Half Year 2026 SMAG Mobile Antenna Masts AG Earnings Call
Speaker #1: Thanks. Hello, and a warm welcome to the H1 2026 earnings call of SMAG Mobile Antenna Masts AG. Before we begin with the presentation, we have prepared an introduction video for you.
Speaker #1: Thank you very much for your attention. I am now pleased to welcome SMAG CEO Ulrich Fein, who will guide us through the presentation shortly.
Speaker #1: After which, we will move on to the Q&A session. And with that, I am handing over to you, Mr. Feind.
Speaker #2: Yes, thank you very much, and a warm welcome also from the Management Board to our investors for the presentation of the first half of 2026, which is almost two and a half months after our IPO.
Speaker #2: And I'm glad to also introduce, next to me, our COO, Kai Oppermann.
Speaker #3: One welcome from my side as well.
Speaker #2: For all the investors, before we go into the details of the first half of this year and reflect on the story, I want to give you a little bit of insight into what's ahead.
Speaker #2: We would, for all the investors who are not so familiar with the SMAG story and our unique positioning in the market, give you a short overview about what we do, who we are, and I'm happy to hand over to Kai for this introduction.
Speaker #3: Yeah, thank you very much, Ulrich. So if we go to the next page, we see, let's say, basically our fields of activity. Ladies and gentlemen, we are, let's say, very strongly rooted in several kinds of use cases, starting from the bottom left.
Speaker #3: In communication, our systems support, let's say, milestone programs such as Tavarn, the German new communication network for the ground forces. But we are also, for instance, let's say, a central part of the IBCS implementation in the eastern flank state.
Speaker #3: At the, let's say, eastern border of NATO, a second very—let's say—important use case for our company and products is ground-based air defense.
Speaker #3: As you know, we are, let's say, a key partner for Patriot programs of five different countries in Europe and the Middle East. We are also part of, let's say, the European effort to integrate different ground-based air defense systems—a program called Areneos, together with MBDA.
Speaker #3: And last but not least, at the top, drone defense—our systems are being used in, let's say, exploring possibilities to protect critical infrastructure. We supplied two systems this year in this use case, and we are looking forward to rolling them out further in the future.
Speaker #3: On the right-hand side, we have more, let's say, use cases linked to electronic warfare and radar applications. Starting with radar, we are in passive radar applications at the eastern flank as well.
Speaker #3: We have electronic warfare. Here, we have supplied systems on trucks in the Baltic region. We have border control—border control amongst others. We support in the UAE, and last but not least, let's say, very promising use cases on physical AI platforms; for instance, integrating, let's say, laser tech, laser effector counter-drone, or also integrating drones on our systems to protect them and improve total value.
Speaker #3: So, if we then go to the next page, we would like to show you how we deliver this value to the battlefield. We have four product families, starting from the left.
Speaker #3: We have the on-truck family. We have then a second. We have, let's say, mast systems that can be mounted on, let's say, armored vehicles.
Speaker #3: Small tanks, but also, let's say, other vehicles. We have container systems and on trailers. To give you a flavor of what these systems can do for our partners from the armies, they are able to support wind speeds of up to 130 kilometers per hour.
Speaker #3: At a height of 40 meters, with a maximum payload of over 500 kilograms, the setup time is under 6 minutes in some systems.
Speaker #3: So these criteria are key to, let's say, the success of the missions—to data transmission, to safety of our soldiers—basically to lay the foundation so that communication, surveillance, and electronic warfare and other use cases can be successfully implemented to basically protect our country and the alliance in NATO Europe.
Speaker #3: On the next page, we will basically discuss how our positioning is. Let's say we are system agnostic. That means that, basically, we can, on the one hand, integrate and do integrate sensors from different manufacturers on the top of our mast systems.
Speaker #3: We can integrate, let's say, technology from Neoprimes into our, let's say, steering modules of the systems. And we also can integrate different platforms—meaning different vehicles, meaning different trucks—so that really places us in the middle of the spider web.
Speaker #3: We are constantly in discussion with the end users basically the militaries with brands but also Neoprimes and suppliers to basically design the systems from the start, make sure that the sensors are really well integrated onto our mast systems, make sure that the rolling platforms or let's say also the containers fit and let's say basically exceed the expectations of the customers.
Speaker #3: So really then, to use a system that guarantees, at all weather conditions, at all times, 100% functionality. And that really places us in the middle of this ecosystem of our industry.
