Cavotec Group AB

Good morning and welcome to Cavitec's fourth quarter presentation. I'm David Pagels, the CEO of Cavitec and I'm here together today as normal together with my CFO Joakim Wahlqvist. Let me start with a short introduction to Cavitech. This year we are celebrating an important milestone. It is now 50 years since Cavitech was founded and these years has been characterized by innovation and building long term customer relationship worldwide. We are specialized in developing, designing and delivering electrification and automation solutions to different industrial solutions. With our offering we are targeting a number of industries and the ports maritime sector has developed as the largest customer segment today. Our business is characterized by long customer relationship and over the years we have built a large installed base worldwide. This large installed base today gives us a great opportunity to grow our service business going forward. In this service segment, we have a broad offering covering everything from service, installations, maintenance and system integration. During 2024, we have increased our resources in the service field by recruiting new skilled service engineers across the globe. With more resources, we build a solid ground for further expansion in this field. We operate across the world and last year, 50% of our revenue was generated by European customers, 40% from the Asia Pacific region. America represents the rest, approximately 10%. In 2024, we made our first installation of automated mooring systems in Chile, in South America. So there is a clear potential for us also to grow in that region. Let's turn to the next slide and remind you about our megatrends that drives our exciting market. The megatrends that drive our market are the urgent need to reduce greenhouse gases and also noise in critical infrastructures such as ports, container terminals and onboard vessels. Noise as an environmental problem is not maybe in everyone's focus, but it's actually a growing area of interest and concerns for ports and other areas such as the heavy-duty vehicles. Research shows that noise has a negative impact on health and therefore becoming more and more a driver of our business since our solutions also support the reduction of noise in different industrial applications and heavy-duty vehicles. A key driver for our business is the fact that these megatrends are supported by international and local regulation that enforces operators of ports, terminals, vessels and other industrial operators to reduce the emissions, pollution and noise. We operate within market segments that are critical to society and where our solutions are needed to lower emissions and create a better environment. Cavitech plays a significant role with our solutions and leading technologies that are proven, reliable, efficient, and safe, and therefore perfectly suited to meet our customer requirements. Let me shortly present our two business segments. First, Ports of Mertram as the world leading solution for ports, ships, and other marine applications. have a unique systems for for example automatic mooring shore power crane electrification a connection and charging system significant significantly improving our event in the environment imports worldwide customers include of course in this case ship owners operators ports and terminals port equipment manufacturer and shipyards ports and maritime is our largest segment and stand for the majority of the group sales and ebitda today However, we also have the industrial solutions that drive productivity and contribute to customers operational efficiency, electrification as well as occupational health and safety. The products for the industry segments include motorized cable and hose reels, radio and remote controls, power connectors, spring driven cable and hose reels. customers in a wide variety of industrial sectors such as cranes, energy processing, transportation, surface and underground mining and tunneling. Service is, as I already mentioned, an integrated part of our business segment. So over to some recent business builds. As you probably already seen, we reported a strong order intake of 51% up in the quarter. These developments are to a large extent driven by strong demands for shore power solutions in Europe and the need to reduce the negative climate impact of shipping. As you probably also noticed, we have recently announced a shore power contract with a total value of 17.5 million euros. You should, however, note that this contract was signed at the end of 2024 and is included in our order intake for the fourth quarter, even though we announced the contract in early 2025. These contracts include five Mediterranean ports, of which three in Italy, with a combined order value of €13.5 million, and a global shipping company with a contract worth €4 million. All these orders are to be delivered over the next two years. The order we signed for automated mooring system in Port of Dublin is also a milestone to us since it's the first installation in Ireland and will serve as a benchmark for suitable post operations in the region. For the industry sector, we also announced an order with Quello who is managing charging solution for electrical vehicles across Europe. The order encompasses 1000 spring cable reels for Quello charging stations. This is yet another sign of our business is driven with the need to reduce the emissions and increase the electrification. I must say I'm quite happy to show you this graph. As you can see, we have succeeded in our transformation of Covertech and we are steadily improving our performance. Having that said, we're not done with our change programs. It's an ongoing story. We still have a lot to do in order to improve our processes and performances. The change programs we implemented two years ago are still ongoing across the group. Potsdam Maritime was the first out with the implementation of this and there we see now the results and now industry segment followed just recently in 2024. Thanks to our improved profitability, we have been able to focus a lot more on product development in 2024. We have, often in close cooperation with customer, developed new products that are in the pipeline to be launched this year. I'm excited about the products we will present and launch during the coming year. As you have seen, we have appointed two new members in the Cavatech management team. Niklas Werdin as the head of Quartz and Maritime and Jonathan Ehrge as the head of the industry division. Full focus on sales for those two guys. Patrick Maris, previously head of Ports of Maritime, has been appointed as the new CTO and head of product development. Already a year ago, Jørgen also was appointed as head of global operations and Patrick will continue his good work on the service field. these changes where we have an organization with a clear responsibilities across the group which will improve our efficiency and resource allocation and make it possible for us to take advantages of the synergy effects i'm convinced that with a new structure and responsibility together with high energy of in the management team we have a solid foundation to continue the growth Just some numbers before I hand over to Joakim to give you a little more detail in the figures. As I already said, we had a strong order intake in the quarter, 51%. And as you know, we have started to review the order backlog in 2023 to secure a high profitability going forward. This work completed and it's good to see that we have a quarter now with increased order backlog again. done with the cleaning and working on move on with a healthier order backlog the adjusted EBIT modern continued stable improvement and the bottom line with the reported a quite substantial improvement from 0.2 million euros to 3.8 million euros so with this short introduction i hand over to Joakim to walk us through the numbers a little bit more in detail

