Ferronordic AB (publ)

Good morning, everybody. Thank you for your interest in Fair Nordic and welcome to our presentation of the first quarter of 2026. Moving to slide two, summarizing the quarter. We saw revenue amounting to 1.128 million Swedish krona, down 6% year-on-year, but up 6% in fixed currency. Gross margin improved to 17.7% compared to 16.3% last year. Operating profit more than doubled to 37 million kronor. EBITDA increased 49% to 124 million and net profit improved to 32 million kronor supported by currency exchange gain and lower finance costs. Net debt at the end of the quarter amounted to 1.957 million Swedish krona up versus last year related to the integration of the house business that was acquired in January and seasonal inventory and rental fleet buildup. Looking at the operations and the quarter from a group perspective, we saw clearly stronger earnings during the quarter compared to last year and continued progress. Activity was fairly good and improved through the quarter and then accelerated in March with good trajectory. Our efforts to increase or improve the aftermarket business and work with operational improvements and broader use of technology and data across the group are starting to show. At the same time, we see significant untapped potential within our existing operations and our existing geographies. And continuing these improvements will be the focus going forward. At the same time, we do evaluate selective Bolton acquisitions. Revenue, I said, was down in Swedish krona 6% to 1.128 million krona. But in fixed currency, it was up 6%, mainly then reflecting the weakening of the dollar year on year. Operating profit more than doubled, I said, to 37 million, supported by continuously strong performance in the United States, positive operating earnings from Germany, and good cost control across the group. EBITDA increased by 49% to 124 million. Net profit improved to 32 million kronor, supported by FX gain and lower financing costs. And I said that the net debt increased following the integration of Housebee and seasonal inventory and rental fleet build up as we prepare for the season to come. So all in all, revenue up 6% of fixed currency basis, positive earnings in Germany and net profit improved 32 million kronor. Looking at the U.S., We saw strong demand in our territory supported by continuous investments in infrastructure and increasing amount of projects related to data centers. The market in our territory was up 12% year on year. Now that includes dealer additions to rental fleets and not sold units, but still a sign that players in the market are positive. We see AI-related investments becoming a major driver of construction activity and equipment demand. Tariffs continue to cause some uncertainty and manufacturers are gradually increasing prices to cover increased costs, but we haven't seen this material affecting the market activity. So in US dollars, sales increased by 16%. with equipment sales up 13%, aftermarket sales up 10% and rental sales up as much as 92%. Gross margin reached 17.5 versus 17.7 last year in line with seasonal patterns. Underlying margins were stable and we managed well to defend our margins. Operating profit reached 47 million, more or less the same as last year in Swedish krona, but up 15% in local currency. EBITDA improved to 112 million, so up 38% in local currency. driven by strong rental activity that has a bigger impact on EBITDA than EBIT as a large part of the rental revenue is going to depreciation. So comforting results in the US, continued strong performance. At the same time, we still see good opportunities to increase market share and aftermarket penetration. We continue the rollout of our new CRM. We are relaunching the automatic lead generation and we are working to expand the rental fleet to gain market share and grow the business. We also successfully integrated the house business in Iowa into the rod operations. This is something we talked about when we reported the Q4, but the Iowa territory corresponds to roughly 10% of the market we covered in the RAD legacy operations. It's a very interesting geography, a lot of activity relating to data centers there as well. And all the time we expect Iowa to reach the same profitability as our other US branches. All in all, revenue in the US up 16% in dollars, EBITDA increased 38% in US dollars, and we had an operating result of 47 million kronor. Going to the next slide, looking at Germany, our efforts to improve the aftermarket business and reduce costs are starting to show results. As a result, we saw positive EBIT in Germany of 4 million kroner despite a continuously weak market. Registrations in our territory nevertheless increased by 3%, and the gradual market recovery seen in previous quarters continued, but at a moderate rate. Increased fuel prices do make customers more cautious and are affecting the German economy in general, but the recovery nevertheless continues. More important from an earnings perspective is that the existing fleets remain active, supporting continued demand for service and parts, and also making sure that fleet renewals will be needed at some point or another. Sales in Germany amounted to 337 million, so lower than last year, mainly due to truck deliveries that were postponed from Q1 to Q2 and the high comparison base last year. Aftermarket sales increased by 6% in Euro, supported by higher productivity and good pricing. Gross margin then improved correspondingly to 18.2%, while gross profit increased by 9% to 61 million. And following the cost reductions we implemented last year, SG&A decreased by 14%. And as a result, we saw EBITDA improving over 100%, and we reached positive EBIT in Germany. Looking at Kazakhstan, we saw sales amounting to 32 million kronor, lower equipment sales, but relatively stable aftermarket operations. Margin improved to 16% and the operations will broadly break even. After having reduced older inventory during last year, we are now rebuilding inventory in Kazakhstan again, in line with the current demand. Our focus remains on operational improvements and continued customer development. So with that I hand over to you Erik.

