iShares MBS ETF Price & Performance (MBB)

Thank you, and good afternoon. My name is Konstantin Mang. I'm CEO of MBB, and I'm looking forward to presenting our full year 2024 figures to you. Today, I'm very grateful that I'm joined by Thornton Teister because not only do I have a slight fever and it feels good to have a backup in the call, but especially because Thorben is a dear friend, and he will take over responsibilities as CFO from July 2025 onwards. So Tom, please introduce yourself. Yeah. Thank you, Konstantin. Name is Tom Teichler. I'm with MBB for eight years. [indiscernible] I've been on the management board since 02/2021, so that's also also almost four years now. I have a background in investment banking. I actually was a equity analyst for quite some time, and yeah, accompanied the almanac PO back then from the bank side and and that was the reason why I changed the MBB. As I said, I've been with the company now for quite some time. And from July, I'll take over the finance, department and, investor relations as CFO. I'm, very happy to be on the call today with Constantine Mang. And, yeah, to present our full year February to you.

Thank you, Tom. Always, I'd like to start with a very quick recap on what makes MBB special. And as you know, MBB offers long term succession solutions sustainable middle stone companies. And we do that in a pretty unique way because, first of all, we are a family business ourselves. And, we share the DNA of the businesses that we want to acquire. Secondly, we have hands of the capital markets That's why we are here today in the end, but that's also why three of us subsidiaries are listed as well. Maybe some of you have been to the earnings calls of and our mantras before us, and and you know that we have a very special relationship with the capital markets. Thirdly, we have a long term focus. When we buy a new business, we really don't have the intention to sell the business. But we want to develop and to grow the business over the long term. And lastly, we focus on sustainable business models. And with that, I don't only mean that we I I mean that we that we don't have an environmentalist agenda. But we believe that trends like the energy transition will offer enormous business potential in in the next decades.

And that's why we like sustainability. And with that, let's jump into our full year figures [indiscernible] it is quite remarkable that in 2024, we broke several records. First of all, we broke the the revenue record of €1,000,000,000 that Mark was very symbolic to us. But to be honest, I don't think it's the most impressive figure here on the slide, but it feels good to have finally reached the billion, the billion euro revenue status. Much more impressive, I think, is that we also probed the hundred million euro EBITDA mark. And we broke it not only by 1,000,000 or €2,000,000 we broke it by almost EUR 50,000,000. Our EBITDA grew by 86% to 149,000,000 last year. I think that's a very impressive figure. Last but not least, we also broke our net cash record. And for the first first time have reached more than 550,000,000 in net cash. And to be honest, this figure is actually lowballing the actual situation because, as we will later see, also invested almost 60,000,000 last year into shares of our own group. If you would add that, you get to net cash of way beyond €600,000,000. If we take a look at how this compares to our forecast over the year, you see that we clearly reached that €1,000,000,000 revenue target, and exceeded it.

And with the EBITDA margin, we actually had we raised our forecast three times last year. And then we had preliminary figures in January. And we broke all these EBITDA margin forecasts and also the preliminary figures and ended up with 14% EBITDA margin, which is absolute record for us. It's a a five percentage points larger than more than 5% touch points larger than last year and it's, 1.5 percentage points higher than our previous high mark. And if we are looking at where we were standing in the fourth quarter, we see that the fourth quarter had an EBITDA margin of 19%. So the fourth quarter of twenty twenty four was far the strongest quarter that we ever had. More than 50,000,000 in EBITDA. Also, grew to over EUR $300,000,000 which is a 15% increase compared to the previous year. Does that come from?

Well, actually, in all three of our business segments, EBITDA grows substantially last year. And that's because in each of our three segments, we had one absolute champion. In the service and infrastructure segment, it was strictly four work, of course. And Tom will elaborate a little bit on on on their success in the last business year. In the technological applications, we had Aumann, that, had absolute revenue [indiscernible] And in the consumer goods segment, we had Hanker which showed, the the strongest, EBITDA margin in the last years. And with that, I would like to hand over to Torm, who will talk a little bit about the developments in each and every of our subsidiaries. Tom?

Thank you, Constantine.

Yeah. Looking at these numbers, we and diving now into our portfolio companies, we really had a remarkable year in in the sense that we really broke several records not only at the group level, but but also at our major portfolio companies [indiscernible] Which both at the same time delivered really strong results. And looking now at the the fallback here on the left side, you see that the company grew revenue by 33% to almost half a billion euros. With an EBITDA margin of more than 16%. And thanks to good working capital management, but also because of that very decent profitability level. Was able to generate a net cash position of more than a hundred 50,000,000. So, that's really comfort for us that this profitability is not, you know, only, an EBITDA margin figure, but it's actually translating into cash flow. And and that gives us a lot of confidence on, on the quality of the of the orders we're working on that. So So looking at the company in 02/2024, we've seen smooth execution in general across most of the projects, and that's that's clearly a marked improvement from 02/2023. So we've gotten better in in executing all the projects, the company is working on.

