Nabaltec AG (NTG) Q1 2026 Earnings Call Transcript

Good morning and welcome to today's Q1 earnings call of NABALTECH. Today's presentation will be held by Management Board Members Johannes Heckmann, he's the CEO of the company, and Günther Spitzer, he is the CFO of the company. The presentation will, as always, be followed by a question and answer session. To ask a question, you have to click the raise your hand button, which you see on the bottom of your screen. And I explain that again in detail afterwards. But with this, I will hand over the word to you, Johannes. Please go ahead.

Thank you, Philipp, for the introductory. I also want to welcome my colleague, Günther Spitzer. Welcome, everybody who is attending today's Q1 earnings call meeting. And I'm pleased to show you the actual financial figures of NovalTech. For those who have not much to do with Norvaldeck, one of the first listeners, a short overview of brief. As I said, we are a specialty alumina and hydroxide manufacturer for flame retardants materials. We are headquartered in Schwandorf, Bavaria. And in addition to our main production site in Chwanda, we also have two operational sites in the US. In the 2025 financial year, the group, as you can see, generated revenues of 197 million euros and an operating result of 15.2 million euros with an EBIT margin of 7.7%, with around 500 employees who are active worldwide and have an export ratio, a strong export ratio of 76.7%. Our sales department is supported by a lot of distribution partners we work with to supply around the globe. We have been operating, as you can see, in a long time, since 1937. Now coming to the two product segments as we report also, here you can see an overview of the two segments, the functional fillers and especially the aluminas with the correspondent revenue and EBIT margin for last year. Of course, as of the magnitude with 144.1 million in revenue, the functional filler is definitely our key product segments and the aluminas are much minor. The growth driver is definitely the functional fillers with fine precipitate hydroxides for cable and wire industry as well as the visco-optimized hydroxides and bromides for allocations in the e-mobility and lithium-ion batteries in the specially alumina product segment we have especially oxides reactive alumnus and ceramic bodies further development will initially be sideways due to the weak demand from the refractory industry as you also can see on the weaker EBIT margin if you look now in detail to the market segment functional fillers you can see that we have a broad book here of flowers for application fields and they are the biggest market as you can see with 56% in 2025 was definitely the cable and wire market here you what is named under the cable wire market especially daughter cables communication cables and energy cables which are currently the most important and increasing development in the tough market in the battery market segment the yellow one with 12 percent we can we summarize our visco-optimized hydroxides and bromides which are used we still see a differentiated picture in this application fields, where the demand for visco-optimized hydroxides continue to rise, while the sales volumes for bromide remain momentarily low. If you come to the special alumina market, of course, also a variety of applications. As you can see, the strongest are refractory and technically ceramics as a main market segment. With a large number of applications for our products, we concentrate primarily on the European region that's a differentiation to the fillers in 2025 the refractory segment shared a total revenue of 46 percent due to a lower demand in the steel industry but this has now been leveled off as of the coming of this year and end of last year so we see that we have reached the rock bottom now coming to the figures highlights as you can see here a summary of q1 2026 revenues in the first quarter amounted to 53.2 million a decline of 2.7 percent compared to the previous year's figures the sales volumes decreased by 3.8 percent but the average sales price per ton was slightly above the first quarter of the previous year the operating results decreased by 33.8 percent to 2.7 million euros the abit margin was at 5.2 percent in the first quarter of 26 after 20 after 7.5 in the last year the decline in revenues combined with increased energy costs, particularly gas, and higher depreciation and amortization costs were the main reasons for the drop in the EBIT margin in Q1 2026. The earnings per share amounted 2.2 euros compared to 0.31 euros in the first quarter of 2025. If we look at the net debt as of March 31st 26. Liabilities to banks were at 91.3 million plus certain lease liabilities according IFRS 16 of euro 44.1 million which were offset by cash and cash equivalents of 92 million euros as of the reporting date of 31st of march 26 this brings the group's net debt to 3.9 million euros as you can see now coming to the details on the functional fillers segment revenues in the functional fillers product segment decreased in this in this quarter by 2.1 percent compared to the previous year's quarter. Sales volumes were 3.6% lower, while the average price rose slightly by 1.5% in comparison to last year. The start of 26, particularly in the month of January and February, was not satisfactory and weak in this segment. In our main product area, fine hydroxides, revenues decreased increased by 8.4% in the first quarter compared to the last year's. Brimhide revenues were down at 8.5%. Only the products area of visco-optimized hydroxides recorded here a dynamic growth of 28% increase in revenues in the first quarter, which proved and confirmed our expectations in this field. at 3.3 million the operating result in the functional filler product segment is with 1.5 million below the level of last year in addition to the decline in revenues increased energy costs and depreciation and amortization are weighing on the ebit in the pro in this product segment particularly depreciation and amortization increase from 2.1 to 2.7 million due to the capitalization of various projects especially the Burmite project the capital expenditures in this segment amounts to 7.2 million in the first quarter investments in expanding capacities for the risk optimized hydroxides and gas-fired boiler for steam generation were the main capex steam boilers is already in operation where the risk optimized hydroxide project is still ongoing in being erected. So this is not activated yet. Let's come to the specially alumnus. Now my navigation, it takes a while. Sorry about that. Oh, it was just a delay here. I'm sorry. This is not working properly. No, it took a while. Somehow there is a problem with the line. coming to the special illuminas if you look at the revenues in this product segment the revenue was 4.6 below previous year's quarter however revenue is higher than in the previous three quarters so this is optimistic the sales volume decreased by 4.4 percent compared to the same quarter of previous year the average price was nearly at the same level as last year so we did not see a deterioration here. Cesare McBody's product area recorded a 7.6 increase in revenues compared to the previous years due to higher sales in the field of catalysts for hydrogen applications. As in the previous year, EBIT for the first quarter was negative at 0.3 million. It is largely in line with a prior year's figure of 0.4 million. Rising gas price, in particular, weighed on the quarterly result. We assume that the bottom, rock bottom, has been reached now, as I already mentioned in this segment, and expect an improvement in the second quarter. If you look at the capital expenditures, these amounted to 1.7 million in the first quarter of 26. Here, the last part of this amount dedicated to the expenditures of the general overhaul of the rotary kiln, which has been now finalized and commissioned. Now I want to hand over to Günther Spitzer, my colleague, who will guide you through the profit and loss of Q1 26. Please, Günther, go ahead.

