Alcadon Group AB (publ)

Då så är klockan 15 och det är dags för en kort genomgång av fjärde kvartalet för Alcadon Group. Varmt välkomna. Jag heter Fredrik Valentin och jag är koncernchef. Today I'm doing this myself. We're changing CFOs after Niklas Svensson left us and Adam Jonsson is on his way in. So we'll see if we can manage through this. If we have questions that we can't answer here, it's great to send me an email and we'll set up a small one-to-one conversation, if desired. Let's get started. I assume that those of you who are listening here today know us quite well, but we'll take a super quick recap. Alcadon Group is a group of European niche distributors in network infrastructure and data communication products that act together under the mission Enabling Digitalization for a Better World. Men vi är fristående enheter och vi kommer komma tillbaka till det lite senare. Just vikten av decentraliserat ansvar och att varje enhet leds utifrån sina förutsättningar och har egna målsättningar. Today, after we have disbanded the German business, we amount to about 1.4 billion Swedish kronor, earning 95, which is an EBITDA margin of 6.6, which we are not satisfied with, but this is one step on the way. However, we are very pleased that our customers are so pleased. We have a large number of customers, primarily installation customers around Europe, who give us a very high NPS Net Promoter Score rating. We came out at 55 in 2025. There we have a target of 30 and we are incredibly grateful that we have such loyal and faithful customers. Vi finns i dag i sju europeiska marknader med verksamhet operativt i sju länder. Vi har gått från åtta där vi nu stänger ner Tyskland och fokuserar på att sälja ut de kvarvarande lager vi har. Det är den befintliga fiber- och bredbandsprojektverksamheten som vi avvecklar. Det betyder kanske inte att Tyskland är helt avskrivet för annan verksamhet någon gång i framtiden. Men här och nu så är vi i sju länder. Our business is primarily done in three segments. The structured cable system, which is the region partner, the growing segment, the data center, and the crumbling segment, broadband and FDTH rolls, where these rolls are now starting to come to an end in a number of markets. Let's sum up 2025. We'll start there before we go into the quarter, and then we'll take the market first. It has been fairly stable in what is our largest segment, structured cable systems, which now stand for a little more than half of our businesses, since we are taking away a large broadband business in Germany. But we have had a constant upheaval in the broadband market, which is of course the main reason for the decision on the dismantling of Germany. In the Nordic countries and now also in the UK, the broadband roll-out is beginning to reach its goal, or its end. It has reached a very high level of penetration. which then affects us and our volumes go down. Then there will continue to be broadband businesses to be done in these countries, but perhaps not of that great dignity and such large projects. But fiber will be exchanged, fiber will be drawn between new data centers and hotels and offices will be built even in the future. So this will never go down to zero, but just the shift between the different segments has gone quite fast. On the other hand, there is growth in data centers, and there are huge investments made in data centers around the world, and not least in northern Europe, up here, where we have quite a lot of electricity, quite cheap electricity, and it is also cold outside, which is needed to cool these computers. This shift has made us revalue some businesses, for example in Germany, and also restructure some of our businesses. To summarize what we have done this year, I have been here for 13 months and we have actually done a large number of things that are now going to start in effect. First of all, we have updated our business idea and clarified the difference between what Alcadon Group does, we as an owner holding company, and what our subsidiaries do. And many of them are called Alcadon, but it's not the same thing as Alcadon Group, but they are subsidiary subsidiaries with their businesses. And we have subsidiaries that are quite similar to the Alcadon companies, Network Center and Wood Communications, where we have allowed them to keep their brands and names. And that is probably a trend that will continue. We as owners will not demand that a name change be made to something, but what is more likely is that we as owners over time will find a new name. And that is precisely to clarify the difference between the investor's perspective and the operating perspective of the subsidiary. We have put a lot of focus on profitability before volume. We have removed our volume goals in our new financial goals we released in May. Instead, we now prioritize what we call R over RK, i.e. results over moving capital, where we have said that over 50 percent, then you are in the green zone and then you have to grow and invest. We think that the daughter companies should have an active additional acquisition agenda. While if you are in the red