Washtec Ag Augsburg

Good afternoon, ladies and gentlemen, and welcome to WashTech's earnings call on the results of Q1 2026. My name is Kevin Lorenz. I'm Investor Relations Manager at WashTech. With me, I have today our Chief Financial Officer, Andreas Papst, who will provide a brief update on WashTech and guide you through our quarterly results. Following his presentation, the floor will be open for questions. Also, you might have just seen a short video on our newest product, JetWash Connect, during the waiting room, which we are very proud of. If you are interested, you can find this and further videos on this new product on our WashTech website, or you can also just send us a short mail and we will share it with you. But without further ado, I'm now handing over to our Chief Financial Officer, Andreas Taus.

Thank you, Kevin. Also from my side, a very warm welcome. I really appreciate that you are in our call today. Let me first give you some brief statements about our current topics at WashTech before I shift over to the figures of the first quarter of 2026. Let's start with our new JetWash Connect. We already mentioned the planned launch of this new product during our last call on the fiscal year 2025. But now we are live, and as you can imagine, we are very proud on our product launch on April 14th. Our new jet wash has some really good features for the users, for our customers, the operators, as well as for us. First, the new steel structure. We own the complete construction details And that puts us in the position that we can source the necessary steel parts locally instead of shipping them from Germany to all over Europe. Second, wash and pay leads to the fact that the average paid time increases by 25 to 30%. That means more revenue for our customers. And third, the new polish is a real eye catcher. You can really see the difference when you clean your car with this feature. With all these advantages, we believe that we can expand our business in this production category even further. Already with our last generation, we were able to achieve double digit million revenue in Europe in 2025. That stands for approximately 10% of our equipment business. So, we expect more to come. That brings me to my next topic. You are already aware that we are optimizing our production. This is one of the biggest levers we currently have in the company. We have made a major step in the future development of our production network. The grand opening of our new plant in Czech took place on March 26th. We started with the transfer of pre-assembly, assembly and logistics to the new building. The state-of-the-art facilities ensures process stability and efficient material flows while enhancing pre-assembly capacity with clear structured process change. Currently, we have already transferred around 50% of the total jobs to be transferred. That means, on the other side, we currently have planned higher costs. There are people in Augsburg who train the new colleagues in check. The handover is in quite good shape and our employees are working very well together. We expect that this higher capacity need will be resolved before the end of this year, and then we will collect the full savings from this lighthouse project. Let me now briefly address the potential risks related to the conflict in the Middle East. From a revenues perspective, our direct exposure in the affected countries is limited and remains modest. However, the broader uncertainty can lead to a temporary reluctance to invest, particularly impacting equipment demand on a global level. This is something we are closely monitoring. On the recurring side of the business, our assessment remains unchanged. Based on historical data, higher fuel prices may lead to short-term adjustments in driving behavior, But we do not expect a structural impact on car wash usage. Accordingly, we see no material long-term risk to our chemicals and service revenues. On the cost side, we are paying particular attention to supply chains and commodity prices, especially energy-related inputs in selected raw materials. For metals, we are in the lucky situation that we have secured a major part of our need until end of this year, already in December 2025. For other parts, we are increasing our stock level cautiously. Higher fuel prices, we counteracted with some surcharges for our customers in the field of service. Currently, we are discussing further mitigation measures and put them in place, depending on the duration of the conflict. You see, we are prepared and do the utmost to keep the financial impact on WashTech manageable and to protect margins. On this slide, which you probably already know, you see our main efficiency programs, which we are currently driving. And you are, of course, aware that these are already fundamental for our company. For sure, you also can imagine that not all of those programs always run 100% as planned. I have already given an update on the optimization of production footprint, where we currently have some planned negative impact on the gross margin, but where we are fully in line with our targets. In terms of installation costs, here we are facing some delays which influence our gross margin negatively. We somehow have underestimated the complexity of this job in some details and have intensified our efforts here. Our program for cost down of production and modularization is currently slightly behind timeline, but overall with no significant impact for the 2026 figures. On the other side, our programs for quality excellence and the global scope configurator are developing extremely well. Our quality cost per units are decreasing continuously and contribute to our profitability. The Globoscope Configurator has been rolled out now to three European countries and further to come. This program clearly delivers what we expected, a strong complexity reduction along the whole process chain from the customer order to production. Now, let's come to the Figure Store Q1 2026. Summing up Q1 in a statement. Revenue is good, especially in equipment in North America. Improvement of profitability necessary. But first things first. Starting with our revenues for Q126, we achieved a new first quarter revenue record of $111 million, representing an increase of 2.3% year on year. This growth was primarily driven by a strong performance in North America, particularly in the equipment business supported by higher revenues with key accounts. In Europe and other, revenues were stable overall compared to prior year. On a business line basis, equipment revenues increased by 7% while service