Careium AB (Publ)

Carium have released their report for the first quarter of 2026. And I welcome you to this live broadcasted presentation. Presenting is Interim CEO Peter Hojman and CFO David Granat. After the presentation, there will be a Q&A where you investors can ask your questions in the live chat. And I will raise them during the Q&A. And we are also in company of two equity analysts that will ask their questions. Welcome, Peter and David.

Thank you.

Thank you. And before the presentations presentation starts in brief, Peter, what have characterized the first quarter of twenty twenty six?

But I would say that, as you can see in the report, I think we have an underlying strong growth in the first quarter of the year and then taking into consideration our earlier communicated initiatives that we are focused on some modernization internally. I think the combination of doing all these efforts as well as at the same time providing very decent underlying growth, I think that would be the main summary and characteristics of the quarter.

Okay, thank you so much. And by that, please go ahead with your presentation.

All right. Thank you. But then if we go to the next slide. Which should be the quarterly highlight slide, I guess. Here we go. Yeah, like I said, Carium provides for the first quarter of 2026 an underlying adjusted growth with over 10%, almost 11%. So we end up on almost 220 million SEC. I think that's a strong statement. You can see that we are growing both related to our services sales and to our product sales. As earlier communicated, we are running some initiatives internally to improve, maybe you can say a little bit of short-term pain for a long-term gain. But still doing that, I think we are delivering decent gross margins, being aware of this, also decent profitability. And in the quarter, it was announced that permanent CEO Tove Kristofsson will join here in a little bit more than a month starting 1st of June. So I think that will be the highlights for the quarter. So we can go to the next slide. And then I will talk a little bit about the sales. And I will continue to give you a little bit of insight and brief in more detail about the different markets before I hand over to David, who will provide you a little bit more guidance on the profitability and cash flow. But starting with the sales related, as we started off, underlying almost 11% growth. It's very close to 220 million in the first quarter. So I think we have a good momentum from a sales perspective. You see that both our service sales are increasing to 164 million approximately, but we also have almost 20% growth in our product-related sales. This is mainly driven by some of our, we call them other markets, but also the activity on the analog-to-digital switch from the UK. And I will come back to that. Gross margin, I would say, is somewhat in the region of historic levels, about 40% there. So overall, adjusted for some of the currency, 220 million and almost 11% growth in the quarter. So with that, we can go to the next slide, and I will try to guide you a little bit from some of our different markets that Carium is reporting on. So if we start with some of the larger areas, as you can see, the Nordics and UK, this is a large portion of Carriol's total revenue. And it's also where we have our own alarm centers, et cetera, in those markets. If we start with the Nordics, you see that services sales is up. So it's a good growth driven by the Nordic countries. And it's driven by also some large contracts that we have historically talked about from Norway. I don't know if someone needs to mute or... All right. Product sales around 5 million gross margin decreasing somewhat. But it has to do with the upfront loading of some long term fairly new contracts in Norway. So I think overall a good growth and decent profitability in the Nordic region. If we go to UK. It's a little bit more complicated. As you have probably seen in the report, and I know that some of you are following Karin, there were some accruals and things done last year for the corresponding quarter. That makes it a little bit challenging to compare. However, there is growth also in the UK. We are growing primarily the product sales. but we have also and we are quarter on quarter growing the business also in the service area and in the report you have seen that we have recently won and we have new services contracts that will start to con contribute with around three million additional revenue per quarter starting from quarter two so i think uh overall uh we see start to see some traction on the a2d switch in uk We are also seeing good momentum in that product-related sales. But as well, even though it's in the report a little bit difficult to compare, we have underlying good traction in our service business. And these are, like I said, the largest markets, so it's good to keep an eye on. But we can go to the next slide and some of the smaller markets. But having said that they are maybe somewhat smaller in comparison, On this slide, as you can see, these are also our high margin gross margin markets. The Netherlands on a yearly revenue around 100 million. You see in the quarter, 24 million. And you can see that we provide a very solid gross margin. So this Netherlands is providing a very good profitability for the caring group. If we go to other markets, we have also here very attractive gross margins, so good profit generation from the other markets. They are smaller. They are fairly product-oriented, so there can be a little bit of volatility between the quarters, but I believe they are also showing some good momentum with decent growth. I think that's kind of the quick summary and a little bit of more insight into the markets. And I'm pretty sure with that, we are going to go to the next slide and then David will provide a little bit more insight. So, David.