Yes, thank you, Johannes. Let's continue with the profit and loss statement of the group for the first quarter of 2026. Our revenue in the first quarter of 26 decreased by 2.7% to $53.2 million. Johannes has already explained the reasons for this. In relation to our sales forecast for the entire year 26 with growth in the range of 4% to 6%, we will have to catch up in the coming quarters. We currently expect a strong second quarter and continue to anticipate year-over-year revenue growth in the second half of the year. Total performance decreased by 5.5% to $52.3 million, while finished goods inventories increased by 0.2 million in the same period of the previous year. they decreased by 1.1 million in the first quarter of 26. The decline in inventory is related to the overall of the rotary kiln. Gross profit amounted to 26.4 million and was down 1 million or 3.6% on the year before. In particular, unexpectedly high natural gas costs resulting from the iron war are weighing on gross profit. EBITDA decreased by 0.6 million year-on-year to 6.4 million, which corresponds to an EBITDA margin of 12.2% after 12.6% in the first quarter of 2025. The decline in EBITDA is attributable to a lower gross profit combined with a slight increase in personal costs of 0.2 million. Conversely, other operating expenses decreased by 0.5 million to 9.5, primarily due to lower exchange rate losses of 0.4 million. Depreciation and amortization arose sharply by 0.8 million to 3.6 million in the first quarter of The main reasons for this increase were the scheduled commissioning of various capital projects, including the capacity expansion at Burmite and the capitalization of a lease transaction in accordance with IFRS 16 for the logistics hub at Weserport. Accordingly, the EBIT margin amounted to 5.2% in the first quarter compared to 7.5% in the year before. Functional fillers achieved an EBIT margin of 7.6% while the specialty alumina segment was negative with an EBIT margin of minus 1.9%. Earnings per share amounted to 20 euro cents. Now I come to the balance sheet. Total assets increased by 11 million to 311.7 compared to the end of 2025. This was primarily due to an increase in property, plant and equipment of of 10.7 million to 161.1 million. This includes assets under construction amounting to 32.3 million, reflecting our ongoing investment program in 2026, and new in the balance sheet, lease rights under IFRS 16 of 4.6 million euros. The leasehold rights are related to the VESA Port Logistics Hub. Inventories decreased by 7.8 million to 43.1. This is mainly due to a seasonal effect as raw materials are purchased only in limited quantities during the cold season. As a result, the value of raw material inventory at the end of March 26 was 6.9 million lower than at the end of 2025. Receivable and other assets decreased by 11.5 million primarily due to the reclassification of 15 million fixed term deposit maturing in April 26 to cash and cash equivalents. Accordingly, cash increased from 72.3 million at the end of 25 to 92 million at the end of the first quarter, 26. On the liability side, equity amounted to 160.8 million, an increase of 2.5 million compared to the end of last year. The equity ratio is 51.6%. Non-current liabilities of 128.2 million include provisions for pensions of 30.4 million, bank liabilities of 90 million and leasing liabilities of 3.9 million. Current liabilities increased by 3.9 million and include higher trade payables of 1.3 million and higher accruals for personal expenses of 1.2 million compared to the end of 25. A brief look at the cash flow statement was slightly higher compared to the previous year's figure of 12.9 million. The cash flow from investments in the amount of 8.9 million includes the expansion of production capacity for viscosity-optimized hydroxides, the overhaul of a rotary kiln, and measures to ensure a reliable steam supply. Cash flow from financing activities amounted to zero in the first quarter. Cash totaled 92 million euros at the end of March 26. For the next slides, the outlook for 2026, I will give the word back to Johannes.

