CTEK AB (publ)

Thank you, operator, and a very warm welcome and good morning to CTEK's Q1 report earnings. Today doing the presentation is me, Henrik Freienius. I'm the CEO. And together with me, I have Tom Mathisen, CFO. And as usually, I will start with a brief recap of what CTEK is before we drill into the numbers. So CTEK was founded more than 25 years ago in a small village called Vikmansyttan in Dalarna by the Swedish inventor Bengt Wahlqvist, who made the first smart battery chargers. So that's where we have built our company on those inventions. We have today two different technologies. We have our low voltage technology and we are selling that in the consumer segment, in client brand segment, in professional for workshops and also in power solution. And the other technology that we have is for EVSE, that's for charging of electrical cars. And we're mainly selling that into destination chargers We have divided our company in two divisions, the consumer divisions that are responsible for the sales to a lot of different channels like e-commerce, Amazon and normal retailers and wholesalers. And we are targeting globally markets. The other divisions is professional division, where we are focusing on our B2B business. That is mainly our OEMs, big sport car manufacturer and car manufacturers, and also for the electrical car chargers, parking operators and destination. That's also a global market for us when it comes to client brand. We are very proud that we have been chosen by more than 50 of the world's biggest and most prestigious car manufacturers. They are using our chargers and put their brands on it. Here you can see that we are in the premium segments and a lot of our products are sold to the same customer segments. And chargers and boosters are sold in a range of different segments. And then our new adjacent power solution is sold also to some of the same customers. And EVSC destination chargers is mainly focusing on parking operators and destination charging parking garage. So digging a little bit deeper into the first quarter of 2026, despite a lowering revenue, we increased our gross margin and our profitability. And we have a very healthy cash flow, which helped our financial situation and our net debt ratio is going down to 0.8. We have also in this report said that we are doing a strategic review of our EVSE business. The background to that is that, as we mentioned in the Capital Market Day last year, we are moving into two adjacent segments in the low voltage business. That is premium boosters and power solutions. Now, after a while, when we have been working in that, we see that there is large potential for us in those segments. And we want to focus our limited resources into that. At the same time, we see, despite the leading EVSE product portfolio, we see a weakening sales development. our main market is sweden and that is at the moment a bit saturated and there is needed to focus more in germany and uk and we believe that our focus could be better spent in the low voltage segment so we are starting a strategic overview and We believe that we as a company can create high long-term value by fully focusing on our low voltage business. And with the financial stable situation that we have now, we are fully prepared to invest both organically and through M&A into this field. If we look into the quarter one, we had a very good profitability and especially cross margin. That comes from Bigger sales, larger sales in the premium charger in the consumer segment. The consumer division growth with 9% organically, which I think is good for the market condition that is today. We see that our new products that we have introduced are very warmly welcomed by our customers, and we continue to invest in the consumer division. In the professional division, we saw lower sales. depending on a weaker EVSE performance, but also very strong comparative quarter for the low voltage client brand, where last Q1, we have the first deliveries to a new motorcycle company. But we see a lot of interest into the new products like our CS1 Generation 2 with Wi-Fi for our client brand customers. So long term, it looks good there as well. With that, I leave the word to you, Tom.

Yes. And so digging a little bit deeper into the financials, I first go through the divisions. And our largest division is the consumer, now standing for 76% of the net sales. And here we managed, as Henrik just mentioned, to increase organically with 9%, driven by the new product launches and the positive development across several regions around the globe. We continue with high adjusted EBITDA, which amounted to... 57 million or just about 40%. And that is driven by both a good product mix, including the good margins on new product launches and also a good geographical mix. And on top of that, good cost control and relatively low OPEX. Continuing with professional division, standing for 24% of our turnover this quarter. It declined organically as the reasons as Hendrik just mentioned. The continuous week EBS market, but also the strong comparison quote for the low voltage part of the professional division. So by that much lower turnover, we cannot manage to keep the positive EBITDA. But the negative EBITDA is purely related to the lower revenues. Then one of our major focus areas for now and back in time as well is the cash flow and capex going forward. And we had strong cash flow this quarter. We had operating cash flow of plus 61 and also after the capex still 54. million in positive cash flow, net cash flow. The capex, as you see in the graph on the lower part of the slide, is pretty low in the quarter. And that stems from that we just finalized at the end of last year, two large product development projects and now are in startup phase where we don't capitalize in this first quarter and going into new product development projects. So the 4% is not a representative value. I believe we will go to the 6, 7% as from quarter two and onwards. But the strong cash flow has also meant both in quarter four and now in quarter one that we have increased our available cash and also did another amortization of 50 million SEC in the quarter. And again, with a low net debt ratio now below 0.8, we feel that you are in a good financial situation and well prepared for all M&A activities going forward. So with that, I hand over to you again, Henrik.

