SCHMID Group N.V. Class A Ordinary Shares

Thank you. Before we begin, a brief personal note.

I joined SCHMID in January because I believe this company combines great technology, strong market positioning and significant value creation potential. I also invested personally because I believe management and shareholders should be aligned.

2025 was a year of transitioning and repositioning of SCHMID. We saw a significant recovery of our operations during the second half, and over the last 6 months, we achieved some very important milestones.

We secured solid financing for the group through our $30 million convertible announced in January, and we just announced a $30 million standby equity line, which allows us to secure funding if and when such funding is required. We reduced our debts through various debt-to-equity programs.

This call marks our first formal investor call, and we intend to engage with the market on a more regular and transparent basis going forward. We also plan to provide quarterly trading updates on revenue and order intake.

Over recent months, we have intensified our focus on margins and cost discipline, in particular, our central costs, both German overhead as well as listing-related costs. I will talk more about that during this presentation.

Lastly, we are also strengthening our ownership culture and changing compensation of management and Board to contain more share-based compensation, and align everybody more with the interests of our shareholders. That sets the strategic context.

Let me now hand over to Roland, who will walk you through the technology drivers and why we believe our growth outlook is compelling.

Thank you, Arthur. I will give you all a short business update of SCHMID.

SCHMID is a trusted equipment provider for the electronics industry for more than 60 years, and we have continuously upgraded our platforms, the InfinityLine H+ and the InfinityLine V+. While we continued the evolution of those product lines, we started investing and developing the next-generation equipment, like the C+, the L+ and the P+.

In addition to this, this L+ panel-sized CMP equipment and the InfinityLine P+, our next-generation panel-level packaging equipment, were developed and well adopted by the market. This is leading to an above-market growth for SCHMID.

We also recognize a shift from wafer to panel-level packaging. High-performance computing and AI are driving the industry towards larger compute package sizes like 120x120 millimeter.

These bigger packages are increasingly being manufactured on rectangular substrates, on panel, as producing them on wafer would mean wasting a lot of production area and material. We currently recognize that several panel sizes, mostly 310x310, 510x515 and 600x600 millimeter, are being established by our customers, TSMC, Intel and Samsung as well as by their supply chain.

As SCHMID is providing panel-level packaging equipment or panel-level production equipment to the industry, this plays very much into our core competence. And we expect that this panel-level packaging market will grow three to fourfold by 2030.

The enormous computing demand of AI and high-performance computing drives the industry towards larger and larger packages. For example, see NVIDIA and AMD, who introduce new product families about every 18 months with compute units of increasing body size, as you see it on this picture.

This is emphasizing advanced packaging on panel level. We also see the demand for novel device architectures.

This high-performance computing and the AI computing are calling for denser structures on the wiring, power consumption, thermal management of the packages, chip on wafer, on PCB and other developing -- other developments are driving more complexity into advanced packaging, such as layer counts, modified SAP and SAP structures combining in substrate-like PCBs. SCHMID optimized the equipment for these processes over decades and through different technological development cycles.

As such, SCHMID equipment is recognized as the most stable and best quality and highest yield equipment. As the cost for scrap material is significant, especially when you increase the body size of the package, the production yield our equipment is providing becomes paramount.

Our new products are adopted well by the market. As earlier mentioned, the new product families, InfinityLine C+, L+ and P+, are well received by the market.

While our workhorses, H+ and V+, are growing well with the electronics market, which is growing at about 10% year-over-year, it is these 3 products which will drive above-market growth for SCHMID. We believe we are approaching the commercial inflection point where these products transition into meaningful revenue contributors for SCHMID.

The momentum of AI infrastructure and optical modules, as well as the adoption of the new product families, are the reasons for SCHMID growing stronger than the market. As shown here, we recognize great adoption and significant order intake for these new products starting in 2023, which was continuously increasing.

Based on current customer activity, we expect continued commercial momentum and potential addition order announcement for the next few products within the next few months. Q1 2026 showed a very strong market in China, and we expect, in general, a very strong second half of 2026 for SCHMID through continuing AI server board demands and huge expansions in the area of flip chip BGA substrates.

