Good morning, ladies and gentlemen, and welcome to the JENOPTIK conference call regarding results for the first nine months of 2026. The conference will be recorded. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Dr. Dominic Dorfner.
Good morning, everyone, and welcome to our call on the results of the first three quarters 2026. With me on the call is Prisca Havranek, our CFO, and we will lead you through the presentation, followed by Q&A as usual. Looking at page four of the deck, let me highlight that we saw continued very strong order intake momentum in our OEM business, clearly exceeding our expectations. As far as we can tell, the ramp-up in the semi industry continues to be in full swing, but also order intake in our Biophotonics business grew further from very high comps last year. These very strong demands now start translating into improving revenue performance as we report the double-digit growth in the last quarter.
We are also pleased to reporting a strong improvement in our profitability in terms of EBITDA margin, which exceeded our expectations primarily because of a fast ramp in Semi and a certain product mix. Prisca will cover this subject in a little more detail just in a minute. Free cash flow was up substantially as well, mainly driven by our strong profit performance. Switching gears and looking forward, our near-term focus is clearly on maximizing output, given our significantly increased order backlog, as well as laying foundation for further growth by executing on capacity expansion projects in our OEM businesses. Last time we spoke, we informed you that we are currently reviewing our strategy and process now being well advanced.
To present our results, we will be hosting a Capital Markets Day on December 3rd, as many of you know, and we are very much looking forward meeting you on that occasion. Finally on guidance. We have recently announced an upgrade of our profit expectations for full year 2026 and now are expecting EBITDA margin to reach around 22%. Moving to page five. As I have just mentioned, we saw particular strong demand in Semi and Advanced Manufacturing, as well as in Biophotonics, continuing in the third quarter, driving order intake and group level up by more than 40% year-on-year, overall exceeding our expectations. By business units, order intake momentum for Semi and Advanced Manufacturing in the third quarter was even exceeding the very high levels we have seen in the first half year.
Overall, dynamics were again driven by our lithography business, as well as continued strong customer activity on our semi-inspection business. Turning to our Biophotonics business, order intake was up by around 11% year-on-year. This, in our view, represents a very strong performance considering the extraordinary high- order intake base of the first nine months of last year. While demand for our portfolio of defense products reached the extremely strong levels of last year, growth was mainly driven by positive order intake dynamics in the medtech and life science field.
Let me remind you that we continue to believe that quarterly volatility of order intake in the business unit can be very high going forward, particular because of a somewhat special order pattern in the defense space, as well as a certain volatility that you usually see when running a concentrated key account business model.
Now, moving to our solutions business for Metrology & Production Solutions, we continue to see quite weak market dynamics in the automotive space, while optical metrology is doing well. For Smart Mobility Solutions, order intake development broadly was as we were expecting, with the growth being supported especially by our North American activities. Overall, as a consequence of these developments in demand, our book-to-bill ratio for the group at the nine-month stage went up sharply to around 1.4x, and our order backlog continued to expand to a bit north of EUR 900 million. Thanks so far, and over to you, Prisca.
Thank you, Dominic, and good morning, everyone, also from my end. Please follow me to page six to cover our revenue development. While we started the year in the first quarter with revenue still slightly down year-on-year, as you can see on the left side of this chart, strong order intake dynamics, as Dominic has already mentioned, started to translate into revenue growth in the following quarters. For Q3, we reported growth of around 18% year-on-year. For the first nine-month period, this leaves us with revenues up by almost 7%. Excluding overall minor effect from currencies, revenue growth would have been up by close to 8%. On a segment level, Semi & Advanced Manufacturing revenue grew by an almost 17% year-on-year, driven both by our lithography business as well as our semi-inspection business.
Optical datacom was also supportive, albeit on a lower level given its relative size compared to the other two businesses. Revenue of the Biophotonics business unit was still slightly below the strong last year level we saw, where we benefited from a strong dental business, as we have flagged several times already. Given this base effect, the medtech business did not quite reach prior year's levels as we were expecting. On the other hand, we see a continued strong development in defense, largely compensating for this.
