Holger Nass: A wonderful morning from Hamburg. My name is Holger Nass, and I am very excited to welcome you to today's Earnings Call of R. Stahl AG for the Q3 of the fiscal year 2026. Results will be presented by Tobias Popp, sole member of the management board. We will have, as always, a Q&A session following the presentation. Please feel free to enter any questions you might have in our chat box on the lower right-hand corner, and we will address them after the presentation. We will record this earnings call, and you will be able to review it later on ResearchHub, as well as on R. Stahl AG's investor relations page.
Holger Nass: We cover R. Stahl in our research universe, and I will put a link to our comprehensive research also in the chat box in a few moments. With all this in mind, I will now hand it over to Tobias Popp. Tobias, it is all yours.
Tobias Popp: Thank you very much, Mr. Nass. A very warm welcome as well from sites R. Stahl to our audience. I am happy to present you the Q3 numbers by facts and figures, and the presentation will follow shortly. I will start with the management summary, and that summary has quite good numbers inside. The order intake has slightly improved against the previous year, but especially against the last quarter. The growth is mainly driven out of Americas and Germany. The sales is slightly behind. This is due to our normal business cycle. Order intake comes first, and then a couple of months later, the sales follows. Especially the central region is a bit behind the expectations.
Tobias Popp: The expectations relate to the economy. I will come to that later. The EBITDA is quite good, slightly behind the one-time high last year, but on a good, robust level. The EBITDA pre-margin remains there at 12.1%. The net profit improved to EUR 3.7 million. The previous year was at EUR 2.6. There we had some positive effects caused by tax, and then the earnings per share increased to EUR 0.56. The free cash flow is something what comes out of our discipline I was referring to last call. It improved significantly to EUR 11.2 million, and when you see the last year with EUR 0.5, this is exactly according to our expectations.
Tobias Popp: Going a bit deeper in the number, in the months, as said before, the only region who is a bit behind is the central region, and that is exactly what I was explaining before. This is due to missing investments, especially in Central Europe, where we have less investments in the chemical industry, where we have less investments in the pharmaceutical industry, and that reflects then to those one-time effects which are missing there in the top line of the central region. All the other regions, like Germany, Americas, and Asia, are doing quite good, according to plan. Therefore, we finally got to EUR 74.1 million of sales.
Tobias Popp: Talking a bit about the profitability, which remains on a good level, and there you see the cost of material ratio fell to 31.7%. The previous year was at 34.5%. Even if we had a lower operation performance, we could achieve a very good ratio in that manner. The personnel costs are decreasing by 11.8% to EUR 30.5 million. This is, as mentioned earlier, mainly caused by the workforce reduction, mainly at Germany.
Tobias Popp: The EBITDA is on a very good level, and finally landed at EUR 9 million, as mentioned before. The EBITDA pre-margin at 12.1%. The net profit rose to EUR 3.7 million, and the earnings per share at EUR 0.56. Talking about the cash flow statement, the cash flow increased in line with the net profit to EUR 8.9 million. The working capital reduced significantly. The cash flow from operation activities climbed significantly by EUR 10.4 million to EUR 14.2 million, which is a significant higher number than the previous year with EUR 3.8 million. The free cash flow rose even more sharply by EUR 11.2 million to finally EUR 11.7 million. There is some decreases in investment.
Tobias Popp: I was explaining last time that we had not that significant investment this year. Last year, we have been talking about the extension of Weimar, and next year, there is some investments expect out of our building, our plant in India. But as of now, no significant investments in that manner. The net debt decreased compared to year-end 2025 from EUR 34.9 million to EUR 33.1 million. Talking about the outlook, I am happy that I can confirm the guidance. The sales is expected in a corridor of EUR 285 million to EUR 300 million. The EBITDA pre will be in between EUR 22 million to EUR 27 million.
Tobias Popp: The free cash flow will be balanced, and the equity ratio, there is a slight change. We go from slight decrease to a stable scenario in that manner. On the other hand side, we will as well faced with the same risks. That means we have still ongoing geopolitical conflicts. You see it every day on the news. The general economy development in our main industries is still very low in matter of investments. I use the opportunity to give you a small update on the strategy, only with some examples out of that. As you know, we are in a program right now, what we call NEXUS, which is deploying in three phases.
Tobias Popp: The first phase, where we are in now, is the so-called foundation and stabilization phase. That has a lot to do with the things what I was explaining before as the outcoming numbers with financial stabilization, with a very high focus on efficiency in our core processes, and of course, with some homework to do on the portfolio side and on the complexity side, in all dimensions, I mean. And of course, the consequent execution of the strategy, which was a bit missing due to the analysis out of the past.