Thank you very much Henrik. I pick up with a little bit more detail on the income statement and the performance across the segments. Starting where you left off or where you started actually, total revenue 1.1 billion, down six percent in Swedish krona but fixed currency basis we were up six percent and just to be clear that what we're doing is then leaving the foreign exchange rates as they were in the comparative quarter, meaning in the first quarter of 2025 when we convert the segment currencies of this quarter, first quarter 2026. If we look at the mix of revenue between the segments, 67% US, so two thirds more or less exactly, 30% Germany and only 3% Kazakhstan at its current level. But we do see a lot more potential there as we do in other segments also. When it comes to the revenue mix, important for the gross margin, that's to a large extent driven by the revenue mix, but also the product mix within equipment sales. We were at 53% of sales of equipment and trucks. That includes both new and used and also conversions from the rental fleet in the United States. If we compare that a year ago, that was higher, 57%. Aftermarket, so this is service and parts, the maintenance work we do. such a big focus area of the work that we do as a company, that was at 39% a little bit higher than a year ago, it was at 37% in the comparative period in 2025, and then 8% rental. Gross margin improved, and that's mainly driven by the meaningfully higher gross margins in Germany and Kazakhstan, which, as it were, were to a big extent driven by that revenue mix that I referred to in those two segments. SG&A, so our overheads and operating expenses were down 11% to 173 million Swedish. And as a percent of revenue, which is an important KPI for us to track, it decreased to 15.3% from 16.2% last year. That reflects both some of the cost cutting that we have been doing and initiatives to rein in on costs and to some extent also foreign exchange effects. Operating margin increased to 3.2% from 1.1 and the operating profit increased from 13 to 37 million, following strong performance in US and Germany. especially the biggest delta compared to last year would be the improvement in Germany and also a reduction in group costs as we'll see in a subsequent slide. Net profit increased to 32 million, some help there also from exchange effects and also lower financing costs. Moving on to the balance sheet, we have a bigger property plant and equipment year on year, and that's mainly reflecting the seasonal buildup of rental fleet in the United States. If we look at the United States specifically and its working capital, and then look quarter on quarter, so not year on year, but we compare it to Q4 of 2025, then we do see an increase, and that's related mainly to the acquisition of Hauspy, which was completed at the end of January, so in this first quarter of 2026. and also the aforementioned seasonal build-up of inventory that Henrik has referred to. In Germany, Working capital also increased quarter on quarter from six to 13% of last 12 months revenue. They're more temporary factors. We had some truck deliveries to clients postponed from first quarter to second quarter and are confident that they will come through in the second quarter and that working capital will then. come down in Germany. In Kazakhstan, a picture also, if you remember last year, for those that follow us, we cleaned out old stock from our inventory. We've been now ordering new inventory with high demand in the local market. And as that being delivered, We see a build-up in the working capital while the market itself was quite slow in the first quarter. So an increase in working capital that we expect to come down as those machines are sold to customers. going forward. Net debt, as a result of these factors, but also to some extent currency effects, was up quarter on quarter to 2 billion Swedish krona, again reflecting that increase quarter on quarter in working capital, but also quarter on quarter the currency worked against us year on year. It was the opposite effect, but over the course that the Swedish krona weakened. Equity to assets decreased quarter on quarter. It was flat year on year. So also capturing some of those dynamics on the balance sheet. Looking at the key drivers or again delta year on year. We see starting from last year's EBIT performance at 13. Again, a strong performance in the US, but close to where it was last year, whereas Germany picked up from minus nine to plus four so a big delta there big improvement Kazakhstan roughly where it was and then we also had to your far right there cost savings mainly on personnel and travel in HQ so group costs coming down leading to that overall improvement in our operating profit performance Moving to looking at on a quarter on quarter basis as well. Here we see them after a very strong finish in the US, a decline, whereas in Germany, We had some one-off costs related to those cost savings that we now see fruits from in this year. So a big improvement quarter on quarter. Whereas Kazakhstan, again, less of a delta there. and again some difference in the headquarter performance there also driven by some of the adjustments of provisions that we had in HQ. With that I move over to next slide which gives our traditional overview or a balance sheet So you'll see that the big assets on our balance sheet, starting from the left, you have a real estate that's both owned properties, that is our workshops, and the least in IFRS 16. And then the biggest item being our rental feeds, mainly in the US, the red part of that bar, but also in Germany, in Germany capturing both diesel and electric trucks. And I would then jump all the way to the inventories. There being a big piece on the balance sheet, again, biggest in the US reflecting the bigger scale of those operations and also in Germany. And then we have the trade and receivables outstanding from customers. And quickly on the liability side of the balance sheet, we have the trade and payables being the interest-free part of the balance sheet and then the bank loans. And thirdly, the big item would be the supplier financing that we have for our both inventory and rental fleet arrangements. So with that, we get to our NIV at 1.4 billion Swedish, which translates into about 93 Swedish kronor per share. Moving over to our financial objectives where we stand with regards to revenue we are at 0.92 partly affected there by currency development since we set these targets and especially then of course the dollar which has weakened against the Swedish krona. Operating margin last 12 months at 2.2. So reminded that we reached 3.2 in the quarter, but this being failing last 12 months, standing at 2.2. net debt EBITDA at the 3.8 up from 3.4 in the previous quarter for the reasons that we have looked at in this presentation. So mainly house and seasonal build up of inventory and rental fleets. And with that Henrik I pass back to you for an outlook before we hand over for questions.

