then we take a rest on Christmas, load the batteries. And then in 2026, looking forward to further grow business, to further grow profitability and to enter the Japanese market as well, which I think is a very, very exciting part of 2026. So thank you very much. Thank you, Mark. Thank you, Christian, for joining me here today. And the entire team also behind the scenes, Jessica and Noemi, who made this happen here today. And thanks a lot. Stay tuned. It's odd to say in the middle of November, but Merry Christmas, Happy New Year. Keep following and you will hear a lot from us in the next weeks until you dance around the Christmas tree. Thank you very much and bye-bye.