Thank you very much, [audio distortion], for the introduction. Good morning, ladies and gentlemen, and thank you all for taking the time and staying with us, to look at our nine-month and third-quarter results here of the year. Daniel and myself are happy to lead you through, the existing numbers, but also give you a proper outlook, to the business. Following this, we will be more than happy to also naturally answer your questions. If I look at it, I think we are looking at a, at a interesting and good combination of significant growth. We're looking at, and, and I think we can say this, an unprecedented level of profitability in this, industry, which I think is also to be seen in, let's say, regards to, to peer performance here. But we're also looking at, I would say, a, a positive and, justified, or optimistic outlook here of the business.
If we look into where we are, I think we have naturally, and everybody sees this, we have a, an economic environment that is as it is. It is challenging in significant parts, and we also have significant changes here on the geopolitical side. And still, I think we can look at a continued organic growth trajectory with significant increase, significantly increased profitability. And I think it's important also to see this against the background of the significant limitations we have been suffering until recently with the insourcing of the membrane technology. Consciously, we were taking into account some temporary shortfalls in the availability of membranes for our fuel cells, especially in the later part of Q2 and now also until the mid of Q3.
These limitations have been fully eliminated, and our facility in the U.K. and Sweden is up and running at target capacity. Further catch-ups we had maybe anticipated. I do not foresee that much of it, but we are running at, I'd say, targeted capacity. On the growth side here, organically, we are looking at 20% organic growth. That is shown until year to date. But then if we look into the profitability, and Daniel will go into the reasons here in a minute, we are looking at 52.8% increase in Adjusted EBITDA and even more than 81% increase on EBIT level. And this also in conjunction with a solid cash generation. Again, we feel that is a significant differentiation factor if you look at the fuel cell industry.
If we look at our also the investments, the improvement in profitability have to be seen also in conjunction with our significant expansion program in the last 15 months. We have opened facilities in India. I mentioned the U.K. We just opened our largest factory in Romania, and we did open the facility in the U.S., Denmark, after the acquisition is in the works. Capacity going forward with the mentioned opening, especially of the Cluj facility in Q3, is prepared for growth. We are looking at let's say an installed capacity on MEAs for the next year of let's say around 20,000 units, 17 to 20 to be precise, and this is also concurrent with what we now can do in Bruntál and the ramping up in Cluj on the fuel cell side.
If we look at our growth strategy, we, I think, have taken also a next step here. We had those, or we have been working on those three pillars: organic growth, new product development, but then also, M&A where it fits. The acquisition of the Ballard assets here for the small stationary business in Denmark, I think, is a good example for it. Below 50 kilowatts, I think we are expanding our technology leadership. And at the end of the day, it's a broadening of our product portfolio, helping us also to reduce some of the spend we had planned for new platforms here internally, access to the market, especially a fast or an early adopting market in Northern Europe on telecom cable networks. And we also think about data centers in this regard.
Daniel will talk about, let's say, the financial position that is needed to further take steps in the market consolidation, which is a clear part of our plan. Looking at the overall environment, we really see opportunities here just by the structure that we have established now. Being established in the U.S., in Canada, and India, gives us good positioning in growth regions, and especially in the U.S., we just spent, coincidentally the week of the elections in the U.S., seeing our biggest customers coming back with significant optimism, also not just on our customers' end, but also with us seeing, let's say, and understanding their plans. I will go into this when we talk about the outlook. Looking at now the near term, next couple of weeks, yeah, what do we expect?
We expect really a strong year-end performance, both in sales, but as well, in the order intake to have a solid foundation here, also to continue our path of profitable growth here throughout the next year. Let me lead you through the nine-month figures here from a market perspective in terms of order and sales. We see an increasing order intake here over the nine months of EUR 98.7 million compared to EUR 89.67 million. So, the trend is right, but we also have to see that right now, with the order book is being down compared to the beginning of the year. This is a major area of emphasis here for us and the team because it is the only KPI we are slightly down. And if we do an analysis here, we see a timing effect that some projects got delayed also, especially government business.
We saw some of it moving in India, but we also saw, let's say, a calibration of volumes here with our largest customer, in the U.S. Looking into the next couple of weeks, I'm extremely confident to show significant projects being brought home and being brought into the order book. The clear intention is also to revise this KPI to a positive again, by end of the year, with growth of about 20%, 19.5%, overall. I think here, naturally, if you look at it, we end up at EUR 105 million revenue compared to EUR 88 million last year. Major driver, Clean Energy, and but still Clean Power also contributing with an average growth rate that is, again, double-digit, I'd say, after some catch-up, still, let's say, in the earlier part of the year after curing some supply chain, long-term supply chain topics there.
