Eltel AB (publ)

Good morning and welcome to this teleconference or web conference where we will present LTEL's first quarter results. My name is Alexandra Stjernlund. I am the communications director at LTEL and here with me today to present the results is our CEO Håkan Dahlström and our CFO Tarja Leikas. Warm welcome. After the presentation, we will open up for questions. And throughout the presentation, you can submit questions either via the website or dial in via the phone conference. With that, I'd like to hand over first to you, Håkan.

Thank you, Alexandra. Also welcome from my side to this presentation from Eltel. Eltel, the leading provider of services in the Nordic in the critical infrastructure. It areas as communication and power, and it means that Eltel enables the digitalization and electrification of our society in many areas. This includes mobile communication, fiber network, private network, but also on the power side, high voltage overhead lines, substations, distribution network, but also things like street lighting. We also have become active in green energy production, including solar parks and wind parks. It doesn't end with that. We also are active in energy storage, electrification of transport and other areas like smart metering. During the first quarter, we see that many of this area are active. However, we see lower activity levels in communication than in power. And we have talked about this before. The exception, I would claim, is the Swedish market. So first quarter leaves us with improved profit. Organically, we have a net sales that is some growth, 0.6%. And this is mainly driven by our Swedish operation. The gross profit, as we are very focused at here in Eltäl, increased with 20% during the quarter. And we see that this trend that we have had continues. So during the last 12 months, their profit improvement has now become significant and we see also the result on the adjusted EBITDA and year over year we see improvement of 4.9 million so in absolute terms maybe the adjusted EBITDA is not so impressive with 900k in the first quarter but with that seasonality that we have in our industry It is a relatively strong first quarter and is the strongest first quarter for eltel in many many years. So with this we have seven consecutive quarters with improved adjusted EBITDA and we want of course to continue this trend. We also see that our financial position in general is improved. And here we have an improvement of networking capital and cash flow. This is, of course, extremely important. And we are really happy to see the improvement of cash flow being 22 million better this quarter than a year ago. This, of course, as you understand, help us also on net debt and leverage and a leverage of 2.1. I would say I have to say that I'm pleased with now in the end of the first quarter. But if we then look a little bit inside the operation to see what has happened during the first quarter, we can see here that the first solar park that we have been active in in Sweden are now in production and that is of course great. We also have finalized our delivery and our contribution to a solar park in Denmark during the quarter and the new really large project for us to establish a new solar park in Finland of the size of 129. megawatt in peak power is according to plan so very important project helping us also a good reason for the improvement of networking capital and cash flow in the first quarter where finland contributed mainly due to this project An area that is very active is the energy storage and here we can see that we during the quarter have finalized our delivery of some of our first systems both in Finland and in Denmark so that's really nice to see and also in e-mobility or electrification of transport we see high level of activities and during the quarter We had success winning a frame agreement in Sweden that I believe will be important for us going forward. But we are very active in many of these type of discussions to electrify the transport of the Nordics. Data center, a relatively new area for us, but is now starting to become visible in the order book here in the first quarter. So really nice for us to see that. And the very important broadening of our customer base, particularly towards the public infra, have gained some significant results here in the beginning of the year. So I would claim that really good start of the year, also winning contract in what I call classic business in power, but also within communication where we see that we have both new customers, improved margin and secured classic customer. As you are aware of we have issues in our operation in Norway and we have now been able to speed up the change of our Norwegian operation under the leadership of our new MD Ingrid and I'm really happy to see the start of this and we are not out of this yet but I'm convinced that we are on the right track to a much better and solid performance also in Norway. With that highlights, I would like to hand over to you, Tarja, to give us the numbers.

Yes. Thank you, Håkan. And yes, I am delighted to report on LTEL's first quarter results for January, March, marking the seventh, like you said, seventh consecutive quarter of year over year profitability improvement. Our net sales declined by almost 4%, mainly due to the impact of last year's divestment of high-voltage Poland. However, organic growth was 0.6%, with notable growth in Sweden, the growth rate was 6.5%. Regarding profitability, our adjusted EBITDA improved by nearly 5 million, reaching a positive 0.9 million. And Norway was the only unit to experience a decline in profitability. I would say that overall, our first quarter was strong. Profitability improvement remains the cornerstone of our strategy and the progress in strategy execution is evident. Given the strong seasonality of our business, we are satisfied with the first quarter's positive result. And in fact, it has been a decade since LTEL achieved this outcome. The next slide is something new that we haven't shown you before, and it illustrates our profitability development during the new strategy execution period. The implementation of our current strategy began in the first quarter of 2023. These graphs illustrate the development over the time. Retrospectively, the turning point was the second quarter of 2023. As expected, gross profit reacted more rapidly, while EBITDA improvement took a bit longer. During past year, we have seen more than 8 million improvement in LTM last 12 months gross profit and more than 12 million increase in latest 12 months adjusted EBITDA. I would say quite nice graphs. Yeah. Next, we will take a closer look at our segments. And I think we should go to Finland first. Finland accounts 37% of our operations. Our net sales here declined a bit, 300,000. we experienced strong growth in power driven by a green energy investment but faced lower volumes in communication compared to previous year adjusted ebit a improved by 2 million euros reaching 1.7 million both business areas in finland contributed to this enhanced profitability and then second largest Sweden is 31% of LTL operations after the first quarter. And we are pleased to report that Sweden has continued in its growth path. Public infrastructure driven growth in communication has been particularly welcome. Solar investments have driven power growth and compensating for lower smart grids volumes compared to last year. We did record over 50 million euros in net sales, reflecting a strong 6.5% growth compared to last year. Adjusted EBIT tripled now to 1.5 million euros. This is the 12th consecutive quarter for Sweden to have a year-over-year profitability improvement. Then we have our new segment, Denmark at Germany, which accounts 18% of LTL operations. Here we see modest growth in net sales, totalling to 30.5 million euros. Communication in Denmark declined, whereas power grew in both Germany, but especially in Denmark, I have to say. In this newly established segment, we report significant profitability improvement. Adjusted EBITDA nearly doubled, reaching 7.9%. This is the highest in the entire LTL group. And this is an excellent result for our newly established segment. And then we have Norway, which now represents 14% of our operations. Net sales decline in Norway has continued, now negative 7.4% in local currency. And this development is in line with our expectation, and it's reflecting the further reduced investments in traditional telecommunication customers. Our operations remained unprofitable with adjusted EBITDA at negative 1.8 million. Towards the end of the quarter, we did see some improvement. But our performance improvement actions will continue in Norway. And then we have our balance sheet items. And here we have taken a bit longer perspective as well. We illustrate the new strategy execution period again. And this 2025 marks the third year on our new strategy execution. All balance sheet items show significant improvement, reflecting our strengthened financial position. we report major improvement in leverage from 6.3 in first quarter 23 to 3.5 in 24 and now a healthy 2.1 net debt was close to 160 million first quarter 23 115 million euros last year and now we are reporting 104 million euros in net debt notably cash flow from operations increased by more than 22 million The net working capital development is equally positive. In first quarter 23, it was negative 5 million, last year negative 59 million and now negative 76 million euros. We are very pleased to see our strategy materializing and results steadily becoming visible. And then it's time to remind us about our financial targets, which we keep unchanged. First, profitability. Group adjusted EBITDA margin, 5%, growth between 2 and 4, and leverage 1.5 to 2.5, and dividend payout subject to leverage target. As I mentioned, leverage resulted in a 2.1 outcome this quarter. And just like previous quarter, we have successfully reached our leverage target. And now Håkan will continue with the strategy theme.