Thank you for joining us today for the Midwest IDEAS Investor Conference. I'm Philip Cooper with Three Part Advisors. Our next presentation comes from Aebi Schmidt Group, which trades on the Nasdaq Exchange under the ticker symbol AEBI. Presenting from the company today is Simone Grancini, Director of Investor Relations, and Marco Portmann, Chief Financial Officer. Gentlemen.
Thank you very much, and good morning, everyone. My name is Marco Portmann. I'm the Group Chief Financial Officer, and again, introducing you to Aebi Schmidt here today. Aebi Schmidt is a global leader in the special vehicles industry. What that means is we are producing everything you need to keep roads up, to maintain street infrastructure, airport infrastructure, and we're also active in other spaces. Particularly, we empower last mile delivery, walk-in vans, step-up vans, as you may know it, alongside other solutions in the commercial truck space. We also have a little bit of an agriculture business as well. It's a broad portfolio that we're offering. In all our markets that we are active, we are commanding a leadership position. That's part of our strategy. We want to grow to become a leader in the space, either organically or through M&A, or we will exit that space.
We are very targeted and very active. Every market we are in has some highly attractive measures and growth tailwinds that we talk about today. Plus, we are, of course, in a situation where we are creating a lot of momentum at the moment following our acquisition and listing last year of 2025. In July 2025, we acquired the former Shyft Group. Shyft was a listed company on Nasdaq, active in similar spaces. We talk about that in a minute. We were a privately held company until then. Situated, domiciled in Switzerland, grown since 2006, essentially with an active pipeline between organic growth focus and M&A, 20% CAGR revenue growth in the last 10 years. Then 2025 in July, acquiring Shyft, not as a reverse merger, but as an actual acquisition, all paid in equity, and listing ourselves on Nasdaq July 1, 2025.
We have about CHF 1.9 billion in revenue last year pro forma, midpoint guidance this year CHF 2.05 billion. We expect to be at CHF 3 billion by 2030, again, as a combination of that same playbook, about half through strong organic growth, about half through further M&A activities. That's very briefly Aebi Schmidt. Now, talking a bit more about the products that we are actually delivering. We are looking at five customer segments. First up, we have municipal, and you can see on the picture that's a street sweeper. That's the space where we are very active in Europe, street cleaning. Predominantly as well, we have also municipal customers both in Europe and the U.S. in terms of snow plows, spreaders, but also niche products like pavement markings. Again, as I said, everything that you need to keep roads maintained.
That is the biggest segment that we have, about 40% of our revenue with about average margins throughout our portfolio. The other big segment is airport and chassis. Airport here is the dominant driver. Chassis has just merged into it because of the production facility being combined. It is similar technology that we have there. That is the highest margin business that we have. We are commanding a number one leadership position globally in international airports. Again, we are providing that mission-critical equipment to keep the runway clean. We are not servicing anything that is associated with the carrier that is actually directly with the airplane, so not the de-icing for the airplane, but the de-icing of the runway itself. Our customer, therefore, being typically the airport directly. Again, internationally, we are number one. We also have introduced new products, smaller, more versatile products last year.
Because we have such a high market share, well below 50% globally, that we wanted to increase our addressable market. So now we are going after the so-called general aviation airports. That is one rank below the international ones with those more versatile solutions that were tailor-made and as a development with the FAA and with those airports in mind and involved. Again, very good space, very high margins. In both of these cases, municipal and airport, that is also where we have basically a strong demand that is non-cyclical, that is also tied to the legacy Aebi Schmidt side. So that is both in Europe and America where we have those commanding leadership positions with backlogs all around at the moment of one year plus. Then we have goods transport.
As you can see on the little picture, that is a walk-in van business plus some other adjacent products, but the walk-in van here is really the interesting part. Again, you will know that the big parcel guys here are the main customers, FedEx, UPS, and so forth. You have also others, tier two customers for food, utility, linen, all kind of delivery solutions that we can offer and serve. This is the interesting space now coming back. So incrementally in terms of revenue growth this year, next year, it is that walk-in van space. Those of you who were familiar with The Shyft, that is coming out of the acquisition. We were not active in that space beforehand. This is interesting because in Corona times there was a huge craziness, of course.
