Thermador Groupe (Euronext:THEP) Q3 2026 Earnings Call

0:00 Good evening, good evening all and welcome to this webinar where we'll be commenting on the turnover for the third quarter and the shareholders letter number 125. So as usual we'll start with our employees. There are now 900 of us. You can see that we're in a situation of stability in Thermador Group. It's pretty good news because our turnover is increasing overall. with the stable number of employees and that's an employee to turnover ratio that we keep a close eye on also absenteeism is down that's another good down slightly down which is good news That was at the end of the first half of the year.

0:53 Figures that we got a bit later than the end of the semester. we do see a drop in absenteeism which is the result of some good work overall by all the teams and I want to thank all those who have contributed to this good outcome so I'm going to talk about some milestones and in particular prices you know that it's an indicator that we keep a close eye on in Terminal Group since COVID in 2020, the COVID crisis. So we're slowly moving out of this negative price zone. And that's all about the price effect, the inflation rate that we pass on to our customers.

1:45 We were at 0.9 at the end of the semester. And at the end of Q3, we were at minus 1%. 0.2 so we're hoping that the price effect will go positive by the end of the year Good news, too, for heat pumps, air-to-water air pumps, because public authorities have announced an objective of 55,000 air-to-water heat pumps financed by the energy savings certificates, which are financed not by the state, but by the private companies involved in energy, like all the energy suppliers.

2:33 So that means this objective of 35,000 units mean that groups of workers of actors working together the six of them all together are ensuring that this work is done properly and that there's no fraud in the use of those energy savings certificate so it's good news for Thermador who sells access access accessories for air to water units but also for XLR to in France. Another positive event in terms of ventilation, good performance for that sector. And we see that from our statistics.

3:18 Good for Accelaire, who sell ventilation, so mechanical systems, and ducts, and so forth, and fans. But they also are involved in the air conditioning market. for mobile units and wall mounted units and fans and they can too you can imagine that the summer we had was pretty favorable to the sale of this sort of equipment because the French people and the Europeans generally had a very hot summer in terms of new housing less good news we'll see that housing permit and housing starts although slightly up but from a low base there's not very good outlook in the medium term then the weather talk about the heat waves not the last one we'll have for sure with some rather negative effects that we didn't expect particularly on the watering markets because as you know we have watering pumps for the retail sector with Audrea and for the professional sector with Jetly but when there's too much heat the water table dries up and there's no water to water with so that's not been a good summer

4:50 for those markets and you can see those in third quarter results of Jetly in particular look at the price effect for 2026 you see on this graph you see that the price effect is minus 0.2 so it's almost invisible organic growth plus 4% and a return to increase in volumes after three years of negative volumes. This year we're seeing a positive change in volumes. So that's good news for Thermador Group with certainly a positive price effect in 2026 overall.

5:40 look now at new housing starts that we mentioned earlier stability around 300,000 building permits submitted requests submitted positive impact for the moment for housing starts but as that curve that yellow curve moves towards the green curve you will you will see a plateauing of that yellow curve over the next months and maybe years even So this new housing effect, this market is obviously affected negatively by the increase in interest rates over recent years in recent months. Coedis has showed us some very good results for industry over the summer so there's the heating the heat pumps for example air to water heat pumps sold by Thermador accessories sorry sold by Thermador who benefit from this increase in turnover in those markets but also and sharp increase in air-to-air heat pumps and we sell accessories in that market as well through AccelAir who sell ducting for this type of machine.

7:14 The market for ventilation is one of the three growing markets for our heating distributors to whom we sell. On the retail side after good month of June which was helped by the mobile air conditioning market we've returned to a modest and even negative DIY market so obviously French people are reconsidering their positions and for buying power reasons are hesitant to spend this having said that our subsidiary Megafair has had a good year because they're worth mentioning and throughout the year for their generators gains in market share and product development which have given a positive outlook for Megafair Domac where I'm those go together of course make a fair domain they work very closely together and they are in via so and I take this opportunity to to say hi so industry trends so we've got the PMI index in France it's near 50 near the 50 line so in France so that shows

