Dustin Group AB (publ)

Welcome to the Dustin Q4 presentation for 2024-2025. During the questions and answers session, participants are able to ask questions by dialing star 5 on their telephone keypad. Now I will hand the conference over to the CEO Johan Carlsen and CFO Julia Lagerquist. Please go ahead.

Thank you, operator, and warm welcome to this Q4 presentation from Dustin Group. And as you heard, Julia and myself, Johan Karlsson, is here to present that to you. If we start with the summary of the Q4 numbers on slide two, As in the last quarter, sales was affected by a weak but stabilizing market with continued general cautiousness by the customers, mainly in the smaller customer groups. In the quarter, we saw some positive development in LCP, where the market, primarily in the Nordics, is stabilizing. Sales in the quarter was 5,056,000,000, representing an organic growth of 3.6%. The organic growth in the SMB segment was negative 6.3. However, this number in SMB was affected by a retroactive change in accounting treatment, and without the correction, organic growth was negative 2.2. LCP showed strength and reported an organic growth of 7.0%, mainly driven by the Nordics, where the market has been stronger. In the Benelux region, market continues to be difficult, but due to some large new contracts in Belgium, we saw growth even there. Gross profit ended at 642 million compared to last year's 644. Gross margin was at 12.7% compared to last year's 12.9%. Gross margin in the quarter is seasonally low due to high share of public sales in Q4. As market continues to be slow in the Netherlands, the margins have continued to be under pressure also in Q4. Adjusted EBITDA came in at 83 million compared to 28 million last year, with an EBITDA margin of 1.6%, compared to last year's 0.6%. And cash flow from operating activities was negative 73, compared to last year's negative 355. Leverage at the end of the quarter was 4.3, which is in line with Q3, and compared to the end of last year, it was 4.0. If we look at operational highlights for the quarter, we can conclude that the previously announced efficiency measures are fully implemented and that the cost saving from that is around 200 million. We are currently implementing the strategic changes that we announced in Q3 with long-term profitability improvements. And we have updated our sustainability targets and aligned them with the science-based target conditions. If we look at the sales growth a little bit more in detail on slide three, as I said before, the market is stabilizing and we can see some signs of recovery. However, the pattern is not the same as in previous downturns in the market. As you can see in this slide, looking at the solid black and brown curve, the normal pattern is that SMB is coming back to growth earlier than LCP. This time, however, we see the larger customers moving stabilization and return of the market is fueled by the change of Windows 10 to 11 and not by change in economic or geopolitical center. The trend of exchange of Windows is so far mainly driven by the larger organizations. Further to that, we see that the larger customers are starting to replace old equipment at a faster rate than the smaller. All in all, this results in a stronger market for the larger customers than the smaller. With that said, let's move to slide four and look at the operational efficiency initiatives. Julia.

