Aebi Schmidt Holding Aktie

Good day, and thank you for standing by. Welcome to the Aebi Schmidt Group First Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Simone Grancini, Investor Relations Director. Please go ahead.

Thank you, Sharon. Good morning, and welcome to the Aebi Schmidt First Quarter 2026 Earnings Call. Joining me on the call today are Barend Fruithof, Group CEO, who will provide the first quarter highlights, outlook and concluding remarks. Steffen Schewerda, CEO, North America; and Henning Schroeder, CEO of Europe and Rest of World, who will detail the performance in the respective segments; and Marco Portmann, Group CFO, who will provide a financial overview.

Before I turn the call over to Barend, I remind you that today's comments include forward-looking statements subject to the safe harbor language contained in this morning's press release and in Aebi Schmidt's filing with the SEC. As a reminder, all Q1 2025 comparative figures referenced in today's material, like all figures prior to the merger closing date are presented on a combined basis for Aebi Schmidt and the acquired Shyft Group. Accordingly, all year-over-year comparisons are based on combined Q1 2025 financial information of both companies rather than stand-alone historical results.

And with that, I hand the call over to Barend.

Good morning, everyone. As shown on Page 5, Q1 2026 was marked by strong order momentum, increased sales and profitability, especially in Europe and Rest of the World. In Q1 2026, our order intake increased by 9% and order backlog by 23% versus Q1 2025. And net sales reflected an underlying like-for-like growth of 7%. Our adjusted EBITDA increased 6% year-over-year, delivering a significantly higher adjusted EBITDA margin of 7.3% versus 6.9% in the prior year, and net income improved by 7% year-over-year.

On Page 6, I will provide you with some more details on these achievements. In Q1, we launched our new brand architecture, completed key facility ramp-ups and positioned the company to execute on our record backlog of $1.3 billion. We also announced a strategic partnership with Yeti Move, a leading provider of autonomous and driver assistance solutions to accelerate the future of autonomous mobility for airports.

Both our segments secured major wins, including a landmark EUR 40 million European airport deal, a $15 million truck body contract, a $45 million orders from multiple state departments of transportation and a $30 million award with an American airport. Net sales delivered an underlying growth of 7% on a like-for-like basis with Europe and rest of the world as a strong contributor to this performance, driven by the successful launch of the new Cleango compact sweepers and continued momentum from the Ladog product.

Ultimately, our adjusted EBITDA improved by 6% in the first quarter of 2026 compared to the first quarter of 2025. Europe contributed to this with an outstanding 201% increase year-over-year.

And now I turn the call over to Steffen.

Thank you, Barend, and good morning, everybody, and thanks for having me. If I had to summarize it in one sentence, 2026 started with strong order entry and solid progress of the integration, especially of our commercial truck business. Our Airport business is still growing strong with over $30 million of recent awards. This also includes the new products we introduced last year, the Badger and the P-Series.

Barend mentioned earlier the partnership with Yeti Move. This is very compelling for North America because we have exclusive rights to bring Yeti Move's autonomous technology to the airports here in the U.S. Our chassis team continues to demonstrate operational excellence. Spartan RV Chassis received Newmar's 2025 Supplier of the Year award for industry-leading quality, innovation, service and customer support.

On the goods transport side, we secured a $15 million contract over the next 3 years with a leading e-commerce player, starting with an initial order of several hundred units. Walk-in vans continued to improve month by month, and our commercial business achieved growth year-over-year, also driven by the vertical integration of our service bodies. Our Municipal business is still seeing strong quoting activity, including $45 million of awards for Monroe and Swenson.

Slide 9, please. As you can see, our backlog in Q1 increased 29% year-over-year. That was driven after a strong Q4 2025 by an 8% increase year-over-year in order intake. The successful order momentum was driven by the product and services from airports, chassis, municipal, as well as strong signs of recovery for walk-in vans. Net sales increased by 3.6% year-over-year on a like-for-like basis, excluding the Blue Arc sales in Q1 2025. Finally, we saw a profitability impact during the ramp-up of the walk-in van production to meet our full year revenue goals.

And with that being said, I hand the call over to my colleague, Henning Schroeder. Henning?

Thank you, Steffen, and good morning from Switzerland. Europe and Rest of the World delivered an outstanding Q1 2026 performance, supported by solid order intake, high net sales and a significant improvement in profitability. As illustrated on Page 11, our markets are showing increasing momentum, particularly in Airport and Municipal, with After Sales making a substantial contribution to profitability growth.

