Cavotec Group AB

Good morning and welcome to Cavitec's second quarter presentation. I am David Pogels, the CEO of Cavitec and together with me today I have as usual Joakim Waldqvist, Cavitec's CFO. I would like to start with a short introduction. For those of you who are not familiar with us, Cabotek was founded 50 years ago by three entrepreneurs in Sweden. Since the foundation, Cabotek has focused on delivering innovative, engineered solutions that enhance safety, reliability and performance in areas such as ports and industries where our electrical cable reels or radio remote system controls are needed. Our products enable decarbonization of ports, mines and other industrial applications. As part of our global expansion, Cavitec moved to Switzerland in 2007. Last year we successfully completed the move of our registered office back to our roots in Sweden. As part of that transaction, we relisted at Nasdaq Stockholm with our new Swedish parent company. This move brings us closer to our shareholders based in Sweden and will enable us to become more efficient in HR. Today, 50 years after our foundation, we are present across the globe with over 700 employees. So I would like to comment on the highlights in the second quarter. Both order intake and revenue developed well. Order intake grew over 11% and the revenue increased by more than 25%. Our order backlog is now record high, which reflects the strong demand for our products and services. Despite the strong revenue performance, I'm not satisfied with the results for the quarter. Profitability has been negatively affected by mix effects, partly caused by delayed deliveries for a few larger shore power projects with low margins. These orders were signed already in 2024. However, I would like to underline that we are confident with the margins within the order backlog for the second half of 2026. In the beginning of the year, we announced that we will implement cost savings measures during the year to reduce our costs by a total 3 million euros with a full effect early in 2027. During the first half of the year, we incurred a restructuring cost of 1.1 million euros. The measures that we have taken during the quarter include the closing of the Rotterdam office and moving the remaining headquarter functions from Lugano in Switzerland to stop. Another important measure is the shift of the group financing from Switzerland to Sweden. During the quarter, we entered into a new five-year financing agreement with SEB in Sweden, which gives us more favorable terms compared to the previous financing in Switzerland. During the quarter, we have presented several significant contracts that demonstrate the demand for our products and services. Among all, we renewed our service agreements with the Port of Salala in Oman for another two years. Under the agreement, we will continue to be responsible for 24-7 on-site repair and maintenance for 32 more Master Baker mooring units, which we have delivered to the port. We signed the first agreement already 2016 and the agreement reflects the trust built over decades of collaboration. During the quarter, we also presented an order worth approximately 1.1 million for shore power equipment for an expansion of the cruise terminal in Southern California in the US. We had delivered shore power systems to this customer before and are of course excited to be part of the next phase of the cruise terminals development. Another key win is the €7 million order to retrofit container vessels for shore power. Retrofit work will be carried out while the vessels remain in operation in order to not interrupt the sailing schedules. This is complex operations, but we have done this several times before, so we built up the experience and this order really demonstrates our expertise and leading position in this field. We are also, of course, proud that we have closed an €8 million shore power order from a leading global shipping company. Following this order, more than 350 vessels in the customer's fleet will be equipped with Cabotec shore power systems. And this order reflects the continued confidence that leading global shipping companies place in our shore power solutions. And as I said previously, we also shifted group financing from Switzerland to Sweden by entering into this agreement with SEB. I will now hand over to Joakim for more detailed comments on the financial performance in the quarter.

Thank you, David. As David mentioned, order intake increased in the quarter with 11.3% to €49.4 million, driven by a good demand for industry products and service offerings, especially motorized cable reels. and maritime did not show an increase in order intake in the quarter, but it's important to keep in mind that we do see a strong underlying demand driven by the need for electrification and decarbonization in the marine industry. Following the good order intake in both Q1 and Q2, we now have a healthy record high order backlog of close to 156 million Euro. I would also like to remind you that Cavotec is a project driven business, which means that both order intake and revenue fluctuates between the quarters. The project driven character of the business also means that we have long delivery times, often over a year for larger projects, such as installation of shore power systems. Moving over to revenue. We saw a strong revenue development in both ports and maritime and industry with sales increasing 34 and 12% respectively. The main development is mainly driven by the good demand for shore power systems and motorized cable grids. Moving over to EBIT, as David said in his introduction, we're not satisfied with the profitability development in the quarter. EBIT decreased to minus 2.2 million with a decrease in EBIT margin of three percentage points to minus 5%. This development is a consequence of mixed effects, partially caused by delayed deliveries of a few larger shore power projects in Southern Europe with low margins. Those orders were booked already back in 2024. Like David said, I would like to emphasize that we are confident with the margins in the order backlog for the second half of 2026. In the quarter, we also have taken 1.1 million Euro for the cost savings measures and the adjusted EBIT decreased to Euro minus 1.1 million with an adjusted EBIT margin of minus 2.5%. Moving over to the net profit. Net profit for the period decreased to minus 3.2 million euros and going forward one should note that we have been successful in implementing our cost savings measures during the quarter and we expect the run rate to be lowered by a total of 3 million euro with full effect early 2027 but we expect to see some effects already later this year. Moving over to the segments, starting with the biggest segments in ports and maritime. Order intake decreased 4.5% to 28 million and the order backlog was essentially unchanged from the first quarter. We noticed a good revenue development though, with an increase of 34% to 28.5 million, which is reflecting the deliveries of the large number of shore power solutions. However, profitability has been negatively affected by mixed effects, partially caused by delayed deliveries of a few larger shore power projects with low margins. Adjusted EBITDA decreased to Euro 0.6 million with an adjusted EBITDA margin of 1.9%. Remember that Ports of Maritime has a project driven nature with long lead times that can impact the performance between the quarters. Moving over to the industry segment. We are happy to see that in the industry segment, the order intake increased by 42% in the quarter to 21.4 million, mainly driven by a very good demand for motorized cable reels. Following the strong order intake, the order backlog increased with 11.7% to 27.7 million euros. Revenue also increased 12.5% to €16.2 million, driven by deliveries of motorized cable reels and a good demand for services. Adjusted EBITDA showed a small decline to €-0.2 million, with an adjusted EBITDA margin of –0.9, mainly due to product mix effect. Although Q2 profitability was below last year, we believe that industry is really improving long term and that the increased customer focus and activity will deliver good results. We still have more work to be done in the industry segment, but we are very pleased with the development and we continue to see big market potential in this segment. Let us move over to cash flow. The operating cash flow and financial position were affected by the lower result in the quarter. At the same time, we have a bit higher inventories as we're building up for the second half of the year and upcoming deliveries. By that, the net debt increased a bit to Euro minus 10.9 million from 8.8 million in Q1. The leverage ratio also increased a bit to 2.33 compared to 1.58 in the previous quarter. As David mentioned, we have now also taken the last steps of the move of Seat from Switzerland to Sweden by refinancing CaboTech in Sweden with better condition. This financing was finalized in June. With that, I'll hand back over to David for some final remarks.

Thank you Joachim. Let me then quickly summarize our presentation. We saw a strong order intake and revenue growth in the quarter, driven by healthy demand for our products and services. Our underlying markets are continuously strong, driven by the megatrends of electrification, automation and regulations. So I'm satisfied with the momentum that we have within Cavitec in our sales activities as well as the overall activity in the underlying markets for our products resulting in a strong order intake and a very high and or solid order book. All time high clearly as Joakim mentioned. We did report a hit on our profitability in this quarter, but we are confident that the margins in the order backlog in the second half of the year are good and we have successfully implemented our cost saving measures during the quarter. Even though this quarter was a disappointment when it comes to the profitability, we are confident that we will deliver long term value for our shareholders. By this, I have ended our second quarter presentation and I'm now ready for take questions.