Cavotec S.A.

Good morning and welcome to Cavitec's second quarter presentation. I am David Pogels, CEO of Cavitec, and together with me today, I have, as usual, Joakim Barqvist, Cavitec's CFO. Since we presented the report for the first quarter, we have carried out a significant change. We have successfully completed the project of relocating our headquarter and registered office from Switzerland back to Sweden. It has been an extensive project involving efforts from both banks, legal advisors and of course a great job for our internal resources. Cavitec have had its headquarters in Switzerland since 2007 and was listed on Nasdaq in Stockholm 2011. With the move, we relisted the shares of our new parent company on Nasdaq Stockholm, which took place on July the 9th. As mentioned, Cavitec was founded 50 years ago in Sweden, and over these five decades, we have built a leading global position in electrification and automation. In addition to helping our customers to improve efficiency, we also contribute to reducing emissions in, for example, ports, mines and other industrial applications, as well as the safe conditions. As you know, we report our two business segments. Our service offering is reported into the two business segments. So for the two segments, ports and maritime and industry. Starting with ports and maritime, we are providing 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 and charging systems. All these solutions contribute significantly to improved environments and working conditions in ports worldwide. Our customers include ship owners, operators, ports, terminals, port equipment, manufacturers and shipyards. Ports and Maritime is our largest segment and represents the majority of the group's sales and EBTA. The industry portion The unique selling point for our industry division is its ability to drive productivity and contribute to the customer's operational efficiency, electrification as well as occupational health and safety. The products include motorized cable and hose reels, radio remote systems, power connectors, spring driven and hose driven reels. We have customers in a wide variety of industrial sectors, such as cranes, energy processing, transportation, surface and underground mining, and tunneling. Service is, as I've already mentioned, an integrated part of our business segments. We have service engineers across the globe. They work either from our service centers or based close to our customers' premises. The service offering encompasses system integration, maintenance, sale of spare parts, inspections, refurbishments, as well as round-the-clock service level agreements. As you have seen in the report, we have been affected in the quarter by the increased uncertainty in the global environment that has led to a greater caution among our customers and is taking longer for them to take the decisions. However, we have a strong order intake in the quarter which is reflecting the strong underlying markets. I would also like to stress that we have seen no changes at all in the underlying business drivers. We see the same mega trend with the need to electrify society at the same time, which I think many people neglect. There is an increasing need globally to reduce noise levels in, for example, ports. These needs also manifest regulations and governmental requirements that affect our customers. Our offering is, of course, a perfect fit to meet those trends. We have a strong market position and a leading technology which explain our strong order intake during the quarter. We are growing both with new and existing customers and thereby expanding our installed base. The installed base is important to us because it provides an aftermarket opportunities to offer our comprehensive range of service activities. Our order intake increased 10.1% to 44.4 million euros, driven by good demand for ports and maritime products and service offerings. The order intake was largely driven by the demand for shore power in Europe. However, as I said earlier, and as you can see in the report, the increased global uncertainty has led to greater caution among our customers, which has affected our sales of goods and services with the shorter delivery terms. This naturally impacted both revenue and profitability in the quarter. Profitability was also hit by the ramp up in the preparations for the upcoming major deliveries that we will see in the second half of the year for Ports of Maritime. As you might recall, we signed significant orders in the Ports of Maritime segment late in 2024, and we will start delivering on these orders on the second half of 2025. In short, Joachim will dive deeper into the numbers, but I'll keep him out for another minute here. Key events in the quarter. I began the presentation by stating that successful change from the missile to Sweden was a major event in the quarter and a historical step for Cavitech. We have now returned to Sweden, where a vast majority of our investors are based. Not only are we getting closer to our investors, but we also expect that the move will allow us to make faster decisions, streamline our processes and become more agile. In short, it will enable us to operate more efficiently and by that also reducing cost. Well, beside the Beside the significant event we also announced a couple of important orders. Among those orders is an order for example to complete shore power systems for newly built container vessels signed with the leading global container shipping company. This order has a value of 8.1 million euros and delivers a scale to begin in the second half of 2026. We also signed a shore power order for Equans for the port of Antwerp Bruges in Belgium with a total value of approximately 1.5 million euros. I would also like to say a few words about the new products that we launched during the big trade fair in Bauma, for instance, in Munich early in April. The project has received a lot of attention from customers and when it comes to the radio remote control system, as you see on the screen, we expect to reach customers in testing for the second half of the year. I'm also excited about the new projects we are about to launch in the fall. We should have more details to present in the third quarter report about those coming launches. Finally, it's time for me to hand over for Joakim to dive deeper into the figures.

