Ladies and gentlemen, on behalf of the WashTec board, together with my colleague Andreas Pabst, CFO, I would like to welcome you to the Q1 statement. As you can see, we are presenting this event as a live stream. Thank you for your feedback that you gave us after last call. We have decided to have the Q&A session as an interactive format. This means you will not have to use the chat, and you can ask your questions directly. Detailed instruction will be given by the operator at the end of this presentation. It was just a few weeks ago when we held the year-end call. Our update on WashTec will be brief. Andreas Pabst will present the figures of the first quarters after my presentation. We will have the Q&A session. WashTec had a really good start in 2023. The first quarter was successful.
Record high revenue, record high EBIT, earnings per share up by 52%. Despite high investments, we had a positive free cash flow. This is clearly a development we are very confident with as a board. The business sky has some clouds too. The order intake in the direct business is slightly slower compared to the prior year. We are observing this closely and are taking actions. The real sky, the weather outside in Q1 was very rainy, even stormy. Wash figures were lower due to bad weather conditions in Europe and North America. With the good weather in the last two weeks and additional customers we won, wash figures are coming back and also our more weather-related figures for service and chemistry exceed prior years' numbers. We will provide more details in a few minutes.
Let me summarize our mission and business model to take everybody on board. Our mission is sustainable car wash. WashTec is the leading provider of innovative solutions for car wash worldwide. Our product range comprises all types of vehicle wash equipment as well as the associated peripheral devices, sustainable wash chemicals, Green Car Care, and water reclaim systems. As specialists in environment-friendly vehicle wash systems, we work continuously on innovations that contribute to sustainable mobility for today and tomorrow. WashTec also offers comprehensive servicing packages and digital Smart Service solutions spanning the entire product life cycles, including equipment maintenance, chemicals, equipment take back, financing arrangements, and operator management. In the ecosystem of innovative and profitable car wash, our digital platform, mywashtec.com, is the one platform that gives our customers easy access to all relevant insights and enables them to control car wash equipment and their business with highest efficiency.
mywashtec.com provides one face to the customer and combines all functionalities to satisfy all needs around the car wash business for everyone, everywhere, anytime. We have implemented an advanced wash count analytics in the cloud. We avail this data in real time now. Next step is already prepared as a product innovation on our digital platform. We have equipped our water treatment systems, the AquaPur Modular, with sensors. Connectivity shows or allows us to collect and process data. For example, the quantity of fresh and processed water, the parameters describing the state of the water, and improved functions due to the data received. We then convert this functionality into Smart Services that can be booked by the user. First customer groups have expressed high interest in this solution.
We at WashTec are committed to integrate sustainability in the business model of our customers by providing sustainable car wash solutions. We will publish our second extensive sustainability report of the year 2022 by the end of Q2 2023. The report will feature WashTec's new mission statement, in which we focus on our customer values. Second, we will showcase general information about the water recycling business. Third, we will publish our CO2 footprint of the sales and service country units. Our sustainability actions and achievements are presented in the proven manner. As every year, spring is the season for trade fairs. The Car Wash Show in the U.S. takes place from May eighth to tenth. Our colleagues of Mark VII will present the innovations supported by WashTec colleagues. Sebastian Kutz and I will attend as well.
From June 14th to 15th, the German fair, Tankstelle & Mittelstand, takes place in Essen. This is the trade fair of mid-sized companies, where we meet our direct customers and independent car wash operators. In case you are nearby, don't miss a visit. I now hand over to Andreas Pabst, CFO of WashTec, to present the Q1 results. Thank you.
Yeah, thank you, Ralf. Hello, welcome from my side as well. Please now move to page number 9. On this slide, you see our main KPIs for the first quarter. As Ralf already summarized, WashTec had a real good start in 2023. The first quarter was successful. Let us now look a little bit closer to the figures. Revenues are second year in a row, north of EUR 100 million. With EUR 109.2 million, we could top our last quarter year Q1 figure by 8.1%. If you will take FX changes into consideration, it is worth to explain that we had contrary FX developments. Whereas Norwegian krones have been supportive, we got some headwind by the US dollar. Overall growth without FX effects would have been a little bit higher than at 8.4%.
Let's look at the EBIT. In Q1 2023, our EBIT comes in at EUR 5.5 million, which is clear above last year's number, an increase of 19.6%. EBIT margin is at 5.0%. How did we achieve this improvement? Clear, higher revenues based on own price increases, as well as higher delivery numbers helped us a lot. We also did our homework on the production and the efficiency side. We acted proactively. In our supply chain, we defined so-called preferred machines. preferred machines are machines which can be sold to many different customers which do not have highly individualized configuration. In that way, we can streamline our production. This is also supported by our focus on machines which have a clearly defined installation time schedule.
