Addtech AB (publ.)

Welcome to the ADTECH Q1 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 Nicholas Stenberg and CFO Malin Enerson. Please go ahead.

Thank you, operator, and most welcome to everyone to ADTECH's first quarter report presentation. Today's setup is that we will use approximately 15 minutes to summarize and give our comments on the results and then open up for questions. As usual, just a brief summary for any newcomers. A quick run-through of the key fundamentals of ADTECH. We are a group of 150 plus independent and strictly decentralized companies operating in 20 countries with a clear business-to-business offering. We operate in six business areas. all with the clear strategies and the value proposition centered around niche products and solutions primarily to manufacturing and infrastructure sectors. We have our successful dual growth engine approach focused to develop and grow the business organically together with our local entrepreneurs and then complement and strengthen our strategy strategic niches with acquiring leading niche companies with a strong offering and fund our acquisitions primarily by own cash flow. That's how the model works. size-wise we have now a turnover rolling 12 of around 23 billion and run the operations with an EBITDA margin at around 16 percent and employ slightly less than 5 000 employees throughout the organization and a small and efficient central team there you have ADTECH in a brief summary with that said let's head on to the quarterly highlights All in all, we can summarize a good start of the new fiscal year. Despite the geopolitical uncertainties, the market situation improved for the group with high customer activity and a very solid order intake, broad-based, I would say. Total net sales increased by 6% during the quarter, organically in line with last year and no effects from FX this quarter. Our EBIT increased with 11% and we improved our margin compared to last year to a high level of 16.6%. We strengthened our cash flow and closed two acquisitions during the quarter. A bit more on net sales. The overall business situation was good, as I said. We grew top line 6%, which means it was from acquisition. but solid contributions primarily from business areas automation, electrification and safety. Segment wise, if we summarize all business areas, the main drivers in the quarters were electronics with products and solutions for electrifying equipment. Special vehicles had a good quarter primarily towards mining and defense markets. Solar contributions also from medical and also transport sector where railway and marine were the main contributors also the niche segment traffic safety also this quarter contributed in a good way with the continued positive development all in all high customer activity as I said the broad-based order intake positive book the bill During the quarter, in part of the business, we've seen a tendency for customers to place some framework orders to hedge against uncertainty and feared price increases and delays going forward due to the uncertainties that we have around us. I will come back with more details about market development in each business area very shortly. EBITA then increased with 11%, also here, solid contributions from automation, electrification and safety. We continue to improve our gross margins across the board, so all business areas increased gross margins. It's very satisfying. And we report an improved EBITA margin, as I said, 16.6%. The positive development is primarily due to continued improvements in the product mix and solid contributions from acquisitions, but also positive effects from active pricing initiatives and, of course, also earlier communicated restructuring measures in a handful of companies, primarily in automation and safety, where we now see good effects. We strengthened our cash flow and profitable working capital remained at high level. A few words on each business area then. From the top, starting with automation, as you can see in the slide, the business situation clearly improved in the first quarter. A broad-based increase in sales and a good leverage on both earnings and margins. and the market situation strengthened. We have now had five quarters in a row with a sequential improvement in order intake and that is a strong indication for us. The underlying demand for product solutions for defense industry remained very strong. Also, order intake in mechanical industry, medical and process had a positive development. Within medical it's primarily OEMs supplying diagnostic and analytical equipment and within segment process it's the food processing OEMs that are the main drivers. So a solid recovery in automation that we've been waiting for and clear positive effects on earnings and margins. Moving on to electrification, also a very strong quarter where market situation was strong. a very good order intake here. Net sales increased with 27%, driven by a solid business momentum in basically all main segments. Mechanical industry and defense, the only exceptions. The latter, defense industry, must due to very tough comps. Here we have projects that are not linear. It can come one or another quarter. It's also great to see that our battery group continues to develop positively with good contributions to many of our customer segments. Strong contributions from acquisitions, primarily Ramme in Germany, which are focusing on the marine segment. In summary, a very strong quarter for allocation, broad-based growth, solid contributions from the choir companies as I said, An EBITA growth of 43 percent with a high margin of sixteen point two. And in the margin, I would say that it's partly boosted by very strong performance from acquisitions with a slight positive seasonal effect in this quarter. Energy experienced a very positive market development in the first quarter. The electrical transmission business recovered in a very good way with high order intake after period with fewer project rollouts and the lower order intake earlier quarters. High demand also in distribution and transport while power generation was stable. Sales were down in the quarter as expected due to very tough comps, but with an improved product mix, our margins increased to 19.5%. Forward looking we have a very strong backlog and good business momentum indicating a strong year but tilted towards the second half of the financial year as we indicated already in the Q4 report but again the products are now coming in just as we had expected the overall market situation within industry was good in the quarter but with variations Solid demand in mechanical industry, electronics, subsea and waste management, but companies exposed to forestry and sawmill industry order intake remained weak. We have been repeating this now for a number of quarters. Customer activity is there and a couple of orders were won during the quarter, but we don't see any general trend shift here. Also, special vehicles met a somewhat weaker market situation where demand being negatively affected by geopolitical uncertainty and higher oil price that we had during the quarter. Total net sales decreased with 3%. Again, this is primarily due to the sawmill volumes. And these effects will of course remain until this market situation improves. Moving on to business area process where the overarching market situation was, I would say, stable in the quarter. Demand was good in marine segments, solid order intake related to regulatory demands and shift to more green fuels. Also, energy and special vehicles had a positive development. Stable in mechanical industry, weak in medical technology, towards tough comps and also forestry and process industry was on the weaker side. And here we again see that activities are good. There are a lot of discussions on products, but the customers are still holding off on investment decisions and products are also continuing to being a bit postponed. All in all, a rather challenging start for process with 2% increase in sales, but this is entirely driven by contributions from acquisitions. Earnings and margins were down to the lower business volumes, but adjusted for revaluations of consideration. We actually saw a slight improvement on the margins also for process in this quarter. Last but not least, safety. which had a very positive development in the quarter, a good business development and solid order intake. The market remained strong within traffic safety and the energy, electronics and engineering manufacturing industry experienced a positive trend in the quarter. Regarding data centers, we saw a bit flattening out on high levels within safety during the quarter. And here we see a little shift towards more local product procurement in data centers. And this will seemingly give potential for several companies in the group moving forward. No clear signs, however, I would say in the construction sector, it's an important sector for safety. So the companies exposed to building installation continue to beat to meet overall weak demand. But overall sales increased by 10%, approximately half coming from acquisitions, positive effect on earnings and margins, also fueled by both product mix that was improved and the previously implemented cost measures in a couple of companies that we've been talking about earlier last year. Well, to sum up this picture, I would say a very solid quarter, positive market situation, high customer activity on group level, variations still between different segments, customers and geographies. And it is clear that the geopolitical uncertainty still adds to the kind of hesitant approach in investing among customers in a number of segments. With that said, I give the word to you, Malin, for a few more details.