Thank you very much, David. David has already addressed that the order intake was up with 10% versus the same quarter last year. I want to also say that the backlog grew by 5.5% versus the same quarter last year, reaching 124.9 million euros. This also represents a 7.4% increase compared to the previous quarter. And this positive development clearly reflects both the continued strength of the market demand and the attractiveness of our offerings. Going over to revenue. Although the underlying markets remain strong, we've really been impacted by the increased caution among our customers, many of whom are affected by ongoing global economic uncertainty. This has led to postponed purchasing decisions, particularly for goods and services with shorter delivery time and timelines to be delivered within the year and in the quarter. This has in turn had negative effect on our revenue development this quarter, which you can see here in the graph. Revenue declined by 16.2% to 35.7 million due to weaker sales in both Portugal Maritime and the industry segments. We were also impacted slightly by currency fluctuations that had a negative impact of 0.3% during the quarter. On top of all of this, it's still important to keep in mind as a project-oriented business, our revenue can fluctuate from quarter to quarter. And additionally, a significant factor in this is that we will not begin delivering on the large port and maritime orders that we signed at the end of 2024 until the second half of 2025 at the earliest. Let's move on to EBIT. And as a result then of the lower revenue this quarter, EBIT also declined. Profitability was further impacted by reduced volumes and the ongoing ramp up efforts in preparation for the larger scale deliveries that we have planned for the second half of the year, the ports and maritime projects that David mentioned earlier here. In addition, also EBIT for both Q1 and Q2 2025 includes some adjustments related to the change of domicile to Sweden. We move over to net profit and the net profit declined and we show the loss of 1.7 million versus 1.5 million versus 0.7 million that we had positive in the same quarter last year, reflecting then the lower revenue. This is of course not satisfactory to see the break in the good trends, but we did have a plan of a weaker H1 and a stronger H2. We now hope that the economy will not impact us further in H2, but we are prepared to handle further macroeconomic uncertainty if that will be the case. Cash flow was negatively impacted also in this quarter, primarily due to the overall performance and the ongoing ramp activities for the upcoming bigger deliveries at the second half of the year. We still, though, have better cash flow year to date June than the same period last year. And our cash position is still good and we still have plenty of headroom in our credit facilities. So still feel comfortable here. Let's move over and say some more details about the ports and maritime segment. We recorded a strong order intake in this quarter. Order intake increased by 19.6% to 29.3 million. And the order backlog grew by 5%, exceeding 100 million euros. This reflects the strength of the underlying mega trends, like David spoke about earlier, and the demands in this sector. However, we are also seeing increased caution among the customers. Decision making processes are taking longer time, especially for goods and services with the shorter delivery times. This has impacted both revenue and profitability for this segment. As mentioned earlier, we're also seeing the effects of the ramp up efforts related to the larger orders scheduled for delivery starting later this year and continuing into 2026. We move over to industry then. And in the industry segment, order intake declines slightly by 4.6%, reflecting the increased caution among customers. As in other areas, more cautious market environment also weighing on revenue and profitability in the quarter. As David mentioned earlier, we've launched several new products this year, though, and we have been positive. It was very received very positively from the customers. However, due to our typically long sales cycles, we do not anticipate significant revenue contribution this year from these products. With that, I will hand back to David for some final remarks.

Okay, thank you very much Joakim. Let me just quickly summarize some key points before we open up for the questions here. We have successfully completed the relocation of our headquarter from Switzerland back to Sweden, where Cavitec was founded 50 years ago, and our investor base is located. This move will allow us to operate more efficiently and reduce costs. In the quarter, we have seen an increased global uncertainty has led to greater caution among our customers, which has affected our sales of goods and services with a shorter delivery times. This has affected our sales volume and profitability in the quarter. We are closely monitoring and developing and are prepared to take action if needed. Once again, I want to stress that we have a solid underlying markets in our business. Our underlying market remains strongly driven by the need to electrify the society and reduce noise levels in environments such as ports. This is also reinforced by the fact that our customers are facing regulations that require them to reduce their emissions and electrify their applications. For us, this creates a good opportunity since we are offering technology and have built a strong market position during our 50 years as a key supplier. Another important driver is of course our large installed base worldwide, which provides us with an untapped potential for service offering. We have an attractive offering and our investments in product development has further strengthened it with new product launches. We have recently launched the next generation of radio remotes and also the MCS manual dispenser that has been well received in the market. And we have more products in the pipeline that will be launched during the second half of the year. As I mentioned in the last quarter, we have made several important appointments to the management team and new organization in play, which makes us more agile and makes it easy for us to find synergies and efficient ways of working. With our strong customer relationship, attractive offering, dedicated employees, I remain confident in our ability to grow profitably and create value. By this, We come to the end of the presentation and we will step over to questions over the phone or by mail through the webcast.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. Next question comes from Albin Barnevik from ABG Sundahl Collier. Please go ahead.