The Airport business is entering a key phase with several large tenders announced or anticipated across major civil and military airports. In Q1, we secured a landmark EUR 40 million strategic contract with Paris airports, covering up to 29 airport machines, including a 20-year service agreement. In parallel, we are building a solid footprint in the APAC region by broadening our local product portfolio.

Within the Municipal business, the launch of the new 4 cubic meter Cleango 550 and continued market share gains by Ladog drove strong order momentum. Street cleaning demand remains on an elevated level with particularly strong traction in Southern Europe. The After Sales business once again proved to be a core profitability driver, fueled by strong post-snowfall demand in Central Europe. In parallel, we are investing in technician capacity and pricing optimization to underpin continued growth.

Turning to Page 12. We see continued order momentum driven by solid volume execution and margin expansion, supporting our ongoing improvement trajectory. I'm particularly proud of the team for delivering an exceptional 201% year-over-year increase in profitability, a standout achievement driven by improved pricing, higher volumes in new business and a significant contribution from After Sales. Net sales performance remained robust, supported by efficient operations, high production output and improved material availability.

That concludes my comments, and I'll now turn the call over to Marco.

Thank you, Henning, and good morning, everyone. As we see on Page 14, our first quarter saw solid order momentum, underpinning consistent backlog growth against the challenging market and despite various uncertainties given the geopolitical situation. This order performance resulted in a very healthy order backlog of now $1.3 billion, up 23% year-over-year, providing good visibility for the remainder of 2026.

Moving on to Slide 15. Net sales in the first quarter reached $456 million, representing a 7% year-over-year increase on a like-for-like basis, overcoming that challenging environment and as we believe, representing a continued growth in relevant market shares. Sales in North America increased by 3.6% versus the first quarter 2025, excluding $26 million of Blue Arc sales realized in '25.

Net sales in Europe and the rest of the world organically grew by an impressive 16%. And as mentioned, we expect to see significant improvements in net sales materializing in the second quarter and especially in the second half of 2026. This is due to the typical seasonality of our business. Our demand pattern results in a softer start to a new year with a continuous quarterly improvement and ultimately a strong year-end.

Looking at profitability on Slide 16. In our first quarter of 2026, we converted an overall stable net sales into a 6% growth in adjusted EBITDA versus prior year first quarter, delivering $33.1 million of adjusted EBITDA in Q1 or a 7.3% margin, representing a strong 40 basis point improvement.

North America's EBITDA margin decreased by 40 basis points, which was driven by ramp-up expansion of new facilities and preparations to convert walk-in van orders into revenue beginning in the second quarter. And as highlighted earlier, Europe and the Rest of World were a key contributor to the group's performance with substantially improved margins, tripling their adjusted EBITDA versus prior year.

Finally, having a look at our balance sheet on Slide 17. Net working capital stood at $449 million as of March 2026, reflecting a typical seasonal increase of $26 million from year-end 2025, while improving $4 million versus prior March 2025. This is driven by required inventory investments to facilitate the expected growth in net sales, which we offset by efficiency gains and improvements in collections of accounts receivables.

Our net debt increased to $455 million as of March 2026, an increase of $18 million versus year-end '25, driven by that seasonal and temporary increase of working capital. With this, we have maintained a stable leverage ratio of 2.88 and are on track to our targets to improve to a leverage of 2.0x by year-end 2026.

That concludes my comments, and I hand it back to Barend for the closing remarks.

Thank you, Marco. Continuing on Page 19. Q1 performance was in line with the expected pronounced seasonality and supports our full year 2026 outlook. Europe and Rest of the World delivered an exceptional Q1, particularly on profitability, while North America showed strong order momentum despite geopolitical and commercial market headwinds. Ultimately, the strong order intake and backlog will drive net sales conversion through the second quarter and into the second half of the year. Additionally, we will see further materialization of merger synergies throughout the year.

Moving to Page 20. Our priorities remain firmly focused on converting our strong momentum into profitable growth and delivering on our full year guidance. In North America, the priority is execution. We are focused on converting our record backlog into revenue, supported by accelerating walk-in van deliveries and increasing throughput at our Chicago Supercenter. At the same time, we are capturing merger synergies, expanding vertical integration and optimizing our operational footprint to further improve efficiency and margins. We also continue to strengthen our After Sales organization, which remains a key driver for profitable growth.

In Europe and Rest of the World, we are driving operational improvements through factory efficiency programs and continued pricing initiatives. In parallel, we are accelerating our After Sales capabilities and expanding our electrical municipal vehicle solutions to capture long-term growth opportunities tied to sustainability and fleet transformation. Overall, we believe the actions we are taking across both segments position us well to improve execution, expand profitability and support sustainable growth.