With this, I'm handing over to Arthur.

Thank you, Roland. Let me start with a review of 2025.

2025 was a year of 2 distinct halves. The first half was challenging, reflecting a halt on most orders given high tariff uncertainty, resulting in revenues of only EUR 16 million.

There were questions around which product category under the tariffs our equipment falls and what level of tariff applies for that category, which meant orders were pushed out. However, around May, orders started rebounding strongly, with the second half showing strong and encouraging financial performance recovery.

Note that despite a challenging first half, we ended 2025 with a very strong order intake of more than EUR 90 million and a very healthy order book of EUR 51 million. In the second half, we saw revenues of around EUR 50 million and an EBITDA margin of about 13%, getting somewhat closer to margins we have historically seen in 2022 and 2023.

Our EBIT margin in H2 2025 was 8.5%. As I will explain shortly, we believe we have levers to further increase that margin during 2026.

Turning to working capital. Summer 2025 was not only operationally challenging year, but also there was a 9-month strategic review period on the potential M&A transaction until October, which meant that no capital was raised either during the de-SPAC process completed in April 2024 or since the de-SPAC process.

The combination of improving business performance and no financing being completed led to a temporary working capital deterioration, particularly as we supported the business recovery. As shown here, total working capital moved to a negative EUR 13 million at year-end.

To support our growth trajectory in normalized operations, we estimate approximately EUR 20 million of working capital investment will be required in total during 2026 before considering any additional growth investments. We have now mostly replenished the working capital gap.

Regarding the balance sheet, our priority has been to simplify and strengthen the capital structure. End of last year, we converted our liability to the private equity investor of our Chinese operation into equity, and our core shareholders waived EUR 5 million of debt.

We are currently further significantly reducing financial debt, primarily through the conversion of loans from our shareholders to equity. This will reduce debt in the next few weeks by a total amount of around EUR 31 million.

At the end of this quarter, our debt profile will be substantially cleaner and mainly consist of low-interest-rate property leases of around EUR 10 million and the $30 million convertible announced in January, of which $18 million remains outstanding. Once this instrument is converted, pro forma debt would be around EUR 23 million, which we regard as a sustainable leverage level.

Additionally, last week, we secured a $30 million standby equity purchase agreement with an institutional investor. This agreement gives us flexible, on-demand access to capital entirely at our discretion, which is important because it provides us a prudent financial backstop while minimizing immediate shareholder dilution.

Shares can be placed flexibly at a 3% discount to average trading levels if and when investments are required. In short, our balance sheet is now in a good position and significant financial flexibility is available, and we are better positioned to support our next growth phase.

Alongside balance sheet improvements, we launched our operational efficiency program. This program not only intends to reduce costs, it is also helping to make us a leaner, faster-moving team.

Important to note that our manufacturing footprint in Germany remains rightsized and therefore unchanged. However, over the past 2 years, our German overhead cost base increased faster than revenues, particularly in G&A and R&D.

To address this, we initiated the so-called Sprint program in January this year. The program targets at least EUR 4 million in sustainable annual savings.

We can achieve these savings mostly through short labor programs and other voluntary head count reductions and keep onetime restructuring costs to approximately EUR 0.5 million. This means a very attractive payback profile and provides us an important margin tailwind for 2026 and beyond.

Additionally, we have started to reduce our listing-related costs such as audit, legal and D&O insurance, some of which had been particularly high coming out of the de-SPAC process. This is ongoing, and we will -- some of the effects -- we will see some of these effects this year and more in 2027.

Finally, let me briefly touch upon our current trading. We delivered EUR 18.2 million in revenues during the first quarter, with order intake of EUR 13.6 million and an order backlog of EUR 49 million at quarter end.

Please note that our order numbers always refer to equipment and processes, not service and spare parts, and also that Q1 historically has been our weakest quarter. Regionally, we continue to see very strong momentum in China, while some European orders have been shifted into the summer and second half of the year.

On current visibility, we believe that we will see a significant uptick in order intake during Q2 compared to Q1. Based on current visibility, we reaffirm our 2026 guidance: revenues above EUR 100 million, adjusted EBITDA margin significantly above 12% and order intake of approximately EUR 114 million.

