Aebi Schmidt Holding Q3 2026 Earnings Call Transcript

Aebi Schmidt Holding (NASDAQ:AEBI) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Aebi Schmidt Holding reported solid growth, with a 5% increase in net sales and adjusted EBITDA, and a $10 million year-over-year increase in net income.

The company secured strong order intake of $528 million, maintaining a record-high backlog of $1.3 billion, particularly driven by the walk-in van market.

Despite supply chain challenges, the company improved its balance sheet through disciplined working capital management and deleveraging, reducing net debt to $446 million.

Aebi Schmidt announced the acquisition of O.J. Watson, expected to close by year-end 2026, expanding its presence in the Rocky Mountains and anticipated to be accretive to EPS in the first year.

The company revised its 2026 guidance slightly, expecting net sales between $1.95 and $2 billion and adjusted EBITDA between $170 and $180 million, while maintaining confidence in long-term targets.

Full Transcript

OPERATOR

Good day and thank you for standing by. Welcome to the Aebi Schmidt Holding third quarter 2026 earnings call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again.

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 Grantini, Investor Relations Director. Please go ahead.

Simone Grantini (Investor Relations Director)

Thank you, Sharon. Good morning and welcome to Aebi Schmidt Holding’s third quarter 2026 earnings call. Joining me on the call today are Barend Gerrit Fruithof, Chairman and Group CEO, who will provide the highlights of the third quarter, our outlook, and the concluding remarks; Steffen Schewerda, CEO of North America; and Henning Schroeder, CEO of Europe and Rest of World, who will detail the performance in their respective segments; and Marco Portmann, Group CFO, who will provide a financial overview.

Today’s comments include forward-looking statements subject to the safe harbor language contained in the press release and in Aebi Schmidt Holding’s filings with the SEC. And as a reminder, all figures prior to the 7-1-2025 acquisition are presented on a combined basis for Aebi Schmidt Holding and the acquired Shift Group. And with that, I hand over the call to Barend.

Barend Gerrit Fruithof (Chief Executive Officer)

Good morning, everyone. Before we begin, as today is Veterans Day in the United States, I would like to take a moment to recognize and thank all veterans across our U.S. workforce and beyond for their service. And with that, let me turn to our business. Our third quarter results show solid growth, higher profitability, and substantial strategic progress in a quarter that was not without challenges, which we will detail as we dive into the numbers. Despite these challenges, as shown on Slide 5, our order momentum remained strong, net sales and adjusted EBITDA improved by 5%, and net income has increased by 10 million year over year.

Looking at our year-to-date performance for the first nine months, we clearly see the strengths of the Group after the Shift acquisition, with substantial improvement, order intake and backlog translated into double-digit adjusted EBITDA growth. Looking at the highlights of our third quarter on Slide 6 in more detail, commercially we delivered strong order intake of 528 million and continued to grow our record-high backlog, which stands at 1.3 billion. This helps us to overcome the softness in selected end markets in North America. We continued to build momentum across multiple businesses with several multimillion-dollar contract awards. We also continue to capture a high wallet share in the growing and recovering walk-in van market and have become the market leader in this space, with a backlog well into 2027.

In Europe and Rest of the World, we secured several notable wins and see very healthy demand for our recently introduced product updates. Ultimately, we grew net sales organically by almost 5% despite challenges in our supply chain with OEM chassis and engine constraints and supply disruptions in Europe. My colleagues will provide details in their respective sections. In terms of profitability, we continued to manage and optimize our costs, compensating for the high inflationary pressure visible in our temporarily lower gross profit margin. Ultimately, we improved our adjusted EBITDA by 5%, maintaining a stable adjusted EBITDA margin, and further strengthened our balance sheet through disciplined working capital management and continued deleveraging.

Now turning to Slide 7 to have a broader look at the remarkable transformation of Aebi Schmidt Holding since the acquisition of the former Shift Group in July 2025. As you can see, we have substantially optimized and consolidated our manufacturing network to improve absorption and operational efficiency. We have also better aligned manufacturing and supply chain operations to reduce transportation costs and improve our resilience, and we consolidated warehousing activities in Charlotte to drive future efficiency and accelerate our after-sales growth.

