Summary of SCHMID Group Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: Q1 revenue was €18.2 million, which increased to €27.8 million in Q2, totaling €46 million for H1 2026. Equipment revenues rose from €10.7 million in H1 2025 to €39.4 million in H2 2026.

Gross Profit Margin: Reported at 21.2%, lower than expected due to a shift towards lower-margin production in China.

Adjusted EBITDA Margin: Expected to be between 6% to 9% for the full year.

Order Intake: €52.3 million in Q3, totaling €96.6 million year-to-date, with guidance raised to €125 million to €150 million for 2026.

Debt Management: Reduced debt from €53 million to €23 million through a debt-to-equity swap. Raised €33 million in new capital.

2Strategic Updates and Business Highlights

Transformation Initiatives: Executed a cost reduction program (Sprint) that eliminated €4 million in fixed costs and reduced headcount by over 40 in German operations.

Expansion Plans: Consolidating Chinese manufacturing operations to double production capacity with an €11 million investment expected to be operational by Q4 2027.

Market Demand: Increased order intake driven by investments in flip-chip BGA substrates and AI server board capacity.

3Forward Guidance and Outlook

Revenue Guidance: Unchanged at a minimum of €100 million for the full year, with a gross margin target of over 12%.

Order Intake Guidance: Anticipated to land in the upper half of the €125 million to €150 million range based on current negotiations and market conditions.

Long-term Capacity: The new Chinese facility is expected to support revenues of approximately €100 million, significantly enhancing operational efficiency.

4Bad News, Challenges, or Points of Concern

Gross Margin Pressure: The gross profit margin is under pressure due to lower margins from Chinese production and increased G&A expenses related to restructuring.

Working Capital Issues: Operating cash outflow of €29.3 million in H1, primarily due to investments in working capital. Challenges in receiving cash advances and delayed payments in China may impact liquidity.

Labor Constraints: Potential capacity constraints in Germany due to labor shortages, with plans to hire contract workers to mitigate this issue.

5Notable Q&A Insights

Order Confidence: Management expressed confidence in achieving the upper end of the order intake guidance, with most projects already in negotiation.

Financing Strategy: The company is well-financed for the next six months, with plans to utilize customer prepayments and attractive debt financing options in China.

Capacity and Growth: The new Chinese facility will significantly enhance capacity, but labor remains a critical constraint in scaling operations.

Market Trends: The demand for glass core substrates is growing, with significant interest from major players in the semiconductor supply chain, indicating a shift towards performance-driven packaging solutions. Overall, SCHMID Group is navigating a transformative phase with positive order momentum and strategic expansions, although it faces challenges related to margins, working capital, and labor availability.