8:44 no real development So not great news for our companies who work in the French market For Europe the situation is better Because that's above 50 the 50 line and has been for a number of months and that probably explains the success of SAIFCO which sells to industry throughout Europe so I will continue with the outlook and the figures so Guillaume talked about the different prospects and the different figures on the market now if we look at our retail channel so that's Mecafer Domac and Audrea part of which is in Spain with Rousseau and you'll see that we're at minus 3.6% at the end of the quarter in terms of turnover compared to the end of the semester in June where we were at minus 4.1% which is obviously better Audria have halted the slide in spite of that problem with the watering market so congratulations to them where they've improved their position they've actually

10:15 reduced the negative side of their turnover. So, Mecca Verdun have a very good year, very good start to the year, and have maintained the beneficial turnover benefits so retail is down 3.6% professional channels up 11.3% but it's important to note that we've got two companies that have joined us C2AI which who joined us at the end of June 25 so that We've got three months for 2026 for figures for them, for 2025 in our figures.

11:00 Kilinox joined us on 30th of September 2025. So if we look at the Pro Channel, we've got 11.3% growth compared to 7.3% at the end of June. And as Guillaume said, we've got Jet Li who's lost turnover in the third quarter and Thermocom 2, which is exposed to the new housing market. and they also showed a decline in turnover and that explains why we've slipped from 14.3 to 11.3 on the Pro channel in terms of growth so the overall consolidated increase in turnover is 8.8% and to constant scope 4% taking into account the reprocessing of C2AI and Kilinox turnover so concerning financial structure we've got some updated figures we've got in terms of equity at the end of June we're at 414 million equity Concerning our loan and financial debt, we've got

12:32 38.8 million euros remaining to be paid. And we're not affected by the volatility of the interest rates because we're on fixed rate loans. we owe money for the next six years approximately on those loans in terms of stock we've got 180.9 million compared to 169 million last year and we're holding 171 days worth of supplies which is an improvement on the end of June so good management of our stocks by our subsidiaries and the impact that has on our net cash position of course we had a lot of we had a lot of purchasing in the third quarter making the most of a favorable euro dollar rate and transport costs on historic negotiated rates so we benefited there as well so it was a good idea to purchase at that time and which allowed us to keep a healthy stock level at the same time in terms of cash so an increase to 113.9 million if we look in terms of detail there are lots of elements okay we've got the stock

14:08 there but we've got customer payments who pay between 55 and 60 days so mechanically for our cash for September, we've got June's and July's payments. So that explains the increase of 9.7 million compared to the end of June. We've also, we need to talk about this share buyback programme which started in August and will end in October. At the present time we've bought 29,325 shares out of the 30,000 target and that's cost us 1.9 million to the end of September for those purchase the buyback of those shares so that concerns cash in terms of capital expenditure capex we continue with our investments there's still a large part of it is in real estate as we communicated previously we've got an extension to our subsidiary Sveraco and this was delivered at the end of September on time and we're going to be now working on moving on to the racks and the automated warehousing

15:46 and that was a total investment of 2.4 million from cash We also started the construction of District Labo's building and we're also starting the the move of FGE-NOX from Brigny in the Rhone department to Cinquantin-Valavier in the Isère and the decision has been taken to bring the teams together the FGE-NOX teams in the same building and we will start the extension to those offices so that's for the real estate for the rest of our investments which have been financed by our subsidiaries so we've got an IT investment in digitalization and we've got three warehouses subsidiaries which are digitalized in terms of preparation of order preparation and we're beginning I've also got the digitalization of our invoicing so we're starting to to invoice studying paperless invoicing and those are investments are in man hours and

17:17 consultants for that part so that's the as far as invest capex is concerned and now and then talked about the the share price, which has been a bit volatile, but I think that's affected many companies on the French market. So in terms of reinvested dividends over a period of 10 years, plus 8.7% with our dividend that's never fallen since floating in 87. We compare ourselves to the CAC 40. We're just slightly below that because they were at 9% per year over that 10-year period. However, compared to the middle and small CAC market, we are doing better because they are at plus 4.7%.

