Washtec Ag Augsburg

Ladies and gentlemen, and welcome to Washtec's conference call on the Q3 results 2025. My name is Kevin Loren, Managing Director at Washtec. And with me today, I have our Chief Operating Officer, Michael Drohlsagen, who will provide an update on the current developments at Washtec, and our Chief Financial Officer, Andreas Papst, who will guide you through the results of the first nine months. Following the presentation, the floor will be open for questions. you may already queue for questions during the presentation by pressing the Pew Q&A button in the webcast and following the instructions. Of course, this call will be recorded and made available on our investor relations website. With that, I'm handing over to our CEO, Michael Drohlzeig.

Thank you. Ladies and gentlemen, thank you, Kevin, and a warm welcome to WorkTech HE's earnings call for the third quarter of 2025. My name is Michael Rothsagen. I'm CEO and CTO of WorkTech HE. The figures for Q3 2025, I would like to present to you the most important recent developments. Let's start by looking at the general economic environment in our core markets, the USA and Europe. In Europe, we are seeing the first signs of recovery, but uncertainties remain due to geopolitical risks and protectionist measures. In the USA, new tariffs and a weak dollar are making export conditions more difficult, while demand for capital goods remains stable. Due to the low level of exports to the USA shown in the last call, the risk for Washtec is low. General economic growth is suffering from the current trade barriers, which is also reflected in the lower market forecasts for Europe and the USA for 2026. This means that Washtec faces challenges going forward, such as subdued investment willingness. But given the current order backlog for Washtec, we remain positive. This is supported by our digitalization and sustainable technology offering, which gives us great opportunities for differentiation and growth. Let us take this opportunity to take another look at the core of our strategic orientation and where we currently stand, our house of strategy. our increasingly smart products for form the basis of our business model however we go far beyond this by bundling these products into modular tailor-made solutions that are precisely tailored to the needs of our customers the focus is on the entire customer journey from the initial contact to long We offer complete solutions from a single source, machines, chemicals and software. With the SCILP configurator launched in Germany in August this year, we can now configure our products in the same way as a car and create bundles with chemicals and surfaces. This is not only makes the job of our sales staff easier, but also gives our customers greater transparency and streamlines the entire process from order creation to machine installation. In the coming months, we will roll out this solution to all markets and also integrate all our products. Our digital products enable intelligent payment and control systems data analysis and performance optimization as well as customer loyalties through smart user guidance we are clearly positioning ourselves as a solution provider with a focus on europe and north america but strategy is nothing without culture that is why we focus on customer orientation enthusiasm and personal responsibility as well as a corporate culture that motivates and supports our employees. Our strategy is brought to life by the people who implement it. And in order to be able to act quickly and empower our employees, we have defined and described four core areas to provide clear guidance for all employees in the Washtec family. Clear statements for our employees and our organization. expectation management for our financial figures lean processes and a clear customer focus the framework is in place now it is up is now it is up the team to bring the strategy to life step by step and as we can see today we are already well on our way A special milestone in 2025 was the completion and official launch of our new rollover machine, SmartCare Connect, as well as our first and most important digital products in May of this year. With SmartCare Connect, we have created a digital solution that not only complements our product range, but also sets new standards in the industry. The market launch was extremely successful. we received very positive feedback from the market in the first few months after the launch. Our customers particularly appreciate its initiative usability, its intuitive usability, integration into existing systems and the wide range of options for data analysis and performance. The system achieves top washing results with short washing times especially when used in combination with our sustainable chemicals. The positioning of SmartCare Connect is clear. It is the digital heart of our new generation of washing systems and stands for innovation, efficiency and sustainability. With SmartCare Connect, we offer a solution that creates real added value for both large fleet operators and individual locations. throughout the entire lifecycle of the system. At the same time, our software SE remains a central component of our portfolio. It stands for proven quality and reliability. While SmartPair Connect focuses primarily on digitalization, smart networking and washing speed with washing time, software SE is with its robust and proven technology. Both product lines complement each other perfectly and enable us to offer the right solution for every customer. The first few months after the launch of Smartfair Connect confirm that we are on the right track. Demand is high, customer feedback is extremely positive, and the market response shows that our strategy is spot on. We will continue to pursue this path consistently. Our efficiency programs are a key component in achieving our midterm target EBIT margin of 12 to 14%. Just to repeat our midterm targets, we are aiming for free cash flow of 40 to 50 million euro, average revenue growth of 5% per year, and a ROSI of over 28%. The key levers with regards to our EBIT margin target are our efficiency program. These are the global scope configurator, cost reductions through modularization, quality improvement, optimization of the product