zone, i.e. below 25%, then it is continued cost savings, restructuring and profitability on marginals that are counted. And that is how we target our subsidiaries. We have also had quite a lot of focus on capital and cash flow. We believe that we can use the money better than if we bind it up in slow-moving laws, which is also the bearing on the decision on Germany. Structurally, we have made a few changes. We have expanded what we call region central Europe, which is an inter-headline. And when you only have eight subsidiaries, it's a bit too small to have several headlines. So from November, all subsidiaries report to the corporation. And today, there are only six. We'll look at that in the next picture. We have also worked a lot to clarify the difference between what the group does and what the subsidiary does, and that we work with a decentralized responsibility. That you as the CEO are responsible for the goals we come to terms with, and that you then get to reach that goal on the path that best suits that company, in that market, in that environment. So whether you should go left or right by any means, the company decides for itself, but the goal must be achieved. In this, we have also developed our governance model. We have introduced the board meetings as our leading organ for subsidiaries, where we set a long-term goal, which is then broken down into a three to four year perspective, step by step. How are we going to achieve the long-term goal? Where the long-term goal coincides with the financial goals of the company. That is to say, is the GDP over 50%? EBITDA margin of 10% and annual EBITDA growth over time of 10% per year. And that is an expectation we have, that the dotter companies we have in the portfolio should manage. And we decided that our German business would not be able to do that over a fairly long period. Therefore, we decided to decouple. We have new leadership in, we write here, four of the seven existing companies. It's the legal units. Here in the next picture we have six operating units. It is Holland that is included under Network Center Group. But in four of these seven companies, we have a new leadership and a new CEO after a while. I'm going to show it to you. I have it on camera with me this time. Vi har jobbat med våra kompensationspaket och ersättningsmodeller för alla vd-ar och ledande befattningshavare är nu helt linjerade med koncernens finansiella mål. Både jag och alla vd-ar har bonus på R över RK och EBITDA och EBITDA-tillväxt. Det är jätteviktigt att man linjerar upp så att alla jobbar åt samma håll. We have, as I said, eliminated Germany. We believe that the market will continue to be very highly priced. There are many actors who want to participate, and then you press the price, and we are more focused on profitability. Under the year, we have also made some progress with our acquisition agenda, which we are now ramping up. We are releasing a lot of cash flows. We will continue with that. A strong cash flow, free movement capital. We will talk a little later in this call about a potential acquisition agenda under a broader umbrella than the business we operate today as a distributor of data cables. We will talk a little more about a digitalization umbrella. Let's move on and talk about the organization. How does the group look today? We are organized with six independent subsidiary companies. One of them is a group. Network Center is our largest business. It is now run by James Reid, after the previous owner Duncan Lindsay left in October. James has operated this for a few years, but now he also gets the full formal responsibility and builds his team. In this business, we have a number of units, both in England, Scotland and Holland, that sort in under the Network Center's logo. We actually have a business that makes a very similar deal, but under a different brand, and that is to be able to access other customer accounts. Here you can imagine the VAG group on cars, that we have both Audi and Volkswagen in that portfolio, and we are perhaps looking at opportunities for further development there. In Sweden, which is perhaps our best growing market right now, Magnus Larsson, CEO, has been there before, but also developed and taken a greater responsibility after we have clarified the difference between Alkadon Group and Alkadon. And with their help, these CEOs have good economists, so I very much believe in the dual leadership, that you are two. It is much easier to get through the challenges when you have a board plank. So Carl Stone is CFO at Network Center and VMOnline is based in Sweden. In Denmark, we have a new CEO. Germany was a legal subsidiary of Denmark, so André started here in October as responsible for both Denmark and Germany, and came quite early to the conclusion that Germany could do something about it. So André is now focusing on developing Denmark. He is still responsible for the development in Germany, and for his support he has Kim Folberg, who is also new. But given that the businesses in both Belgium and Denmark have also been put together earlier and have the same business system, Kim also supports