Thank you, David. We start with the revenue and we have seen a stable improvement during the year of 2024, even though we in the quarter is down 15% versus a very exceptional strong quarter in Q4 2023. Revenue for the full year was down some 3.2%, which is largely a result of our more stringent order intake process, where we have focused much more on profitable orders. When looking at this graph, I want to stress, which I've done many times before, that we are to a large extent a project-driven company, which means that we cannot rule out that fluctuations between the quarter will happen on our revenue. So move on to the order intake. The graph at the top of the slide really shows a good order intake. We reported here in Q4 an order intake up more than 50% from the same period last year. It's a very busy quarter. We also see here the order intake is up 13% during 2024 compared to 2023, which is also good news. This is driven by a very good demand for our shore power solutions, but also an increased demand for our service offerings. The graph at the bottom of the slide also demonstrates that this higher order intake have generated an increase in the order backlog. I would say now that we are mostly done with what David here called the cleanup exercise of the backlog, and we now feel comfortable with the margins that we have in the order backlog. And we are now ready to slowly but surely press the gas pedal a little bit more on the order intake. So let us move on to profitability. As David has said, we have over the past two years made significant progress in improving our profitability. I think this development is a clear result of the change programs that we have executed throughout the company. EBIT did slightly decrease in the quarter versus 2023, but I think the big story here is really 2024 versus 2023, where we have done an improvement of over 50% in EBIT. We have chosen also to show the cost of our investigation of a potential move of our registered office from Switzerland to Sweden as a non-recurring cost. We will also continue to report these costs separately as in non-recurring. I also want to underline one more time that we are happy, but not satisfied with our profitability, and we are in no way finished with the transformation of Cavitech. we have a lot more initiatives and improvement activities on our to-do list, which will continue to further improve the value creation. Let's move on to net profit and earnings per share. As you can see, also the net profit improved in the quarter compared to the previous quarter in 2024. We can see We can see that for 2024, we have made a significant improvement in both net profits and earning per share from a very small net profit in 2023 of 0.2 million euros to 3.8 million euros now in 2024. Let us have a look also on the cash flow. As you can see from the show, we have quite substantial fluctuation in operating cash flow over the year. This is really due to the project nature of our business and the completions of our projects and customer payments. If we look at the full year, the cash flow has improved quite significantly to 6.2 million from the 1.9 million euros in 2023. This is, of course, satisfying and we're beginning to really see the effects of all the work that is being done. But we will continue to focus, of course, on the cash flow and working capital also in 2025. Now we turn to the P&M ports and maritime segment. And as you can see, ports and maritime have demonstrated a very stable, improved performance over the past quarters. One should remember, though, that especially the ports and maritime business is to a large extent a project business, and it can fluctuate quite a bit between the quarters. Profitability has improved nicely since we initiated the change programs and should be looked at really over the full year 2024 to get a better picture. The good order intake in the fourth quarter, as David has mentioned earlier, shows that we have a continued strong demand for our solution and that it's also a testament of our continued competitiveness in the ports and maritime segments. So let us move over to the industry segment. The acceleration of the change programs in the industry segment started in 2024 when David and Jonathan Ericsson took over the division. And there's now a number of activities ongoing on improving internal processes, enhancing the products and our service offering and strengthening the sales force. Our target is of course to do the same journey as we have done with the ports and maritime segment and I feel confident now that we are on the right track with this work. By this I want to hand the presentation back to David.

Thank you Joakim. Let me briefly summarize our key strategic priorities. We are, as Joakim said, we're not done with execution of the CH programme, but we're well on the journey. We have continuous group-wide initiatives going on. And in addition, we have a strong focus on the industry segment, where we clearly want to see the same development as we have done on Ports America. Among the group-wide initiatives are improvements of sourcing and supply chain, where we identified a number of areas where we have taken action or intend to take action short-term. We have an exciting pipeline of new products that will be presented and launched during the year, which we believe will be strengthening our competitiveness. And we have started during 2024 with our extended service offering, which has proven to be a rewarding strategic decision. And we see that there is a good potential for us to managing our installed base globally and harvest on that. The good thing with the installed base is also that it's growing every month, every quarter, every year. And finally, as Joachim said, cash flow and working capital continue to be the key focus for us also in 2025. So let me just quickly summarize some of the key points about Cavitech before we open up for questions. We see a good robust underlying market demand which our recent announced orders clearly demonstrates. We have by the latest changes in the Cavitech management team created an energetic experienced team and efficient organization which is the foundation for our continued success. Our steadily improved profitability shows that we have made the right strategic priorities and the company is now set and ready for exciting journey ahead of us. And finally, we have an attractive offering which perfectly matched the needs for the society to transition to zero emissions and a more sustainable world. By this, we have come to an end of our presentation and we welcome questions over the phone or by mail through the webcast.