Moving to Page 21, covering our outlook and summary. We confirm our full year 2026 guidance, net sales in the range of $1.95 to $2.15 billion, adjusted EBITDA between $175 million and $195 million and year-end leverage at or below 2x. Q1 has put us on track to deliver these targets, supported by strong order intake growth, exceptional performance in Europe and Rest of the World, meaningful profitability improvement and solid progress on working capital. In addition, we expect North America to return to significant growth from Q2 2026 onwards, driven by strong order momentum, new locations and further realization of synergies.

That concludes our presentation. I now turn it over to our operator to open up the line for questions. Operator?

[Operator Instructions] And our first question today comes from the line of Michael Shlisky from D.A. Davidson.

Can you maybe tell us a little bit more about the autonomous airport product agreement that you made? I guess I'm kind of wondering what will Aebi Schmidt's role be in that? It's just an upfitting but just of a vehicle that's on a tarmac? And also, any sense the size of what that might mean for your EBITDA in the coming years?

So Mike, this is Steffen. I take this one. So what that means is we will integrate that technology into our products. That goes beyond upfitting because we will integrate the entire system into the vehicles that go on the airports, and we took -- we take the full ownership of the entire system. That also requires a very close cooperation with the airports.

When you're asking about the impact, the financial impact, there will be one in the mid and long term. These things are usually in the development phase for a couple or several years. So there's nothing in the short term, but what we expect here in the short term is that we will have some prototypes running on airports. I hope that answers your question.

Yes. Also wanted to follow up with some details on your walk-in van comments, Barend. You had mentioned things are getting better there. Orders are increasing. Can you just give us a sense as to when things are up and running again. It sounds like you had some automation or some outside help or help from Europe brought over to the U.S. to help that walk-in van business ramp up this time around, this brand-new cycle here. Curious as to, a, how that's going? Are things on schedule with hiring, with making the production improvements? And then secondly, whether there could be some large margin expansion this cycle versus what Shyft Group saw last time around?

So Mike, thanks for that. I'll take that, too. So indeed, we had some ramp-up procedures here through the first quarter, and we commented on that as well. The comment related to the support from Europe is we have expats over here, which are here also on a long-term base to support that ramp-up. So we are through this at the moment, and we see a massive improvement here through Q2 into Q3, supported by a strong order entry.

On the margin expansion, I don't want to comment that too much in detail, but we see an improvement here, significant improvement over the last months month-over-month.

I mean, Mike, this is Marco speaking. To add on that, I mean, that's really the underlying basis here, right? You're fully on point with that question. We have seen a depressed walk-in van market in the past couple of years. We now see that structural recovery from the order momentum. And yes, of course, not just with the improvement of our production setup and efficiency, but also generally with the recovering of the walk-in van market, we will see that margin that you're asking about coming back and be realized over the coming quarters, absolutely.

Your next question comes from the line of Greg Lewis from BTIG.

I appreciate the strong order intake. It would be helpful, I think, for us if you could kind of bracket kind of the time lines of converting that as we look at airport, municipal and even the walk-in van. Just kind of curious how we should be thinking about that maybe this year and maybe even in the next year.

Okay. Thanks, Mark (sic) [ Greg ], for this question. As we mentioned in our presentation, we still have a huge backlog in the municipal area with the launch of the supercenter in Chicago, we really started to ramp up and to convert. So there, you will see definitely much higher revenues in the second quarter. Then airport, as we already mentioned with fourth quarter results, I mean, it's still we're booking into end of 2027, beginning also 2028. So there, we also ramped up our output. So there we are well on track.

And also on the walk-in van, we improved our output. At the same time, we also were able to reduce our net working capital in that specific area. And we also received already orders for 2027 in the walk-in van area. So that's a bit high level. Europe is like quite stable as we had in the past. So the only area where we see a bit slow -- where we see slow activity is in the area of commercial business. So -- but also here, we see some positive trends. And Marco, I don't know if you want to add a few things.

Yes. I mean, look, Greg, to be a bit more specific as much as I can, at least, we have guided and still do so also in our today's earnings materials that we expect to realize about 45% of our revenue this year in the first half and about 55% in the second half. So you already see, if you take that math from the midpoint, you see that's a 22% increase that we expect for those 2 second -- for those 2 half years.

And you can expect to see already a sizable step-up now in the second quarter, which, as Barend just alluded, right? So it's the walk-in van orders coming in with a lot of other things that materializing in the next couple of months on top of that.

Okay. Great. And then just a follow-up, Marco. As we think about the guidance, what kind of swings us between the low end and the high end on revenues?