Belgium. It has become cost-effective and uses resources in two places. In Belgium, we have lifted up Pite Norden, which was sales-responsible and now runs the company. I wrote in the report that we might not be tired of waiting for these fiber-sales, but we have to make sure that we have other income streams. So, PIT is driving a rather active agenda to also develop the distribution of data cables and power cables within industry and infrastructure. There it starts to change, a little bit at least. And that's something exciting I think we can learn from in other countries. In Ireland, Keith Mahoney runs the Wood Communications business. We acquired it in 2024. It is our finest business in key terms. All three of the company's financial goals are fulfilled in Ireland. We have a turnover margin of over 10%. We have an ROV of over 50%. And we have an increase of over 10%. So here it is more about finding continued growth areas for Wood Communications. And they can be found both within and outside Ireland. In Norway, Inge Dahl is the head and Inge started as the head of a newly launched small company in Norway called Network Center AS, which is a subsidiary of Alcadon AS. The idea was to reach suppliers through the Network Center brand that we had not reached through the Alcadon brand. Now we run these two businesses in parallel under the same head, so Inge is responsible for both businesses, where Network Center focuses on data centers, which are being built very strongly in Norway, and Alcadon focuses on structured cable systems and fiber. Also here, the businesses are supported by skilled and experienced economists. And it is with these setups that we lead our operations in board meetings with me as head of the board and Adam as CFO is board together with respective directors of each company. And then we have a slimmed H&K of four and a half individuals, which are support functions for these companies. It is in the companies that the decisions are made, are carried out, that's where we set the strategies and that's where the goals are fulfilled. And then we support with bookkeeping, recruitment, consolidation, M&A, business development and above all group IT. And in IT we are primarily focusing on IT security, to ensure that we build strong walls around all the different systems we have around them in the subsidiaries. Let's go into the quarter. We have the decreasing sales. This is when we have taken away Germany from both outfall this year and outfall previous years, so it is apples and apples. So the sales dropped a bit driven primarily by a decrease in broadband in the UK, which is the main cause. while our gross margin increases by 1%, which we think is good. Our costs are somewhat higher, and this is related to the relocation, when we do relocation work outside of Germany. So it's people who need to leave, and it costs a little bit. We don't usually show it in detail, it's a bit too personal, because it's just related to individuals, but there is a relocation cost here. Then we deliver an EBITDA of 24 million, on an EBITDA margin that is a little lower than we want it to be. But we manage to deliver a continued EBITDA growth, which is our goal, to grow EBITDA slowly but surely. We raise the capital movement here, R over RK, or Profit Rewarding Capital, to 39%. We think that's good. Jag har jämfört med en del med min förra arbetsgivare Bergman & Breving och de är nu på 35% så det är kul att vi går om dem. Man ska alltid tävla litegrann. But then they will have to move up further. We have a strong cash flow in the quarter. Very good. It is of course driven by the fact that we continue to free movement capital and lower laws. These are the laws that have been in place for a very long time that we are now selling out to a lower margin. Therefore, there may even be a negative EBITDA impact sometimes. But we get cash in and it is very important because we want to use the money for something else. Vår skuldsättningsgrad sjunker, det tycker vi också är bra. Det ger oss rörelse och manöverutrymme när vi kanske vill titta på tillväxt både organiskt men även genom förvärv. We have also listed Germany. If anyone wants to ask a detailed question about Germany, it would be great to hear from them. But what we have done is that we have removed almost 80 million of revenues during the year, which then contributed negatively with almost 6 million. So, in that sense, we strengthen our profitability as a result and also in terms of capital. If we look at the numbers for the whole of 2025, it is reported that Germany remains on the left side, compared to what we reported last year. Where we then fall in turnover, we give ourselves a yellow line, but we strengthen our gross margin. We are not satisfied with the expected margin or the expected result, but we are satisfied with that we get the storage down, we get the storage turnover speed up, the capital movement is strengthened, the cash flow is strong and the debt goes down. And the mix between our businesses, as I mentioned. When we remove primarily broadband businesses, the proportion of structured cable systems and data