I think we are back to 10%-11% growth, solid and substantial. If we now look into the regional perspective, yeah, we have some impacting factors here, quarter on quarter. We saw Asia in nine-month, in a nine-month review being the strongest growth area still. But then still in the third quarter, we see a shortfall year on year. I mentioned some of the shifts in projects in India, well, in the U.S., largest overall contributor to sales in absolute numbers, but then also compared to last year, a slight decrease. Currency effect, as well as, let's say, some shipment delays on our end, make it look this way here in the nine-month review. We are significantly catching up in the last quarter of the year here. And I think I can only say we are shipping at capacity level also to the U.S.
Clean Energy, 24.6% growth rate. And as said on the Clean Power side, a good 9%. If we look now into the structure of the business, we are still benefiting from a significant demand here in our industrial applications. We are talking about customer groups here in the public safety area, CCTV, and civilian surveillance, a strong element, but then also government, especially defense, being a strong element. We are running up to a level of 14%-15% of sales in defense as well as public security applications. And we see, let's say, the industrial part of the business accounting for about 50% of the growth. In all our year-end discussions with customers, I had the pleasure to meet our biggest partner in the wind industry here in Germany yesterday night.
Also there, they are providing LIDAR wind measurement systems to wind customers, not just on a German level, but also on an international and global scale. Good news here is they are also running at capacity and also see a continuation of growth here. This wide range of applications, including naturally oil and gas, I will get to this also in the outlook, is again giving us this resilience here, and I think is also the basis here for continued growth. Clean Power Management, again, existing customer base continuing to grow. We have, let's say, our largest customers like Thermo Fisher, continuing to be in this 9%, 10%, 11% growth rate. And also in the upstream oil and gas part, where we also provide some power products. Investment is ongoing.
If we then let's say summarize this here, yeah, we have 70% of the business now in the clean, approximately 70% in the Clean Energy part and 30% in the Clean Power part. I think that's again also falling out following our strategy and also reflecting the different, let's say, growth paths of those segments. But naturally this higher pace growth with the higher profitability on Clean Energy is one of the elements that we will also see reflected in the earnings. And with this, I would like to hand over to Daniel to lead you through the financial results in more details. Thank you, everybody. Thank you for joining the call.
Thank you, Peter. Let me give you quickly a summary of key KPIs we've seen.
Peter already mentioned, you know, that the growth and earnings momentum in the first nine months not only remain strong with regard to revenues, but also earnings and margins reflect the strong operating performance, including with the group-wide cost discipline. This is reflected in what we consider to be strong nine-month KPIs across the board, which is revenue. Peter mentioned, EUR 105 million, up 20%. An Adjusted EBITDA margin of 17.3%, which is 3.8 percentage points expansion compared to the nine months in 2023. The Adjusted EBIT margin of 13%, which is a 4.4 percentage point expansion compared to the same numbers in the last year. Cash flow from operating activities, which amounted to EUR 14.1 million, which is also up from last year.
If we look at the gross profit, we see that we, you know, after a strong first half year, we also delivered a strong third quarter, with a positive price volume development, a continuously attractive product mix, and operational efficiency, all of which make a positive contribution to the gross margin and the earnings development. Consequently, we have made continuous progress on our gross margin expansion, which is one of the key drivers for the overall profitability, and at the same time, we were following our expansion, and growth, path. The gross profit, and you may have seen that already in the report, reached EUR 43.9 million, exceeded last year's nine-month profit significantly by EUR 10.6 million or 32%.
And with the gross profit growth outpacing revenue growth, this translates into a gross margin of 42%, which is not only significant, significantly above the level of the previous year's nine-month gross margin, which was 38%, and notably above the level of the last full year's annual gross margin, which was 40%, but it's also the highest gross margin in the company history. We have managed to keep an excellent balance between price stability and volume growth in the last nine months. The drivers between the gross margin increase and the gross margin level are pretty much unchanged of what we've reported in the first quarter and the second quarter. It is, first of all, higher revenues, which are leading to relatively lower production overhead per unit. It is a consequent pricing strategy in both segments. It is an attractive product mix in both segments.
We're looking at, you know, normalized costs of raw materials. We didn't have any material impairment on inventory. We already took the higher cost of the MEA into account. What we see is that the gross margin in both segments has improved, with the segment Clean Energy, and that is consistent with the previous quarters, showing a higher gross margin expansion. For the entire nine months 2024, the gross margin in the segment Clean Energy improved by a 4.1 percentage point, driven by a significant expansion in the first quarter 2024. We then had a virtually stable gross margin in the second quarter 2024, and then again an expansion in the third quarter. The key driver is still the same. It's a bit of a product mix, larger orders for EFOY high power platforms, which tend to have a higher margin.