Well, thank you, Peter. And as you said, now an update on the profitability for the first quarter. EBITDA amounted to 30 million compared to 34 for the same period last year, reaching an EBITDA margin of 13.7%. EBIT amounted to 30 million in the third quarter compared to 17 million last year, giving an EBIT margin of 5.7%. We see increased net sales that has a positive contribution to gross profit. However, we do have a higher cost base due to investments in structural improvement initiatives that Peter mentioned before. That has an impact on the EBIT in totality. Note that last year included a one-time accrual in the UK impacting overall profitability. Adjusted for this, we see that gross margin EBIT and EBITDA increased in this quarter compared to last year. Profit for the period was 8.4 million and 7.5 million last year. With that, moving on to the cash flow and the next slide. Cash flow from operating activities amounted to 7 million in the first quarter compared to 90 million for the same period in 2025. The lower cash flow from operating activities is mainly driven by build-up of working capital to more normalized levels in the quarter. Cash flow from investing activities amounted to 21 million in the period compared to 24 last year. As a result of this, free cash flow decreased 40 million in the quarter compared to a decrease of 4 million in the same period last year. Cash was 38 million and net debt was 170 million at the end of the quarter. And with that, I hand over to Peter for some quarterly summary and concluding remarks.

Right. Thank you, David. So we can go to the next slide. Here we go. Yeah. So if we try to summarize a little bit like I started this presentation, I think. We see that Karin provides a solid growth with almost 11% underlying. We are growing the product sales. We are growing the services sales. Profitability is decent considering that we are investing in those internal initiatives. So I think in that perspective, positive development in quarter one. If you look at and talk a little bit about some of the challenges that you can potentially see in the report, then it's that we are a little bit hampered by some of these early investments in positively large Norwegian contracts, but they are a little bit upfront cost heavy for us. We need to invest into these customers, but it's long-term contracts, but that's going to influence us short-term. We have also a somewhat higher cost structure that, like we have communicated earlier, that during quarter one and quarter two, we're probably going to uphold that slightly higher cost level. And that's what you can see in the report. And that might also influence the cash flow a little bit. And considering that we had a very good cash flow in quarter four, it's somewhat lower this quarter. So that's maybe some of the challenges. Now, for the quarter, if we look ahead, Maybe I should start from the bottom since we have a new appointed permanent CEO starting 1st of June. What I'm going to do here during the last couple of weeks or months is, of course, to be part of trying to make as good handover as possible to the new CEO. And that part of that is, of course, to introduce and the documentation and part of the organization that's working on all these initiatives so that could keep its momentum that the organization is doing very well. It's also to keep a focus on, like I alluded to earlier here today, on the continued focus for Carium of the analog to digital switch, for example, in UK, because that could be a positive development for Carium. You might have seen some news as well this week related to our Nordic operation and the Swedish operation related to the ADDA framework. And what has happened there is very much correct. ADDA is called in Swedish like an award intention. So a certain number of suppliers have received an award intention letter from ADDA. But there is a, it's called an avtalsperre in Swedish. I'm not sure about the, like a grace period until actually today, the 23rd of April. That means that none of these suppliers have, no one has signed an agreement with Ada. That can only happen after the 23rd of April. Now, you can consider whether Carium is one of the companies who have received this award intention letter. And yes, that's correct. But we have not signed a frame agreement yet. We have not been able to do that. No one has done that. As soon as we sign... The frame agreement, which is now more likely, then we are going to communicate that to the market so you can feel comfortable that Carium has signed the contract. And as other communicate on their website, they at least have the ambition that they should go live from approximately 15 on May. So that tells me that most probably these award intended suppliers will try to sign the frame agreements between 23rd of April until the 15th of May. And as soon as we sign a contract frame agreement with ADA, we will let the market know and everyone know. I think that's what we kind of had today as concluding remarks. So maybe we should open up for questions.

Okay, thank you so much, Peter and David. Looks like you are well positioned for 2026, the rest of it. And by that, let me welcome Alice Baer. She is equity analyst at ABG Sundahl Collier. Please, Alice, go ahead with your questions.

Good morning, everyone. Thank you for taking my questions. So starting off just first on Norway, you mentioned upfront costs and margin pressure from onboarding this large Norwegian customer. Could you do a question, I guess, could you firstly quantify the one of costs associated with this? And at what point does this customer become margin accretive? And then also, what does the steady state sales and margin contribution look like once fully onboarded? And how does the contract structure compare to your typical Nordic bundled agreement?

