Addtech AB (publ.)

Welcome to the Ad Tech Q4 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to CEO Nicholas Stenberg and CFO Malin Enerson. Please go ahead.

Thank you, operator, and most welcome everyone to ADTECH's year end report presentation. The setup is as usual, Malin and I will use approximately half an hour to summarize and give our comments on the results and then open up for questions. Before we head on to the highlights of the report, just a very quick run through of the key fundamentals of ADTECH We are a group of more than 150 independent and strictly decentralized companies in 20 countries with a clear business-to-business offering. With our new strengthened organization since the autumn, we operate now in six business areas, all with clear strategies and a value proposition centered around niche products and solutions primarily to manufacturing and infrastructure sectors. We have what we call a dual growth ending approach. Our focus is to develop and grow the existing business organically together with our entrepreneurs and then complement and strengthen our strategic niches with acquiring leading companies with a strong offering. And we fund our acquisitions primarily by own cash flow. Size-wise, we have now a turnover for the full year of almost 23 billion. We run the operations with an EBITDA margin at around 16% and employ around 4,600 employees throughout the organization with a small and efficient central team. So with that said, some quarterly highlights. Despite the increased geopolitical tension, as we all know we have around us, we ended the year on a good note. Market situation was in general positive, with high customer activity and a solid order intake. Net sales increased by 2% during the quarter and organically we were in line with last year. The positive EBITDA growth trend continued and with a very strong margin. More details about that later on. Our cash flow remained at high levels and we closed in total six acquisitions during the quarter, followed by two more after closing. Net sales development, the overall business situation, as I said, was good, grew top line 2%, solid contributions, primarily from business areas, automation, electrification and process in the quarter. The FX headwinds continued with the total negative effect in the quarter of 4%. Looking at segment drivers in the quarter, process, different process segments, Transport, primarily in railway and marine, and also special vehicles, excluding construction and forestry machinery, were strong drivers, and also products and solutions to electrify equipment in different end market segments. And this growth partly offset weaker sales in the quarter within electrical transmission, as well as sawmills. All in all, a solid quarter sales-wise, not least giving the FX headwinds that I mentioned. Overall customer activity was high in the quarter, good order intake and a positive book to bill. The intake was broad-based, but with a tilt towards the longer end of the book. I will come back with more details about this shortly. EBITDA increased in the quarter with a very solid 15%, where almost half was organic. It's very satisfying to see double-digit growth in five out of six business areas, with energy being the exception, primarily due to fewer transmission product rollouts and also very tough comps from last year. We continue to improve gross margins across the board, which is very satisfying. And in Q4, we report a record high EBITDA margin of 17.3%, which is, however, somewhat bolstered by positive effects from revaluation of purchase considerations, as you can read in the report. But also when adjusting these, we end up at 16.4%, which means that we continue the very positive trend. And this is primarily driven by improved product mix and also acquisitions, but also positive effects from earlier communicated restructuring measures in a handful of companies where we now see good effects. I mentioned also the operative cash flow and the long-term financial target R2RK continues to improve to very good levels, which Malin will come back to later. Heading on to a few comments about each of the six business areas development in the quarter. From the top, starting with automation, as you can see in the slide, the business situation clearly improved in the quarter with a broad-based increase in sales with good leverage on both earnings and margins. Also, the market situation remained favorable, now with four quarters in a row with a positive order trend. The demand for products and solutions within defense and processing industry, primarily food processing OEM, was strong. Also, the order intake from OEM supplying engineering was good and medical stable at an aggregated level with customer supplying diagnostic and analytical equipment were on the positive side. Moving on to electrification, where market situation was very strong with good demand in basically all key segments. Net sales increased 12%, where energy, medical and special vehicles being the key drivers. And all these three segments was also fueled by a continued positive development within our battery group that have had a really strong year, I would say. Also solid contributions from newly acquired companies. So in summary, a very strong quarter for electrification, broad-based growth and a favorable product mix leveraging the results. So EBIT up 31% and the high margin of 16.7. Q4 was on the weak side for business area energy, as I mentioned in the beginning. Negative effects from a lower order intake in previous quarters and very tough comps related to electrical transmission pushed down sales 7%, as you can see. However, margins remained at high levels, mainly due to an improved product mix and continuous very good cost control. And these temporary shifts in order intake and product rollouts in the transmission business is, as we have said many times, due to permit process appeals and capacity restraints on the customer side. And this is part of the business. We have to look at this more on a long term and the underlying market situation here is very good significant investment needs for renovation and expansion of the grids we have a strong backlog of quotations more than we have had ever before so this indicates a strong year also ahead however tilted towards the second half Other key segments for energy such as niche products for electrical power distribution, power generation, transport sector had a stable market situation where wind and hydropower and also railway sticking out positively. The overall market situation within industry remained positive with increased demand in all segments, especially vehicles. Data Telecom and Marine. The will to invest within sawmill industry remained weak, even though we had a couple of project wins in the quarter, but generally it's still a weak market. And we also saw in this quarter somewhat softening from high levels within subsea. Total net sales decreased 3%, and this is primarily relating to the lower sawmill volumes. effects that we will also see when going into the new fiscal year until that market situation improves. EBITDA and margin levels increased from already high levels due to strong product mix and margins in finalized projects during the quarter. And this was strong even when excluding the effects from revaluations of purchase considerations. As you can see in the report, it's quite a lot in industry here. And this is primarily relating to one acquisition that we made in 2023 that has strongly underperformed since we acquired the company. We make a lot of acquisitions, as you know, and sometimes you can really bump into something where we have underestimated and misjudged, especially the people. We also always talk about it's the culture in the end and the people. And here we did a mistake. That's for sure. We have taken a new grip on the company now with new leadership and a new strategic focus. Moving on to business area process, where the overarching market situation was stable in the quarter. Despite the current uncertainty within the shipping industry, we saw positive product order intake within marine. Also special vehicles showed continued strength. Engineering and medical were stable, while energy and process were on the weak side, all in all. In general, customer activity is good across the board, but there is still hesitation and the continued tendency among customers to postpone investment decisions. Possibly this is also fueled by the increased geopolitical tension. uh the business situation for process was favorable with double digit digit sales growth where marine and product deliveries in process industry were the main drivers also we see an improved product and project mix in the quarter that pushed the margins to new record levels partly boosted by positive evaluations but even taking that out is really good margins last but not least safety The demand situation for companies exposed to building and installation remained weak in Q4. We've been waiting now, I would say, for a couple of years for this market to come back, and we still see that it's a weak market. Medical and engineering were also on the weak side, but we saw positive continued trend within defense that we start to see some good markets also for safety. and a bounce back from data centers after a period of more hesitant demand also traffic safety remained at very good levels and adjusted for fx net sales were stable and with positive effects from product mix and previous cost cutting initiatives the profitability margins increased in a satisfying way in the quarter so to sum up then Clear variations in the market situations, both between companies and segments and geographies as well. But we continue to experience a hesitation to invest among customers while we see good growth in other segments and areas. So we conclude a solid quarter with a positive market situation and a high customer activity all in all. With that said, I give the word to you, Malin, for some more details on the quarter.

