Aebi Schmidt Holding AG (AEBI) 2025 Q2 法說會逐字稿

The Aebi Schmidt Group Second Quarter 2025 Earnings Call.

(Operator Instructions)

Please be advised that today's conference is being recorded. I would now like to send the conference over to your first speaker today, Randy Wilson, Vice President, investor relations. Please go ahead.

Thank you. Please turn to slide 2 for a safe harbor statement.

Today's conference call contains forward-looking statements which are subject to risks that could cause actual results to be materially different from those expressed or implied. Primary risks that management believes could materially affect our results are identified in our forms S 4 and 10Q filed with the SEC.

We'll be discussing non-GAAP information and performance measures which we believe are useful in evaluating companies operating performance. Reconciliations for these non-GAAP measures can be found in the conference call materials.

Please turn to slide 3.

Before we begin today's presentation, we wanted to share details regarding the financial reporting framework following the merger of Aebi Schmidt Group with the Shyft Group on July 1, 2025, which are detailed on the slide.

Please note that for comparability purposes, adjusted EBITDA is not adjusted for non-cash stock compensation.

Turn to slide 4, and I'd like to introduce the speakers for today's earnings call in the agenda for our presentation.

Barend Fruithof, Aebi Schmidt Group CEO, will provide the company overview and deliver the concluding remarks. Steffen Schewerda, CEO of North America, will cover the performance and developments in the North American market. Henning Schröder, CEO of Europe, we'll discuss our Europe and rest of world segment, and Marco Portmann, Group CFO, will provide a financial overview.

The team looks forward to providing a comprehensive introduction of the company's operations across regions and exciting progress underway with the recently combined companies. Now I'll hand the call over to Barnes. Barn.

Thank you and good morning. I would like to personally welcome you to Aebi Schmidt's group's first earnings call as a public company. My name is Barend Fruithof, and I have been the group CEO of Aebi Schmidt since 2017.

Since I joined the team and I have grown a Schmidt from a niche agriculture products manufacturer to a specialty vehicle market leader with strong profitability, I'm honored to lead the combined company after the merger with the Shyft Group, and it's a pleasure to introduce ourselves.

Now turning to slide 6.

In the first half of 2025, Aebi Schmidt made significant progress across multiple fronts, positioning the combined company for strong future growth.

Despite a challenging geopolitical environment, Europe achieved double-digit organic growth complemented by landmark deals in North America and other regions, contributing to a very strong $1.1 billion over the backlog.

The merger integration is moving ahead swiftly with the new organizational structure effective on day one and additional significant synergy opportunities already identified. The integration of our commercial truck business. Monroe with Royal, [Dormac and ITU] is also progressing very well, and Aebi Schmidt has a local for local production strategy, avoiding significant impacts from tariffs with a strong US production base.

Turning directly to slide 7, I would like to introduce the newly combined company to you. Aebi Schmidt stands out as a global leader in specialty vehicles delivering innovative and tailored solutions across key markets. With $1.9 billion in net sales in 2024, the company operates 16 production facilities and employs 6,000 people worldwide.

We are present in 17 countries supported by dealer partnerships in over 90 additional locations. Our business focuses on five main markets airport injustice, commercial trucks, goods transport, municipal and agriculture.

This diverse portfolio highlights Aebi Schmidt's commitments to specialized application and customer centric innovation in the specialty vehicle industry.

Moving on to slide 8, our strong leadership across multiple key markets and segments highlights our growth strategy.

The total addressable market across all our end markets is nearly $12 billion according to management estimates. This market potential highlights the large opportunity set for Aebi Schmidt to grow and capture additional market share. We hold top positions in several key markets. We're number one on our relevant airport segment, both in the US and in Europe.

We're in the TOP3 for commercial trucks in the US. We're a leading producer of walking lens. We are now the one in heavy duty snow removal equipment. We are the leading producer of EV sweepers, and we are number one in our relevant agriculture segment in Europe.