remained stable. Consumable revenues declined mainly to the weather-related lower wash volumes, however, The revenue decline was less pronounced than the drop in volumes, underlining the resilience of the underlying business. Looking at our profitability, we see an EBIT of 3.8 million euro. This is an EBIT margin of 3.4%, whereas one year ago, we booked 4.5%. The shortfall was on the one hand side expected by necessary expenses caused by some programs. Remember my statements for our production shift to check. On the other side, we saw a cost increase in terms of installation. Our measures we started are not finished and do not show positive effects in the first quarter, but they will come. We have full focus on this cost block. Having a short view on free cash flow, the number is down by 9 million to 7 million Euro. drop doesn't make me too nervous right now, as we have increased our stock due to the real good order backlog we have. Therefore, our net working capital increased to 94 million Euro, a comparable number of March 2025 was 82 million Euro. So overall, Q1 was mixed in terms of financials and hard work is still in front of us. But given the strong top line as well as our current order backlog, or a book, we can look optimistic in the future, especially if we look at the development in equipment. What brings me to the next page. In the first quarter, we see a clear differentiation across our business lines. Equipment was the key growth driver with revenues up 7% year on year. This growth was primarily driven by North America, supported by higher revenues with key accounts, while Europe and others also showed a slight increase. Service revenues were stable compared to the prior year, once again underlining the resilience of our recurring revenue base. This stability is a key strength of our business model, particularly in a more volatile macro environment. Consumable revenues were below the prior year level, mainly due to weather-related lower wash volumes. Importantly, the decline in revenue was less pronounced than the decline in volumes, which demonstrates the fundamentally sound operational development of our washing chemical business. Overall, we are confident with the growth of our top line. Now, let's put eyes on our segments. In Europe and other, revenue remained broadly stable year on year. Earnings in the segment were impacted by higher costs, mainly related to the expansion to our check side, as well as delays in the execution of certain efficiency initiatives, particularly in installation logistics. I already gave some insights here. In addition, earnings were affected by weather-related lower activity in consumable business. North America, we saw clear improvement in both revenue and earnings driven primarily by higher equipment revenues with key accounts. The segment benefited from improved execution and more favorable product mix. Looking at the EBIT number, we see an increase in this KPI by 1.4 million euro to now break even. This is the best EBIT in the first quarter in North America since 2017. Yes, that's remarkable. Coming now to our rebate bridge, showing the development of Q125 to Q126. The increase in group revenue in the first quarter generated a positive cross-profit contribution, while at the same time the gross margin declined year on year, coming from 29.3% last year to now 28.4%. This was mainly driven by a less favorable product and regional mix, including a lower share of consumables and a higher share of equipment business in North America. In addition, cross-profit was impacted by planned temporarily higher costs, primarily related to the expansion of the check side, and delays in selected efficiency programs, as already mentioned. Selling expenses increased in line with revenue growth and remained broadly stable as a percentage of revenue. Administrative expenses are slightly higher compared to last year, mainly to ongoing IT projects. On this slide, you see some more financial KPIs. Net income and earnings per share follow mainly our EBIT development. Our net financial debt is still in a very good shape despite the outstanding amount is higher compared the same time one year ago. The reason for this is besides higher dividend payment and the share buyback program, we already mentioned higher net working capital. On the following slide, you see our equity ratio and our fixed asset ratio, both in a reasonable sense. In terms of employees, it is remarkable that we have increased our workforce by 94 year on year. Most of our new colleagues have been hired in the business line service, followed by sales department. Now, to the equipment order backlog. As always, indexed. Basis this time is the year 2022. Equipment orders received was significantly higher in the first three months of the year than in the prior year quarter. This cut across both segments and was primarily due to the positive trend in North American segment where the increase was even well into the double digit percentage range. Therefore, as already mentioned, we have a very strong order backlog, plus 10% compared year on year, plus 16% compared to end of 2025. And by the way, the increase in North America is even stronger. as a good view on the top line in the coming months. Let's now turn to our guidance for 2026. In general, BOSTIK confirms its guidance for 2026 and expects that the delays in the efficiency project will be made good over the course of the year. That is where we, the management, and the complete team need to focus on. We expect revenue growth in the mid-single-digit percentage range and an increase in EBIT that is disproportionately higher than revenue growth. The forecast does not make allowance for any further significant worsening of the economic situation due to the developments in the Middle East or other global disturbances due to some political statements and actions. However, in addition to high volatility in raw material markets We are currently seeing a significant increase in uncertainty regarding the future course of the conflict in Middle East and the resulting indirect economic impacts. That doesn't help too much for stable guidance. So, this time, it is even more important to state that this guidance is subject to uncertainties, and all these figures reflect our expectations based on our current knowledge and significant deviations in either direction are not factored in here. This concludes my remarks. On the following page, you will find our 2026 financial calendar. Thank you very much for your interest so far. Kevin and I are now available to answer your questions you might have.