centers increases. I can comment on a question we got now. What kind of data center business are we delivering to? Alcadon Group's subsidiaries are perhaps best at small and medium-sized, that was a strange expression, but data centers that are all from a classic data hub at a company to a hospital, a school, a university, but also up to so-called co-location data centers that rent out capacity. Vi har inte varit onosa på de riktigt stora som man oftast tänker på, man läser om i tidningarna, som byggs av de så kallade hyperscalers. Men försiktigt börjar vi gå dit också. Primärt är vi väldigt duktiga på mellanstora datacenters runt om i Norden och Europa. Let's take a look at our quarterly performance. We are taking small steps in the right direction. We have a strong cash flow, starting up to the left. We are strengthening our RURK. This is against reported figures. Until Q3, Germany remains and then Germany is gone. We continue to deliver an EBITDA growth, although a weak one. We reduce debt and we have continued to have a good cash flow on the stock. If we look at the lower left corner, we have the debt rate that varies over time, and that is precisely the idea. Vi trycker ner skuldsättningen, sen förvärvar vi något, då tickar den upp. Det är det som händer 2022 när vi köper Network Center. Så jobbar vi ner skuldsättningen. Sen betalar vi ut i Earnout, så jobbar vi ner den. Sen köper vi ett nyt bolag och sen så fortsätter vi att jobba ner. Så det där är ett dragspel som kommer att fortsätta spelas på när vi då går in och tittar på lite förvärv. Should we look at priorities in the future? What should we do this year? We need to give the management groups we've just set up, which have established some time, to work with their... We've set clear goals, clear work plans in each country. It is time to let the delegated responsibility do its job and ensure that the goals are met. We will continue to keep an eye on our label levels. We are starting to measure what we call red hink, that is products in labels that are older than 12 months. Then you come up with a special list that each company reports to every month and has a plan for action. And this is something that you have to continuously work with, to constantly look at what is at risk of becoming long-term in the stock market and standing there and stumbling and binding capital. We can get even better at that. Here we need to learn from the experiences from Germany. And that's what we're going to do. We need to increase the pace in reducing this dependence, or what we call the one-sided setup, when we perhaps have businesses that are very dependent on one type of market segment, for example broadband. In Germany, we decided to put it down. In Belgium, we are still very exposed to broadband and there we want to try to develop businesses in structured cable systems, in data centers, but perhaps also other types of niches under a broader digitalization umbrella. Vi behöver säkerställa att den här marginalen vi har lyft upp fortsätter att ligga där. Det kan vara genom att jobba ännu bättre med prissättning framåt, göra det ännu mer granulärt, men även jobba bakåt mot våra leverantörer och hela tiden se till att vi har tillräckligt med marginal emellan. We talked about the focus model now over at RK, it needs to continue to be implemented so that we can secure the cash flow. It is a simple cash flow motto and when we can also raise it in the subsidiary companies at the customer case level, then it will be really powerful, but we still have a job to do. And as we commented earlier, we want subsidiaries to be able to acquire, but then you have to start with taking yourself to the green zone, that is, are there companies over 50? There it is an expectation that you should use acquisition as a tool in your growth. If you are in the red zone, then acquisition is not an allowed way to go, not as a CEO at least. However, perhaps we at the group level can make strategic acquisitions to bring together such businesses, but you can't buy yourself out of a problem. But if you are in the yellow zone, between 25 and 50 percent, then it is of course up to the scale that determines if you are okay with additional waste. And in parallel with that, we now need to speed up our acquisition agenda when it comes to platform acquisitions. Outside of the existing distribution business, there are a lot of exciting companies that make any kind of product that can be linked to the digitalization of society. And we intend to make an acquisition in the size of 10-12 million EBITDA per year. That is part of our growth strategy. I'm going to summarize by just exemplifying where you could look for such acquisitions and where they are. There will be a lot of text, but we will have tried to illustrate an onion. We have some kind of core in the onion, which is our business today. It is the distribution of primary data cables and accessories around it. The first growth can happen in the core, when you buy a company or grow organically in a niche that you are not in. You may simply set up a business area or data center in a remote country and recruit two