Coor Service Management Holding AB

Good morning ladies and gentlemen and welcome to the core service management Q1 2025 conference call. At this time all lines are in a listen only mode. Following the presentation we will conduct a question and answer session. If at any time during this call you require immediate assistance please press star zero for the operator. I would now like to turn the conference over to Ola Klinginbord CEO and president of core. Please go ahead.

Welcome and thanks for listening in to core's Q1 report. My name is Ola Klinginbord and I'm the president and CEO of core. I started my position seven weeks ago so I thought I'd start out by giving you some initial reflections on my first time with the company, my first period here with the company and to give you an overview of the market. I will then hand over to our CFO Andreas who will present some more details around financials before we summarize some key takeaways and and have an opportunity for a Q&A. So starting out as you see from some of these illustrious pictures I've been really going around the core business during my first week. My focus has been to really get to know the business and understand our opportunities and challenges. So I really conclude going forward some insights from from all of these visits and the analysis that I make from that. However at this point there is still a fact-gathering process going on. But I've already met with many customers, I met with our employees and I can really conclude that we have a fantastic set of employees. There's a lot of high competence, there's drive, great commitment, commitment to service, commitment to our clients and strong professionalism throughout our employee ranks. There's also strong customer relationships with long-standing clients that we've been working with for many years as well as some new ones and it's really obvious that our customers' relations goes deep and are really really strong. Also it's obvious I think that we have an attractive offering and that there's really strong demand for our services and that there seems to...so that is that I think that that is really really clear. So those are some of the kind of key findings from from from these first couple of weeks in the business. Now going forward here and looking a little bit more on the view of the market, I think some of these realizations, those strong customer relationships etc. already this quarter transformed into some good deals. I would like to highlight the Ekinor win that we did this quarter which is a backbone for the Norwegian business. It's an oil and gas contract with the oil platforms and that is now prolonged for another five years with additional opportunity to prolong even further and it really creates a stable base for our Norwegian business for good times of going forward. Also in Denmark we signed a new contract with Copenhagen towers which is also a landmark in Copenhagen that we think will be good addition to our portfolio. Also a lot of smaller prolongations and new business coming in so I think it's a good testament to the fact that there is a strong demand for our services. We look we're confident from the market situation. It's stable and unaffected by some of the turbulence that we've seen in the rest of the markets, at least so far. So those are some initial reflections and with that I'd like to hand over to Andrea to take it through some of the numbers.

Thank you Ola. We'll start with an overview of the business KPIs. In the first quarter organic growth is negative 2% and that is from ended contracts and somewhat lower variable volume. The EBITDA margin for Q1 is .7% and that is a significant improvement from the .3% we presented previous quarter. Cash conversion that is an LTM number and ended at 81%. Also that a stable improvement compared to the 57% previous quarter. More details around that later in the presentation. Leverage also that an LTM number ended at 2.8, a slight decrease from previous quarter driven by the improved cash flow. On the P&L net sales ended at 3 billion 52 million SEK that is 2% down compared to last year. Organic growth negative .8% and FX negative 0.5%. The adjusted EBITDA amounted to 144 million SEK which gives an EBITDA margin in the quarter of 4.7%. Items affecting comparability during the quarter amounted to 20 million SEK mainly from redundancy costs for related to the changes in the organization that we implemented during the first quarter. Net income is 50 million SEK and adjusted net income when adding back amortization amounts to 64 million SEK. On the Fulje numbers we see that net sales is close to 12.4 billion SEK. Fulje organic growth is negative 1.4%. The Fulje adjusted EBITDA level is 530 million SEK which gives an EBITDA margin of 4.3%. Adjusted net income for the full year is 176 million. A quick status on the implementation of a more simplified and unified organization for support functions that goes both central and in the countries. We announced that in the previous quarterly report. The changes will give us a more efficient and flexible organization that has better conditions to realize the effects of the ongoing harmonization work in the company while also reducing personnel expenses in administration throughout the organization. In total the changes involve a reduction of some 130 positions and full year savings of some 120 million SEK. The new organization took effect on April 1st and the savings will be generated gradually during the first half of the year. The implementation has proceeded well. The timeline we set up has been followed and risks associated with such a change have been mitigated in a structured way. The purpose of the changes have been well received in the company and we now have partially new assignments for our staff functions with higher focus on operational efficiency. We then move over and looking at Q1 country by country and starting off with Sweden. We see organic growth of negative .6% in the quarter. Effects from new contracts that are offset by the ended property part of the contract with Saab. We also see a more normalized level of variable volume compared with high levels in the same period last year. Adjusted EBITDA of 145 percent, the current margin at 8.7 percent. A solid improvement from previous quarters margin of 7.3 percent. The operations in Skarabajstäd performed as expected in the first quarter and the measures implemented last year are now completed. High personnel costs continue to have a negative impact on parts of the operations although at lower level than in the previous quarter driving the improvement. The Swedish organization continued to actively work to strengthen its workforce planning capability to further improve operational efficiency and profitability. We then move over to Denmark. Organic growth of negative 5% in the quarter primarily explained by a couple of ended mid-sized public contracts as well as somewhat lower variable volumes within both property and for snow removal. Adjusted EBITDA at 34 million SEK and margin at 4.8 percent is significantly stronger compared to previous quarter. We see positive effects of improvements in operational control of the business resulting in better stability in the financial results. Margin improvements from previous quarter is also explained by a positive retroactive one-off effect which contributes positively with some 0.5 percent. As in Sweden there is a continued focus to further improve operational efficiency and profitability and to continue create stability. During the quarter Peter Hasbakt was appointed CEO of Core Denmark as of August 1st. Peter will join Core from his role as CEO of In Norway we see organic growth at 5% from high variable volumes which offset the effect of a contract that was proactively ended in the previous quarter. Adjusted EBITDA for the quarter amounted to 20 million SEK and margin was 3.7 percent. Performance were largely in line with last year's first quarter somewhat positively impacted by the proactively ended contract. And last among the countries Finland we see organic growth of negative 9% per quarter that is from a couple of smaller contracts that was ended as well as lower variable volumes related to snow removal. Adjusted EBITDA and margins are in line with last year. Moving on to cash flow and balance sheet. During last year we saw an increase of working capital as a result of changes in the contract portfolio and year and balance effects and to some extent due to way of working. A number of measures have been taken to reduce the level of working capital in 2025 and during the first quarter working capital was reduced by some 200 million SEK resulting in a significant improvement in our key metric cash conversion to 81 percent compared to 57 percent in the previous quarter. With that we also see net working capital as percent of net sales at the more normal level at negative 8.3 percent. The company remains focused on additional working capital reductions in 2025. Leverage that is on the bottom right of the slide decreased to 2.8 from improved cash flow. A quick revisit of the cash conversion development presented in the previous quarter. You have the numbers presented then in red at the slide. The improved cash conversion in Q1 is driven by reductions in working capital built up last year. Temporary effects from balance day effects at year M has been fully restored and is the largest single driver behind the development in Q1. Negative effects from initial build up in new contracts has been partly recovered in the quarter. The same goes for the backlog in our billing process as well as the effects in personnel related liabilities. We remain confident that with the actions being implemented our working capital profile will be restored during 2025. And with that I hand it back over to Ola.