Bufab AB (publ)

Good morning and good afternoon, everyone, and a warm welcome to Bufab's Q3 report. My name is Erik Lindén, President and CEO of Bufab Group, and together with me here today, I have my CFO, Marcus Herreberg. This presentation will be recorded, and by attending to the meeting, you will agree to the recording. I will start to take us through the highlights of the quarter, then I will leave the word over to Marcus for some financial highlights. After that, I will go through the performance in each of the regions before we sum up the quarter. Let's start with the Q3 highlights. I'm overall very pleased to report another strong quarter for Bufab. We've delivered strong organic growth and achieved significant improvements and record margins on both gross and operating margin. We continue to execute very well on our strategy with clear focus on value creation for our customers. We deliver a total growth of 16.6% with a strong organic growth of 6.5% driven by market share gains and the somewhat stronger underlying demand in the market. The demand was particularly strong in electronics, mechatronics, electrification, digital infrastructure, aerospace and defense. The gross margin improved by 1.6 percentage points, which is a record high 34.3%. This ended up into a strong adjusted operating margin of 15.6% and almost all our operating companies improved the results with particularly strong improvements for our sisters in Europe, West and Asia Pacific. I'm also very pleased with the start for DCIron, which we acquired at the beginning of the quarter. The company has developed very well at the early stage, but so far very good start and integration process is progressing according to plan. I will now leave the word over to Marcus for some financial highlights.

Thank you very much, Erik. And we start by turning to slide six in the presentation, looking at the growth. The growth trend continued in the third quarter. Net sales increased by 16.6% to 2,236 million SEK. Acquisitions meaning Novia in Q4 2025 and DCI run acquired in this quarter contributed to 9.5 percentage points out of the total. Currency had a slight positive impact with 0.7 percentage points and organic growth was strong 6.5% in the quarter. and by reporting a strong organic growth also in this quarter, we marked the fifth consecutive quarter of organic growth for the group. Order intake was in line with that sales. The organic growth was strongest in Asia Pacific as well as in Europe West, but also UK, Ireland as well as North and East also contribute to this. It's basically only Americas where we had negative organic growth and the reason for this is mainly due to one-time refunds of previously paid costume duties and as well as a slight lower demand within the RV and automotive markets. We turn to slide seven in the presentation where we see gross model development as well as OPEX development and The gross margin in the quarter, the margin reached record level of 34.3%, up 1.6 percentage points year on year. All regions improved their operating, their gross margin. The drivers remain the same basically as in the recent quarters, a better customer mix and product mix combined with more value-based pricing as well as some sourcing savings. OPEX amounted to 18.1% of sales. This was positively affected by revaluation of earnouts amounting to 20 million SEK, but we also have a negative impact of 7 million SEK in connection with transaction costs for these items at the beginning of the quarter. Adjusted for those items, OPEX ratio as percent of net sales was 18.7%, meaning a decrease of 0.2 percentage point year over year. So we continue to see good cost control as we grow. We turn page to slide 8 in the presentation, where we see the operating margin development. And I guess we can sum it up basically like this, that the strong top line growth that we saw in the quarter, the high gross margin and the good cost control in terms of OPEX resulted in a record high adjusted operating margin of 15.6% in the quarter compared to 14.2 last year. Adjusted the beta increased by strong 28% to 349 million SEK. Behind the increase, it's basically four of our five regions that improved their operating margin. Only America's not making a year-over-year increase, but they remained on a very solid or strong level of 20.8% despite the lower top line. We turn to slide nine in the presentation where we see the development of our cash flow in the quarter. And as you can see, cash flow from operating activities increased to 370 million SEK in the quarter compared to 293 last year. It's actually marked the strongest quarter so far in 2026. And the increase is mainly explained by what we already have talked about, meaning the improved underlying result. Working capital contributed slightly positive despite an to the organic growth we saw in the quarter. So strong organic cash flow generation despite strong organic growth. We turn to page 10 in the presentation where we see the development of our indebtedness, the net debt versus EBITDA. And net debt decreased by around 50 million SEK during the quarter to 3,444 million SEK, which includes leasing. and this was achieved despite the acquisition of DC Iron in the beginning of the quarter. Adjusted net debt versus EBITDA improved to 2.2 times from 2.4 at the end of the last quarter and it was also actually a year-over-year decrease with 0.1 percentage point also that when taking into consideration that we made quite a big acquisition in Q4 last year meaning Novia as well as the driven by increasing in underlying result together with the strong check flow that we have seen. With that said I'll leave the word over to Erik again to go through with the different regions.

