Stabilus SE to Discuss the Acquisition of DESTACO Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Akshat Kacker - JPMorgan Chase & Co, Research Division - Analyst : Michael, Stefan. And congratulations on this transformation announcement in my view. I have a few questions, 3 in total. The first one is on growth. Can you just talk about the financial profile or revenue trends at DESTACO in the last 3 or 5 years, how has the top line development been over the last 3 years? I think that would be interesting to know. The second one is a clarification on the revenue synergies, I know you talked about $50 million in opportunities. Is that only from selling DESTACO products through established distribution or are you also including some benefits for the Stabilus portfolio across Asia and Americas primarily? That is the first question in total on growth. The second question is on cost synergies. Could you just give us more details on where do these come from specifically materials, R&D, common overheads, logistics. Could you just talk about where do they come from? And any cost we should be mindful of in implementing these synergies? And the last one is on the leverage target of 2.5x in 2024. Could you just talk about the different moving parts in that calculation? Are you going to propose a dividend for fiscal year 2023? How does your capital allocation strategy change post the transaction? Are you focusing on organic investments and deleveraging going forward? Some clarity on that would be helpful.

Question: Akshat Kacker - JPMorgan Chase & Co, Research Division - Analyst : Yes, it does. I have 2 very quick clarifications. So the first one on going back to the growth profile, I completely hear the cross-selling opportunities, which make a lot of sense and the revenue synergies for both organizations. But then I look at your ambition for revenue CAGR over the next few years and including synergies, it's around 9%, which is in line with the addressable markets and the TAM opportunity that you have showed on one of the slides, which I think has an 8% or 9% CAGR built into the overall growth profile there. So is that growth very conservative from your side? Do you expect to outperform that number? Is that a very cautious number? That's the first question. And the second question is on capacity utilization at DESTACO, sorry, and CapEx requirements to deliver the growth ambitions in the next few years?

Question: Yasmin Steilen - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Congratulations on the long awaited acquisition, first of all, so in the Industrial segment. And encouraging to hear that you have an exclusive negotiation on the transaction and no need for capital requirements. Anyway, some follow-up questions, if I may. So you mentioned that the sector was growing in the double digits in the past. So this is basically also what we can assume that for the historic sales CAGR for DESTACO, I assume then the second one, maybe you can shed some light on the competitive landscape of DESTACO, the market shares they have in the different regions. Then rather more housekeeping question, so the 20% EBIT margin looks impressive at first. Can you confirm that in terms of financial approach regarding capitalization of development costs, et cetera, it's comparable to your policy. So just like to understand whether this margin is sustainable and not based on different accounting approaches. Then on the cost synergies, also a follow-up. So you stressed it might also partly steamed from production side optimization, mainly on the admin side. So is it correct? Is my understanding correct that we should not expect any meaningful one-off costs from these measures? And the last one, again, coming back to the cash generation. So based on your -- the leveraging plan, it seems that working capital, and you mentioned already with regards to CapEx, that it should be rather comparable. So maybe you can walk us through the underlying capital requirements, basically, CapEx, but more importantly, working capital of DESTACO.