18:13 Thank you, Patricia. I'd like just to answer the question that's come up on the webinar, on the chat. why is the why is the share price going down despite of these good results we do have an explanation for that which is obviously partial but which has been given us by investors who are familiar with the group and invest elsewhere French and international investors that their customers are worried about France's exposure to debt, public debt and it's considered a systemic risk on the one hand we've got very high level of debt in France and the investors haven't understood how we're going to actually put that right both in terms of the politicians who are in power today or those who are standing for the election next year so there's a certain level of uncertainty which obviously investors don't like and you can imagine that the terrible instance that we've seen this weekend have not improved investors perception of France and that could explain to some extent this poor performance again today on the Thermidor share and other shares of course as well share prices as well

19:46 to reassure you I would invite you to to look at the PR compared to the past and you'll see that the stock valuation is very low compared to the past so we are on a low price tenants trend but our performance is good and I would like to say that as managers of the group Patricia and myself We have invested in Thermidor shares and some of us a large part of our equity. So we remain confident about the future and we look at this as closely as you do. And as you've seen from the 10 year projection, the 10 year record, it's pretty good.

20:47 Some employees would like to be able to buy shares, but the trends are not particularly good at the moment. So that's for just to talk about the French context. In this difficult context, there are some good news. We see in particular that some developing markets like, for example, the market for data centers. We know that France produces low-carbon electricity, decarbonized electricity, and a lot of those involved in the data center market have projects in France. And we are potentially suppliers of certain equipment, particularly valves for data centers.

21:37 as you see on this the next item on the slide so developing markets and we've got some a number of subsidiaries involved in those markets and have interesting projects for the year ahead not doesn't mean we'll get all of them and these are mostly industry subsidiaries between air treatment, so processing of cold water, chilled water, or applications for subsidiaries like SAVARACO, but also subsidiaries who sell measurement equipment like Distribut Labo and C2IAI.

22:25 Piping in stainless steel for example with PBtube and FG Enux that's a good transition there talking about those metal tubing we've seen PBtube over the last recent months really taking off in that market both in stainless steel and connectors for construction but also for industry through FG Inox which has a very similar range of products. So these markets are progressing and we are active on those markets. A market where we're also progressing but with more more with market share gains swimming pools so there's a big progression in France it's the third France is the third biggest market in in the world and you see that French people love swimming pools and and this is particularly true today because of the heat that we've had over recent summers and for the swimmers ahead so great performance by ALO on that swimming pool market the reuse of water is a real challenge I talk about it almost every time but I think it's a medium-term

23:55 phenomenon and we're pretty sure that with the droughts that we're having in the countries of Northern Europe and the center of Europe, in the UK and France and Germany. where water is increasingly rare and therefore increasingly expensive. So all equipment, particularly those sold by Jetly, which allow you to recover water, harvest water and reuse it, are going to be successful markets in the future. In terms of organic growth, we've got Accélère who are progressing. They're also gaining market share and they're in a growing market.

24:44 So this company has moved well beyond, after all these years of effort, they've moved well beyond the break-even position and we're expecting a real positive performance for 2026. which is good news for our shareholders but also for the management and employees of XLR who have made every effort to make a success of their company. We know that next year there won't be a buoyant market. We're going to have to work on organic growth. That means gaining market share, new markets, new countries, new product ranges, but also the price effect, which will play in our favor next year.

25:32 And then we've seen a question coming in and that allows me to answer that one. Indeed, we're seeing suppliers talking about substantial price increases for 2027. because of salary costs, transport costs, et cetera. Some of our products that come from China or India are subject to the MACF tax. It's the carbon borders tax. And all these additional costs will be passed on to our customers, of course. We won't be excessive in that but it will allow us to maintain our commercial margin and that will of course Increase mechanically our turnover next year.

26:27 So a question from Marcus Talking about the inflationary trend Concerning this carbon borders mechanism. It's already had an impact on our prices because we've got three subsidiaries Involved and they start at the beginning of our year Because we've allowed for that we know that the final price will be Will apply from February 2027 But we have a provision for that That's the case of FG INEX and Sveraco. They've already passed on those price increases to their customers. Sveraco was in April and June for Sveraco.

27:19 for this new tax. So the question was, are we able to pass on these increases to our customers? Our suppliers are talking about price increases and that will pass by, of course, negotiations. but we've also got large amounts of stock of course with the purchase we made this year we've got 171 days of stock and our subsidies are already working on their prices for 2027. So talking about our reorganization in terms of external growth, we hope to be less dependent on the French markets in the future.

