SCHMID Group N.V. Class A Ordinary Shares Q4 FY2025 earnings call

Strategic & Capital Structure Updates

• New CFO Arthur Schuetz joined in January 2026 and personally invested in the company to align management and shareholder interests; 2025 was a year of transition and repositioning for the firm, with strong operational recovery in H2 2025
• The company has strengthened its balance sheet and capital structure: completed a $30 million convertible financing in January 2026, secured a $30 million standby equity line for discretionary on-demand access to capital, reduced total debt via multiple debt-to-equity conversions, with core shareholders waiving EUR 5 million of debt
• After planned debt conversions, pro forma total debt will be ~EUR 23 million, consisting primarily of low-interest property leases (~EUR 10 million) and $18 million outstanding on the January 2026 convertible; the company now has sufficient financial flexibility to support its next growth phase
• Management will increase regular market transparency, including planned quarterly trading updates for revenue and order intake, and has shifted management/board compensation to higher share-based awards to strengthen an ownership culture aligned with shareholders

Technology & Commercial Highlights

• SCHMID is a 60+ year trusted equipment provider for the global electronics industry; the company has upgraded its legacy InfinityLine H+/V+ platforms and developed next-generation C+, L+, and P+ product lines
• Industry demand is shifting toward panel-level packaging driven by AI and high-performance computing, which require larger compute packages that are more cost-efficient to produce on rectangular panels vs. round wafers; the panel-level packaging market is expected to grow 3x to 4x by 2030
• SCHMID's new L+ full panel-sized CMP system and P+ next-generation panel-level packaging system have achieved strong market adoption; the company expects these new product lines to drive above-market growth and is approaching a commercial inflection point where they will become meaningful revenue contributors
• Regional demand momentum remains very strong in China, while some European orders have been pushed into H2 2026; significant order announcements for new products are expected within the next few months

Operational Efficiency

• Launched the Sprint operational efficiency program in January 2026 to address excess German overhead (G&A and R&D) that grew faster than revenues over the past 2 years
• The program targets at least EUR 4 million in sustainable annual cost savings, primarily via voluntary headcount reductions, with one-time restructuring costs limited to ~EUR 0.5 million, delivering strong margin tailwinds from 2026 onward
• The company is also reducing high listing-related costs (audit, legal, D&O insurance) carried over from the de-SPAC process, with partial savings in 2026 and full savings expected in 2027
• The German manufacturing footprint is already rightsized and unchanged; production capacity is being debottlenecked to support expected growth through 2027, with additional production space added in China

SCHMID Group operates two core product segment categories: legacy workhorse lines (InfinityLine H+ and InfinityLine V+) focused on traditional PCB and industrial electronics, and new next-generation advanced packaging lines (InfinityLine C+, L+, and P+) focused on AI infrastructure, high-performance computing, optical modules, and panel-level packaging. For the 12 months ending Q1 2026, 60% of total order intake is tied to AI infrastructure/advanced packaging-related products, with the remaining 40% from legacy product lines. Management expects the AI/advanced packaging share of order intake will increase to 70% by the end of 2026. Full year 2025 total company revenue was EUR 66 million (EUR 16 million H1, EUR 50 million H2), with H2 2025 EBITDA of ~EUR 6.5 million (13% margin) and H2 2025 EBIT of ~EUR 4.25 million (8.5% margin). Q1 2026 total company revenue was EUR 18.2 million, with order intake of EUR 13.6 million and ending order backlog of EUR 49 million. Full year 2025 total order intake exceeded EUR 90 million, with an ending 2025 order book of EUR 51 million.

• Management reaffirms full year 2026 guidance: total revenues above EUR 100 million, adjusted EBITDA margin significantly above 12%, and total order intake of approximately EUR 114 million
• Full year 2026 order intake and revenue are expected to be back-end loaded, with a significant uptick in order intake in Q2 2026 vs. the seasonally weak Q1, and stronger performance in H2 2026 driven by AI server board demand and flip chip BGA substrate capacity expansions
• Medium-term margin targets: management expects to return to historical margins of ~20% EBITDA margin and ~14% EBIT margin; while full achievement in 2026 is not guaranteed, these levels are achievable in the medium term
• Management expects to end 2026 with an order backlog of EUR 60 million to EUR 70 million to carry into 2027, which will support performance in the seasonally weak Q1 2027
• Total working capital investment of ~EUR 20 million is expected in 2026 to support revenue growth; working capital as a percentage of sales is expected to stay between 7% and 10%, consistent with historical levels, supported by 30% cash advance terms on most equipment orders

• Early 2025 tariff uncertainty for equipment classification led to a broad order halt in H1 2025, resulting in very low H1 revenues of only EUR 16 million
• A 9-month strategic M&A review process through October 2025 delayed capital raising, leading to temporary working capital deterioration and negative total working capital of EUR 13 million at the end of 2025, though the gap has mostly been replenished
• Order timing in the capital equipment business is inherently lumpy, with larger project timelines subject to uncertainty that can shift revenues between fiscal years
• Geopolitical risks: as of the call, the Iran conflict has not impacted material access or customer demand for SCHMID's products, but ongoing geopolitical volatility could impact global supply chains or customer investment plans
• The advanced packaging and panel-level glass substrate adoption cycle is multi-year, with qualification cycles taking 1 to several years, so large-scale high-volume manufacturing revenue may be delayed relative to current expectations

Q: What is the current product mix of AI/advanced packaging vs. legacy demand in the order book, and how will this mix shift over the next 12 months? / A: 60% of order intake over the last 12 months is tied to AI infrastructure or optical module demand. Management expects this mix will increase to 70% AI/advanced packaging by the end of 2026, as new product adoption accelerates. This shift to higher-share advanced packaging products is expected to continue into 2027.

Q: What is SCHMID's competitive differentiation for glass core substrate processing, a key product for next-generation AI computing? / A: SCHMID's new InfinityLine L+ is a proprietary full panel-sized chemical mechanical polishing (CMP) system, which is a core required piece of equipment for glass core panel-level packaging. Glass core substrates are critical to enabling lower power consumption and better signal integrity for next-generation large AI compute packages. SCHMID is positioned as a premium supplier with industry-leading production yield, which is increasingly valuable as package sizes grow and scrap material costs rise, allowing SCHMID to win projects even against lower-cost competitors.

Q: How does the advanced packaging adoption timeline typically progress, and when should we expect broad high-volume manufacturing to ramp? / A: Customers are in multiple stages of adoption: small R&D lines have existed for a decade, small-volume production is already underway at a U.S. glass core project, and large players led by major OEMs are now lining up for small to mid-volume production. The industry tipping point for broad high-volume conversion is expected in 2027, with larger project order intake starting in H2 2026.

Q: What are the capital requirements for production expansion to support expected growth, and do customers help finance expansion? / A: SCHMID's business is very low-capital intensity, as it primarily does assembly and testing of equipment, with historical CapEx consistently around EUR 1 million or less per year. Limited incremental CapEx is needed for capacity expansion. Additionally, most equipment orders require a 30% cash advance from customers, which materially reduces working capital requirements for growth.