footprint, and reduction of installation costs. We will discuss these programs in more detail during our capital markets webcast on November 20th. Our message is clear. We have had a very strong third quarter and are fully on track to achieve our targets 2025. For 2026, it will be crucial to focus on our further efficiency programs in order to realize this proportional EBIT margin growth by 2027. As part of our strategic goals, We are focusing on sustainable reductions in production costs. We see great potential here through complexity reduction, modularization and standardization, as well as the harmonization of central components. We estimate a reduction in variant diversity of over 20% at component and module level. which will also have an impact on our supplier base and its consolidation. However, the effects here will be felt downstream. The goal is clear and is being pursued with enthusiasm. Significant savings and further simplification of our product platforms by 2027. A key highlight of the current financial year is the successful rollout of our new digital products. Following an intensive preparation phase, we are already in the middle of the rollout phase with pilot projects. We have been able to launch our easy car wash pro and car wash assist solutions on the market and gradually expand their introduction. Easy car wash pro and for you and car wash assist are already in use in over 50 pilot facilities in more than five countries. Further pilot facilities are planned in over seven countries and over 500 new facilities are planned for 2026. The feedback from our key accounts and from area sales is extremely promising. The rollout of our digital products is an important component of our growth strategy and sends a clear signal to the market. WashTech is shaping the future of vehicle washing digitally networked and customer-oriented. Another important step we decided on is Washtec's new share buyback program. The Executive Board and Supervisory Board relied on the 23rd of October. The program will start tomorrow on the 6th of November and will run until 4th of May, 2026. A total of up to 100,000 shares or a maximum value of 5 million Euro can be repurchased. Why do we think this is a good program? First, a share buyback is a clear sign of our confidence in our own financial strength and the future development of our company. We have a solid balance sheet, a strong liquidity position. With a buyback, We are sending a signal to the capital market that we believe in the sustainable success of Bosch Tech. Second, our buyback program increases the value of each remaining share, reducing the number of outstanding shares increases earnings per share. I will now hand over to our CFO, who will present the detailed financial figures and the performance of the individual segments. Thank you for your attention and enjoy the second part. Andreas, the stage is yours.

Also from my side, a very warm welcome. I really appreciate that you are all in our call today. Let's go directly to our results. I am pleased to present our results for the first nine months of 2025 as the numbers speak for themselves, not only compared to prior year, but also in a five-year perspective. We did very well. Strong top-line growth and outpacing growth of profitability. We achieved revenues of 358 million, up 7.2% year-on-year, confirming the strong, especially in Europe. EBIT grow disproportionately by 17.4% to 32 million, significantly outpacing revenue growth. This is the second highest EBIT in the last five years. Only 2021, the year after COVID, showed a higher number here, which had a significant catch-up effect. Our EBIT margin improved to 9.0% compared to 8.2% last year. This reflects the success of our cost discipline and operational excellence initiatives combined with a tailwind from higher revenues. Also, free cash flow rose by 11.2% versus the prior year to now 28 million. This is mainly driven by optimized working capital management and higher net income. The free cash flow ratio of 7.8% is highest in the last five years. And if you now look at Q3 standalone, the figures are even more impressive. EBIT increased by 35.8% compared to prior year, and it even outpaced the double-digit revenue growth of 10.3%. Also on the long run, BORSTEC had never seen a higher increase in those numbers year on year. Overall, we achieved revenues of 126 million in the third quarter, with an EBIT margin of 11.8%, or in absolute terms, 50 million euro. So overall, in Q3, we are clearly on track according to our ambitions. Top-line growth, accompanied by an over-proportional growth of profitability. As you see from this slide, we have a pretty strong top-line growth in all business lines. It's a broad-based growth and a solid foundation of recurring revenue, meaning the sum of service and consumables, which now accounts for 47.5% of total revenue. Revenue from equipment grew especially in Q3 with 13.7% year-on-year. For the first nine months of 2025, this results in an increase of 6%, reaching now 184 million. Growth momentum in Europe and other segments successfully offset substitute performance in North America. Especially Germany and France continued their very strong performance also in Q3. Service revenue grew by 7.5%, totaling 160 million. This improvement reflects our focus on process optimization, digital connectivity, and expanded capacity. We hired additional service technicians and field service solution software. By September, we had approximately 13,000 machines connected, an increase of around 14% compared to year-end 2024. a clear indicator of our progress in building a digitally enabled service ecosystem. This will help us in future to grow our profitability even further. Consumables delivered the strongest growth, up 11% to 53.7 million. Looking at the revenue share, equipment remains our strong or largest contributor at 51.2%, but recurring revenue, meaning services, which accounts for 32.5%, and consumables, which accounts for 15%, are catching up. Therefore, the recurring revenues are now up to 47.5%, last year's 46.9%. The revenue mix develops further to our goal of 50% recurring and therefore higher predictable revenues. Let's now turn the perspective and take our segments into the focus. Our results clearly