20-F: SCHMID Group Navigates 2024 Downturn, Secures Critical Funding

SCHMID Group N.V. reports a significant net loss in 2024 due to listing expenses and market downturns, while securing new financing and forecasting growth for 2025 and 2026.

Summary

• A net loss of EUR 84.3 million was reported for 2024, a substantial decline from a net income of EUR 37.9 million in 2023.
• Revenue decreased by 32.6% to EUR 60.8 million in 2024 from EUR 90.2 million in 2023, primarily due to weakened demand in key Asian electronics markets.
• Gross profit fell to EUR 12.0 million (19.8% margin) in 2024 from EUR 26.4 million (29.3% margin) in 2023.
• Operating results shifted from a profit of EUR 32.2 million in 2023 to a loss of EUR 82.5 million in 2024, largely influenced by EUR 71.6 million in share listing expenses.
• Cash and cash equivalents decreased to EUR 3.8 million in 2024 from EUR 5.7 million in 2023.
• Order backlog as of December 31, 2024, stood at EUR 27.7 million for machine sales and EUR 1.8 million for spare parts and services.
• Estimated sales for 2025 are approximately EUR 66 million, with a reported EBITDA margin of around 10%, which is lower than previous guidance.
• A 20% increase in order intake is forecasted for 2026 compared to 2025, with expected sales revenue exceeding EUR 100 million and an Adjusted EBITDA margin of more than 12%.
• The company secured $30 million in 7.00% Senior Convertible Notes due 2028 in January 2026, with $15 million funded and the remaining $15 million conditional on registration statement effectiveness by June 30, 2026.
• A EUR 5 million shareholder debt waiver was granted in September 2025, and debt set-off agreements were executed with XJ Harbour (USD 26.96 million) and SCHMID Avaco Korea (EUR 2.3 million equivalent) in late 2025/early 2026.
• A secured two-tranche term loan facility of up to EUR 10 million was signed with Black Forest Special Situations I in December 2025, with EUR 2.5 million drawn.
• Two material weaknesses in internal control over financial reporting were identified for both 2023 and 2024, related to IFRS/SEC expertise and IT general controls.
• NASDAQ issued delinquency and delisting notices in May and November 2025 due to delayed 2024 20-F filing, but an extension was granted until April 30, 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a challenging period marked by significant financial losses and operational delays, partially offset by successful capital raises and a positive outlook for future growth driven by innovative technologies. The going concern uncertainty and internal control weaknesses are notable concerns.

Positives

• Strong order intake of approximately EUR 95 million for 2025, driven by demand for AI-server boards and high-performance computing.
• Forecasted 2026 order intake increase of around 20% compared to 2025, with expected sales revenue over EUR 100 million.
• Anticipated Adjusted EBITDA margin of more than 12% on sales for 2026, with potential for significantly higher margins due to the 'Sprint' cost-saving program.
• Successful securing of $30 million in senior convertible notes and a EUR 10 million term loan facility, addressing critical liquidity concerns.
• Shareholder debt waiver of EUR 5 million and debt-for-equity conversions improved the company's financial structure.
• Continued technological leadership with Embedded Traces (ET) and Through Glass Via (TGV) etching systems, offering significant efficiency and environmental benefits (up to 30% energy reduction, 70% water reduction, 40% chemical reduction, 30% CO2 emissions reduction for ET process; 35% power reduction for TGV).
• Partnership with TRUMPF for innovative glass substrate manufacturing for microchips, positioning the company for future growth.
• Strategic expansion into new geographies (Asia outside China, North America) and growing markets like fuel cell production.
• The 'Sprint' cost-saving program is expected to yield over EUR 4 million in annualized savings.

Negatives

• A significant net loss of EUR 84.3 million was reported in 2024, a sharp contrast to the net income of EUR 37.9 million in 2023.
• Revenue decreased by 32.6% in 2024 compared to 2023, primarily due to weakened demand in key Asian markets.
• Gross profit margin declined from 29.3% in 2023 to 19.8% in 2024.
• The company incurred substantial one-time share listing expenses of EUR 71.6 million in 2024 due to the de-SPAC transaction.
• Cash and cash equivalents declined from EUR 5.7 million in 2023 to EUR 3.8 million in 2024.
• Estimated 2025 sales of EUR 66 million are lower than previous guidance, attributed to delayed market recovery and customer 'wait-and-see' attitudes, as well as project delays.
• Two material weaknesses in internal control over financial reporting were identified for both 2023 and 2024, related to insufficient IFRS/SEC accounting expertise and ineffective IT general controls.
• Received NASDAQ delinquency and delisting notices in May and November 2025 for delayed 2024 20-F filing, highlighting compliance issues.
• An ongoing legal dispute with Validus Broker Dealer Investment Management Company LLC over an unpaid $2.35 million promissory note that matured on June 13, 2025.
• The funding of the second $15 million tranche of convertible notes is conditional on the effectiveness of a registration statement by June 30, 2026, posing a material uncertainty to the company's going concern.