Since January, we only produce when we know exactly when the equipment can be installed at customer sites. Otherwise, we do not produce, even if that means we need to take out some temporary workers or even close part of the plant for a day or so. This brings us back to our profitability path. Acting so, we are able to increase our production efficiency. We see here first results. It is true that due to increasing purchasing prices, our gross profit margin with 25.5% is still below prior year, we see a positive monthly development. It moves in the right direction. Furthermore, in the U.S., we started a program, we call it Road to Red Rocks, which will lead to better profitability there. This program includes a large variety of different methods, from purchasing over installation and service to streamline our chemistry distribution.
China, we are currently discuss about the best way to penetrate the local market. Generally speaking, we are very cost sensitive on all layers of our company. As stated at the annual press conference, we really concentrate on increasing profitability. You see, we are doing a lot to stay on track for improvements in 2023. Another focus item we are working on is our free cash flow. As you probably know from our annual report, we acquired land and buildings occupied by our US subsidiary in January 2023. Mainly therefore, we had a high cash outflow from investing activities, EUR 11.1 million in Q1 2023, compared to only EUR 1.2 million in Q1 2022.
Despite this significant higher capital expenditures, we managed to generate a positive free cash flow with EUR 1.9 million, whereas the comparable figure of 2022 was negative. We achieved this via improvement of our cash inflow from operating activities by EUR 13 million, due among other things, to the higher gross cash flow and the reduction in Net operating working capital. Net operating working capital sums up to EUR 100.8 million compared to EUR 105.2 million end of December 2022. Our equity ratio end of Q1 2022 is 31.2%, a solid number too. Let's spend some time on our long-term development. Next slide, please. On this slide, you see our five years development of revenue and EBIT for the first quarter.
As you know, in general, first quarter is the weakest for WashTec. Compared to the first quarters since 2019, you can easily see our positive development. Coming from pre-COVID revenues of EUR 92.3 million in 2019, we are now at a volume which is 18% higher, a CAGR of 4.3%. By far more impressive is the development of our EBIT number. Coming from EUR 2.6 million in 2019, which is an EBIT margin of 2.8%, we more than doubled our EBIT and come in at EUR 5.5 million, an EBIT margin of 5%. This is, in our opinion, a very respectful CAGR of 20.6%. Enough about long-term development. Let's have a look at our regional revenue share.
Next page, please. If we look at our regions, we also see this impressive revenue growth. Whereas in our strongest region in Europe, we grew last year by 12.4%. We achieved in Q1 2023 good growth of +6.4%. Without headwind from Norwegian Krone, the growth would have been 7.7%. In Europe, we could increase our revenues with equipment, with service, and with chemicals. The figures in North America are even more impressive. After +58% Q1 last year, we again grew significantly in Q1 2023 by an additional 17.5%. Also, without FX tailwind, the growth rate is 13.7%. Due to this higher growth rate in North America, the region now stands for close to 20% of our group's revenues.
This growth is attributable to the equipment and service product segment, mainly due to higher equipment sales. Only in the APAC region, we fall by EUR 0.2 million behind last year, as we had a weak start in Australia. Moving on to the EBIT performance by region on page 11. In Q1 2023, we managed to increase our EBIT in our biggest region, Europe, again, an increase by 34.1% to EUR 5.9 million, after an already high increase of 16% in Q1 2022. This is a result of the positive revenue performance and the strict cost management. In North America, our EBIT was, despite a significant increase in revenue, at the same level as prior year, at -EUR 0.3 million. To increase our profitability, we launched an efficiency program, Our Road to Red Rocks.
Work on this program has already begun, and we are certain that we will see here improvement over the year. Our APAC region generated in the first quarter a small loss of EUR 0.2 million. Coming now to revenue by product category. Revenue from equipment and service reached EUR 91.1 million, up 8.6% year-on-year. This is mainly driven by own price increases done over the course of last year and at the beginning of this year. Also the number of machines sold is higher than in Q1 last year, especially in U.S., whereas in Europe, the service growth was higher. Revenue from chemicals was EUR 16.7 million, up 7.1% versus prior year. This came mainly from Europe, where we could expand our business to new customers.
In North America, we saw a small decline in our chemical business due to weather conditions. Next slide, our EBIT bridge, shows some more details to explain the EBIT development compared to the prior year. As already explained in our last calls, we are facing significant material cost increases, which we conquer by own price increases and efficiency improvements. Despite good progress, we are in terms of Gross profit margin with 25.5% still below comparable figure of Q1 2022, which is 26.8%. Nevertheless, our higher revenue helped us a lot. That Gross profit in absolute terms increased by EUR 0.7 million. Mainly higher outbound freight led to higher selling costs, whereas our strict cost management led to lower R&D and especially lower administrative costs.
We managed to decrease the functional costs as a ratio of revenues from 22.8% in Q1 2022 to 21.0% in Q1 2023. All this contributed to an increase of our EBIT by 19.6% to an overall amount of EUR 5.5 million. This clearly is a development where we, as WashTec Board, are confident with. Next page, please. I already mentioned that we have bought land and buildings occupied by our U.S. subsidiary in January 2023. On this picture, you can see the front of the building. It is located in Arvada, a town close to Denver, Colorado. The whole area has more than 300,000 sq ft, approximately 29,000 sq m. Enough space for our own production for North American market and enough space for further extension of our business.
