Ependion AB

Welcome to Appendian Q1 Report 2026 presentation. During the Q&A 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 speakers, President and CEO Jenny Shaddoll and EVP and CFO Joakim Lorien. Please go ahead.

Thank you very much. Welcome everybody to this Q1 presentation for Appendion. The headline of this report is record order intake and strengthened profitability as you have seen. So as usual it is myself and Joakim Lorén in the call and the agenda is similar to previous times even though we have changed the format of the presentation slightly. So I will start by giving a general business update and also looking into the two business entities then Joakim will dive more into the financials and finally I will give some concluding notes and outlook and after that we will open up for Q&A as usual. So summarizing the quarter, we have seen already in the fourth quarter of last year an increase in the activity level and increase in order intake and we are very pleased to see that this quarter the activity level has strengthened further and we have an order intake increase of 41% to the record high level of 778. million Swedish kronor and I'm pleased to see that this is driven by strong bookings in both business entities across basically all our focus segments and all geographies so it's a broad uptick that we are seeing and organically and in fixed currency the increase is 32 percent. As you probably know, there is a lag in our business between order intake and sales normally. So sales increased by 10 percent, but organically it was flat. And the book to bill ratio that already last quarter was way above one is now 1.3 for this quarter. You have probably noticed that we have changed our result measure to EBITDA and our EBITDA strengthened to 75 million kronor and an EBITDA margin of 12.5% compared to a rather weak quarter last year, 9.7%. The free cash flow in the quarter negative of course that's not how we want it to be but we do see a seasonal pattern in cash flow and the negative level was due to increased safety inventories and also some higher accounts receivable towards the end of the quarter. You have probably read in the papers there is a strained global supply situation especially related to memory circuits driven by the AI boom that is driving up prices and it's increasing lead times. We have full focus in both business entities first of all on securing access to material but also of course offsetting the cost increases that we see due to this with price adjustments. And we have done, as you all know, a lot of investments in recent years in both business entities, in R&D, with acquisitions, with India establishment and so on. And there is a really strong focus across the organization now to really drive profitable growth based on these investments. And also, as everybody else is seeing, the geopolitical uncertainty remains. All right. Diving a little bit more into the two business entities. If we start with the Vestromo, we have a record high order intake with an increase of 57 percent. That is without any major project orders in the quarter. And it's driven by all our key segments. So train networks, trackside, energy networks. and also defense, but the development was particularly strong in the train segment, which is also Vestimo's largest segment, as you might know. Sales at plus 21%, driven by strong development of Elotech. And the book-to-bill Investimo for the quarter is 1.28. Profitability-wise, we have a stable development, 16.6% on the beta level in the quarter. And we were talking about the defense segment in the last report, and you know that there is a decision for Vestamo to really go after this segment now. And there's a lot of initiatives going on in the quarter towards this new focus segment. And we do see with the European increase in spend and the focus on finding regional strategic suppliers, there is an interest, an incoming interest from several players in this industry. And we have discussions ongoing and activities ongoing, even though, of course, we know that creating business out of this is, of course, going to take some time. But we also have some very well-known customers already in this industry. So that is developing in a good way. Also, the India market, very positive. The fact that we now have India. A strong local presence is very appreciated both by our existing global customers with activities in India, but also we see interest from local Indian players and new players as well. positive development there, and we know that there is massive infrastructure investment happening in India, especially in metro expansions, in long distance trains, in freight locomotives and so on. So the activity level is very high in India, so that's very good. And Yellowtech continues to develop very well as well. Also, I can mention, and we mentioned that in the report, we have initiated a strategy update in the Vestamo business entity, and that is really to set the stage basically for the next growth phase, looking at our segments, looking at our playing to win strategy, and also looking at our sales organization, how we can make sure that we have the most effective sales organization going forward. Okay, let's move then into Bayer Electronics. I'm very pleased to see that with all the work that has been going on within Bayer Electronics, with the strategy that has been put in place and executed over the last years in a business environment that has been actually very challenging, I'm very pleased to see that now we are starting to see the results of that and we see an order intake growth of 20% driven on one hand by the marine segment with lots of activities with our customers there. but also a high demand from customers within EV charging and also in a growing niche segment that we are seeing which is data centers where bioelectronics products are used for UPS equipment that is then used in data centers particularly in the US market. Sales-wise, we are at minus 6%. We have the last quarter now where we still had in the comparison quarter a small volume of phased out products, 9 million Swedish kronor. And if we look at the currency adjusted in fixed currencies, the sales development was actually plus 2%. Book to bill at 1.33 for the quarter, quite strong. And the most important part here, of course, is that we see that the profitability has moved in the right direction for sure with the increased gross margins according to what we were expecting from the new strategy with a more focused portfolio. And we came out at 11.4%. percent EBITDA margin in the quarter. The new generation of HMIs, the X3 family, we do see a lot of customer interest still, and that is really, really good. We have more than 200 customers now that have placed orders. And what I'm really pleased to see and what we are also expected, of course, from this launch is that some 20% of these are new customers, which is, of course, very promising as well. Bayer Electronics have also targeted the defense segment and we have launched a version of X3 called now Xtreme Ultra towards the defense sector where we have certified the tested the product against military standards and are now talking to potential customers and also some existing customers in the defense sector as well. So that was a summary of the two business entities. So with that Joakim, I will hand over to you.