Risks

• Ability to maintain the listing of securities on NASDAQ.
• Intense competition in markets, including from large Chinese players and alternative product providers, potentially impacting new product development success.
• Damage to brand reputation from negative publicity or actual/perceived product issues.
• Profitability could suffer if cost management strategies are unsuccessful or competitors develop advantageous cost structures.
• Disruptions to the supply chain, significant increases in material costs, or shortages of critical components.
• Fluctuations and developments in the global electronics end-market and government spending in the defense industry.
• Economic, financial, geopolitical, epidemiological, or other conditions (e.g., war in Ukraine, US-China trade tensions) causing business disruptions.
• Operations and assets in foreign jurisdictions may be subject to significant political and economic uncertainties.
• Limited ability to obtain additional capital on commercially reasonable terms.
• Substantial regulation and laws, and unfavorable changes or non-compliance, could harm business and operating results.
• Failure of information security and privacy concerns could lead to penalties, reputational damage, and harm business.
• Inability to successfully execute growth initiatives, business strategies, or operating plans.
• Inadequate protection of know-how and innovations, including patent applications, could adversely affect competitive position.
• Inability to attract and retain qualified personnel, consultants, and collaborators.
• Risks associated with potential acquisitions, including integration difficulties, dilution, and failure to realize anticipated synergies.
• Decreases in the average selling prices of products could adversely affect business, financial condition, and results of operations.
• Requirement to record impairment charges on accounts receivable if outstanding balances are uncollectible.
• Uninsured losses and liabilities from natural disasters, catastrophes, fire, or other unexpected events.
• Limitations on the ability to use and operate certain portions of facilities due to real property leases.
• Uncertainties presented by foreign legal systems could limit legal protections and subject the company to legal risks.
• Material increases in labor costs in China could adversely impact business and operating results.
• Changes in the Chinese government's policy on foreign investment in China may adversely affect business and results of operations.
• Exposure to potentially adverse tax consequences due to international operations and corporate/financing structure, including challenges to tax residency and changes in tax laws (e.g., Global Minimum Tax regime).
• Ability to utilize net operating loss and tax credit carryforwards may be subject to limitations.
• Potential classification as a Passive Foreign Investment Company (PFIC) for U.S. federal income tax purposes.
• Increased legal and financial compliance costs as a public company.
• Ineffective internal control over financial reporting could adversely affect investor confidence.
• Reliance on foreign private issuer and controlled company exemptions from certain NASDAQ corporate governance requirements may limit shareholder protections.
• Significant concentration of share ownership by Anette Schmid and Christian Schmid gives them control over shareholder actions.
• Volatility in the market price and trading volume of Ordinary Shares and Public Warrants.
• Delisting from NASDAQ due to failure to meet continued listing requirements.
• Lack of analyst coverage could cause share price and trading volume to decline.
• Shareholders may be subject to limitations on transfers of their shares.
• Sole and exclusive forum provisions in Articles of Association may limit stockholders' ability to obtain a favorable judicial forum.

Future Outlook

The company estimates 2025 sales to be approximately EUR 66 million with a reported EBITDA margin of around 10%, lower than previous guidance due to delayed market recovery and project delays. For 2026, a strong and accelerating order intake outlook is expected, with an estimated increase of around 20% compared to 2025. Sales revenue is projected to exceed EUR 100 million, and the Adjusted EBITDA margin is expected to be more than 12%, potentially higher due to the 'Sprint' cost-saving program. Growth is anticipated from the continued expansion of Advanced Packaging, IC-Substrate, and HDI-PCB capacity in Asia, signs of recovery in Europe and North America, and the strengthened product portfolio including InfinityLine solutions and glass-core processing technologies. The company expects its ET technology to significantly increase capital expenditure spending for new factories, from 30% for traditional methods to 90% for ET technology factories.