Thank you, Tom. So just to conclude the Q1, despite a continued challenging market environment and lower revenue, we managed to keep up the gross margin and our profitability. And we also grow 9% in our very important consumer division. We had a lot of successful product launches and we look forward to seeing them developing. and we also then released that we will do a strategic review of the EVSE business in order to better be able to focus our resources on our core low voltage business. With the strong financial situation we have, we are prepared to invest both organically and in M&A's to increase our focus there. And we are following our strategic path towards our financial targets. And with that operator, I open up for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Sophia Sorling from DNB Carnegie. Please go ahead.

Hi, thank you. Hi, Henrik and Tom. A couple of questions from my side. First of all, within the consumer tradition, you mentioned that the strong states were driven by public launches. Would you say that it's an effect also from the premium boosters or is it mainly from low voltage?

Good morning, Sofia. We have started to launch our boosters and sold in Q1. It's maybe not a material part of the sales in Q1, but we see definitely all of our new products, both in our new charger segments are very positively received by our end consumers.

All right. Do you expect rather a boost in sales from premium boosters in Q2?

The premium boosters that we so far have introduced is in the higher price end and not the volume boosters. That will come later this year or beginning of next year, depending on how the development works is going. But of course, we expect an increasing sales of the booster, but the real boosters, boost in the booster segment will come when we introduce the volume models.

Okay, I understand. And regarding product launches, do you have any new product launches during 2026?

Yes, we have a roadmap now for 2026, 2027 and onwards. So we are continuing to investing in new products. Absolutely.

And a question on the strategic review for the EVSE segment. Let's say that the result of the strategic review will be that you will divest the EVSE operation. My question is how integrated is the EVSE operation now in all terms of your business and how easy will it be for you to, in that case, divest this operation?

As we mentioned, we are just starting the strategic review now and now decisions are taken. But the EVSE business is a business of its own. We have separate development department. We have separate support department. We have separate sales department. Of course, we are also sharing some functions, but I would say that it's an own business and standing by itself.

Okay. Yeah, and within the professional division, so you mentioned a weak EVSE segment, but I can also see that the, within the low voltage business is also, the next stage has declined quite significantly compared to Q1 last year. How would you describe the underlying demand within low voltage within the profile division and how do you see that business or demand developing going forward?

That's correct. We had a very strong comparison quarter. Q1 last year, we made our first deliveries to a new customer, the European biggest motorcycle company, and they were filling their pipes. So that was a big boost last year. So it is strong, strong comparison figures. But the professional client brand business is a bit going up and down between the quarters, depending on when the OEMs are putting in their big stock orders. So if I look at it overall. According to my knowledge, we are not losing any market shares, more the opposite. We are upselling with our new models. So we are transitioning from old platforms into new platforms, which is also increasing the revenue and profit. So I have a very bright view of the client brand also going forward. But then, of course, everything is dependent on market sentiments and how well they are selling their cars as well.

Yeah, I understand. And a question on the gross margin, which is, yeah, which increased significantly within the consumer division during the quarter. And what would you say is the main driver behind that margin improvement and also how how to think about that margin. And yeah, is that a sustainable growth margin in your view, or is it just like a really strong one this quarter?

It is a really strong one, and it is depending on, I would say, mainly three things. We have a product mix effect, we have a regional mix effect, and we also have an effect of new products introduction. So I think We're not guiding into too much of how exactly the gross margin will look forward, but I think this one is very strong. We have improved it now for many quarters, but if it will be as strong as quarter one going forward, I dare not to say.

