SMA Solar Technology AG

Thank you very much, operator, and welcome everyone. We very much appreciate that you are taking the time for this investor and analyst call on our full year 2024 results. Today in the call is my colleague and SMA CEO, Juergen Reinhardt, and our new colleague, Olaf Heiden, who took over as a Chief Transformation Officer and COO as of February 14, 2025. Welcome to the call, Jürgen and Olaf.

Thank you.

This conference call is scheduled for up to 60 minutes and will be recorded. After the management presentation, we will be happy to answer your questions. Today's presentation is available on our investor relations website. The replay will also be available on our investor relations website shortly. Our agenda for today. First, I will give an overview of our full year figures 2024. After that, Olaf will give an overview on the most important elements, our restructuring program, and Jürgen will talk about the key items of our transformation program. Last but not least, we're happy to look at our order backlog as well as our outlook for the financial year 2025. I expect the presentation part of the call to last about 30 minutes. And after the presentation, we are happy to answer your questions. I'll refer to our disclaimer on page two. So let's move to page four, financial highlights of the full year 2024. Key financials. The group sales reached 1.5 billion euros and were below last year with 1.19 billion euros in 2023. Large scale continued to perform strongly while home solutions and commercial and industrial solution revenues were still affected by the continuing market weakness. Group EBITDA came in at minus 16 million euros after reaching 311 million euros in 2023. Reasons were the low sales and the resulting lower fixed cost digression in the home solution and CNI solution segment, but also increased cost and impairment loss on inventories and provision, as well as expenses in relation to the restructuring program. I will provide more insights on the individual segments in a moment. Free cash flow reached minus 184 million euros, resulting from an increase of networking capital related to the reduced sales in home and C&I. Compared to the free cash flow end of June 3, 2024, which stood at minus 220 million euros, we achieved already a significant improvement and thus were able to stabilize our cash position end of 2024. Total order backlog stood at 1.36 billion euros end of December 2024. Now let's move to page five, sales by region and by segments. On the left-hand side, you can see that EMEA is still our biggest region that came down to 48% from 68% in 2023 due to the soft sales development in home and C&I in 2024. America's revenue share increased from 25% to 40%, mainly driven by the large-scale segment. The large-scale segment remains the strongest in this region with more than 90% share. The APEC region share increased from 7% to 12%, also from strong growth of the large-scale business. Here, Australia again showed a very strong development. The top three markets for SME Group in 2024 were US, Germany, followed by Australia. Now let me walk you through the sales per segments on the right side of the slide. For the whole year, the sales development in Hohmann C&I was driven by a delayed increase in order intake due to the slower than expected reduction of inventories at distributors and installer stops and a sustained overcapacity in the market. Additionally, lower electricity price, high interest rates and increased uncertainty due to the elections in Europe and the US in 2024 led to postponements in investments. Against this backdrop, revenues in home segment decreased by 71% from 580 million euros in 2023 to 170 million euros in 2024. The segment's share of total sales thus came down to 11% compared to 31% in 2023. EMEA remained the biggest region for the segment. CNI achieved €184 million compared to €479 million in 2023. EMEA remains the strongest region for the segments with 74% share of total revenues. Last day showed a very strong revenue development from 845 million euro in 2023 to 1.18 billion in 2024. Americas remains the strongest region with a stable 49% of the segment sale. As is expected, the strong project pipeline built up since second half of 2023 was realized in our revenues. Now let me provide you with more information on our profitability. EBITDA came in with minus 16 million euros compared to 311 million euros in 2023 due to slow sales and the resulting lower fixed cost digression in home solutions and CNI solutions. Other reasons were the increased costs and an impairment loss on inventories amounting to 113 million euros as well as provisions in relation to the restructuring program of 33 million euros. Due to the reduced sales level and the revised market growth expectations in home solutions and CNI solution segments, impairments on capitalized development projects amounting to 22 million euros and provisions for purchase obligations amounting to 16 million euros were also recorded. In addition, the earnings include income from the sale of chairs in Alexon GmbH amounting to 19 million euros. EBITDA margin reached thus minus 1% compared to 16% in 2023. With about 77 million euros, depreciation was above the level of 2023 of 42 million euros, mainly as a result of impairments and higher amortization of intangible R&D assets. Now let's have a look on the segments in detail. EBIT. for home segment amounted to minus 151 million euros compared to plus 148 billion euros in 2023 due to the price and volume-related sales decline, as well as increased costs and impairments on inventories of about 45 million euros. Furthermore, the segment's earnings are negatively impacted by the provision for purchase agreements totaling 10 million euros. The impairment of production line amounting to 4 million euros and the impairment of capitalized development projects in the amount of about 15 million euros. CNI came in at minus 164 million euros plus 