I mentioned that in the half-year financials already, that the industrial applications, you know, which account for more than 50%-66% of the segment revenue, tend to have higher margins. But also in the Clean Power Management segment, we increased the gross margin continuously and gradually. We have slightly stronger margins in that segment across most of the product families, in combination with lower unit costs, as segment revenues increased 10%. It's a solid quarter in terms of revenue for high value-add units, lower unit costs, and a slightly better product mix. If we then go into our EBITDA, from reported EBITDA to Adjusted EBITDA, you see that the reported EBITDA was EUR 16 million for the first nine months compared to EUR 11.6 million in the first nine months 2023. On reported EBITDA, we had a margin expansion to 15.3% compared to 30.1%.
But remember, reported EBITDA is not our key KPI. It is Adjusted EBITDA, how we get to Adjusted EBITDA. Those of you who've been following us know the adjustment. Again, nothing changed here, but let me repeat them really quickly one more time. So the reported EBITDA includes non-recurring expenses and income. These are related to provisions, additions to the capital reserve for the LTI programs, and it's related to transaction expenses for acquisitions and strategic opportunities. The adjustments have been made analogous with the previous nine-month adjustments to provide you with an across-the-years comparable and more objective indicator for operating performance. So the reported EBITDA was in the first nine months negatively impacted with EUR 2.1 million by those non-recurring expenses. The negative impact in the first nine months 2023 were much lower, with only EUR 370,000.
The expense for the LTI program, which are SARs stock option programs, and this year PSP performance share programs, amounted to EUR 2.4 million in the first nine months. This is significantly higher for what we've seen in the last year nine months, where it was EUR 200,326. This is not only, but also to a number of new programs that we, granted introduced for a number of senior managers in SFC Group, this year. The income from the LTI program to the reversals of the provisions amounted to EUR 638,000, compared to EUR 397,000 in 2023. Transaction-related expenses pretty much, on the level, of what we've seen in the first nine months 2023, with EUR 450,000, compared to EUR 437,000, and this amount always is a good indicator of our level of engagement when it comes to potential, acquisitions, and M&A. That brings us, to the Adjusted EBITDA.
The Adjusted EBITDA amounted to EUR 18.2 million, which is, you know, 4, 53% and well above the level of the nine months in 2023, where the adjusted EBITDA amounted to EUR 11.9 million. So we are particularly happy that we've managed to further expand our Adjusted EBITDA margin in the first nine months of the year, which came up to 17.3%. This represents, if we do the math and the increase of the margin of 3.8 percentage point in comparison to nine months 2023, and means that we are very well within our midterm target range, with what we consider still to see, you know, in the midterm is some upside potential. The excellent overall figure is attributable to significant gross margin gains and good operating leverage.
I already discussed the gross margin gains, and let me dig into this one more time to review the key drivers behind this absolute EBITDA increase and also bring forward some of the functional cost discussion on which I touched later on also. First of all, gross margin expansion, you know, with regard to the gross margin expansion. It's not a single factor that drives it. It is a fixed cost and production overhead cost resolution resulting from higher revenues in combination with the product mix and a positive pricing effects and by and large stable input prices. So that and I discussed this earlier led to a gross margin expansion of 3.9 percentage points. And secondly, the impact of the increase in Adjusted EBITDA is the operational leverage or scaling.
We like to reiterate that we are really committed to delivering profitable growth and staying disciplined in our cost, but also on operating leverage and scaling. It's not the one factor. It's not the one functional cost. A lot of various factors are coming together. So even all of the adjusted functional costs, other than the sales and marketing expenses, for the specific reason, increased absolutely. Sales and marketing and R&D increased disproportionately with respect to revenues, and G&A increased slightly. G&A general management costs increased slightly above revenue. It is at the same time, mostly driven by personnel expenses as well as corporate development activities. So if you look at the adjusted sales and marketing expenses, which account for 40% of the total functional cost, they remained on an absolute stable level.
This is, however, due mainly to the utilization of certain accruals in Q3 2024, which is more of a seasonal effect. I will touch on this later on. Adjusted sales and marketing expenses came up to 11.4% of revenues versus 13.7% in the first nine months in the previous year. This is what we believe a notable 2.3 percentage points relatively less. And the relative contribution of the relatively lower sales and marketing expenses to the increased Adjusted EBITDA is approximately EUR 2.5 million. Adjusted R&D expenses, hardly surprising, given the, you know, short- and medium-term fixed-cost character of R&D expenses increased marginally slower than sales, resulting in a cost-revenue relationship of 4.6% versus 4.7% in the first nine months 2023, which is, you know, 0.1 percentage point lower. The relative contribution to the absolute EBITDA increase is EUR 178,000.
