Ferronordic AB (publ)

Welcome to the Faro Nordic Q2 2026 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now, I will hand the conference over to speakers CEO Henrik Carlberg and CFO Erik Donnemar. Please go ahead.

Good morning everyone and welcome to our presentation of the results for the second quarter of 2026. Starting with some highlights for the quarter. We saw increased earnings in all markets, revenue increased 43% or up 54% in fixed currency with growth in all segments. Gross margin amounted to 15.8%, somewhat lower than last year on higher equipment share of revenue, but was up in our main market, the US. Operating profit improved to 68 million compared to minus five in Q2 last year with profitability in all three markets. EBITDA nearly doubled to 180 million kronor compared to 95 the year before. Net profit improved to 45 million compared to minus 51 the year before, supported by lower finance costs and currency gain. Thanks to the increased EBITDA and lower net debt quarter on quarter, net debt to EBITDA improved to 3.0 compared to 4.5 the year before, with net debt then down 112 million in the quarter. So in summary, 43% revenue increase, operating result of 68 million, leverage of 3.0 and earnings per share of 3.08. As I said before, we saw increased earnings in all markets. We did have a strong quarter with higher earnings. The things we've been working on in recent years are increasingly visible in the results. That is mainly then focus on the aftermarket, cost discipline and increased use of data throughout the operations. I'm really happy to see growth and improved profit in all markets but the overall earnings increase was driven by high US sales with June being a record month. Focus remains on existing operations. We see untapped potential in all markets while at the same time continuing to evaluate selected Bolton acquisitions. Revenue as said was up 43% to 1.6 billion krona compared to basically 1.1 billion last year or 54% in fixed currency. Operating profit total 68 million with SG&A down 2% despite higher revenue. EBITDA nearly doubled to 180 million kronor giving us a total net profit of 45 million supported by currency gain but mainly covered by the operating improvement. Net debt to EBITDA improved to 3.0 which is in line with our financial targets compared to 4.5 a year earlier with net debt down 112 million in the Looking at the US in particular, we see strong demand from infrastructure activity and continuously accelerating data center construction activity across the territory. Sales were up 53% in US dollars with equipment sales up 89%, aftermarket up 22% and rental up 15%. Equipment growth was driven primarily by articulated haulers, very much needed for data center construction and ground preparation, and then an exceptionally strong dune. Despite higher equipment share in the total revenue mix, we saw gross margin increasing in the US to 18.2% compared to 17.3% the year before. Operating profit more than doubled to 74 million compared to 26 last year. EBITDA was up 74% in US dollars. Aftermarket continues to grow nicely, but is somewhat constrained by technician capacity. We could sell more service and parts if we had more people, and we are working to fix that. Sales will vary from quarter to quarter, but the underlying drivers installed machine base, aftermarket penetration, and rental fleet continued to build, giving us a good base going forward. During the quarter, we also continued to develop the US platform. We signed a service agreement with Volvo Penta, giving us possibility to service and sell parts for Penta engines. We also extended our cooperation with Sandvik to include underground drills. At the same time, we continue to improve the platform that we have in the US by implementing better sales management processes and working on continued digitalization of the business. So in summary, the market is strong, driven by AI and infrastructure. We have a good platform and a good team, and we're working to improve these further to take a greater share of the potential business in our US territory. Going to Germany, strong deliveries and higher aftermarket sales. The signs of recovery that we've seen earlier continued, but modest pace. Registrations of new trucks in our territory was up 7% during the quarter. Our own truck deliveries were up 52% in Euro with 267 units delivered compared to 100 in Q1. This also had a positive effect on working capital which is now down to 10% of LTM revenue. Each truck delivered expands the population that drives the aftermarket demand going forward. Aftermarket sales then was up 9% in Euro on better productivity and pricing with June being the strongest month of the year so far. Gross margin reached 10.9% compared to 13.7% the year before because of higher truck share in the total revenue mix, but the gross profit increase was up 17% to 59 million. SG&A down 14% year-on-year, reflecting the cost reductions that were implemented during 2025. Operating profit then totaled 8 million compared to minus 13 in Q2 last year. Workshops have more to give. We continue to work on increasing technician capacity, which remains the main constraint in growing the aftermarket business. At the same time, we did sign a lease contract now for a new workshop in central Hesse, about 40 kilometers north of Frankfurt. That will help us to provide even better service to our customers going forward and will grow the profitable aftermarket business. Looking at Kazakhstan, the market was more or less on hold during the quarter due to delays in government spending on infrastructure projects. This is something we expect to pass. Sales were nevertheless up 88% to 49 million kronor, driven by higher equipment sales. Gross margin was flat around 24% and operating profit then totaled 3 million compared to a loss of minus one the year before. Erik, I hand over to you.