Okay. And a follow-up question on that. Given the increases from the premium booster, would that dilute the gross margin in your view, or do you expect to have a similar pattern as the low-voltage business?

It has definitely at least a similar margin as the other low-voltage business.

Okay. Yeah, that was all my questions. Thank you.

Thank you, Sofia.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Mattias Ehrenborg from Red Eye. Please go ahead.

Yes, good morning, gentlemen. Mattias Ehrenborg from Red Eye. Obviously positive to see a strong consumer segment once again. I was just wondering a bit about the regional performance in Germany and Luxembourg. I noticed that both regions were down quite significantly year over year. How much of this is driven by professional volumes or channel effects like Amazon versus underlying demand?

Yeah, to start with this, that we have divided Dash with separated out Luxembourg is an accounting question. We need to do that to follow the audit practice. So with that, it's no big secret that Luxembourg is related to Amazon. And you can see there a decline. And that is just... The reason that the buying pattern from Amazon is a bit changed versus last year. The outsell from Amazon is going well. So it's just a prioritization effect of the quarters. Otherwise, we can see that you also say that the German market is having a little bit of a challenge this first quarter. And we have not lost any customers. It's not that, but we have not had the best opportunities. performance during this quarter some issues with our bigger customers reorganization etc have impacted but otherwise we believe that we will we'll see stronger quarters going forward also in germany okay i think that was a good answer uh just i was just wondering a bit about um client branded volumes because i noticed that in q1 last year you had

You made big deliveries in Q1, I think, to a German customer, if I'm not mistaken. Has that impacted the comparative numbers at all for Germany as a region?

Absolutely, yes. Absolutely. It's also a big part of that.

Okay. Thank you. And regarding market conditions in general, I know that the development in the Middle East can be helping for sure, but regarding the end consumers, purchasing power and risk and so on. How would you describe the demand conditions across the consumer professional segment during this quarter? Has it changed anything during the last quarter in terms of behavior or demand patterns?

Now, we had a strong growth in Q1 in the consumer segment with 9% organically, which I think is very strong considering the market situation. So, of course, with all the turbulence that is occurring, it's not helping the consummate sentiment. But in Q1, we saw a strong organic growth in consumer segment. And I would say in the client brand, it increased. the decline there has more to do with facing and a strong comparison quarter than any underlying lower demand.

Okay. As you mentioned, the consumer segment was very strong once again in the quarter. Would you say that there's been any shift relative, if we look at the first half of the quarter compared to the second half, or is it quite even, even spread?

In the quarter, I would say it is quite evenly spread.

If we move over to your M&A progress, you have mentioned earlier that you have outlined an M&A strategy. Could you provide some sort of update on how this is progressing? Are you seeing a solid pipeline or have you moved into more concrete discussions of the current status?

As we mentioned at our capital market day, we will be looking mainly in the power solution area. And we are working on our pipeline as we speak. And we are not going to reveal any how far we are in those discussions, but we are working with them.

And final question from my side, possibly the biggest takeaway from this report, of course, on the consumer segment is the EVSE strategic review as you mentioned and those still are the days but could you elaborate on sort of the key options you're considering and perhaps some expected timeline if that's a bit tricky one.

As you said, it is tricky and we have not made any decisions right now, but we are doing the strategic overview. We believe that we have an extremely strong product offering, one of the absolute best destination charges on the market, now also certified for the German market. And we have a strong sales organization based in Sweden, but the Swedish market are at the moment a bit saturated. So we see slower sales there. We don't see that we're losing any market share or something like that, but we see that there is a slower market. And we recognize that in order to get the full potential, We want to investigate if there is any partner or any other company that maybe have a better structure in Germany, UK to leverage on that and get out our very good products.

Okay. That makes good sense. So we continue to monitor that. Thank you very much for your answers. And that was all from me. Thank you.

Thank you, Matthias. 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, operator, and thank you very much for taking the time, listening in, and talk to you next quarter. Thank you very much. Thank you. Bye.