Addtech AB (publ.)

Welcome to the ADTECH Q2-2026 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 Niklas Stenberg and CFO Malin Ennarsson. Please go ahead.

Thank you operator and most welcome everyone to the ADTEX second quarter report presentation. The setup is as usual. Malin and I will use approximately 20 minutes to summarize the results and give our comments and then open up for questions. A very quick run through of the key fundamentals of ADTECH. We are today a group of plus 150 independent strictly decentralized companies operating in 20 countries with a clear business to business offering. We operate today in six business areas. All of them with clear strategies and the value proposition centered around technical niche products and solutions primarily to various manufacturing and infrastructure sectors. We have, as you know, a dual growth ending approach focused to develop and grow business organically and then complement and strengthen our strategic niches by acquiring, leading niche companies with a strong offering, and we fund our acquisitions primarily by own cash flow. Science-wise, we have a turnover of around 23 billion SEK, run operations with an EBITDA margin of around 16, and employ today a bit above 5,000 employees throughout the organization with a small and efficient central team. With that said, to the quarterly highlights, we summarize a solid second quarter with high activity and a strong order intake. Total net sales, as you can see in the picture, increased 8%, of which 2% was organic. EBITDA increased in the report by 17% and the margin of 16.7%. However, quarterly result and margin were affected by a positive one-off of 55 million SEK within business area safety. We will come back on that within short. We closed one acquisition during the quarter and have started our third quarter in a good way with two more acquisitions in UK. One of them connectors and switchgear that was completed actually this morning. So therefore it's not in the report. More details on sales development. The overall business situation was good and we had solid contributions, especially from the business areas automation and electrification. Segment-wise, the main organic drivers in the quarter were electronics, with a broad spectrum of products and solutions for especially electrifying equipment. Special vehicles had another good quarter, especially towards mining back on high mineral prices. Very solid contributions from the niche segment data centers where we continuously see more and more companies breaching in and capturing potential. And of course, not least defense with the continued positive trend. So as I said, all in all high customer activity, broad based order intake and a positive book to build. I will come back with more details about market development in each business area shortly. But before that, some short comments on EBITA development. As I said, we increased by 17%, a solid contribution from automation, electrification and safety. And we continue to improve gross margin across the board and also an improved EBITA margin. As I said in the beginning, the result is boosted by a positive one item in safety. And what we have done here is company reconstruction, which led to revaluation of the continent purchase consideration. we will give some more details on that. Malin will elaborate on all non-recurring items a bit later. But again the underlying margin trend remains positive and we continue to see positive effects both from improvement in product mix but also active price management and also of course from acquisitions. So then a couple of comments in our six business areas starting with automation and as you can see in the deltas the business situation continues to develop here very strongly. a broad-based increase in sales and good leverage on both earnings and margins. The market situation strengthened further during the quarter. Some indications that some customers are building up inventory to mitigate longer lead times and cost inflation. So that could have some impact on demand situation. But underlying demand for product solutions for defense remains strong. Also in mechanical industry, medical process had a positive development. And within medical, it's primarily OEM supplying diagnostics and analytical equipment. And in process, it is the food processing OEMs and also automation projects that are main drivers. So in summary, tailwinds and automation remain strong with the backlog now being converted into sales and with strong active pricing. We can see that in combination with last year's cost-cutting initiatives, we have very positive effects on earnings and margins as well. Also, electrification delivered another very strong quarter. Net sales increased 31%. driven by solid business momentum in basically all segments. Solid underlying demand for companies supplying electrification, energy and defense customers also strong in the quarter. Furthermore market situation good in mechanical data telecom here we have some presence in data centers as one example and in medical flat dish all in all but it varies between the companies As I mentioned in the Q1 call this summer, we have strong and partly front heavy contributions from acquisitions and electrification. And this is primarily related to Rame, the German company supplying solutions for maritime electrification. So strong delivery both in Q1 and Q2, as we indicated in the beginning of the year. But all in all, strong quarter from electrification, broad base growth and resulting in a very strong EBITDA growth and high margin. Within energy, the positive trend from the first quarter continued also in Q2. The order intake within electrical transmission distribution developed strongly. and also sequential increase here from Q1. Power generation railway remains stable at good levels and segmented industry was a bit on the weak side. But sales were slightly up all in all despite very tough comps and also we have some increase in earnings and also on the margins primarily due to better product mix in the quarter. Looking ahead we are entering the second half with a strong business momentum for energy and well-filled order books which creates very good conditions for an increased pace the coming quarters. The overall market situation within industry was stable in the quarter. Order intake in special vehicles, mechanical and waste management was flattish, but demand for component solutions toward data centers and defense to some extent mitigated the continued weak market situation for the sawmill business. We don't see a trend reversal yet here, but there are some glimmers of hope and a couple of orders were won during the quarter. Underlying the challenges still remains that the sawmill customers have a weak profitability and that is holding up investments. But to sum up, a challenging quarter with a decrease in total net sales of 7%. Very tough comps here from last year's strong sawmill product deliveries in that quarter that we were very specific on when we released that quarterly report. And also this quarter, some timing effects within sub-C. So these effects, of course, both result in margins. But we have a strong value proposition in a lot of niches here and less challenging comps ahead, which bodes for a more positive development in the second half. Moving on to process. The overarching market situation was good in the quarter. Order intake sequentially improved. where marine remained strong, primarily relating to increased regulatory demands. Also, energy and special vehicles had a positive development while it was stable in mechanical industry and a bit weaker in medical. The segment force and process vary between companies in process. What we can see is that food processing continues to be well, where we see a hesitant approach in oil and gas and chemical customers due to lower profitability in energy intensive sectors. So here we can see that the focus still is on increasing efficiency maintenance and kind of need to have investments rather than initiating larger capex investments so this is something we have said a number of quarters now but again this sequential improvement in process all in all the second quarter with seven percent increase in sales a good mix between organic and acquired growth EBITDA was slightly up compared to last year, but the somewhat weaker product mix and increased costs in the few companies put pressure on the margins. And these cost increases primarily relates to investments for entering new markets where we can see future potential. Finally, safety. which had a positive development in the quarter, a solid order intake, strong demand for product solutions toward data centers continued, um and sub seven traffic safety weakened in the quarter uh towards tough comps um long-term the underlying potential remains strong here but again a very tough comps for safety in traffic safety um no clear signs of an increase in this construction sector yet as you know we have a quite big exposure here in safety so we continue to all in all meet a weaker demand for the construction sector. Overall, for safety, sales increased 4%, approximately half from acquisition, with a positive effect on earnings and margins also adjusted for the positive one-off. and some more words on this one of it was a decision we made to close one of the units in the company that we have quite recently acquired and this this unit has strongly underperformed it's a quite small part of the overall company but here when we bought the company we thought we would have quite strong growth in that unit and that's a strongly underperformed we had a forward-leaning purchase price model here and that explains the big revelation of earnouts but the The main part of the company we acquired is running in accordance with what we expected, so this was really relating to a specific unit. Okay, to sum up, all in all a solid quarter, a more positive market situation in this quarter and high customer activity. which makes me optimistic about the coming quarters. Of course, still variations between segments, customers, geographies, and also that the geopolitical uncertainty still adds to the hesitant approach in investing, especially in larger investments. Very brief comments on the first six months. Two solid quarters in terms of customer activity. Order intake has been good. And I think, as I just indicated in the second quarter, it's really variations between the companies. But this is really the strength of running this very diversified portfolio. All in all, solid sales growth in the period. We have been good at getting the volumes into the results. EBITDA is up 14% with strong margins, but when adjusting for the specific one of the underlying growth is still at solid 11% and an improved margin towards last year. With that said, I give the word to you, Malin, for some more details.