28:08 So we've recruited somebody at the beginning of September who will be working 100% on looking for opportunities of companies that could join us and then working on those opportunities to arrive at as a deal which would allow such companies to join us so we're getting organized at the moment so as to professionalize and industrialize and systemize these processes hoping to get to a level of two acquisitions per year particularly the water cycle industry in Europe and as you saw with Patricia we do have the cash to invest in those things the dividend policy remains the same since we were floated irrespective of the share price this dividend has never fallen in absolute values and that's important for long-term private shareholders who don't necessarily sell but who are expecting regular dividends and that was confirmed at the last board meeting and we will be maintaining this policy of stability or slight increase in dividend where it's possible.

29:28 A look at organic growth to make us feel better. Last year on Q4 our business was negative, our turnover was negative, so we have a favourable base which should allow us for the final quarter of 2026 to have a positive result compared to the previous year. So that means we'll have four positive quarters and the success we had from the second and third quarters were mostly through customers buying ahead of time to save on future increases so we've got 0.6% growth for Q3 if you between July, August and September there was not the same trend in terms of increase in turnover and more importantly when you look at the results we do have subsidiaries for second quarter for example who benefited from this good trend and the Q3 we had Jetly who lost turnover we have Thermacombe 2 and also Isacel who lost

30:58 turnover so you see that on the third quarter we were less good should we say it's there's a negative price impact but it's less but it's more to do with the the volume effect and for those three subsidiaries who lost business we have a question from Marcus about this is asking if whether the growth was reduced at the end of the third quarter. So we're going to answer questions that we've got. So first question for Jean-Pierre. So why do we keep so many companies rather than grouping them into just a few subsidiaries?

31:46 When you look at Sverco, it's not really a small company, but the new companies that come on board are smaller and immediate sized companies who are very specialized on their markets and on their products. and within those companies we've got experts on those products and people working there who are really responsible for their operations. In terms of sales forces, selling this really high-tech kind of equipment is obviously difficult. and so we need specialized salespeople for that. So I think it's more advantageous to stay with very competent, highly motivated employees rather than having bigger companies with the opposite effect.

32:32 And so we're going to stay with that model. It doesn't stop us in certain cases to work in grouping companies together, which was the case of Deepra and Rousseau, to create Audreya. This doesn't prevent similar companies like PipiTube and Thermacom to work very closely together, or Mecafer and Domac, for example. So we are able to find synergies for those subsidiaries which work on similar markets. So I've talked about the share price. I won't say any more of that. I've been challenged because of another question. I'll look at that later.

33:19 and saying that the shareholders may be disappointed. So another question about the price. We note regularly a level of price share between a higher share price in the summer and at the end of the year. If you take the share price over the year and divide it by 11 and multiply it by 6, you get what the average is for the end of September. It's not an exact science, but it gives you an idea. A question from Rudolph.

34:13 question from Thierry is there a pressure on prices outside the Red Sea so in terms of purchasing transport that's what I was saying before is that we signed contracts for the year fixed prices for transport and that was done last year and we continue to do that in 2026 and when we negotiated we negotiated well and so we got fixed and fairly low prices and we're not impacted that's not that's not to say that we're not going to be impacted in the future and obviously in 2027 we'll probably have price increases for transport so downstream from our warehouses to our customers we've got a diesel tax which is imposed on our transporters and there there's an adjustment obviously to make we have to follow the diesel price and that allows the transporters to pass on those costs so we manage but we do manage to maintain our transport prices from from us to our customers in terms of raw materials we've had as you said increase in raw material prices.

35:41 Rudolf asked the question 350 yesterday and I It seems like a lot he says in terms of the volumes of the ship sorry about the share price It's clear that when we see a debt the public debt social tensions all these things impact Thermador Group's share price, but other companies too and and I would invite you to look at the the expected result in relation to the actual share price and these analyses that have been done by specialists and if you want to have an idea of what the net result for 2026 will be for Thermadog and you can compare that to they share price today and we see that they are we've got PA our results which for the most patient amongst you the most automatic among you as a good starting point a question from so how do you how do you justify your annual growth objective of above 7%.