Speaker #2: Okay, thanks, Kai. The investors reviewing the first half of our journey in 2026—we have spoken in the IPO process probably often about the project Tavarn—but we can say that the first half was nothing less than remarkable for the company.
Speaker #2: The signing the official signing of the Bundeswehr Tavarn LBO project is a total of was a total of 120 million fixed order backlog and this is a total contract with up to 900 million including the optional parts of this contract.
Speaker #2: So, this was an outstanding first half-year. We completed, now at the beginning of July, our IPO. It gives us the opportunity, with almost €30 million of funds to invest, and we will explain to you our journey of investments in a couple of slides. For the future, we aim to broaden and use this opportunity of large contracts, a significant order backlog, and the best-in-class product to set the right cornerstones for the future.
Speaker #2: The first half year was also implemented, or was driven by a ramp-up of our ramp-up execution, and ramp-up of our production and our total capabilities.
Speaker #2: We grew our total output by 20% to slightly more than 20 million, and our net sales also increased by slightly more than 15% to 12.6 million.
Speaker #2: However, as you can see also in the KPIs on the right-hand side, these ramp-up efforts and also partially the impact of product mix resulted in a temporarily lower profitability, with an adjusted EBIT margin of 2.6%.
Speaker #2: We go a little bit more into detail in the next couple of slides. We stand with the guidance and confirm the guidance which we have given, with €55 to €60 million in total output and 19% to 21% adjusted EBIT margins.
Speaker #2: What is remarkable, of course, is that we guided you through the process of our total order backlog of €1.4 billion by the end of 2025. This order backlog stayed at the same level, and we can also report a slightly increased but tremendous order backlog of €1.4 billion by the end of half one of 2026.
Speaker #2: So, Kai, if you would like to talk a little bit about the investments and the use of proceeds.
Speaker #3: Yeah, thank you. Indeed, the company is strategically now well positioned with the funds of up to €30 million that we have basically been able to, yeah, to receive during our IPO, or in the IPO.
Speaker #3: So basically, we have three pillars here that I would like to explain a bit further. Let's say the first pillar, and basically the central pillar, is our growth investment, which makes up about two-thirds of the funds. This has basically two aspects.
Speaker #3: One is the ramp-up, and let's say, industrialization and enlargement of our facility here in Salzgitter. As you probably know, we have at hand 10,000 square meters of production space.
Speaker #3: We will double that at the end of the year, starting at the end of the year and then equipping that next year. So that at the end of next year, we will have then more than double—20,000 square meters.
Speaker #3: And in this process, let's say we are already—let's say we've already made substantial investments. We have already invested in a welding robot line.
Speaker #3: We have set up our, let's say, first truck line and in the first half of the year we have basically improved the handling and logistics in our factory, making work better for our employees and making it more efficient.
Speaker #3: Invested in that and then, in the major points still to come this year, we are going to invest in a new, basically, paint shop. Paint, as you know, is a very critical application here in our industry. You speak about functionalities such as infrared visibility or decontamination capabilities.
Speaker #3: So, paint shop is one very big item. We also discuss, or let's say, invest in a second facility for our, basically, mast tower assembly.
Speaker #3: This is, let's say, a huge facility where we can basically unfold the mast completely and do all the, let's say, very detailed checking and installation work on that.
Speaker #3: And those items together will be, let's say, around $2 million. We will still invest in aluminum welding and also invest in more fixtures, basically in the handling of—let's say—the assemblies. So this is by far the, let's say, most important pillar. The second aspect of that is international growth, right? As we reckon, Europe is one Europe, but all the countries have, let's say, different, basically, priorities. As Ulrich outlined, we see a lot of growth potential also in major programs such as Tavarn or others in European neighboring countries, but we reckon that this will not be possible to solve, let's say, out of Salzgitter Bad.
Speaker #3: So, we therefore prepare for footprint internationalization so that at least part of the value chain can then also be localized to participate in this market growth.
Speaker #3: Two other aspects here is working capital investment and strength and balance sheet. Working capital investment ladies and gentlemen two basically two layers. One is supply security take the electrical components rare earth chips so we are basically stocking now what we need for our contract execution either at our factory or at our supplier so that they are physically basically on hand and secondly here we have let's say what we call intelligent inventory there are many let's say opportunities for instance in service having the right parts on stock puts you in a position to fulfill the customer requirements very swiftly and this will generate new business.
