Alligo AB (publ)

Q1 report 2025. The presenters, as always, will be Irene Winsterborn-Balander, our CFO, and myself. And as usually, we will focus on the highlights. It's a report busy today and yesterday, so we'll keep the speed up and focus on the relevant things. This time we will bring up, you know, we normally take up a couple of themes and this time will be one growth area, which is Recare, which is being launched right now. And then we'll touch upon the turnaround project in Finland. So this is Aligo, 9.4 billion SEC turnover, 2500 employees and 243 stores, the number of stores as increased quite a bit thanks to the acquisition of the battery lager that added 27 new stores to our group. As you know, Sweden heavy in turnover, even more Sweden heavy in results and own brands as it looks 18%. But as you know, the more companies we buy, which mathematically will have zero own brands when we acquire them, will mathematically reduce the share of own brands into our group. We increase sales of own brands, but that is a mathematical effect when we add companies to our group. So if we take the two different models we work with, we have the integrated business with a brand in Sweden, the tools brand in Norway and Finland, and that business, our group as such is 48% through stores. 39% of direct sales and 13% of the non-integrated companies. So we believe in this scalable platform with Nordic functions, shared functions. It could be purchasing, procurement, logistics, finance, and so forth. And that's a scalable platform. But when the market is shrinking, it's difficult also to reduce in a similar way as the volumes is going down. So it's a brilliant upside when business is going up, but it's also more challenging when business is going down. But we have this scalable platform, and now all the pieces are in place. So to touch upon the non-integrated companies a little bit, we have this group of product media businesses, 13 to the number, half a billion second turnover. We have the welding, as you know, another competence area, technical area, six. companies with 400 million in turnover. Battery, we sell battery in the integrated channel as well, but we also acquired Batterilagret, adding some 275 million to our turnover. And then we have other areas. Markus is the one standalone workwear business. These two in Finland, HTP and RTP, I'm not even trying to pronounce it in Finnish, added 175 million to our turnover. And then we have five other businesses which are a bit separate, some of which could be included into the integrated channel at the later stage. So last year, nine signed acquisitions, added 42 stores. We acquired a growth of 4.5%, 200 employees, 750 million in turnover. And we're especially happy that we could add some competent areas in battery and in welding. So we really took the grip of the welding business and also have a nice footprint now in battery. Highlights, still a bit annoyingly slow development in the market and things which is happening around us is not perhaps pushing the turn to come quicker. So we've still been facing Some weak demands in Sweden. Norway, still the same story as always. Oil and gas is progressing nicely. We see some improvements in Finland. And we see positive market signals. We see more and more things which are in favor for us. The upcoming rotavdraget in Sweden. Interest rates are coming down. The dollar coming down is positive for us. The trade tariff war. opens up opportunities for us. So there are many things which is pointing in the right direction. But as of now, we don't really see it in the figures. But we can also say that we continue to be very prudent in which project and which customers we do take. So we want to safeguard the gross margin and not starting to go for volumes and affecting our gross margin. So that is also offsetting a organic growth potentially to a certain extent. We think we are doing a pretty good job. Despite all in the management team, we are focusing a lot on sales. We have during the quarter identified, initiated and finalized a cost reduction program, which will add or reduce 100 million SEK to the cost base at the end of the year. We've been focusing on growth by acquisitions. We are heavily focusing on inventories, even if we are adding more of own brands which has a negative effect on the cash flow so generally we're focusing on our inventory situation and price adjustments trying to adjust this market situation we are in we have a good delivery capacity Sweden and Finland since before and Vestby has now been stabilized and in much better shape more to be done but it's absolutely good enough Well, the macroeconomic factors, you can read any magazine or anything on the web. It is what it is. But we have not been, we don't sell products from the US. We import a lot from China and we sell to the Nordics. So from our perspective, this is actually not negatively impacting us. If anything, it should positively affect us going forward. So first quarter in brief growth by 2.5%. As I said, oil and gas in Norway is still stable. Irritatingly enough, still negative organic growth. So the gross revenue growth we see is acquisition driven. Cash flow of minus 38 million, more or less on the same level it was 2022. Then we had 2023 and 2024. in between when we reduced stock levels at this time of the year, heading into slower markets. So that is also a little bit of effect there. We have an adjusted EBITDA of 74 to compare with 84 last year, one trading day less, which ends up in an EBITDA margin of 3.3. And the gross margin is in line with what it was last year. If we adjust for the acquisitions made, they have a good net margin, the acquisitions, but in most cases they have a lower gross margin. So when you add those volumes to us, we have a little bit of an effect on the group gross margin. So it's stable. Highlights, focused on sales. Haven't they said that for a long time at Aligo? Yes, of course we've had, but we also had things ahead of us we needed to fix first. Vespri in Norway, Jeeves in Norway, know all the other grips we have done throughout the years but from now on we do not have many other excuses it's brutal focus on on sales we launched recare i hope you've seen it in press and other places which will be interesting to follow and the 1832 is a it's a super powerful weapon to for those customers who are more price sensitive battery logger we mentioned we can skip that and the additional cost program we have launched of 100 million SEC is already closed and done so it's not just a wait for the cost run out. ERP implementation in Norway has gone well as you know but a little bit of a hiccup during the quarter when it comes to the actual invoicing to make sure that people do the right thing. The sales person should mark an order it's ready to be invoiced And the finance function should do their part. And that process had some hiccup. So we've had an unnecessarily effect on the cash flow based on that. And the TTA, as we call it, the turnaround project for Finland, it started up and ongoing. So a little bit on prioritized growth areas. I think we've shown this picture before. We say we focus on services, focus on our store sales. We have a special focus on one customer segment, which being construction industry. we focus on own brands. So if we take the services part with Recare, it's now, we mentioned it many times, but it's now launched and we have a team working with it visiting customers and we feel it's a super competitive offer at a lower price point for the customers We already signed some 5-10 contracts. We have a good pipeline of customers coming in. And now we need to fine tune it in Sweden and make it up and running. And then it will be launched in the second half of 2025 in Norway and Finland. Our Norwegian and Finnish colleagues are eagerly waiting to launch this. Of course, it's a little bit of a process to setting up with the laundry service, sewing and repair, reuse, and then the whole process around. It takes a little bit. We need to do it in a structured way. But it's now in the market and we are marketing it and selling it. Tools turnaround project, as you've seen, it's not a new thing. It's an old problem we've been fighting with. It's the tools part of the Finnish organization has. has a profitability level which will not assist in bringing us to the 10% EBITDA margin we've set for the group as our strategic target. So we need to address it. Nobody's been able to fix it in the past. We for sure have taken the challenge and said we will be the ones that fix it. We're closing shops. We are reducing cost. We are looking at the customer base. Are we over-servicing some customers? Do we have unprofitable customers? And could we find new customers that appreciate the offer we have? So Finland, in order to contribute to our group target, needs to be on 6%, 7%, 8% EBITDA level. That is not the tools business as such. It would be enough if it is a little bit above 5%. So it's not that we... we try to achieve something totally impossible. So if the tools business is about 5%, then we can make the finish part of our organization profitable enough to add to the big puzzle of the whole illegal group. A little bit lower, substantially lower, own brand part, 11%, and only 27% in store sales. So you know that we are focusing on increasing the share of own brand and increasing the number of small and medium-sized customers, i.e. store sales. Financials, Irene.

