THEON has strengthened its portfolio with the acquisition of 60% of the Harder Digital group. This represents an investment of 34 million euros.
In this way, THEON acquires a specialist manufacturer of Image Intensifier Tubes (IIT) operating mainly in Germany and takes the first step in its efforts to secure its supply chain by also working on long-term commercial agreements with its main suppliers.
As the company underlines, this acquisition, which is in line with the strategic priorities communicated during the listing process of THEON shares on the Amsterdam Stock Exchange, comes at a critical time, as global geopolitical developments and emerging threats have created a delicate balance between supply and demand in the field of NightVision. This acquisition allows THEON to vertically integrate a critical element in the Night Vision systems production chain, increasing safety and operational flexibility. It gives it even greater access to specialized technologies, supporting the development of new products through additional capabilities of the company’s Research and Development department.
The acquisition will be carried out with a capital injection of €34 million, implying a mid-single-digit multiple of the expected EBITDA for the year 2026. The majority of the funds will be allocated to upgrade Harder Digital’s production facilities and increase the dynamics of the 3rd generation lamp production lines mainly in Germany and Latvia. The remaining resources will be used for the financial restructuring of the company. It is expected to be completed in the fourth quarter of 2024 and will be fully financed with available funds, which will be deployed over two years. According to Christian Hatziminas, founder and CEO of THEON, “This is the first step in the implementation of our strategic development. This specific acquisition will allow us to achieve a partial verticalization in our core business area, night vision, and at the same time strengthen THEON’s presence in Germany and the Baltic region, which are some of our key markets. The implementation of our global expansion is expected to continue with additional acquisitions from a long list of target companies that we have identified, including several companies in Germany.”
HarderDigital, which is currently operating at significantly below its maximum capacity, is targeting sales of EUR 17 million with an EBITDA margin of 10 percent for 2024. In the medium term, it expects to triple its sales by 2028, achieving a profit margin equivalent to that of THEON, after restoring its full production capacity and achieving economies of scale. This is also in line with the expected increase in global demand and makes it necessary for THEON to continue its long-standing cooperation with other lamp manufacturers. THEON currently supplies almost 50 percent of HarderDigital’s production, which is expected to continue, while the remaining production will continue to be outsourced.
Regarding THEON’s performance in the first half of 2024, the company showed a strong commercial performance. New orders increased by 35.1% compared to the first half of 2023, reaching €77 million, with growth expected to accelerate in the second half of the year. The order book of €427 million provides good predictability for 2024-2025. THEON is in an advantageous position in terms of current and future tender processes worldwide and expects an increase in the order book in the second half of the year. At the same time, investment is progressing in the creation of a new production facility in South Korea. The company recorded revenues of €152.4 million, up 161% thanks to recently signed contracts and the exercise of options on existing contracts.
THEON achieved strong profitability with a 252.6% increase in Adjusted EBITDA to EUR 38 million and a 270.3% increase in Adjusted EBIT to EUR 36.9 million. This resulted in an EBIT margin of 24.2%, compared to 17.1%, already achieving the profitability targets for the 2024 financial year. As of June 30, 2024, THEON’s capital expenditures amounted to EUR 5.1 million, in line with the full-year forecast of EUR 10 million. The net cash position at the end of the first half of 2024 amounted to EUR 53.3 million. In July 2024, the company distributed dividends of EUR 14.4 million (0.206 per share). As part of securing supplies and further reducing delivery times, THEON is also working on long-term commercial agreements with its main suppliers. The company highlights that Exosens, the main supplier of THEON lamps for many years, will continue to be its largest supplier in the coming years. Commenting on the company’s results, Mr. Hatziminas emphasized that “new orders are expected to accelerate during the second half of the year, in line with usual practice and the strong market demand for our products. Therefore, THEON is in an advantageous position for the second half of the year and the Management remains confident that it will achieve the expected results for the 2024 financial year.”