Overall, we continue to believe that Biophotonics will end the year with some moderate growth. For Metrology & Production Solutions, revenue development primarily reflects a continued difficult market environment in the European automotive industry. Let me mention here that we have reviewed prospects and plans for our automotive-related assets and have consequently decided to impair some of our assets.
I will cover this topic in greater detail in just a few minutes. Finally, revenue of our Smart Mobility Solutions business was up by almost 12%, driven by almost all regions. On the next page seven that is, we look at our profit performance. As you can see on the left-hand side of this slide, the group's EBITDA reached around EUR 178 million, up by a little more than 35% compared to last year. This implies an improvement of our EBITDA margin by around 470 basis points, which was primarily driven by the following elements. Firstly, of course, revenue growth leading to better fixed cost absorption.
Secondly, we benefit from an overall lower cost base resulting from our cost reduction program executed last year. Finally, we see improvement in our product mix, especially relating to our Semi business.
Overall, we believe that product mix was extraordinarily strong in Q3, which has led to a group EBITDA margin of more than 26%. On a business unit level, based on the aspects I mentioned before, our Semi business recorded a very strong EBITDA margin of close to 34% for year-to-date September. Despite a certain decline in revenues, as I have explained earlier, our Biophotonics business continued to operate on a strong margin level of around 23% in the first nine months.
In the SMS business, we also saw a good move forward in terms of margins, as the top line growth was driving operational leverage. Turning to MPS, I think we indicated in prior calls that the business is subject to a certain seasonality. Hence, MPS returned to profitability now at the nine-month stage, even though, as stated before, automotive end markets remain challenging for us.
The other line, which includes our corporate center as well as Prodomax, saw an about EUR 13 million negative swing in EBITDA year-over-year, largely relating to certain corporate project costs as well as provisions relating to share-based compensation, while Prodomax is no relevant factor here. Looking at the key aspects of our P&L on page eight. Gross margin was considerably up year-over-year, which was primarily influenced by a general lower cost base as well as a higher contribution of our Semi business, as I have mentioned before.
On the function expense side, I think we still remain disciplined with those expenses up by 4% year-on-year, as we had to recognize high expenses for share-based long-term incentives, amongst other things. The change year-on-year in the other operating result was primarily driven by our decision to take an impairment charge in the mid-single-digit euro magnitude relating to our Hommel business.
As we stated before, the business did not perform as we were expecting, leading us to review our midterm planning, and this triggered the impairment taken. Despite this, EBIT for the period under review grew even faster than EBITDA, given slightly lower ordinary depreciation and amortization. Therefore, EBIT was almost up by 59% year-on-year, while the respective margin jumped to 14.4%. Bottom line, our earnings per share were up 60%, reaching EUR 1.28 . Turning to page nine, where we look at cash flow and balance sheet data. Let me start with operating cash flow. Given the strength in order intake and the growing order backlog, our priorities remain on optimizing output and our ability to serve our customers.
Hence, we have been taking on more working capital compared to the end of last year, resulting in operating cash flow growth being inferior if you compare it to profit growth. Adding on to what I just said, you see that our working capital ratio was up at the end of the first nine months at around 31%, and I would like to reiterate what I said on our last call, that for the full year 2026, we expect this ratio to trend to slightly above 2025 levels. Free cash flow, however, was up year-on-year due to lower investing cash outflows. In our year-on-year comparison, I think it's worthwhile mentioning that the prior year's figure still, of course, included considerable cash outflows relating to our new fab investments.
On the remaining key financial parameters, I would like to note that we've been making additional progress in reducing our leverage, which now stands at 1.1x compared to the 1.6x at the end of last year. So, our already very robust financial situation has been improved further. And with that, I would like to hand back to you, Dominic, to cover our outlook.
