Alcadon Group AB (publ)

Good afternoon and welcome to Alcadon Group's presentation of the second quarter 2026. My name is Fredrik Valentin. And my name is Adam Johnson. And the new as of this time is that we will actually try to speak English throughout the presentation. So bear with us on that. To start with, we thought we'd just give you an insight on how the quarter went from a macro perspective. that go through a little bit of financials as usual and then wrap up with the priorities and direction going forward. And as usual, feel free to put in any questions that you might have through the chat and we will address them at the end of the presentation. If we start with the Alcadon Group and what we are and what we do for those who are newcomers, but also for those who have been around for a while, because during the quarter we have actually refined how we describe ourselves, not the least given the fact that we have done an acquisition of a product company. So previously we described ourselves, as is seen on the left side of the page here, as a group of European niche distributors. within the network infrastructure niche. While we, as of this quarter and going forward, have decided to broaden that perspective a little bit and now try to describe the Alcadon Group as more of an owner company. Our mission is to acquire, own and develop leading companies and brands that offer system solutions products that support digitalization of society. That's a niche that we have been speaking about for a number of times and we will continue to do so. But now we also start to a little bit more show our intentions to become or at least take the first steps towards becoming a niche serial acquirer in this niche of digitalization of society. and today we have a turnover around 1.4 billion Swedish so that's 130 million euro approximately with an EBITDA margin of around 7% rolling 12 so a slight improvement towards last year We are today present in seven European markets, although we closed to Germany here in December. So left is these seven countries that we are today present in. And as of 1st of June, we are now starting to do a little of a split up between our different entities. So we have a number of what we call distribution specialists under different brands, where we have network center operational in the United Kingdom and Netherlands and partly Norway. We have Wood Communications based in Ireland and then we have Alcadon which is actually a brand used in several countries. And now as of 1st of June also a product specialist in A antennas which we will talk a little bit more of going forward. But if we look at our strategy and what we do, this is a recap of what we presented in our annual report earlier this year. We believe that there is a lot of opportunities within this niche of digitalization of society. Therefore, we have established a strategic direction to broaden the offering that we as owners of niche specialist companies will focus on. Previously, until before 1 June, we only had distribution businesses in our portfolio. And as of now, we also have a product company. Our intention is to continue to develop the distribution specialists and let them do what they are very good at and also broaden the offering in that niche, meaning not only be too dependent on one separate leg, for instance, broadband rollout, which we know is in decline, but also to grow the offering into other product groups that support the digitalization of society as a distributor. And at the same time, we want to continue to acquire product companies like the one we bought on June 1st. And those product companies do not necessarily have to have any connections with our distribution business. And that is the whole purpose of the game is to broaden also our ownership structure, to balance risk and to create an increased shareholder value. And in doing this, we try to become more clear on what is the difference between the Alcadon Group and the subsidiaries. And since we are using partly the brand of a few of our subsidiaries, the Alcadon brand, we try to be more consequent in describing Alcadon Group as the holding company with the mission to acquire and develop our companies, while Alcadon is a brand used in several countries in the distribution niche. While our subsidiaries are independent, they are autonomous. They have a large degree of freedom and the responsibility to do their business in their way, in their niche. And as I said, we have a number of distribution businesses. They are fairly similar to each other, but with differences in between. And as of 1st of June, also a more product-oriented company. And this is the direction that we plan to continue to develop the Alcadon Group. and both develop the existing distribution business at our new product company and acquire more product companies. Zooming in on the product company, just giving you a brief of what A Antennas is doing. So it's our first acquisition under this new or broadened strategy. We thought we'd just discuss it slightly what they do, but also give you a hint of what the future M&A activities might look like because the A antennas is in many parts a good template to that. So this is a small technology-driven company founded in Sweden in 2011 as a spin-off of a very large antenna company that in those days were deeply involved in cellular connectivity and antenna design. A antennas, designs and develops antennas and related products for harsh environments where data transfer needs to be enhanced with an antenna, especially in what is called the smart metering technology. In Sweden, we know them mainly in electrical meters, as shown