Our financial results and footprint for North America and Europe and the rest of the world emphasize our broad market reach.

Turning now to slide 9, we are exceptionally well positioned for growth and value creation. As a world class leader in specialty vehicles, we have successfully scaled our operations globally with a strong focus on the highly attractive North America market and a strong presence in Europe.

Our extended portfolio, shared innovation and the customer relations are driving competitive growth.

We are well on track to achieve annual run rate synergies of at least $25 million to $30 million by the 2nd year of the merger closing.

Ultimately, our strategic vision is to generate revenues of $3 billion with a me adjusted EBITDA margin.

Continuing on slide 10, Aebi Schmidt Group and its management have a strong track record of successful M&A integrations supported by our new colleagues from the Shyft Group. The combined revenue growth from 2018 through 2024 of both Aebi Schmidt and Shyft is a proof of our strong M&A track record with successful integrations.

While we are focused on integrating Aebi Schmidt in Shyft, we are continuing to create value with smaller acquisitions. Aebi Schmidt most recently acquired [LA LA] in late 2024. The success of this acquisition is evident with a very strong 62% increase in order intake for the first half year of 2025 compared to the same period in 2024.

Shyft strategically strengthen its policy of business in Florida through the acquisition of Lightning wireless solution which closed end of June. In short, we are very well experienced in M&A, and the successful integration is part of our DNA.

Turning to slide 11, since day one, a dedicated and experienced project team has been driving the integration process, ensuring that targeted synergies are realized. We have identified significant upsides of $10 million, primarily from cost synergies. This is a significant upside potential beyond the target of $25 million to $30 million.

And as I already mentioned in this context, tariffs impacts have been effectively avoided through our local for local production strategy.

This structured approach and positive outlook demonstrates strong execution and value creation from the merger. With that, I will now turn it over to Steffen Schewerda, Steffen go ahead.

Thank you, Barend. Good morning and thank you for the opportunity to talk to you today. First, allow me to introduce myself. My name is Steffen, Steffen Schewerda, and I have been with Aebi Schmidt since 2020 and the role of the CEO for North America.

And prior to Aebi Schmidt, I worked at SAF Holland, a commercial vehicle company where I was responsible for the business in the Americas with the North American headquarters in West Michigan.

Turning to slide 13.

So let me give you a brief overview about our North American business. We're talking about roughly $1.4 billion in sales and an adjusted EBITDA of $107 million. At the end of 2024, we were sitting on a backlog of more than $800 million which represents more than 50% of our annual North American revenue.

As you can see, we are operating in 4 key markets which are airport and chassis, commercial trucks, goods, transport, and municipal, and for each market our products are made to order with a few minor exceptions.

Especially the airport and the municipal side showed very strong demand and very low cyclicality over the last 5 years, and we believe, and what we are seeing is that this will also continue into the foreseeable future.

Continuing on slide 14.

As you can see on the map, our geographical footprint is now much larger than it was before.

So we will utilize this footprint to provide national coverage and also to cross sell our products as we are closer to our customer base. What it also does is that it allows us to strengthen our after-sales footprint and it makes it easier to deploy our field service teams.

When you look at this map, you see that we are present in a lot of the major population centers in the United States, with a few exceptions, and we are looking into opportunities to further expand this footprint where it is necessary and where it makes sense.

Turning to slide 15.

We are focusing a lot on the sales side of the business with basically 3 fundamental pillars. The first one is the empowerment of the sales team. That way we make sure that the sales team has all the tools and capabilities and the autonomy. It needs to be successful.

Secondly, we of course expect execution. We are setting very clear individual sales goals and also require the individual salesperson to document their opportunities and activities. This way we create maximum transparency. And the third aspect is the monitoring of the performance, which happens on a daily and weekly basis.

However, it also includes detailed reviews on an executive level to make sure we provide the necessary support. But also to capture all opportunities, especially the cross-selling opportunities across the entire organization.

And I have to say that in all three aspects we have made a lot of progress already within the last weeks here since the merger.