Management Comments

• "Our current projections for our revenues and Adjusted EBITDA for fiscal year 2026 are, and our past projections for past fiscal years were, based on our assessments at the time of the macroeconomic conditions in our key target markets and in particular the development of the electronics businesses and significant customer orders."
• "While we based our projections on market trends and discussions with key customers as well as our order backlog as of December 31, 2025 and 2024 respectively, the forecasted revenues and Adjusted EBITDA may not materialize as our forecasts are based on various external factors (e.g. global tariff policies, supply chain issues, or non-materialization of orders due to customers strategic reorientation) or delays in order timing and other factors such as competitors getting orders which the Company expected to receive."
• "Our management expects that the further penetration of the ET technology in the overall market will lead to a significant increase of the share of capital expenditure spending for a new factory from 30% of equipment spending for a traditional fabrication methods factory to 90% in an ET technology factory."
• "Due to positive feedback from our customers, we expect to receive orders for our ET technology as well as for our TGV Etching system in 2025."
• "We assume that selected Asian countries that have not been in the spotlight to date will develop strongly in the coming years. Furthermore, we continue to believe in very strong economic development in North America."
• "Recently, we have noticed weaker economic development in Europe. However, the latest political developments and the efforts of European countries to become less dependent on the USA and China could accelerate investments driven by strategic autonomy, supply chain resilience, and sustainability objectives, from which SCHMID expects to benefit selectively."

Industry Context

StockSavvy.ai notes that SCHMID Group operates in the highly cyclical and competitive electronics industry, particularly in PCB and substrate manufacturing. The company's focus on high-end technologies like Embedded Traces (ET) and Through Glass Via (TGV) etching aligns with the growing demand for advanced packaging solutions driven by AI servers and high-performance computing. The partnership with TRUMPF for glass substrate technology positions SCHMID to capitalize on future microchip generations. The emphasis on 'green production processes' and reduced environmental footprint also aligns with increasing ESG pressures across industries. The trend of nearshoring global semiconductor supply chains could impact regional demand dynamics, potentially benefiting SCHMID's established presence in Europe and North America as countries seek strategic autonomy and supply chain resilience.

Comparison to Industry Standards

• SCHMID's ET process offers significant environmental benefits compared to traditional manufacturing: up to 30% energy reduction, 70% water usage reduction, 40% chemical consumption reduction, and 30% CO2 emissions reduction.
• The newly launched TGV etching system reduces power consumption by 35% and is a more cost-effective etching solution.
• The market for advanced microchip packaging is expected to grow to over $96 billion by 2030 (Boston Consulting Group), indicating a strong growth trajectory for SCHMID's specialized offerings.
• The company's modular equipment kit for high-end PCB and semiconductor packaging, including subtractive, semi-additive processes (SAP), and modified semi-additive processes (mSAP) techniques, positions it against multinational competitors such as MKS Instruments, Inc., and regional players in China and Asia Pacific.
• In the photovoltaics market, SCHMID competes with multinational companies like Shenzhen SC New Energy Technology Corp., and various smaller specialized companies in other energy sectors.

Management Changes

Corporate Governance

Legal Proceedings

• SCHMID China Ltd. (SCL) filed a claim against Beyond Force Company Limited for an outstanding payment of RMB 53 million (approx. $7.6 million) plus RMB 21 million (approx. $3.0 million) interest. Beyond Force counterclaimed for approximately RMB 123 million (approx. $17.6 million). Both claims were dismissed and forwarded for retrial. A first instance decision on January 16, 2026, justified SCL's payment conditional on SCL paying over RMB 10 million (approx. $1.4 million) to the company. Beyond Force may appeal this ruling.
• Gebr. SCHMID GmbH filed a lawsuit against Shenzhen China Science & Technology Co., Ltd. (China SC) on February 13, 2025, alleging trademark infringement and unauthorized copying of proprietary technology, seeking injunctive relief and compensation.
• Validus Broker Dealer Investment Management Company LLC filed a civil action against SCHMID on July 17, 2025, in the United States District Court for the Southern District of New York, concerning an unpaid $2.35 million promissory note that matured on June 13, 2025. The lawsuit remains pending, and the company intends to pursue all available defenses and potential countersuits.

