Dustin Group AB (publ)

Good morning, everyone, and warm welcome to this Q2 presentation from Dustin Group. As you heard, Julia and I are here to present the result to you. I think we can have a look at slide two and what we will go through today. We will, of course, go through the Q2 result, but we will also talk a little bit about our strategic focus and the way forward, as well as the announced rights issue. So if we then move on to slide three to the Q2 result. As in last quarters, sales was affected by a weak market with continued general cautiousness by the customers in many of our customer groups. However, we saw some positive developments in both LCP and SMB. Sales in the quarter was 5 billion, 408 million, or 4.5% above last year. In SMB, organic growth was negative 2.6, while LCP was up by 6.4%. In LCP, we were recovering some of the delayed volumes from Q1 as a result of the IT platform implementation, but we also won new contracts. In SMB, we saw some stabilization of the market and the negative market development was slowing down. Gross profit ended at 762 million compared to last year's 856 as a result of lower gross margins. Gross margin was 13.9% compared to last year's 16.3. We will talk a little bit more about that in the next slide. Adjusted EBITDA came in at 110 million compared to last year's 201. Items affecting comparability for the quarter was 55 million and was totally referring to the efficiency program that we have implemented during the quarter. We have also made a non-cash impairment of primarily goodwill of 2.5 billion. And we'll talk a little bit more about that later in the presentation. EBIT ended at negative 2 billion, 503 million, mainly as a result of the impairment effect. cash flow from operating activities was 180 million positive compared to last year's negative 202 million. And leverage at the end of the quarter was six times compared to four times last year, leading up to the announced rise issue. So this we will talk more about later. If we then have a look at the gross margin on slide four, as I said before, gross margin this quarter was 13.9 compared to last year's 16.3. The majority of the difference was explained by a very strong margin last year coming from some really high margin rollouts in the Netherlands. If we instead compare with the average margin for the last 10 quarters, that average would end up at 14.6 and the difference to this quarter margin would be 0.7. The negative effect compared to the average is mainly explained by the high share of new contracts with lower margins. and the general price pressure in the market coming from the slow volume development. Moving to slide five and the segments in some more detail, where Julia will give us some more insights.

Yes, thank you, Johan. We then move to page five, where we look at the S&B segment, where sales landed at 1.5 billion SEK, which was 2.2% below last year. The organic growth was minus 2.6%. As Johan mentioned, in this quarter, we do see some signs of stabilization, and specifically we see that the demand among small customers and for our B2C segment was slightly improving. But the overall market remained cautious due to the ongoing economic uncertainty. Looking at product mix, we see that the share of software and services declined somewhat, mainly due to the stronger focus on standardized service portfolio and flat hardware sales. Gross margin declined slightly in the quarter, which together with the lower sales led to lower segment result, even though it was partly protected by a bit of lower cost base. All in all, the segment embodied ended at 3.0% compared to 4.2% last year. The total segment result was 46 million compared to last year's 66 million. If we then go on to page six, we look at the LCP segment. And sales in SAP was 3.9 billion second a quarter, plus 7.3% growth versus last year. Organic growth was plus 6.4%. And sequentially was a strong growth versus the poor Q1 sales. And the sales growth was mainly driven by the public sector through both recovered sales in the Benelux, this relating then to the delayed order from Q1, where we did our IT platform implementation, but also to the several new frame agreements that Johan mentioned. On the opposite, we still continued cautious development for a large corporate business. From a geographic standpoint, all the Nordic countries except Finland delivered growth, while Finland was still challenged by budgetary constraints as in previous quarters. As said before, we do see a large volatility in sales between quarters in the LCP. As we just reviewed, the gross margin dropped in the quarter compared to last year. As you saw, the last year was a high comparison quarter driven then by high one of high. high margin rollouts. And the large share of new framework agreement with initially lower margins had a negative impact on the overall gross margin. In addition, we saw a negative mix effect of having a lower share than of large corporate customers, which have a higher average margin, and this also had a negative impact on the results. We do continue to see an increase in the take back, which had a positive impact on both margin and EBITDA. Overall, this led to a segment result of 99 million SEK versus 164 million SEK last year. And the margin ended at 2.5% compared to 4% last year. Still a large improvement versus the previous poor quarter. Moving on to the cash flow and capex on slide seven, we see that the cash flow for the period was 89 million SEK. Looking at the details, we see that the cash flow of operating activities before change in net working capital was 94 million SEK compared to last year's 165 million SEK. And the difference is mainly driven by the lower operational results. Cash flow from change in net working capital was plus 86 million SEK compared to last year's negative 367 million SEK. This quarter was mainly affected by improved inventory after very high levels in Q1. We will look more at network and capital in the next slide. In total, the operating cash flow was plus 180 million in the quarter. Cash flow from investing activities was minus 41 million compared to 58 million last year. More on this in just a few seconds. And the cash flow from finance activities was minus 50 million versus plus 40 million last year, where last year had a positive effect from the proceeds of the rights issue carried out in December 23. Moving to CapEx, the total investment in the quarter was 127 million, of which only 41 million affected cash transfers. And the majority of the 41 million was related to IT development. Investment in tangible and intangible assets was 63 million this year, of which only 2 million affected cash flow. The non-cash items are mainly related to lease contracts. Investments related to services was 25 million compared to 29 million last year. None of it affected cash flow. Coming then to page eight, we look at the networking capital development. Networking capital landed at 60 million plus, which was lower than last year at 90 million, and also a clear decrease versus the previous quarter. Inventory levels increased versus previous year, but as I said, decreased versus the previous high quarter as we expected. We're still a bit above our target levels and we'll work to further decrease this. Account payables and accounts receivables were both high in the quarter, mainly due to timing effects and also improved trade payment terms towards suppliers. Other payables also increased due to goods received but not invoiced. Overall, the quarter landed at more normalized levels than we've had in the last two quarters. As I said before, we always have some timing effects in individual quarters, but our long-term target for nitrogen capital remains to be around minus 100 million SEK. And with that, I hand back the word to Johan.

