Balco Group AB

Hello and welcome to today's webcast where Balco Group will present its financial results for the second quarter of 2026. Joining us today are Acting Group CEO Johan Dyrberg and Viktor Arvidsson, CFO and Head of Investor Relations. You are welcome to submit questions using the form located to the right of the webcast. If you have joined by phone and would like to ask a question, please press star nine to raise your hand. And when you're invited to speak, press star six to unmute your line. With that, I will hand over to you, Johan and Victor. Please go ahead.

Thank you very much. So good afternoon, everybody. Welcome to this Q2 report. So, yeah, I think we can... Step right into it, Victor, please. First, a snapshot of Balco Group. I think it's interesting for everybody. You probably know this already, but 85% of our market is in the Nordics. We have about 15% of our revenue in some other European countries. The Group was founded in 87 and have a couple of subsidiaries. The offering is really, we're pretty complete, especially in the Nordic markets when it comes to different type of balcony solutions. And we keep them apart in general, two different renovation and a new build. The market, we are market leaders. And we have also, especially in the Nordics, and we have a small position, penetration in Germany and UK, where we have a challenger position. Yeah, I think we can move on from there. So, order intake. We had a good order intake. It was good. The business is there. We have a backlog of up 18% versus Q2 last year. We have weak operating cash flow this year. We think our cash position is pretty normalized at this point. Net sales increased by 12%. And we have an improved operating profit, but it's still so low level. So we'll talk more about that. We have initiated a project to address this, which I'll get back to a little bit more. So Barco Group has through its subsidiaries, we feel we have a very strong market position. We're known to deliver high quality solutions with different segments and markets where we together as a group are active. The market has been really tough the last couple of years, but we see signs of recovery, mainly in the renovation segment. Not very strong, but we see recovery. But what I think is important now, since two months, I've been here a little bit more than two months, focus is really to adapt the group to the current market situation and also better utilize the strength the group has as a group and focus 100% on profitability. then of course down the road also profitable growth going forward. We have an action plan in place. We're still investigating and I hope to come back to discuss. No, I don't hope I will come back and discuss more and describe more of that in Q3. We have had a very constructive dialogue with our principal bank, which has resulted in a supplementary agreement that will provide the conditions we need for us to return to sustainable, profitable growth. Please, Victor.

Okay, so if we look at the financials in the quarter, net sales amounted to 370 million SEK versus 331 last year, with an organic growth of 11% and more or less no currency effect. The adjusted operating result amounted to 12 million SEK versus 6 million last year, corresponding to an adjusted EBITDA margin of 3.2% versus 1.9 last year. The order intake, as Johan mentioned, was strong. It amounted to 600 million SEK versus 519 last year. The order backlog increased by 18% to 1,693,000 versus 1,439,000 last year. The adjusted earnings per share amounted to 0.21 SEK versus 0.01 last year, and the earnings per share amounted to minus 0.07 SEK versus zero last year. The operating cash flow amounted to minus 62 million SEK versus negative 30 last year. If we look at the different segments, starting with the renovation segment, the net sales amounted to 274 million SEK in the quarter versus 253 last year. That corresponds to 74% of the total net sales. The order intake in the quarter amounted to 474 million SEK versus 386 last year, corresponding to 79% of the total order intake. Adjusted operating result in the quarter amounted to 6 million SIC, which is the same as last year, corresponding to an adjusted operating margin of 2.3% versus 2.4% last year. The order backlog amounted to 1,220,000,000 SIC versus 1,134,000,000 last year. That corresponds to 72% of the total order backlog. Turning to the new built segment, the net sales in the quarter was 96 million SEK versus 78 last year, corresponding to 26% of total net sales. Order intake amounted to 126 million versus 133 last year, corresponding to 21% of the total order intake. Adjusted operating result in the quarter was 5 million versus 1 million last year. That corresponds to an adjusted operating margin of 5.3% versus 0.8 last year. The order backlog amounted to 473.6 versus 305 last year, corresponding to 28% of the total order backlog. If we look at the financial positions, we had at the end of the quarter an equity amounting to $738.6 million versus $753 million, same period last year, with an equity asset ratio of 44%, down 1% versus last year. The interest bearing net debt, including leasing debt in relation to adjusted EBITDA amounted to 6.2 times versus 5.6 the same period last year. And as Johan mentioned, we have signed a supplementary bank agreement that runs until the first quarter of 2028 and our covenants are within this agreement. I hand back to you, Johan.

Oh, thank you. So concluding remark is really what I started with. We're a strong group. We have a lot of potential right now. It's about really making the order book turn into EBIT and focus 100% on probability. And we have a good action plan to do so. And I look forward to present more the results of that plan during Q3. So please, I think that's what we have and we're very open to answer any questions you have.

Thank you for that presentation. Now we will open up for a Q&A session and let's start with some written questions. Do the temporary loan concessions remain in effect through the third quarter of 2027?

Yes, they do. The target levels are gradually increasing, but they are until third quarter 27. Yes.

Great. What is your outlook for demand for balcony and facade renovation projects during the remainder of 2026? I think the market is

cashing up a little bit. I think we have been on the bottom. I don't I don't foresee that it's going to be a tremendous change. But it's not going to be the market is not going to be against us. I think it's going to be gradually improving from where we are today.

Yes. And can you talk more about the various markets and where you see improvements?

You can see the renovation side starts picking up. The new build is still very, very slow, and we don't foresee the new build coming back very soon. But renovation starts picking up a little bit from low levels, but it's picking up.

Yes, let's move on to this question. Which business segment and geographical market does the marine business belong to?

The marine business actually is based in the Swedish operations.

All right. And how much revenue did the marine business generate in Q2 and what level do you expect in Q3?

The marine business is a very long-term business and it fluctuates very much between the quarters and we don't comment on each quarter in the marine.

Operating cash flow was negative 62 million SEC in the quarter. How much of this was purely related to timing effects? and should investors expect a significant reversal during the second half of the year?

We don't answer how much the effect was in the quarter, but as Johan mentioned before, the cash position is on a normalized level now, so we don't expect any bounce back from that regard in the second half of the year.

Yes, let's move on. You had a strong order intake in Q2. Can you elaborate some on what sort of projects and geographies? Is it broad based on concentrated on a few smaller or on a few smaller?

Well, we did announce that we took a big project, Stensa, about 100 million this year that of course affected the order intake during the quarter. Pretty big. That's my answer to that.

Yes, thank you. All right, we got this one. The renovation segments order intake increased by 23%, but it's just that EBITDA remained broadly unchanged at 2.3%. What is preventing the stronger order intake from translating into higher margins?

That's exactly what we're going through right now. Understanding and putting up our plans for I mean, we have hundreds, as I said before, we have very strong focus on on actually delivering increasing profitability. And that's that's about like to get back to more more detailed answers on that during Q3.

Yes, unless there is no one who has joined by phone and would like to ask a question. If you do, please press star nine to raise your hand. And when you're invited to speak, press star six. That was our last question. I will give you some time if any of the phoners would like to raise a question. All right, that was it looks like the final question for today. So we will conclude today's conference call with that. I would like to extend my sincere thanks to Johan and Victor for the presentation, as well as everyone who submitted questions and joined today's webcast. I wish you all a pleasant rest of the day.

Thank you. Thank you very much. And thanks for listening in.