demonstrate resilient growth in Europe and other region while North America faced headwinds not only but also from currency effects. Revenue, Europe and other segments increased by 10.3% year-on-year, reaching 309 million. EBIT rose even more sharply, up to 23.6 to 33 million, driven by strong revenue performance across all business lines. The EBIT margin improved to 10.5% compared to 9.8% last year. These results reflect and the benefits of our high capacity load in our production plants. Beside this, we work full steam on our efficiency programs and have already achieved important milestones this year further to come. Nonetheless, we will see the full contribution of these efforts as planned next year or partwise even in 2027. Despite that, we had some additional expenses related to corporate strategy and ongoing IT projects. Contrary, revenues declined in North America by 9% in the first nine months. FX had some impact. On US dollar basis, revenue is down by 6.1%. However, operational performance stabilized in the third quarter. Especially equipment revenues came back. Overall, North America delivered an EBIT of 1.4 million in Q3, up from the prior year. With that much better Q3 result, the segment stands now, after nine months, at breakeven. This gives me some optimism for the coming quarters. To visualize different influences on our EBIT, this bridge might be helpful. Due to higher revenues, we could book 7.3 million additional gross profit and another 3.1 million due to higher gross profit margin. The gross profit margin is now at 31.6% compared to 30.4% last year. This positive performance was mainly due to the increased business volume in Europe, as already mentioned, given in the current setup of our production plants and working close to the limit. and we are facing in some regions installation capacity constraints. The product and the regional mix also supported . Contrary, we had higher selling and marketing costs resulting from higher outbound freight rates in connection with the revenue growth and of the expansion of our sales organization, as well as from the launch of the new products. Higher administrative expenses are mainly linked to IT expenses for ongoing projects, such as already named SAP investments, and new software for the service optimization. In total, earnings before interest and taxes are up by 4.8 million to now 32.4 million. This results in an EBIT margin of 9.0%. Now, some other important KPIs. In line with EBIT development, net income increased compared to last year. Similar earnings per share, we achieved 157 Eurocent compared to last year's more than 15 Eurocent. Our net financial debt of 60 million is 5 million above prior year's level. With credit lines of around 100 million, unused by more than 50%, our financial position is quite strong. In respect of net operating working capital, we see more or less similar numbers by around 90 millions compared to end of September last year. Compared to the end of last year, which was at 94 million, we are down by 4 million Euro. We are still cautious about investments. Meaning after nine months, we spent 5.5 million. The main portion of those investments is linked to our North American production plant where we bought some machines to strengthen our local production footprint and to our digital products and solutions. Our equity ratio is at 25.5% compared to 7% end of Q3 2024. But our balance sheet is still very solid and very healthy. In terms of employees, 85 more people work for WashTech compared to one year ago. The majority is hired for service. I already spoke about this one. Let us now debate a little bit about our order backlog. As usual, this slide doesn't give absolute numbers, but index numbers based on a five years view. In the first nine months of 2025, WashTech Group did very well in terms of order intake. Especially in Germany and France, we had a very strong order intake, whereas North America remained prior year's level in Euro and a little bit above in US dollar. Especially in Q3, we saw here some progress. Overall higher order intake results in higher order backlog, which is 20% over year end 2024 and a comparable level compared to end of Q3 2024. Knowing about this good order backlog, we have some clarity on increasing equipment revenues in the next six months in all seconds. This provides us with a solid base for the month ahead. Coming now to our guidance. WashTick confirms its guidance for the Group for 2025 based on our current order backlog as well as progress of our initiatives. Especially the EBIT development in Q3 supports our guidance with regards to a disproportional increase of EBIT compared to revenues. We now expect revenues and earnings growth in Europe and other segments to be comparatively stronger and in North America weaker in local currency. But overall, we expect for the group a full year growth of revenues by mid-single digit percentage and a disproportionate EBIT increase in excess of revenue growth. Full year's free cash flow is expected to be in the range of 35 to 45 million euro, and we also see improvement in our rosy number. Summing up, we confirm our group guidance for 2025 and we look optimistic into the future. This forecast is based on the assumption that the current global trade conflict will not have any significant negative impact on investment behavior in the car wash market. Next slide, please. So before we start with the Q&A session, a quick reminder about our upcoming capital markets communications. Feedback we got from you after our first capital market webcast on July 10th, we feel ourselves confirmed that this type of communication really adds some value. Therefore, we have recently announced to do our second capital market webcast on November 20th. We are working on the details, but I can tell you that we want to explain in much more details what is the plan in future for our consumable business, as well as some deep dive into our efficiency programs. These are essential part in our plan to achieve our midterm profitability targets. So we hope that you dial in. Straight after, we will be in November at the German Equity Forum, where we can meet in presence. We are looking forward to meet you there. So that's it from my side. Thank you for listening.