Guideline Geo AB (publ)

Hello, welcome to this Q1 report from Guideline Geo. My name is Molly Syberg. I'm the CEO of Guideline Geo. I'll start with the one pager about the company and then we will move our focus to the Q1. As always, please type any questions that you may have in the chat and we will have a Q&A session in the end. Who are we? We are your guide to the subsurface. We design and manufacture non-destructive geophysical solutions that are used for subsurface surveys. Our main applications are utility locating, finding pipes and cables subsurface, ground investigations such as ground stability prior to any type of infrastructure or construction, groundwater management to find and explore new groundwater aquifers. We're a stock listed company. We have more than 100 years of history. And given our size, we have a true global reach that you can see in the map. And we sell direct through our own subsidiaries and indirect through the industry leading partner network that are the Blue Dots. And we are on a growth journey since 2020 to 2025. And we closed last year at 200 million Swedish kronor. Enough about us. Let's move to Q1. It was a good quarter. It was a strong quarter. Our net sales was flat compared to last year, 49.4 versus 49.7. But if you look at this in comparable currency, it would have been a growth with 16%. Order intake, 51.7 versus 46 last year, is a growth with 12%. Our profitability grew a bit from last year's Q1, 2.3 versus 1.8 EBITDA and minus 1.4 versus minus 3.3 last year's Q1. We have a positive and strong operating cash flow, 9.8. And we are still at a strong and solid net cash situation with 23.6 million EBITDA. But let's look at the net sales and order intake split by region. And if we look at APAC, it was not a strong quarter. In APAC, we see a continued strong trend in India, and that's really pleasing to see. We changed the distributor a couple – one and a half years ago, and they're doing tremendously good for us. And on top of that, it's pleasing to see and it helps us when we see EU signing a trade agreement with India that is supporting, that gives us confidence in a continued growth in India. China is on a poor trend and is behind the decline in APEC. We're not the only one that see a decline in China. There is strong competition with local vendors, and you also see more and more tenders requiring local domestic brands in their tenders. EMEA had OK, pretty solid net sales and a strong order intake that we haven't completely delivered yet. Europe is behind the growth. And I'll come back to that in some future slides, exactly what products we've sold in Europe. Middle East and Africa started the year pretty good, but since the Iran conflict was started, we've of course been impacted in the Middle East region. America's strong quarter. Year over year, quarter by quarter growth. So we're doing well in America. It's really pleasing to see. And it's U.S. driving most of this growth. Specifically, this Q1, also pleasing to see is that we saw strong order intake and sales from Brazil. We've also done some sales. some channel changes in Brazil that has been positive. And also here again, EU has signed a trade agreement with the Marcos Sour agreement and that in our minds will also help us going forward. So Geopolitical instability, but because of our geographic spread and our strong partner network, even though we see negative trends in some parts of the world, we can always find pockets of growth where we are. So overall, happy to see this. We are exporting, and 95% of our sales goes on export. So when you analyse us, you need to understand how the currency affects us. We sell mainly in US dollars, quite a bit in euros, and some in Australian dollars in our Oceania subsidiary. Our supply chain is mainly in SEC, and two-thirds of our employee costs are in SEC. So currency impact in Q1, if you look at our net sales, was 49.4. But in comparable currency to last year's 49.7, the net sales would have increased by 16%. And if you look at the graph showing the currency development, you can see Q1 2025, we averaged the dollar at around 1080. And in Q1 2026, we averaged the dollar at 920. So, of course, that is what makes the difference. But during the quarter, we had a headwind from the currency in our EBIT with plus 2.2. And then you had, again, if you look at the black chart, the dollar chart, you can see that during Q1 2026, we entered the quarter with the dollar at roughly 9.20 and we ended, we left the quarter at 9.50. So that gave us the tailwind from the currency in the quarter. But enough about the currency. What about the products? This chart shows the sales between our product lines. And Q1 was a strong Marlowe quarter. Across most of our products in the Marlowe portfolio, which is really pleasing to see, our high volume product, the Marlowe Easy Locator Core, the 2D solution, really good sales, US, Europe, strong sales. Our array solutions, our 3D solutions, also sold really well in Q1. Both the Mira Compact that I've talked quite a bit about, the newly released, and I'll come back to that, the Mira Flex, also sold well in Q1. And also our earlier, the Mira HDR solutions have been selling well in Q1. And again, we are doing pushes for growing on aftermarket sales. And slowly, quarter by quarter, we are increasing our aftermarket sales. And that is also pleasing to see. If we turn our eyes to Eibar, it was not as strong quarter. But what was strong in the quarter was our TEM sales. And I'll come back to that in a product slide in a while. And the light blue bar on top of the Q1 is what we call other. And this quarter, we had strong sales from our Roytech business in North America. And I'll come back to that, too. If we look at profitability, we were pretty satisfied with this result. EBITDA of 2.3 and EBIT minus 1.4. As expected, I'm pretty okay. What drives this is a mix of things. Of course, I mentioned the currency effect. The product portfolio mix that we sell does affect the EBIT level, of course, some third-party products. have lower margins and some products are really high margins. So that affects overall profitability or margin. We have some one-time effects from a cost perspective. We held two partner conferences and that means a lot of travel and some additional cost around that. And we also did an IT upgrade of our ERP system that was a one-time cost in this quarter. Net cash and cash flow. We had a positive operating cash flow, 9.8. Q1s are often a good cash flow quarter because we sell a lot, we deliver a lot in Q4, and then we get paid in Q1. So expected, but still positive. And we have a solid net cash