Speaker #3: Last but not least, strength and balance sheet, for instance, we have to—you have reckoned that we have a, let's say, huge amount of free payments, that we have a good market position to impose that in the market. But these have to be securitized, and obviously the cost of that will fall by having a better balance sheet position, and that is in the third layer of our use of proceeds.
Speaker #2: Great. I mean Kai speaking about specifically your spoken specifically about already the ongoing projects of our production expansion. And obviously with our order backlog at a tremendous high 1.4 billion this is one of the key elements what will drive our future growth and also profitability increases.
Speaker #2: But it's also a main point of discussion with our customers. And as you can see here, our order backlog stays at these tremendous levels.
Speaker #2: And what is, though, still a highlight to mention in comparison, also to the points that we discussed, is that between the first half of this year, we were able to increase our fixed order backlog from €140 million by 30%, up to €180 million.
Speaker #2: Our frame order backlog remains at $1.1 billion, and you can see with a soft order backlog at slightly more than $120 million that we are managing the shift from right to left to give our production and our execution security for the next couple of years.
Speaker #2: It is extremely important to mention that, of course, as we are operating in mission-critical situations, all our programs are predominantly driven by NATO states and large lighthouse projects.
Speaker #2: Such as Tavarn that we mentioned but it's also Eastern European ICBS projects. The internationalization strategy we spoke about this earlier Kai mentioned it and we highlighted kind of our drive now to use the best in class products to gain additional business.
Speaker #2: Here is one part that we would like to mention: we are now already working with large Western European prime customers, participating in RFQs, and we have made good steps going forward.
Speaker #2: Of course, we cannot disclose anything, and it might be for future announcements, but our activities with hiring our international sales director from France really show the fruit of this work. Now it's up to us to perform and excel in this.
Speaker #2: Looking towards the development of the first half in comparison to last year's first half, here in the chart you can see how our total output increased in comparison to the first half of 2025.
Speaker #2: It is, though, like you can see: revenue was increasing by 15%. Total output grew more according to our local GAP. The difference between total output and revenue is the change in finished and unfinished products.
Speaker #2: And this is sort of our ramp-up, and what we will benefit from in the next couple of months when we bring this to revenue.
Speaker #2: As explained in the ramp-up execution phase, we explained—here you can see the Q2 comparison this year to last year. But what I would like to highlight is that we expected during the process that Q2 would be almost a repetition of Q1.
Speaker #2: And this is based on the topics that in Q1, we delivered both prototypes for the Tavarn project, and in Q2 we used the time to build up our assembly line, build up our production lines.
Speaker #2: And we're able to get the first industrial customer approval by the end of Q2, so by the end of June. This marks the ramp-up journey.
Speaker #2: On the right-hand side, we explained we had last year, and in the business, always a very favorable part of aftermarket service sales. We expected this, of course, with strong new orders, with our order backlog being full-on with big products.
Speaker #2: That we will decline slightly in percentage, but as you have probably read just yesterday, we signed a very nice contract with one of our customers for a European defense program for the service team, with €6 million.
Speaker #2: And also, this shows that in mission-critical situations, our customers rely on our capabilities to refurbish and enhance products that are already in the market.
Speaker #2: Yeah, okay. Of course, we have also developed in profitability. Here, you can see the comparison of the first half year of 2026 compared with our first half of 2025.
Speaker #2: And also the comparison of the two quarters, so intrinsically between the years. Our profitability dropped compared to last year mainly because of three reasons.
Speaker #2: The one is, of course, the absolute strengthening and increase of cost due to the scaling and to the ramp-up of our factory, but also the factory and the entire organization. As you have reckoned in our guidance, the €20 million was purely also driven for ramping up and getting our production into the serious production mode.
Speaker #2: The second reason is an unfavorable product mix within the year-over-year comparison. This mainly reflects a customer that we had in Q1 of 2025.
Speaker #2: However, it's very important to mention that with these products, we have already secured one additional contract with this customer, where execution will start at the end of Q4 this year.
Speaker #2: And we're about to sign further contracts with this customer. So this very positive business will also come back to our P&L statement. Yeah. And like mentioned beforehand, we grew in output, and the growth in output was driven by growth in net sales, but also primarily by the increase and the super increase of our work in process.
Speaker #2: Here, we realize profitability once we ship the goods to our customer and run through the acceptance tests with our customer and their end customers.