Thank you Erik. So we are optimistic about the US operations and the market environment ahead. I said earlier infrastructure spending remains at a high level across our territory. The need to repair roads and develop infrastructure, bridges and so on continues at the same pace as last year. At the same time we see that this is increasingly complemented by large-scale data center investments. The scale of planned IE-related investments in the US, be it data centers or semiconductor factories, is really unprecedented. We have several projects within our territory that are expected to support construction activity and equipment demand for several years to come. The customer order books, they are solid and underlying demand is robust. Now we have Housebee integrated and we continue to invest in rental, CRM and lead generation. And with that, we are well prepared to take more market share, increase our aftermarket penetration and that way improve our operational leverage in the US further. In Germany, we expect the recovery in the market to continue as fleet renewal needs continue to build despite higher fuel prices linked to the conflict in the Middle East that add uncertainty. Importantly, demand for service and parts remain strong. And as new truck sales improve, that demand for service and parts should grow further. So with a lower cost base in Germany, a better aftermarket business, and still with an organization that is able to handle larger volumes, we are well positioned for higher sales and improved operational leverage in Germany too, as the market normalizes. In Kazakhstan, we see good opportunities, particularly in mining and road construction. We have a new management in place and focus on improved operational execution. And in Kazakhstan too, we are very well positioned to grow revenue and profitability over time. That concludes our presentation. Thank you.

Can we hand over to the operator for questions, please?

