Ladies and gentlemen, welcome to Vantiva first half 2026 results conference call, chaired by Tim O'Loughlin, CEO, and Lars Ihlen, CFO. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If you would like to register a question, please press star one on your telephone keypad. Just to remind you all, this conference is being recorded. We would like to inform you that this event is also available live on Vantiva's website and with synchronized slideshow. During this conference call, statements could be made that constitute Forward-Looking statements based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the future results expressed, forecast, or implied by such Forward-Looking statements.
For a more complete list and description of such risks and uncertainties, refer to Vantiva's filing with the French Autorité des Marchés Financiers. I would like to hand over the call to Tim. Tim, please go ahead.
Thanks, Thierry. Good day, everyone. Welcome to our first half 2026 results presentation. I will move to slide number four. Let me start with the key highlights of the first half. One of our major achievements of the first half was the successful extension of our debt maturities completed at the end of the period. This is a really positive step in our recovery journey and will help reduce our financing costs on a go-forward basis. On the business front, Q2 unfortunately continued some of the negative trends that we saw in Q1. Our performance was impacted by supply volatility and some pronounced unfavorable phasing within the year. Our broadband activity was almost flat at actual exchange rates, but the demand for the video products continued to decline. Despite all of that pressure on the top line, our EBITDA margin remained resilient at 5.8%, which was nice to see.
Another positive achievement from this period was generating free cash flow. Despite the lower EBITDA, and reduced support from working capital, we were able to maintain some positive free cash flow. Looking ahead to the second half, I am anticipating stronger activity supported by a catch-up in demand due to that aforementioned phasing issue. However, the second half remains dependent on component availability, and it is quite a volatile environment from a component standpoint. Everyone knows and is familiar with the memory issue, for example. Regardless, we are confirming our guidance of positive free cash flow for the full-year. Before I conclude this section, I would inform you that the general meeting will be held. We will hold an extraordinary general meeting in September of 2026 to authorize the transfer of the company's listing from Euronext to Euronext Growth.
We also had intended to have an authorization of a convertible bond issuance at that meeting. We are here announcing that we will delay the board vote and the subsequent shareholder vote of that convertible bond until 2027. If we move next to slide number five, take a look at a couple of key financial figures. Revenue decreased by 14.7% to EUR 734 million during the first half of the year. This decline was primarily driven by ongoing market weakness and unfavorable foreign exchange movements. If you look at it from a constant exchange rate standpoint, revenue declined by 8.9% year-over-year. Despite the pressure on revenue, EBITDA remained solid at EUR 43 million, reflecting the benefits of the implemented reorganization measures and the enhanced operational flexibility achieved across the group.
While affected by lower volumes and reduced working capital support, free cash flow remained positive at EUR 30 million compared with EUR 95 million during the first half of 2025. If we now move to slide number six. Q2 performance remained broadly consistent with the trend observed in Q1. Broadband activity was largely stable in the first half, declining slightly on a reported basis, but growing modestly at constant exchange rates, and it was supported by strong demand in North America versus Eurasia. In video, demand continued to decline significantly, a trend that was exacerbated even more so by temporary component supply constraints. Revenue was also impacted by unfavorable phasing, which we expect to reverse in the second half, supporting a stronger level of activity in H2.
If we move to slide number seven, as mentioned in my opening remarks, we are confirming our guidance for positive free cash flow for the full-year. I will now hand over to Lars, who will present the detailed accounts.
Thank you very much, Tim. Over the next few slides, I will walk you through the H1 results in a bit more details. As Tim just mentioned, revenue decreased by EUR 127 million- EUR 734 million this year. The impact of lower volumes and mix brought EBITDA down from EUR 66 million last year to EUR 43 million this year. This represents 5.8% of sales, a decline of 177 basis points versus last year. After deducting depreciations of EUR 26 million, EBITA stands at EUR 17 million for the semester and reduction of EUR 18 million from last year. PPA amortizations is roughly in line with last year's figures, but we see a significant EUR 40 million improvement in non-recurring items. This is mainly driven by lower restructuring reserves, as we are now reaching the end of our targeted cost optimization program.