And then last but not least, in relation to revenues, the adjusted G&A expenses grew slightly faster, resulting in a G&A expense revenue ratio of 12.5% compared to 12.2% in the first nine months of 2023. And that's a relative negative contribution to the increased adjusted EBITDA of EUR 334,000. Depreciation amortization total, amortization and depreciation were EUR 4.5 million, so versus 4.4 in 2023. You know, and you've seen that that almost 40% of our depreciation is related to IFRS 16 accounting, which is EUR 1.8 million. This is notably above last year figures. It has to do with the new sites, with the new buildings that we rented in Romania and U.K., which obviously also drive the IFRS 16 depreciation. So the depreciation without the IFRS 16 impact comes up to EUR 2.7 million.
And for a large part, those depreciations are resulting from the depreciation of capitalized R&D expenses, which was EUR 1.4 million, compared to EUR 2 million in the last, last year's first nine months. Other tangible and intangible assets make up for the rest of the depreciation, EUR 1.3 million. That brings us to the Adjusted EBIT, which amounted to EUR 13.7 million. This is a 13% Adjusted EBIT margin. The key reason for the drivers for the margin expansion of the EBIT are basically the same as in the EBITDA. Let me quickly dig into the operating expenses. You may have realized that the nine months 2023 numbers do not compare exactly with the numbers published last year.
This results from discussions we had with our new auditors and the fact that the income from the reversal of the reversal of the LTI provisions are no longer shown in other operating income, but directly in the functional cost and that impairment losses of gain of financial assets, basically IFRS 9, is now presented in the P&L, no longer presented in the sales and marketing expenses, but a separate line item in the P&L. Remember that when looking at the Q3 numbers of 2023. Sales and marketing expenses as seen, and I discussed it already briefly, they remained almost stable compared with the previous years amounting to EUR 12.1 million adjusted for the LTI income and expenses, compared to EUR 12.1 million the previous year, 11.4% of the revenues compared to 13.7% in the first nine months of 2023.
We had a one time, not one time, but sort of a seasonal effect, resulting in the decline of sales and marketing expenses in the third quarter 2024, compared to the previous third quarter, which were the utilization of certain personnel expense accrual across a group, which had an impact on the personnel expenses. R&D expenses and R&D spent, so R&D spent, and I will discuss how this is, you know, calculated. In the first nine months were EUR 7.5 million. That compares to EUR 6.5 million in the first nine months 2023 and is a solid 15.5% up. How are these costs made up? It is first of all the R&D expensed in the P&L adjusted for the impact of the LTI programs, which amounted to EUR 4.8 million in the first nine months 2024, comparing to EUR 4.1 million in the first nine months 2023. So this is 15.7% up.
We add the R&D expenses not capitalized. That amount was EUR 2.2 million in the first nine months. And then we also look at the subsidies, which were EUR 506,000 in the first nine months, you know, 80% or 76% more than we had in 2023. And if you add up those numbers, you get to what we have, the R&D spend. R&D spend is about 7.2% of revenues, slightly or marginally below what we've seen in the last year, 7.4%, but you see that the absolute amount has increased. And in long term, we're looking unchanged at, you know, around 7% of revenues for R&D. G&A expenses, and I already mentioned it, the adjusted G&A expenses increased significantly solidly to EUR 13.1 million compared to EUR 10.7 million.
The drivers behind it, and we already discussed it in the first half year, is, on the one hand, mostly personnel expenses, a higher headcount also with the expansion for production facilities, where we now have also administration staff hired, especially in the third quarter. We have significantly higher IT expenses in there with the introduction of SAP and implementation all over the group. That is also a driver, and to some extent we also had higher travel expenses in connection with the corporate development exercises we are doing. That corresponds to 12.5% of revenue; slightly, the ratio is slightly higher than what we've seen in the first nine months in 2023, where we had 12.2%. A quick look at the balance sheet, fixed assets, and CapEx. The total CapEx, the gross CapEx excluding right-of-use and IFRS 16 accounting impacts, amounted to EUR 7.4 million.
So that is EUR 2.6 million up from what we've seen in the first nine months 2023. The main drivers in that was the investment in the MEA production in the UK, and in our production site in Romania. That you'll see also that the CapEx split between intangible assets and PP&E has reversed, in this year. It's about 31% for intangible assets and 69% for PP&E. Normally you would see, that ratio is, reversed, where we have, higher investments in intangible assets, than P&E. But it was, as I mentioned, driven by our expansions. Looking, at our cash position, and cash equivalents, the cash freely available is EUR 65.7 million. So we are very well, positioned, for our corporate development exercises as well as, for our growth. The financial debt, was 3.9%. Nothing has changed there in the, type of debt.