Beyond footprint optimization, we have expanded our upfit center network to broaden our reach and to be closer to our customers. Additionally, we have accelerated the synergy realization and remain on track to achieve 37 million by year end, with an additional 5 million for next year. Overall, these actions are laying the foundation for a stronger, more efficient, more scalable business. Turning to Slide 8, while our focus remains on delivering strong near-term results, we are equally committed to building the foundation for sustained success in 2027 and towards our 2030 midterm targets. We continue to strengthen our competitive position, growing our market share, like in the walk-in van space. We enlarged our total addressable market with new products for regional and general aviation airports, and we have recently strengthened our leadership team with three business unit presidents to accelerate growth in North America.

We also created a new Chief Global Production Excellence role to improve operational performance and appointed a new Chief Supply Chain Officer to strengthen the supply chain in a challenging environment. Finally, we have announced on Monday the planned acquisition of O.J. Watson, a municipal and commercial operator with around 28 million net sales per year. Our first acquisition after Shift gives us direct presence in the Rocky Mountains, closing a white spot. We expect the transaction to close before year end 2026 and to be accretive to EPS in the first year after closing. Together, these initiatives allow us to drive sustainable performance improvements well beyond 2026.

And with that being said, I turn the call over to Steffen for the North America update.

Steffen Schewerda (Pres Vehicle Solutions & CEO North America)

Thank you, Bart, and good morning, everyone. We are on Slide 10. North America continued to deliver strong progress during the third quarter. In Airport, we secured a $9 million contract with major Canadian airports, and we had first successful deliveries to a leading U.S. airport, creating opportunities for future growth. In goods transportation, we have become the market leader in walk-in van upfits. According to our estimates, we have achieved a majority of wallet share with most strategic customers year to date. In our commercial truck operations, we continued to expand customer relationships, including a $15 million multi-year project for Monroe Commercial.

Finally, in Municipal, we secured a $4 million road-marking truck order from a major state transportation department as just one example of continued healthy demand in the customer segment. Overall, customer engagement remains strong. Our competitive position continues to improve across our businesses. Turning to Slide 11, let me highlight an example of value creation post-Shift acquisition: the transformation of our walk-in van business. What was an underperforming operation at the time of the acquisition is now a high-performing plant that has allowed us to become the number one outfitter, and I’m especially proud to say that this is first and foremost an internally driven success story. We have significantly strengthened our sales approach, capturing key strategic customers.

This includes winning back high-value accounts with direct involvement from senior management. The market is also recovering after several years of post-COVID normalization and is growing. We currently estimate the market at 500 to 600 million, with additional tailwinds to further growth. Importantly, this has not only been a sales success story; it’s above all an operational turnaround. Over the last 15 months, first-pass yield improved by 64 percentage points.

Units requiring rework dropped by almost 90%. Output per day increased by 77% while direct labor headcount was reduced by 9%. This all is comparing June 2026 versus one year prior at the closing of the acquisition, and we have further improved our operations since, for example surpassing the shown first-pass yield of 74% in the last months. This showcase demonstrates the expertise and effectiveness of our team. Turning to Slide 12, North America delivered a strong quarter, overcoming headwinds from selected soft markets, supply chain capacity constraints, and cost inflation. Order intake was impacted by reduced OEM chassis allocations for commercial trucks, elevated fuel prices, and OEM inventory reductions ahead of new model launches. Nevertheless, backlog remains above $1 billion, providing strong visibility into 2027. Net sales increased nearly 8%, driven by internal improvements in Municipal, increasing capacity and turning the existing backlog into revenue.

As mentioned, continued strength in walk-in van operations contributed as well, as adjusted EBITDA increased significantly by more than 8% to $37.2 million. Profitability improved despite higher material costs and weaker aftermarket activity, especially in the Utilimaster business. Overall, we continue to make progress while positioning the business for long-term growth, and with that being said, I hand the call over to my colleague, Henning Schroeder.