Thank you very much Jenny and I will go into the financials and I will start with some words on orders and sales. As Jenny said, the orders were up 41%, the level 778 million actually and that is an all-time high record level. We have never been on a on the 700 million before. So it's something that we are very pleased to note. Organically, as Jenny said earlier, 32% up. The acquisition of Velotech is contributing 19%. And we have quite a strong headwind when it comes to FX that is impacting with minus 10%. And together that gives us the 41%. Sales, as Jenny pointed out, now big uptick on the sales level yet so organically flat acquisition is adding then the 16 and also here the the headwind of fx is impacting minus seven if we look at sequentially we we do see a strengthened order intake also from the good quarter in q4 last year And that was well above the 600 million. So we up 22% compared to last quarter and sales is also improving somewhat. If we then look at the profitability, the improvement is then 2.8 percentage points from the low level in Q1 last year and now to 12.5 for Q1 this year. And the main background to this uptick is that we have definitely better performance by Bayer Electronics, as Jenny pointed out before. But also the fact that Vestamo is delivering on a stable level, but being a larger part of the group now with the addition of Velotech. So two points, two folds on the profit increase, Bayer Electronics improvement and the fact that Vestamo is the bigger part of the group. So if we look at the income statement summary, we talked about the first two lines already, should mention that in the quarter, the impact of currency effects is negative and it's impacting the beta level with 6.5 million. And the main part of that is transactional variances. In between EBITDA and EBIT we have the depreciations and amortizations of excess values driven by the acquisitions and we had a larger impact of the Velotech acquisition already in Q4 and the level remains now in the first quarter this year. So the beta margin came in at 11.2% compared to the 9% in last year. There is a relatively big difference on the financial income and expenses line, and that is driven by currency effects on financial items. So net profit increased with 27% to 40.5 million for the quarter and the earnings per share is up 15% to 1.26 kroner. If we look at then the cash flow and Jenny pointed out that we have impacts of increased inventories related mainly to increased safety stocks for some of the components that we now see some turbulence in the market and we believe that it's important for us to secure our delivery of possibilities and and therefore we have increased our safety stocks that is impacting and then also our accounts receivables um phasing you could say there is more of that by the end of the quarter so that gives us the minus nine million However, if you look at the history, it is a seasonal pattern, you could say. Last year, we were around minus 12. So a negative start, but going forward, we are quite optimistic when it comes to the cash flow. Then when it comes to net debt EBITDA, we can conclude that we have a healthy balance sheet and that provides confidence that we can continue the active M&A agenda that we are having in the group. That concludes the finals. Over to you Jenny.