To summarize, we strengthened the balance sheet, improved operational execution and see strong commercial momentum in our new product portfolio. We believe SCHMID is entering an important growth phase, and we look forward to updating you on this process.

Thank you very much.

[Operator Instructions] And with this, we will start with the first virtual hand from [ Sebastian ].

Can you guys hear me okay?

Yes.

Okay. Great.

So it's great to see the momentum in the business, the cleaning up of the balance sheet. I wanted to ask maybe just on the current order book, how much of it is tied to advanced packaging and AI-related infrastructure versus your more traditional PCB and industrial electronics demand?

And how should we think about that mix shifting over the next 12 months?

Thank you very much for your question, and I would like to answer that. About 60% of our order intake of the last 12 months is AI infrastructure or optical module related, and this mix is expected to move towards about 70% by the end of the year 2026.

Okay. Got it.

Great. And then just on the panel-level packaging adoption cycle, it seems like 2026 is maybe the start of an inflection and then more of that comes '27 and '28.

But could you maybe just give us a sense where we are in terms of your customers really evaluating those technologies versus starting to see some pilot production and then when you think that broader high-volume manufacturing can really begin?

With this panel-level packaging, basically 2 business fields currently converge. One is customers moving from wafer-level packaging towards panel-level packaging, and another is flip chip BGA substrate manufacturer implementing more functionality in their products, such as with glass core substrates.

So we do see this already happening. We are already in discussion for Q3, Q4, bigger projects already happening in order intake this year and being ramping -- or ramping in 2027.

Okay. Great.

And maybe if I could -- just one more question. You brought up the glass core substrates.

Can you just remind us what is the SCHMID differentiation in the process capabilities there versus some of your competitors or some of the incumbents?

Well, with our latest product developments, like the L+, InfinityLine L+ is a full panel-sized CMP system, chemical mechanical polishing system, which is a key equipment for this panel-level packaging with glass core substrates. And as AI infrastructure and high-performance computing continue to demand more compute at lower power consumption and also improved signal integrity, we think this will happen and glass core substrates are paramount to enable the next-generation compute units.

And then we have a further virtual hand from [ Katherine ].

So I think it was on Slide 8. So based on the expectations for the adoption of advanced packaging techniques, how would this typically translate into orders for prototyping and then ultimately high-volume manufacturing?

And which products in particular would you expect to see the highest demand?

Well, these architectural changes we've shown on Slide #8 are multifaceted and have impact on the whole supply chain, so from PCB to substrate to OSAT and foundry. Typically, the required processes are qualified in R&D, then industrialized in smaller volume and ramped for higher volume in manufacturing.

This kind of qualification cycle can take from 1 year to several years. We currently see strong demand for complex HDI multilayer and substrate-like PCB, and we do already have intense discussion with flip chip BGA substrate players ramping new factories next year, which will require also the newer products like the C+ and the L+ I've shown earlier.

Great. Okay.

And you talked about some capacity constraints in both facilities in Germany and China. Are you able to say what the plans are to deal with those constraints, particularly considering the growth outlook for '26?

Arthur, are you going to answer this, or shall I?

Sorry, go ahead.

So capacity -- production capacity constraints are currently debottlenecked in China. We are ramping and building additional space and production floor to cope with the demanded capacity.

And as Arthur mentioned earlier, we are having programs in place here for the German headquarters to increase capacity as well. Most of the newer products like the C+ and the L+ and also the P+ are kind of just assembled and tested here.

So our manufacturing capacity is sufficient to cope with the demands we see for 2026 and 2027.

Great. And could I ask a question about the geopolitical environment, just whether particularly the Iran conflict is affecting access to materials that you need to build your tools and whether you're seeing any effect on demand from your own customers?

We don't see any impact on our business from this conflict.

Okay. And then just looking at the -- your FY '26 order estimates, I mean, obviously, the Q1 intake was the low -- is usually the lowest of the year and was less than 1/4 of your full year expectations.