Henning Schroeder (CEO Europe and ROW)

Thank you, Steffen, and good morning everyone. Europe and Rest of World has proven to be a resilient business amid geopolitical uncertainty, supply chain disruptions, and ongoing high inflationary pressure. As we see on Slide 14, we continue to win the relevant deals across all our business lines. In Airport, we began with deliveries to Paris Airport ADP only two quarters after securing the award. Demonstrating the strength of our operational execution, we also delivered a cross-brand solution for a leading northern European airport, combining technologies from North America and Europe into an integrated customer solution.

In Municipal, we secured preferred supplier status for 100 side loader waste collection bodies with a leading Spanish waste management provider. Within Agriculture, customer response to the new Evitera truck has exceeded expectations with more than 100 orders received since launch. These achievements demonstrate the strength of our portfolio and the depth of our customer relationships. Turning to Slide 50, Europe has consistently been a strong driver of profitability for the group, supported by our leading market positions, strong aftermarket business, and disciplined execution. Our core European markets delivered an outstanding performance during the first nine months of 2026 compared to the same period last year. Order intake increased by 13%. This translated likewise into 13% organic net sales growth versus the first nine months of 2025.

At the same time, aftermarket net sales increased by 11% compared to the prior-year period, underlining both the broad installed base and the extensive after-sales network across Europe, with a share of our after-sales revenue reaching nearly 25% year to date. And as I outlined a minute ago, our future growth is supported by the successful launch of new products like the Terra truck, the Klingo and its electric version. With additional product launches planned in 2027, we are confident that we can continue building on this momentum in our core European markets.

Moving to Slide 16, having just detailed the strong growth in our core European market, we also need to acknowledge the weaker demand from China and the Middle East impacting overall performance. In China, lower public investment, stricter local content requirements, and delayed tender activity continue to affect market demand. In order to address these challenges, we strengthened our market position by expanding our localized product range and offerings through our established joint venture in China.

In the Middle East, the continued geopolitical conflict has begun to affect order demand, limiting growth opportunities. And unfortunately, we also faced the insolvency of two smaller but important suppliers in Europe in the third quarter, temporarily leading to a disrupted supply chain in what was otherwise a strong operational performance. Ultimately, net sales declined 3.6% in the third quarter compared to the prior year, with year-to-date growth coming in at a very respectable 5.4%.

Looking at our profitability, adjusted EBITDA was further impacted by inflation, pressure on material costs, as well as significantly higher freight costs, and as such we see a similar pattern as in net sales with an adjusted EBITDA decrease in the third quarter while upholding a substantial improvement year to date. Looking ahead, our priority is to restore growth in the Rest of the World, particularly in China. We are well positioned to deliver tailored local solutions and capture growth opportunities as market conditions improve.

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

Marco Portmann (Chief Financial Officer)

Thank you, Henning, and good morning everyone. Turning to Slide 18 to look into more details of our consolidated third quarter financials, order intake increased by 2% year over year to 528 million. The growth was driven by North America and within North America by the continued recovery of walk-in van demand. Our Municipal business continues to show good demand in both segments, likewise to our Airport business, except for the mentioned weakness in the Rest of the World.

We ended our third quarter with an order backlog of 1.3 billion, 16% higher than the prior year, driven by that walk-in van demand in North America. Moving to Slide 19, looking at net sales, net sales grew by 4.6% year over year to 493 million, driven by North America with almost 8% organic growth versus a slightly weaker Europe and Rest of World, as outlined by Henning. The achieved 5% growth demonstrates the resilience of our business despite several supply-chain-related challenges during the quarter. We continued to deal with supplier insolvencies in Europe, OEM chassis supply constraints in the US, and temporary production disruptions.

While these factors impacted volumes during the quarter, our teams addressed these issues and we have seen the underlying potential of our facilities after the executed improvements during the last couple of months. Turning to Slide 20 for a more detailed view on our gross profit margin development. In Q3 2026 our gross margin stood at 19.2%, 80 basis points down from prior year and approximately 130 basis points below our own target level for the quarter. This reflects the combination of external headwinds including ongoing geopolitical uncertainty, adverse macroeconomic conditions, and especially the pronounced and continued material cost inflation. In this situation, our first priority is protecting our current profitability.