Thanks a lot, Prisca. Please follow me for the outlook to page 11 of our slide deck. Given our recent ad hoc announcement released on October 21st, I think there is not too much left to comment on. Given the strength that we see on our order intake side, combined with our ability to optimize near-term output, we are reiterating our revenue guidance, which stands at 5%-9% growth for this year.
Given our improved product mix in the first three quarters, we do now expect EBITDA margin for full year 2026 to be around 22%, compared to our previous expectation of between 20%-21%. CapEx, we do expect to end the year on a lower level than 2025, while beforehand we were expecting a slight decline only. This mainly relates to certain shifts of a number of smaller items into next year.
Please be reminded, amongst other things, the main capacity expansion project at the moment relates to our classical optics site in Jena, where we are working on expanding our high-precision clean room production, which mainly relates to our semi-inspection business. With that, I'd like to thank you and hand back to our moderator to start the Q&A session.
Ladies and gentlemen, we will now start the Q&A session. To ask a question, please press star, nine, and pound key on your telephone keypad. If you would like to revoke your question, press star, three, and pound key. You can also use the dial-in function in the webcast and raise your hand for asking a question. I repeat, to ask a question, please press star, nine, and pound key on your telephone keypad, or use the dial-in function and raise your hand. The first question is from Maissa Keskes at ODDO BHF. You can speak now.
Yes, good morning, everyone. So, giving the strong momentum in orders and your improved visibility on margin, which is partly related to high sales from OEM, could you explain why you haven't narrowed your sales guide as you have done for margins? Is there still some uncertainties or downside risk about your revenue expectation for 2026? Thank you.
Thank you, Maissa, for your question. Let me take this one. You are right. We have, let's say, have a range of 5%-9%, so the upper range that we had initially already narrowed down in August, and we left that intact, which of course indicates a certain volatility that we could see in Q4. I wouldn't over-interpret this. But as you always know, we have a strong Q4 typically, and there could be various things that could play out, both in the OEM businesses, but I would also like to point you to the solutions businesses.
Overall, we've decided to keep this range intact, while we have sort of pointed to around 22% for the EBITDA I've just seen. I hope that gives you a little bit of more color on this question.
Yes, thank you. One more question on margins. On Semi & Advanced Manufacturing, we know that the semiconductor business is the highest margin activity within the group. However, the EBITDA margin of 37% is still exceptionally high, even compared to the previous cycles. Could you elaborate on the main drivers behind this performance? Is it due to pricing increase or higher contribution from Dresden? Do you expect this level to continue into the upcoming quarters?
Yes, thank you, Maissa. Let me also take this question. So you've spotted it correctly. We had an extraordinary high margin in Q3. Let me say that this is, while we had a good Q3 across all businesses, the Semi business performed exceptionally well. I've mentioned before, couple of reasons of why this is. Amongst them, of course, being the high growth we said, the still lower cost base, while we are adding going forward, of course, more operators into the system in Semi, and then also product mix effect.
I would say two things. Please don't extrapolate this margin level into the upcoming quarters. This would be too much. On the other side, I would also mentioned that in Q4, we typically have also less production days available for our sites, so that can also be a factor in looking into Q4.
Having said that, what I would like to say is that the revenue step-up that we saw in Semi, we continue to see, let's say, for the going quarters, broadly in line with what we saw in Q3 from a top-line point of view. This is important to mention because I think it points to the step-up in output that we are seeing, which is basically the proof of the high revenue intake we saw in the beginning of this year, now step by step translating into higher revenue growth. Do not extrapolate the Q3 margin going forward.
Okay. Very helpful. Thank you.
Yeah.
Next question is from Olivier Calvet at UBS. You can speak now.
Thanks for taking my questions. I have three. The first one would be on your CapEx guidance, which you updated. Just curious if it's related to the Jena site expansion being delayed, or if you could also discuss the outlook for CapEx into 2027. That would be the first one. The second one would be, what's your order book visibility into 2027? Should we assume around a sort of 65% or so of your order book to be translated to revenues in 2027? The third question would just be on capital allocation. Obviously, you have a very low level of net debt to EBITDA at this point. Can you give us an update on your capital allocation here, or is that something where we should expect more details at the CMD on December 3rd? Thanks.
