Cavotec Group AB

Good morning and welcome to Cavitec's first quarter presentation. I'm David Pagels, I'm the CEO of Cavitec and together with me today I have as usual Joakim Wahlqvist, Cavitec's CFO. Let me as usual start with a short introduction of Cavitech. This year we are celebrating our 50 years anniversary. I think that the key takeaway from our long history is our ability to innovate and to adapt to changing market conditions. Not least in these times when we are living in an uncertain world with many rumors, speculations and changes and unclear messages, this is an important ability. Cavatec is specialized in developing, designing and delivering electrification and automation solutions to different industrial applications. With our offering, we target a number of industries and over the past years, the ports and maritime sector has developed our strongest customer segment. We contribute to reducing emissions in, and among other places, ports, while our solutions also help to lower noise levels. As you know, we report two business segments. Our service offering is reported into those two business segments, ports and maritime, as well as industry. Ports and Maritime provides world leading solutions for ports, ships and other marine applications. We have a unique system, for example, automated mooring, shore power, crane electrification and connection, as well as charging systems. All these solutions contribute significantly to improved environmental and efficiency in ports worldwide. Our customers include ship owners and operators, ports and terminals, port equipment manufacturers, as well as shipyards. Ports and Maritime is our largest segment and represents the majority of our group's sales and EBITDA. However, we also have the industry segment with its unique selling points and its ability to drive productivity and contribute to the customer's operational efficiency, electrification as well as occupational health and safety. The products on the industry segment includes motorized cable reels, hose reels, radio remote controls, power connectors, spring driven cable reels. We have customers in a wide variety of industry sectors such as cranes, energy, processing and transportation, surface and underground mining and tunneling. It's a big growth potential in this huge segment as you all can understand. Services, as mentioned before, is already an integrated part of our business segments. We have service engineers across the globe. They work either from our service centers or are based at our customers' premises. The service offering encompasses system integration, maintenance, sale of spare parts, inspections, refurbishment, as well as round-the-clock service agreements. As also mentioned before, we have agreements with customers where we operate our delivered machines on their behalf 24-7. The mega trends that drive our market are the urgent need to reduce greenhouse gases and also noise in critical infrastructure such as ports, container terminals and onboard vessels. Noise as an environmental problem is maybe not in everyone's focus, but it's actually a growing area of interest as many cruise terminals are located very central in cities and therefore an issue that needs to be taken care of. Research shows that noise has a negative impact on health and is therefore becoming more and more of a driver to our business since our solutions are silent and also reduce the noise in different industrial applications as well as heavy duty vehicles. A key driver for our business is the fact that these mega trends are supported by international local regulations that enforces operators of ports, terminals and vessels and other industrial operations to reduce emissions and noise. We operate within market segments that are critical to society and where our solutions are needed to lower emissions and to create a better environment. Cavitech plays a significant role here with our solutions and leading technologies that are proven reliable, efficient, and safe, and therefore perfectly suited to meet our customers' requirements. Regarding who is in power in certain countries in a certain mandate period, the long-term trend is clear. Everyone wants to be seen and needs to be as green as possible going forward. Our business is characterized by long term customer relationship. And over over 50 years, we have built a large installed base worldwide, which is also growing year by year. These large installed base gives us a growth, good opportunity to grow our service business going forward. the service segment we have a broad offering covering everything from service installation maintenance and system integration as well as i mentioned before even operating our machines for our customers services of course increasing important if customer wants should be more hesitant with the investment should we see that we know that the demand for service like spare parts maintenance will have a balancing effect This quarter reflects, it's a typical first quarter for Cavitec, but it really reflects that we have a product driven business where the revenue and earnings may fluctuate between the quarters, depending on which product we invoice and when. As you may recall, we began 2025 by announcing several large European shore power orders signed at the end of 2024. These orders have a total value of 7.5 million euros and include deliveries to ports in the Mediterranean and global shipping companies. When evaluating the order intake in the first quarter, I think it's fair to view the strong order intake that we also had in Q4 last year. The revenue development is related to both the maritime in the same quarter in 24 recorded significant revenue from deliveries to offshore power system, which we do not really see at the same time in this quarter. But again, it's a normal first quarter for California. It is, of course, encouraged to see that the cash flow development and the strengthening of our financial position We have a strong focus throughout the organization on cash flow and working capital, which is now showing clearly in the numbers. Joakim will give you more details about the financials in a few minutes, but I want to mention a couple of other things first. So before going over to Joakim, I would like to say a few words about our new product that we launched in the quarter. They were both launched at the big trade fair industry fair Bauma in Munich early in April. And I'm thrilled to see the interest that the customers showed during this event. First of all, a new generation of radio remotes in a modular housing, which makes it easy to customize in a flexible way to adapt into customer specific needs. This will also come in an explosion EX version, explosion safe version very soon. And this is really something that was well received in the market during the exhibition. In addition to that one, we also have the MCS manual dispenser for up to four and a half megawatt, also shown at the Bauma in Munich. This dispenser with included cooling units, because it needs to be cooled cables and connector due to the power, will serve customers for both ports and maritime as well as within the industry segment. So now over to a little bit of what's going on in the world right now and our situation versus potential trade tariffs. We operate across the world and last year about 50% of our revenue was generated by European customers and 40% from the Asia Pacific region. Approximately 10% of our revenue is generated in North America, which the majority is in the US. So, less than 10% of our revenue is generated by business in the US. However, most of those revenues relates to service offering, which is local offering provided by a local guy in a local service organization. As I mentioned before, we have people operating the machines on the behalf of our customers. And of course, there are local guys in US who's doing that. So our exposure to potential trade tariffs in the US versus Europe is quite low. And since we run in an operation where we assemble our products, we can quickly and relatively easy start production in the US of volumes if needed. As you know, we have started production in India last year, which was a quick and cost-efficient action. And therefore, I see no problem if we should repeat the same thing also for US. So now I hand over to Joachim to comment the financials a little bit more in detail.

