Eltel AB (publ)

Welcome to this presentation of LTEL's third quarter results. My name is Alexandra Kjernlund. I am the communications director at LTEL. The results will be presented by our president and CEO Håkan Dahlström and our CFO Tarja Leikas. After their presentations, we will open up for your questions. Throughout the presentation, you can submit questions either via the website or dial in via the phone conference and press pound key five. With that, let's move to the next slide as I hand over the word to you, Håkan.

Thank you, Alexandra. Really good quarter. And first of all, maybe a good morning also from my side. Great to have you here. Yes, third quarter delivering according to our expectation on our strategic moves that we had taken. And I will elaborate more on those in the end of this presentation today. But I would like also here in the beginning to say that we are delivering on the improved profitability. especially in Finland, but also in Norway, and great to see Norway coming up on the right side of the zero. Broadening the customer base, we are doing that in all markets, but especially, of course, in the new business areas. The new Anna Jason market, here we see especially great development in solar, but also data center is coming as a rapid growth area. And I will elaborate a bit more on that in the end of today's presentation. But as you most likely have seen, we do have a strong development in ELTEL Finland, where the growth engine is in power. The quarter has had quite high sales activity to be at this time of the year. Q3 is normally not so strong when it comes to contracts, but during this third quarter we have been able to have 176 million in new contract value. to be compared with 136 from last year. So a step up there. And what is also important to see here is that almost 24% of this TCV is actually from the new business areas. So important move taken there. We have some important large contracts that we have during the quarter announced, and I will just touch base on them here with first the day one data center contract, important for us, of course. And together with that, we see also a new contract with Karuna. In the press release of this, it has a value of 81 million, and this is including the option years. We normally don't do that, but in this case, it was sort of, since we align all of this type of communication with our customers, normally we talk only about the committed time period. And in this case, that would be roughly 32 million for the first four years. And that is the portion of this that we also have included in the TCV that we report here. So the 81 is not included. It is 32 million that are this part of the 176 million in the TCB. Also an important frame agreement with E.ON. We had one in the second quarter, for you who remember that, but this is another one. Important step for the power part of the Swedish business. Really great to see how power in Sweden is stepping up quarter by quarter. And not least, I would like to highlight also the great work that our colleagues have done during the autumn here to restore critical infrastructure in all Nordic countries, but maybe especially in Norway this time since the storm army hit so bad in Norway and their grid in Norway. So a lot of our colleagues there have been out many, during difficult circumstances to restore this for the society so critical infrastructure. So really proud of all our colleagues to do this service and maintenance work. If we continue to look a bit more on the financials, I will say that the net sales is mixed during the quarter. We have growth, somewhat growth in Sweden, very stable, if we say so, Finland, Denmark, Germany, and then a decline in Norway that it's double digit and we are not able to compensate fully for that. So we are down 1% organically, meaning also local currency is 1.6 down. But overall, good growth, a lot of activity in power. In communication, we see more and more initiative in public infra. And here, this is most visible for us in the Swedish market. Overall, communication is more stable, I would say, in the Swedish market, and a bit more declined in the other market. a mixed bag as you hear on the net sales profitability wise this is the ninth consecutive quarter when we improved that yesterday a bit and i'm of course happy for that and that we can keep this this is extremely important for us that we every quarter are beating our own track record So in absolute terms, still some way to go, absolutely. But I would claim that this quarter, the figure shows that our strategy is working and the implementation of the strategy is done in a good way. So a solid quarter. And by that, over to you, Tarja.

Thank you. I'm pleased to present the results for the third quarter and for the period January-September. And I would say that we are proud to present this historic, you didn't say historic, but I used the word historic, because first time in a decade we have reached this level of profitability. In regards to net sales, Sweden continues to deliver growth. Finland and Denmark, Germany remain close to last year's levels, despite a slow turn in communication volumes. And in Norway, we see positive signs from the new customer wins. From CFO's perspective, it is particularly encouraging to see how our organization has remained committed to improving the profitability. And that is in all of our markets. Our third quarter adjusted EBIT A reached 9.1 million, the highest quarterly result in a decade. This is a milestone which reflects not only our strong performance in this quarter, but also the consistent progress we made throughout the year. The improvement is visible in all of our segments and it underscores the strength of our operations. We have been executing our current strategy now since the beginning of 2023. The latest nine quarters, we have delivered year-on-year adjusted EBITDA improvement. At this point, we are delighted to report improvement and positive adjusted EBITDA in all our segments, like I said. Compared to previous years, latest 12 months adjusted EBITDA, we are close to 11 million improvement. And then the segment results where we have Finland. Finland accounts now for 48% of our group operations. Here we delivered stable year-over-year performance, but beneath this stability, however, we saw a shift in dynamics. While communication volume softened, our power experienced strong growth. Adjusted EBITDA improved significantly, up to 20%, reaching now 8.8 million. The result is driven by our continued focus on operational efficiency and cost discipline. This quarter, Finland is not only our largest, but also the most profitable segment. And then to Sweden, which represents a quarter of our operations. Sweden had a solid quarter, with net sales growing by 3%. This is a strong result, especially given the high comparison base from last year's major project completions. The growth reflects the expansion of our customer base in public IFRA and telecommunications. Profitability adjusted EBITDA margin declined from last year's 4.2 to 1.8 and this largely due to the absence of last year's exceptional project closings. These projects delivered above average margins. Then Denmark and Germany, which together are accounting for 14% of our operations. Here we saw net sales remaining flat, again due to lower communication volumes. However, power continued to grow. Denmark-Germany has consistently contributed to the profitability. This quarter was more demanding and the profitability declined from last year's 4.9 to 3.9. Nevertheless, January-September profitability improved notably. And then to Norway, which is contributing 12% to group operations. Here we see a net sales declining by 12%. The growing revenues from the new customer wins are not yet enough to mitigate the declining volumes from traditional seller communications. But we see clear signs of improvement and turnaround efforts gaining results. Notably, Norway delivered a positive adjusted EBITDA for the first time in two years. This is a direct result of our focus on operational excellence and in strict cost control. While challenges remain, the development in customer acquisition and margin recovery are really encouraging. And then, interestingly, the balance sheet. Our balance sheet reflects the refinancing we completed in June. And as a result, net debt now stands at 172 million compared to last year's 145 million. Leverage remains at 3.5, which is consistent with last year. Here it is important to note that the refinancing reclassified the hybrid bond from equity to debt. On a comparable basis, leverage would have been 3. We continue to see strong seasonal pattern in our operations and the third quarter typically consumes working capital. Networking capital remained firmly negative, now negative 31 million compared to negative 33.5 last year. Our personnel count is now down more than 500. This is demonstrating our ongoing efforts to optimize our operations. And then it's time to remind us of the financial targets, which we keep unchanged. Group adjusted EBITDA margin, 5%. Growth between 2 and 4%. Leverage between 1.5 and 2.5. And then a dividend payout subject to leverage target. And as Håkon promised, he will now share the latest with the strategy execution.