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Albin Barnevik from ABG Sundahl Collier. Please go ahead.

Good morning Henrik and Erik. This is Albin at ABG. So if we start with Germany, we see the equipment sales being down quite a bit, yet we saw an earnings recovery driven by the strong gross margins of some 18% in the quarter. So do I understand it correctly that this was primarily driven by a strong aftermarket, which was up 6% organically, I believe. And how much of these gross margins and this improvement here is structural, would you say?

The improvement quarter or year on year is definitely driven by the aftermarket. That is a correct understanding.

Yeah, I would say, I mean, when you say structural, Albin, I think that I would put it the following way. I mean, you know, our core strategy is to grow the aftermarket. So we'll continue to do that in Germany. We think we can increase penetration and take a bigger share of the aftermarket that is out there, service more trucks. So that we expect to continue to grow. And also when we look at the economy, while there are concerns about the pace of the recovery in Germany, we see continued utilization of trucks. So the trucks are being used and our strategy is to take more of the aftermarket there. Then you have the new truck sales, which tend to be more volatile. It will vary from quarter to quarter. In this quarter specifically, we had, as we mentioned, some of the deliveries delayed from the first quarter to subsequent quarters. So you would see a decline there that is maybe not typical. But I think the way to look at it, and we want to see, we're careful to give guidance as you know, but it is to see that aftermarket continue to grow. It is stable as trucks are being utilized, whether new trucks are sold or not. And we are leveraging our organization and reaching to take more market share there. But the new tracks, we of course, we need to replenish that population. We need to build population. But the sales from one quarter to another is going to be more volatile. Over time, we definitely see potential to take market share in that as well. So structural, I think, yeah, we want to see that aftermarket remain at least stable, and we see the potential to grow it from where we are now. And then I think the truck sales will be more volatile from quarter to quarter, but the trend should be upwards. As I think we stressed, even if the recovery is taking some time, customers are always using the trucks, so they will have to replace those trucks. And that's when we refer to the pent-up demand. Yeah, that fleet renewals has to happen. It has to happen.

I see. Yeah, when I say structural, I was referring to perhaps structural versus the seasonal patterns where you've had strong Q1 gross margins before. And you also talk about the favorable product mix within the equipment sales. Are there any particular products that have been especially creative or mentioned perhaps?

No, I don't think anything really sticks out. I mean, we had good, in the US, good activity when it comes to converting machines from the rental fleet. That typically has higher margins than when we sell new equipment out of the box, so to say. That contributes to the revenue mix. But all in all, as I said, we, underlying margins in different revenue streams are fairly stable despite competition still being high. And I think we are doing well in defending our margins.

All right. And that's clear. And we also saw OPEX coming down in Germany due to the cost savings that you had flagged before the quarter. SG&A being down 14%. Would you say that you're at the cost floor now or are there further reductions possible or do you have further reductions planned?

Well, I mean, we always look to optimize costs, but our focus now in Germany is really to grow the service and parts business and to drive that and then be in a good position to capture the market when it comes back.

All right, understood. And moving on to the US then, you talk about the AI and data center construction here, some accelerating demand driver going forward. Could you perhaps split out how much of your US territories active projects are data center related? Is that possible?

No, I don't. think it's possible to give a number on that, but it's clearly an uptick in the number of projects being quoted and the number of deals were involved in relating to data center. I mean, these projects are enormous in the sense that the territory of the the land that you need to build one of these data centers is so big and you need to move so much dirt that it just requires a lot of articulated haulers and excavators and wheel loaders to do that.

Yeah, understood. And of the US organic growth, Dan, how much did the acquisition of Housebee contribute here?

We don't give the exact split, Albin, but I think maybe if you go back to the press release of what we saw Housebee being, approximately 10% of revenue, and then I think we are integrating the assets that's going well, but it's taking some time to get things up and running in our way. So probably lower than that in the start. That's what you can assume. And we're putting everything in place to make sure it gets up to full potential, both in terms of revenue.

