Hello and good afternoon. Welcome, everybody, to Dr. Hönle Group's earnings call for the first quarter of the 2025-2026 fiscal year. Let me briefly introduce the presenters today. Results will be presented by Dr. Franz Richter, who is the CEO, and Robert Stark, who is the CFO of Dr. Hönle AG. mwb research recently picked up coverage on this interesting company, last week, to be exact, and you can find the research and the latest update on ResearchHub. I also will post a quick link in the chat box on the lower right-hand corner. The presentation will, like always, be followed by a Q&A session. Should you have any questions, feel free to enter them into the chat box, and please make sure to preface them with your name and your company name. I'm looking forward to your interesting insights, and now hand it over to Dr. Richter.
Yeah, thank you very much, and welcome to our conference call also from my side. We just published and presented the quarterly report, first quarter. As usual, the first quarter started a bit slow. We are top line, basically, on the same level compared to last year, and the EBITDA is a little bit below last year. Robert will go into more details later on. In general, the general view is that we see a slow and a little bit of reluctance in the industry, especially with the customer in the Curing business, but the whole industry, also in other divisions, automotive, is slow right now. We do have positive effects and a very active market in Disinfection that is offsetting a little also from weaknesses in other business units.
As I said, the sales level is basically on last year, and we expect that we will have more business going forward, the second, but especially third, fourth quarter. That is where we probably will see better revenues and better business. The activity right now, of course, besides active penetration with customers and quotations, is also a focus on after-sales support, because especially in those times where investment budgets are a little bit tight, usually the money for after-sales support, for maintenance and support upgrades is a little bit easier to achieve. That is where we focus right now on. With this introduction, I would basically hand over to Robert to go through the number part.
Thank you, Franz, and also good afternoon from my side. As mentioned, I will take you through the financial development, focusing on revenue and EBITDA. I will comment on the performance of our three business units, and finally on our capital structure and cash flow. I will basically start with the overall performance in the first quarter of our fiscal year 2025-2026. As you know, our business has a meaningful project component, which naturally leads to quarter-to-quarter fluctuations in revenue as well as profitability. This is particularly also true in our first quarter, which we see here, which is typically kind of weaker for us. Group sales came at EUR 21.5 million, which is broadly in line with our prior year level. On the earnings, EBITDA amounted to EUR 0.5 million, which is in the same amount below last year's level.
Basically, there were two key points to highlight on the earnings side, as Franz also indicated, the mix and the volume effects, especially from the weaker development in Curing, which weighed on the group profitability in the quarter. Secondly, on the cost line, we saw temporary headwinds from currency effects. In particular, these were unrealized intercompany currency exchange effects, and we had somehow also higher marketing and IT expenses in the quarter. These were temporary burden on the quarter, with a softer contribution from the sales parts of our portfolio, especially in Curing. Turning the slide, you can see that the quarter clearly had different dynamics across our three business units. Starting with Adhesive Systems, sales were at EUR 8.1 million, essentially at a prior year level. EBITDA came at EUR 0.7 million.
From a business perspective, this performance was within our expectations. Operationally, we continue to see a stronger adhesives business supported by a higher demand in medical technology applications. This range with what we see right now is offsetting a weaker equipment business in the adhesive curing business in this segment. Overall, the unit is developing as anticipated. To Curing, we had a weak start in the new fiscal year, so sales were down to EUR 6.6 million. EBITDA was EUR -1.2 million. The key driver is demand. Curing is, to a large extent, an investment goods business and therefore highly exposed to CapEx cycles. In our customer segments, especially mechanical and plant engineering, sheetfed sector, we have seen further investment reluctance with customers postponing business or stretching decision cycles. From the Management perspective, we are addressing this into two levels.
On the commercial side, we are pushing initiatives, like Franz mentioned, for after-sales business, for lifecycle solutions, to generate additional, more resilient revenue streams to support the recovery during the year. On the cost side, Curing remains under clear cost-savings program, so we are continuously aligning with the cost base, with the current top line and the environment we are challenging. The last business unit, Disinfection, finally delivered the strongest performance in the quarter. Sales were up by 18% to EUR 6.7 million. EBITDA was up to EUR 1 million. This unit continues to benefit from a strong demand for water disinfection systems and we are seeing a very solid momentum here. Given this positive development, we are actively strengthening the commercial execution.
Specifically, we are stepping up for our sales efforts in the Americas and Southern Europe to further leverage the momentum and expand our reach in these markets. Moving to the next slide, it briefly covers our capital structure and cash flow. Our equity ratio stands at 53% as of end of December, which underlines a solid capitalization for the Group. On the net financial debt, from our point of view, two things are important. First, the net debt position largely reflects our investments in company buildings, and these are long-term secured. Secondly, the net financial debt is continuously decreasing. Yes, we see a small catch-up in Q1, but nevertheless, overall it is decreasing. There's a kind of strong discipline in cash and financing. For the cash flow in the weak quarter, we generated a slightly positive operating cash flow of about EUR 200,000.
Cash flow from investing were nearly EUR 400,000, financing EUR 600,000. The overall cash change was EUR 1 million for the quarter. With that, I would hand back to Franz for some words for the outlook.