Well, I mean, look, in terms of Airport and Municipal, we do have the very strong backlog, which now also is indeed looking very healthy in the meantime in walk-in van orders. which I should point out is a little bit unusual, right? So typically, walk-in van is a lower cycle between orders and realization, but this is really now the bigger recovery of the bigger orders. And you can see that this also has built up some backlog, which we now translate.

So what drives us then consequently between the lower and upper end of the guidance? As you know, we also have the other segments, commercial specifically, and that's also where we commented on. That is still soft, and that's still unclear how it will develop for the second half year. So we will see how much of that we can realize in the coming months and how the market is developing, but that will be ultimately one of the key drivers between the revenue guidance of $1.95 billion to $2.15 billion we've given.

Your next question today comes from the line of Matt Koranda from ROTH Capital.

Is there any way to break apart the North American order flow of $366 million that you called out? I'm just curious, sort of, the breakdown between walk-in van and then municipal and airport. I guess the reason I ask is just trying to get a sense for the flow of walk-in van order demand. I know it was quite strong at the end of last year. It sounds like it's continued strong in the first quarter. But I guess there's some crosscurrents at the parcel fleets if you listen to their sort of commentary around average daily package volume and whatnot.

So just trying to get a sense for sort of how sustainable walk-in van order demand is.

Yes, I'll take this one. This is again, Marco speaking, Matt. I fully get where your question is coming from. But as you do know, we are not necessarily giving too much details out, especially on the order data between our end-customer segments. But I can confirm that walk-in van recovery, and as we said with the full year guidance -- or let me actually -- let me take a larger bracket even, right?

So we saw the recovery coming in end of 2025. And as we commented in November with our third quarter '25 release, we didn't know at the time whether this was structural because it was a few customers, it was some selected orders, but it was a very good healthy sign. And as we said then with the full year release, we have really seen that this is now broadening. It's throughout the customer portfolio, and that's exactly what we also can confirm today. We see that this is really a healthy development. And as we said, we believe this is really now structural with that market coming back after a long depressed phase in the last couple of years following the COVID times.

So it is a sizable part of the $300-plus million order intake. But again, unfortunately, I can't give you the exact specifics. We're not breaking that down into the actual customer end segments.

Okay. That's fair, and I appreciate the comments. And then on, just like, the cadence of the year, especially for North America, it sounds like you're signaling a steady ramp-up in production throughout the year, so probably sequential improvement across the year in terms of revenue. Should we assume that EBITDA sort of improves commensurately with sales growth as well sequentially throughout the year?

Yes, Matt, this is Steffen. I'll take this one. Yes, this assumption is correct. And we see this trend kicking in, and that is a -- that's a correct assumption, yes.

Okay. Got it. And then just last one, from a broader perspective, in terms of the guidance reiterated for the full year. How did you, if at all, I guess, factor in any increased component costs associated with higher oil prices and freight across the globe?

So Matt, very good question. I mean, in certain areas where we have a very high backlog, so there we have a few challenges. But honestly, that is already factored into our guidance because we were always kind of cautious there. And we already have taken measures given material and commodity price increases, we also have increased freight costs, and we also have done a few things on the After Sales.

So on that end, we feel so far quite comfortable. So that will not heavily impact our EBITDA. So I think we feel comfortable. And as you know, normally, we lock in the steel. So we have long-term contracts with our suppliers. So we feel quite comfortable and that will not heavily impact our EBITDA guidance. Does this help?

This concludes the Q&A for today. And I will now hand back to Simone Grancini for closing remarks. Please go ahead.

Thank you, Sharon. I thank everyone for joining today's call and your interest in the Aebi Schmidt Group. As always, please reach out to [email protected] if you have any follow-up questions.

And with that, Sharon, please disconnect the call.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Aebi Schmidt Group Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Simone Grancini, Investor Relations Director. Please go ahead.

Thank you, Sharon. Good morning, and welcome to the Aebi Schmidt fourth quarter and full year 2025 earnings call. I'm Simone Grancini, the company's Investor Relations Director.

Joining me on the call today are Barend Fruithof, Group CEO, who will provide the fourth quarter and full year highlights, outlook and concluding remarks. Steffen Schewerda, CEO, North America; and Henning Schroder, CEO, Europe and Rest of World, who will detail the performance in the respective segments; and Marco Portmann, Group CFO, who will provide a financial overview.

Before I turn the call over to Barend, I remind you that today's comments include forward-looking statements subject to the safe harbor language contained in this morning's press release and in Aebi Schmidt's filings with the SEC.

And with that, I hand the call over to Barend.