Thank you very much Henrik. I'll turn to the financial statements and look a little bit more in detail how the performance of the quarter is reflected in those statements. Starting with the income statement. Revenue again strong across the platform and across the markets. Consolidated up 43% to 1.6 billion Swedish krona. It is the strongest revenue we've had since 2022, so very encouraging to see. Growth in all markets, so the mix of revenue across these segments is relatively stable, 62% US, 35% Germany and Kazakhstan, 3% of that revenue mix. If we look at the revenue mix across business areas, we see however that this quarter was strong in equipment and truck sales, which again reflects business activities in all segments, but maybe notably in the US, very strong equipment sales there, especially towards the end of the quarter. and Germany also where we also saw some trucks being delivered from sales in sales activities in the first quarter. So 62% equipment and truck sales after market 31% and rental 7% that compares to last year it was 49, 41 and 9. So a meaningful difference again driven by new equipment sales conversions and used in the US and also strong tractor deliveries in Germany. Despite that shift in revenue mix year on year the gross margin was relatively stable down slightly and that decline was driven by Germany and in turn in Germany it was again that big delivery of trucks and the number of fleet deals, which tend to come at the slightly more compressed margin as well. So slightly lower gross margin, but stronger gross profit on that significantly higher revenue. If we look at SG&A, despite the growth in top line, costs were held back for the group as a whole. SG&A down 2% to 177 million Swedish. Some help also from the currency there. The average rates in dollars and euros were lower against the Swedish krona year on year. As a percent of revenue, this is a KPI we keep an eye on in all our segments and across the group. SG&A declined to 11.4%. That is, of course, also an effect of higher revenue, so raising that base. Operating profit up to 68 million. with a margin of 4.3% that compares to a negative result last year and a negative margin of 0.4%. So a very strong year-on-year increase there. Net profit of 45%. From that operating profit of 68%, we had lower net interest costs, so finance costs, and were also supported by A SEVENTEEN MILLION SWEDISH FOREIGN EXCHANGE GAIN AND WITH THAT I MOVE IN TO LOOK A BIT AT THE BALANCE SEAT LOOKING YEAR ON YEAR FOR A START ON THE PPE SO MIND YOU THIS IS our properties, but mainly our rental fleet in the US, in Germany. That was higher year on year. That is reflecting investments in the rental fleet in the US mainly. and to some extent also currency effects. Here we would look at end of period FX rates and that work to increase the PPE in the consolidated Swedish accounts. If we would look rather quarter on quarter, which you can do also in the table there to your left, We also see a slight increase, not as big one. And again, that's partly reflecting that rental fleet in the US, which we keep investing in and which has high utilization, which is also reflected in the results of the second quarter. Working capital is at the core of our business and important for our returns on the capital we employ. In the US, we saw a decline in working capital from 19% to 14%, that is as a percent of LTM revenue. reflects partly inventory decrease, to some extent transfers from inventory to the rental fleet, and also higher payables. Receivables are up as they would be when sales increase, so that's in line with with normal business practice. German working capital also down from 13 to 10% of LTM revenue last 12 months revenue that is partly reflecting the decline in truck inventory. As mentioned before, we had a buildup of trucks in the end of the first quarter and that were that they were delivered through the second quarter contributing to that decline in working capital. In Kazakhstan, we had an increase in working capital on a currency basis or SEC basis, Swedish krona, but as a percentage of revenue, a decline there as well, given the higher revenue in the quarter. Net debt for the group as a whole decline that reflects part of this reduction for the group as a whole quarter on quarter reduction in working capital and release of cash and the operating performance and also to some extent foreign exchange differences. And the profit for the period as well as again FX translation contributed to a higher equity as we said and an increase in equity to assets for the group. And with that, I move over to the operating profit dynamics starting year on year. Again, last year was a weak quarter at negative five. Very strong positive dynamics in the US in this quarter from 26 last year to 74. This is in Swedish krona, of course. So again, or an increase of 47. In Germany we moved from minus 13 to plus 8, so an increase of 20. And in Kazakhstan from negative 1 to plus 3, so an increase of 4. All segments, we're happy to say, contributed to the improvement and strong results of this second quarter 2026. Moving to quarter-on-quarter dynamics, a similar picture again. All segments contribute to improvement starting from a higher base from Q1 of this year. The strong performance in the US in Q2 again stands out. Also an improvement in Germany on the profitable first quarter we had. and then also moving from break-even to plus three in Kazakhstan. On the asset side, so just quickly reminding of the balance sheet, the assets that are generating the returns for the business. We see that the biggest part of our balance sheet is the rental fleets. And then in red, it is mainly the rental fleet in the United States, but also rental fleet in Germany. Second, in terms of weight on our balance sheet are inventories as part of working capital. So these are mainly machines in the US, trucks in Germany and machines in Kazakhstan, but also parts, of course, to make sure we have iParts available to service our clients and customers. And receivables, a natural part of our business. And again, that tends to vary a bit with current sales or sales in the most recent period. And then to your far left, there also our infrastructure, of course, the real estate, our workshops and the fixtures and fittings in those workshops. On the liability side, we, of course, try to work as much with payables to our partners as we can. We also work with our bank partners in bank loans and with our partner Volvo with their VFS facilities and that brings us to a net asset value of 1.4 billion or 97 kronas per share. And with that, Henrik, we move to the financial objectives where we are. We are starting on the revenue. moving higher from where we were, but not at our target. We have to some extent the FX against where we set the goals, but again, the dynamics is moving higher. In operating margin, good progress in this quarter indeed. towards our goal of being above 6%. This, I remind the listeners, is last 12 months trailing, so the last four quarters combined. And balance sheet measure net debt and against the income statement EBITDA, We are now also at our target there, which is very positive and encouraging. So a decrease from 3.8 in the first quarter and 4.5 a year before. Good traction there. With that, Henrik, I turn to you for something on the outlook before we open the floor for questions.