Thanks a lot, Olivier, and let me guide you through these three points, and certainly more to be shared then in December. In terms of CapEx guidance, yes, the majority of, or one of the big projects in terms of investments is related here to our site in Jena when it comes to high-precision optical components and the associated clean rooms with machinery. As we mentioned earlier, there are some minor items that are getting delayed. We are still targeting towards the end of next year, 2027, to go live with that according production.
Obviously, we are mitigating accordingly to assure that equipment will be live at the time as we are ramping accordingly. When it comes to then CapEx guidance towards 2027, that is too early, and we will get back to that throughout our usual cycle when guiding for next year.
Order book, yes, we are expecting about 30%-35% of the order book to be translated into sales for this year, which then translates also to the according revenue guidance, as mentioned earlier. The vast majority of the remaining order book is going to be translated into revenue in 2027, so you are correct with the assumptions as we mentioned. When it comes to capital allocation, also more to share than when we come to December timeframe, and we keep our according capital allocation as a high-level guidance, as we have them in place in terms of, number one, being into organic growth and allocating capital towards expanding our ramping businesses, then certainly paying dividends as we did in the past in a stable environment, and then thirdly, looking into potential bolt-on acquisitions going forward.
But more to share, but guidance in terms of capital allocation remains as has been iterated now.
Thank you.
The next question is from Craig Abbott at Kepler Cheuvreux. Your line is open.
Hi, thanks also from my side. I will limit myself to three as well, please. First question, I just wondered if there is any color you can provide, at least qualitatively, on order intake trends you are seeing in Q4, obviously particularly in Semi & Advanced Manufacturing. Could we expect a book-to-bill in Q4 again above 1x, both for that division and the group? The second question is, you had this exceptional product mix in 2027. We appreciate that we cannot just extrapolate that. We understand that.
But is that something that could potentially happen again in 2027 or beyond, or was that just a really a unique one-off situation? If you could provide us some color there, that would be great. And the third question, please, is, could you give us an update, please, on the situation at Prodomax? I am talking about operationally.
I appreciate you are going to update us on your strategy at the CMD, but in terms of operationally and the whole tariff debate impact, if you could give us an update there, that would be great. Thank you.
Thanks a lot. Happy to provide some more color, or trying to, because the first one was order intake outlook for Q4, right? Let me.
Correct.
Let me start out that that is actually quite difficult for us to mention order intake trends as they turned out to be quite volatile, especially the ramping businesses we have as of today. Let me make more a general statement. All we see and hear from our customers at that stage indicates there's no sudden demand change to be expected. That still means that it could be volatile in Q4, but the fundamental drivers in the business based also on the customer interactions that we are having are stable towards the demand in our businesses. Certainly it's fair to state that our order intake in the first three quarters was running at very high levels. Let me hand over to Prisca.
Yeah.
For some.
Yeah. Thank you, Craig, for the question on product mix. I will try to give you a little bit of more additional flavor on that exceptionally high margin of Semi in Q3. I mentioned product mix, so you will fully understand we have a pretty concentrated customer base, and there will always be some kind of fluctuations going on there. That is one reason there. I already mentioned the lower cost base.
As you know, we are in the process of supporting the ramp-up, so that of course means that our personnel costs are somewhat lagging, as we are putting resources basically into the site, but that takes a little bit of time. I think that basically what I would close with is saying, in Q3, literally everything was going right, and things were firing on all cylinders, which is obviously good, and we're happy about that.
I do not want to take from what I said about Q3 earlier, but of course, the continuous incremental ramp-up of our Dresden fab will also be accretive to our margins in the Semi & Advanced Manufacturing space going forward, without being able to give you particular insights beyond that. I hope that gives you a little bit of more color. As for Prodomax, which you see amongst other things within the other segment, nothing has changed there from our strategic intent. We reiterate that we want to divest this business, but we are not able to give you a timeline right now. Operationally, I would say we see also a fairly good Q3 after, I would say, an improving Q1 and Q2, as we have mentioned. I would say cautiously positive on that.