Good morning, everyone. 2025 was a historical year for Aebi Schmidt, marked by the acquisition of the former The Shyft Group and our listing on NASDAQ. I'm extremely proud of our fourth quarter performance. As we see on Page 5, our order intake increased 46% in the fourth quarter versus 2024, and we ended 2025 with a record high order backlog.

Our adjusted EBITDA increased 31% year-over-year for the fourth quarter, delivering a significantly higher adjusted EBITDA margin of 9.1% versus 7.4% in the prior year. And our strong cash flow enabled us to reduce our leverage to 2.8x, strengthening our balance sheet heading into 2026. I thank our employees for their exceptional contribution and our customers for their continued trust.

On Page 6, I provide you with some more details on these outstanding achievements. Our exceptional order momentum was driven by strong orders in airport and municipal and especially by a recovery in the walk-in-van orders. We believe this reflects a structural recovery in demand. On the other hand, we expect a continued softness in truck body and commercial markets with only a slow recovery in 2026.

In terms of net sales, our fourth quarter grew 6% versus prior year. A 5% decline in legacy shift was more than offset by the rest of the group. Europe and the Rest of the World was a strong contributor to this performance with substantial organic growth in almost flat market. We also accelerated and increased the cost synergies from the acquisition of Shyft with an additional procurement and revenue synergy expected to materialize in the second half of 2026. Ultimately, our adjusted EBITDA improved by 31% in the fourth quarter 2025 compared to the fourth quarter of 2024. Europe contributed to this with an outstanding 234% increase year-over-year.

Continuing on Page 7, we look at the foundations we have built that will deliver our 2026 growth path. First, our M&A strategy continues to deliver, and this goes beyond The Shyft acquisition. Both our smaller acquisition, LWS in the U.S. and Ladog in Germany continue to provide outsized growth to the group, and we see further opportunities for small bolt-on acquisitions. Second, we have launched multiple new products. This includes the first service body jointly developed by Monroe and Royal presented last week at the NTA. The launch of new compact airport products to enlarge our addressable market, and we are exploring to design a more cost-competitive offering of our Blue Arc truck. Finally, we opened new locations and secured major first-time customers, which will support revenue and profitability in the second half of 2026.

Let's also briefly look at our brands on Page 8. We're simplifying our brand architecture, sharpening our market presence and sending a clear signal that we are one powerful group. This makes it easier for our customers to navigate the group's broad range of solutions, simplifies customer engagement and allows us to communicate in a more meaningful and cost-effective way.

And now I turn the call over to Steffen.

Thank you, Barend. And good morning, everybody. Thanks for having me. We're on Page #10. So to put it in one sentence, 2025 was an outstanding year, especially in terms of order momentum. Our airport business is seeing very strong order entry, also supported by the launch of our new products. These products are gaining really nice traction and first deliveries have been made to customers already. On the walk-in-van side, we see a recovery of the market, combined with what we believe is market share growth. On the commercial side, we see some softness, which we are able to partially offset by stronger fleet demand. And our Municipal segment shows very strong quoting and order entry. That confirms our strategy to expand our geographical footprint.

Slide 11, please. As you can see, our backlog increased by 25% in the fourth quarter versus prior year. That was driven by a 63% increase year-over-year in order entry. Net sales and adjusted EBITDA in Q4 was slightly below the fourth quarter in 2024. This was mainly driven by the softness in walk-in-van and truck bodies and included ramp-up expenses for walk-in-van production and additional locations. And looking at these KPIs, it is clear what the focus points for 2026 are. It is order conversion and profitability, and I will explain this a little bit more in detail on the next Slide #12. So based on our strong backlog, we are positioned to deliver growth in 2026, which we expect to accelerate throughout the quarters. On the market side, we expect that we will continue to realize strong order entry. This is driven by market recovery, market share expansion and also the introduction of new products. On the sales conversion side, our new location in Chicago is now fully operational. We are starting to deliver the first municipal snow and ice trucks to a major DOT starting in April. Two new upfit centers in Minneapolis and Toronto are also gaining traction.

And on the walk-in-van side, we are already starting to increase output, which we expect to accelerate in the second quarter. And on the profitability side, we are executing on vertical integration in our Commercial segment. In addition, we expect to realize material cost savings in the second half of the year, and our cost structure is being aligned as we speak. Our increased output will also result in higher plant efficiencies, of course. And on top of that, we are planning to consolidate some of our warehouses in the Midwest to gain efficiencies in logistics and net working capital.

And with that being said, thank you, and I hand it over to Henning.