on the pictures on the right hand side. These are the electrical meter cabinets on the outside of buildings. with the antenna mounted to the left here on the upper left part of the gray cabinet. And on the right hand side there are the extra strong antennas mounted on top of the cabinets on the wall. And this is to enable data transfer in environments where connectivity is weak or where the broadband or 3, 4 or 5G development hasn't reached yet. The installed base for antennas for this company is fairly large in Sweden and now the company is focusing on developing also an export market to new countries. We see that the development of smart metering in Europe is kicking up so this is a focus area for us. and for A antennas. It's a small company, six employees in total turnover of 50 million SEK which is 5 million euros approximately and very strong financial figures supporting the group's financials. This company adds a competence that our existing subsidiaries do not have or they do but not in this depth which is wireless connectivity. We are very good at cables but this brings us also the wireless data transfer knowledge. It operates in a regulatory market. This is decided by the electrical companies and also the regulator on different markets to install or start with the remote metering to reduce cost of people traveling out to read your water meters or electricity meters. And we see this development in Europe over time. And we believe that this is a strong potential for us to capitalize on. And some takeaways for future deals when we continue with our M&A journey is that we are looking for companies like A Antennas with a proven operational track record that have an established market position. We like to buy mature companies that know what they do. We like companies that are product owners. They do in-house design and development. Those are skills that normally drive higher gross margins and build higher barriers of entry. And we like when we build win-win transaction models with both upfront and earnouts to motivate the management to stay and really form partnerships with us over time. And we like the size. Here is between 5 and 10 million euro turnover with decent profits. That is a good balance between opportunity and risk for a player like us starting the journey towards a niche serial acquirer in the niche of digitalization of society. If we touch a little bit on the quarter and the macro perspective. It has been a slightly challenging quarter when it comes to turbulence on the market. We have seen everything from geopolitical turmoil, the closing of the Hormuz Strait, bringing severe logistical challenges to both us and players in our markets. We have seen scarcity on raw materials with Meta buying a year production of fiber producer Corning and making it harder for others to get access to fiber material. And all of this has of course influenced the price fluctuations. So there have been very quick price changes and really difficult to get hold of materials for our customers projects. And we believe and would like to give strong credit to our daughter companies in how they have handled this situation because it has been a fantastic work done by our subsidiaries to balance risk and opportunity in such a turbulent market that we have seen in the second quarter. On top of that, we see that the broadband rollout in Europe is coming to an end. And when we say the rollout, we of course mean the installation of broadband fiber to homes. Then this market is now transforming into connecting those homes and actually getting subscriptions so they can have income on their investments that they have made. That is of course affecting us and especially those companies that have had a large exposure to broadband. We do see that the economic uncertainty and increasing interest rates hampers the development in residential construction. We are fairly exposed to that as well in several markets with structured cabling. There's a lot of cables going into new buildings, both the residential but as well as commercial buildings. And we see how product companies more and more are bypassing distributors, especially on the larger deals. And all of these are things that we need to handle and manage and I think we have handled it really well. So again, large credit to our subsidiaries. On the other hand, we see really big opportunities continued in the data center niche, very strong growth, especially driven by AI, where we believe that there are quite interesting opportunities in most of our markets, but mainly, especially in the Nordics, given low temperatures and cheap energy. We see increasing investments in infrastructure as well as in the defense sector, which is quite new niches for us and interesting to expand into, bringing new exciting opportunities, as well as the rapid development of connectivity and more and more things are connected to a broadband network that is developing. We have a 5G network now covering large parts of Europe and 6G is waiting in the hallway. As networks become more and more stable, there will be more and more data transfers and that will bring more opportunities to us as well. On top of that, with a broadened agenda into, or at least a broadened opportunity, when we say that we are now looking into a niche of digitalization of society and not only into distribution of cables, it opens up opportunities for new acquisitions where we can look under a broader umbrella. So macro in the quarter challenges and opportunities at the same time and fairly well managed or really well managed by our subsidiaries. Shall we talk a little bit numbers, Adam? Yes, please.