Thanks, Günther, for analyzing and presenting the financials in detail here. I just want to give you now a short outlook as we see the oncoming quarter in 2026. As you know, the order situation in 2026, we will see continue to be strongly influenced by short-term factors and high volatility. The visibility which is reflected by our customers is still mixed. Also, despite the situation, we expect revenue growth in the range of 4% to 6% for this year compared to the previous year. We can see that now the situation, despite this volatility, has improved compared to the first quarter. So, we can confirm the revenue growth as is. On the earnings side, we expect an EBIT margin in the range of 5% to 7%. The lower EBIT margin compared to last year, where we had come out with 7.7%, is primarily due as you can read already due to the higher costs of material, especially for raw materials and energy. And in addition to due to the significant increase, as I mentioned and got to before in depreciation and amortization due to the capitalization of the various projects which were shortly mentioned that during the presentation yeah then I think we are done with the presentation you can see the financials where we present ourselves the financial calendar here we will be attending various investment conferences still I would then hand over to Philip again to moderate the Q&A session and I'm very happy to answer your questions good myself of

course yes thank you very much Johannes so as said we will now head into the Q&A as I said in the beginning questions will only be taken by our audio line in order to do so I would ask you to click the raised hand button which you see on the bottom of your screen. One additional information for those who ask question in written form before the call, we will ask you to also raise your hand again and ask the question verbally in order to the question being answered. And with that, we see the first raised hand by Christian Zunter. Christian, you can unmute yourself now.