And beyond that, we've we've seen good progress on a number of important projects such as Camberma Hamburg, But, most importantly, actually, the the gradual ramp up of the a naught project, you know, that large electricity highway project which was really driving, especially the second half of the year, and also a very, very good q four turnover. Which allowed the EBITDA margin to reach 19% in the q four. Which overall is more than seven percentage points higher compared to last year. So as you can see, we're slowly getting back to to the margin levels, at least on a quarterly basis we've seen in the IPO. That is giving us, a lot of confidence in the company in general. And looking ahead, we have a well filled order book with, of course, the a naught playing also a very important role in 02/2025. But also, projects from all sectors pretty much. So from the electricity side, but also the the gas sector with the Eva and VAAD pipelines, in the order book now. Well as electrolyzer projects, which are all providing for tailwind and and really, yeah, give us confidence on on the outlook for this year and beyond.

So for this year, we, expect solid growth in terms of revenues, to 540 to 570,000,000 with an EBITDA margin of 16 to 17%. That, from my point of view, we're going to see decent double digit growth. And and a slight improvement in the EBITDA margin. And yeah. So so that is, obviously, providing for all good you know, backstop for for our group guidance, which, which will follow after this chapter. Looking at the right side, you see DTS. DTS has seen, a good start into the year 02/2024, actually. However, starting in the second half, we we've seen, order postponements, unfortunately. Into this year. Which were basically a result of, on the one hand, a hesitance by German SMEs to invest, you know, amidst the, US election. Which created certain uncertainties. And on the other hand, we we had new elections in Germany, which led to weaker public sector investments.

However, we're optimistic on 02/2025 given that IT security becoming an ever more relevant topic for companies and also government agencies. And the regulatory incentive such as NIST two example, but also very importantly, the German government's, spending intentions which are primarily focused on infrastructure, defense, and digitalization, looks set to be a major tailwind for local German players such as DTS. So, additionally, DTS has used the year 02/2024 to continue to develop its own software and security services. And that not only pro improves the company's competitive positioning, but also its underlying profitability. So after let's say, year 02/2024 at DTS, we're quite optimistic about 02/2025. And and look forward to to the development of the company in this year. Turning to the next page, the technological application segment. We see on the left side Aumann, which has delivered really a record year 02/2024. Both in terms of revenue and, EBITDA. Reaching, 312,000,000 in turnover. And an, EBITDA margin of 12%. And while the order intake, unfortunately, has come down due to a slowdown in in the e mobility rollout. We're convinced that Western OEMs will continue to invest into new e mobility lines in order to prevail on the global market.

And our impression is that the consolidation we've seen in on the order front has actually been used by by many OEMs to well, become a bit more strategic in in terms of what kind of platforms they want to pursue. So our our hope is that that we'll see an improvement on the order intake front in the course of 02/2020 five.

Beyond hope, Arman has been quite actively addressing opportunities in in other sectors outside the automotive industry particularly clean tech, aviation, but also life sciences. We believe that this, that there's structural growth potential in these sectors going forward. And in order to institutionalize that, Oman repositioned it classical or former classical segment into next automation. And in our point of view, that's a very important step to to to have institutionalized that. Also inside the company. So looking at 02/2025, Aman still has a very solid order backlog, and that secures the the guidance of 210 to 230,000,000 in revenue. With an EBITDA margin of eight to 10%. So this guidance looks well secured, I would say. But there's a and there's a certain chance that we'll see improvements in the order intake in the course of the year. At the right side, of the segment, we have Deliignant. Deliignant has well, seen a year with Volvo lower demand in 02/2024. Especially in the caravan business, which was affected cancellations by, by OEMs. Resulting in revenue decline to 65,000,000. Nevertheless, the company, reacted very quickly and already early on took action to adjust its cost base. And finished the year now with a solid EBITDA margin, at least given the the significant sales decline, which is at the upper end of its guided range of 4% to 6% And looking ahead, we see first cautious signs of improvement.

And while the company's also here working on addressing opportunities outside of the automotive industry. So we we we expect actually to have seen the the trial in in 02/2024 and and and and hope for improvement now in 02/2025. And last but not least, moving on to our consumer goods segment, we saw a strong turnaround at Hunky Tissue especially on the profitability level, which was thanks to more stable energy prices overall. But also the expiration of energy price hedges, which had hurt us in the past. So this has has a lot of profitability. To to rebound in in the current year. But, also, the company really has taken the year to invest into a new converting capacity. And that will, going forward, allow us to convert almost your mother roll production of the company into converted tissue products, and that is obviously good for profitability. So we're very much looking, forward to 02/2025. Yeah, with the prospect of this capacity ramping up and and supporting the very strong EBITDA margin we already saw in 02/2024. Last but not least, CDFormPolz had a muted year 02/2024, but also here we expect to have seen the bottom and see very cautious first positive signs.