So as you described, Fredrik, this Q2 was challenging from a macro and a global perspective. But we believe that we, despite that, performed a rather solid quarter from the financial aspect. And on this slide, we're looking at the numbers presented at each reported time. And we then performed a fifth consecutive quarter with increased EBITDA. As you can see on the left hand graph as well, that's mainly driven by the increased EBITDA margin. So a year of strong focus on profitability and costs has improved our margins and substantially improved our EBITDA as well. We also reported an increase or improved profit over working capital, which is our measurement of how efficient our subsidiaries and ourselves are working with profitability and the working capital. We see a strong increase, partly driven by the increase in profitability, of course, but mainly from the working capital aspect. And even though we had an increase in inventory, inventory during the quarter from from previous quarter we working very efficiently with the other aspects of the accounts receivable and accounts payable making the the improvement in the profitable working capital the investment in inventory also brings down the cash flow the operating cash flow a bit from a very strong rolling 12 in q1 however we note that we still are on a rolling 12 higher operating cash flow than our

for rolling 12 EBITDA.

On the right hand side, we also have the net debt, which is unchanged at 2.3, still with the acquisition of Antennas, which were satisfied and means that we have still some leverage to continue our acquisition agenda going forward. And the numbers in slightly more details and compared to previous year, we see a welcome shift in trend in revenue growth from previous year. As noted before, it has been a year of a lot of focus on margins and profitability over volumes. Now we can see that more and more of our subsidiaries are coming to a position where in our focus model where they can prioritise sustainable growth. So looking year over year, it's rather small changes, but it's margins being trimmed and small efficiency gains behind this and making the result improving both quarter over quarter and year over year. If we look a bit more on the balance sheet and going in a bit more detail, we can see that the inventory is down from last year, but it's up for quarter of a quarter. But the working capital is decreasing quite substantially. So it's a great work by our subsidiaries and really disciplined work with the working capital and working with our customers and suppliers and making sure that we get We're not acting like banks to our customers. Again, profitable working capital up five percentage points from last year. Again, just showing the hard work and the discipline in all aspects during the year. On rolling 12, we can see that we're trailing on the top line. But again, that is because of the focus on margins. And we can see that on margins, we're improving more than one percentage point on gross margin and as well as on EBITDA margin, making the profit in absolute numbers just behind, although we're trailing on the top line. So looking forward to continue that trend going forward. Touching in on each market and each subsidiary quickly to give an update considering the markets are a bit different and our entities are in a bit different stages. And starting off with the Network Center Group which is our largest entity in UK and the Netherlands. As Fredrik mentioned, we see a drop in the sales from broadband, and as described in the report, that came a bit faster than anticipated, so a lot of work put in to refocus efforts and resources into the AI data centers to shift volumes over to that segment. In that change, we also need to have a high focus on profitability, both from operational aspect, but also from gross margins and working capital. So we are in the midst of a change and shifting from volumes from broadband to data centers in the UK. In Sweden, we see another great quarter growth in all business areas in combination with healthy margins. So set up for further growth and according to our group's focus model, we have increased efforts into finding new growth opportunities. If you're looking at good communications in Ireland, another solid quarter with continued impressive profit over working capital contributing very well to the group. We see a lot of product driven data center business in Ireland, which has a high degree of volatility, both in terms of volumes, but also margins. So we continue to be close to the customers and always focus on profit over working capital in each separate deal. In Norway we can see large investments into data centers in the country and we are in a change in an organizational restructuring to adapt to that. So coming from being very broadband and fiber dependent, we are shifting our resources into more data center opportunities. So we're in the midst of that, but see big potentials to that in the both mid and long term. Looking at Alcadon Belgium, we have the continued work of expanding outside the broadband. That's slowly paying off and we can see that in the numbers as well and differentiating our revenue streams. That together with efficient working capital and a lean organization after the leadership change in the fall of 2025, we're setting up for expanding that business as well. And as well as in Denmark, we had gone through quite some substantial organizational changes during the fall of 2025. We're very satisfied with the team in place, and we can now see that they're coming up to productivity, which now shows in the numbers as well. So once again, showing a quarter of a quarter growth and improved margins and profitable working capital. And then lastly, we have A Antenna, so acquired in 1st of June. As mentioned before, they have a very strong profitable working capital and contributing to the Group's financial targets. So focus here is set on growth in both new and existing markets.