We have financed the purchase price of $10.3 million with U.S. bank facilities so that we do not face any FX exposure out of this one. This led to a slight increase of our net debt position, which is EUR 28 million end of Q1 2023. A comparable figure, end of 2022, was EUR 27.1 million. Overall, I believe this is a clear statement to our U.S. colleagues that WashTec Board trusts in further expectations in the North American market. Coming now to our guidance. In terms of revenue, EBIT, and free cash flow, we had a very good first quarter. We are on track. A good start in 2023. On the other hand, we are watching carefully our order intake.
In the first quarter, it was down year-on-year following the demand in the market as a whole, currently somewhat slow. Accordingly, the order backlog at the end of March was slightly down on a year earlier. Therefore, overall, we look at optimistic but cautious in the future and keep our guidance with revenues at ±3% of prior year level. Due to our measures, we expect a significant increase in EBIT and a significant increase in free cash flow. Finally, let me guide your eyes to our financial calendar, which is on page 17, and on our event calendar, which is on page 18. You see our next event is the annual general meeting May 15th, followed by the spring conference in Frankfurt one day later. We hope to see you there. This is from my side.
After a short break, we will be happy to answer all your questions you may have. I hand back to the operator. Thank you.
Thank you. We will now take our first question from Stefan Augustin from Warburg Research. Please go ahead.
Yes, hello. Thank you very much for taking the question. The first one is actually a little bit on the order development. You, Mr. Pabst, you outlined that the order backlog is slightly down year-over-year. Can you add any more flavor to it? Is, let's say, if framework contracts still sufficient to model that you would actually also be able to have the same amount of sales as last year in the other 9 months? Is this just precautionary or do you really see a bit downward trend here in the business?
The second question would be on Asia to understand a bit more how the decline of 200,000 EUR in revenue can cause this significant swing in profitability, even though the chemical business seem to be okay in Australia. Just to understand how this works. I have two smaller housekeeping questions, each on then on cash flow. The first one is the reduction of receivables in the first quarter, is that simply, let's say, we shipped the machines in December, then we had the stuff as receivables, and it's simply money collection? Or is there another financial transaction, like Forfaiting EBS or whatever, behind that big reduction of receivables?
I also recognize that we have a lower cash tax payment, in the first quarter. Will that level out during the rest of the year, or can we assume really a lower cash tax payment this year?
I guess I take the questions.
Yeah.
I guess I take the questions.
Yeah. Go ahead.
Augustin, thank you for the questions. Yeah. Maybe starting with what is in the order backlog. What we are currently see is that giving the current uncertainty in the overall economic environment, we see that some of the order like they did in the past, uh, let’s say, at the same speed, yeah. If you look at our sales funnel, this is where we collect all the possible orders in the future. The sales funnel is quite good, yeah. The signed orders are a little bit lower than we had last year, and that is something what we really need to watch and be very careful. Is there a reaction in the market?
Currently we do not see it, but we do not have so much order intake than what we would have expected for the first quarter. You ask the question about what's in Asia, what is especially in Australia. If you look at the overall APAC region, we have really weak machine revenues in Australia, whereas China is quite good. It's on budget level. Do I have really sorrows about that? No, I don't. I really see that the machines in which we have not delivered in Australia in the first quarter, they are really sitting on the order backlog, and there are contracts behind that. This is just a shift from one quarter to the next one. It's a little bit of accumulation of some customers.
I'm pretty sure that this will be resolved in the next quarter or next 2 quarters. As company is small, yeah, so you immediately see the result then. You had the question about cash flow and reduction of the receivables. Yes, on the one hand side, we had a very good sales in the month of December. That means we had high accounts receivables end of the year, and we are now collecting the money. That is part of the story, but it's also part of the story that we are really increasing our processes in collecting accounts receivables. Yeah, we are focused on it, collecting the money. That is 2
Two arguments for this reduction.
I guess the last question was about taxes in the, in the, in the cash flow statement. There's a shift, yeah, of we paid some taxes in advance in Germany, and we will get it back or the other way around. It is a shift. It is nothing which will last until the full year. Quite complicated.
Thank you very much for these detailed question, answers to the questions. It's good to hear that we can really model forward, lower days outstanding for receivables.
I cannot tell you what you have to model. But for me it makes somehow sense, yeah, that we will bring down our accounts receivables, yeah.
Thank you.
Thank you. It seems there are currently no further questions in the queue. With this, I'd like to hand the call back over to Dr. Ralf Koeppe for any additional or closing remarks. Over to you, sir.
Yeah. Thank you very much. Ladies and gentlemen, I hope you enjoyed the new format and the interactive discussion session now. We try to improve our processes for the call. Looking forward to see you at Monday in a week at the general meeting. Furthermore, we're going off to the fairs and Andreas will attend some investment meetings. We're looking forward to meet you and have a good day. Thank you very much.
Thank you. Bye-bye.
Bye-bye.