Dustin Group AB (publ)

Welcome to the Dustin Q3 presentation for 2024-2025. 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 CEO Johan Carlsen and CFO Julia Lagerquist. Please go ahead.

Good morning, everyone, and warm welcome to this Q3 presentation from Dustin Group. As previously said, Julia and I will try to take you through the main messages of the report. We move to the content of today. We will go through the Q3 result. We will also follow up on the rights issue and talk about our strategic focus and the way forward. But if we look at slide three and the Q3 result, As in the 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. Sales in the quarter was $5.89 billion, representing an organic growth of negative 2.9%. Both segments performed at the same level, and SMB had an organic growth of negative 2.6%, while LCP was down by 3.0%. In SMB, we saw some stabilization of the market and the negative market development was slowing down while margins in SMB continued to be at good levels. In LCP, we had challenges due to lower market volumes in the Netherlands while the Nordics performed well. Gross profit ended at 680 million compared to last year's 821 million, mainly as a result of lower gross margin. Gross margin was at 13.4% compared to last year's 15.0%. Rosemarine was mainly affected by the lower margins in the Benelux region. More about that in the next slide. Adjusted EBITDA came in at $72 million compared to last year's $130 million, and EBITDA margin was at 1.4% compared to last year's 2.4%. Cash flow from operating activities was negative $139 million compared to last year's positive $454 million. Leverage at the end of the quarter was 4.3 compared to 6.0 last quarter, mainly reduced by the finalized rights issue. But then we'll move to slide four and look at the gross margin in some more detail. As I said before, gross margin this quarter was 13.4 compared to last year's 15.0. If you look at the different parts of the business, we can see that LCP Nordic developed well from a margin perspective. and that total SMB also performed well. The shortfall in LCP Benelux mainly come from two things affecting margin. The first one is in Belgium where we have won many new contracts in the public sector and where the margins initially are low. Here we also see a double-digit volume increase in sales. The second one is in the Netherlands where a slow market for many quarters have resulted in price competition. This is particularly visible in the tender business to the public customers. All in all, the negative margin effect coming from the LCP Benelux business was 1.7%. Let's move to slide five, where Julia will take us through the status in our efficiency initiatives.

Thank you, Johan. Yes, on page five, we look at the cost development in the quarter, and here we can see that the reorganization and our cost-efficiency measures have had a clear positive effect compared to last year. The overall SG&E expenses decreased by 14%. This was positively impacted by Forex, but also excluding this, cost decreased 11%. The cost-efficiency measures previously estimated at 150 to 200 million yearly effect are now near completion and landing in the higher range, higher end of the range. And it's the main reason for the decrease. Looking at number of FTEs, we see that we have reduced with 150 FTEs or 7% versus the same quarter last year. And if we go back two years, the total decrease is 12%. In addition, we have also reduced consultants and temporary staff, plus reduced number of offices as part of our cost efficiency program. If we then move to the overview of the S&D segment on page 6, we see that sales landed at 1.4 billion, or 5.3% below last year. The organic growth was minus 2.6%. As Johan mentioned, in this quarter we see some signs of stabilization, but the overall market remained tentative due to the ongoing economic uncertainty. We do see a slight increase in demand in the larger S&D customers in the Nordics, but in total the sales dropped towards this previous quarter. Looking at the product mix, we saw that the share of software and services increased somewhat up to 13.8%, mainly as a result of a stronger focus on standardized service portfolio. The increased share of software and services also contributed positively to the gross margin, which was flat versus last year, but improving versus the previous quarter, thanks to a focused price discipline. The improved cost base, as we have mentioned, protected the segment result, which landed at 37 million SEK. It was in line with last year, despite the lower volumes. All in all, the segment margin ended at 2.7%. This was a slight improvement versus last year, though coming from a low level. Coming up to page 7, we look at the LCP segments, the large corporate and public customers. And the sales in LCP was 3.7 billion SEC in the quarter, down 7.2% versus last year. The grand goal was minus 3%, so there was a large negative forex impact coming from the strengthened SEC in the quarter. Here we have a bit different picture between the regions. The economic uncertainty impacted the market development. This was mainly evident in the Netherlands. In addition, some frame agreements were impacted by increased price pressure. On the opposite, we saw positive development in Sweden and Finland, mainly driven by development in the defense investments. For Finland, this was a trend shift compared to the previous quarters, where budget austerity has hampered growth. Belgium displayed very positive growth, even by some large new agreements. As said before, we do see large volatility in sales between quarters in LCT. As Johan just shared, the gross margin dropped in the quarter compared to last year, mainly driven by Benelux. The high share of new framework agreements with initially lower margins, combined with increased price pressure and diminishing volumes, had a negative effect. On the opposite, margins in Nordic were slightly improving, mainly due to the country mix. In addition, the negative customer mix of a lower share of large corporate with a higher average margin also had a negative impact on the result. We continue to see an increase in take-back, which had a positive impact on the bottom line, and we also saw positive development on our private label business. The improved cost structure had a positive effect on bottom line, but could not compensate for declining volumes and margin. Overall, this led to a segment result of 63 million SEK versus 130 million SEK last year. The margin ended at low 1.7% compared to 3.3% last year. Then moving on to cash flow and capex on slide 8, you see that the cash flow for the period landed just above 1 billion SEK mainly driven by the rights issue. Looking at the details, you see that the cash flow for operating activities before changing the dividend capital was 27 million SEK lower than last year. The difference was mainly driven by lower operational results. Cash flow from change net worth capital was minus 167 million compared to last year's positive 373. This quarter was mainly affected by increased inventory and delayed payment flows linked to timings of public holidays at the end of the quarter. We will look more at net worth capital on the next slide. In total operating cash flow was minus 133 million in the quarter. Cash flow from finance activities was impacted by the rights issue, as I said, and more on this in the next two slides. Looking at the capex, we see that the total investment in the quarter was 69 million, of which 47 million affected cash flow. This mainly linked into IT development investments. Investments in tangible and internal assets were 28 million, only 10 million affecting cash flow. The non-cash items is mainly lease contracts. And investments related to services was only 4 million compared to 8 million last year, non-affecting cash flow. Then coming to page 9, we look at the networking capital development. Networking capital landed at 261 million, which was higher than last year at a very low minus 205 million, and also an increase versus the previous quarter. Inventory levels increased versus previous years and also somewhat versus previous quarter, now at 1,098 million SEK. This is due to lower than planned activity at the end of the quarter, mainly linked to the Netherlands. This is above our preferred levels and we have a clear target to reduce going forward. Account payables and account receivables were both lower than the same quarter last year, mainly due to timing effects of large orders in the last year and lower sales. However, receivables decreased less than the payables. They were impacted by delayed payments due to timing of public holidays at the quarter end. I said before, we always have some timing effects in individual quarters, but our long-term target for net earning capital remains to be around minus 100 million. And with that, I hand back over to Johan.