Everybody was at home, everything was delivered to home, and you had a peak delivery in 2023 and essentially a dead market in 2024, 2025. Now that space is coming back. The orders have been picking up in late 2025. We now see a structural and broad recovery in order intake in 2026. We are now fully booked into 2027 in walk-in vans. So again, as I said, incrementally, this is the very interesting space at this very point in time. I should also point out for those who were following The Shyft in the past, it is however just a smaller piece now of the bigger cake. It is 20% of our revenue at this point. So it is, yes, the significant driver in incremental revenue, but it is also not the company as a combined Aebi Schmidt that it is today. Then we have commercial trucks.
That is basically the service bodies that we produce, alongside some other products, including trailers and further commercial solutions. Those truck bodies, or those service bodies, that was a big consideration also with our merger with The Shyft. We were essentially buying those service bodies from a direct competitor in the past. We now can produce them in-house. That gives us quite a bit of a margin uplift, was part of our synergy consideration out of that. That is the space where you deliver to your plumber, your gardener, pool maintenance, whatever it is, those service bodies for their day-to-day job. Lastly, we have the agriculture business, and we are number one in the alpine markets. That means essentially, we are not competing with a John Deere or anything like that.
We are active whenever you need a solution in a steep hill or alpine markets, as we say. This is where the Aebi brand comes from. This is Aebi Schmidt or Aebi specifically as a branding. That is what we are producing, in fact, in Switzerland. As you can imagine, that is predominantly Switzerland, Austria, and a couple other countries that we are exporting them into. Admittedly, the smallest piece of our business by now and also not the one that has the most significant growth. We spoke about that in terms of goods transport at the moment, but also strong organic growth in municipal airport. Agriculture, the core of our name, but the smallest of our business by now. Good. That is a brief overview of what we are doing. With that, I hand it over to Simone. Thanks.
Good morning. On the first page, I am going to give you a little bit of an overview on the industry, on the specialty vehicle industry, why it is an attractive case. I do not want to go in details on every single point, but just the top three points for me. First of all, we are talking about mission-critical products. If you think of an airport or a municipal customer, they have to have that machinery ready to go. Even if it snows rarely, it needs to be there, needs to be functional. They need to clean the runway as fast as possible. So mission-critical product, it has to be there by law, and that connects to the second point. The budget is usually there, because those customers, they need to finance the purchase of the machine. So very low cyclicality. That is a very good point.
The second point I wanted to mention is the high entry barriers, and that goes both on the product and the customer relationship. If you talk about the product, it is a niche market. You need a lot of specialized skills in engineering, in R&D, in the production, in the supply base. So it makes it difficult for a new entrance to try to break in and become a strong player in the sector. So that is one, the high entry barriers on the product. Second one, maybe even more important, it is really the customer relationship. Most of our customers are very loyal. Most of these type of customer tend to have a preferred supplier model when it comes to supply. Once the relationship is there, once the rapport is there, it becomes very difficult for new entrants to come in and break that customer relationship.
The last of the three points, you see the bottom two here, is really on the industry itself. There is a lot of consolidation opportunities going on, a lot of transaction potential. Simple reason, because economies of scale play a big role, so smaller players tend to be incorporated into the bigger player. In a nutshell, why specialty vehicles? Top three reasons, we're talking about mission-critical products with stable budget. Two, there are high entry barriers for new entrants. Three, it's a dynamic industry when it comes to consolidation opportunities. Now that we know more about the industry, why the company Aebi Schmidt? Don't want to go in all the details, but you see three main topics, the proven growth, today's competitive edge, and future tailwinds. On the proven growth, you see a good balance of organic and inorganic.
When you see the CAGR over the last 10 years, + 20%, as Marco mentioned. We have a strong organic growth, focus on the customer centricity and discipline execution. When it comes to M&A, we do have a proven playbook of M&A, and I will come back to that in a moment. You see some examples here, Meyer, Swenson, and so on, and of course, most recently, The Shyft acquisition, a very large transaction for us. It has been proven very successful, and I will show you a couple of numbers in a moment. Proven growth track record is the first reason of why Aebi Schmidt. The second reason is today's competitive edge. The one sentence I would like to remember is Aebi Schmidt is a global leader positioned for profitable growth and resilience.
