Hiab Oyj Unsp/Adr

Welcome to HIAP's first standalone earnings call. In the first quarter, our profitability improved, driven by strong execution in all divisions. My name is Aki Vesikallio. I'm from HIAP's investor relations. The results will be presented in more detail by our CEO, Scott Phillips, and the CFO, Mikko Puolakka. First, Scott will go through the group-level topics. Then Mikko will dive deeper into the reporting segments, equipment and services, as well as financials and outlook. After Mikko's presentation, Scott will return to the stage for the key takeaways of the quarter. After the presentation, there will be a Q&A session. With that, over to you, Scott. Thank you, Rocky.

And good morning, everyone, from my side. In summarizing the quarter, I'd characterize it as Team HIAB delivered a strong start to the year. The team and our partner network continue to do a nice job of executing our strategic priorities around innovation, commercial, and supply chain excellence, and delivering our services and segment growth plans, all of which enabled HIAB to deliver strong results across all key KPIs. With the growing trade and geopolitical tensions, the level of market uncertainty is much greater versus the comparable period. And consequently, our outlook for profitability remains unchanged for the year. And we'll come back to that point later. So moving to group level topics, The end of the quarter marked the end of the formal program to restructure Cargotech into three separate companies due to the excellent work from our former group colleagues and many of our fellow hirbers around the world. And as a consequence, we started the second quarter as a new member of the NASDAQ Helsinki. With our focus on value creation first, customers next, we continue to be able to invest in differentiating capabilities to make our business operations and that of our customers safer. Our safety KPIs are on an all-time best level, both for leading as well as lagging indicators, as our industrial injury frequency rate for the quarter was 1.0, and we are on a level of 2.3 on a rolling 12-month basis. So great work by the team, as this is a critical pillar of our people, culture, and sustainability strategy. We continue to focus on outcome-based innovations, and one I would like to highlight is in our multi-lift brand as we progress towards a fully automated duty cycle, creating a step change improvement in safety and productivity for our customers. Now, moving into the order intake picture, the demand story of the quarter was dominated by escalating trade tensions through the last two months of the quarter, which negatively impacted order intake in the Americas region. while all other regions increased versus the comparison period last year. As a consequence, order intake for the period remained or was roughly on a level of the last 10 quarters was 378 million euros versus 386 million euros for the same period last year. So as I mentioned, we're roughly on the same level of average order intake since Q4 of 2022. Our rolling 12 months order intake remains on a level of 1.5 billion euros. And our order book now stands at 601 million euros, which is 22% below the comparison quarter last year. And in terms of segments, defense logistics were up versus comparable periods, so we got a nice tailwind there. And in constant currencies, order intake would have been approximately 375 million euros, so we benefited around 100 basis points from the currency translation. Now looking further into the geographic split of order intake, we saw a nice upward trend in Europe and the Asia Pacific regions, while the Americas was down due to the softening demand in the US. Europe, Middle East, and Africa represented 54% of orders and was up 24 million from 179 to 203 million euros, or 13% compared to last year. Americas on the other hand was down 37 million from 182 to 145 million or 20%. And APAC was up 5 million euros from 25 to 30 million euros or about 20%. And moving into our sales. Our commercial and supply chain teams, together with our partners, continue to do excellent work in converting our inventory into revenues throughout the quarter. As a result, our revenues were down 1% in actual exchange rates from €415 million to €411 million and down 2% in constant exchange rates. Rolling 12-month sales ended Q1 at €1.644 billion, so slightly below last year's actual, so indicative of the normalization of our order book and the steadily increasing revenue curve of our services business, which increased in relative amount from 28% to 29% of sales. Now, as we have a four to six month lead time in converting orders to sales, the geographic split of our revenues varied compared to the visualization you saw from the order intake. Therefore, EMEA was down $9 million from $201 to $192 million, or 4%, while the Americas were up $11 million from $184 to $195 million, or 6%. And the Asia-Pacific region was down from $29 million to $24 million, or 18%. We were really pleased to see that the book to bill was positive in the quarter for both EMEA and the APAC regions. And also pleased that our echo portfolio sales were nicely up from 115 to 142 million or 24% and constituted 35% of total sales versus 28% in the period last year. Now turning our attention to our earnings on the 411 million euros of sales, we continue to benefit from the implementation of our strategy actions biased towards profitable growth. As a consequence, our profitability has improved for the period for each of the past three years. So nicely moving from 53 million in Q1 of 23, or 12.2%, to 61 million last year, or 14.8%. And then, of course, where we land on the quarter this year at 66 million euros versus 61 million euros last year, or a 7% increase. And that's despite the slight reduction in revenues. And as Aki mentioned in his opening, the contribution comes from all divisions, focusing on reducing material and conversion costs most notably. The improved profitability enabled a good development of our operative return on capital employed. And moreover, the team delivered excellent results in reducing our net working capital. And combined with the improved profitability, enabled Hayab to deliver 170% cash conversion, which Mika will elaborate on further during his presentation. Now, as we know, there are many questions regarding the tariff and trade situation with the U.S. We thought it would be helpful to provide you with a graphical representation of our supply design of products that we provide to our U.S.-based customers. So looking at the visualization left to right, where we are most exposed to the current trade situation is in our loader crane business, as they are assembled and primarily sourced with suppliers based in Europe. Next, moving to the right, we have our truck-mounted forklift offering with design and sourcing primarily in Europe with assembly of all U.S. demand fully in place in the U.S. Next, we have our fully U.S.-based businesses for both demountables and tail lift under the Golfab and Wolfco brands with some sourcing exposure from component suppliers in both China and Mexico. So we think that we're extremely well positioned, geared to scale in the U.S. market, and are executing plans today, as we've talked about for each of the past four or five years, in fact, to expand our exposure to our very important market in the Americas. Now, wrapping up the group section, we wanted to provide an update on how we are progressing towards our long-term targets we shared last year. So recapping what we shared earlier in the year during our Q4 earnings report, our growth over the cycle, return on capital employed, and sustainability ambitions remain unchanged from what we communicated in our capital markets day last year. Our operating profit, now that we have clarity on our starting point as a standalone company, has been adjusted to 16%. Further, we targeted gearing on a long-term basis to be below 50% and a dividend range of 30 to 50% of earnings per share. Therefore, through Q1 this year, we believe we're still on track to achieve our long-term targets. As a rolling 10-year compounded annual growth rate is approximately 7%, Our last 12 months operating profit is 13.7%, and the last 12 months operative return on capital employed is 29.6%. So with that, I will turn it over to Miko to take you through the financials and then rejoin the stage later for a brief wrap-up and Q&A. So thank you.