Good morning. I describe 2025 as a landmark year for Europe and the Rest of the World in terms of order intake growth and strong profitability development throughout 2025. As written on Page 14, our markets are gaining strong traction, particularly in airport, municipal complex sweepers and agriculture. The Airport segment is entering a pivotal year with multiple large tenders expected, fueled by rising defense budgets, driving military-related demand and increasing local content requirements. The municipal sector continues to be powered by complex sweepers, delivering double-digit growth for our core products in 2025. Ladog products have exceeded expectations. We are accelerating our capacity expansion plans, while winter products show a mixed performance due to limited snowfalls across many European countries. Agricultural Products showed strong momentum in 2025, growing more than 30% versus 2024, supported by the rollout of the new generation of Aebi Combicut motor mowers.

Slide 15, please. In Q4, we sustained growth in order intake and delivered a significant 25% year-over-year sales increase, driven by airport, municipal and spare parts. I'm especially proud of the team for delivering an exceptional 234% year-over-year increase in profitability, an outstanding achievement powered by strong volumes, solid gross margin performance and disciplined OpEx control.

Proceeding to Page 16, our strong 2025 performance provides the foundation for positive year-over-year quarterly and sequential improvement throughout 2026. On orders, we expect to leverage our expanded dealer network to accelerate the Europe-wide Ladog rollout, build on strong Municipal and Agricultural momentum, following successful product launches and capitalize on our centralized airport tender team to secure large global deals and increase win rates. On sales margin, we expect to implement factory efficiency programs and finalize production relocations to reduce material costs. We will utilize our EU pricing engine to optimize margins in spare parts and realize the benefit of implemented price increases across new business and aftermarket segments.

On cost control, we expect to capture the benefits of regional back office consolidation, further leverage our Eastern Europe corporate center and convert disciplined OpEx management into tangible cost savings.

That concludes my comments, and I turn it over to Marco.

Thanks very much, Henning, and good morning, everyone. As you have heard already, 2025 ended with significant order momentum as we captured many market opportunities following the acquisition of the former The Shyft Group. On Page 18, we see this exceptional order performance resulting in a very healthy order backlog of over $1.2 billion, up 21% year-over-year and providing good visibility into 2026. And we expect to see significant improvement in net sales materializing in the second quarter and especially the second half of 2026 out of that backlog.

On the topic of seasonality, our demand cycles generally lead to a strong year-end with a comparatively slow start into a new year. For 2026, we expect this quarter-by-quarter seasonality throughout the year to be even more pronounced than in an average year, more on this later by Barend.

Moving on to Slide 19. Net sales in the fourth quarter reached $528 million, representing a 6% year-over-year increase and bringing full year sales to $1.9 billion, a 2% increase compared to 2024. Looking at our fourth quarter net sales in a bit more detail. Sales in North America decreased 2% versus the fourth quarter 2024 due to the pronounced weakness in the acquired Shyft businesses with a 5% decline, which could not be fully compensated by the 2% growth in the legacy Aebi North American businesses. Sales in Europe and the Rest of the World increased by a notable 25%, contributing to over 1/3 of total net sales in the fourth quarter.

Looking at profitability on Slide 20. On a full year pro forma basis, we turned a 2% net sales increase into a strong 13% increase in adjusted EBITDA year-over-year, delivering $156 million in full year 2025 or an 8.2% adjusted EBITDA margin. In our fourth quarter specifically, we converted a 6% net sales increase into an impressive 31% growth in EBITDA versus prior year fourth quarter, delivering $48.1 million of adjusted EBITDA in that fourth quarter 2025, equal to a 9.1% margin. North America's EBITDA margin was flat on the back of that 2% net sales decrease, while Europe and Rest of the World delivered a significant EBITDA growth with over 600 basis points improvement.

Finally, having a look at our balance sheet on Slide 21. Net working capital decreased by $29 million or 6% since September to $423 million as of December 2025. This decrease was driven by a $38 million lower inventory, reflecting both improved efficiency and the seasonal decrease at year-end. On the back of a strong cash flow in the fourth quarter, our net debt decreased to $437 million as of December 31, 2025, a decrease of $32 million compared to September. With this, we have also delivered a first significant step to reduce our leverage, improving almost half a turn to 2.8x as of year-end 2025 with our communicated target to improve to below 2.0x by year-end 2026.

That concludes my comments, and I hand it back to Barend for closing remarks.

Thanks, Marco. Let me start my concluding remarks with a summary of the key achievements in 2025 shown on Page 23. We're outperforming on synergies, expecting to deliver over $40 million versus our initial $25 million to $30 million target. Our intake increased by 22% versus 2024 and adjusted EBITDA improved by 13%, reflecting strong operational execution. At the same time, we launched new products and opened new locations, further strengthening our foundation and positioning the company for sustainable growth.

