Cavotec SA

Good morning and welcome to Cavitec's fourth quarter presentation. I'm David Peggels, the CEO of Cavitec and I'm here together today as normal, together with my CFO Joachim Valfvist. Let me start with a short introduction to Cavitec. This year we are celebrating an important milestone. It is now 50 years since Cavitec was founded and these years have been characterized by innovation and building long-term customer relationships 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 and maritime sector has developed as the largest customer segment today. Our business is characterized by long customer relationships and over the years we have built a large install base worldwide. This large install base today gives us a great opportunity to grow our service business going forward. In the 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 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 mega trends that drives our exciting market. The mega trends that drive our market are the urgent need to reduce greenhouse gases and also noise in critical infrastructures such as ports, container terminals and on-board 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 mega trends are supported by international and local regulation that enforces operators of ports, terminals, vessels and other industrial operators to reduce 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. Cavitec 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 & Merchants as the world leading solution for ports, ships and other marine applications. We have unique systems for example, automated mooring, shore power, crane electrification, a connection and charging system. Significantly improving our environment in ports worldwide. Customers include of course in this case ship owners, operators, ports and terminals, port equipment manufacturer and shipyards. Ports & Maritime is our largest segment and stands for the majority of the group sales and e-bottles 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. This developed 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 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, three in Italy with a combined order value of 13.5 million euros and a global shipping company with a contract worth 4 million euros. 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 we 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 emissions and increase electrification. I must say I'm quite happy to show you this graph. As you can see, we have succeeded in our transformation of Cavitec 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. Port and 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 offered in close cooperation with customers, 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 Cavitec management team. Niclas Vedin as the head of Port and Maritime and Jonathan Ehrig as the head of the industry division. Full focus on sales for those two guys. Patrick Meyers, previously head of Port and Maritime has been appointed as the new CTO and head of product development. Already a year ago, Jørgen Olsson was appointed as head of global operations and Patrick Baudin will continue his good work on the service field. With these changes, we have an organization with a clear responsibility 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 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 an increased order backlog again. Done with the cleaning and we can now move on with a healthier order backlog. The adjusted EBIT margin 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. 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 a 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 Cavatec. 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 that for 2024 we have made a significant improvement in both net profits and earnings 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 chart, 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 are 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. 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 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 Erickson 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 are not done with the execution of the change program but we are well on the way 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 and Maritime. 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 in the year, which we believe will be strengthened 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 Joakim 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 Cavitec 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 Cavitec 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 purchase and the company is now set and ready for exciting journey ahead of us. And finally, we have an attractive offering which perfectly match the needs for the society to transition to Syria missions 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.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Laura Motadi from ABG Sundal Collier. Please go ahead.

Hi, Laura here from ABG.

Good morning. Firstly,

it's very promising to see that you had a strong order intake in the quarter. And as you mentioned, Q4 is usually a stronger quarter for Cavitec and that Cavitec is also an order-driven business. So we should see some variations between quarters basically. But what can we expect in terms of orders going forward? And my question is how should we look at this high order intake level from here?

I think, thank you Laura for the question there. What I see is that we had a 20-24 which finished very strong in the quarter. And as you say, normal for us, but at the same time a little bit abnormal because it was really a good uptick there. At the same time, there is a lot of those trends that is supported by regulations and in many cases, customers want to be seen as green, they want to do the right things and therefore they really want to rapidly move over to shore power solutions, etc. in order to do their part of the journey that the global world has ahead of it. We had a strong order intake for the power moves and the shore applications in Italy in the quarter. We see now the same trend continues in Italy and then also going to be spreading out along the coast of Europe and also see other countries to follow the same pattern there. So we believe that the high intensity on the market and the high demand for our product and our solutions in the market will continue over the quarters and years to come.

Okay, thank you very clear. You just mentioned that you have seen a good momentum in the power moves and the shore power side. But what can we expect in terms of order and momentum in the industry side? Although the industry orders were up year on year, they were sort of slattish sequentially. So could you maybe talk a little bit about what you are seeing on the demand side on the industry segment?

On the industry segment, as Joakim mentioned before, I took over together with Jonathan Eriksson, who took over the industry segment during 2024. We have done a lot of activities there in order to engage the team and make sure we have the right people in front of the customers, that we have the right sales tools, that we have the right tools in the toolbox, so to say. And therefore we see a completely upgraded momentum in the executives also on the industry side. In addition to that, we are also launching a number of new products. Some will be launched in Bauma exhibition in April and some others to follow through the year, which will then also complement and broaden our offering for the solution for our customers there. So I'm positive to the industry segment development. I'm very excited to see what we can do with it, with efforts. Again, you don't change things overnight, but I think we have had a good part of 2024 to mobilize and we are ready to go. And I'm confident 2025 will be the year when we do the same trend change as we've done, as we've seen on Ports and Maritime. That's going to happen on the industry side.