This leaves us with a positive EBIT of EUR 2 million, an improvement of EUR 20 million from last year. After deducting interest and tax, the net result for continuing operations was negative EUR 66 million, an improvement of EUR 7 million from last year. Including the discontinued activities, the full group results improved by EUR 227 million to a EUR -68 million. The remaining table on this slide details the components of the free cash flow, which I will cover in more details on page 11. Page nine sets out the components of non-recurring items between EBITA and EBIT, which as mentioned earlier, is mainly explained by the reduction of restructuring costs.
Page 10 sets out the bridge from EBIT to the group's net result. Net interest was in line with last year's figure, but other financial expenses increased by EUR 11 million- EUR 28 million, which is entirely linked to the accounting impacts from the refinancing. As we were recognizing the new debt, we had roughly EUR 28 million of additional costs recognized just for this operation. Taxes decreased by EUR 5 million year-over-year.
On page 11, you can see the variance in free cash flow versus H1 last year. As noted earlier, EBITDA was down by EUR 23 million year-over-year due to lower activity, partly offset by EUR 7 million lower CapEx and EUR 6 million lower restructuring payments. Working capital contributed a positive EUR 57 million variation in the period, versus a positive EUR 118 million in the last period, resulting in a EUR 61 million negative variance year-over-year.
Pension payments decreased by nearly EUR 5 million, while financial payments decreased by EUR 7 million. Cash tax payments increased by EUR 6 million, mainly due to a tax refund we received in the same period last year. Together, these movements bring us to a free cash flow of EUR 30 million for the first half. On page 12, you can see the liquidity and debt position at the end of the period. We ended the period with EUR 21 million in cash on hand and our Wells Fargo credit facility had additional availability of EUR 6 million, giving us a total liquidity of EUR 27 million. The net debt including operating leases ended at EUR 536 million, an increase of EUR 28 million since the beginning of the year. This concludes my presentation, and we will now open the floor for questions.
Okay, thank you, Lars. Ladies and gentlemen, if you wish to ask a question, please press star one on your telephone keypad.
The first question is from David Cerdan from Kepler. Please go ahead, sir.
Yeah. Good afternoon. I have a few questions. My first one is regarding the decline in the revenues. Part is related to something that could be, I would say, resolved soon. Maybe if the environment was normal, what kind of revenues or trend you were expecting? Secondly, do you think that the catch-up effect will be very visible in H2? The last one is regarding the free cash flow. If I am correct, H1 was at EUR +30 million , so it is positive. How do you explain this number? Do you think that at the end, in H2, you should consume some cash or not?
Thanks, David, for those questions. I think, Lars, I will let you handle free cash flow, and I will try to handle the year-over-year revenue decline and the resulting catch-up that we are envisioning here. I think, David, there are some exceptional things happening in the market today related to components and supply. We did have a significant push-out due to some memory supply issues with one of our customers in Asia that had some impact on our results there. We think we catch up on that in the second half. There is definitely a North American broadband phasing impact in the numbers, where we see much stronger broadband demand in the second half of the year versus the first half of the year. I think we are projecting and seeing a stronger broadband second half for the year.
That has really been expected from a phasing standpoint throughout most of the year here. Really TBD on what revenue might have looked like without supply constraints. They are impacting all of the electronics industry and automotive, and enterprise information technology. Everyone has been impacted by the component constraints. I think we will continue to monitor the market and see where top-line revenue lands for the second half, but through good management and prudence, we should be able to maintain positive free cash flow. Lars, do you want to tackle the EUR 30 million free cash flow question?
Yeah, of course. Of course, Tim, and thanks for the question, David. As you see, yes, we managed to generate EUR 30 million of free cash flow despite the lower revenues and EBITDA, and that is mainly coming from the improvement in our working capital situation of EUR 57 million. This is not something we expect will happen again in H2, but we are seeing reductions in the restructuring cost, as I mentioned. We expect them to continue to be less impactful in H2 of the year. Also, as you were mentioning, a bit higher activity, so EBITDA and the contribution from that should increase in the second part of the year.
Even if we do not know we will have a strong working capital variation as we had in the first semester, we are quite confident that we can guide to a free cash flow by the end of the year.
David, is that okay?
Oh, yeah. Sorry. Yes. Thank you.
Okay. Let's move to next question, please.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is a follow-up of David Cerdan from Kepler. Please go ahead, sir.