Thanks Marcus and we will then start with the performance in region Europe North and East. Let's say it's increased by 3.2 percent in the region of which organic growth was 3.0 percent. several companies continue to develop very well in region particularly norway poland and hungary as well as boom max supported by strong market share gains the modern defense due to infrastructure electrification remain strong while construction and furniture industries remain on a low level the gross model developed very well increasing by 1.9 percentage points this was driven by improved customer product mix together with our continued focus on value-based selling The region's cost level increased mainly due to foreign exchange losses on operating receivables, somewhat higher obsolescence costs and also investments in growth. Despite this higher cost, the improvement in gross margin more than offset the high expense ratio. As a result, the operating margin improved to 15.6% compared with the 14.6% in the comparative quarter. If we then continue to Europe West, net sales increased by 39% during the quarter, with very strong organic growth of 14.2%. The acquisition of Norway Group contributed by 25.2%. The strong organic growth was driven by continued market share gains, improved product mix, and previously communicated larger projects, which are progressing according to plan. Looking at the demand we saw particular strengths in mechatronics, aerospace, electricity and defense. The gross margin increased by 2.4 percentage points driven by improved product mix and a higher value added from new projects. The operating expense ratio adjusted for the evaluation of continued purchase considerations of 20 million decreased to minus 12.8%. The improved operating expense ratio was direct result of strong operating leverage on additional volumes combined with the solid cost control in the region. All in all, this resulted in significant improvement in profitability with adjusted operating margin increasing to 15.4% compared to 12.7% in the comparative quarter. Finally, the recently acquired Norway Group delivered a stable performance in the quarter for Europe West. If we then continue with regional Americas, they had a total growth that was negative by 6.6%, of which organic growth was minus 8%. The negative organic growth was due to refunds of previously paid custom beauties, lower demand in the RV and automotive markets, and a strong comparative quarter. Adjusted for the refunded custom beauties, organic growth was minus 4.3%. Despite lower volumes, we saw a strong improvement in gross margin, which increased by 3.4 percentage points. This was primarily driven by a general price adjustments and our continued successful efforts to improve profitability within the CSG group in the US. The lower organic growth also resulted in somewhat high cost level relative to sales. together with somewhat high obsolescence cost for the region. Overall, the adjusted operating margin remained at a strong level of 20.8% compared to 22.2% in the comparative quarter. Continue then with the region UK Island. Net sales grew strongly by 20.2%, while organic growth was solid 5.4%. DC Aeron acquired at the beginning of July contributed with 13.4 percent to the sales development for the region. Timco continued to deliver robust sales despite the week's construction market while rising stainless steel prices supported a slightly improvement for Apex. We also saw strong improvements in gross volume up 2.4 percentage points year on year. This affected a better customer product mix, higher price on stainless steel prices and the addition of DC iron which has a somewhat higher gross margin than the rest of the companies in the region. The cost level was somewhat higher reflecting transaction costs for the acquisition of NOVIA sorry for this iron adjusted for this cost operating expense ratio was 22.1 percent compared with 22.6 percent in a competitive period. Altogether, this resulted in a strong improvement in the adjusted operating margin, reaching 13.8% compared to 10.7 in comparative quarter. Then finally, Asia-Pacific, we saw very strong growth in the region, with total growth of 22% and organic growth of 28.4%. The development was particularly strong in BIFAB Shanghai and BIFAB India, driven mainly by continuous strong growth within energy industrial automation solutions. Growth monitoring also improved significantly by 6.0 percentage points, reflecting continued value-based pricing, a better customer-product mix, and also purchasing savings. At the same time, the higher volumes provide a strong operating leverage combined with continued good cost control and altogether this drove a substantial improvement in profitability reaching an operating margin of 21.1% compared to 14.3% in the comparative quarter. I will then go through two group news and I will start with the customer case and today I will talk about our customer Knorre Bremsen. Knorre Bremsen is a market leader within rail and commercial vehicle braking systems with operations in more than 100 locations globally. They have a broad product portfolio and a relative complex C-parts and technical components requirements within their operation. When KB started to interact with Bufab, they had a clear mission to consolidate their broad supply base and to lower the total cost. We at Bufab saw in early stage a big opportunity to support KB on their journey and create peace of mind within the C-parts and technical components space. Today we support KB with end-to-end solutions covering sourcing, quality, sustainability and logistics. And we create clear value through tailor-made solutions that suits KB's needs on each site. We are today one of KB's three strategic global distributors supporting more than 30 sites in total with big opportunities for further growth into new commodities and also to more sites globally. So hopefully it's the starting point with the growth yearning together with Claude Bremse. I would also like to take the opportunity to welcome you all to Bufab's Capital Markets Day that will take place in Stockholm on December 10th. Please register by sending an email to Sofie Unisjö at Byfab. I hope to see you all in Stockholm in the beginning of December. Finally, I will end this call by summing up the quarter and say a few words about the priorities ahead. To sum up, I'm overall very pleased with the performance in the quarter. We delivered a strong organic growth of 6.5% and record high gross and operating margin. We have now seen strong year-on-year development in our gross margin for 13 consecutive quarters, and we expect the gross margin to continue to improve during the rest of the year. Looking at the market, the EU political uncertainty remains, but we saw some improvements in the market during the quarter. We also see somewhat higher purchasing prices from Asia that we will of course handle as we normally do in Bufab in a good way. Looking ahead, our priorities remain the same. We will continue to execute our strategy. take the opportunity to gain market share, gradually improving our margins, and have good control of our cost base. And of course, delivering a solid cash flow. We'll focus to continue our value journey. We'll clear focus on improving our customers' product, improving for our customers, and also improving our product mix, and also continue our work with implementing value-based pricing organization. Overall, we have a very strong momentum in the organization, and I think we're very well positioned for the coming years to serve our customers in an even better way. That was my final slide for today, and I will now leave the floor open for Q&A. Please.