Continuing on Page 24. Looking at 2026, we expect a pronounced quarterly seasonality, mainly driven by market conditions and geopolitical uncertainty. Q1 will start slow as our strong walk-in-van orders will convert into revenue beyond the quarter, while the commercial market remains very soft despite some signs of recovery. In Q2, we expect order conversion to accelerate, supported by our ramp-up of production and upfitting capacity. By Q3, we expect improving market conditions in the commercial and fleet markets and the realization of procurement synergies. And finally, in Q4, we expect to benefit from the usual seasonal strength, especially in Europe and the rest of the world.

Moving on to Page 24 for the outlook. Let me conclude with our 2026 guidance and priorities. We expect net sales between $1.95 billion and $2.15 billion and adjusted EBITDA between $175 million and $195 million, and the leverage at year-end 2026 at or below 2. To deliver this, we expect to maintain strong order momentum and accelerate backlog conversion into net sales through better production efficiency. We expect to drive profitability through efficiency gains at legacy Shyft, optimized footprint utilization and delivering our synergies. And at the same time, we will maintain our strong focus on leverage and balance sheet. In short, our 2026 focus is on disciplined execution to sustain and build on the strong momentum achieved in 2025.

That concludes our presentation. I now turn it over to our operator to open up the line for questions. Operator?

[Operator Instructions] And the first question comes from the line of Greg Lewis from BTIG.

I was hoping you could talk a little bit more. I mean, clearly, it looks like we got finished and started with some order momentum in the walk-in-van market. Kind of as you see that playing out, like what's kind of some of the things that customers are talking about and driving that? One of the things that we had heard last week was around just, hey, the fleet is just -- it's just time for some renewal. Any kind of sense for how much of this is renewal? How much of this is demand? How much -- like how can you kind of frame that just given your confidence in the potential increases in walk-in?

Right. Greg, good morning. This is Steffen. I'll take that question. So what we are seeing and believing is that it is both. We are entering a phase of renewal at this point in time and one market participant is buying more than the other one. I mean we know who the big -- two big players are. But we believe it is a combination of renewal and additional demand. And we see this going forward, not just a blip here over 1 or 2 quarters. When we talk to the customers, that is structural and sustainable demand here.

Okay. And then I was hoping you could talk a little bit about the backlog. You mentioned -- you called out that the backlog points to about 15 -- is spread out over 15 months. Is that something where the backlog is? Is the duration of the backlog increasing, decreasing versus maybe where it was a year ago, is part of that a mix of what is being ordered?

Greg, thank you very much for this question. So I mean, we were able to increase our backlog on a pro forma basis if you compare it with 2024. And there is a bit of a mixed picture. So we have a very strong backlog in our municipal business as well as in our Airport business, for example. We were also able to increase our backlog in Europe versus previous year, which is a very good development given the market circumstances. And at the same time, we were also able to massively increase our backlog in the walk-in-van business. We're having some challenges in the commercial market as well as in the truck body market. So there we need to do some more work. And we expect that the market will improve, and we see already first signs in that area.

We will take the next question, and the question comes from the line of Mike Shlisky from D.A. Davidson.

Some of your truck body comments that you made, you mentioned that it's been slow, but there was so much excitement about the new truck bodies that you're introduced in -- at the NTA show last week. Do you think that your truck body business will outperform the broader market in '26 just on that new product? And just tell us about how it may have been received at the show. What are customers telling you about the new product there?

So Mike, this is Steffen. I'll take that one. So what we introduced on the show was a new service body on the commercial side. Basically, that is part of our committed integration here, more vertical integration. We talked about this in numerous occasions here. So the service body on the commercial side has very, very good feedback. On the truck body side, the new product we showed was -- you could see this on the Isuzu stand. This is a cooperation together with Isuzu. It's called the Advantic. We are the exclusive partner for Isuzu getting this into the market. To answer your question, I do not really believe that we will outperform the market here in 2026, but I truly believe that we will put a strong foundation here into place over the next quarters then to accelerate in 2027.

Great, great. Secondly, a large e-commerce company has announced in the last couple of days that they plan to scale back or stop using the USPS for a lot of their deliveries. They're USPS' biggest customers. I presume they're going to have to take some of that delivery volume in-house as well as farming out to the other large delivery providers. If they're using the other providers, if they're using their own vehicles, and I know that they have some of their own kind of custom-made vehicles, but they are a mixed fleet. If that changes away from the USPS, is that a positive for Aebi Schmidt going forward as far as mix of how much business you can capture now? Or was USPS a pretty big customer, and there won't be much of a change here?