Thank you, Niklas. You have mentioned a lot of important matters already. I will dig down in some of them. As you heard, our EBITDA grew and the profit margin improved compared to last year. The EBITDA margin increased by one percentage point adjusted for revaluations of earnouts. and we had just another quarter with a record high margin. We had good contributions from acquisitions, but the development was also attributable to an improved product mix, good pricing power, and the fact that restructuring measures taken 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 still has a good development. Regarding other operating incomes and expenses, revaluations of earnouts were more or less in line with last year, while currency effect from revaluation of balance sheet items had substantially less negative effect on other income and expenses than last year. Our cash flow from operating activities strengthened compared to the same quarter last year by stronger margins and efficient working capital. Cash conversion was stable at the satisfactory level. Inventory levels increased somewhat during the quarter due to acquisitions and the usual summer buffering, but also due to price increases and supply chain disruptions. All in all, inventory levels are still at healthy levels in relation to sales and order backlog, and profitable working capital remained at 81% sequentially. Our financial position remained very strong during the quarter and our gearing and leverage decreased compared to last year, even though our net debt has increased. We have a very satisfactory headroom in our financing structure, which strengthened further during the quarter through the rising of new debt. While we do not have any specific debt targets, we believe our strong balance sheet provides significant capacity to fund future acquisitions and organic growth investments. And with that said, I hand over back to you Niklas for more information about acquisitions, I believe.