CTEK AB (publ)

Welcome to CTEK Q3 Report 2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Henrik Fagranius and CFO Tom Mathuizen. Please go ahead.

Thank you very much, operator, and a warm welcome to CTEK's Q3 earnings call. Today's presenters are myself, Henrik Wagenius, and beside me I have our CFO, Tom Mathisen. Before we start, I do, as usual, take a short introduction of CTEK. CTEK was founded more than 25 years ago in Wikmanshytten by the entrepreneur Bengt Wahlqvist, who was the inventor of the first pulse charging charger. We have three integrated center of excellences in Falun, Norrköping and Shenzhen, where we do all the R&D, testing and quality. We have mainly two technologies. And in those technologies, we have different subsegments. So we have the consumer, client brand, professional, and power solution for low voltage. And in the EVSE, we have destination charging, client brand, load balancing, and service and support. We go to the market through two divisions, our consumer divisions that are focused on retail, and e-tailers and importers and partners. And then we have our professional division that is focusing on B2B business, where we have our client brand business and also our EVSE business. We have been chosen by the best customers. We have more than 50 premium sport cars manufacturers as our client brand business. And as you can see on the picture, a Lamborghini is one of them powered by Ctech. So who are using our products? It's a lot of different customers segments that are using our products all from Motorcycle, cars, sport cars, workshop, commercial vehicles, boats, RV vehicles, and then for our EVSE business, it's parking operators, charge point operators, and others. And as you can see, our main segment today is the chargers and they are covering most of our different consumers and also boosters are going to be covered by the same. And then we have power solution overlapping and we have the EVSC for short points operators and parking operators. As you might know, we announced our financial goals in May this year, and we have done this illustration to show the way forward toward our goals. And we have covered the three first steps. And during Q4, we will also be able to cover the next step, launch of new products and product categories. With that we are then digging into the third quarter. Our turnover was 212 million SEK, organic growth of minus 1%. However, if we exclude the GM business that we have discontinued, it was an organic growth of 4%. And the growth were mainly coming from the low voltage segment, which also then helped us to achieve very high gross margin of over 59%. The adjusted EBITDA landed on 32 million, which is just above 15%. And the cash flow was minus 19. And we have a net debt ratio of two. So the key takeaways is that the low voltage segment is continuing to grow. It was... a lot of sales to Amazon in the quarter. They have changed their purchasing pattern a bit. They are now taking direct deliveries from Asia, which means that they are ordering a bit in advance. So that will have an impact In Q4, we are growing with Amazon as a customer and we have been growing with them for over five years now. And we are growing also this year, but there is a little bit of a different pattern in their ordering. We also see good traction in our client brand when it comes to our EV charging. It's a slower market, but we have a very good offer there and we get good customer feedback and we are also launching new products. When it comes to cash flow, Q3 is not our best quarter when it comes to cash flow. This quarter we also had a late payment from one of our big customers of 20 million that came 2nd of October instead of the week before that impacted the quarter. But we see that and we will come back to more details for the cash flow. We are also on plan when it comes to our upcoming product launches, and we are increasing the nearby addressable markets significantly. And in the fourth quarter, we will introduce CS1 with Wi-Fi function, the NXT series, and of course, our premium boosters. So with that, I hand it over to you, Tom.

Yes, thank you, Henrik. So dig a little bit deeper into the financials for quarter three. We can see in the consumer division that stands for about three quarter of our turnover. We have higher net sales than the same quarter last year, 12% organic growth. As Henrik said, partly related to a different purchasing pattern from Amazon, but still good sales. We continue to have strong and high EBITDA levels in this division of about 41%. For the professional division, as you which obviously then stands for one quarter of our turnover. We see a different pattern. It's a net sales decrease of around 27%. And this comes partly from the seized collaboration with GM, but also from the lower activity in the EVSE market. EBITDA is on a zero level. I think it's important to notice that in these numbers, we have taken a hit of 2 million SEC related to retroactive correction of import duties in Europe. Without that, we would have continued to have a positive EBITDA margin of around 4%. Coming then to cash flow and cutbacks. So as Henrik mentioned, not the strongest quarter for us, and that is a seasonal pattern that we have seen the recent years that in quarter three, we usually have negative cash, but then it comes back in quarter four. And in this particular quarter three, we had on top of the normal seasonality also They changed Amazon pattern with strong sales to Amazon during quarter three, but they have also longer payment terms than the average. And on top of that, we had a big customer with some late payments that also impacted the cash flow in the quarter. So we expect as previous years to have a positive net cash in quarter four going forward. CapEx, as you see in the graph below, we continue, as we have communicated before, to go back to more normal levels. We should invest in CapEx for us is investment in new products. We should have a rather high, but not as big the peak we had in 22, 23. So we are now back to more normal levels. And as Henrik also mentioned, we still get out new product that we are launching now in quarter four. We continue to keep the net debt ratio on two. This is well below the financial targets of three. So with that, I hand it back to you.