It’s working capital facilities with SFC Netherlands and SFC Canada. So that brings us to a net debt, or in this case, a net cash position of 61.5 million EUR. Equity increased by 10 million EUR, with a positive income that we had. The equity ratio remained pretty much on the level of the year end, 72.3%, and the net profit solidly 8.7 million EUR. Cash flow strong, good, well prepared for our growth. The operating cash flow, cash flow before the change in net working capital, was 80 million EUR. So up almost 6 million EUR compared to the first nine months in 2023. The net working capital increased in the first nine months. Remember, we already discussed it in the first half year and that we would see an increase in our net working capital, increased by 2.5 million EUR.
Modest increase, what I would consider. The drivers behind it is basically the inventory, after the destocking that we had in at the end of the first half year, increased cash impacting by EUR 3 million. If we look at the days of inventory on a 12-month trailing basis, we're looking at 165 days. So that is up from the 128 days that we had at the year end. Again, there was destocking also at the year end and in the first half year. So we really pulled in again some inventory for the further production and growth. The accounts receivable slightly went up compared to year-end level, resulting in a decrease of cash of EUR 1.5 million. If we look at the days of sales outstanding on a 12-month trailing basis, we're still with 81 days, below the 88 days that we've seen at the end of last year.
Remember also days of sales outstanding or the accounts receivable has always been a little bit impacted at the business that we have at the end of the quarter or at the end of the year. So not a big change. It's more or less stable. And then we look at the other short-term receivables, which are, you know, prepayments, VAT, and taxes mostly, which increased cash impacting by EUR 372,000. And we look at the inventories, the accounts payables, increased cash impacting by EUR 2.6 million. If we look at the days of payable outstanding, we're looking at 97 days versus 66 days at the year end, just to give you an indication on that. After tax payments, this results in a positive cash flow from operating activities of EUR 14.1 million, much higher from what we've seen in the first nine months last year.
Or we mentioned the cash flow from investing activities was negative with EUR 6.4 million higher than in the nine months in the previous year. The cash flow from financing activities amounted to negative EUR 2.2 million. Remember this, there's also the IFRS 16 impacts in there. That results to a change in cash of EUR 5.5 million for the first nine months, which is a nice and good thing to have. With that, I'll turn it back to Peter.
Thank you very much, Daniel. Now let's maybe just complement it. Yeah, also on team's level, we were at the end of the quarter a number of 451 permanent employees. So a 12-13% increase in total headcount. Again, one of our focus areas also operationally, hiring and retention and continues to be.
So now, what does it all mean now for the immediate future? You've already, most of you have seen now, let's say our confirmation and specification of the guidance, but maybe also two, three thoughts going beyond this. Based on the first nine months, also on the backlog and the momentum we see, we're seeing a growth of 20%-22.6% resulting in a range of EUR 142 million-EUR 145 million of revenue for this year. One can actually see this as the lower half of the guidance. I think at the same time, it is, let's say, by far, the best year in the history of the company. And at the same time, I think I mentioned, well, some of the limitations we had here on the capacity supply, but also some quarter-on-quarter shifts of projects. So, that's, I think, where we are on a realistic level.
If we look at EBITDA and EBIT, yeah, we are moving this up, let's say, within the range that we had specified that the EBITDA adjusted to 20, to a range between 20 and 21.5. So it's definitely the upper half here. Well, give us a couple of weeks here and then we drive this up as far as possible. So on the EBIT side, I think even slightly better, what we see here, is a range of 13.8-15.1. Again, the previous numbers we had out in the market, 9.8-14.7. So we lift up the upper end depending naturally on revenue development and cost development here. And closing out, I think with some observations, some impressions I gathered over the last couple of weeks here in terms of going beyond the year end and looking in 2025.
Together with Hans Pol, our colleague, we have been seeing and we are seeing our top customers over the last couple of weeks and in the remaining weeks of the year. We see consistent optimism here. We see, let's say, investment plans that are coinciding with our own growth plans. We look into the growth drivers. Yeah, the key element are our methanol fuel cells here in the Clean Energy part. This is where we are, where we have built up a customer-based business where we do not sell our products on subsidies. Our customers are not depending on, let's say, government spend. It is a total cost of ownership model and it pays off and has, in addition, a positive ESG impact. The power product I mentioned already, I think significant, consistent, the growing accounts here with a double-digit 10%-11% growth is what we see.
And then if I look into the U.S., coincidentally, we were there exactly in the week of the elections. I think what we saw is customers being optimistic, some of them really excited. Well, naturally, that's also then depending, let's say, also on their individual political views. And I'm not here to comment on this, but what we also see is that some of our customer industries, be it oil and gas, be it the defense and also the public safety area as well as mining, are expecting, let's say, from the focus of the incoming administration, a significant impetus. And, having an optimistic customer base is, I think, a good place to be. And looking at potential tariffs, yeah, we have shown to transfer part of our value chain to India within a short period of time.