Yes, good morning. This is Albin Barnevik from ABG, standing in for Laura Matadi. So I have a couple of questions. So firstly, given the global economic uncertainty and caution among customers for short cycle products, how has your visibility on customer demand changed? Do you expect further push outs or cancellations in the coming quarters?

First of all, we have not seen any cancellations of orders. I think that's important to underline. And there's still a very solid pipeline of deals that we're working with. So we're not expecting that to be a big, big impact during the second half of the year. But it's still a lot of uncertainty, obviously. And we're monitoring that very carefully. And we're working very hard on the back end, obviously, to make sure also that we can cover for potential further downturns in the economy. We've seen that we have actually managed to get a bit more flexibility in our production cost, which has helped us to keep good margins on the business that we have delivered. And we've also already now started to be to strengthen our efforts on the SG&A and cost control. So we're ready if the economy will continue to be uncertain, but we have not yet seen any cancellation of deals.

I see. Thank you. And if I may, as you mentioned in the report, there's a strong order intake, particularly within the ports and maritime. So if you can elaborate a bit on when you expect these orders to start converting into sales, especially given the delays within the mentioned short lead time orders?

Yes, I can take that one. What we normally have when we talk about, as Joakim mentioned before, it's a product driven business, meaning we receive orders and then we engineer them and then we need to manufacture them and we need to ship out to customers. For ports and maritime applications, the lead time of our systems could be everything from shorter, of course, but you could typically have been in nine to 15 months delivery time. And as we mentioned before, we received a lot of orders to us in Q4, 24, and therefore they will be delivered out then from Q3 and then some of them even into 2026. so um there is a there is a long lead time in the product by the nature of the products uh because this is very big system so so i so that's that's where we are where we are timing wise yeah timing wise it is what it is and we are we're not really worried about that i see and if i may just the final question uh so the ebit margins came in significantly below expectations uh

And beyond the one-off relocation costs, what actions are you taking to protect the margins in the short term while preparing for the ramp up in H2 and 2026 deliveries?

Yeah. I mentioned a few of them, obviously, previously here in my answer, but we have a number of programs ongoing and these programs have been ramping up slowly over the last couple of years. David and I came on board here. Everything from cost activities in our engineering that are starting to take effect now, we have huge huge activities on on the procurement side and of course the general cost control programs across across both the divisions so and i'm quite pleased also to see that the volume flexibility in our production that we worked worked hard with is is starting to show also that we managed to guard our margins even with lower volumes all right thank you that's all for me thank you very much albin

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

Okay. I don't think we have any more over the phone here, but we can take maybe the first question here. What can you do about the very low daily turnover of shares? Is there any plan to repurchase shares or to increase it? I think one of the things that we wanted to become more visible obviously for our investor base and almost 90% of the ownership base now is in in Sweden. Our move back of domicile to Sweden will help us to be more visible here. So we believe that that will be a positive effect. David, anything to add on that?

No, but then in parallel to that one, we need to be more visible as well. We need to have more investor meetings and present what we're doing because we're still a little bit too unknown company on the Swedish stock market. And that's what we need to change, of course.

And the focus will be to be more active out there, obviously, to present the company and the strategy work that we're doing right now. So we're in the middle of the strategy work also, and we will start to be more active once we are through the strategy work. Okay. You showed strong order intake, but you also say that your customers postpone their decisions. Could you give some more flavor to the market development?