Thank you, Tom. And then to summarize the quarter, we took a big step towards our financial goal when it comes to profitability. That was thanks to good sales in the low voltage segment. And we had a record high gross margin. We are also looking now forward to the upcoming product launches and the increase in the addressable markets, which will help us to also reach our goal when it comes to turnover for the next coming years. So the highlights then for the coming quarter is the CS1 Wi-Fi introduction, the NXT introduction, and the premium booster introduction that will come at the end of the year and have significant growth in 2026. So with that operator, we hand over to question and answers.

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 Tom Gwinchard from Pareto. Please go ahead.

Hey, guys. Just a few questions from my end. Starting off on the Amazon delivery and order patterns, can you quantify that to some extent, the impact in Q3 and expected impact in Q4 here on a year-on-year or sequential basis?

Yeah, it is a bit hard to quantify it for Q4 because we don't know how Q4 will end. It's a lot about depending on how Cyber Monday and Black Friday and those events are going. going. But we have seen that we are growing with Amazon so far. But I would say that the impact for Q3 of the year would have been 20 to 30 million in preponed and majority of that in Q3.

All right, perfect. And then just on the sort of timing on the new product launches, how fast can you get them to market once the product is launched? Do you have any indicative sort of lag between product launch and revenues?

There we are a little bit dependent on our partners and how quick they can get it into their stores. We will start the selling as we speak of the NXT series and the booster will then be in December and the CC3 iFreshed will be very late in this year. So we do not foresee any major impact in Q4, but then ramping up beginning of next year.

All right, so gradual scaling throughout 2026. Do you have any volume indications on sort of year end 26 or full year 27?

No, we do not do any guiding there. All right, perfect.

That was all from me. Thanks.

Thank you, Tom.

The next question comes from Sophia Sorling from DNB Carnegie. Please go ahead.

Yes, thank you. Hi, Henrik and Tom. My first question then. So if we look at the steps to your financial targets, you mentioned that you expect some 50 million sales within EVSE, those supported by the UK and Germany market during 2026. So my question is first on the UK market, it has been quite challenging if you look one year back for you and how is that progressing during the quarter? Have you seen any improvements, although at low levels, but have you seen any improvements in the UK market that actually support the sales into 2026?

It's still a tough market situation. We have seen a little bit of stronger customer interest in our products. So we've seen customer coming back to us, but I think it's still a tough market situation. The feedback that we have received from our customers is that they like the products very much. It's a robust product with very high uptime. And I think when we see the market turn, we will also see some orders coming in also in the UK.

All right. And in Germany, have you already planned for and have you any feedback from potential customers ahead in Germany when you will launch? a specific product in that market?

We have started the discussion, of course, with our pan-European existing customers, and that's our goal to start with them also in Germany. And as mentioned, we have received good feedback on our product, but they are, of course, eagerly waiting for the products to come out physically.

Okay.

and great and you talked a lot about the new product category of premium boosters but what about power solutions can you elaborate a little bit on that phase one we are heavily in work with that we are now in the development phase of phase one of the power solution and that is planned later for 2026.

Okay, is that... a new communication from your side that you're planning later on 2026 for Power Solution?

No, Power Solution, if you look at the stair that we have made, it is there in the 2026. I would also say about already in January, February, we are launching some products in the Power Solution segment, our iChargers. But a more broadened product portfolio will be able during later in 2026.

Okay. Great. That was all from me. Thank you.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Tom Gwinchard from Pareto. Please go ahead.