We accelerated and amplified cost measures, maintained strict discipline to mitigate the margin impact, and have managed to fully compensate for the weaker gross margin on adjusted EBITDA level. Our second priority is restoring gross margins over the coming quarters. We have already implemented substantial pricing actions covering the realized and expected material cost increases. However, it takes time until these prices are fully realized due to the long backlog in multiple businesses.

We also advanced operational initiatives, including further footprint optimization, and it is encouraging to see that the gap is already closing. The year ends with the year-on-year decline narrowing from 100 basis points in the second quarter to 80 basis points in Q3, indicating that the actions taken are beginning to deliver results. While the external environment remains challenging, we are confident that the size of action will ultimately drive further improvements to our performance, and this temporary margin pressure does not impact our business model or longer-term outlook.

We reaffirm our 2030 target with an adjusted EBITDA of at least 13%. Now turning to Slide 21 to look at adjusted EBITDA. As just explained, we are fully compensating for the temporary lower gross margin with our decisive actions and operational improvements. Ultimately, adjusted EBITDA for the third quarter increased 4.9% year over year to 44.2 million, representing an unchanged margin of 9.0% and the growth of our profitability in line with our sales development.

Finally turning to Slide 22, net working capital stood at 465 million at the end of the quarter and remained broadly stable on a like-for-like basis, that is, without the targeted, also temporary, investments in inventory to alleviate the material cost pressure. Real-term growth in working capital was 3% compared with net sales growth of nearly 5%, demonstrating continued underlying efficiency improvements. Net debt declined to 446 million, reducing leverage to 2.66 times and representing a reduction of more than half a turn compared to prior year.

Further deleveraging is expected until year-end on the back of an expected strong operating cash flow in the fourth quarter, reflecting our yearly seasonal pattern with a strong year-end run from September to mid-December, and we ultimately expect leverage below 2.5x by year-end 2026. With that we will have deleveraged by at least three-quarters of a turn in a span of 18 months from the SHIFT acquisition to year-end 2026. This strengthens our financial position and supports our long-term capital allocation priority, including headroom for further acquisitions.

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

Barend Gerrit Fruithof (Chief Executive Officer)

Thank you, Marco. Let me conclude with a few key messages on Slide 24. First, we are strengthening our position in most of our markets. We are winning strategic customer awards, expanding partnerships, and see more and more cross-sell opportunities. This shows that our sales approach works and our product solutions are highly appreciated. Second, despite a challenging environment, we are able to deliver good organic growth of almost 5% and we have the backlog for future growth. Third, as long as we are facing temporary pressure on our gross margin, we will continue our strict cost management to compensate for that impact. The respective necessary sales price increases are fully executed, will materialize in the coming quarters, and we expect to see the recovery of our gross margin accordingly.

And of course our priority is to accelerate measures to improve production efficiency, execute on sales pricing, and deliver the expected margin recovery. As we demonstrated with the turnaround of the walk-in van business, we are a strong operator with a proven ability to execute and deliver results. Some of these actions will take time to fully come through, but they will further strengthen the quality, the resilience, and earnings power of our business.

Given these market headwinds and disruptions, we are slightly updating our guidance. For full year 2026, we expect net sales between 1.95 and 2 billion, adjusted EBITDA between 170 and 180 million, and leverage below 2.5 times. We remain confident in our long-term targets, in the actions we are taking, and in our ability to create sustainable shareholder value. That concludes our presentation. I now turn it over to our operator to open up the line for questions.

OPERATOR

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. Please limit yourself to one question and one follow-up only. To withdraw your question, please press star 1 and 1 again. We will now go to our first question. One moment please. And our first question today comes from the line of Michael Schlitzky from DA Davidson. Please go ahead.

Michael Schlitzky (Analyst)

Yes, hi. Thanks for taking my questions this morning. Maybe I can start with asking about some of the happenings over in Europe. You mentioned that several European suppliers faced insolvency during the quarter. I’m curious whether you have found new suppliers by this point and whether everything is back to normal, up and running with somebody else, or still a bit more work to do there.