37:16 So just to be clear, our turnover has stagnant for five years, 2021 and 2022 followed the COVID years. and they were absolutely fantastic years okay so I asked our shareholders to refer to 2019 before the Covid to compare our results when you look at the turnover and what we showed at the annual general meeting this meeting we see that turnover since 2019 clearly we're behind on our objective of seven percent per year but that can be made up and in particular because we've got very historically high levels of cash in the group and so we can acquire so so we can go ahead with acquisitions so we we remain with our objective to double the size of the group every ten years that's seven percent growth every year given that in that annual group there's growth there's a part of acquisition of approximately the half of that and half of that is organic growth we've had negative inflation periods and now we're on a positive inflation period Jean Florent asks a question about research on capital.

38:43 So the ROC is passed from 20% in 2022 to 12% in 2025. I will send the information about again, but I think it's 16 something around there percent. our profitability has fallen mechanically it has an impact on the ROCE of course but we are between 16 and 17 percent and we're pretty optimistic about maintaining this and that's on page 19 of the 16.4 yeah I just confirmed that from the the the annual document the annual report so just to correct that information from Jean Florent so why does the variable earnings of the management look more at operational profit rather than indicators which include capital invested and their cost so I don't know if you looked at that information in our report it's pretty complicated but we wanted to have something fairly something simpler so it's obviously complicated with non-financial indicators and we didn't want to make things even more complicated

40:15 this notion of result on capital employed is not understood by everybody I would like to emphasize the fact that even though the earnings of the directors of the group are high they're pretty reasonable if you compare our overall packages with comparable companies, the variable part of our earnings is very high. But what's the most important for you is the package complete the full package and ensure that there's no nothing wrong with those ethically with those amounts. As I said before, we've got a lot of money invested in Thermador Chess, so I can tell you every day we're motivated to grow the company over the long term. So personnel costs have gone from 10.5% to 13.2% of turnover between 2022 and 2025.

41:26 so we bought companies during those years and their ratios employee to wage bill to turnover weren't necessarily favorable in those companies and then we obviously we understand that we need to find productivity gains so that's something we analyzed last year. and we saw that we had increase in headcount or in wage bill to constant turnover levels. So it's important to understand the complexity in terms of our purchasing operations, the eco-design, carbon rules that our customers demand. So we had to invest in our purchasing teams and our office-based sales teams. So we're kind of on niche markets and they're high-tech products.

42:37 So all that has a cost. And we also saw that additional services, now we sell products with, before we just sold a product, now we sell products with after sales, with certificates and so forth. So that increases the personal cost. So we've really taken that on board and we're working on on digitalization. We have an IT development program which will help us to answer our team's requirements. It's 18.43, so we've got 15 minutes to finish this webinar. I'd ask you to be reasonable on the number of questions.

43:34 So we'll just take a break on the questions that you're asking. And those who ask a lot of questions, maybe because you would leave a bit of space to other people. So, Jean Florent. So, have we calculated the savings which you could make by mutualizing purchasing and administrative functions? As I said earlier on, we've got our subsidies which are autonomous on certain subjects, in particular human resources, customers, suppliers. this they are they who are responsible for their objectives their strategies and all of them are autonomous in terms of the logistics because the success of our companies is the ability to deliver correctly and quickly so on those subjects we don't want to risk reducing the commercial and logistic forms our companies by mutualizing their services but yeah for IT logistics perhaps we could look at future improvements and we also working with subsidies to to bring on those improvements so so when you say why not do it I would say that we are doing that and that's what we're doing in many subsidiaries.

45:06 We can't do everything at the same time, of course, because of the human resources that are available to us. These projects involve changing fundamentally things and they take a lot of accompaniment for the human resources. And I would say that we've talked about transport in purchasing and sales and those piloted by Thermador Group at the top. So what we've been able to centralize in that field and which could bring us economies of scale, we've done. and sharing of good practices like in digitalization. All that we've done recently in Thermador is going to be replicated in Jetly, Savarco and they will benefit from the testing if you like at Thermador Group, at Thermador.

46:01 So those learners are passed on. so you say maybe the shareholders are disappointed by the current variation I can't I can't deny that we share that disappointment but I would say again results are pretty good and we have a long-term vision so I wouldn't say that I can't say that France is responsible the situation in France is fully responsible for that the share prices but it is substantially the case you can see that when we produced when we published our half year results the share price went up and Are we trying to cancel our shares with a buyback of shares?