Good morning also from my side as well. Next, I will describe the quarter one performance of our two very freshly established reporting segments, equipment and services. And let's start with the equipment business first. As a reminder, our equipment segment consists of loader cranes, demountables, tail lifts and truck mounted forklift divisions. Equipment orders declined 6%. The decline came from delivery equipment and in particular from the US market. Lifting equipment orders were flat during quarter one. During quarter one, most of our deliveries came from the 2024 order book. Therefore, the lower order intake in the US was not visible yet in quarter one sales. The operational execution from all our equipment divisions was really good. Despite lower sales, as you can see, all equipment divisions improved their profitability. This is thanks to the commercial and sourcing actions which Scott referred to earlier. When looking back the past performance of equipment business, the profitability has been actually quite stable with this kind of quarterly sales of roughly 290 million euros. You see the profitability dip in quarter four, 2024. And as you remember, we booked 15 million euros non-recurring costs during that quarter. Most of that was related to the Italian operations restructuring, where we expect the benefits to materialize in the second half of this year. As you can see also from the right-hand picture, the cross-margin improvement has been the main driver for the equipment business strong quarter one profitability. This improvement stems from the decisive commercial and sourcing actions that we have put in place already in 2024 and now harvesting the benefits from that. These are no kind of one-time actions, but really continuous improvement, and really an integral part of our strategy execution. Then looking at services, services orders grew actually very nicely, 8%, and this came from recurring services like spare parts and maintenance, and to some extent also from installations. This growth is actually the result of our service strategy execution, for example, growing the number of connected units and service contracts. Last year we had roughly 48,000 connected units already and 20,000 service contracts, so really nice growth from 2023. Sales was on last year's level. Basically, the recurring services sales increased while we delivered during this quarter a bit less installations compared to last year. Services profitability has been very stable over the past quarters, as you can see from the left-hand picture, and also quarter one was no different from the history. Sales volumes measured in constant currency were slightly down, as we delivered a bit less installation services compared to last year. Next, let's have a look on the total HIAP financials, and these are HIAP's financials excluding the MAC records of continuing operations. As you saw from Scott's presentation, the Q1 performance was very solid. As mentioned already in a few instances earlier, commercial and sourcing activities are the main contributors to the 1.4% unit improvement in our gross profit margin during Q1. This improvement has more than offset the 1% sales decline, as the graph on the right-hand side shows. When we look the lines below operating profit, first of all, our average interest on loans is fairly low. It's 1.99% per annum, and the company has also sizable cash position. So it's quite natural that the interest expense has remained on a low level. Our tax rate was 28% during quarter one. HIAP's balance sheet continues to get even stronger. If we look at the balance sheet excluding Macregor, HIAP's gearing was minus 12%. This gives some 630 million euros headroom if we think our objective to keep the gearing below 50%. We repaid a 100 million euro bond in January 2025. And as you can see from the right hand picture, we do not have any major debt maturities coming up anymore this year. There is still 150 million euros bond and that will mature in 2026. Like Scott mentioned already earlier, we had a really strong cash flow during quarter one. And just for the high up, the cash conversion was around 170%. Networking capital declined significantly. Our inventories declined by 15 million euros. And then we have been able to release also significantly money from other networking capital elements like VAT receivables from quarter four level. McGregor is still included in our total reported cash flow. But as mentioned already earlier, most of the quarter one cash came from high up. Concerning our outlook, we maintain our outlook for the year 2025, i.e. the continuing operations. In practice, the standalone higher comparable operating profit is expected to be above 12%. We have defined this outlook in early 2025, already taking into account the potential uncertainties in the US and also outside the US arising from the recent trade tensions. And with that, then I hand over the presentation to Scott to summarize the key takeaways.