Thank you. Yes, as you just said, our EBITDA grew and the profit margin improved compared to last year. The adjusted EBITDA growth amounts then to 11% and the margin increased with 0.3 percentage points. I will elaborate. Niklas mentioned that we have made a restructuring measure in one of our relatively newly acquired companies in business area safety. This gave a positive net effect of 55 million with a revaluation of earnouts of 64 million and restructuring costs of approximately 9 million. The EBITDA margin in safety amounts to 15.3% in the quarter adjusted. Furthermore we had unusually high transaction costs in relation to an acquisition in industry this amounted to approximately 10 million and was due to the fact that there were multiple shareholders which required handling that differed from our usual process overall margins are strong thanks to acquisitions and improved product mix good pricing power and the fact that restructuring measures that have been taken in businesses with persistently lower market conditions are now having a clear impact. We can also see that the trend line of total costs in relation to sales has a continued good development. And as always, we invest as well as hit the break where needed. Our cash flow from operating activities, we can somewhat compare to the same quarter last year, but we're still on good levels overall. The decrease was caused by an increase of working capital due to both strong invoicing at the end of the quarter but also some increase in inventory levels due to supply chain disruptions and high order intake. Profitable working capital increased to 82% and all in all inventory levels are still at healthy levels in relation to order backlog even if inventory versus sales increased somewhat. Our financial position remained very strong during the quarter and our gearing and leverage remained at low levels, even if we saw a sequential increase since first quarter as expected after the dividend payout in beginning of September. Our strong balance sheet provides significant capacity to fund future acquisitions and organic growth investments. With those short comments, I hand over back to you, Niklas, for some further comments.