Yeah, I think concerning the outlook, of course, we are early in the year. Uncertainty in the markets are still there. From the activity we see from those activities we are taking, we reiterate and keep our guidance revenue in the EUR 95 million-EUR 105 million range, and the EBITDA level should be between EUR 6 million and EUR 9 million. As I said before, of course, at this point in time, some uncertainties are there, and I think it's not only for us, it's for everybody in the industry, and we will monitor very closely the activity. As Robert mentioned, cost cut and very cost-sensitive activities will be watched carefully. With this outlook, I would like to hand over back to the operator and take questions.
As you have the last slide, the next activity on our side is then the shareholders' meeting in end of March, on March 25th.
Thank you so much. We already have two questions, and I would like to ask everybody who is interested in asking questions to please use our chat. Don't forget to add your name and your company name, and we discuss them with management. First question comes from Patrick Mayerhofer, Analyst at mwb research. We've seen good growth in Disinfection, and he's asking whether that growth was driven by project timing, i.e., projects that may be moved from Q4 into Q1, or by stronger underlying demand.
The sales and the Disinfection, we see the underlying demand. We see it especially in the water disinfection. There are a lot of new projects. This is nothing about project timing. It is in line with our sales focus and the demand on the market. No timing effects on this side.
No, sorry.
Staying to the issue of project business, have we seen any delays of projects from Q1 into the next coming quarters? That's the first part of the question. What else do you have to provide visibility of a turnaround in the revenue development of the UV Curing business?
First of all, there is not one or two big projects which make a big difference. There are always some push-outs from a customer side, but not a significant order of magnitude. On the other side, we try to pull in from the second quarter into the first quarter at the end of the quarter. That's usually the game we are playing at the end of the quarter. That's usually push-outs and pull-ins.
Looking at the earnings development in Q1 versus the guidance for the full year, I think you're down about EUR 0.5 million in Q1, and you're expecting EUR 6 million-EUR 9 million EBITDA for the full year. Can you bridge that a little bit, where the momentum in the remaining nine months is coming from some higher revenues? You talked about some one-off costs that you incurred or higher cost base in the Q1, but how that comes together to give credibility to the guidance?
Yeah, of course. First, one element of course, is increased top line. More orders, top line increase will significantly contribute to higher profitability. You can see the revenue of 2021 in the first quarter. If this would continue on the same level, of course, the profits will not be in the range, but that would mean the total number would be only EUR 80 million or EUR 84 million. We expect an increase in top line and, together with that, of course, also significantly increase in profitability.
Mm-hmm. Just to all the participants, if you have any questions, once again, please feel free to use the chat box and enter them. We will pick them up and discuss them with management. A few questions coming in. We've already answered the first two. Let me come to the next one. Sandra Stöckl from. Can you please give us a rough idea how large the current cost-cutting program is going to be, and when you plan to progress and how you plan to progress with it?
Yeah. So we can put it roughly. So it is strongly depending on the top-line development and the order income we will see in the next couple of weeks. So therefore, nevertheless, curing is for transformation. So, we have measures in place which will lead, depending on our execution, up to one million in savings. But still, it depends how the business is running the next couple of weeks and months.
Makes sense. Let me see. I don't have any other questions currently, but I certainly would like to give everybody a chance, because I know the typing might take a few moments to enter a question if they have one. Bear with me for one second. Let me ask you another question. Looking at operating expenses, they were up 18% in the first year-over-year, FX, marketing, IT. Do you expect the cost base, the one-off costs, FX and the like in the remainder of the year to become less pressure-full or to continue on the same level?
We never know how the euro against the U.S. dollar will perform the next month. It strongly depends on the American President, what the U.S. dollar is making up. Nevertheless, we have a couple of IT projects in-house, which are mandatory, upgrading some systems. Therefore, the expenses for IT will be a little bit higher than last year, which is budgeted. Nevertheless, we are strongly focusing on which return comes from which trade fair, from which events we are looking to. Therefore, this will be balanced out, and we never know what the exchange rates will bring to the future.
Sandra Stöckl comes with a follow-up question. Anyways, what are the current steps taken towards market expansion, and do you expect additional upfront costs? When do you expect revenue impact to be significant?
First of all, we are not looking for expansion in terms of acquisition, if that is behind the question, or in huge investments. I think right now there are basically, as I said, partnering with companies which do have technology which is helpful, or with customers which have access to markets on a sales front. That is basically to broaden our offering to the market, to customers, and let's say, upgrade our offerings right now. It's not in the terms that we are looking for new products in general or huge investment upfront. We do have an ongoing R&D development where we do upgrades and improvement to our products, for example, more towards LED, cost reduction with some outsourcing parts and so on. It's not an increase of investment, of capital injection, what the question was here.
Understood. Once again, ladies and gentlemen, if you have any more questions at this point, please feel free to ask them. I will give you a few more moments to use our chat tool to enter them. In case you're already fully satisfied with the answers you have received, then, of course, we can also end the call a little quicker. Let me just wait and give, once again, everybody a chance. Looks like there are no more questions. I do appreciate you taking the time to answer all the questions we had. I wish you a successful remaining nine months of the year, and everybody who participated, have a great afternoon. Thanks for joining.
Thank you very much.