We will now begin the question and answer session. If you wish to ask a question, you may use the Q&A function in the webcast and follow the instructions. You will see a confirmation that you have entered the queue. So, let's have a look. We have the first question from Stefan Augustin from Barbrook Research. Mr. Augustin, we can hear you.

Great. I hope so. Thank you. I have a couple of questions. So the first one is actually can you elaborate a little bit more again on the headwinds? So when do you think which one of the headwinds is going to start to decline? I mean, Czech Republic is probably second half of the year, so not Q2 yet. When is the element of the installation efficiencies going to kick in? And can you remind us on the SAP integration costs in Q1 26 compared to the ones you might have had in Q1 25? So that would be the first block.

Okay. So, yeah, you're right. profitability or their increasing profitability for the transfer to Czech Republic will kick in more end of this year. And we will see full effect according to the actual plans. And we are in the current timeline. We are fully on track. We will see that in 2027. In terms of installation costs, we are currently really a little bit behind. We detected some, let's call it difficulties where we need to dig further and we need to create other solutions to come back here. So that means I would say we are here now one quarter behind, but we will manage to come up with this one during the year. And then you asked about the cost for the implementation of SAP. So if you look to the EBIT bridge, which is in the presentation, the deviation in administrative cost is more or less coming from from this cost for the introduction of S4 HANA. So it's around about 200K.

Okay. Thank you very much. The next one is the, you mentioned that the orders that you received in Q1 are largely also on the U.S. side, but we should also expect growth and a positive book to fill in the quarter on the European side.

So if I look at the order income, I'm positive in Europe as well as North America for the first quarter. Both showed an increase compared to prior year. That is good. The increase was even higher in North America.

So yes, you're right with your statement. Probably the weather, especially in Germany, has been quite good in the second quarter or in April, so it would not be wrong to expect better chemicals business in the second quarter. Is that a fair assumption?

Let me think about, so currently we have May 5th, I guess, so the second quarter is not completely done, yeah, but looking at April was good washing weather, especially in Europe in one of our key markets. That's some headwind we have, tailwind.

Okay, and then maybe just switching back a little bit. The headwind on the insulation efficiencies, is that more in Europe or respectively? If we have in the second quarter stronger volumes to expect from North America, Would we still see a very sizable drop through in operating leverage as the installation part is quite okay in North America?

That's really a good question. Thank you for that one. So the topic what we see in installation costs is mainly related to Europe. So the installation costs in North America are on a reasonable level if you compare it over the year and compare it to the targets we have.

All right. Thank you very much.

You're welcome. Thank you, Mr. Augustin. And we have another question from Wolfgang Specht from Derndorf. Mr. Specht, can you hear us? We can't hear you. Sorry, okay. I see the question was actually written in written form. So the question is Connection is a mess. Still would have several questions. Okay. And as I was just saying, our provider has now also included an option that you can dial in via phone. Currently many analysts have the problems that their banks are very restricted with their TNs. So if you can If it's possible for you, then you can also dial in via phone. And there should be all the procedures should be described. There should be a number that you have to call. So let's maybe give him a little bit more time if there's a question coming or not. Else, I don't see any other questions right now. So I don't know, should we give him another minute or should we?

So let's wait for 30 seconds. and see if it works.

If not, yeah. There should also be an option to write down questions in text form, although for everyone else who might still have questions. Hmm.

Mr. Specht, we would really like to answer your question. So if it doesn't work right now, probably then we can do it later on. That is for all the audience. But then I would say no further questions right now. So then, ladies and gentlemen, on behalf of the whole management board, we really would like to thank you for your interest in WashTech and wish you a pleasant day. Thank you. Bye-bye.