Tobias Popp: That phase will guide us 2027 to, from a business development point of view, more fancy phase 2, which has to do with growth. We, of course, do not ignore the opportunities we have even in phase 1, therefore, I brought 2 examples with me out of this ongoing market penetration. The one is a success story from a pharmaceutical investment in the US, there we could deliver for a pharma producer a certain amount of explosion-proof control devices, boxes, connectors, and of course, HMI, human-machine interfaces, what we are producing in Cologne.
Tobias Popp: The success factor in that manner was definitely an early involvement, a specific specification work, and of course, the collaboration. When I mean collaboration, it means the site team together with the central product management team. This is then the winning formula, I would say. Those things are really important because even if there is some pressure on the economy, we need to show face, we need to go for opportunities, it is good to see that we are creating some of those. Therefore, I brought a second with me, which has to do with a very old industry, which is oil and gas, that oil and gas example is out of the North Sea.
Tobias Popp: There we could deliver for an oil field operator in a similar volume explosion-proof lighting fixtures, so we could help him to renovate, to upgrade his platform, and use our high-efficient LED emergency lighting for that. The success factor was similar, there it is really, as I mentioned before, there it is really good to see that our strategy is executing there. If we work as a team towards the market, we can really get something more out than just the 1 plus 1 is 2. Then we get the 1 plus 1 is 3. With those examples, I will finish my quick Q3 heads-up, I am really happy and open for your questions.
Holger Nass: Great. Thank you so much. We do have a few questions already. Let me maybe start out with the outlook for 2027. We have seen that the order backlog declined about 14%. What gives you confidence to return to revenue growth in 2027?
Tobias Popp: The confidence for the revenue grow is definitely the run rate. I was mentioning that at the side note a couple of minutes ago. The order intake comes first, and then the sales is following. While having now a positive trend on the order intake, I am optimistic that we can create more sales then in the following, and more sales creates more earnings, and that is the answer.
Holger Nass: Great. Thank you so much. That was looking into 2027. Looking at the remainder of the year, you are also expecting a significant revenue increase in Q4. I guess it is the same argument that makes you confident to reach the guidance with a strong Q4. It seems like we have lost our staff for one second. Let me just make sure that we get them back online. Just stay with me for one second, please. I apologize for the inconvenience, but we will have it fixed in no time. Thank you. We will take one more minute. Apologies. Looks like we have them back online. It will be a few moments until we have them visually
Tobias Popp: So-
Holger Nass: with audio back. There you are. Tobias, we hear you very well. Let us continue.
Tobias Popp: I am very sorry for the technical issues, but we are back on track.
Holger Nass: No problem. Welcome back.
Tobias Popp: I got your last question, and I would like to add one comment to the one I already did. I was commenting with the run rate, and the second one is, of course, a proper market penetration. That means a strategic market penetration, and there we did a lot of homework the last couple of months in matter of doing proper specification work. What I was referring to was the two market examples and stuff like that, and that will both help the run rate and the focus at the market in order to get something more out.
Holger Nass: Great. Thank you. There was a warranty provision that we have seen in Q3, about EUR 1 million. Can you give us a little bit more background on that, and do you consider that to be a one-off, or should we expect further charges in the warranty provision?
Tobias Popp: This is referring to a warranty claim out of Northern Europe, and this is the counter booking against that warranty claim. From that point of view, not more, but nobody knows. We will keep you updated on those things.
Holger Nass: Great. Thank you. Looking at something everybody's talking about these days, data centers. Do you see data centers as a potential growth market for your solutions, with or without explosion protection, and are you already pursuing that opportunity?
Tobias Popp: Of course, I am following those news and those potentials there. Unfortunately for Stahl, this is not really our, let's say, growth area, because from a technology point, we are simply over-engineered there with our explosion-proof equipment we have. Nevertheless, there is some thought as well that those, let's say, data centers may be cooled by any gas and stuff like that, and that would be then another, let's say, entry point for us. As of now, in the traditional technology, what they are executing, not.
Holger Nass: Great. Thank you. In the footnotes, you talked about a reference to mergers and acquisitions, M&A. Was there any M&A activity in Q3?
Tobias Popp: No M&A activities in this Q3, and that goes along with the strong link to the strategy at the end of the day, because as I mentioned, we are still in that stabilization phase, and this is foreseen then when we go from phase 2 to phase 3, something like that, in the strategy where we then proactively see as well. First of all, we need to earn the money, no?
Holger Nass: Thank you. Looking at the NEXUS, you gave us a quick update on that. One of the questions is your guidance of revenues by 2030 of around EUR 500 million. Do you still deem that realistic, or will there be an update to those numbers?
