Aebi Schmidt Holding AG (AEBI) Earnings

Management highlights

- 1-Year Shift Acquisition Integration Milestone - The combined company hit key growth and profitability targets one year post-acquisition: order intake up 26%, adjusted EBITDA up 22%, and EBITDA margin improved 120 basis points compared to the 12 months pre-acquisition. - Integration is complete: operations are successfully integrated, the North American footprint has been expanded, brand architecture is simplified, and the annual synergy target has been increased to over $40 million run rate, with 37 million expected to be realized by end of 2026 and the remaining ~$5 million in 2027. - Operational and Commercial Highlights - North America: Secured a landmark seven-year $96 million walking frame contract, expanded cross-selling to include cargo vans for the long-term customer; achieved a record quarter for Royal service bodies, with production up over 20% from historical averages; completed the Juliet production ramp on schedule; secured multiple municipal contracts; expanded the Atlas Care service network via partnership with Lost Travel Stops. - Europe and Rest of World: Secured a $11 million major German motorway contract and was selected as the preferred supplier for winter maintenance and sweeping equipment by a major UK airport group; successfully cross-sold LADOC vehicles into the airport segment to expand addressable market; launched the new Ebi Terra agricultural truck, which generated strong customer interest; saw growing demand for electrified municipal vehicles. - Innovation and Strategy Update - Launched multiple new products: the Klingon 550 Compact Sweeper, next-generation TerraTruck, expanded electric vehicle offerings, and new airport equipment solutions; is co-developing autonomous airport operation solutions with VATmove. - Released updated Group Strategy 2030, with the long-term ambition to become the global leader in specialty vehicles and reach over $3 billion in annual sales via organic growth. - Balance Sheet Performance - Net working capital improved year-over-year to $449 million amid strong sales growth, reflecting improved efficiency and disciplined management; net debt was relatively flat at $450 million at quarter end, down $5 million from Q1 2026; leverage ratio fell to 2.7x, down more than 0.5x from June 2025.

Guidance

- Full year 2026 guidance for net sales and adjusted EBITDA is confirmed, maintained from prior estimates. - The year-end 2026 leverage target is revised slightly: from the prior target of 2x or slightly below, it is now updated to 2x or slightly above, due to temporary supply chain security investments that will impact results through end of 2026 and into Q1 2027. Management remains on track to hit the long-term 2x leverage target. - Price increases implemented to offset material cost inflation will mostly be realized in results by end of 2026 and early 2027, and are expected to improve gross margins. - Long-term 2030 targets: over $3 billion in annual revenue, and adjusted EBITDA margin of 13+%. Margin expansion is expected to progress linearly rather than in large, uneven steps, driven by a combination of operational efficiency, after-sales business expansion, and remaining acquisition synergies. - The mid-term working capital target of ~20% working capital-to-net sales ratio remains on track to be hit within 2-2.5 years.

Segment performance

Group-wide: Total Q2 2026 order intake was $516 million, up 16% year-over-year; total net sales reached $496 million, up 9.4% year-over-year; adjusted EBITDA was $42 million, up 22% year-over-year, with an adjusted EBITDA margin of 8.5% (up 90 basis points year-over-year); total backlog grew 20% year-over-year to $1.3 billion. North America Segment: Order intake was strong, with backlog increasing 27% year-over-year; net sales grew 11% year-over-year, driven by walk-in van backlog conversion, strong airport segment performance, and improved municipal output; adjusted EBITDA increased approximately 22% year-over-year, outpacing sales growth. The segment contributed ~61% of total group net sales. Europe and the Rest of the World Segment: Order intake increased approximately 20% year-over-year, supported by strong demand across Southern and Central Europe and large contract wins; net sales grew approximately 7% year-over-year; adjusted EBITDA increased 25% year-over-year, driven by higher gross margins, strong aftermarket performance, and disciplined cost management. The segment contributed ~39% of total group net sales.

Risks & headwinds

- Ongoing geopolitical uncertainty (including the impact of the Iran conflict pushing energy and material costs higher) and trade tariff discussions are triggering supply chain disruptions and material cost inflation, which creates temporary pressure on gross margins, especially given the large existing order backlog that delays the impact of implemented price increases. - Chassis supply for walk-in vans remains a critical industry-wide risk, though the recent Ford-Bluebird chassis production transition is viewed as net positive for supply stability. - Unexpected secondary price increases from tiered suppliers have created unanticipated cost pressure that has impacted near-term gross margins.

Analyst Q&A

• Q: Michael Schlitzke (DA Davidson) asked for details on the $96 million seven-year North American frame contract: whether it was already included in Q2 backlog, all revenue would ship in 2026, and how unusual this order size is. /

  A: Management confirmed the first revenue from the contract will be realized in 2027. Per the company's accounting policy, multi-year frame contracts are not added to backlog until individual purchase orders are received. The order is unusual in that it comes from a segment outside the traditional large parcel delivery market, and expands the company's relationship to include cargo vans alongside walk-in vans, demonstrating successful portfolio broadening.

• Q: Schlitzke also asked for management's perspective on Ford's transition of walk-in van chassis production to Bluebird, and if any changes are planned at Abi Schmidt. /

  A: Management views the transition as positive overall, as it stabilizes chassis supply and eliminates the risk of a large supply gap tied to new 2027 EPA certification. The company has deepened its relationship with Bluebird, and the transition maintains two chassis suppliers for the market, which is beneficial. Some customers have already shifted from Ford chassis to FCCC chassis, and the company is monitoring the market as Bluebird executes its aggressive 2028 launch timeline.

• Q: Ben Summers (BTIG) asked how much M&A is baked into the 2030 $3 billion annual sales target, and what acquisition opportunities management is seeing. /

  A: Management's first near-term priority is deleveraging the balance sheet. M&A is a secondary growth lever, with the primary opportunities being: further consolidation in Europe's fragmented commercial vehicle market, and expansion into the sweeper segment in the US to match the company's successful European business model.

• Q: Matt Kuranda (Roth Capital) asked what temporary supply chain investments caused the slight leverage target revision. /

  A: Management explained that while major components are still available, unexpected secondary supplier price increases have created material cost inflation pressure. To mitigate this, the company has increased safety stock and purchased larger material batches to lock in better discounts. These are temporary investments lasting through early 2027, and the company still remains on track for its mid-term working capital efficiency target, having already improved the working capital-to-sales ratio 2 percentage points in the last year.