Henning Schroeder (CEO Europe and ROW)

Yes, thank you for asking the question. Yes, this has been addressed and relocated, and we are back to normal operations by now.

Michael Schlitzky (Analyst)

Great. Appreciate that. Thank you. Henning, I also want to ask separately about the trajectory of the walk-in van business in 2027. You’re going to be seeing, I think, Ford winding down at least some of their capacity throughout the, perhaps all of it. And then you’ll see eventually the new supplier ramp back up again. I guess first, was that part of the chassis supply issue that you mentioned, that they’ve already maybe started to scale down production a bit?

And I’m also just kind of curious how you and the customers are going to work through 2027. If one supplier is winding down on the chassis and one’s winding up, just how that might work. Are they pre-buying? Are you pre-buying, or have you just talked with them about production and delivery schedules?

Steffen Schewerda (Pres Vehicle Solutions & CEO North America)

Mike, this is Steffen. Thanks for this question. Two points to that. Number one, when we talk about the shortage on the chassis supply, this is more towards the commercial side. When we talk about pickup trucks and car manufacturers on the walk-in van side specifically, we believe, and we confirmed that the supply through 2027 is secured with the existing allocations, and the supply will last until the second supplier will ramp up.

Barend Gerrit Fruithof (Chief Executive Officer)

Well, there you go, Mike. Just let me add one point. You know, there is also a bit of a challenge with the OEM. They launched their 2027 chassis a bit later and that affected then also our sales. So we expect recovery then beginning 2027. And honestly we also were able to win some nice fleet deals which then will also kick in in 2027.

Michael Schlitzky (Analyst)

Great, thanks so much. I guess I’ll pass it along. I’ll hop back in queue.

OPERATOR

Thank you. Your next question today comes from the line of Matt Claranda from Ross Capital. Please go ahead.

Matt Claranda (Analyst)

Hey guys, good morning. Thanks for taking the questions. Maybe just starting out with the revised guidance for 26, just wanted to get a better feel for the cut at the midpoint. If we’re thinking about the $75 million revenue cut and the $10 million EBITDA cut, how much, I guess, should we attribute to North America and the supply chain issues around commercial truck body and chassis versus the EU and some of the supplier issues that you highlighted in the prepared remarks.

Marco Portmann (Chief Financial Officer)

Yeah. Matt, this is Marco speaking. Yes. So on the revenue guidance update, essentially there’s a good chunk coming now out of the third quarter, I mean, as you have seen, right, versus our own expectations coming from these supply chain disruptions. And that is indeed quite sizable in Europe, with also some impacts, as you mentioned, for disruptions in the US too. That is the bigger share of what you see in that revision. That is the main driver at the end of the day.

Matt Claranda (Analyst)

Okay, got it. And then maybe just one on the recent acquisition that you announced, O.J. Watson, any historical context on sort of the revenue growth profile there? I know you guys mentioned sort of a pinpoint revenue number for I guess the most recent fiscal year. Could you confirm, I guess, the timeframe of that revenue that you provided from the most recent fiscal year? And then what’s the margin profile of that business look like? And maybe just tying it all up, sort of talk about the strategic importance of sort of the business there in terms of how it fits with your existing upfit business that you already have.

Barend Gerrit Fruithof (Chief Executive Officer)

Okay, first of all, thanks a lot for this question. So the revenue, as I mentioned in my speech, is 28 million. So that will also fully kick in then in 2026. This is first of all, then you know, what’s the strategic logic behind the whole transaction? We always had a partnership with O.J. Watson. So we know them and we know their business and we always had a white spot in that specific area. And there is a third reason why we made this acquisition.

You know, Denver is they run close to 100% with our equipment and you know, that helps also to support them in terms of service and after sales. So strategically that makes a lot of sense. And the margin profile, the other question you asked, it’s similar as we have at the whole Aebi Schmidt Holding in North America. Okay, got

Matt Claranda (Analyst)

it. Yeah, that’s very helpful, Baron. Thank you. And then maybe just historical kind of revenue profile in terms of growth and how to think about sort of the way that you bend the growth curve on a go-forth basis with them as part of. Absolutely,

Marco Portmann (Chief Financial Officer)

Yeah. I mean historically they have grown decently over the years. More importantly for us looking forward, we expect them to grow at the same level and above with high growth profile compared to the other North American business. So as you know, we guide mid term for a 6% growth year over year, generally speaking. And they will be slightly above that.