Speaker #2: Whilst EBIT and EBITDA remained below the previous year, and also after reversing the non-recurring items, we had minus €1 million EBITDA. This is compared to the €2 million of last year.
Speaker #2: And you can see that our CapEx initiatives with investing into our factory for the ongoing opportunities, we had $1 million, which was more than half a million more than last year.
Speaker #2: However, the changes in networking capital and the very positive impacts from down payments of our customers significantly changed the impact on cash conversion. Our free cash flow at the end of the period was plus €0.6 million, compared to minus €1.5 million last year. This again shows that, in this mode of the contracts that we win and whilst we deliver the contracts at high profitability, our cash conversion is at an extremely high level.
Speaker #2: Even as we start investing more into the future than we have done in the past years. So, ladies and gentlemen, coming to the part of what do we expect from the remainder of the year.
Speaker #2: We have confirmed the guidance for this year; we are extremely positive. On having put the right development initiatives for '27 and beyond. As mentioned, this year we feel we have kind of the extra efforts to take due to ramp-up, but also one legacy project that we still have in our books, and this will be shaken off in the first quarter of next year.
Speaker #2: So we are here, very positive on the underlying case of SMAG. We have put a lot of energy into the organization and into the production ramp-up.
Speaker #2: We are looking at a business that has very high order visibility. We were able to increase our fixed order backlog by more than 30% at the beginning of this year, and we expect more order intake and more contracts to be signed in the near to mid future.
Speaker #2: Execution is, of course, one of the main and top priorities ongoing for the business, and we are confident that we will strive on the road to further convert the frame to fixed order book and do everything here to not only satisfy our investors, but also, and of course, our customers—like the customers for the Tavarn project, but also our other customers who are driving projects on key European NATO defense programs.
Speaker #2: With that having been mentioned, also, as a kind of final slide on our activities in terms of our interaction with the investors, we have ramped up with new ways in our coverage.
Speaker #2: Kai will join tomorrow's New Ways European Midcap Conference in Paris. I will join, and I will present SMAG on October 8th at MWB's Research, Defense, and Security Conference.
Speaker #2: We are on the main stage on the 25th of November at the German Equity Forum. And then, already now looking into next year, by May 2027, the Kantor Investor Conference.
Speaker #2: In May, we'll publish our annual report and we'll have the annual general meeting in June 2027. And, of course, we will, to the end of this month—the month of October—then publish Q3 numbers.
Speaker #2: Okay, that was the presentation from the Management Board of SMAG for H1. We will now jump to the Q&A session.
Speaker #1: Yes, thank you very much, Mr. Find and Mr. Oppermann, for the presentation. Ladies and gentlemen, now it is your turn. We are opening the Q&A session.
Speaker #1: If you would like to ask your questions in person via audio line, please click on the raise hand button. If you are dialing in by phone, please press the star key 9 to raise your hand, and star key 6 to unmute yourself.
Speaker #1: And additionally, you're also very welcome to post your questions in our chat. And we already do have the first raised hand. Mr. Finn Kempa, you should be able to unmute yourself now and ask your question.
Speaker #1: You should be able to unmute yourself now. We can hear you.
Speaker #3: Perfect. Thank you, guys, for the presentation. I have a couple of questions from my end. The first one is: you mentioned current inspection and acceptance bottlenecks that lasted also into Q3.
Speaker #3: So, if deliveries should be delayed as a result, should we expect these volumes to shift into 2027, or is there a risk that they could be pushed out even further?
Speaker #3: Maybe another question is: Could you outline the concrete measures that you're taking to remove these bottlenecks, and what timeline do you currently expect for the inspection and acceptance process to be fully normalized?
Speaker #3: And then, maybe in the end, if I recall correctly, around $100 million was moved from the soft backlog into the framework backlog. Maybe you could provide some context on what drove that reclassification.
Speaker #3: Thank you.
Speaker #2: Yep. Finn thanks for your questions. I will start with the with the first question your contractor question and on the measures what we do kind of to accelerate and smoothen the process with the acceptance as we have mentioned that also on the slide to Kai.
Speaker #2: First and foremost, we have delivery, so we're delivering on contracts. So, in the eventuality of an acceptance that will not take place in 2026, these deliveries are then pushed and postponed to 2027.
Speaker #2: Means that this is kind of the this would be then just a matter of project phasing and whatever is kind of taken away from 26 would be added to 27.
Speaker #3: Okay.