Thank you, Johan. Moving to page four, looking at the cost development in the quarter. We see, as in the previous quarter, that the reorganization and our cost efficiency measures have had a clear positive effect in the quarter compared to last year. Overall, SG&E expenses decreased by 6.3% in the quarter, This was positively impacted by Forex, and excluding this, the cost decreased 4.6%. The effect is slightly less than previous quarters, as we had some positive one-off effects last year, plus that we have in general less consultants and temp staff over summer, so the saving there becomes more. The cost efficiency program is now completed, with annual savings of close to 200 million SEK. The main driver is less personnel. Looking at the FDs, we see that we have reduced FDs 225 or 10% versus the same quarter last year. And if you go back two years, the total increase is 13%, the solid reduction in workforce. In addition, there has been a reduction in number of consultants and temporary staff, plus reduced number of offices contributes to the savings. Then we move to the OE of the SMB segment on page five, where sales landed at 1.2 billion sick or 7.9% below last year. However, as Johan said, the quarter was affected by a year-to-date retroactive change in accounting treatment regarding net revenue recognition related to software and this lowered net sales. Excluding this effect and the forex effect, the decline in sales was to 20%. As Johan mentioned, in this quarter we see some signs of stabilization, but overall the market remained tentative due to the ongoing economic uncertainty. From a geographic point of view, Sweden and specifically Norway performed well, while Denmark and Netherlands were the main drivers of the decline. Looking at product mix, we saw that the share of software and services sales decreased down to 10.4%, but this was mainly due to the mentioned retroactive change in accounting treatment. The increase in the gross margin improved versus both last year and the previous quarter. And the improved cost base from the cost saving program protected the segment result which increased to 34 million versus 9 million SEK last year, despite the lower volumes. And all in all, the segment more than ended at 2.9%, which was an improvement versus last year at 0.7%, obviously coming from a low base. Note that last year was negatively affected by a one-off posting related to coaxial managed services of 13 million SEK. Going to page six, we looked in at the LCP, the large corporate and public segments. And the sales in LCP was 3.9 billion SEK in the quarter, plus 4.6% versus last year. And the granite growth, 7%. So there was a continued large negative works impact on the strength of SEK. Sales were also improving versus previous quarter. The growth was mainly driven by the increased demand in Nordic, stemming from the demand of Avengers 11, as Johan was just talking about. The economic uncertainty still impacted the market development, mainly evident in the Netherlands, where we also saw heavy price competition. On the other hand, Belgium showed continued strong growth as in previous quarter due to some large new agreements, and Finland also continued to show solid growth after a tough year. As I said before, we do see large volatility in sales between quarters in S&P. Gross margin decreased versus previous year. The increased price pressure in the Netherlands on diminishing volume had a negative effect. We also saw continued effects from larger contracts with low margin. On the opposite, margin in the Nordics was slightly improving, helped by country leads. On a global level, there was a negative customer mix with a larger share of public customers versus last year, which then have a lower average margin. This had a negative impact on the margins. We continue to see increase in take-back, which had positive impact on both the margin and the beta. And we also saw positive development in our private label business. The improved cost structure, mainly thanks to the restructuring program, had a positive impact on bottom line. And overall, this led to a segment result of 80 million SIC, which is 53 million SIC last year. And margin ended at 2.1% versus 1.4% last year. We note that last year was also impacted by a non-recurring cost of 21 million. Moving then to look at the cash flow in CapEx on slide 7, we see that the cash flow for the period was minus 1.2 billion SIC. This mainly driven then by the repayment of loans after the rights issue, where the proceeds from the rights issue came in the end of Q3. Looking at details, we see that cash flow from operating activities before change in net working capital was 150 million plus, which was an improvement versus previous year, mainly driven by the improved operation result, but also the real tax position. Cash flow from change in net working capital was minus 180 million SEK, which was still better than last year. We normally have a negative seasonality effect in Q4, with purchases earlier in the quarter and large roll-up at the end of August. We'll look more at that during capital on the next slide. In total, the operating cash flow was minus 73 million in the quarter. And the cash flow from financing activities was, as I said, impacted by the repayment of loans. Looking at CapEx, we see that the total investment in the quarter was 52 million, of which 36 affected cash flow. This is mainly linked to IT development investments. Investments in tangible assets was 15 million this year, which only two was affecting cash flow. The non-cash items are mainly lease contracts. And investments related to services was 4 million compared to last year of 23 million, and none of it affecting cash flow. Coming then to page eight, we look at the networking capital development. Networking capital landed at 477 million SEC, higher than last year at 170 million, and also increases the previous quarter. Inventory levels increased versus previous years, now at 1,086 million SEK. This mainly linked to Benelux and customer-specific inventory, but somewhat lower sales than expected. This is slightly below previous quarter, but clearly above our target levels, and we have a clear target to reduce going forward. Accounts receivables increased versus last year, impacted by invoicing of larger contracts in Benelux at the end of the quarter. There is, as said, a normal negative seasonality to accounts receivables and payables in Q4, as you get goods in early in the quarter for configuration and then have large rulers at the end of the quarter. This was more visible this year with large sales volumes to specific customers. As said before, we always have some timing effects in the quarters, but our long-term target remains to be around minus 100 units. And with that, I hand back the word to Johan.