Matt Claranda (Analyst)

Okay, helpful guys, thank you. I’ll turn it back in queue.

OPERATOR

Thank you. Your next question comes from the line of Dave Storms from Stonegate. Please go ahead.

Dave Storms (Analyst)

Morning and thank you for taking my questions. Just with some of the improvements that you’ve made in the walk-in vans. You know, I think it was slide 11 that highlighted this. How are you thinking about your capacity and maybe additional capacity unlock if you can replicate this at other existing facilities? And then maybe if you can parse that into your ability to keep up with the backlog and new orders in North America.

Steffen Schewerda (Pres Vehicle Solutions & CEO North America)

So good morning, this is Steffen. Thanks for the question here. So talking about this maybe two or three points here. On the walk-in van municipal and airport side, we are close to capacity here at the moment. We are a little bit low on the capacity side with commercial on truck bodies. Two shifts are possible, but we are facing people constraints. But we are looking very positively into 2027 that we can balance the output and the demand here that the market requires.

Dave Storms (Analyst)

Understood, really appreciate that. Also wanted to circle back to something that was mentioned in prepared remarks. In Paris, you’re able to start delivering in the Paris airport, you’re able to start delivering in about two quarters there. How applicable is that? Maybe some of the North American contracts you signed recently in Canada or elsewhere.

Henning Schroeder (CEO Europe and ROW)

Yeah, thanks. I mean we highlighted this as a great success in terms of the Paris airports that we delivered rather quickly after taking the order, because that’s not necessarily the usual approach in airport. Airport typically is nine months plus between order placement and first deliveries and especially with our long backlog, that is something we can add for the benefit of the customer with quicker turnaround and obviously priced accordingly from our side then as well.

That is however a good example of the European operational strength. Doesn’t directly one to one apply to the US, but obviously we are bringing in, generally speaking, a lot of the expertise in the US as well from our European colleagues, basically reflecting the same improvement methodology in how we do our production. And you also mentioned the Canadian market, given this tariff discussion and so on. We are also able to deliver some products from Europe towards Canada and there we already have some tenders on our table because they want to avoid having these tariff costs.

So there we have, honestly with our setup, we have a very flexible model in place, you know,

Dave Storms (Analyst)

Understood. Thank you for taking my questions and good luck in the next quarter.

OPERATOR

Thank you. Your next question today comes from the line of Greg Lewis from BTIG. Please go ahead.

Greg Lewis (Analyst)

Yeah, hi, thanks and good afternoon and thanks for taking my question. I was kind of curious as you kind of alluded to the margin ramp and some of the cost potential gains that you could get. I mean, I guess what I’m trying to wonder is, obviously post the election there’s talk of tariffs being lifted in the US. If we think about when that starts to happen, like how long should that take to really start to show up in the numbers? Is that a quarter, is that two quarters?

How long should we think about that benefit starting to flow through in the margins.

Barend Gerrit Fruithof (Chief Executive Officer)

So just first from an overall picture, you mentioned again, the tariffs. The tariffs is not a big issue for us. It’s more the energy prices which affects us. Some of the steel prices went up close to 100%. And as you can imagine in the municipal space you have a high portion of steel. And that really affects our gross margin. And as mentioned in the presentation, we expect a recovery between 90 up to 160 basis points. So we already started to increase prices, but given our backlog, that takes a bit of time.

That’s why we also had a strong focus on executing the synergies and strong cost control, and probably a bit more details towards the margin from Marco.

Marco Portmann (Chief Financial Officer)

Yeah, I mean, just to add. Right, you said it. The tariffs itself are not a huge topic, and that will not generate in that sense a notable uplift. But we would be very happy if that topic resolves because of course the distortions are also impacting us at least indirectly as well. So no one likes that situation and especially the volatility in that area. But generally speaking, everything that we talk about here from a supply chain perspective, be that commodities, energy prices or tariffs, you can think about that with about two to three quarters delay until you see it in the numbers.