Just curious to understand what gives you the confidence in that full year estimate.

When we are talking with our customers, we are working with our customers closely. And we see a step investment in flip chip BGA substrates happening and starting in Q3 -- late Q2, early Q3 this year.

We are already in negotiations for delivering bigger batches of equipment to our key customers who are ramping capacity for especially optical modules and AI server boards.

Okay. And then I think, Arthur, you touched on this on working capital.

I think there was kind of a high level of trade payables at the end of '25 which you've been paying down so far this year. Could you give us a sense of what kind of working capital requirements might be needed in '26 as your revenues are ramping?

I think in general, if you look at '22 and '23, we had sort of 7% to 10% working capital percentage of sales. And I think that's a good indicator of our future, including 2026.

Keep in mind that we -- on most equipment orders, we get about 30% of cash advance from the customer, so that obviously helps to keep the working capital at a pretty reasonable level.

Great. Okay.

And then just one final question from me. I don't know if you'll be willing to answer this one, but are you able to give us any kind of target gross margin and EBITDA margins that you'd be aiming for in the medium term?

What I would say is that if you look at '22 or '23, we had around 20% EBITDA margin and sort of, let's call it, 14%-ish EBIT margin. And I don't see any reason that we wouldn't be able to achieve those margins, whether we completely get there this year is not something I can say at the moment, but definitely something that's achievable in the medium term.

And then we move on with the next person in the queue. So this is [ Andrew ].

So a little bit of a follow-up to the last question, but in the context of the $100 million revenue guide and EUR 114 million of order intake, can you just talk a little bit about the ramp from, I guess, today's EUR 49 million of backlog to that target, how you expect it? I think you mentioned you expect Q1 is typically seasonally weak.

How you expect that to ramp into the back half of 2025?

Roland, want to comment or you want me to answer that one?

I did not completely understand the question. Can you...

The question was the ramp-up of the orders. I mean I would say that clearly we see this more back-end loaded.

So as we -- as I noted, I think we can see that the second quarter is more order intake activity as Q1. In Q1, you have Chinese New Year and you have sort of European holidays.

It's typically weaker intake -- order intake. The second half will be stronger than the first half.

And yes, we generally see this more back-end loaded. The reality is also there are some larger equipment orders where timing is always a bit unclear.

So it can be a little bit lumpy in any case. Unless Roland, do you want to add anything to that?

No. I mean that's the nature of our equipment business.

We have orders on hand until -- or order intake done until, let's say, July, August. We can still convert that into revenue as our equipment is, as Arthur earlier mentioned, we get 30% down payment and we produce the equipment and we recognize revenue when we ship the equipment.

So orders taken until July, August will still be recognized as revenue in the fiscal year. All the other orders which will be collected later will be taken as order backlog into the next year.

And for 2027, I expect it will probably take EUR 67 million order backlog into this year, which is always helping also our Q1, our weaker order intake in Q1.

And then on a related point, how do you see the mix shifting into the back half of the year? Is it expected to look similar to the latter of '25 and the beginning of '26?

Or do you expect the remaining order backlog as it plays out to come with a different product mix?

The product mix will -- what we recognize, the product mix is moving towards more AI infrastructure and optical module-related products, which means more sophisticated product lines of H+, V+ and also C+. And this is expected to move to about 70% in terms of the mix by the end of the year.

And order backlog for 2027 is expected to be at about -- so early 2027, what we will cover and carry forward is about EUR 60 million to EUR 70 million of order backlog we will start into 2027.

Got it. And then just one more question.

On the advanced packaging side, you highlight the shift from panel level to wafer level. Curious what you're seeing from your customers.

Are they in pilot and R&D stages? How the qualification process works?

And curious how you see that ramp into potentially higher volume manufacturing.

When you look at the whole supply chain, it's in different stages. So we see panel-level packaging already starting probably 10 years back in small R&D lines.

We do see a bigger project in the U.S. in Covington with glass core substrates already running in small volume.

And we do see other big player driven by Intel and other big OEMs lining up now for small and larger volume. We do see this tipping point or the conversion then here in 2027.

And with this, let's take a look to our written chat. And there we have a first question.