You all know we are looking at different options in the U.S., so we are also not afraid of this. A real good and positive outlook here also in regards to what we expect here from our overall customer base and especially the U.S. With this, yeah, I would like to hand back to our operator and open the floor for your questions. Thank you very much.
Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and then one on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question.
Anyone who wishes to ask a question may press star and one at this time. One moment for the first questions. The first question comes from Karsten von Blumenthal from First Berlin Equity Research. Please go ahead.
Good morning, Peter. Good morning, Daniel. My first question is regarding the U.S. You mentioned the customer optimism. I'm happy to hear that for your business. My fear is that you might be hit by tariffs the U.S. might impose on products from the EU. So perhaps you could comment on that. And then a question, or perhaps we start with a question. I can do the next one.
Hello, Karsten, good morning.
As mentioned here in the closing remarks here of my presentation, yeah, we are taking this into account into our planning and we are able to transfer parts of our value chain, as you've seen it also with, or as we have demonstrated here in India. And we are not talking about years. We are talking here about a period of six-to-nine months. So, and we are, I'd say, besides the greenfield operation now in Utah, we are qualifying potential acquisition targets, which could even accelerate this process. So we are actively preparing for this. But still, being in industries, being with customers, that are, let's say, optimistic and being there as, let's say, a product that is, at the end unique in its way of replacing incumbent technologies is still a good combination. It doesn't relieve us from the obligation to perform.
And that's, I think, what we have to demonstrate . Yeah, some of the capacity limitations in the second half of this year didn't help here. We cured this and we prepare for the next steps.
All right. That sounds promising. Thanks for that. One question regarding your gross margin that was pretty impressive in the nine-month basis. How do you see that for next year? Do you see further increases possible? Do you think you will stay at that level? That would be interesting to know.
Hi, Karsten. So first of all, the question, of course, I would see that it stays at the level that it is because the drivers behind it don't really change. For the time being, we don't really see any increase in the inputs.
So we would also and then it comes with the, you know, with the operational leverage, potentially see also an increase, depending a little bit on the product mix, that we're going to have going forward. But if you look at the drivers, what has driven the gross margin expansion so far, I would see, you know, a stable one, with the potential, obviously, to increase it.
Right. Thanks for that. Last question from my side. When I look into your earnings per share, diluted and undiluted, especially diluted, that is weaker than your, the growth, weaker than your net result. What is the reason for this?
Sorry, can you repeat? I did not exactly understood the question. Sorry, apologies.
So if I look into your earnings per share, the growth is weaker than the growth in the net income.
So what is the reason for that?
In the earnings per share or in the diluted earnings per share?
Diluted.
Yeah, because obviously dilution is based on the PSP and stock option programs. As I mentioned, we introduced some new stock option programs, equity settled, also for senior management, so not for the management board, this year. And that results then in full dilution based on these programs. That is the key driver behind it.
All right. Thanks for taking my questions.
Thank you.
The next question comes from Usama Tariq from ABN AMRO-ODDO BHF. Please go ahead, sir.
Hi, good morning, team. Congratulations on the great results. I hope I'm audible.
Absolutely. Hi, Usama. Yes.
Hi. Hi. Good to hear you. I have a few sets of questions. Number one is just housekeeping. When is the Ballard acquisition expected to close?
And do you already include it in sales guidance or not?
We expect the Ballard acquisition to close this year, ideally, you know, at the end of this month. And yes, the impact of that is reflected in the sales guidance. Remember, we are pretty much at the end of the year, so you could imagine that the impact may not be significant in one month, right? Yeah. And I think we will see it in the; you will more see it in the profitability guidance than in the top line guidance. We do not expect any significant shipments to happen on our accounts.
Okay. Okay. Very, very grateful. Now I have another set of questions with regards to trimming of the top end of the sales guidance.
Could you maybe give a little bit more color on that, on which segment would it be more due to? Is it due to Clean Power, Clean Energy? Just a little bit more color on that. Why, what are the underlying reasons behind it, if I may ask?
Well, I think the proportional impact here on the remaining part of the year will not significantly change. We expect now in Clean Energy, again, a bigger proportion here of defense and public security, as well as North American sales and sales to India in the year-end business. So, what you see there on the upper end, I think, is a bigger impact from the Clean Energy part.
Okay.
On that, adding up a question with regards to India, you mentioned that there have been some sort of delays, project delays. Is that only limited to India, if I understand correctly?
Well, at the end, yeah, we are experiencing nothing, let's say, unexpected here. It's still a government business, and we see this not just, let's say, as a specific fact in India, but it had, let's say, the biggest impact, let's say, in our Q3, because we are having the biggest volumes here of defense shipments right now to India.