46:58 So we decided to buy 30,000 shares and that's one of the it's linked to the operations of developing employee shareholding so these shares are not going to be cancelled they're going to be used to sell shares to our shareholders to our employees sorry Thierry is worried that we might get a new tax on medium-sized companies next year I don't think so We're not in fiscal integration, so we look at this subsidiary by subsidiary in terms of thresholds, in terms of profit levels.

47:57 We're below those levels. So the buyback of shares, is it compatible with the purchasing of foreign companies? I don't think it's incompatible. I think we can use these shares that we own to finance acquisitions abroad. And I think that's appealing to companies that want to join us. Can you give us more information about your project for buyback? you'll find that in the resolutions so it's nearly finished that because it finishes in October and we explain the use of these operations it could either be for transactions for external growth or as motivational tools for employees and managers from the group Thierry asks if we've had any contacts in food liquids in the food market for Spain yeah for KNOX in Spain we are we're working on those synergies but they haven't been deployed yet but that's one of the subjects that we will be working on in the future using Kinox's know-how in Spain and Portugal for those materials so it's more to do with special pumps for moving liquids around in the food agri-foods business and mixers and that kind of thing and

49:31 and these are produced in Italy so in Europe they could be interesting to companies in the Terminal Group Rudolf asks if we're buying back shares to work on the share price so we give them an objective in terms of number a range of share price and they act on the market independently so that we're not intervening directly on the market in terms of buybacks it's limited but in terms of quantity so it's 20% I think and that's the limits the impact they can have on the price so asking whether we'll be working on external growth in 2027 yeah we hope so we're getting organized to do that in order to have more and more opportunities the idea is is to have a broad scope of opportunities in order to be able to really choose the best possible candidates.

50:46 Jean Florent says the analysis notes are interesting, but these are sponsored activities that are paid for. So it's not the case with CIC. The reality is that Thermador partially finances the work of the analysts but we allow them to work independently and I'm sure you will trust us with that. and you'll see in the past that they've never said anything false about Thermador Group so I invite you to look back to reassure about the future and the fact that these analysts are very serious and I would ask you to trust us we're not here to Yeah, there was a relation to buy back the shares.

51:50 It's something we put in the ATM every year and it was planned. It was limited to a certain amount. I think it was 3%. We also limited the price, a maximum price. you want it and it's based on the price the share price in December and it's the same method every every time ok I will answer you that more precisely. That was your question about the shares. And as we were just saying before, it could be factional growth. And we do 107 107 euros was the maximum price and it was 30% maximum.

52:57 Jean Florent comes back to me saying the indicator on the ROCE is a very good long-term indicator. I'm not saying the contrary. I'm not arguing that. And that doesn't stop us being really motivated to work on our working capital requirements. It's obviously very important in terms of the ROCE. And that's something that we've done in the group for several quarters through our stock. After the mad post-COVID years, we had to bring our stocks down to a lower level, the level of our sales.

53:51 And that explains the very good cash position we are in at the moment. So Romain is asking about cyber security. What is your level in terms of cyber security investments in progress or to come? So we have two full-time staff and one person working on cyber security. yeah we'll continue to invest and do we communicate a lot on what we're doing no we don't that's a choice we've made and are we insured and no we're not insured for that kind of risk it's could we be insured and that's yeah one of the questions we'll be asking ourselves for next year in terms of cyber security there's one element which is training for our employees so we've got a training program regular training programs so as to avoid incidents or accidents coming from human error personally I'm sure you've often been contacted by fraudulous sources SMS text messages emails trying to extort money from you it's true for everybody it's true for companies of course as well and these forces are very aware of all these

55:24 all these tricks and so we are training our employees to to be careful to be careful of that. I've got no more questions from investors. It's 6.55 PM. Our team behind the glass have done excellent work. Thank you to them. Thank you for simultaneous translation from Neil. for translation. It's a real person. It's not AI. So thank you for all your questions. We see that you're very passionate about Thermador. And we will continue with the adventure, of course, and hope in the coming quarters we'll be able to present better news, give you better news about the share price.

56:28 Don't hesitate to try to get the young people in your worlds involved, neighbours and family. Please encourage everybody to vote next year in the election and that will make things clearer from 2027 onwards after the general election. Goodbye to all.