Thank you, David. We start with the order intake and David has already said a few words about it. But when looking at the order intake, we need to have in mind that we really are in a project oriented business. And also, which David mentioned shortly, we had a very hectic Q4. We announced early 2025 that we, late in 2024, closed shore power orders worth 17.5 million euros. for a number of Mediterranean ports and a global shipping company. But also in addition to that, we signed late in 24 and announced early 25 an order for an automated mooring system for Port of Dublin and an order for Quello for 1,000 spring cable reels for electric vehicle charging stations across Europe. that was orders amounting to almost 5 million euros. So we had a very hectic Q4, and when it comes now to order intake in Q1, that's a little bit slower because some of the orders shifted between the quarters. We continue to have, though, a very solid backlog of 160 million euros as of now. And we also feel very comfortable with the profitability that we have control of the profitability in that order backlog. We continue to revenue. Revenue decreased with 9.8% in the quarter versus last year and this decrease in revenue relates mostly to ports and maritime as we are comparing with a quarter in 24 where we had some significant deliveries of shore power solutions. And we still feel though that the business here is fundamentally strong and there's a solid demand and the development is merely reflecting how the business is project driven and fluctuates between the quarters. Let's go to EBIT. And as a consequence then of the lower revenues in ports and maritime in the quarter, we also saw a decrease in the EBIT. On a positive note, though, the industry contributed positively to the development, thanks to the margin enhancing measures we implemented all during last year. And that's very nice to see. In the previous quarter, we started to adjust for the non-recurring costs related to the investigation of a potential relocation of the registered office from Switzerland to Sweden. Then we move over to net profit. It's, of course, not satisfying to see how our nice and smooth development was a bit broken this quarter. Having said that, we still had a positive net profit in the quarter for the seventh quarter in a row, and we continue to strengthen our financial position. And I just want to stress again that this really do reflect the character of our business. As you understand, I'm much happier to show you this graph. We had a strong operating cash flow in the quarter, 5.4 million euros, which is significantly better than the same quarter last year, but also can be compared to the operating cashflow for the full year of 24, which was 6.2 million euros. So very good development or very good start of the year cashflow wise. And this is really a result of the increased focus on cashflow and working capital throughout the organization. And consequently also our financial position has been further strengthened and we continue to reduce the net debt in the quarter and also improve the leverage ratio. So moving over to ports and maritime. The ports and maritime segment had a slow quarter, especially compared to Q1 last year. We have said it a couple of times now already, but I would risk of repeating myself, Ports and Maritime has an especially project driven business and we have an installed capacity also for a higher volume. So this impacts the profitability in the low quarter like this. But we still have a fundamentally strong business here with a solid demand and the customers are still very active in the ports and maritime segment. So Niklas Werdin and his team, they're still very busy catering to the requests from customers. So moving over to industry, I'm also pleased to show you this graph. We have been talking about the efforts we've been putting into industry now for some time. And last year we had a number of profitability enhancing or margin enhancing measures that we implemented during the year. And it's now really satisfying to see that these measures are starting to take effect. And I feel that Jonathan Ericsson and his team in the industry segment here is having a very good momentum. So very nice to see the development in the industry. And this is an area also that, as David said earlier on here, there's a lot of potential in the industry segment for Cabotek. Industry also has a more stable revenue development, which is reflecting the character of this business with a bit smaller and more recurring orders. And with those few words, I want to continue to hand back to David to sum up a bit our presentation before we take the Q&A.

Thank you very much Joachim for that. So let me just quickly summarize some key points before we open up for questions. First of all, we target markets which are driven by the need to electrify society and to reduce noise levels in environments such as pools. This is also reinforced by the fact that our customers are facing regulations that require them to reduce their emissions and to electrify their applications. For us, this creates a good opportunity since we are offering leading technology and have built a strong market reputation and position over our 50 years as a key supplier to our customers. Another important business driver is, of course, the large installed base worldwide, which continues to grow and provides us with an untapped potential for service offering. Secondly, we have an attractive offering and we are further strengthening. We're putting more efforts into new product launches. We have done that last year. We continue this year. And we're recently launched the next generation of the radio remotes, as well as the MCS manual dispenser, as I showed you earlier. And we have more products in the pipeline to be launched during 2025. And finally, in January, we appointed the new heads for ports and maritime industry and also product development. By this we have now a new organization in place which makes us more agile and makes it easier for us to find synergies and efficient way of driving our business. When I meet with colleagues in the organization, I'm thrilled by the energy and enthusiasm, along with a strong customer focus and goal and mindset of exceeding our expectations and goals. By this, we have come to the end of our presentation and we open up for questions over the phone or by mail through the webcast.