Yeah. Very quickly, regarding your liquidity, do you think that this is enough for, I would say Q3? If not, what is the alternative regarding the liquidity, which was, if I am correct, EUR 21 million?
Yep. No doubt liquidity is a bit tight these days. We are expecting to see improvements in the second semester of this year. We should have more availability on our Wells Fargo facility after refinancing. That is something we will see. We will also see better liquidity from higher activity. It is a bit tight at the end of Q2, but we expect this to improve into the second half of the year.
Okay. Just regarding the pricing of your products, if I'm right, there is an inflation in many costs. Do you think that you will be capable to pass through this cost inflation to your client? Are you protected because of the nature of a contract or anything like that? At the end, if there is an inflation in term of production cost, this should also support maybe a return to a positive organic growth thanks to a pricing effect. Do you think that it could be credible scenario?
I'll take those questions, and thank you, David. Appreciate that. They're very timely questions. Obviously, unable to release anything specific about any of our customer contracts and relationships. We do think, though, that the situation today in the market with many of our clients is a situation where pass-through of some of these extreme cost increases will become the norm in the market and will be quite necessary. There is extreme appreciation that can potentially exceed the margin profile of our industry in some of these component categories. We've seen within our space and within these related spaces, even in the mobile phone space from very well-known players, that people are passing through these inflated costs through the ecosystem.
I think there's good collaboration and cooperation from our valued customers, and we're working through with them, trying to find the exact balance that is necessary for the rest of this year and into 2027, as we see the costs shifting. The second part of your question is about these rising costs and if it will have a positive impact on our results. You know our guidance Positive free cash flow for the second half of this year and the retraction of any guidance on top line. I do think next year in 2027, we'll have to get a little bit closer to see what the balance is of overall service provider CapEx budget and spending relative to the ultimate cost increases that we see from the suppliers and from all of our partners in the supply chain.
I think you could tell a bull or a bear story on 2027, depending on those two dials that will get turned. CapEx spending from operators related to their tolerance for the increasing costs in the marketplace, and all of that will start to reveal itself, I believe, over the second half of 2026, as we look out into 2027. Thanks. Great question.
Okay. Just a rapid question regarding your relationship with your suppliers. Do you think that some players do not have this kind of problem, or it is roughly the same problem from everyone?
We believe that everyone in the space, from the largest mobile phone suppliers to the smallest consumer premise equipment OEMs and everyone in between, everyone is seeing appreciation of these components. You can track the memory prices on the DRAM exchange, for example, and we are often in the spot market checking prices relative to the strategic deals that we have with our really valued memory partners, for example. There is just appreciation across the board, and it is hard to imagine that any player is immune to the current market appreciation of pricing and also the allocation and scarcity that is occurring right now.
Okay. It is very clear. Thank you.
Yep.
Thank you, David. Next question in line, if any, please.
Any further questions, please press star and one on your telephone. The next question is a follow-up of David Cerdan from Kepler. Please go ahead, sir.
Yes. Sorry, I didn't have a lot of time to read the press release because you know that this is a very busy period for equity analysts. Just a rapid question regarding the restructuring charge. If I'm correct, it's lower in the PNL than in the cash flow. Is it normal? What can we expect in term of PNL and free cash flow for the restructuring charge this year?
Yeah. So it is normal, David, because some of the restructuring plans we have set up is lasting for more than one year. They had a PNL impact last year, and we are still having some of the cash impact of that this year. This explains why there is a mismatch there. But the good news is that the less we set up, of course, the less the future payments will be as well. So we are expecting the restructuring cash out to continue to go down this year, and we expect that to reach a low level in 2027. So we will wrap up all of the plans in 2027 before we are back to a completely normal level by 2028.
Okay. Thank you.
For any further questions, please press star and one on your telephone. There are no more questions registered at this time.
Okay. So at this point-
Very good.
It's time to close the call.
Yeah.
Tim, I leave to you.
Thank you. Yeah. Quick statement. I appreciate that. As always, I want to thank all of our employees, all of our customers, all of our stakeholders in the business. It was a good half. Look forward to speaking with everyone again at the end of the second half to report our full-year results. Thank you again for joining today's call.