CTEK AB (publ)

Thank you so much, Operator, and warm welcome to today's presentation of the Q3 report on CTEK. So I will start with some overall information about CTEK. CTEK was founded more than 25 years ago by this happy man and entrepreneur Bengt Wahlqvist in Vikmanshyttan, Dalarna. We are doing all our product development, design, and testing in Sweden. And then we have production in Asia and Mexico. We are chosen by the best. We have almost all premium car manufacturers as our customers. And here you can see a nice Lamborghini co-branded with CTEK. We are mainly having two technologies. One is the EVSE, which is chargers for electrical vehicles, and the other is low voltage, where we are having chargers for consumer, we have chargers for workshops, and as I mentioned before, for client brand, and also integrated solution that could be in recreational vehicles or in blue light. Here we have tried and show you where we have addressable market for our different products. If we start with the electrical vehicles and the plug-in hybrids where we can sell our EVSE chargers, but it's also demand for our pro chargers for the workshops and also every EV and plug-in hybrid has also a 12-volt battery that might needs to be taken care of. For the combustion engines, we have our 12 volt chargers, both the consumer version and the client brand and the workshop. Then we have two other segments where we have more or less only dipped our toes so far. It's the recreational vehicle and leisure, a segment I know from my previous work at Dometic. And there we have today different products, but there is much more addressable market to go into. and then we have industrial that could be material handling or robots where we also have products today and so far quite a small footprint there is more addressable markets to gain if we look at the way how we go to the market we have two divisions one is the professional that are catering to the B2B. It's the client brand low voltage chargers and it's also our EVSE chargers. Customers could be the big OEM premium car manufacturers like Ferrari, Lamborghini, Porsche and also for the EVSE it could be parking operators, CPOs like Vattenfall, APCOA and others. Our biggest segment or division is when consumer, where we sell our consumer products in the low voltage. And their typical customers is e-tailers like Amazon. It could be distributors and also retail chains like Hyla and Mekonorme. And there we are having sales in more than 70 different countries. So if we then walk into the figures for Q3, It's a very stable quarter. We saw an organic growth of 15%. We increased our gross margin with 4.8% units to 56.4%. Adjusted EBITDA, 30 million. That was an increase to 13.6%. Q3 is our seasonally lowest when it comes to cash flow. We ended up in just minus 3 million compared to minus 14 million last year. EVSC share is 15% and we have a solid financial situation with a net debt ratio of two times. So I'm happy to see that we are following our strategy. And in phase two, we are focusing on organical growth. This is the second quarter in a row that we can show organic growth for the group. And the organic growth was, as I mentioned, 15%. We increased our profitability and we also saw the best ever third quarter for the consumer division. If we talk a little bit more about low voltage, this was the fifth consecutive quarter with organical growth and the four latest with double digits. The reason to that is that we have seen higher sales in our pro chargers for the workshop. We also see that our premium charger CS1 is selling very well. We see also that we're growing in client brand by the OEM. And we see that the focus sales activities are paying off. We are gaining new customers. We are growing with existing customers and we are taking market share among others by the e-tailers. So Tom, I leave it to you.

Yes. So some financials for the quarter. So I come to this very crowded slide with a lot of numbers and I repeat a little bit of what Henrik just said. We are happy to see the 15% organic growth on the net sales up to 222 million SEK for the quarter. And also, of course, happy to see that it has paid off in both higher gross margins, but also higher adjusted EBITDA from 18 to 30 million, which compares to 13.6% versus 9.1% same quarter last year. We have an item affecting comparability of 4.7 million, and that is only related to what we announced in last quarter, that we are moving our head office from Wikmansyttan to Falun. We still have it in Dalarna, but on another place. Coming to some more information from the divisions, as Henrik mentioned, we have a very strong quarter again for the consumer division, which stands for two-thirds of our net sales. Now coming up to 150 million for this quarter in net sales and a good adjusted EBITDA of 40% plus for the period. And again, continuous growth quarter on quarter. Coming to the professional division, obviously then standing for the one third or the other part of the net sales. It is an organic growth, even on a lower pace for this quarter. We are still, of course, not happy with that. We have a loss on the EBITDA level. But worth to mention here is that, as you recall, we did this reorganization to two divisions and formed a professional division in the middle of quarter three quarter four last year and as you can see on the graph on the bottom part of the slide you can see that they have a constantly improving margin from low levels but even so better without having any help from the volumes so with higher volumes on in the professional division we will turn these to positive numbers going forward Some words about cash flow and capex. Obviously, very important for us to keep under tight control. As Henrik mentioned, quarter three is a seasonally tough quarter for the cash. We are, however, improving from minus 14 last quarter three to minus three this quarter. You can see that we have cash and cash equivalents going from 144 to 98. That is actually just because we have amortized 100 million SEC earlier this year. It's number by number actually an improvement. I say and that also shows that we have now refinanced during quarter fee our credit facility with Swedbank and that is on this in the same amount as before 600 million sec we were free plus one plus one year validity on the down graph you can see that the capex as we have said before we have been on very very high levels we are going back now to more normal levels that will probably maybe continue to go down another percentage or so going forward but it's still high it should be high because we are a company that is have to develop new products all over time So by that, I hand it over back to you, Henrik.