Super. Thank you, Adam. And as you mentioned, you mentioned the team and the changes that we have done during the year. So organization wise, we are set for additional growth. We today, as we said, have seven separate subsidiaries reporting to us. We have completed the recruitments on all levels in the subsidiaries as well as on head office. So we have a small but very efficient head office consisting of you and me but also having filled up the team with Alma and Johan and David here so that we have capacity to continue acquiring companies and to plug them into our operational model. and we have very good leadership structures in the subsidiaries. So we are satisfied with the engaged and motivated team going forward and with space to add more companies in due time in a pace that we choose, which leads us a little bit to looking forward. So if we would just look at the priorities that we have set for ourselves here for the coming 6 to 12 months. The first one is of course in the distribution business. We need to continue to stay relevant to our customers. It is a challenging market in many aspects. It is fluctuating, the prices are changing, the access to raw material is tricky. We need to continue to broaden our offerings, both by entering new market segments, but also offering new products, and to be making sure that we are not too dependent on either too few segments or products or customers. And this is an ongoing work that never stops, but I think we have taken great steps during the year and during the quarter. We need to continue to identify new opportunities, stay in the front seat and not in the backseat driving. We as distributors need to be competitive on our pricing, but you mentioned that we are not the bank, so we need to make sure that we get paid and balance both the accounts receivables and accounts payables. And I think we have done a great journey so far. We see that competence, knowledge and service level are more and more becoming differentiators if we want to stay as niched and specialized distributors. And again, this is an area where our daughter companies are really good. On top of that securing cash flow in turbulent times it is very important to keep financial discipline so we balance this demand for increased inventories that we see turbulent market then you want to stock up and you want to make sure that you have stuff in the warehouse to sell and at the same time we need to make sure that we do not end up with this sitting on the shelves later on we have done that and don't want to see that again. So this is about taking shared risk with both customers and suppliers. Again, an area where I think that we have shown a great performance during the quarter and looking forward to see that continue. And then continue the acquisition agenda in the pace that we want and control. We are continuing to build the pipeline. This takes time. This is relation based business. But this is also where we will spend quite a lot of time during the fall to continue to fill up interesting cases in the pipeline. We analyze our opportunities carefully. We will take a better safe than sorry approach. Rather say no than maybe and make sure that the companies that we do acquire when we do so will contribute with a well and carefully balanced risk on that. What we are aiming for where we look for profitable well-run entrepreneurial led companies in the current geographies. We currently do not see any need to expand beyond those seven countries we are present in. We look for product companies but we will of course also look for add-on acquisitions so these are more for standalone companies. and our ambition is to acquire 10 to 12 million SEK that's about 1 million euro EBITDA per year if the cases are right and the timing is right and our intention is to try to continue to do that with our own money meaning not to print any new shares And just wrapping up with the recap of the acquisition strategy that we previously communicated. We call it the layers of the onion that we are looking for acquisition opportunities both close to the body of existing businesses as well as in different layers going further and further out but still under the umbrella of digitalization of society. and the Aeon Tenos case is as we mentioned before a good example of where we enter a brand new segment but still within the digitalization and with the approach of a niched serial acquirer. So with that we thought we should just wrap up today's presentation and open up for any questions.

Yes, so we got one question here. So could you remind us about what share of network centers revenue comes from fiber and broadband?

We normally do not communicate the revenues per company, but we can say that they are fairly similar to what we normally present as a group. So 20 to 30% approximately.

And then we also got a question on how do you view the market turbulence in the upcoming months?

It's of course very hard to tell about the future, but we do see, given now that we are in the midst of August, so we are halfway through this quarter, the market is still turbulent and it's still challenging. Raw material is hard to find. Mainly the same challenges as we saw in Q2 are still in place.