Thank you. A follow-up on power solutions. Just wondering how closely related is your sort of projected volumes in Europe if you look at RV sales and also in the maritime sector, the market development there. How closely tied is it to new build in your outlook and estimates here?

I would say that 50 50 50% towards new build and 50% toward the aftermarket. And the aftermarket is, of course, a very big portion of about I think it's about 15 million RVs registered and 50 million boats registered.

And in terms of geographical split here, primarily, Europe focused or any specific geographies you're targeting there?

We have said that we are targeting Europe as priority number one and then also Australia since we are strong in Australia and after that also US.

So the market in Australia has picked up quite significantly post COVID if I'm not mistaken, right?

Yeah.

But then relatively flat to mute the new build demand in Europe and quite weak in the US. Is that a correct picture?

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

Good morning, gentlemen. I was just curious to hear about the reason behind the improved profitability in that professional segment in this quarter despite the lower sales volumes.

note that other external expenses was quite low in the quarter on a group level and i was just wondering if there's any correlation there yeah q3 is of course uh a good quarter when it comes to opex because we we have a lot of the people on vacation so we have normally a bit a little bit lower opex in q3 when it comes to the professional segment uh i would say that there is uh a higher share of low voltage products and also we have better margins in our newly launched EVSC charger CC3.

Okay and just going back to the other external expenses being down a few millions year over year. I suppose you still had the holiday effects last year. So is there anything in particular that affects this quarter or how could we view that?

No, I would say this quarter, it's a little bit how this vacation period has spread over the quarter as well. But it's also a little bit the reason we have still continued to take down some of our OPEX expenses, less of consultants during the year, et cetera. So that also have an impact on the OPEX for the quarter.

Okay, excellent. And also looking at your geographical sales split, We note that the dark region was quite strong in this quarter, whereas the rest of Europe was quite soft. I suppose the former was driven by Amazon, if that's correct. But what is the reason for the rest of Europe being relatively weak?

You're right. The dark region is, among others, Amazon, are strong in the dark region. And the rest of Europe, I would say that We have seen gradually better in Scandinavia if we take from the start of the year. But it is still not a supermarket out there. People are a bit hesitant. But we see Scandinavia is coming back. They had a weak start of the year, but they are coming back. And I would say the rest of Europe is scattered.

Okay, so no major accounts being the driver here, so to speak? No, no. Okay, excellent. And I also just wanted to get back to the power booster launch. Maybe it has been answered already, but do you expect a gradual ramp up in sales or will it be, do you expect an inventory build up from your customer's perspective going into Q4, for example?

Now, since this is a new segment for us, I would say that it will be a gradual ramp up. It takes some time for the customers to test them and get them out and get end consumer feedback, et cetera. So it will be a gradual ramp up.

Okay. Going to the EVSE sales in the quarter, I know you often emphasize that it's more driven by infrastructure investments and new build rather than EV sales in specific quarters. Although I suppose this should correlate over time, of course. What are your current main and near-term challenges, would you say, for the EVSE segments?

As I stated, I think we have a very good product out there. We have a very good and solid offering to our customers, and they seem to appreciate that. We have got some awards for the best uptime, and I would say we need people to start building more garages and refurbishing existing garages. So it's really about what needs to start and then of course We are looking forward to open up Germany as a big market and also continue our efforts in UK Okay Thanks for that and just a final question from from my side We've seen several big car OEMs recently pushing their EV targets in time and also increasing R&D spending on hybrids and

even combustion engines. What is your view on the current state of the low voltage market if you also consider a short-term perspective and a long-term perspective?

Short-term and long-term it's very positive. We see that the market for our low voltage product is mainly on seldom used vehicles like sport vehicles like boats etc and of course the the growth of hybrid is also positive for us because they use both the ev charger and the low voltage charger which is also the same for EVs or for complete EV vehicles. So I don't see that we are so vulnerable to those trends. We have product offering for whichever direction it will go into. And we are certain that there will be long term demand for our low voltage products.

But do you see a weak EVSE market being positive for your low voltage market in a long-term perspective, or can both markets coexist in a long-term perspective?

Yeah, both can coexist. There is also a 12-volt battery in EV cars, so both markets can coexist, and I wouldn't say that one or the other is better for us. Okay.

Thank you. That was all for me.

Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you very much for listening in, and looking forward to hear from you soon