Mike, I believe that this is an advantage for Aebi Schmidt. I mean, in this context, there was also the notion of, "Hey, we do it within 1-hour delivery or 3-hour deliveries," where customers pay a little bit more. We're talking about the same article here and the same announcement. So I believe it will drive additional demand. The question is what kind of vehicle, what kind of concept will this be? But I believe in our product portfolio, we have something to participate in that market, and we are in active discussions.

Your next question today comes from the line of Matt Koranda from ROTH Capital.

I guess I wanted to hear on the midpoint of the adjusted EBITDA guide for '26, it looks like about nearly $30 million in improvement. But I guess you guys have said synergies in total are north of $40 million from the combination. Obviously, that gets realized over a couple of years. So I just wanted to hear a little bit about how much gets realized in '26, and what's built into the full year guidance?

Yes, thanks. Good morning, Matt. This is Marco speaking. So yes, midpoint, $185 million of our adjusted EBITDA guidance, and -- I mean to reiterate in 2025, right? So we always said we're going to deliver at least $40 million in total now. And out of that, we have realized in '25 somewhere in the mid-teens. That's predominantly cost synergies. And we expect the same amount to realize also in 2026 on top of that. Keeping in mind that specifically the procurement synergies, they will kick in, in the third quarter 2026. Again, that's relating also to what we just talked about with the service body. And we have also revenue synergies, which are predominantly kicking in, in the second half of 2026 as well. Before we will then see the full realization by summer 2027 as we have initially announced pre-merger. So we're still fully on track to that. But also keep in mind, it's not just the synergies. If you look at the different -- the difference between 2025, '26, there's also one-off expenses that we have to account for 2025, we faced some additional stuff that isn't part of the adjusted, some ramp-up expenses that are operational, some compliance topics, a couple of these things. And also in Q1 now '26, we'll still have some ramp-up expenses, specifically in the walk-in-van business.

Okay. Got it. And I wanted to hear a little bit more about the seasonality commentary that you gave in the prepared remarks. It sounds like you said first quarter, usually your lower quarter in terms of seasonality, but might be a little bit more pronounced this year. Could you unpack some of the factors that are causing the more pronounced seasonality? And is that more pronounced in one of the two segments in North America or Europe, or is it both? I just want to hear a little bit more about how to think about it.

Yes. I mean, I think commentary is right. Generally speaking, we do have quite a bit of seasonality, a bit more than maybe typically would be expected, coming especially a little bit from the ordering cycles we see in Europe, but also generally the snow business or snow-related business that we have. And as we said, in 2026, this is going to be quite a bit more pronounced. So we will see, of course, a slower start in Q1 because these walk-in-van orders, while we do have the backlog now, and we still see the good momentum, it will materialize only beginning in Q2 really. And we still have some one-off expenses associated with that ramp-up in the first quarter. So we don't have the revenue yet, but also some costs already flowing in.

And that also from a segment view, will hit us, of course, in the U.S. So you will see that if you compare Q1 U.S. or North America as the segment officially is called versus last year. In Europe, you will see quite a good improvement Q1 over Q1. But of course, keeping in mind that Europe has had a slow start in 2025. So yes, you see that basically coming in out of the order backlog that wasn't there in Q4 that now leads to that lack of revenue basically in Q1 walk-in-vans, and again, commercial truck body, we commented on that. It is a soft market. We still see that, and that will persist through Q1 or does persist through Q1. We can say that as of today.

And of course, the geopolitical environment also didn't really help in the last couple of weeks. So you feel that as well. And then you have basically in Q2, Q3 of the ramp-up, as we explained, and the fourth quarter really will be, I would say, similar to what you have seen now in the dynamics in 2025, but again, more pronounced that this is really the strong quarter that will bring the year together. I just wanted to be precise on that to rightsize expectations on our quarterly momentum of 2026.

And Matt, just to add one point. As you know, we have built a new upfit center in Chicago that will help to accelerate our backlog in the municipal area into more sales. And we will see already an improvement in March, and that will then go up already in the second quarter. And that's also a good thing then to reduce our backlog and turn it into sales in the municipal area.

This concludes the Q&A for today, and I will now hand back to Simone Grancini for closing remarks.

Thank you, Sharon. I thank everyone for joining today's call and your interest in the Aebi Schmidt Group. As always, please reach out to [email protected] if you have any follow-up questions. And with that, Sharon, please disconnect the call.

Thank you. This concludes today's conference call. Thank you for participating. You may all disconnect.