SCHMID Group Q2 Earnings Call Highlights

Key Points

• Balance-sheet restructuring improved financial flexibility: SCHMID raised EUR 33 million and reduced debt by EUR 31 million through a debt-to-equity swap, bringing total debt down to about EUR 23 million.
• Orders accelerated, but profitability guidance was reduced: Year-to-date order intake reached EUR 96.6 million, with management expecting the upper half of its EUR 125 million–EUR 150 million target. The company maintained revenue guidance of at least EUR 100 million but lowered its adjusted EBITDA margin outlook to 6%–9% from above 12%.
• Cost savings and capacity expansion are underway: SCHMID expects roughly EUR 4 million in annual labor savings from its Sprint restructuring program and is targeting at least 5% purchasing-cost reductions. It also plans an EUR 11 million China campus investment that could double local production capacity by late 2027.

SCHMID Group NASDAQ: SHMD said its first-half 2026 results reflected a period of balance-sheet restructuring, cost reductions and accelerating order intake, while lower first-half gross margin led the company to reduce its full-year adjusted EBITDA margin outlook.

Chief Financial Officer Arthur Schuetz said the company raised EUR 33 million through convertible and standby equity facilities and reduced debt by EUR 31 million through a debt-to-equity swap announced in May. The transaction reduced total debt from EUR 53 million to about EUR 23 million, which Schuetz described as a sustainable level.

“2026 remains a transition year, but the foundation is now in place for a strong second half of 2026 and a promising 2027,” Schuetz said.

First-half revenue rose as equipment sales improved

Revenue totaled EUR 18.2 million in the first quarter and EUR 27.8 million in the second quarter. Schuetz characterized the first quarter as seasonally weak and weaker than expected, while revenue improved in the second quarter.

Equipment revenue increased to EUR 39.4 million in the first half of 2026 from EUR 10.7 million in the prior-year period, according to Schuetz. Spare parts and services revenue rose to EUR 6.4 million from EUR 5.9 million a year earlier.

Gross margin was 21.2%, below the company’s expectations. Schuetz attributed the result partly to lower scale and a revenue mix shift toward China, where margins are somewhat lower. He said SCHMID expects the mix to shift back toward more German production-based revenue during the second half.

General and administrative expenses increased by more than EUR 3 million, driven by the company’s Sprint restructuring initiative, share-based compensation and capital-structure-related costs. Other income and expense included approximately EUR 1.7 million of foreign-exchange losses, compared with EUR 6.3 million of gains in the first half of 2025.

Financial-result losses reflected accounting for the XJ Harbour liability that was converted into shares in January, as well as warrant fair-value movements and roughly EUR 875,000 of interest expense, Schuetz said.

Sprint program targets lower fixed and purchasing costs

SCHMID concluded the first phase of its Sprint cost program, reducing more than 40 full-time-equivalent positions in German overhead functions. Most of the departures are expected in the third quarter.

The program is expected to result in about EUR 4 million of annual labor-cost savings. Restructuring costs are expected to total approximately EUR 700,000, of which about EUR 400,000 was recorded in the first half.

The company has moved to Sprint’s second phase, focused on purchasing costs. More than half of SCHMID’s expenses relate to purchased materials, and management is targeting savings of at least 5% on those purchasing expenses. Schuetz said the company expects to achieve most of those savings by year-end, while product redesign efforts intended to reduce component costs are more likely to affect 2027.

Operating cash outflow was EUR 29.3 million in the first half, mainly reflecting EUR 26 million invested in working capital. Working capital rose to about 14% of last-12-month sales at the end of June from a negative position at the end of 2025. Management said it aims to reduce that level toward 10% or less over the medium term and expects the absolute working-capital amount to remain flat or decline by year-end.

Orders accelerate on substrate and AI server-board demand

Chief Sales Officer Roland Rettenmeier said SCHMID delivered one of its first InfinityLine H+ systems for 700-by-700 millimeter panel-level packaging to a U.S.-based customer during the first half.

The company reported EUR 52.3 million of order intake in the third quarter to date and EUR 96.6 million year to date. Rettenmeier attributed the acceleration to investments in flip-chip BGA substrate capacity and continuing AI server-board capacity additions.

He said the market momentum emerged in late in the second quarter after major substrate manufacturers developed plans for new factory investments following an identified shortage in IC substrates. Most of the remaining orders expected this year are already in negotiation, he said, while many recently received orders and expected near-term orders are slated for 2027 production.

SCHMID raised its 2026 order-intake guidance in July to EUR 125 million to EUR 150 million and now expects results in the upper half of that range. The company said its order backlog stood at EUR 89 million, which Schuetz described as close to a record level.

Management maintained its full-year revenue outlook of at least EUR 100 million but lowered expected adjusted EBITDA margin to 6% to 9%, from prior guidance of more than 12%.

China expansion planned as demand grows

SCHMID plans to consolidate two leased manufacturing facilities in Zhongshan, Guangdong Province, into a larger company-owned campus. The EUR 11 million investment is expected to double production capacity in China, with the new site projected to begin operations in the fourth quarter of 2027.

Schuetz said the existing facilities can support roughly EUR 50 million in revenue, while the new facility could support around EUR 100 million. Construction is expected to begin after land acquisition and finalization of architectural plans, with spending expected to occur roughly evenly over about 12 months beginning in September or October.

The company’s Malaysian facility is operating and expanding to serve a growing key customer in the region, Rettenmeier said.

Management said capacity constraints differ by region. China currently faces building-capacity limits that the new facility is intended to address, while Germany has available space and does not face machinery constraints. Schuetz said labor availability, training and retention represent the principal operational constraints in Germany as the company grows.

On financing, Schuetz said SCHMID is “pretty well-financed” and does not anticipate a need to raise new equity during the next six months. The company may use non-recourse Chinese debt to fund working capital and the new factory, with management estimating an average funding cost of about 2.7% for new Chinese debt.

Rettenmeier also said the company is engaged with major supply-chain participants evaluating glass-core substrates. He identified metallization of through-glass vias as a technical bottleneck, alongside end-customer qualification. He added that semiconductor customers for panel-level packaging typically accept higher prices and service levels, which could support SCHMID’s gross-margin mix over time.

About SCHMID Group (NASDAQ:SHMD)

Schmid Group AG is a global engineering and manufacturing company specializing in flexible packaging and barrier coating technologies for a range of industries. The company’s core offerings include turnkey coating, metallization and extrusion lamination lines designed to enhance the functional performance of films and substrates used in food, pharmaceutical and medical packaging applications. Schmid Group’s expertise also encompasses process engineering, product development and on-site support services, enabling clients to optimize production efficiency and sustainability in high-volume manufacturing environments.

In addition to its barrier technologies, Schmid Group provides modular solutions for thin-film coating, printing, slitting and winding, as well as machinery for flat glass finishing such as washing, sanding and patterning.

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