Thank you, Tom. So as I mentioned, a stable quarter, second consecutive quarter of organic growth for the group, increased margins and a solid net debt ratio, strongest third quarter ever for the consumer division, and first quarter with organic growth for the professional division. And that makes the fifth consecutive quarter of organic growth for the low voltage business. So this picture I've shown a number of times before, this is our three phases that we're following. The first was stability, where we got our cost under control. And now we are moving within the phase two, where we have a focus on profitable growth. And this is the second quarter that we show organic growth. So we are well into that phase. And then later on, we will enter phase three with more accelerated growth geographically and product expansion and also investigate M&A possibilities and moving into other segments. So with that, I open up for questions.

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. The next question comes from Johan Eliasson from Kepler-Chevreau. Please go ahead.

Yes, good morning, Henrik and Tom. Johan at Captain Chevroix here. Just a question a little bit. I mean, you once again had the strong numbers, as you point out, for the low-voltage part. As I remember it, it sort of kicked off last year with a very cold and early start of the winter period in the northern hemisphere. I mean, that means that from a weather perspective, you have a bit of a tough comp. How does it look into Q4 as of now? Will you still be able to grow in this quarter?

Yeah, good morning, Johan. As you mentioned, in Q4 last year, there was some very cold weather, which we are happy for. So it is tougher comps, but we see a stable business. And we are, as you know, not guiding for Q4, but we see a stable business. And we are a better company right now. We have worked with our sales force. We are increasing our sales force. We are having made better processes and we are gaining customer and momentum.

Excellent. And as part of those actions, are you seeing that you are sort of taking market share in the US, for example, on the low-voltage side.

If we look at the total group, we can see that we're growing with 15% and there is no detailed market share analysis for the low voltage segment. So we know that we are gaining market share for in among some e-tailers where we have a little bit higher visibility. We are gaining new customers and we are growing with existing customers as well. and north america we just moved the uh the uh production to malaysia uh to avoid the tariffs and uh we have hopes to that we will uh expand in north america the coming quarters but but the good growth is not necessarily north america now it's it's sort of in your traditional markets where you're expanding it's um i would say it's broad over the our core markets and the whole company has

Okay, excellent. And on the Malaysia move, are you expecting the same sort of gross margins that you have today? Or is there any negative or positive effects with or without these tariffs today?

When we're looking historically, we have been a little bit too highly priced compared to our customers. We should have a premium price, but that has been a little bit too high in North America. So we will adjust the price level so we are getting more competitive in the North American market. And I foresee that we will keep our good gross margins going forward.

Okay, excellent. And then just on the, you mentioned here that you will have an additional 20 million from the GM contract related to the earlier version. Can you say anything about the sort of newer version you are supposed to sort of continue to sell in the years ahead?

We have very low visibility about that. So I would have to refer you to GM's communication there. And even if they sell EVs, then the dealer also need to sell the charger. So we are not in control of that.

Okay.

Thank you very much. Thank you.

The next question comes from Mattias Ehrenborg from Redye. Please go ahead.

Hello Henrik and Tom. Mattias Ehrenborg here from Redye. Just a few questions here from my side. I want to start off with the North American market and especially with the big customer there, General Motors. I noticed in the quarter that they had very steep sales growth within EV and also in Q2 as well. Have you seen an impact from this on your side of the end or what's your view on that?

No, we still have very low sales in North America.

Looking forward then, do you see launching new car models especially premium where you are sort of towards. Do you expect any, I don't know, significant movements in order intake from that or is there anything you can share on that?

Now we have very, as I mentioned, very limited visibility about that. So we don't, I can't guide any direction there. However, for the North American market, we are looking forward for the low voltage now with our production moving to Malaysia.

Just to relate to that, you expect to, you obviously have a big, big portfolio of some really big brands in the car spectrum. Do you expect to gain some new customers related to this or is it more expanding on the existing ones but in North America?

I would say it's both. And I think when it comes to cars, we have almost all the premium car manufacturers in the world as today. But I'm happy to see that we gained one of the biggest European motorcycle manufacturers in the quarter. And I think there we have more motorcycle manufacturers worldwide to approach and to sell to.

Just related to that, do you expect to see any significant sales from this new motorcycle contract or is it more a testament to Seatec's offering so to speak?

I would say that we will see sales in Q4 and then it's always depending on what is significant or not but we will see sales already in Q4 for that customer.

Also just looking into the professional segment which you posted some uh very solid improvement in the eda during this quarter um is it primarily due to the sales mix or is it also opex that comes into play here that you have reduced or what does it look like underlying yeah the the main reduction of opex we did uh

beginning or end of last year and beginning of this year. So I would say it's the sales mix. We see that the client brand low voltage is selling very well. And that helps, of course, the gross margin in the segment. So I would say that's the main factors.

Can you tell us anything about the ongoing You launched the CT3 earlier this year, especially in the UK. What has been the development during this quarter, especially in the UK market, would you say?

You mean the CC3? Since it's a very slow EVSE market overall, we have been focusing on selling out our old model CC2. And we have delivered some of the CC3 and the customers are really happy, but it is generally a slow EVSE market. So we're focusing to getting out the stock of the old products.

Just a final question from my side then. Obviously a very strong report especially with regards to the low voltage sales and the consumer segment but you already touched on this earlier but the underlying demand during Q4 this far, could you give us some sort of sense of what it has been like? Someone mentioned earlier quite tough camps here in in Q4 relative to last year, but the underlying demand, what would you say it has been like?

We're happy with the changes that we have done and the focus that we have brought into the organization and all the improvements that we have done. And we are not guiding, as you know, but we see a stable development.

Excellent. That was all for me and congrats on a solid report. Thank you.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you, operator, and thank you all for participating in today's webcast. And I wish you a very good day and talk to you soon again. Bye.