Good morning. First question would be on the development of defined hydroxides so down roughly eight percent can you elaborate a little bit on the drivers behind it because it historically this one has always been quite stable was it volumes for the prices and if it was volumes could you share some insight on what industry or end markets were particularly weak um it was definitely uh on volumes as you could read that the prices were fairly not slip declining so much it was it can be brought down to a few customers

i think it was there is no trend to be seen some customers have taken down their orders but it was not it is a differentiated picture of the reasons was it a high inventory and they just uh lacked uh was it to some other reason but that's not a clear picture the what i can say the good news is it changed now in the second quarter it turned around and so i would just read it as a as a short period of time so there was not um a critical uh structural uh decline to be seen it was really some just a few uh bigger customers who either were high inventory

but as a as there is a turnaround now i would just see it as a q1 effect okay and then it's kind of a follow-up question on this you already said that you see pickup in q2 what you're currently seeing in terms of demand would that already be sufficient if it carries on throughout to year to meet the guidance or do you need additional demand pickups in the second half to to get into that range good i mean we certainly need the whole year to to fulfill the forecast as we or the outlook i would not say we see a turnaround but seven

certainly we need a consistency throughout the whole year yes but what you're currently seeing in the second quarter or especially right now this if this continues throughout the year this would be sufficient yes okay and could you quantify how big your exposure to data centers is within the functional filler segment or also within the the fine hydroxides product group no i we cannot we have not this inside view because we are so diversified and for those who are not targeting norbertek in specific so much we have two client bases we have compounders who are the the supplier of the cable and wire manufacturers for the polymers and a bigger client clientele is our is all the compounders and the compounders don't really disclose or um to us where their compounds go do they go into electrical cables for energy storage for energy supply or do they go into other cables so this visibility was this in detailed uh visibility we do not have it's hard to find out uh you only can get the feeling if you ask the big players like nexons and prismian where their direction goes right and one one one last question on boom might has anything changed in terms of customer rfqs anything like this that or is it still really weak it also maybe compared to last year is it more more more inbounds anything that could point towards the sentiment changing or at least stabilizing also i would say the last one it's it's more stabilizing on a low level but as i said we get a lot of inquiries we have a lot of products being approved there is interest but there is no substantial move in picking up more volume as i said the customer base we have who take constantly volumes are there we see here and there uh an increase that depends certainly if if a customer gets a bigger project dedicated then we will see that with our existing ones but now an absolutely trend mover move we cannot see momentarily it's it's still lacking especially in europe as i i mentioned very often there are enough sheet manufacturers of separated manufacturers in europe existing what they lack is really the pickup by cell manufacturing And as most who are familiar with this e-mobility, there is a lack of cell manufacturing in Europe. Now there are rumors that the Chinese want to move into Europe. We will see what comes. But this is the main reason. Our Korean customers in Korea, our Japanese customers, and even the Chinese customers are there. but there is such a a big um price war and over volume over capacity in china itself um that this gives a lot of uh headaches to to the whole industry i've just read that 91 of the cell manufacturing is meanwhile concentrated in china and this uh is a one reason why the separator markets outside is just struggling okay perfect that's it for now thank you thank you Christian for your question oh there is another

question coming from Harry Kilby from Addison Harry you can you cannot meet yourself now thank you for the presentation um just two questions from me when you expect to the capacity expansion in the visco optimized to be complete and how do you how does this then how do you expect this to affect your product mix and could you possibly give us a little bit more detail on what the margins are like in this segment are they higher than the fine hydroxides for example and then just a sort of other follow up could you possibly just remind me on your natural gas heading strategy in the year and if

you expect sort of if it if the prices sort of stay at the levels they're at or are you sort of mitigated against some of that versus heading okay first question visco optimized uh commissioning of the plant is now scheduled uh end of year first quarters 27 of course we will have there as transition time uh of about three to four months to get uh quality approval for all the major customers as you as we move in an a mobility or in the in the car industry they have the 4m change management for the intermediate time of course we have an existing manufacturing site which is highly staff intensive and for the new plant we will do a fully automized plant how does it affect definitely then it has a capacity of about for the viscose itself 30 000 tons and it can translate into a step up of revenue of up to 40 plus million euros as is as of prices as of today in terms of comparison of margin a bit margin is uh it's uh above the abit margin of fine hydroxides so it definitely is an important improvement in the mixture of results for novel tech coming to the gas philosophy of the gas tragedy yes we are hatched until september this year for 50 of our volume um and for the rest we float momentarily we try to rehash to continue that momentarily the prices are not in favor but we monitor this very strongly day by day and week by week and if a point in time comes we definitely will use that open window to hatch at least a certain quantity though it's not our mentality to speculate amazing thank you very much for that all right Harry thank