Yes, thank you. As Clay mentioned, the trend scene throughout 2024 continued into Q1, and we have further reduced the cost base while focusing on sales. Revenue increased by 2.9% in the quarter, driven by a 7.8% growth from acquisitions, but contracted by a negative organic growth of 2.5%, one trade a day less, and FX effect. The organic sales development was weakest in Sweden, while Norway continued to be favored by a strong oil and gas sector, and sales to Finland have recovered, although from low comparables last year. EBITDA reached 74 million, a decline from 84 million last year, And the result was weaker due to one trading day less, weaker demand for the integrated business in Sweden and Finland, and a decreased gross margin in Norway. Acquired results and cost savings have partially offset the declining gross profit as illustrated in the EBT bridge. And as you can see, the cost reductions have balanced the annual salary increases and the inflation effects. related to other expenses. And furthermore, as Cain mentioned, we have initiated an additional cost-saving program to reduce the cost base by approximately 100 million SEK with a gradual impact starting from mid-year. And you recognize this picture as well. And as you can see, Sweden has the highest shares of SMEs and own brands, followed by Norway, while Finland has the lowest. And this directly correlates with profitability in each market. The higher the shares, the greater the profitability. The integrated business in Sweden faced challenges in 2024, as the wheat market primarily impacted small and mid-sized customers. However, the decline related to SMEs is now less significant, partly due to low comparable, and the share of SMEs has increased from 65 to 70 percent in the quarter. In addition, the share of own brands in Sweden has increased from 26 to 28 percent of sales of our own brands since the main part derived from this channel. And the share of SMEs and own brands has improved slightly as you can see in Finland and Norway. The gross margin decreased slightly in the quarter, driven by negative country mix and the higher share of acquisitions with lower gross margin, and also a continued positive sales trend within oil and gas in Norway. However, this was somewhat offset by Sweden's increased share of SMEs, which positively impacted the gross margin in Q1. Moving on to some highlights of each market development in Q1. And the market remained weak in Sweden, with organic growth declining by approximately 7%. And the decrease is primarily related to larger industrial customers and the reduction in one-off orders within the public sector, implying a more favorable shifting customer mix and an improved gross margin. Cost savings and acquired results have a positive impact on the overall outcome, but they cannot fully offset the weak organic sales. The oil and gas market has remained strong in Norway, as said earlier, but the sales have also suffered from the EOT change in this quarter. And the result is behind last year due to a slight drop in gross margin. And there was a sales recovery in Finland. However, it was from weak comparables. While our recent acquisitions have contributed positively to the results, the old school's business is still struggling. And as Clayne mentioned, the project initiated in Q4 to reverse the negative profitability trend is progressing, but it will take some time. Operating cash flow was lower than last year because of reduced EPIC-DA and inventory build-up of our own brands and temporary challenges in the invoicing process related to the EOP change in Norway. The investing activities primarily relate to the completed acquisition of the largest acquisition to date. And the organic investments have been reprioritized in favor of acquisitions and are lower than last year. And the capex to depreciation ratio was 0.9, which aligns with our long-term target level. If we look into the financing activities that relates to the amortization of leasing liabilities, and the increased utilization of our credit facilities explained last year's positive cash flow from financing activities. The net theft at year end was 2 billion SEK, an increase from last year due to higher acquisition pace and decreased operating cash flow. And the ratio of net theft to EBITDA was a multiple of 2.9, while 2.7 was reported to Handelsbanken as we can consider the full year expected profit from the asset ratio. The ratio is higher than last year and year-round due to a combination of lower EBITDA and increased net debt. Our covenants relate to interest coverage and equity asset ratios, and they are fulfilled at the end of the period and there is still good headroom before reaching the threshold. And despite the increased leverage, we maintain a solid financial position. Leverage remains within the financial target range and will decrease gradually. Handing it over to you, Clem.

Thank you, Eliane. Summary and outlook. And then Q125 in summary, increasingly focused on sales and launching.