That's really our one-sentence summary, a global leader positioned for profitable growth and resilience. The points you see here are supporting that. Just to bring you one example, the local for local. We try to buy and produce as much as possible, like in the U.S., for the U.S., and in Europe, for Europe. That helps us with being more protected from global events, macroeconomic events, tariff discussion, Middle East situation, you name it. We're not immune to that, of course, but with the local for local model, that helps us to be more resilient. The last point on the future tailwinds, you see a similar, as I mentioned before, so it's still a good balance of organic growth and inorganic growth. On the organic growth, you see the first point, the market position, the vertical integration after sales and footprint.
When it comes to M&A, as I mentioned, it's really the playbook that we have used now multiple times, and it's working very well. Speaking of M&A, really on the next slide, I want to take a moment on The Shyft acquisition. Now it's a one-year anniversary of our acquisition. We closed it July last year, so it's been a full 12 months. You see the financials on the left, 12 months pro forma pre-acquisition and 12 months after acquisition. They speak for themselves. Order intake +26%, profitability up 22%. It's been working very well. We're very happy and proud of the acquisition, of the results that we have achieved. If you see on the right-hand side, you see some other more qualitative achievements. Don't want to go through all of them, but just a couple.
First one, the company was operational from day one. Every employee and the business leader were taking full ownership from the first day with the combined company. When it comes to synergy, just to give you a quick summary, we started with $25 million-$30 million target on a yearly run rate. We increased it to $40 million. Now, as we said in the last call, we expect to achieve $37 million run rate by the end of this year and an uplift of additional $5 million by the end of next year. Getting us to the $42 million, which is exactly a bit more than $40 million, as we said. That is a combination of several factor OpEx, purchasing, and revenue. We can discuss it in the Q&A if you want, but the point is, it has worked.
Our playbook works, and of course, we would be happy to implement it also with the future transactions. Last page on my side on the segments. Marco spoke about the business line, but when we report, we actually report with geographical segments that you see here. North America and Europe. The point I just want to make here, as I mentioned, global leader position for profitable growth and resilience. Here, I am showing the global leader piece of that sentence. On North America, we are present in 95% of the. We cover 95% of the population here in North America, and that was one of the main reason of The Shyft a cquisition, really to get to the national presence. If you are a FedEx or a Penske, then you need to have a counterpart that is also able to cover the national footprint.
That is what we achieved with The Shyft acquisition, and it is now successful in North America. In Europe, of course, The Shyft acquisition did not have an impact. It was only U.S., but you see the same story there. We are present. The blue dots are the local sales organization, and the red dot are the production facilities. We are present across all the Europe and beyond Europe, in the rest of the world with a dealership network. With that, I hand it back to you.
Yes. Look, quantitatively, where are we today and what are we guiding for where we are going to be standing in a few years, 2030 to be exact? As I said before, last year, 2025, pro forma, we had a revenue of just CHF 1.9 billion, now hitting the CHF 2 billion mark this year, and we clearly say we want to be at CHF 3 billion in a couple of years, by 2030. We expect to see 6% organic growth, and we continue to see that also in Europe. That always seems to be, of course, a bit of a concern in question. If you look at our last two quarters, we had essentially double-digit growth organically still also in Europe, despite already the strong market position that we have in a flat market.
We are taking it directly from our competitors, and we see that in their figures as they are publishing. In terms of EBITDA, we were at 9% or just about 9% last year pro forma. We are guiding to just over 9% with our midpoint this year and 13%, as you can see on the slides, by 2030. The actions you see here, and that is the good tailwind and internal improvement potential that we have, is not fully, but to a large degree, independent from the overall market development, because these are internal measures or mostly internal measures that we can execute on. Let us walk through there very briefly. Synergies and OpEx, again, we speak about the Shyft acquisition with CHF 40+ million of synergies total.
We speak about further OpEx optimization independent from Shyft in general, but that is about 1% uplift in margin that we expect to realize here fully then by 2027. We have sales price and mix. Here, yes, this is to some degree market dependent, but it really is also the maturity of our business where we are having a different strategic focal point now. Europe, we are very much now established with our market share, as I mentioned. We have been having very strongly a growth-oriented focus only, and we play the long game. I should really emphasize that. Now we are moving ahead with expanding the margin. So we first take the market-leading position, and then we are expanding the margin. If you look at our segments, you can see that Europe has a lower margin than North America.