Yes, let's then move to slide 9 and have a look. On this slide, we've tried to list the most important activities that we're working on in order to get back on track with the result. These ongoing activities are the move of many services portfolio to standard in all markets and to all customers. We truly believe that the standardized services is the future. For us, it gives opportunities for scalability and for our customers, it gives security and predictability. Then the implementing of the new organization structure focused on the key parts of the value chain, which means offering sales channels and delivery supported by enabling functions like people and culture and finance. This new structure gave focus to the development of service software and hardware offerings targeting our core customer groups. It also put the customer in the center with various sales channels to use. Moving to the efficiency program, where we have implemented most of the activities during the quarter, according to plan, and we see the full effect of the 150 to 200 million coming through by the end of this financial year. Further to that, we have now implemented the new IT platform in the Benelux, and we are targeting further automation and process improvements in these markets coming from the implementation of that new platform. And as you've heard, in addition to that, we have as a result of the more focused service strategy and the higher uncertainty of the future in the macro perspective decided to make a non-cash impairment of primarily goodwill of 2.5 billion in the quarter. If then move to slide 10 and the rights issue. As said in the information before, the rights issue of 1 billion 250 million is fully guaranteed and will be used to repay debt. The improved financial stability can be used to focus the organization on continuing delivery on the implementation of the strategic plan and hence improve the business result long term. As you can see to the right on the slide, the debt level goes down from approximately 3.2 billion to 2 billion as a result of the issue. With that, leverage is coming down from 6x to 3.7x based on Q2 numbers. With the current plans, we expect to come down in our financial target grid of 2 to 3 in the coming quarters. Moving to slide 11 where you can see an overview of the key activities with the timing for the rights issue. And a general extra general meeting will be held on the 5th of May to approve the issue. Then the annex nine will be published on May 6th and the subscription period will open up on the 9th of May lasting to the 23rd. The outcome of the rights issue will be announced on the 27th of May. With that said, let's move to slide 12 and a summary of the quarter. In summary, Q2 was a quarter where we sequentially improved from Q4 and Q1, but was still challenging from a market perspective. Net sales was up by 4.5% with LCP leading the way. Gross margin at 13.9% affected by high competitiveness due to slow market and new framework agreements in LCP. resulting in an adjusted EBITDA at 110 million down from 201 million, mainly as a result of the lower gross margins. The board of directors have resolved on a fully guaranteed rights issue of approximately 1,250,000,000 to strengthen the financial position to ensure high pace of change to improve profitability. And the efficiency measures announced in the last quarter is proceeding according to plan. We are also continuing to strengthen the strategic focus on standardized managed services. If we look forward, we can see that Gartner, IDC and Canalys are expecting global PC market to grow in 2025, fueled by the ending support for Windows 10, the AI PCs and the post-pandemic replacement cycle. This will be an opportunity for us as we are prepared to take on a more positive market sentiment. And I think with that said, we conclude the presentation part of this meeting and we open up for questions.