And finally turning to slide 16.

We are in a very strong position here in North America. For example, we are a leading player in sectors with high growth potential, for example, the commercial truck business.

We also have a proven M&A integration playbook, which is being applied as we speak.

Some of our core markets like the airport market, are very resilient and are showing very low cyclicality. In addition to that, we have very low exposure to tariffs. We have a strong North American production footprint, and in addition, the major portion of our supply chain is also localized.

And last but not least, where it is necessary and where it makes sense, of course, we sell directly to the customer to further improve our margins. This direct interaction with the customers also helps improve our service quality and gives us the chance to further optimize our aftermarket business.

With that being said, I would like to thank everybody for listening, and I will hand it over to Henning Schroder. Henning.

Thank you, Steffen.

Good morning and thank you for the opportunity to speak with you today. Before I begin, I would like to introduce myself. My name is Henning Schroder. I joined Aebi Schmidt in 2019 and lead the Europe and rest of world segment.

Prior to my current role, I oversaw research and development, product management, and sales for the company.

I joined Aebi Schmidt from Hella, a tier one automotive supplier, where I had a 17-year career with responsibilities, including product management, aftermarket sales, assignments to Asia, and leadership of international operations in North America. Please turn to page 8.

Our strong market position across Europe and the rest of the world is a testament to our strategic focus and operational excellence.

With direct sales in 12 countries supported by a robust network of dealers, we ensure comprehensive market coverage and customer accessibility.

A workforce of 1,500 employees operates from a strategically located production sites in Europe, enabling scalable production to meet diverse market demands.

This extensive production capability combined with our comprehensive product range and global distribution network underpins our leadership and customer accessibility.

Please turn to slide 19.

Our sales organization is structured into 4 regions international, covering the rest of the world, Southern Europe, Northern Europe, and Dutch, or Germany, Austria and Switzerland.

This structure is supported by 12 local sales organizations ensuring strong regional coverage. The airport sales team operates through direct sales, specialized dealers, and a joint venture in China highlighting our global approach.

Additionally, dedicated after sales and digital teams drive recurring revenue streams through service contracts and subscription-based digital solutions, reinforcing customer engagement and long-term.

Turning to slide 20.

Our European business remains stable and cash generating, consistently outpacing GDP, which highlights its resilience and long-term value.

The region offers a promising growth trajectory with solid returns, supported by a strong after sales business that delivers steady, recurring revenues, reinforcing a robust operating model.

Our extensive local sales network foster close customer relationships and allows us to provide tailored services, giving us a competitive advantage in regional markets. Importantly, we hold the number one market position in our markets with consolidation trends and high entry barriers helping to maintain and expand our market share.

Now let me turn it over to Marco.

Thank you, Henning, and good morning, everyone. My name is Marco Portmann. I'm the group CFO and I had the pleasure of joining Aebi Schmidt Group in April just prior to the closing of the merger.

I have 15 years of progressive financial leadership experience, including a CFO at Swiss Steel Group, a leading European supplier of sustainably produced steel.

So, starting on slide 22, let's have a look at our second quarter results.

At the launch closed on July 1st, we separately present the results of Legacy Aebi Schmidt and Legacy Shyft. For Aebi Schmidt, that's increased by 4% to $278 million with an adjusted EBITDA of $21.3 million or a 7.7% adjusted EBITDA margin.

This is our prior year, mainly due to one-time expenses for warranty and R&D, and the comparison versus an exceptionally strong prior year.

Our battle grew significantly to $745 million with strong momentum in Europe of $53 million or 8% versus year end.

Meanwhile, Legacy Shyft Group experienced a 9% decline in sales to $176 million, primarily due to soft walk-in van sales.

However, profitability improved significantly with an adjusted EBITDA up 26% to $13.2 million, driven by exceptionally strong cost containment prior to the merger.

Shift to the backlog also grew to $323 million, supported by a 65% increase in order intake compared to last year's quarter.