But of course, it is too early to really call this substantial, as the automotive market in North America and also the sentiment overall between Canada and the U.S. have not really improved markedly, I would say. But overall, we see a certain cautiously positive view on that.
Thank you very much.
Next question is from Michael Kuhn at Deutsche Bank. Your line is open now.
Thanks for taking my questions. One more on the Semi segment and, let's say, order patterns. We've heard from a number of companies that they, let's say, get more visibility from their clients as there is also kind of a rush for delivery slots. Obviously, your customer base is quite concentrated still. Would you see that your visibility has changed? Also in the context of the Semi business, you mentioned optical datacom, which is still small, but obviously a strongly growing segment. Could you give us an indication on how big it is currently for you and what could be the growth perspectives for that business? A quick one on Biophotonics, also very strong margin in the third quarter, and obviously a growing defense share helping here.
Maybe a few additional comments on how big was that mix shift and whether we should expect that mix shift to continue into the next quarters as the defense business is still underlying growing.
Good. Michael, thanks. Let me start out to give some more flavor along these very relevant points. Semi order patterns, certainly with all our semi equipment, but semi customers in general, we are in very close cooperations, and you will understand that I cannot go into individual details here in terms of both short-term delivery and expectations and demand situations, but then also at the more midterm in terms of which levels we are preparing ourselves. Visibility certainly has been improving, especially obviously versus last year, but also versus first half of this year. It is about both short-term delivery for our customers, but then also continuing preparing for the ramp that we have ahead in a healthy environment.
On the datacom side, we have been commenting on that business being on a low double-digit euro revenue number.
In terms of outlook and expectations, I would like to point you towards the upcoming Capital Markets Day that we have on December 3rd. Upfront, please don't expect that business to be of a magnitude like the equipment business, but certainly an interesting one in terms of potential and growth rates. More to share later. When it comes to Biophotonics, yes, certainly we've always mentioned that the especially sales side, but overall business side is currently profiting from the underlying demand in the defense space for infrared cameras and laser rangefinders. We do also see that mix to continue in the direction as we currently see it also for the upcoming future.
Maybe one follow-up.
Yep.
Because we've heard that.
Sorry, Michael.
Yeah.
No, go ahead.
On delivery patterns and bottlenecks, that topic has also come up with a number of companies in the semi space. Do you see any major factors, let's say, affecting your ability to deliver currently in terms of supplier relationships? I mean, obviously, we know you are expanding your own facilities, but I think some details in that context would also be helpful because some companies seem to be mostly held back by constraints in the supply chain and obviously not by demand.
Yeah. That holds for the whole industry and also us. Nevertheless, we do believe that we are in a good situation to master that. We are running programs where we look obviously in all the dimensions that are required to ramp the business, and that especially holds for three areas. One is the according investments that are needed in terms of machinery. There we are on good track, and that is more a mid-term topic and also to follow 2028, 2029, and forward. Then the second and the third one are more the short-term topics in terms of adding labor and also having a supply chain in place that can support that. These are certainly the day-to-day activities that are being managed with utmost focus in order to drive that.
As of today, knock on wood, we are in a situation where we can support the growth as required for our customers and also see that continuing for the near future. Please also keep in mind, as I mentioned earlier, that we are running operations that has a relatively long throughput time in some of our plants, which also means that there is a time lag between orders and then sales by simply the nature of our business in terms of how we produce our products. But the growth in revenue, as we also see in SAM now in Q3 in semi, is, I think, a good indication that this ramp is happening.
Thank you.
Remind you can still ask questions by pressing star nine and pound key on your telephone keypad, or use the dial-in function in the webcast and raise your hand. The next question is from Martin Jungfleisch at BNP Paribas. Your line is open now.