That is now gradually expanded in the next couple of years. That is part of the sales price piece. We have also opportunity there in North America with the stronger leadership position nationwide that we now take on following this merger, and then also mix. Mix is two elements. That is not just the mix within the products themselves and new business, but also in terms of after-sales share. Our after-sales share is developed. It is about 20% in Europe. It is not developed in North America. I should say both on the legacy Shyft side in North America, but also on the legacy Aebi Schmidt side in North America. It was not the focus in the past years. So we are at about 10% in after-sales share of total revenue in the U.S. That also can be grown to +18%, probably 20% in the very long term.
In our guidance to 2030 here, we consider +15% by 2030, and that is basically a growth of about 1% in after-sales share of total revenue every year. So this takes a bit of time, but it is a huge opportunity. We have put all the pieces in place this year. Happy to talk about that in more detail in the Q&A if you want to. We will see that now scaling up beginning next year. It is 20%-25% higher gross margin than the new business otherwise is providing. The biggest piece, as you can see, is in fact the third one, 250+ basis points that we are expecting.
That is the further optimization, not the synergies out of Th e Shyft acquisition that we are accounting for, but really the further optimization of our production footprint in the U.S., where we now can further consolidate our production facilities, further gain the efficiencies, and really ramp up those production in a manner that we think is optimized. By that I mean that we are very keen on having a base utilization in all our plants because that allows us to retain personnel, blue-collar workers that are highly educated and trained. They are much more efficient. You have much less quality issues, and that is how we have won in the past. You have to have the right customer portfolio, creating that base utilization, having a strong baseline in your workers that then really provide that output. Then you scale up when the market goes well.
You mix the shifts with experienced workers and new ones that you hold temporarily. So there we see really a lot of opportunity, and as I said, this is to a large degree independent. That is the same playbook we have already done in Europe that is more matured, and we are now doing that also in the U.S. with production, after-sales, with everything that we spoke about. Again, this is what we expect to bring us to that +13% That is not the end of the story. If you look at our markets in general, we also look at, of course, what competition is doing. There should be a higher margin even still possible than that, but this is our medium-term target in the next couple of years. Moving on then, in terms of capital allocation, also a couple of things I want to emphasize.
First and foremost, we of course prioritize the organic growth investments first, but this is really not a huge part. In fact, long term, we guide to about 1.5% of sales. But in 2025, 2026 now, earlier this year, we have actually finalized a lot of our product updates, electrification of street sweepers, for example, but also the introduction of new airport products. So 2026, 2027 in particular, there is really not a lot of CapEx coming, even 2028. We are talking a little bit about investments in facilities, in fact, more than products. With that consolidation in the U.S., that may be a pain point here and there, but that is really not significant. Even when we talk about the long-term spend, that will be a little bit higher than that. The majority then of our allocation should go into M&A. We spoke about the playbook.
We spoke about the fact that CHF 400 million-CHF 500 million of revenue is our acquisition targets in the next few years, as we have done in the past. So that is where we want to allocate the capital. Then third point is indeed the return of capital to shareholders, but that would not be the primary focus. If there would be a big share buyback in the next two years, it would actually rather be a failure to find the right targets to acquire. Because again, that is our primary focus. On the balance sheet, again, we can also go into detail there in the Q&A. We have further optimization on working capital in particular. We are currently, or we used to be with the close of The Shyft transaction at 25% working capital to sales ratio. We are now at 23% a year later.
We believe we can get to 20% in the next couple of years because it has not been a focus. That we also have to acknowledge as a privately held company, very cheaply financed in the past, working capital just really wasn't a focus. There's a lot of opportunity to gain efficiency, and essentially our target here is to have that significant organic growth without having the need for net investments in working capital, balancing that growth demand with efficiency gains at the end of the day, and again, improving to 20% working capital to net sales ratio eventually. That's on capital allocation, and I hand over back to Simone for the close.
For the close, as I mentioned, the one sentence I'd like you to remember, global leader positioned for profitable growth and resilience, and you see it spelled out here. On the global leader, I already spoke about it. We have the two home markets. In U.S., we cover 95% of the population thanks to The Shyft acquisition, and in Europe, direct sales organization models and production plants across the continent. That makes us unique. Really a global presence with national presence in the two continents. On the revenue and profit growth, that's what Marco just spoke about, I wouldn't repeat myself. On the resilience, also here I mentioned the local for local model that is helping us to protect us from global events, macroeconomic tariff discussion, Middle East and whatnot.