Speaker #2: And Kai, okay. Perhaps you did—you said basically the process of certification and acceptance. Let's say we have successfully passed the acceptance process for, let's say, one part of the Tavarn project.
Speaker #2: And what is basically to be accepted is, once you have basically passed the first acceptance, the process has then been very well defined, the documentation has been accepted, and then basically the process is speeding up, right?
Speaker #2: So, knowing that—I mean, it's no industry secret—knowing that the German quality acceptance organization is also basically required to, let's say, speed up processes, ramp up.
Speaker #2: This is a very, let's say, important factor. We have on-site here a team of dedicated personnel from this organization. We have seen the speeding up for, basically, the small Tavarn system, and we successfully started the certification for the large system as well.
Speaker #2: So, we expect this to be ended soon. And then, also seeing the same effect and speeding that up. So, our associates, they work hard.
Speaker #2: Let's say, basically, we want to make this acceptance as smooth as possible. This should be normalized—as you demand it normalized, basically. Then, at the end, let's say end of November or mid-November, it should be normalized, and then we will be, let's say, on full steam from then on.
Speaker #3: Okay.
Speaker #2: I think you had a third aspect: the reclassification of order backlog.
Speaker #3: Exactly. Yeah, from the soft backlog to frame, if I recall correctly.
Speaker #2: Yep, exactly. So, if you recall the page total—I'm flipping back to it. I hope you can all see it.
Speaker #3: Yes.
Speaker #2: The $1.4 billion remained the same, of course. The fixed order backlog increased, primarily due to the one contract that we won towards the end of half one.
Speaker #2: And decreased as a matter by revenue. Frame order backlog is driven mainly by the large programs, frame order part of Tavarn, and then the other Polish business that we're working on, which is kind of the continuation business.
Speaker #2: And from our classification also, whilst this becomes more and more precise and we are jumping into the final negotiation or the negotiation rounds, also our project with MBDA has moved from soft order backlog to frame.
Speaker #2: And then, new opportunities that we are kind of—where we explain that we are in a very solid position as a single source, have increased to a soft order backlog, whilst we take a very delicate and rather conservative approach on the size of these projects.
Speaker #3: All right, perfect. Thank you, guys.
Speaker #2: I think yeah.
Speaker #1: Thank you very much. Meanwhile, we have also received some questions in the chat box. One of them you already touched on a little bit.
Speaker #1: Can we expect the rate of frame backlog conversion to fixed backlog to speed up, or will it continue to be lumpy, with one-off moves?
Speaker #2: Yeah, that's an excellent question. The answer to that is that mostly we work on very large programs, so kind of the idea is we are in a project business.
Speaker #2: So our business is that we participate in larger contracts. We have won yesterday a project of $6 million. This is rather on the small-hand size of our businesses.
Speaker #2: And we're currently working, as mentioned, on one program. We believe that we are rather close to getting commitment from us and our customer of approximately €70 million—seventy.
Speaker #2: And then, looking at the change over the years, there's the program signing with potentially our customer on the Araneos, with $150 to $200 million potentially.
Speaker #2: And by the middle of next year, around September, we expect that the optional volumes of Tavarn will be signed. That is major, lumpy one-offs, probably as per the question.
Speaker #2: But still, we see the acceleration and the clear milestones here of when our business shifts from frame to fixed. And on the go, we expect also, of course, smaller programs to be signed.
Speaker #1: Perfect. Thank you. The next question is, the management guidance has a KVAT that requires key suppliers to deliver on time and on budget. How can you manage or mitigate these risks?
Speaker #2: Yeah. I guess that's a very typical one of any business that is in our ramp up situation. I mean we are we have given the guidance of also growth for the future where we said business will accelerate with probably 40% 40% growth rates this is then of course the huge opportunity but the topics of ramp up that we mentioned suppliers and the acceptance of our customers but also the German Bundeswehr authority are key drivers.
Speaker #2: And I guess, Kai, if you want to say a couple of words towards the key supplier risks and how we mitigate them.
Speaker #3: Yeah, basically, yeah. Thanks, Ulrich. Let's say the basis for our business is—I mean, our large contracts in the order book—they are based on precursor models.
Speaker #3: So we have basically for the truck system we have a precursor model at the eastern flank NATO's eastern flank. And for the small let's say the Marston tank that is the small Tavarn we have supplied already 70 plus units to Switzerland.
Speaker #3: So it has to be understood that this is not something that is, let's say, completely new or so. It's a proven design. And obviously, this also relates to supply sources.