A lot of questions there. I mean, we don't comment exactly on the numbers as we have not decided to. It's more explaining why the margins in the Nordic looks like they do right now. What we can say is that we... almost done there is some kind of lagging cost so we expect the more one-off related cost to kind of go down here so I would say the Q2 is the last quarter where we will see effect of that that is mainly the big and it's related to that we go out to all the user so to say and put out new products replace the old products and put in new products so it's a one-time thing that we do once in the start of the contract that's why it's a little bit capital heavy in the beginning okay thanks for that color moving on then we've talked

quite a lot about R&D spend and we know it's up and you've flagged for this, but could you be specific about what's being built and what's the expected capitalization versus expensive split going to look like going forward? When can we expect these investments to translate either to new revenue or measurable cost efficiencies? Could you just expand on the actual R&D plan?

I can expand a little bit on what we're actually doing, and then I'll let David tell you a little bit more, depending on what he is willing to tell you related to CapEx, OpEx, etc. But like we wrote, I think, in the quarter four report, some of the initiatives has to do with, you can see, I would say like this, you know, Carium is a rather... rather young company a little bit more than four years ago there was a lot of fragmented acquired operations and with some different operational models business models etc but they are all depending on the technology what we are working on right now is to make sure that the software that is actually catering for for connecting our hardwares with alarm centers etc that we can run that in all markets in a very efficient way you can consider for example activation of products provisioning of products if the better we can do that with modern technology and do that in the same way in all markets then you can run your business in a much more efficient way that's one positive from a financial operational perspective but probably also gonna improve the customer offering and the ease of use for the end user we are serving you know our customers are many times the municipalities or care companies but the end user is actually elderly people the easier we can make it for them and the more efficient we can run our operation This is kind of the whole intent with a lot of that tech development modernization. So it's actually how we can build the software a little bit smarter, utilize modern equipment and tools to enable this throughout all the operations of Carrius. So that's what we put in some of these initiatives and more related to software and R&D. So, a little bit Alice, again, a little bit of short-term pain. And I think that's what I mean is strong with this report. We do all this work and my hope is and the intention is that we should long-term get some very good both user benefits as well as a more efficient operation.

Okay, thank you, perfect. And moving on then, I guess this might be hard to answer, but just could you give us a framework of thinking about where normalized margins should land? I mean, is mid to high single-digit EBIT long-term right through the cycle target, or should we be thinking higher with more scale, or sort of just could we get any color on both timing and some sort of actual figure for where you aspire to be?

Now David will be afraid that I will state something here since it's obvious that I'm leaving, so I think I will hand it over to David.

We've decided that we don't communicate any financial targets for 2026. We try to kind of put it into words in the quarterly report, and we will continue to do that. We, as Peter mentioned, we're doing some initiatives right now, and we definitely see, as Peter mentioned, that we can gain both cost savings and efficiency improvements going forward. So with that said, we definitely see that we can have higher margins that we have today than we have today.

Okay, fair. You mentioned possibilities for M&A. Given the current debt and cash flow situation, what is your realistic M&A capacity? How do you think about the right leverage ceiling when you're simultaneously investing heavily in organic growth?

I would say we are well positioned. I would say we have sufficient cash. I think we are at the healthy level right now. If we can generate some more cash flow, we can lower the net debt as well. We could facilitate smaller acquisitions. If we do a bigger one, I would probably say that we look at other sources of financing.

Okay, perfect. And just a final question for me. You added roughly, I think it was about 16,000 connections in the quarter. It was very strong in the Nordics as well. But service revenue growth was about 2.3%. And that's what I love that. I mean, when you think about revenue per connection, is that falling? And could you explain this dynamic as a mix shift towards lower RPO contracts or sort of what's happening on that side? How should we think about it?

I would say that as a growth percentage it's hard to compare that's why we're noting a little bit that last year there was a one-off in the UK for the service business so like UK for example adjusting for that we did have growth on the service sales so it's a little bit hard to compare year over year on that term i think it will be easier to understand now that we don't have the full financial lease effect either so like quarter on quarter now it will be probably much easier to understand okay perfect that was it for me

Thank you so much, Alice, for your participation. And by that, we are moving over to equity analyst from the bank SEB, Fredrik Reuterhall. Please welcome with your questions.

Thank you. Good morning, Peter and David. Good morning. So I just want to do a follow-up first from a question of Alice. The initiatives that you launched last quarter, how many quarters are left in that, would you say? I mean, I understand it's, you know, continuously progress, but are you done like 50% or can you talk more about that?