people. Then we are closest to the body or core. One step outside of that, then you may take a business you already have and go into a new geography. Typical to open a network center in Norway. We are in Norway, but we did not have a data center business, but then we did it as a geographical move from the UK. This is business and activities we expect the subsidiary to do themselves with support from us and four and a half at the group level. So it can happen organically, it can happen through acquisitions, that you may find a geographical acquisition in a part of a country that is remote that you are not yet in, then it is a quick way in. That is, as I said, something we want the subsidiaries to do themselves. In the borderline between subsidiaries and group acquisitions, it can be that you look at new products or that you fill in your offer with product groups that you sell today or with product groups that you do not sell today. It can also be that the group looks at a supplier that is a product company that has very good margins. Maybe Alcadon Group can acquire such a company. And then continue to distribute through the subsidiary companies, but keep the two businesses separate. That it should continue to happen on a sharp customer-leverantor relationship. And in the outer layer of such a sheet, one thinks a little more of a series of acquisitions model. That you look at product companies with high profitability, which then directly contributes to the key figures of the company. And you buy them stand alone. They will be based on something under a paraply that says digitalization. Probably connected to a product that exists in a data center or in an IT environment. And then I always mention Vime cable steps. I talk about it as a typical example. Now it was Storskogen who bought it a few years ago. But it's such metal steps that lie down under the inner roof that we put cables on. It is not possible to build a data center without such, and therefore they are important for digitization, so Alcadon Group can own such a company. It has nothing to do with the existing business of distribution of data cables, and that is a bit of what the point is, to spread the egg so that not everyone is in the same basket and find nice niche companies that perhaps have a international scope already today and that we can develop and that would find a safe haven in a group of companies that really understand the environment, because the end customer is the same. There I thought we would stop and take a quick look at questions that have appeared and see if we can answer them. And if you have a question that you can't answer today, please feel free to contact me via e-mail. Vi fick en kommentar från hur Alcaron Group organiserade och det har vi besvarat. Vi har sex fristående verksamheter med egen ledning som är ansvariga för sina egna mål och med vägen dit får de ta själva. Vi fick en fråga på omställningskostnaderna. Om kostnaden ökar med 7 miljoner, hur mycket är omställningskostnaden? Vi väljer att inte redovisa det beloppet, men det är korrekt noterat att antalet anställda minskar. Det brukar kosta en slant att göra sådan minskning. Vi ska se vad vi har här. Can you tell us a little bit about what you expect from the gross marginals? Will we increase them in the future? The goal is to strive for an EBITDA margin of 10% in the group. To do that, you need to increase your gross margin. One way to do that is to enter a segment that has a higher gross margin. There is a typical data center with a higher gross margin than broadband. Another example is to acquire companies with higher gross margin than what you have yourself. Do you reorganize because it's a tougher fiber climate or to optimize the cost base? I would say that we make continuous adjustments. We should make continuous adjustments to follow market trends all the time. Now it's a technical change. The competence that we have in broadband will be valuable in the future. But we don't have full competence in data centers where a lot of money is invested. So we need to build that up. Otherwise, it is perhaps a classic leader evaluation. Those who have built a football team, you will always have one player who is best and one who is worst. And then you always have to work with your entire team and develop everyone. And some may not want or can be on the road. So that should be a continuous work. So the transformations we do, they have more with the principle of building Alcadon Group to an owner and investment company. and clarify the decentralized responsibility than with the market. Under the decentralized responsibility, the dotter companies will pair market swings themselves. And then you have to have people on board who proactively understand it and want to do the journey and do it themselves. Bra, som sagt. Vill ni någon sugen på en lite djupare interaktion eller diskussion så ta gärna en kontakt. Annars tänkte jag att vi skulle avrunda där och så ger vi oss direkt in i Q1 som vi har kommit en bra bit igenom och så hörs vi när Q1 är över. Då passar jag på att tacka för mig och önskar alla en fortsatt trevlig eftermiddag.