Now going into 2025. So with that, I hand it back to Constantine for the group guidance for 02/2025. Yes. So if we add up all the forecast that Tom already presented on the individual company level, we expect that in total, we see a rather stable revenue in 2025, an EBITDA margin of between 1114%. As you heard from Tom, there are definitely two different effects this year. On the one hand, we have the weakness in the automotive industry. Which will lead to a lower revenue, at Aumann. But on the other hand, we expect significant growth both from VT4WAG and DTS primarily, but also from others. And the question is basically how these different effects will net out each other. The other big question, of course, and that the EBITDA margin range is relatively large for 2025 is the economic uncertainty. Of course, we don't have any special, insights in how a trade war might end if, it it comes to that. And, for that, I I I think we have a little bit room to maneuver here with this rather large EBITDA margin guidance of 11% to 14%. No matter what happens, I think we still have a more than robust, balance sheet thanks to the strong conversion also in the last year.

We have a 65% equity ratio We have 5,554,000,000 in net cash. And out of that, 281,000,000 net cash are in the holding MBBSE. So I think we do have a lot of room to maneuver here. And taking into account what we have in invested into our group. Companies over the last two years namely €40,000,000 in MBB just last year. Or, in total, €40,000,000 in forward shares over the last two years. Also in almond shares. You see that the balance sheet is very strong We have record net cash even though we, increased our share in our subsidiaries. We actually acquired 14 percentage points for ownership in Over the last two years and are now at 50% the same as at Aument. And if you take the €110,000,000 that invested into stocks of our portfolio companies and MBB itself, the the the value of these hundred 10 has has actually doubled until now. And this is especially due to the, strong stock price performance, but also underlying value performance of MBB and FOREWAG. I personally think we wouldn't have managed to achieve a similar return with any m and a transaction over the last two years. Right?

I mean, doubling money in in two years is quite a success, especially in the markets. And I think it pays off that we know our subsidiaries very well. We we know what we have. And and therefore, it it clearly made sense that, we increased our shares in these companies. If we take a look at the dividend, you might have seen that we, propose a dividend of three years 33 for for 2024, so being proposed to the next, annual shareholder meeting. And that consists of an increase in the base dividend to one year eleven, and that's actually the fifth dividend fifteenth base dividend increase that we proposed. Very few companies in the German market have achieved that, that they pay a very steady base dividend that is increased basically every year. On top of that, we propose a €2.22 anniversary dividend to celebrate MBB's anniversary 2025 and also to share our success with you our shareholders. Looking at the sum of the parts valuation, you see that MBB is still valued very attractively if we take our shares and the publicly listed companies, Forwak, Almond and Dalit, Knit, you end up with €575,000,000. You add up to 281,000,000 in net cash in the holding and you see that, you are already above our market cap.

And that's why we decided to also continue buying back shares and actually increasing also the price up up up to which we are going to buy these shares back and our share buyback program runs till April. Before we come to the Q and A, please let me add a few personal remarks. You might have read that after ten years with MBB, I've decided not to prolong my contract as CEO. The contract would have been due for renewal in June. My time at MBB was incredible. I learned a lot of course, from my colleagues, but also from you, our shareholders. But I believe now it's time for me to start a new adventure and luckily, we have an excellent team at MBB. First and foremost, our largest shareholder and Executive Chairman, Christoph Niesenmeyer but of course also Torben and many others. Until the June, I will remain at your full disposal. So please free as always, to contact me or to contact Tom, who will take over investor relations from July onwards. And with that, I think, Tom, we are very happy to answer any of your questions. Thank you. Yes. Definitely.

Thank you so much for the presentation and the dive into your financial figures of 2024. Dear participants, you have now the opportunity to ask your questions directly to doctor Mann and mister Teichler if you would like to speak directly to them, just raise up your virtual hand. If you have dialed in by phone, you can use the key combination star key nine to enter the queue. Followed by pressing star key 6 to unmute yourself. And, if you're not able to speak freely today, you can also submit your quest in our chat box. And let's have a quick look So by now, there are no questions. I guess you explained the presentation so well. So let's wait a couple of seconds.

That's a good thing about, releasing preliminary figures early on, so many shareholders had. The opportunity and took the opportunity to ask questions between the release of the preliminary and the final figures.