Yeah, we don't specify it, but I think we can say that most of the growth in Q1 came organically. That's correct.

Yes. Okay. And when do you expect the house fee margin to be aligned with the RUD EBIT margin, perhaps?

don't i don't really want to speculate too much there but but you know it's it's it's a market that covers 10 of the market we used to have and there's no reason why we should have a lower share in in iowa compared to other territories over time and there's no reason why our profitability should be should be lower so so when exactly that will happen i i don't want to speculate in but over time it should be the same as we have in our other US branches and just sort of contributing to operational leverage in the US business.

Yeah all right that's clear and if we move on then to the net debt coming up a bit in the quarter both sequentially and year-over-year. And this is, of course, partly, as you mentioned in the presentation, part of a seasonal pattern as well as due to certain lower equipment sales in the quarter, perhaps than expected. I suppose this is Houseby related as well. Is that correct?

Yeah, I mean, there are three things driving this. I mean, one is the acquisition of Housepy where we, I mean, everything we, almost everything we paid for was actually equipment and being added to rental fleet and inventory. On top of that, you have a seasonal buildup of inventory and rental fleet in the US, which I think, I mean, it's a sign of the statement we make in the outlook. We are seeing very high demand and we are building inventory and rental fleet to cover this demand in the season. And then on top of that, we have these truck deliveries in Germany that were postponed from Q1 to Q2. So that drives net debt as a whole. And as you saw, I mean, leverage also came up somewhat during the quarter. And I mean, the net debt increases immediately when we add inventory and rental fleet, while the EBITDA that we are expecting to get from these investments come with somewhat of a delay. So over time we are working to deliver the company.

Do you think that you will be below the leverage target as we end 2026?

Again, Albin, you're in on guidance. And I think, I mean, we set these financial targets as long-term objectives. So I don't want to stipulate the timeline there. But I do think we are saying that, I mean, if you look at these effects, we have Hausby, we have the delay of some of the deliveries in Germany. and we have a seasonal buildup in the US. All of those should normalize over the year. And then there is a structured part where we keep investing in the rental fleet in the US, but that should also come with higher EBITDA from that investment. So I would at least say all those factors speak for that ratio coming down.

I hear you. All right. Just a final question if I may. On the group costs, they've been lower now for four quarters in a row compared to the previous period. I sense a pattern of normalization here within this cost range. Is that correct?

I think it's correct. It is, I mean, not over temporary. We have reduced costs on a group level. So there is a structural component there. And I think if you look quarter on quarter, for example, in Q4, there were bonus provisions that were reversed. So you had actually negative costs, if you see what I mean, like positive contributions. So that reduced cost in Q4. But yes, I mean, we have worked on the cost on the group level and we continue to do so. So I think, yeah, you can probably look at the current level as more indicative.

All right. Thank you. That was it for me. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time, so I hand the conference back to the speakers for any written question or closing comments.

Two questions, Henrik, coming in to us over mail. I won't state any names because I'm not sure they would want that. One question is on working capital. I think we've addressed this. It's if the increase that we've seen is more temporary or structural. I think we just touched on that, that we do see it as more temporary given the seasonal factors and the build-up related to to house bid and we are comfortable with higher working capital but when it comes with higher revenue so looking at working capital as a percentage of revenue that we want to normalize and come down and we will always want to keep high capital turnover and good returns on capital. The second question, Henrik, I leave to you. It's related to what we say about the potential for further Bolton acquisitions. So the question is, should we expect any such acquisitions in 2026?

Well, as we state, we continue to evaluate opportunities. We have a very strong platform in the US, particularly for Bolton acquisitions. And over time, we are positive about finding such and that's in line with our strategy. But whether or not we have concrete cases, that is not something we will share.

Thank you. And that was it, what I had on email. So I turn back to the operator. We have no more questions here. If there are no more questions from the audience. If not, then we thank everybody for their interest in Paranordic and hope you have a great rest of the day and the week. Thank you. Thank you.