I would do that in a little bit, even though my time here is limited. But I have initiated them, Fredrik. So I would say, as we have communicated, the main part of the cost here, as we have so far communicated, is quarter one and quarter two. Some of these initiatives are going to take a little bit longer. But, I mean, what we have communicated is that... The somewhat higher spending on it, related to it, is mainly for quarter one, quarter two.

Okay. And I would say that, as Peter mentioned before, I would say the initiatives, and it could be within R&D and so on, it's about also gaining efficiencies in the organization. So it's more efficiencies will follow on the initiatives.

Okay, and I guess I mean, of course, it's going to be eternal efficiency, but would we see it in, you know, the margins as well? Or is this more like more efficient than you can, you know, cut costs within the company?

Yeah, but like I said, Fredrik, it's a combination here of doing some of these initiatives will make Carium, a more European unified company that's going to be able to run in a more efficient way. There you go. That sounds like margins have potential in a positive direction. We need to invest a little bit to secure this. And I think that's what we try to say in the report. We are now working on it. We have communicated. We're going to have somewhat higher cost levels in quarter one, quarter two. You should not calculate that all the benefits from this, some of them, you know, that might take 12 months, 18 months. Some of it, it's going to get probably, most probably somewhat better and better over time. And so far, we have just said that the main part of the cost related to this is related to quarter one and quarter two of 2026.

Okay, I've got it. The Nordics was very strong, and I assume it's back of Norway. And would you say the large order there for Ask and Iberium is fully up and running now? Yeah.

Okay, that's good. Like David said before, I think you said that we are still investing, initially upfront investing with the customer, also during quarter two. From there, we should have an up and running long-term contract.

We have the full sales, but we do have a higher cost base than we will have going forward in the quarter.

And then I have some more general questions. First, on average for your customers in the Nordics, how many years would you say they are on a contract? It's like three to five years or shorter?

You were cut off a little bit in the beginning, so can you repeat?

Sorry, yeah. I have a question on the average customers in the Nordics. How many years are they on a contract?

It's very different between Sweden and Norway, I would say. So in Sweden, I would say four to five years, if you can correct me if I'm wrong, while in Norway it's longer.

Okay. And then I'm a bit curious, how many of these customers do a renewal of the first contract? I mean, can they do a renewal or do they need to work on the contract again?

Okay, but without going into too much detail, Fredrik, here, so like David said, yes, there's quite a difference in the structure of the contracts between Sweden and Norway. What I have found during my time here in starting to analyze a lot of these contracts is that there is a very high percentage that are renewing. If you look at some of the customers who have been with Carium, Even though I say this is a young company, it was also an acquisition from the beginning. Many customers are renewing their contract with Carium. And There's a difference, so I don't dare to say any average, but you can have X number of years plus a potential option to renew one or two or three times. And I'm just saying that what I found is that there is a high percentage converting positively into the renewal cycle of the contracts.

Okay, that's good. And then I have a question regarding the hardware that you install and lease out to customers. How many years do you use them before they need to be replenished?

Also very much dependent on the market. I mean, we see Like in the UK for example what we see is that people are still using kind of very very old products so it's some markets use them until They no longer work, and then they have to switch digital products instead of going analog or, I don't know, I'm not a technical expert, but kind of copper wire products. I don't know what the right term is. While in other markets, it could be that once you do a renewal or like a new agreement, it's also part of swapping products. So it's very much from market to market.

Good, good. And then I have a question regarding the ARPU. You have a picture in the annual report that was pretty interesting, I think, where you said that care transformed from reactive to predictive. I just want to ask you, how many years do you think before the large part of your revenues come from today's reactive to more proactive and predictive?

You want to answer that, David? No, but that's a good question, I think, Fredrik. And, you know, I don't know. I can relate to it having been out in several of these markets. I mean, remember, like David mentioned, some of the markets are still on analog technology, old copper wire technology. That's not related to Sweden or the Scandinavian markets, but other European markets are. I mean, if you look in Central Europe, if you look in UK, there's still a lot of people on copper. The first step is to bring them into a digital environment. Then I think the industry will see, but this is not going to happen overnight. There might be positive attributes from being able to work on a little bit more proactive way, but that's going to require digital solutions, technologies, etc. I think you're right the industry is going in the direction but I don't dare to tell you exactly when and how much that's going to contribute. I think right now there's a lot of talk around it and let's see how that plays out. I think Carium is in a good position to be able with a lot of digital products that's a good starting point to be able to see how this can broaden potential the offerings etc. If that starts to take off in a direction. I think that's kind of my trying to have some kind of balanced answer.

