SCHMID Group N.V. Class A Ordinary Shares 2026 Q2 Earnings Call

Thank you, Mara, and good morning, good afternoon, everyone. I would like to start by giving you the headline picture of the first half of 2026. In short, this has been six months of significant transformation. We have repaired the balance sheet. Our cost program has been executed, and we are seeing real momentum in order intake. Let me walk through the four numbers that tell the story. EUR 33 million of new net capital was raised to our convertible and SEPA. EUR 31 million of debt was reduced through a debt-to-equity swap announced in May. EUR 4 million of fixed costs were taken out through our Sprint program. EUR 52 million of orders we saw in the last eight weeks. 2026 remains a transition year, but the foundation is now in place for a strong second half of 2026 and a promising 2027.

Let me now walk you through the P&L of the first half. First of all, the Q1 was a slow start. It tends to be seasonally weak, but it was weaker than expected. We have seen EUR 18.2 million revenues in Q1, which increased to EUR 27.8 million revenues in Q2. Out of this, equipment revenues was EUR 10.7 million in the first six months last year, which was a very weak half year, to EUR 39.4 million in H1 2026. Spare parts and services increased their revenues from EUR 5.9 million to EUR 6.4 million year-on-year. Our gross profit margin of 21.2% was lower than expected. This is partially just the lower scale, but then also a shift towards China, where we have slightly lower margins and which we expect to reverse in the second half to more German production-based revenues.

Our G&A expenses increased by more than EUR 3 million because of the Sprint restructuring, share-based compensation, and capital structure items. I will talk more about that on the next page. Other income and other expenses include about EUR 1.7 million foreign exchange losses. This was EUR 6.3 million gains in the first half of 2025. The financial results losses reflect the accounting treatment of the XJ Harbor liability, which we converted into shares in January, and to a lesser extent, also the fair value movement of the company's warrants. It also includes, for your information, about EUR 875,000 of interest on our debt. Let me move to the next page and walk you through how we get to our adjusted EBITDA. The adjustments include about EUR 420,000 of Sprint restructuring costs. Share-based compensation reflects 2026 and 2027 C-level awards for shares and options.

Under IFRS, these had to be recognized mostly in H1 of this year. Capital structure restructuring costs reflect the fact that we had two 20-F filings this year, this half year. We are still under the Nasdaq monitoring period, which means higher filing requirements until February 2027. We also had some costs that came with the debt-to-equity conversion. Let me now talk about our Sprint program. We concluded Sprint One. We reduced headcount for full-time equivalents of more than 40 in our German overhead functions. Most of those departures will happen in Q3. We will have about restructuring costs, about EUR 700,000, of which, as I mentioned, EUR 400,000 was expensed in the first half.

This is mostly for paid leave, again, running into Q3 mostly, and then some small severance payments. The run rate has been achieved of about EUR 4 million expenses savings in labor costs, and this also reduces our fixed costs and lowers our break-even point. Now, we have started moving to the second phase of our Sprint program, which is a purchasing cost savings program. More than 50% of our total expenses are purchasing materials, and our target for savings are 5% of those purchasing expenses, at least 5%. As we now see a period of increasing volumes for purchasing, this is a good time to renegotiate terms and conditions. We think that most of those 5% minimum savings we can achieve by year-end. However, we also redesign some high-cost components and this design to cost will take us a bit of time and will be more something for 2027.

Let me then walk you through cash flow and working capital. We had EUR 29.3 million of operating cash outflow in H1, which was mostly the EUR 26 million of investments in our working capital. As you can see, we had negative working capital in December of last year, and we're now at about 14% of LTM sales by end of June. Now, medium term, we think we can reduce this back to more something like 10% or less. We also believe that the absolute amount of working capital is something that we can keep flat or reduce by year-end. We spent about EUR 800,000 on CapEx. We're typically running at EUR 1.5 million of annualized CapEx. Obviously, in the second half, we will start seeing some of the spending on the Chinese factory, which in total will be for around EUR 11 million, and this is land plus building.

It's not so much the machineries that we effectively have already. As I mentioned before, we raised about EUR 33 million to the convertible and the standby. That leads me to the balance sheet. We did a 30.75 million debt-to-equity swap announced in May. This meant the total debt has been reduced from EUR 53 million to about EUR 23 million, which we believe is a sustainable level and also means that we actually now have some debt capacity and can fund some of our growth in debt rather than equity. Additionally, obviously we have this convertible, the Black Forest convertible, EUR 2.5 million that matures in March. Of the $30 million convertible issued in January, $11 million are remaining. We have $20 million convertible that was raised in July.

As part of the convertible financing, we now have additional debt capacity for China, as long as this is non-recourse to Germany subsidiary or to our topco. That means, for example, the Chinese factory can be financed on a non-recourse project base of debt. We can also raise additional working capital or bank loans up to the EUR 20 million level. The average cost of funding for our Chinese debt, the new debt, will be around 2.7%, so very attractive rates. Additionally, we still have $21 million of standby equity remaining. We have not drawn on that in the second half of this year, and are not intending to draw on this for the rest of the year. With that, I now hand over to Roland, who will give an operational update and talk about our order intake situation.

Thank you, Arthur. Let me give you an operational update. We executed well in the first half of 2026, and we also delivered one of our first InfinityLine H+ for 700 by 700 millimeter panel-level packaging to a U.S.-based customer. In addition to that, to grow with our customer, we decided and started to consolidate and expand our Chinese manufacturing campus. We will move the currently leased two locations to one bigger SCHMID-owned manufacturing campus in Zhongshan, Guangdong Province, which is the same province as today. With this, we are consolidating our current operation and will double our production capacity in China. The total investment is about EUR 11 million, and the new facility is expected to be operational by Q4 2027. Our Malaysian facility is successfully established, up and running, and currently expanding to fulfill the demands of our growing key customer in this region.

Our order intake is accelerating. In our investor call in May, I've stated that Q1 was rather slow due to new factory planning of our flip-chip BGA substrate customer, and that I expected some momentum in the market through flip-chip BGA substrate capacity investments in the second half of 2026. We already recognized this momentum in late Q2, and we do see continuing market demand through the rest of 2026 and the full 2027. Due to these flip-chip BGA substrate and continuing AI server board capacity investments, we already achieved a EUR 52.3 million order intake in Q3, and are totaling out to EUR 96.6 million order intake year to date. These high-end equipment orders also balance the loading of our German and Chinese manufacturing locations, as Arthur has previously explained. We published and raised our order intake guidance for 2026 in July this year to EUR 125 million-EUR 150 million.

And based on what I currently see and the information I have, I do expect us to land in the upper area of that guidance. With this, I am handing back to Arthur.

Thank you, Roland. Looking at our new guidance, the revenue guidance remains unchanged. For the full year, we expect at least EUR 100 million revenues. If you are looking at the adjusted EBITDA margin, obviously this used to be more than 12% guidance for the full year. We now expect 6%-9% margin, EBITDA margin, adjusted EBITDA margin for the full year. Order intake, as Roland just mentioned, within the EUR 125 million to EUR 150 million range, we now expect to be at the upper half of that range. With that, we conclude our presentation, and I hand over back to Mara to organize the Q&A session.