Speaker #3: However, we have purposely designed our products so that there is no, let's say, special material—think of special steel or anything—that you cannot easily source in a constrained situation, or highly engineered products.
Speaker #3: So these are let's say the foundation of our basically supply chain. So yes we have basically on plan our supplier development what is basically the first let's say the first action here we have already let's say increased our supplier development team to four people.
Speaker #3: And they are constantly with the suppliers, making sure that this is delivered on time and in quality. And obviously our strategy includes second sourcing. Basically, we started that already—let's say last year—and this second sourcing process, where you have more than one source for a certain good, will be finalized in the coming months.
Speaker #3: Last but not least, as a, let's say, third item or measure, we have here basically well-ahead stock keeping to make sure that, let's say, goods are in the right quality in the, let's say, in the warehouse so that this cannot impact, basically, our production system.
Speaker #1: Thank you very much. Meanwhile, we have also received some new, raised hands. Mr. Raman Huber, you should be able to unmute yourself and ask your question.
Speaker #4: Can you hear me?
Speaker #1: We can hear you. Yes.
Speaker #4: So, coming back to the question of this risk of delays—in your guidance, you gave, saying that all, you know...
Speaker #5: Till now, your guidance is okay, like this. So, does it mean that the delays you mentioned till now, they are in the guidance? So, if you—
Speaker #6: does not restart.
Speaker #5: Straight away, are you going to reach into your sales guidance?
Speaker #7: Ramon, thanks for the question. I will give you the answer. That is correct. We have confirmed the guidance, and of course, we have the plans for how we will deliver by the end of the year.
Speaker #7: We have here plans with our customers. It is probably to say that, or it is fair to say that like any company, ramp-up has kind of its ups, it has sometimes its setbacks, but we have here the plans to deliver this.
Speaker #7: This is an inclusive plan, also worked with our main two key customers that we have. On the other hand, also the positive part, what we have here taken into account with the signing of the one contract with our Eastern European customer in the middle of the year.
Speaker #7: We have also heard their demand for accelerated deliveries, so we'll deliver four more units for them over the remainder of the year. Taking all this into account, we confirmed the guidance.
Speaker #7: And yeah, but we thought it was fair to mention deliveries of key suppliers and the customer acceptance, because these are of course the main topics in this journey.
Speaker #5: Oh yes, for sure. I'm happy to get the details, but it's good if you're going to get there anyway. So the other one is on the margin.
Speaker #5: So you need a margin of around 25% or something like that for the second half. So, does it have to do with new contracts, or is it more legacy business falling out and then the margin increases so much?
Speaker #7: Yeah, it's basically—there's the one legacy project that we have also mentioned in all our risk factors, that we now deliver and which will fall out, as you mentioned, and the new business, sort of the delivery of the new business we mentioned.
Speaker #7: that we kind of managed the ramp-up with three units of Tavan Large. This is a project, like the other new businesses, with a much better profitability scheme.
Speaker #7: Also, the project with our customer, which I mentioned, where we have won the four additional units, has a better profitability structure, and this is the main reason.
Speaker #7: And of course, we invested significantly in operational expenses, both in personnel costs and in OPEX. We increased our workforce substantially in the first half of the year to be able to deliver in the second half.
Speaker #7: going forward.
Speaker #5: Okay, so you— we can also expect a much higher margin, then, for next year.
Speaker #7: That is at least also our expectation for the short- and mid-term future, yes. Thank you very much. Good luck.
Speaker #5: Thanks.
Speaker #7: Thank you very much. We also received a further question in the chat, which is: to reach the lower end of your guidance, you need €35 million output in H2.
Speaker #5: How will that split Q3 and Q4, and will sales match output?
Speaker #7: Yeah, thanks, John. Thanks for the question. This is the $35 million kind of on the output on the lower end. This will be significantly driven, of course, by sales recognition.
Speaker #7: We explained, I think, that in our German GAAP standard, as you—what you can activate into your work and processes is potentially around 55% to 60% of the sales price of a unit.
Speaker #7: Hence, this is then kind of revenue recognition—is a key driver on this journey to reaching the total output and partially towards the question of the 35.
Speaker #7: Million. The split between Q3 and Q4 is that, of course, we have done all the work in the first half for the ramp-up, but it's obviously also not just a turning of the switch.
