WashTec Q1 Earnings Call Highlights

Key Points

• WashTec posted record Q1 revenue of EUR 111 million (+2.3% YoY) but profitability fell as EBIT dropped to EUR 3.8 million (3.4% margin vs 4.5% a year ago), driven by planned costs from its production footprint optimization and higher installation expenses while free cash flow declined to EUR 7 million.
• The company launched the JetWash Connect product and is shifting production to a new Czech plant (about 50% of planned jobs transferred) to enable local steel sourcing and long‑term cost savings, though the transition is creating temporary higher costs now.
• Order momentum strengthened—equipment backlog rose 10% YoY (and 16% vs end‑2025) with North America driving double‑digit order growth—and WashTec reiterated 2026 guidance for mid‑single‑digit revenue growth and a disproportionately higher EBIT, while flagging geopolitical and commodity‑price uncertainty.

WashTec ETR: WSU reported record first-quarter revenue for 2026 but saw profitability decline as planned costs from its production footprint optimization and higher installation expenses weighed on results. Management reiterated its full-year outlook, citing a strong equipment order book while also flagging uncertainty tied to the Middle East conflict and ongoing volatility in raw materials markets.

New product launch and production network shift

Chief Financial Officer Andreas Pabst opened the call by highlighting the launch of the company’s new JetWash Connect product on April 14. Pabst said the product includes a new steel structure where WashTec “own[s] the complete construction details,” enabling the company to source steel parts locally rather than shipping components from Germany across Europe.

Pabst also described customer-facing features intended to support operator economics. He said “Wash & Pay leads to the fact that the average pay time increases by 25%-30%,” which he said translates into more revenue for operators. He also pointed to a new polish feature that he said is “a real eye-catcher.”

In terms of market opportunity, Pabst noted that with the prior JetWash generation, WashTec achieved “double-digit EUR million revenue in Europe in 2025,” representing about 10% of the equipment business, and said the company expects additional growth from the new platform.

Separately, Pabst provided an update on WashTec’s production optimization, describing the March 26 grand opening of a new plant in the Czech Republic. He said the company has started transferring pre-assembly, assembly, and logistics and has already transferred around 50% of the total jobs planned for the move. The transition is currently creating higher costs, as employees in Augsburg are training new colleagues in the Czech site. Pabst said the company expects the higher capacity needs to be resolved before the end of the year and then anticipates collecting the “full saving” from the project.

Middle East conflict: limited direct exposure, monitoring indirect impacts

Pabst said WashTec’s direct revenue exposure in affected Middle East countries is limited, but broader uncertainty could temporarily dampen equipment demand globally. On the recurring side, he said WashTec does not expect a structural impact on car wash usage, adding that higher fuel prices may cause short-term adjustments in driving behavior but are not expected to create a “material long-term risk” to chemicals and service revenue.

On costs, Pabst said the company is monitoring supply chains and commodity prices, particularly energy-related inputs. He noted that WashTec secured a major part of its metal needs through the end of the year in December 2025. For other parts, WashTec is “increasing our stock level cautiously.” He also said the company has countered higher fuel prices with surcharges for service customers and is evaluating further mitigation measures depending on how long the conflict lasts.

Q1 2026 results: record revenue, EBIT margin declines

For the first quarter, Pabst summarized results as: “Revenue is good, especially in equipment in North America. Improvement of profitability necessary.” WashTec posted first-quarter revenue of EUR 111 million, up 2.3% year-over-year, which Pabst described as a new record for a first quarter. He attributed growth primarily to North America, particularly equipment sales supported by higher revenue with key accounts. Revenue in Europe and other regions was stable.

By business line, Pabst said:

• Equipment revenue rose 7% year-over-year.
• Service revenue was stable compared with the prior year.
• Consumables revenue declined, mainly due to weather-related lower wash volumes, though Pabst emphasized the revenue decline was less pronounced than the drop in volumes.

Profitability declined year-over-year. WashTec reported EBIT of EUR 3.8 million, for an EBIT margin of 3.4%, compared with 4.5% in the prior-year quarter. Pabst said the shortfall was partly expected due to costs related to ongoing programs, including the Czech production shift, and also reflected increased installation costs. He said measures to address installation cost pressures had not yet produced benefits in Q1, adding that the company is focused on the issue.

Free cash flow fell EUR 9 million to EUR 7 million, which Pabst linked to higher inventory levels due to what he called a “real good order backlog.” Net working capital increased to EUR 94 million from EUR 82 million in March 2025.

Segment performance: North America improves as Europe faces temporary cost headwinds

In Europe and other regions, Pabst said revenue was broadly stable, but earnings were impacted by planned temporary costs related to the Czech expansion and by delays in certain efficiency initiatives, particularly installation logistics. He also cited weather-related lower activity in the consumables business as a further drag.

In North America, WashTec reported improvement in both revenue and earnings driven by higher equipment revenue with key accounts, supported by improved execution and a more favorable product mix. Pabst said segment EBIT improved by EUR 1.4 million to break even, calling it “the best EBIT in a first quarter in North America since 2017.”

At the group level, Pabst said gross margin declined to 28.4% from 29.3%, driven by a less favorable product and regional mix, including a lower share of consumables and a higher share of North America equipment. He added that gross profit was also affected by planned temporary costs tied to the Czech expansion and delays in selected efficiency programs. Administrative expenses increased slightly year-over-year, which he attributed mainly to ongoing IT projects.

During the Q&A, Warburg Research analyst Stefan Augustin asked about SAP integration costs. Pabst said the deviation in administrative expenses was “more or less coming from” the S/4HANA introduction and was “around about EUR 200 thousand.”

Order intake strengthens; guidance reiterated

Pabst said equipment orders received in the first three months of the year were significantly higher than the prior-year quarter across both segments, with North America increasing “well into the double-digit percentage range.” He added that equipment order backlog was up 10% year-over-year and 16% versus the end of 2025, noting that the increase in North America was even stronger.

WashTec confirmed its 2026 guidance and said it expects delays in efficiency projects to be made up over the course of the year. Pabst reiterated expectations for mid-single-digit percentage revenue growth and an increase in EBIT that is disproportionately higher than revenue growth. He said the outlook does not assume any further significant worsening of the economic situation due to developments in the Middle East or other global disruptions, while also emphasizing that the guidance is subject to uncertainty and does not factor in significant deviations in either direction.

On timing of key headwinds, Pabst told Augustin that profitability benefits from the Czech Republic transfer are expected “more end of this year,” with the company “fully on track,” and said the full effect would be seen in 2027. On installation cost inefficiencies, Pabst said the company is roughly “one quarter behind” but expects to catch up during the year. He added that installation cost issues are mainly related to Europe, while North America installation costs are at a reasonable level versus targets.

About WashTec ETR: WSU

WashTec AG provides solutions for car wash in Germany, Europe, North America, and the Asia Pacific. The company offers gantry carwashes, self-service, and commercial vehicle wash equipment, as well as conveyor tunnel systems. It also provides water recovery systems; full maintenance; on-call service agreements; service projects and upgrades; spare parts; and digital solutions. In addition, the company offers car wash management services; and financial services, such as financing and leasing solutions.

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