Turning to slide 23 to highlight the combined financial performance of the new Aebi Schmidt Group for the first half of 2025.

Sales declined slightly by 1% to $907 million due to a weaker North America driven by the lower sales of walking vans.

Europe and the rest of the world grew 2.5%, supported by strong demand from airport customers.

Adjusted EBITDA decreased 2% to $65.7 million, reflecting an EBITDA margin of 7.2% due to the slightly lower sales and one-time impacts.

Split between the two legacy businesses, the adjusted EBITDA contributions were $43 million from Aebi Schmidt and $23 million from Shyft.

Importantly, I will combine all the backlogs through to $1.1 billion, indicating a robust pipeline and confirming our expectations for a significantly stronger second half of the year, particularly towards the end of the year, with an expected recovery in North American walk-in vans and improved profitability, especially in Europe.

This foundation positions the group well for future growth and [moor] expansion.

Put on this like 24.

Our financial strategy is focused on substantially deleveraging while preserving the ability to pursue strategic tech acquisitions.

Our combined working capital was $465 million at its seasonal peak during summer, driven by winter product cycles and pre-production efforts to balance manufacturing throughout the year.

Our net debt stood at $446 million as of June 2025, driven by the seasonal working capital needs and one-time impacts from transaction expenses and currency fluctuations as our EUR denominated debt carries heavier in our US dollar balance sheet.

And to note, we view our net debt excluding $59 million of long-term subordinated shareholder loans which we carry at very favorable fixed interest rates of 2.5%. With our commitments to the leveraging, we aim towards the leverage ratio 2.0 by year 2026.

Additionally, we will sustain a competitive quarterly dividend of at least $0.025 per share, balancing shareholder returns with growth opportunities.

Concluding with our outlook and guidance on slide 25.

We expect our strong market momentum to continue with a robust order activity in North America, including a recovering markets and improving margins in Europe and the rest of the world compared to the first half year. For fiscal year 2025, we anticipate sales between $1.85 billion and $2 billion with an adjusted EBITDA ranging from $145 million to $165 million.

And I'd like to emphasize our adjusted EBITDA is not adjusted for non-cash executive compensation, and our guidance is prior to the significant synergy realization we expect to kick in in 2026 with our updated synergy targets of $35 million to $40 million.

With that, I will hand it back over to Barend.

Thank you, Marco.

Let me summarize on slide 27.

The strategic vision of Aebi Schmidt Group to establish itself as a premier leader in the specialty vehicle market targeting revenues of $3 billion and achieving emits adjusted EBITDA margin.

The company is successfully integrating the recent merchant and driving strong financial performance.

We hold leadership positions in key regions such as North America and Europe, reinforcing our market presence. The group is achieving significant deleveraging, reducing net debt, while continuing to invest in growth and to deliver returns to shareholders. Overall, I'm very excited to lead the team in reaching its full potential, creating a powerhouse company.

With that, I will turn over to our operator to open up the line for questions operator.

Thank you. (Operator Instructions)

Matt Kuranda from Ross Capital.

Hey, good morning, everybody, and congrats on getting the merger done. Wanted to start, I guess, with the synergies. It looks like those are coming in ahead of the initial expectations of 25 to 30, maybe just wanted to get a little bit more, from you guys on where the additional synergies were found and how do we expect those to show up in terms of timing, and the adjusted the results and. Just clarify, it sounds like it's not built into the '25 guidance that you gave, so maybe just talk a little bit about how those flow through in '26.

Sure, I'll take that question, Matt. This is Marco speaking.

In terms of synergies, yes, looking at the combined company, we have seen, additional opportunities and we are executing additional opportunities in our operational expenses in terms of external spend and also in terms of middle management layers that. Looking at very critically for a lead organization that we're building going forward in terms of timing, we are not giving an update today to what we previously have announced, which is that we expect 50% net synergy realization by mid 2026 and the full realization by mid-2027.