23 versus plus 23 million euros in 2023 due to the reduced demand on the resulting low sales as well as increased costs and impairments on inventory of nearly 50 million euros. In addition, provision for purchase commitments amounting to 5 million euros as well as the impairment of capitalized development projects, totally 8 million euros negatively impacted the segment earnings. Our large scale segment showed a significant earnings improvement in 2024, reaching 227 million euros compared to 104 million euros in 2023. Reasons were the high level of sales and fixed cost digression, Increase in sales, the profitability of the product mix and a very good earning of Altenso contributed to this. Conversely, the impairment of inventories of 90 million euros had a negative impact on the EBIT. And overall EBIT margin increased to 19% after 12% in 2023. The overall EBRT margin for the SMA group amounted to minus 6% compared to plus 14% in 2023. Now, we will move on to the balance sheet and the networking capital development on the next slide. Networking capital, which is shown on the top left of the page, reached 473 million euros and is above the 2023 year end figure of 392 million. This leads to a net working capital ratio of 31%. Let me explain the net working capital development in detail. Inventories end of 2024 were at 564 million euros compared to 559 the year before. On the first glance, this appears to be stable. However, it includes 113 million euros of devaluations booked in 2024, which resulted from long-term purchase obligations, which were based on higher revenue expectations for home and CNI solution. Excluding 2024 devaluation, inventories increased. by approximately 120 million euros compared to last year. Trade receivables decreased in line with the lower level of revenues compared to 2023, and trade payables also decreased compared to year end 2023, also reflecting our lower purchasing volume for home and C&I, especially in the second half of 2024. Advanced payments, which we receive from our customers, increased compared to year-end 2023, in line with the strong performance and project pipeline of our large-scale segment. Net cash came down from 283 million end of 2023 to 84 million, mainly as a result of the build-up of networking capital. However, our restructuring measures, which started in Q4, showed the first positive results. And thus, we were able to stop the cash drain and stabilize our cash position. Now let's have a look on the group balance sheet on the right side of this page. And as I have already explained the change in net working capital positions, I will now focus on the major changes in our balance sheet positions. As I just explained the change in net cash, I will start by explaining the change in total cash and financial liabilities. In order to ensure that we are constantly have sufficient cash for our running operational activities, we utilized 145 million euros from our revolving credit facility for December 2024. You may recall that we negotiated this new credit facility with our banks in 2023 as short-term financing for changes in net working capital. So exactly for our current situation. You find this under financial liabilities in our balance sheet. And this also explains the difference between our net cash of 2020, 45 million and our total cash position of 229 million euros per end of 2024. Regarding the other balance sheet items, non-current assets increased to 479 million euros, mainly as a result of ongoing investments in equipment for our new production facility for the new large scale product platform. as well as IFRS 16 leasing additions from these contract extensions. Shareholder's equity decreased from €686 to €553 million due to our net loss in 2024. Provisions increased from €201 million to €233 million mainly due to the increased provision for personnel as part of the restructuring program. Our liabilities increased to 446 million euros, mainly driven by the higher advanced customer payments related to our large-scale pipeline, which I mentioned before. That concludes my explanation of the balance sheet, and now let's have a look on our cash flow development. In the reporting period, gross cash flow came in at €111 compared to €333 million in 2023, as our operating result was far below the extraordinary level of 2023. As a result of this lower gross cash flow and the increase of networking capital, cash flow from operating activities amounted to minus 113 compared to plus 141 million in the year before. In 2024, the group invested 90 million euros in net capex, which mainly composed of investments in our product portfolio, including capitalized R&D project costs and investments in fixed assets. The increased level of investment spending was mainly related to our new platform in large-scale and project solutions, which also includes the expansion of our production capacity and capabilities here in Germany. Considering all these effects, our free cash flow decreased from 57 million euros to minus 184 million euros in 2024, mainly resulting from higher networking capital excluding devaluation effects, which have no influence on the cash. Please note that we had no cash outs from the restructuring program in 2024. This will be made in 2025. So let's move to the next page, order backlog. And looking at the left side of the slide, you see that our order backlog reached a level of about 1.3%. product order backlog stood at 1 billion euros. On the right side of the page, you can see that large scale product order backlog remains very strong with nearly 982 million euros, followed by C&I with about 31 million euros and home by 21 million euros. For the group in total, order intake in Q4 was very strong, for large-scale. Order intake for Hormin C&I remained very soft as expected. This is it for the moment from my side, and I would like to hand over to Olaf and Juergen for more details about the ongoing restructuring and transformation program.