So it says, can you tell us more about U.S. activity?

Well, in the U.S. sales side, on the sales side, we are working closely with the big player in the U.S.

from the OEMs to PCB and substrate manufacturer. We do see big investments also starting there in Q3, Q4 this year.

So for example, TTM has announced some expansion. And also, Intel is driving the whole supply chain, not just in the U.S.

towards the adoption of glass core substrates. So our U.S.

market work or our U.S. customer relation is continuing and we do see some significant investments also in the U.S.

happening.

And next question, can you share who are -- any of your major customers are?

Competitors, right?

Competitors or customers?

We're not going to talk about the customers, we can't name them. There was also a question on competitors, which I think Roland can talk a little about.

Yes, we do have one European competitor delivering smaller equipment, more simple equipment on horizontal equipment. We do have competitors in Asia Pacific, in Taiwan and in Japan, also in China.

But as mentioned earlier, SCHMID has done a lot of lessons learned in the IC substrate business, and we are recognized by the market and by the customers as the premium equipment supplier for best yield output. And as the complexity of those products is increasing and also the package sizes are increasing, yield is becoming paramount because you will waste a lot of material and a lot of money if you produce defects.

And this is why we currently win projects even against low-cost competition as our customers also can do the math and see when they buy SCHMID equipment, they will have a better outcome of the whole investment.

And then we received a couple of more questions. Will you be initiating coverage by Wall Street analysts?

Not much I can say. Yes, we do expect some coverage going forward, absolutely.

Great. And the next question is a bit longer.

Regarding your joint solution with TRUMPF for glass substrates, so through glass vias, what is the current status of the qualification progress with major chip manufacturers? Are you still in the pilot phase or are you already seeing indications of orders for mass production?

So we cannot talk about qualification process or status with our major customers, but we are continuing on this. It's not just TRUMPF.

It's -- I mean TRUMPF, we are cooperating for the TGV process, for the through-glass via process. There are also other market player who are offering this kind of technology.

But yes, we do see this is going beyond R&D and beyond smaller volumes. That's what I was mentioning with what we will see in the second half of this year, we expect larger orders for this kind of new device architectures.

Next question. Can you please provide information about the institutional investors that provided loans to the company?

I think nothing other than what's disclosed in a 20-F.

All right. And then how much capital do you estimate you will need to expand production?

And what have you looked at having customers to help finance expansion, whether directly or through order commitments?

So I would say that our production is not very capital intensive. We have very little machinery here.

You can see that historically our CapEx has always been around EUR 1 million or less. It's a lot of assembly work.

And therefore, any expansion would require very limited CapEx. And the other thing I would say is that our customers, as I mentioned, pay about 30% of cash advance for any order in general, there's some regional differences.

And obviously, that helps us on the working capital side. Those -- yes, that's it.

And by now we have one question left. It's a bit long as well.

Intel, TSMC and Samsung are obviously big key customers. How are they approaching the glass substrate opportunity?

Are you their key supplier? Are they approaching the bottleneck risk to advanced packaging and glass substrate differently given the current procurement environment?

Well, yes, they are indirectly our key customers, so we are key supplier to their supply chain. As you might know, Intel is not maintaining any own facilities for panel production or PCB or substrate production.

They rely on Ibiden and AT&S, Unimicron and similar players. TSMC is moving forward with 310x310 millimeter panel, also thinking about implementing glass in those kinds of panel sizes.

And Samsung, we are in touch, but also with Samsung's supply chain more or less, we do see with SEMCO glass core substrates moving forward. And as mentioned earlier, these glass core substrates fuel the AI infrastructure and high-performance computing with lower power consumption and improved signal integrity.

So this will happen, and glass core substrates will be paramount to enable the next generation of high-performance computing at lower power consumption.

And this answer concludes our call for today. So thank you very much for joining and you've shown interest in the SCHMID Group.

So from my side, I wish you all lovely remaining day and hand back to Arthur and Roland for some final remarks, which concludes our call for today.

Thank you for joining our first formal investor call and look forward to speaking to many of you in the future.

Thank you very much.