you very much uh for your questions uh we see uh uh another question coming up from uh dominic keening uh dominic you can unmute yourself now please go ahead well here's folker boss is speaking from barter bank just used another uh mobile as my mobile did not work obviously do you hear me now yes yes okay cool perfect thank you very much and yeah thanks for taking my question um first one would be on coming back on on current trading it's good to hear that you said a second quarter uh showed an improving uh trend here could you confirm that both segments uh returned to growth in the um second quarter as of now or the first question and second question is a bit of uh yeah for curiosity i mean in your press release you gave encouraging a mark remarks that you benefit from a infrastructure data center projects for example in my view these building activities are at full swing in the moment and we see at other companies like whole teeth which are involved in these kind of building activities I can tremendously benefiting here so my question would be why do you think never take is not able to to write the

sentiment wave so to say why it is not seen as an as an crucial provider of offer of products for these kind of data centers going forward thank you as the first question was regarding a pickup or an improvement in sales of both segments I can answer said with an yes definitely we see on both segments that there is a pickup but still with a volatility and short visibility but there is higher demand second the impact on on this construction what you mentioned we have to look at in a very differentiated way first of all what drives our volume starter center starter centers yeah where uh i forgot to there was a question i think christian said this about the visibility of can you say what share of daughter centers um what we can what we were told by a customer but this was united states related that they are now starting to slowly install more capacity in anticipation of all these data center erections. I think it takes some time. I don't know now, Volker, what you relate to construction. Yeah, construction is the one side until these data cables and the interiors are designed or equipped. This takes, it's always a delay, but I'm not the expert here. You have to talk to the cable and wire manufacturers. I think we see a stronger demand. Is this affected to the existing data center buildup? I cannot tell. The big moves still are to come like Microsoft and there's no secret said they want to build up now in the Cologne area, this data center, it's still ahead of that. The impact probably on our business unit will be more seen in 27 or 28 ongoing. so this is not as an intermediate one-to-one move where we see and and in where we see a translation in immediate volume ramp up is with visco optimized in the car industry any car which is sold more in electromobile is practically translated in more volume of our products so there we have a clear market related visibility whereas with the other products due to the fact that we are low in the supply chain you know in t1 or 2 that makes it a little bit more difficult to see the immediate impact that's all i can say momentarily but uh i um but i i'm sure with with an announcement of one of our most important customers us that they are now starting ramping up in anticipation that's a good sign that they get themselves into a position to follow the market yeah thank you for sharing your you on that I mean seems that it's a bit of you are a bit of undiscovered potential profiteer if then the the building activities will really pick up and more demand of these cables are needed it I

wouldn't think so okay thank you very much and all the best thank you yeah Thank you Volker for your question and for the moment we do not see any further questioners lined up in the queue so if there are any further questions I would ask you to take the opportunity now and raise your virtual hands let's maybe give it another moment but that does not seem to be the case. So with that, I will hand back the word to you, Johannes, to give some final remarks to the listeners. Thank you.

Thanks everybody for attending. Thanks Philipp for the moderation here on this Q1 earnings calls. I just want to summarize. We see a move in the market still even if the market is a little bit shaken but with the momentarily picture on our clients i am optimistic that we can move forward as according to our forecast so this is a good news even with the geopolitical situation in the moment we have a quite good chance to participate in the growing market thank you very much for everybody and hope to see you at some conferences or in the next earnings call thanks everybody