But you're right, looking also at some non-adjusted one-time expenses like getting entire new roof stocks compliant, we are not expecting a significant synergy contribution in our guidance that we communicate today.

Okay, right, understood, and then maybe just wanted to get an update on the outlook for '25, the combined Outlook, just if folks are plotting it against.

What you know maybe pro forma they were doing combining sort of the outlooks between Aebi and Shyft when you were giving in those outlooks a few months ago might be a little bit below sort of the combined pro forma so can you just talk a little bit about the delta, I guess you know if I look at what I was expecting.

In the pro forma numbers it was a little bit north of $2.1 billion in sales and call it $185 million or so and address the and it sounds like the outlook currently as it stands is more in the $2 billion or slightly below $2 billion range and something like $155 million at the midpoint. So maybe just talk about where the delta comes from currently in the outlook.

Sure, let's take first on the sales side, the point. As we commented in the first half here, we have seen soft walking sales on the shift side and also, of course, that indicative guidance there was already including the full revenue synergies as well.

So that's the bridge there to the upper end of our current guidance of $1.85 billion to $2 billion revenue. In terms of profitability, you're looking at the [2,140 million] that was in the nurture communication.

Keep in mind again, we are not adjusting for the stock compensation. That's the 1st $10 million you have to take off of that. It did also includes the $28 million synergy midpoint expectations which again for this year 2025, we are not including a significant synergy realization in 2025, and that brings you to [17]. Near the top end of our current guidance of 145 to 165 and keep in mind, as we said, we are very confident in delivering that guidance and it's also, of course, reflecting a reflection of the geopolitical uncertainties that we see and that have arisen since that initial communication.

Okay, very clear. I'll leave it there thank you.

Thanks, ma'am.

Thank you.

Mike Shlisky from D.A. Davidson and Company.

Yes, hello, good morning, good afternoon.

Hi there, so looking at the numbers what I had here is that Kind of back things out here, your back half of the year you could tell it's going to be $80 million to $100 million, is that correct? And that's actually higher than what I had, at least at the at the mid point. So I'm kind of curious.

How There's absolutely no surges involved in that 80 to 100 in the back half of the year. Well, I guess, first of all, is that number correct?

So yes, as you can see, we expect not only a stronger second half year, but really a second half year that is well within the expectations. And in terms of synergy inclusion, again, let me reiterate. It is not that we say that the guidance is technically without synergies, but we don't expect a significant net synergy realization this year because the synergies, they will take its time to be fully executed, of course, and to be really kicking in.

And again, there are some longtime expenses. I reiterate the stocks compliance that's required for the full company that will drag us a little bit in the 1st 6 months. We will wash it out quickly and of course in 2026 we will deliver those material signatures going forward.

Okay, that makes sense.

Thank you. I also wanted to just get a little more color on the 50% increase in the orders that Shyft group. What drove that? Is there a certain end mark that drove that, and it sounds like.

Shyft from an EPA standpoint may not be quite at the level it was before the merger. It looks like that's what you implied in your comments and in your slides.

Help me kind of reconcile what seems like a pretty strong order rate with even thought that EBITDA challenged versus your prior ex expectation thanks.

Mike, let me take this one. This is Steffen. Good morning. So what we see on the shift side is that after the softness here in the walk-in band market, we see it is slowly coming back.

The second half will be stronger compared to the first half as we expected, and this will also continue into 2026.

So this is carried by a recovery, a moderate recovery of the walk-In van business.

Okay, and then I leave it that side though for some reason it sounds like that won't be as strong as you said, so could you explain the.

The cadence as to how that came to be on this.

This is.

This is Marco speaking. I mean, look, we're commenting that indeed shifts, yes, if you look at the adjusted ATR that they provided in the first half here, they are on track. But in fact, in our belief with the softness we've seen, we are actually anticipating the former shift business to contribute below the previous guidance at the lower end there at the high 50s for the full year, which is a bit of an update, a bit of a weakness that we see in yes.

Okay, maybe one last one for me about the.