Yeah, yeah, I understand. I mean, the faster you push for UK firstly, up, you know, more to proactive, that's going to, you know, increase the RP pretty significantly, I would say. So that's interesting. Good, good. I just have one last question, actually. In the presentation from the Q425 listed under priorities ahead to increase focus on your early announcement platform, the iCare, we talked about it before. Can you remind us of the status of the platform and do you have any timeline when it will be fully developed?

I know there's a lot of historic communication around this platform. I keep contained within some of these positive initiatives. This specific platform is an alarm handling platform, so meaning for alarm centers. It's two-folded. I mean, we are already utilizing this platform. You can consider it like a standard SaaS platform. And we have already implemented it in our Swedish operation. We are on our way to implement it in our UK arc. meaning our own alarm center. This will provide Carium with very beneficial cost savings because this platform we have developed ourselves from one of the former acquisitions. What we have done in these initiatives is also to commercialize this offering because it's a great platform and there are hundreds of alarm centers throughout Europe. This could be a road in for Carium in different markets from another perspective. But it can also provide Carium a possibility to sell a standard kind of SaaS platform. So a software with a recurring business in the care market and providing long-term contracts with recurring revenues for a very critical industry niche, critical software where Carium is very strong. So we have just commercialized it and we are starting to talk to also to external customers. So we will keep you updated when that materializes, both if we can provide clear internal savings from it, but also if we start to bring in more external commercial customers on it.

Okay, that's good. And just to confirm, I read in, I think it was the annual report 2004, that the MD medicals in Germany should be fully, you know, up and implemented now. Is that the case or is it still not?

Then you probably read it 2024. No, not 2004. That's right. But Fredrik, I will be a little bit careful here. I was not here. I had not communicated that. I think there was an intention that they were going to be one of the early potential external customers. We have them as customers. We are selling products. We have a good relationship. Let's see if they're going to be the first external customer or if it will be someone else. But we will keep you posted.

Okay, that's good. Okay, that was all for me. Thank you very much.

Thank you. Thank you, Fredrik Reuterhall of SEB. And Peter and David, there are some questions from the viewers. I will raise a few of them. Like you said, it's possible to sign the framework agreement after today's date. In time, when do you see sales in Sweden being positively affected from this finalized framework agreement?

You know, hopefully we are and we have all intentions to sign this frame agreement. That means, you know, Carium sits on a very large customer base and market share in Sweden. Signing this frame agreement at least keeps us engaged. provides Carium with a long-term continued possibility to win new tenders. But remember, Carium has a large market share. This is only for new tenders coming up. Then it's important that Carium is there. But Carium has a large customer base, not all customers. and municipalities are going to start to do new procurement processes from 15 on May. No, it's only for the ones who are going to do that in the future. So from that perspective, it's important. But remember, Carium has long-term relationships and a strong market share. But this will put Carium in a good position being able to do new procurement, win new ones.

Okay, thanks. And there's another question connected to this. In how many municipalities are you active today in Sweden?

I don't dare to tell. I know, but I'm not sure that this is public information.

Okay, moving on to other markets. How are they performing in specifically Germany, France and Spain?

As you saw, some of them are, most of them, the countries you're mentioning, we are reporting under other markets. And I think we just presented that they have a solid, it's fairly much product related. This is not countries where we have our own alarm centers, et cetera. But I think we demonstrated a fairly decent growth in the first quarter, double digits. So positive development, absolutely.

All right. And can you provide us with the ballpark figure of the temporarily elevated costs you expect in H1, the first half year?

We don't go into details on those kind of ones.

I think we stick to what we have communicated. And you get a little bit of guidance in the quarter one report. And then we have said quarter one, quarter two.

Okay. In Q4, you said that analog digital switch in the UK was putting pressure on margins. How was that elevated during the first quarter?

But I think, or maybe I should hand it to David, but I think it's also highlighted in the report. You see a somewhat lower gross margin in the UK, and part of that has to do with... with the volumes that are starting to be on the market and the pressure on the market to win these analog to digital switch, customer switching there. So it's in line with our expectations and the market dynamics, I would say, and we see a little bit of signs on it already in the quarter one report.

Thank you. And a final question. When it comes to acquisitions, could you give us any hint on what kind of companies or geographical areas you're looking at?

We don't comment on that right now.

Okay, thank you. That was my last question. Thank you so much for your presentation and all the answers. And see you again in three months. you.