Okay. Now very clear. On M&A, you've already indicated that U.S. would be the potential geography you're looking at.
Yeah. I think here at the end, it is, let's say, the existing setup and the diversification of our customer base.
For the remaining part of the year, I think we are, as said, shipping at capacity levels. But I think going forward, it is a positive environment having, let's say, a government, or having, let's say, some of the industries really in the focus of the incoming government, and therefore having, let's say, the right level of optimism that usually leads also to the right spending levels and investment levels. So it's an upcycle. And being already an established partner there makes you naturally also benefit, fit in a natural way from it.
And maybe one last question that you've been very generous with time. Would you be more looking towards a technological acquisition or more like an aggregator? Any color on that in the U.S.?
At the end, honestly, we are looking at both of it, because the Ballard acquisition is adding a solid product platform that needs to be integrated now, but also a good customer base. And if I look at the U.S. right now, yeah, we I think we still stay on track here to look for faster market access, system integration into one of the verticals or one or more of the verticals we are in, be it oil and gas, be it defense and public security. And well, on the technology side, I do expect some consolidation opportunities coming up, seeing, let's say, the situation in the industry.
Okay. Thank you so very much. Thank you. That would be all.
Thank you.
The next question comes from line of Thomas Deser from Union Investment. Please go ahead. Good morning, everyone.
Two brief questions, if I may. What is the book value per share at the moment? Bloomberg doesn't provide that. And second question is, the figures are strong and the share price is weak, and you talk to investors. So what is your take? Why is the selling pressure there?
Well, if I may start, Thomas, with the second one. Our primary focus naturally is to deliver an operational result, which usually is, let's say, the base is also for the development of the performance of the share. If we are looking into especially now the European small cap sector, it has been a challenging environment, I would say, throughout the entire year. And if we also look into the sector performance here, hydrogen and fuel cells, not a favorable environment, too.
Yeah, we are trying to differentiate as much as possible, and we are out there on roadshow, but naturally, we cannot revise some of those macro elements. But at the end, my conviction and, let's say, our experience tells us we deliver on the operational side, and long term, this is the basis where you convince somebody putting money into your company, huh? But the macro environment is not, I'd say, what we can influence here. Yeah. And book value share, I'll quickly tell you, this is not a number that I have in my head right away, but the way I'll quickly tell you, I think it's EUR 8. But I'll be happy to look at this and send it to you, send an email to my investor relations, and then we'll calculate that ratio.
Okay. Excellent. Thank you very much.
Thank you.
The next question comes from the line of Malte Schaumann from Warburg Research. Please go ahead.
Yeah. Good morning, guys. The first one is on the sales guidance for the full year. Is it just India that is responsible for the kind of slight shortfall in comparison to your earlier expectations? Or are there other areas which are developing slightly weaker than assumed?
Good morning, Malte. Well, I think what we are looking at, yeah, and it is either the lower half or the upper half. I think what we are targeting is definitely on the upper end of what we are seeing right now to the midpoint of the original guidance. We also have to say, and we mentioned this in our, let's say, North American results. We have a negative currency effect that also takes some percentage points away, but that's fact.
So, the combination of really, I'd say, the capacity limitations we suffered from for a part of the year where we are now at, let's say, capacity levels we need, but a further catch-up, seeing where we are in the year definitely is just, let's say, partial here is one thing. And the other thing is really some shifts quarter on quarter, which is definitely not unusual from our perspective, but it's this combination, including some currency effect here.
Okay. And these shifts are only India or other material customers as well?
No, as said before, I think, shifts there in India, but also, I'd say some volume calibration also in Q3 here in the U.S. with the major customer there, made us being, let's say, more cautious here.
Looking at the latest discussions, especially with seeing our Indian partners last week, being in the U.S. the year the week before, I think we have justified optimism going beyond now Christmas and going beyond year end, but it's really a shift between quarters here.
Yeah. Okay. Then on Q4 profitability, I mean, if I take your guidance for the full year, then you're targeting for an EBITDA margin of only 6%-7% maybe in the fourth quarter of the year. So maybe you can provide more color why that is or why would that be. And probably there are some one-off effects included. Maybe you can talk about these, maybe Ballard, so we can give some more background on the weak profitability that is baked into your full year guidance in the fourth quarter.
Hi, Malte. Hey. So you touched base on it.
Yes, it's yeah weaker, you know, the fourth quarter also has always have some sort of cost flowing into it. And again, you know, it's not every quarter is exactly the same. But you touched on it. One of the reasons obviously is the Ballard acquisition. We're getting at Denmark setting up and running, right? It's going to be a SFC site up there, where we now taking over not only assets but also certain employees from Ballard. There's always some cost associated to it. Then secondly, what you also see in the fourth quarter is that some of the expenses increase in context with some advisory activities, also audit activities that we're having that are the key drivers in there. And then we also see that at the year-end, sometimes there are certain bonus payments for all employees.