We also have a geographical diversified platform between U.S. and Europe, and also a strong balance sheet to support the resilience. That's really the Aebi Schmidt investment case. Happy to take questions in the Q&A. Looking at this year and this quarter, more specifically, you see the 2026 guidance. Sales and adjusted EBITDA was confirmed a couple of weeks ago with the earnings call. We had a slight revision on the leverage that is around two times. Speaking of the last earnings call, I have really the last page of the presentation. I just want to bring the top five achievements that we presented a couple of weeks ago talking about Q2. On the left-hand side, you see the order momentum, very strong, +16 intake, +20 on the backlog. That's of course a super achievement.
But I want to point out we have been pretty constant in delivering on order momentum. If you look at our calls, the Q1 and before that was our strong point of delivering really order momentum to the investors. What shows up in this call specifically were what you see on the right-hand side. Adjusted EBITDA has increased 22% and net income by CHF 18 million. Profitability has improved significantly. That is really the point of translating our order momentum into profit. As we spoke in the earnings call, in Q1, we had the production ramp-up that was completed, and then over the last year, we were closing the acquisition of Shyft with a lot of transactions and one-off. All of that is finally coming to an end, and you finally see order momentum translating into profit, EBITDA, net income, and then eventually into cash.
That closes our presentation, and we are happy to take any questions.
On Shyft, what about the transition between electric and gas? Why buy Shyft?
Why buy Shyft in terms of basically the solutions of classical, let's say, diesel engines versus EV, you mean? Look, Shyft has been active in the walk-in van space, particularly in both cases. So they are a leader, number two, specifically in the past, in the walk-in van space with traditional solutions, diesel engine solutions. Shyft has invested a lot into an EV solution as well. That's called the Blue Arc. Particularly Shyft had invested more than $100 million in that solution. That is something that we didn't value when we closed the transaction. In fact, we wrote down all the assets with the purchase price acquisition to zero. There was one customer, 150 trucks delivered of the EV solution. It's still a product we are upholding. We ramped it all down. We can sell it today.
But it's not something that we think is the big upside because you have essentially a bifurcation of the market demand. On the low end, that is where you see more electrification. That's where you see potentially and also optimization for the very small delivery windows, three-hour delivery or even shorter. But for the bulk of it that you still need, you will still need those traditional walk-in vans, diesel engines, and also the weight capacity that an EV cannot offer. So there's always going to be that space, we believe, with significant growth going forward. Again, as we can also see the market picking up today. Because yeah, you hit not just the space limitation as it used to be, but nowadays you also often hit the weight limitations of those walk-in vans. So you need a diesel solution.
Tariffs, can you just comment on that?
Sure. We mentioned it briefly. We do have a local for local production setup. We are producing in Europe for Europe, in the U.S. for the U.S. That already gives us a lot of resilience. The tariffs itself, we consider a negative because of the uncertainty it creates, because of some distortions also in the supply chain. In fact, we don't say that publicly. We publicly say typically it's neutral as an impact for us. It partially even had positive impact. Because of our setup, we had some competition that was actually shut off from importing into the U.S., European competition. For us, it is from a customer perspective, actually was a net positive. Of course, we still would like to see it gone, that discussion, or at least settled in terms of what is the tariff structures.
Admittedly, we also see that in some of the materials that we're buying, not in commodities, that's fairly actually fixed and in place either because we have secured the pricing or because we have price surcharges like aluminum surcharge, for example. You see it, of course, in other supplies that you buy that tariffs are an issue and that every supplier of ours is claiming that, of course, I need a price increase because of it. So uncertainty is not good, but from a business perspective, tariffs aren't bad for us.
Yeah. When you spoke about the M&A as part of your growth plans for your 2030 guide, can you maybe talk about what the opportunity set looks like in terms of potential acquisitions and what shareholders should be looking for in terms of what you're looking at?
Yes. Our playbook typically is that we ideally see one to two small bolt-on acquisitions a year with a bigger one every two to three years. That is typically what we ideally would see. The M&A pipeline is quite active and full at the moment. But we also are clear that following Shyft acquisition, we first want to deleverage. That is why we guide also the leverage this end of year 2.0 to really open up the option space for us. What are we looking for? Well, in Europe, unfortunately, the remaining competition that we have, we cannot buy them because of anti-competition laws. So essentially we have to squeeze them out of the market. That is particularly the case in the airport business. So what we are looking for in Europe is really something like the Loddon acquisition.