I think everyone understands and knows fairly well that our underlying business for industry, for instance, is the mining and mining underground and open open surface mining. And there is a strong demand for But of course, it's somewhat a little bit uncertainty with the tariffs around the world, etc. And of course, we are, as everyone else is looking at, can we sub-assembly parts of our products in US in order to offset part of that risk, of course. And that is something we should do together with our customers. When it comes to some of the postponements from actually shipping out equipment for ports and maritime, it's also that our equipment needs, it's quite complex systems and therefore also requires the port authorities to approve them. Port authorities is a little bit of a function you can't really affect when they want to decide and when they want to approve certain things. So we're a little bit on hand on them, but that's primarily happening on them. in the italian ports but at the same time we have a good communication and we wanted to be approved and our customer wanted to be approved but it's it's just a little bit of a lag in in the decision and for for making it actually happening but it's coming through now and that's what we are what we see

Okay, and we have some other questions here. What should we expect for the third quarter and the ending of the year? Should we expect some positive effects from the orders you signed in 2024? And yes, as we mentioned earlier in the presentation, we mentioned in earlier reports also that we did close and we had a really strong queue for 2024 with the 60 million euro order intake. And like David mentioned also, the lead time for the typical orders are about nine to 18 months, depending on the composition of the orders. So we are expecting a number of these orders to go out late 2025 and give a positive effect on the second half of the year. Okay. Apart from. OK, apart from overall global economic uncertainty, have you seen any effects of the US tariffs on your business, David, maybe?

Yes, we and again, this is this is, of course, the famous theme for for many companies now because it changed more or less more rapidly than the weather, especially here in Sweden. The weather is one day good, one day bad. But we see a stronger demand from our customers that they will like. And again, as we said, we are delivering equipment to our customers who deliver to their end users. And of course, we're working together with them in order to see how can we help to assemble products, to localize production, et cetera, in US in order to offset that. It is something which is already planned for and we have a couple of those activities ongoing already. We should remind that it's a fairly small amount of our business that is for the US market in general. So we're not really worried about it. But at the end of the day, we want to take this opportunity to strengthen our position in the in the American market together with our customers in order to grow the business. So of course, there is an opportunity there to see this as an opportunity and a positive side effect that we will work with. And this is exactly what we're doing now together with our customers in an open, positive, cooperative way.

Okay. Do you have any planned capital market day to get more investors attractive to the company? Yes, we do. We have one in late November with Aktiespararna, where we will participate. And we will, as David mentioned here, continue to be more active now when we are back with Domicil in Sweden. So yes, there will be more of that coming up. Could you tell us more about the new products that you plan to launch in the second half of the year?

We don't really want to talk too much about the launch, the product we're going to launch, because then we're destroying the surprise moment there. But we will present products that we have seen is a little bit of gap in our product portfolio for ports and maritime applications. There are a couple of those coming up. uh at the same time some of those we will uh also present during our um cabotek 50 year anniversary in nova mid september there will be some will be launched to customers then and and and there are some others as well during the autumn uh we will also then as we said before we have the the radio remote next generation um already launched and is now out for and with customers and we see a great interest there, I must admit that will also come then in an explosion safe version that will also be launched towards the end of the year. So there are a lot of things happening here, and I think it's it will it will somewhat complete the gap where we see our that we have some weaknesses in our portfolio. And of course, we see them. We optimistic that that will lead to increased possibilities to offer to our existing and even new customers.

We had one question here also about the order backlog increase. Was some of the growth because of potential deliveries that were delayed in the quarter?

It's a little bit of a mix of that because, as I said, there is very, very seldom cancellation in our business. It doesn't really happen. But, of course, we have customers who are depending on that they would need to deliver. We need to have timing when we're going to install the things on vessels. And then if the vessel is then postponing the dry dock, then all of a sudden we have no other option than just adjusting versus that dry dock rescheduling. The same thing happens then when it comes to when we have customers who have certain products and we need to adjust for for their needs. But again, this is the nature of a business. This is also the complexity with our business when we're measuring one quarter by quarter. But I'm not really worried that we lose business, but it moves easily from one month to the other or for one quarter to the other or towards the end of the year for one year to the other. That happens and that's the way it is. But we have a very agile and flexible production set up with people who are very prepared to step up and meet the customer needs whenever they need to happen. So we are prepared for it and I'm not worried that we're not going to be able to meet the requirements from the customers.

I think that was the questions we had at this point. So if No further questions. Then maybe, David, do you want to wrap it up?

Yeah, I can wrap it up by this. We have ended our second quarter presentation and that's it. And I think we are very pleased where we are. We've been quite a lot of work and we should not underestimate the work with the relocation of the domicile that's been a little bit of a hard work for a lot of people but we're good to be back in Sweden again and again to be more open more communicative also with the investor base when we're here so I'm looking really looking forward to that uh also looking forward to speak to you in november when we present the third quarter results but until then um me and you are kim and we wish you really some vacation exactly some nice summer until we speak next time thank you very much for listening thank you