Speaker #7: And the digital process that then, from July and Q3 onwards, everything is set in place. We have seen, sort of, and done all the work of the measures to kind of accelerate our ramp-up, but have started in July slightly slow into Q3. But it's also normal that this is a continuous increase between Q3 and Q4.
Speaker #7: And then, going forward, also for the next couple of years.
Speaker #8: Thank you very much. The next question in the chat is: given you said the risks of delay are already baked into FY guidance, this would imply an underlying upgrade from the guidance given at IPO.
Speaker #8: Where is that coming from?
Speaker #7: That question is hopefully well understood. The baking in, we have sort of, as mentioned, started probably slightly slower into July than expected, but now have sort of the plan and the ramp-up and the activities like mentioned that we are confident in order to reach the guidance from the IPO of 55 to 60 with a 19 to 21% profitability scheme.
Speaker #7: We don't see that this would be kind of a change in guidance or kind of an upgrading of the guidance in comparison towards the IPO.
Speaker #8: Thank you very much, ladies and gentlemen. At this point, once again, a reminder: if you happen to have questions, please place them in our chat box or click on the "Raise Hand" button.
Speaker #8: And since we don't seem to have—oh, there is a raised hand again. Mr. Chai Sokolov, you should be able to unmute yourself now.
Speaker #5: Yeah, so I'm not sure if, uh, if you hear me and I have— Yeah, I just wanted to ask, you mentioned a few times, um, that you need to share...
Speaker #9: shaken off the older legacy programs, and, and I'm curious how, how hard is it to shake them off and if it's, and if it's reasonable.
Speaker #9: Meaning you have your— you're not a new business, and you sold many systems, older systems, and you also talk about your aftermarket effort. So, is that realistic to— or what do you think the exposure of that issue is, of keep dragging or dealing with all their projects?
Speaker #7: Yeah, understood, Chai, and thanks for the question. To give you a broad answer to that one, this legacy project is one specific project with a customer we signed a couple of years ago, sort of before the time vendor, and it is one very innovative program which we now have under control.
Speaker #7: But which took us a lot of learning years in the last couple of years, in terms of an engineering solution. I think probably you have heard from this explanation, with innovative programs often times in the past.
Speaker #7: We think that this will bring a lot of additional sales in the future because of the system in a container with a very heavy antenna.
Speaker #7: It's very complicated—complicated to engineer. But once we have mastered that in this one, and it's not comparable to the system on a truck, it's not comparable to the system on an armored vehicle. But once customers, or the end users, are impressed by the capabilities, we'll have more sales in the future with that program.
Speaker #7: The question regarding shaking off—the schedules see that, let's say, to the end of Q1 of next year, this program will be shaken off.
Speaker #7: And just, it's not kind of then a one-off, but it's more like a shake-off in terms of ease of easing the pain because we're then delivering— currently we have an amount of more than 16 containers in our factory, and we will continuously now deliver them out to the end of Q1 of next year.
Speaker #7: And yeah, maybe that's a good point. We understand that our customer is convinced that we now have a technical solution. We understand that there's more demand for the future and potentially, like you said, the aftermarket or the service sales business.
Speaker #7: This is a very complex program, so we also expect some service sales, of course, or some nice service sales for the future then. Okay, thank you.
Speaker #8: Thank you very much. Again, ladies and gentlemen, a reminder to place your questions in the chat box or to click on the Raise Hand button.
Speaker #8: And should you be dialing in by phone, press *9 to raise your hand and *6 to unmute yourself. And since there seem to be no further questions, we therefore come to the end of today's earnings call.
Speaker #8: Thank you for your interest in the SMAG Mobile Antenna Masts AG, and should you have any questions at a later date, please feel free to contact Investor Relations.
Speaker #8: A big thank you also to Mr. Feit and Mr. Oppenheimer for your presentation and your time, and I wish you all a successful day. I hand over to you, Mr. Feit, once again for the closing remarks.
Speaker #7: Yes, thank you very much for hosting this event, and thank you very much to our investor and analyst community for joining and showing such great interest in SMAG and our developments.
Speaker #7: It was a pleasure to also have this interactive session and to be able to answer your questions. And as our Investor Relations section grows, the potential meeting points with us will increase.
Speaker #7: We are also happy to see one or the other of you face to face in the near future. Thank you very much, everyone, and have a great afternoon.
Speaker #10: Yeah, thank you from my side, too. And, perhaps, if somebody happens to be in Paris tomorrow, I would be really keen on meeting you then.