Greg Lewis (Analyst)

Okay. And then realizing that we’re going to integrate O.J. Watson, clearly you know the business pretty well. You know, you did mention this was the first acquisition since we kind of absorbed Shift. You know, was this kind of a one-off or is this something where as we look out over the next 12 to 18 months, this could be first of what we think could be, you know, or another way, are there opportunities to continue rolling up the upfitting market across North America?

And I think, Bernard, you mentioned there was kind of a white space or hole in that Rocky Mountain region. I mean, it does look like there should be other opportunities for more of that type in M&A. Is that fair as we look out over the next 12 to 18 months?

Barend Gerrit Fruithof (Chief Executive Officer)

Absolutely. And just to put this a bit in a broader context, so as you mentioned in our 2030 strategies, so we need to add roughly 400 million of revenues by acquisition. And we always mentioned that we also want to do some tucking deals as we have done with this O.J. Watson deal. And there we have some more on our radar screen. And as you have seen, these are most of the times deals where you have a family behind and it’s a succession topic. And there is always a question to build trust, then becoming part of a listed company.

That is always a bit of a jump as you can imagine. And that is one of our core competence, doing these deals. You can also compare with a deal we have done in Europe two years ago. That’s the lotto. That’s probably one of the best deal we have done ever. There was also succession topic and there is more to come.

Greg Lewis (Analyst)

Super helpful. Thank you very much.

OPERATOR

Thank you. Your next question is a follow up from Michael Schlitzky from DA Davidson. Please go ahead.

Michael Schlitzky (Analyst)

Oh hey, thanks for taking my follow up question here. I want to go back to slide 7. You outline a couple of things that have happened since the Shift deal back in 2025. The very last thing that you mentioned happened here on this slide. You didn’t mention in your comments, you just wrote it here. You extended production capacities in both the municipal and Blue Arc line in Charlotte. A little bit surprised to hear that about Blue Arc. We haven’t discussed that in a couple of quarters.

Are you really expanding production and what’s behind that? And just give us the update on how Blue Arc is kind of going here.

Marco Portmann (Chief Financial Officer)

Yeah, Mike, I’ll take this one. This is Marco speaking. So well spotted actually. And yes, so Blue Arc, let me put it this way, Blue Arc is definitely not dead. In that case we have in fact had follow-on demand for it. We are producing Blue Arc as we speak. That’s what we refer here to with that line in Charlotte. But of course that doesn’t mean that we have picked up Blue Arc as a program. So we’re not investing in a big next generation overhaul or anything like that.

We are producing Blue Arc vehicles in our established lines indeed where we have expanded capacities, with a slightly adjusted version from the original Shift solution that is cheaper and, as we can see by some demand, that is recognized in the market with some pickups. So we will see if that turns into upside. For now, for the time being those are smallish numbers or small numbers indeed with first couple of let’s say trials at the end of the day.

Henning Schroeder (CEO Europe and ROW)

And then you had another question, Mike, with regards to the municipal production. As you know, we have a very high backlog and we try to use our locations, and that’s why we call it some pop-up production, which we have implemented, for example, in Charlotte, and there will come another one in Auckland during the course of next year to speed up, to reduce the backlog. That’s the reason behind, and honestly, that already works pretty well. So that’s the reason behind.

Michael Schlitzky (Analyst)

Outstanding. I appreciate you taking that follow up.

Henning Schroeder (CEO Europe and ROW)

Thank you, of course.

OPERATOR

Thank you. This concludes the Q and A for today, and I will now hand back to Simone Grantini for closing remarks.

Simone Grantini (Investor Relations Director)

Thank you, Sharon. I thank everyone for joining today’s call and your interest in the Aebi Schmidt Holding. As always, please reach out to investor.relations@aebischmidt.com if you have any follow up questions. And with that, Sharon, please disconnect the call.

OPERATOR

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

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