Related Party Transactions

• Anette Schmid and Christian Schmid waived EUR 5 million in financial liabilities owed to them by SCHMID in September 2025, dating back to 2016, for no consideration.
• As of December 31, 2024, non-current financial liabilities included EUR 21 million in loans from shareholders and EUR 14 million from other related parties. Current financial liabilities included EUR 8.694 million from shareholders and EUR 28.018 million from other related parties.
• The company received a cash injection of EUR 0.2 million from a related party of the Schmid family on December 15, 2025, with a 5% interest rate and 15-month maturity.
• In December 2023, SCHMID signed a sale and leaseback contract with Schmid Grundstcke GmbH Co. KG, an entity controlled by Mrs. Schmid, for production facility and office buildings.
• A subscription agreement and set-off agreement were entered into with XJ Harbour HK Limited on November 12, 2025, to issue 12,540,539 shares to XJ Harbour to set off $26,962,158.90 of liabilities (including accrued interest).
• A subscription agreement and set-off agreement were entered into with SCHMID Avaco Korea Co., Ltd. (a 50-50 joint venture) and AVACO Co., Ltd. on November 3, 2025, to issue approximately 1.07 million shares to SCHMID Avaco Korea for USD 2.50 per share against EUR 2.3 million of liabilities.
• The secured two-tranche term loan facility with Black Forest Special Situations I (signed December 16, 2025) is backed by a consortium including the Company's chairman (Sir Ralf Speth), board members, and CFO (Arthur Schuetz).
• Christian Schmid and Anette Schmid are major shareholders, jointly holding 56.77% of outstanding Ordinary Shares (excluding earn-out shares), and hold private warrants.
• Compensation packages for CEO Christian Schmid, former CFO Julia Natterer, new CFO Arthur Schuetz, and COO Helmut Rauch include fixed salaries, annual fees, and variable components tied to performance and share-based incentives.

Stakeholder Impact

• Shareholders: Experienced a significant net loss in 2024 and face potential dilution from recent capital raises (convertible notes, warrants, XJ Harbour, SCHMID Avaco Korea). The NASDAQ delisting risk and reliance on foreign private issuer exemptions may affect investor confidence and protections. The concentration of voting power with the Schmid family could influence corporate decisions. However, future growth from new technologies and market expansion offers potential for long-term value.
• Employees: The 'Sprint' cost-saving program involves measures like natural attrition, termination of temporary labor contracts, and a short-time work program in Germany, which could impact employment levels. New compensation plans for key management include share-based incentives, potentially aligning their interests with company performance.
• Customers: Benefit from the company's continued focus on high-quality, innovative products (ET, TGV) and customer-oriented services. The development of greener production processes and advanced packaging solutions addresses evolving industry demands and ESG goals.
• Suppliers: The company's liquidity issues and debt restructuring efforts, including set-off agreements, could impact supplier relationships and payment terms. Disruptions in the supply chain remain a risk.
• Creditors: Recent debt restructuring, waivers, and new financing (convertible notes, term loan) have addressed immediate liquidity concerns but introduce new obligations and conditions. The ongoing legal dispute with Validus represents a potential financial liability.

Next Steps

• File the 2025 annual report on Form 20-F by April 30, 2026.
• Achieve effectiveness of the registration statement for the second $15 million tranche of convertible notes by June 30, 2026.
• Continue implementing the 'Sprint' cost-saving program to realize over EUR 4 million in annualized savings.
• Further penetrate the ET technology in the PCB and substrate market.
• Expand product portfolio and market penetration in high-end PCB and organic substrate markets.
• Continue R&D and pilot lines for glass substrate manufacturing, with volume adoption expected midto long-term.
• Grow after-sales services revenue proportionally to the installed machinery base.
• Consider selected strategic acquisitions in process control, yield optimization, manufacturing data integration, and high-end factory automation.
• Further expand into new geographies, particularly Asia outside of China and North America.
• Prepare required documentation for the retrial of the SCHMID China Ltd. vs. Beyond Force Company Limited legal case.
• Evaluate and pursue all available defenses and potential countersuits in the Validus Broker Dealer Investment Management Company LLC lawsuit.
• Address and remediate identified material weaknesses in internal control over financial reporting.

Key Dates

Recommendation

The company is navigating a challenging period with significant losses in 2024 and ongoing liquidity concerns, as evidenced by the NASDAQ delinquency notices and the conditional nature of the second convertible note tranche. However, management has taken decisive actions to address liquidity through debt restructuring, waivers, and new financing. The strong order intake for 2025 and positive outlook for 2026, driven by innovative technologies like ET and TGV in high-growth markets (AI, advanced packaging), suggest potential for recovery. The company's long-standing expertise and strategic partnerships are strengths. A 'hold' recommendation is appropriate as the company works through its financial and operational challenges, with future performance heavily dependent on successful execution of its growth strategies and resolution of the remaining financing conditions and internal control weaknesses.

Keywords

Electronics, PCB, Substrate Manufacturing, Photovoltaics, Energy Storage, Embedded Traces, Glass Substrate, AI Servers, High-Performance Computing, SPAC, NASDAQ, IFRS, Financial Reporting, Risk Management, Corporate Governance, Debt Restructuring, Capital Raise, Semiconductor Equipment