Thank you, Niklas. As you heard, our EBITDA grew and the profit margin improved compared to last year's fourth quarter to a record high level. We delivered strongly despite the market conditions remaining volatile. There are always variations within and between our business areas and they perform with varying strength from year to year. But for the group as a whole, this is the fifth year in a row where we have had a positive development trend of our rolling 12 EBITDA margin. We are very proud of this outcome and we see the current rolling 12 margin as sustainable and of course as always with the ambition to increase. We had a quite significant effect from revaluation of earnouts in this quarter, and as Niklas mentioned, it was primarily due to one underperforming company in business area industry, where the earnout was reversed. Adjusting both years from total revaluations of earnouts, we had an increase in EBITDA margin of 1.5 percentage points, and still a record high margin in the quarter. The increase was broad based and all business areas increased both their gross margin as well as their profit margin during the quarter. For the full year, we had an increase in EBITDA margin of one percentage point thanks to active work to increase the value add in our value proposition, good pricing power and strategically improving our product mix and at least good contribution from acquired companies as well as good leverage from organic sales. The impact of revaluations of earnouts on the development of the operating margin is insignificant for the year. Of course, a firm grip of overhead costs is also contributing to the outcome, and the restructuring measures taken during the year in businesses with persistently lower market conditions are starting to have a clear impact now. We can see that the trend line of total cost in relation to sales has a good development. Regarding other operating income and expenses, we had a somewhat less negative currency effect in the fourth quarter regarding revaluation of balance sheet items, while it was in line with last year for the full year. Our cash flow was solid during the quarter and in line with the same quarter last year. Rolling 12, our cash flow from operating activities strengthened from already high levels to almost 3 billion SEC compared to 2.7 last year. The change in working capital was relatively weaker compared to the same quarter last year, mainly due to changes in accounts receivable, which are affected by the timing of sales and invoicing during the quarter. Inventory levels continued to decrease organically, even though not to the same extent as during last year. the inventory value remains at satisfactory levels in relation to the order backlog as well as in relation to sales and all in all our long-term target profitable working capital continued to improve and reached 81 percent in the quarter our gearing and leverage are stable at low levels and our financial position remains very strong Compared to Q3, we saw a slight increase in leverage due to high acquisition pace, which in fact we see as a positive development for the time being. Our financing structure was strengthened through the refinancing of existing credit agreements during the quarter. And in combination with our strong balance sheet, this gives us plenty of room to continue our growth strategy and continue to invest in attractive companies, which I think you will talk more about. Now, Niklas, over to you.