All of this is factored in. I would not necessarily say it's that weak quarter. Yes, it may be a weaker quarter and you know I'm a bit cautious, factored all of those things in, to some extent seasonal expense, but also, as I mentioned, acquisition. Yeah, that's it.
Okay. Let's see. I mean, it would be the weakest quarterly profitability since 2022 or so. It's not that strong, but maybe it's prudent to take a cautious approach.
Agreed. Agreed. But as I say, you know, we do have quite a bit of corporate development activities out here.
Yep. Yep. Fully understood. Okay. Then on maybe next year, I mean, I'm not asking for guidance, but seeing that, I mean, we are seeing an order intake growth about 10% maybe after nine months.
Maybe it will also be 10% growth in the full year 2024 in comparison to 2023. Organically, you're growing kind of 20% this year. So what are your thoughts? I mean, you're targeting, targeting growth, CAGR more closely to 30% and then seeing the 10% growth in the order level, seeing the current economic environment. So maybe you can kind of give us a broad overview on what you're seeing in the pipeline and your thoughts about 2025.
Absolutely. Thank you. Order levels right now, yeah. Give us time until Christmas and, and we will look again at the different situation, being really, really confident here, knowing where we stand, let's say, with some of the major closings we have still before the year end. So, trying to, to nature or being confident to move this up above, let's say, the current levels.
And then I think we should not forget, and this is an ever-growing element to it. We have a larger installed base out there. We have a replacement and refurbishment program now being implemented with our largest customers. And we know end-of-life times, and we have, let's say, a recurring sales revenue line that is, let's say, consistently, and I would almost say significantly growing. And I'd say the combination out of this with, let's say, some larger projects also on the defense part of the business is, let's say, what I think are the three pillars that we are basing our growth assumptions on it. And yeah, if we look at this year and if you look at the original guidance, yeah, again, a range between 20%-30%.
We talked about some of the limitations we, I'd say, target to end up at potentially the midpoint, which definitely would then also have an impact still on the earnings side. Having a conservative view on it at this point in time still, I think, is our good tradition. And then we look at it whether, or at what point we end and whether we can still generate some positive surprises there.
Yeah. Okay. On the recurring part, maybe you can share a number, how the trajectory was, how much recurring sales in 2023, what's the expectation for 2024, and then maybe a rough guidance for growth in 2025 on the recurring portion.
I think if you're looking to this and if you see, let's say, our industrial business there on the fuel cell side, with all the historical installations and depending then on application fields, you see different lifetimes of products, and we are following this up, and now with our cloud being operational and having systems in there, we also see the performance of the products, so if you look into, let's say, the industrial part of the sales, we know that between 20% and 25% is already, let's say, a recurring part, and it's just a question of lifetime there.
But I think we can also look into this in more details from a model perspective here offline because with and now I'd say thousands of systems already being in our cloud in there we get more sophisticated on this end. And this gives us naturally a good database also for projections.
Yeah. Okay. Yep. Makes sense. Then on last question final question on Asia Toyota Tsusho et cetera maybe you can provide an update on where you stand with your plan to broaden your base and business in the Eastern Asian region?
There also we among the partners we have seen in the last couple of weeks also Toyota naturally is part of it.
We are happy with the pace we are seeing in Japan, but we also have, let's say, a limited part of the original exclusivity and have revised it and have opened up in parts of Southeast Asia because we feel we need more channels to market and implementation program that I think will unfold its impact on the business, just not this year, but going into 2025. It is, I think, a good basis we have established here with our long-term partner, but we all have recognized it needs more channel to market and also a multi-channel access in Southeast Asia, including the Philippines, including Taiwan. That's in implementation right now. If you look at it, original expectations were higher, very clear. Happy in Japan needs revision outside Japan.
Okay.
So when we talk in a year, maybe so by the end of next year, you should have probably much better setup, so to speak.
I would not even wait that long. We are, let's say, implementing as we speak and we cannot wait naturally. Now we need to have feet on the ground in 2025 already, apart from the Toyota team. And we are also sending own people to Asia, and we are also not hesitating to look at, let's say, potential smaller acquisitions there for market access.
Yeah. Okay. Good. Thanks.
Thank you. There are no more questions at this time. I would now like to turn the conference back over to Dr. Peter Podesser, CEO, for any closing remarks.
Well, again, thanks very much to all of you, for the time.
As always, come back to us, relate back to us, to Susan, Daniel, and/or myself. And yeah, you see us here in a good and optimistic year-end closing exercise. And this will be exciting times here through Thanksgiving and the Christmas time for us until we close our books on the 31st of December. Thank you very much. Thank you.