And just to add on, as you mentioned, there is a balance as a distributor on the inventory levels and how to handle this market turbulence. So we see that at least for now on that continues in Q3 and let's not speculate on how long.

Let's see, but Q3 has started as turbulent as Q2 was.

We also got a question. Is there a level in terms of percentage of group revenues you seek to limit the group's data center exposure to? How much is too much?

It's a good question if there is any too much. I think it's rather to be very careful on their cases. So it's never good to end up in one customer or one segment. I think we have learned quite a bit from the broadband adventure, which was a great one. We made enormous amounts of money during a period of time. So the most important is to balance any trends like this, if it's broadband or data center, whatever comes after that, and not throw all the eggs in one basket. But to remember that structured cabling as well as broadband will continue to be there. We will not of course limit anyone to do business, but we need to be very careful of not exposing ourselves too much to a segment or a customer or a country or any niche.

And then a question on M&A and acquisition. So one is how is your current M&A pipeline and I can kind of combine that with how can you elaborate a bit more on the data center opportunities. How is your current M&A pipeline?

and we always want the pipeline to be longer and bigger but it's absolutely not empty we are all the time looking at the new companies and new opportunities and that's a never-ending work so I would say that the pipeline looks okay but I want it to be even even longer or bigger or broader whatever dimension you want to use but it's absolutely not empty

And then the next question was if we can elaborate more on the data center opportunities within the Nordics.

We can get with the macro trend. This is available information everywhere. But of course, the Nordics are attractive to invest in for larger data centers, also smaller ones, but especially the large ones. Because in the Nordics, there is a cooler climate, given that these data centers generate a lot of heat. and the electricity is fairly cheap and also sustainable with water and hydropower, wind power and so on. So this is on the macro level what attracts the big data centers to come to the Nordics.

And we also got a question on our focus model. How many of the group companies are within green, yellow and red?

And how has this developed? We have so far not presented the group companies and their position in the focus model, but we can say that they have all moved towards the right side since we started this or restarted to measure this one and a half year ago when I came on board. So there are more companies in the green, there are more in the yellow and there are less in the red.

And a bit on that subject, when will you reach 50% profit over working capital? If I remember correctly, a community, do you would reach this before reaching 10% EBITDA margin?

Yeah, that was a good memory there from the questioner. It's more of a philosophical discussion here that with the exposure that we have to distribution, distribution businesses are tricky to get to 10% EBITDA margin. So it's all about the speed that we acquire product companies with higher EBITDA margin. But as a distributor, you can work more with your working capital, which is why I or we said earlier that with the structure that we had then and still now, it will probably go faster to reach 50% profit working capital than 10% EBITDA margin. but we are not setting any time stamp or time limit to when. As fast as possible would be a good answer but it also takes time. So I prefer small incremental steps and improvements and to make sure that we actually stay there because our financial target says that we shall reach and maintain a profit or working capital of 50%. But it will take us years to get there.

And then again, one more market question. Can you discuss what you're seeing in the structured cabling market, both residential and commercial, industrial?

Structural cabling is our bread and butter and core business. It accounts for almost 50% of the group's total turnover. And structural cabling is almost like bread and butter. It's always needed. When you build a new house or you renovate something or you move an office or you build a school, you will need cabling. Not only electrical cabling, but also data cabling. and this is the core of the larger entities in the Alcanon Group. And we see this to continue to grow with 1, 2, maybe 3% per year just as community and the world as a whole grows.

Maybe we can just mention that in those areas as well, we've seen some projects being postponed due to the kind of the global turmoil and sometimes maybe lack of products, not within our niche, but in some other parts of that construction, which makes our deliveries also being postponed. But in general, underlying.

It's an underlying stable, not so sexy development, but it's there and it's a good base for our businesses.

Good. That was all the questions we got for today.

Very good. Thank you very much everyone for listening in and as always feel free to reach out if we can clarify something. Then we say thank you for today. Thank you. Have a good afternoon. Thank you.