Great, very clear. Thank you. I just had one on your geographical sales. The majority of your sales are currently in Europe and Asia, but you have some 10% in the US. How do you see the growth potential in the US and what are you seeing on the demand side, particularly in the US?

We see the US market and I think we're all a little bit reading the news day by day in terms of tariffs and tolls. The scene is changing a little bit around the world, that's clear. We still think that the US has a good underlying strong market demand. We are of course looking into how can we sell them, how can we serve the US market also by being local in order to avoid potential things that might be set up. So I see a positive trend also in the US and we're already well set up to meet that. On the radio side, we have a lot of activity going on also in the US where we see that. And also on the Ports and Maritime side, we have also interesting prospects in the order intake pipeline that gives us a good and positive outlook to the US over 2025.

Great, thank you. That was all from my end. Thank you very much.

Okay, thank you, Laura.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

Okay, we have a question here from Johan Evelor.

Okay,

I was a little bit quicker than the moderator there, sorry for that. We have a question here on the written questions from Johan Evelor. Congratulations for the result on the way forward. Good. Did any business orders get rolled over from Q4? To 2025? Yes, we have to some degree, not the majority or anything, but of course we have always, as Johan explained before, we are in the product business and sometimes orders are slipping in from one quarter to over to another quarter and from one year to another year. But we didn't have any extraordinary, we had just the normal pattern that we normally see and that is also what we are planning for. With the cash flow and debt levels throughout transformation work much improved, does the company consider need in acquisition to complement the portfolio to further grow top line and profitability and to a further improved role as a system integrator? What we have done there, and that is not a secret, but we have used the last two years in order to do the change programs, to shape up things, to clean up so that we are now a healthier order backlog and we have also, as you can see as a result of that, we have completely different degrees of freedom when it comes to our financial figures. And of course we will look into mergers and acquisition opportunities. We haven't really had the bandwidth before and we didn't really have the freedom due to our performance if you look back to 2022, but definitely in 2025 and onwards we have now dedicated resources which look into strategy and M&A. And of course this is something which we are looking into and I see there is a lot of possibilities for us as a company to grow both organically but also then through acquisitions. So clearly it's something which we are now paying much more attention to and are involved in. Are you disclosing or setting targets for service portion as a part of the business internally going forward? We as many companies, we see services as an integrated part of our maritime as well as the industry and we want to keep it that way because it's the same customer and it's the same product that we are then servicing in the field. So we will continue to report the service business into the two divisions. We see a growing opportunity to intensify that within especially industry and as I mentioned before, the more we grow our installed base, the more room we have to also harvest on the service field. But it will be an integrated part of the two main divisions. And here comes a question for you Joakim. Are the total costs for the company moved to Sweden estimated to exceed 0.2 million reported and will those then be taken into one?

Right now we're still in the evaluation phase. So of course there will be some costs connected with a positive decision but right now we're not disclosing any specific numbers around this. We're still evaluating the situation. But we will continue to report it as non-recurring given the fact that we would take a positive decision around this and actually go ahead with the move.

Okay and then we have another question here from Johan. Then finally given the relative growth and the momentum in the US, has Cavitec increased its personnel and sales service staff levels to increase the large potential to exceed the 10% in the US? And the answer is clearly yes. We see the US as a market where we can grow significantly and we have added salespeople, we have added people, sales support engineers etc. in the US and that we will continue to do in the US as in all other areas where we see the opportunity to grow the business.

We have one last question here also. Port of Dublin signed an order for automated mooring. What development do you foresee in this part of Europe? Can we expect other ports to follow?

Port of Dublin, as you know, when it comes to the automated mooring system, our moormaster is the market leading solution there and therefore of course we as I mentioned last year we integrated in San Antonio in Chile and now we have this again big installation coming up now for Port of Dublin. Port of Dublin is an important customer and we have seen when we have those moormaster installation it attracts a lot of attention from other customers to come and visit and we have had a lot of customer visits to our existing moormaster installation but the closer we can show how well this technology really works and how satisfied the customers are of course the easier it will be to also convince other customers. It's a little bit of a conservative business but at the same time with so many installations we have now worldwide I'm confident that also the Port of Dublin will be a good reference and also to be a good marketing potential for our moormaster solutions.

I think that was the final question that we had here in the feed. If no other questions then I believe we are ready for today. We

want to thank you all for listening in and I'm really excited to take Cavatec June 2025 to the next level. I think we are in a good position for it. It will be a lot of focus on what we can do in order to satisfy customers and increase our offering and then we have really an exciting year ahead of us Joakim.

I'm looking forward to it.

Thank you very much for listening.