Tobias Popp: Yeah. As you know, we skipped that number when my colleague was leaving the company, for a good reason. This is not. We need to grow step by step, and to just put a number on it, if it is EUR 500 million or if it is EUR 1 billion or whatever, does not help there. We need to do our homework. We need to go the ladder up step by step, and if it is at the end of that journey, then the strategic journey, organically wise, something in between as of now and EUR 500 million, I am fine with that. It is more that we really do those steps consequently instead of then flying for any high numbers.
Holger Nass: Thank you. You reported in Q3 that you had a good development of the cost of materials and also of the personnel year over year. Can you give us an outlook as to what your targets are for materials, cost of goods sold, and on the other hand, for the personnel cost to revenue ratio?
Tobias Popp: Yeah. The outlook is when we talk about sustainable operations, so we should keep in such corridors what we achieved now, in both dimensions, because then we have a fair chance that we go in a sustainable operation on the cost side. That is in both dimensions challenging. On the one hand side, the material mix we need to manage, which is always to do with market investments, which are working against a good material quota when we talk about big projects and stuff like that. On the other hand side, we need to, of course, do the one or the other investment in stuff as well, and those needs to be balanced well in order to operate sustainably, as I was starting my speech.
Holger Nass: Great. Thank you. Looking at the P&L for Q3, there was a plus in taxes in Q3. Can you give us some insight on those?
Tobias Popp: I was looking for the English word for latente Steuern. The deferred taxes was the reason to activate those, and that was the positive effect we had tax-wise.
Holger Nass: Got you. Looking at the order entry, do you see sign for orders coming from the Middle East, or what developments are you currently observing there?
Tobias Popp: At the moment, we are not heavily counting on the Middle East order intake because the war is still there. It is extended even a bit. Saudi Arabia is affected, the UAE, of course, mainly Abu Dhabi there and stuff like that. This is all the parts where those investments take place. That means, from my point of view, the investments are not off the table, but they are shifted. Therefore, I do not count them in Q4. That will be then, in a good case, an upside.
Holger Nass: Looking or following up on the cost of goods sold in Q3, can you elaborate a little bit on what drove the cost of goods sold ratio down in Q3? You have already talked about this a little bit, but maybe you can give us some more insights.
Tobias Popp: This is the flip side of what we just talked in the Middle East. When on the one hand side, we are missing those projects. On the other hand side, we have then this bread and butter business. That means the MRO business and replacement stuff and all those things, and those products are well-known for even lower material ratio. If you have then the Pareto out of that, then you have a much better position in the material ratio. In parallel, of course, is the operational excellence. You need to manage your supply, and you need to manage your operations. That all comes together in numbers what we just shared.
Holger Nass: Great. Thank you. From what I can see, we are almost done. I see somebody still typing, which means we might get another question. I will give you the time, of course, to finish writing that question and just have a second patient, and then we will get to this very shortly. Still typing. Seems to be a longer question, but from what I can tell, we are almost done, so that should be with us shortly. It reads, "Company like BMW, for example, report difficulties with their supply chain. What about R. Stahl?
Tobias Popp: A good question. Not so easy to answer. This is a mix of everything. There is, of course, unexpected things what can always happen in direction of electronics. On the other hand side, we have a certain learning curve. That means we had a shortage of material years ago, and we anyhow supply purchase a bit different because we have that, let us say, business model with high mix, low volume, and that demands other rules, especially when it goes in supply chains. Long story short, we do not see any shortages right now, and the ones we have, we can manage quite good.
Holger Nass: Well indeed. It seems like we are out of questions at this point. The only thing that is left for me to do is, on the one hand, to thank everybody for participating. Tobias, thanks so much for your insights. Thanks so much for all the questions that you submitted. A few things on the housekeeping front. The recording will be available later today on ResearchHub as well as on the R. STAHL Investor Relations page. We will send you a short feedback form right after this and would like for you to give us some feedback so that we can then forward to the company.
Holger Nass: Also, if you have any further questions, of course, feel more than free to reach out to us, but also to Frau Schäuble, the head of IR at R. STAHL. Also, last but not least, I would like to show you a few additional slides that you can pay attention to. This is the 9-month sales, cost reductions, cash flow, the company calendar, some share information, and of course, a disclaimer. You will get this information also in the form of the presentation on ResearchHub later today. With all this in mind, thank you once again. Tobias, if you want to have the final word, it is all yours.
Tobias Popp: Yes. Thank you, Mr. Nass. Once again, thank you very much from my side as well for your time, for the audience, for the good questions. Again, sorry for the short interrupt we had IT-wise. That is all to say right now. I am looking for the next call. I wish you a good rest of the week, and keep on being interesting about R. STAHL. Thank you.
Holger Nass: Thank you so much. Have a great morning, everybody. Bye.