That was the last one in Europe, small, specialized local products that we can use our platform for and scale up significantly. We have essentially doubled Loddon's output within 18 months, and we have significant orders even beyond that. So that is tuck-in acquisition with the target to get a little bit less dependent on winter and snow. I want to emphasize that, yes, we have a lot of snowplows and snow-related products. So that is, of course, a thing in Europe where we want to be more active in different spaces just to balance a little bit our portfolio. In the U.S., that is where the majority of M&A activities, of course, are expected to materialize. You have multiple things to consider. One is that we spoke about it.
We now have a 95% coverage in terms of the population, but we still have some gaps in our footprint, some upfit facilities, some dealers in the commercial space that we are looking at. We have maybe targeted extension of our product ranges as well on the upper and lower end for really niche solutions, but with very high margins that are interesting. Then also something that we want to reach into, we are open about that, is the street sweeper business in the U.S. We are selling sweepers in the U.S., but e-sweepers, that is where we are the number one. Let us say if you are in New York and you see sweepers, it is probably one of ours. But in terms of the actual sweeping business, it is a highly profitable market and we are not active there because our current setup is not certified.
Our diesel solutions in street sweeping is not something we are currently selling in the U.S. We will not grow organically over the next years. If we really attack that space, it is going to be also through an acquisition of a number three, number four in the space today. That is also the last point, also part of the consideration for the acquisition with Shyft, where we have the service bodies that we now can produce in-house instead of buying them the bases from a direct competitor in the past. That can also be something that we are going to be talking about in the future with M&A, that we are securing our vertical integration even more so than we are today, especially because we have different segments. In some of them, we are chassis producers already.
We have the full vehicle that we produce essentially except the engine. In others, that is not yet the case. We have some supplier relationships that are vital to us. That also might be something that we are looking into. That is how we think of it. What we are not doing, I also want to be clear about that, we are not looking at further expanding the customer base. We are very keen on the cross-selling opportunities and really looking at the customer base that we have established that we want to further develop. Other questions?
Can you talk about expectations for new products, how that factors into your organic growth strategy?
Sure. I think I mentioned it briefly. The airport space, roughly 20% of our total business, but a significantly higher than average margin for us, so very important earnings contributor. We have a market share of international airports way beyond 50%, as I said. What we have done now last year is introducing the so-called Batcher, a smaller, more versatile product, and the so-called P-Series as well, which is an adapted solution that we had as well. With those two, we have essentially now doubled the total addressable market. We basically grow the pond that we are active in because eventually we would be running out of steam if we just go for the big international airports. That is why we are now really actively going after the regional airports, which is running off very nicely. We have introduced these in summer last year, summer 2025.
We already now have a very strong demand, first delivery, so that is ramping up very nicely, with also a very nice margin for those new products. As I mentioned, we also have the electrification of the street sweepers. That is a big deal in Europe, of course. Cities especially, they are looking into more electrified solutions. We now have a full range from the smallest one to the big street sweeper solutions, electrified. We are going to be offering electric solutions also in other products, in multipurpose vehicles for utility and upkeep that municipalities are also looking for.
That is also going to be a nice upside. In the U.S., it is predominantly at the moment as well, then in municipal that we see small adaptation, new generations, and that is well-recognized and appreciated by customers. But there's not a game changer in that sense in the municipal space like in Europe with the electrification.
How do you think of net leverage in terms of acquiring companies? Is there a number, I mean, upper and lower limit
Yes. Look, we feel most comfortable with a leverage of 1.5-2.5. As I said, we were at 3.3 with the close last year. We want to be at 2.0, roughly 2.0 by year-end this year. That's where we see that we are open again for M&A transactions. That's where we feel comfortable with. We have no issue with temporarily taking on a higher leverage if we see that with an operational cash flow, we can, in a reasonable timeframe, pay that down and de-leverage after the close of a transaction.
What is the upper range push?
For a game-changing transaction, three and a half, but that would have to be a game changer. Good. We're running out of time. Thanks very much and of course, if there's follow-up questions, please reach out. Thank you.