Absolute. But there's one person who has dialed in who has a question. So please unmute yourself by pressing star key 6, and please introduce yourself to us.

Unfortunately, we cannot hear you.

Hello? Can you hear me now? Open. Maybe you can Hello? Write the question into the chat box. Can you hear me now? Yeah.

Hello. It's Gael from MBB.

Hi, Gareth.

Sorry. It's very complicated. Star nine, star six. A lot things to push here about my management. I'm very glad you made it. Unfortunately. It's two numbers I have to remember. I was wondering whether you're looking at any kind of new industry, anything in mind apart from bolt on share buybacks, etcetera, anything else that could excite us over the next year or so?

Yeah. Of course. I mean, we I think there's lots of opportunities, that are are arising from the infrastructure investment package by the German government. I think there are also lots of opportunities in in in the defense sector. So generally look at anything that offers a lot of growth potential. And, unfortunately, many of the traditional German industries are not the ones offering the most, growth at the moment and the best prospects, But I think it would also be wrong to to say that nothing in Germany has any future. You know? There there there are lots of interesting industries that have become actually more interesting over the last few weeks and months. And, we are identifying companies in these sectors and always looking at opportunities. So, sure. That that remains part of our strategy.

Okay. And maybe on DTS, what kind of like to launch an IPO process for DCS how DTS, sorry, how big does that business need to be to make sense?

I mean, we don't have a clear threshold there. The bigger, the better. But at the moment, we are we have no intention to IPO with DTS or any other of our private businesses. I think that DTS just become became much more valuable in light of, the whole security the investments into security that we are going to see see I think American IT security vendors who have been in the past treated as just as safe as as European have really a harder time at the moment. So someone that offers local solutions that are developed, maintained, hosted, and everything here in in in Germany, has become much more valuable to the whole industry.

Perfect. Thank you. All the best.

Thank you.

Thank you so much. So in the meantime, we received further question in the chat box from David. I would be curious to hear a bit more about further plans to capital allocation, which in principle consider investing as minority shareholder and or outside of Germany, also with regards to the change of leadership?

Tom, I think maybe Yeah. Yeah. I would say, to, to the question of of minority shareholders, I don't think we're really interested in in in in investing as minority shareholders. We have got experience with becoming major shareholders in companies where we can actively involve and and develop the businesses and we, we see that to be more difficult if you are in a minority shareholder position. And on the one hand. And on the other hand, it's also I think, a question of capacity We we are a fairly lean organization, and obviously, you know, spreading our capital in in in in several minority investments and then having to manage those obviously, binds more capacity than sort of focusing on one one majority investment. And so I I don't think really minority investments are going to be part of the plan. Just as they haven't been part of the of of the capital allocation process in the past. Investing outside of Germany, I think that really depends on which level you look at. So if you look at our portfolio companies, which operate in certain industries, We very much also look at opportunities outside of Germany and and try to diversify and expand into attractive regions.

But from an MBB, perspective, I wouldn't categorically, exclude it, but our focus clearly Germany or at least the DACH region, where we believe we, we have a high competence in in executing on on on these things. So, prospectively, maybe, we we we might have looked at at very interesting things. We'll definitely look at things as they come along, but but the focus, generally will remain Germany. So looking at the capital allocation strategy also going forward. I think, we'll we'll stick to stick to our strategy. Which has has driven the success of m MBB. And and, obviously, with the Christoph Niesema also coming back, or closer again to the operating business.

I think we will sort of pick up and and continue on the strategy, which which has driven this development in the past. And I'd also like to thank Constantine very much for for for the great couple of years we had here together in his great insight and also leadership and in developing the company over the last four years in particular. We'll miss him very much, but but I think, looking at the figures we've seen today, the company is very well set up to, to also take the challenges and the opportunities which are lying ahead of us.

Alright. Thank you.

Thank you so much for answering, mister Tyler. So then we have a follow-up from David. Would you consider ramping up stock buybacks even further? If it look at rough figures, MBB stock seems strongly undervalued right now.

Well, I mean, at the moment, we do have a a stock buyback program running. After this program has run out, we will have our AGM, and then we take careful look again on where our stock price is and where our valuation is. And then decide if we will continue with another program. But for the moment, we have, one program running, and, I I I think there's no need to, stock anything up at the moment.

Thank you so much. So in the meantime, we have received no further So therefore, we come to the end of today's earnings call. So thank you everyone for participating and for your shown interest in MBB. So should further questions arise at a later time, please feel free to contact us. So, yeah, mister Mang and mister Teichler, thank you to you to you too, a lot of twos, for your presentation and the time you today. So, all the best for 2025. So from our side and on behalf of MBB, you again. Have a great Monday, and see you soon.

Thank you very much.

Thank you very much.

Bye bye. Bye.