The commentary on things ramping up into the 4th quarter, was that a sales and I comment, I guess you help us figure out the cadence between 3rd quarter and 4th quarter.

Typically in the US there's different holidays than in Europe, for example, the summer holidays over in Europe or, just a little more days off. Just give us a little sense as to how much of that calendar, how much of that is actual business getting better at the year end, and other drivers that make 3 and 4Q different.

Mike, I take that question. So there was a bit of a different picture, if you look at the old Aebi Schmidt group, they have a very, I would say sustainable as well as sales in the shift group we will. See a strong pick up in the 3rd quarter by the end of the 3rd quarter and in the 4th quarter, and our old Aebi Schmidt business in Europe normally makes roughly 40% of their revenues in the last 4 months and also the big bunch of EBITDA.

So we will have a very strong 4 quarter as well.

And as you can imagine, because of the strong backlog, most of these revenues are already secured.

So it's a mixture then of the typical calendar for the combined company as well as an improving Shyft group towards the end of end of the year that's a good way to characterize it.

Yeah, that, that's correct. This is Marco again. The group going forward will have a seasonality with a generally stronger second half year, and again this year, a bit more amplified and pronounced towards really the 4th quarter as well. That's correct.

Thanks Mike. Okay, operator, thanks so.

Much appreciate it.

Thank you.

Your next question comes from the line of Greg Lewis from BTIG. Please go ahead.

Yes, hi, thank you and good afternoon and good morning, everybody and thanks for taking my questions. I was hoping for a little bit more color.

Thank you for the backlog number. It is there any way you could talk through how much of that back like the duration of that backlog, I is that going to be realized over the next kind of year and any kind of sequencing around how we should be thinking about turning that backlog in the revenue.

Let me quickly summarize our backlog a bit, also here, in Europe, it's like 3 up to 4 months. Then if you look at the old, at our old Aebi Schmidt business in North America, if you take, for example, our airport business, that we have lead times. Which are higher than 360 days, similar situation in the municipal business. And if you look at the at the Shyft group, they have increased their backlog, but there we have normally a feasibility of roughly 3 up to 4 months.

And having said this, so we have already most of our revenues for 2025 already secured.

Okay, super helpful and then just realizing this is kind of your first public call out there, I think a lot of us on the call are very familiar with, the ship business, I was hoping maybe you could spend a couple minutes maybe talking about.

You know how we should be thinking near term and long-term around, both the airport and municipal I mean it seems like it's a steadier business. Is that just a function of where we are in a replacement cycle or, any kind of like high level thoughts how we should be thinking about airport and municipal, not only for the rest of this year but more over the next 2 to 3 years just as we think this is an opportunity for Aebi Schmidt to really develop a nice stable revenue stream there.

Answer that question.

Good morning. This is Stefan. I'll take that.

So what we see on the airport and the municipal side is there is a good market activity out there in terms of tenders and quotes. So when I look into our internal sales pipeline and the opportunities I see going forward, it's a very stable situation.

We see that the funding is not disrupted in a major way on the municipalities, also not on the airport side, and it's very snow independent, which is a little bit counterintuitive, but basically an airport, but also a municipality has to have equipment to clear the roads if it snows, 1 week out of the year or 3 months out of the year. So we think and we see a very stable situation.

Okay, thank you very much.

Thanks Greg.

Thank you. This concludes the Q&A for today and I will now hand back to Randy Wilson for closing remarks.

Thank you, operator. I would like to thank everyone for joining today's call. The Aebi Schmidt management team looks forward to connecting with the investment community over the coming months, including the D.A. Davidson 24th annual diversified Industrials and Service conference in Nashville on September 18th.

Thank you for your interest in the Aebi Schmidt Group, and as always, please reach out to investor Relations at investor.relations@www.aebi-schmidt.com. If you have any follow-up questions. With that operator, please disconnect the call.

Thank you. This concludes today's conference call.

Thank you for participating. You may now disconnect.