I have two questions, please. The first one is a bit of a follow-up on the question just now. I think you mentioned on capacity expansion, you mentioned the expansion in the OEM business. Can you just talk about when is this turning into additional revenue generating capacity? Would you assume as of today, and also given your backlog, that capacity is going to be a big hurdle for growth next year, or are you still relatively relaxed on that topic? That's the first question.
Yeah. That's not a black and white answer probably, but to your second point, we don't see capacity expansion as the hurdle for growth next year. Nevertheless, we are firing also here on all cylinders when it comes to equipment and also more to prepare us for the ramp also going forward. Please also, as you know, keep in mind that we actually invested significantly, especially in the Dresden facility in the past that is obviously now supporting also the growth in some of our product lines that we see now and also going forward. Plus, based on the current clean rooms and production facilities, capacity expansion is also driven through adding more machinery into the current shop floors. Yeah.
Yeah. No, that makes sense. Thank you. The other question is just mainly on cost. Your OPEX were sequentially down in Q3 by around EUR 4 million or EUR 5 million or so versus Q2. It was mainly on G&A. Can you just talk about how we should think about these cost factors in the fourth quarter and maybe also going into 2027, and maybe also how potentially rising input costs like energy costs, et cetera, could be a headwind? Thank you.
Yeah, Martin, let me take that question. There is no extraordinary impacts other than I mentioned in the other operating expense, right, in our OPEX or in the functional cost rather, right? They will always fluctuate with a certain degree. We will have going forward, that's valid for Q4, but also for next year, the general labor inflation obviously. We remain, let's say, disciplined when we are adding headcount, but of course, with all the growth, we will also be able to support some headcount in our OPEX. So there's really nothing additional I would want to point out at this point that will have a major impact on any of the functional cost lines. So I would say general in line with inflation at this point.
Okay. On a quarter-on-quarter basis in the fourth quarter, would you expect OPEX to materially tick up? Just on the R&D sales and the G&A side of things, these three items?
Yeah. I cannot really give you a quarter-related guidance on that, so bear with us. I think you will have to wait until you see the financial results for the full year in early next year.
Okay.
Not really much.
I'll wait. Okay, thanks.
The next question is from Valentin Jahan at Stifel Europe. Your line is open now.
Hi, everybody. Do you hear me well?
Perfectly. All good.
Perfect. Thank you. I would have just one question. When we listen to your semi-cap customers, they describe a favorable demand environment extending beyond 2027. My question would be, is that consistent with your own recent discussions you have with them? In particular, are those conversations giving you greater confidence in the duration of the current positive upturn of the cycle?
Okay. I am not sure if I acoustically did rest at all. If I heard you correctly, the question was our view based on our talks with our customers in terms of where we stand also 2027 and beyond in terms of confidence, right? Yes, that is obviously the crystal ball that is being discussed in the whole industry, and we can reiterate what was mentioned earlier, and it was also shared by according analysts in that whole space.
We do see a strong demand in 2027 and beyond for our major semiconductor equipment customers in the lithography and also in the inspection space. We do see no signals that that is going to change in the timeframe of 2027, 2028. Obviously, then there is the view in terms of what that means in 2029 and 2030, and for the time being, we also remain positive for that outlook.
Okay. Thank you.
At the moment, there seem to be no further questions. With that, I hand you over to our speakers.
Thank you very much. Highly appreciate, and thanks for participating in our quarterly results call. Let me summarize what we mentioned earlier and how we see the situation. We saw a continued strength in order intake in our OEM businesses. We see revenues picking up. Profitability levels seen in Q3 benefited from a temporarily strong product mix in our view, and as such, should not be extrapolated. Our order backlog is up significantly compared to end of last year, representing a strong basis for another successful year of JENOPTIK when looking into 2027 in our view. And finally, we are very much looking forward to seeing you all at our Capital Markets Day in Dresden on December 3rd to discuss further strategic direction for our company. Thanks a lot, and goodbye, everybody.