situation, very similar to what we had after last year's Q1, 23.6. I want to highlight a couple of things around our markets and our applications. The Q1, we saw strong sales and order intake from the infrastructure customers and from utility locating customers. It goes hand in hand with our model product lines and mainly driven from US and Europe. Pleasing to see. The groundwater market continues to go well for us. And again, here's where we saw a strong trend in sales from our TEM products. And then we also had a strong quarter from the defense sector. For those of you who follow us, at the end of last year, we signed an OEM partner agreement with an partner in the defense industry. And we got multiple orders from this OEM partner in Q1. In Q4 last year, we also signed a frame agreement with the European Armed Forces, and they also continue to place order with us in Q1. Also pleasing to see. Some of you might have seen two press releases that went out in Q1, and they were about large orders that we got from mining customers in the U.S., In North America, we are a distributor of solutions from South African Roytek Mining. And we sell their slope stability radars for open pit mines, like you can see in the picture, to make sure that the slopes are stable. And in Q1, we got one order from a U.S. existing customer of another radar solution, like you can see in the picture. And we also got from an existing customer a three-year service agreement worth 6.0 million Swedish kroners. Important for this business is also import taxes to the US. Last year, we faced 40% import taxes from South Africa to the US. And of course, that impacted all new sales. But since February, that is now down to 10%. So this has helped open up this market for us again. And I'm really pleased to see these large orders coming in immediately. Early in the year, we focus on gathering our partner network. And in Q1, we held two partner conferences, one for the Latin American partners in Argentina, this time in Buenos Aires in February. And for our Asian partners, we gathered 45 of our Asian partners in Thailand in early March. And these are important to us because 65% of our sales is through our partner network. So they are our salespeople. So we need to stay close with them. We need them to give us direct feedback, what is needed on their specific market in their specific regions. And for that, these conferences are really important to us. We also provide sales training. We do product launches. We do product trainings and we train them how to demo our solutions, hardware and software. And these groups have started to share between themselves customer cases and best practices as a way to learn from each other. And of course, it's also really important for us to build that network, to build those strong relationships between us and our sales channels. And product highlights, innovation highlights in the quarter. We launched in the quarter something that we call the Malo Mira Flex. And you can see that on the picture on the top. It's a 3D GPR solution suitable for mobile infrastructure surveys such as road investigations that you can see in the picture. And the solution is the box under the vehicle. This is not a typical product from us. This is what we call an OEM product where we sell components. We sell our radar antennas. We sell our software as components to a customer who integrates this into their full solution. This has been really well received and we started selling it a little bit before we launched it and we already have quite a number of vehicles like this driving around the world doing subsurface surveys. The picture below is from the product ABEM Ground Temp Trek that we launched end of last year. And it's a mobile solution for groundwater prospecting. Really easy to use, really helps increase infield productivity for water surveys. And you can see the result directly in your app while you're walking. We took orders from end of last year and we started shipping during the quarter. So this is why I said that we saw a strong trend for the TEM business in Q1. That was partly due to demand. the build up sales order backlog of these. In the US, in the quarter, we made a structural change internally. We've had three offices in the US and for a small team that has been a bit too large of a costume. So we've been thinking about this for quite some time. And due to a couple of reasons, a staff change was one of them. During Q1, we initiated to consolidate all sales, service, support and the warehouse and administration to a new office in Denver, Colorado for our ABEM and Malo business. So we'll move within the territory, as you can see in the picture. And our ambition is to strengthen the team by doing this. And we know this will increase our internal efficiency. And of course, we will also get some cost savings on top of that. So in Q1, end of Q1, we moved out of our current office in South Carolina, in Somerville. And in Q2, we will move into the new office in Golden, in Colorado. We will, though, keep our existing RoiTech office where we have our warehouse for the service in Salt Lake City in Utah. It's a small office. And the sustainability highlight for this quarter is around cables. And around supply chain. Because a key cornerstone in our sustainability strategy is to have our supply chain as local to our manufacturing site as possible. That means close to Västerbotten in northern Sweden. And your physical cables, they are a key component to our Eben product lines. We sell a lot of cables. Customers can buy a kilometer of cables from us, and they're heavy, they're high quality, and they're costly. So, during Q1, we validated a new supplier of these cables in Västerbotten. And that means that we have a dual sourcing of these important components going forward. Our existing supplier in the US for that market and... a Swedish-based supplier for the rest of the world. So this shortens transports and we increase our overall rate of local manufacturing of our parts. So to summarize Q1, it was a good quarter. Despite the geopolitical turbulence in the world, our global presence through our subsidiaries, but also through our partner networks, makes us stay strong. We saw a strong growth in the U.S. this quarter. I'm really glad to see that. We've also focused on the restructuring of our own U.S. operations and initiated a consolidation of offices. So with that, I end the presentation and hand over to take any questions that you may have.

Yes, and the first question we have is that you mentioned two large orders from the mining industry. Can you elaborate around this and can we expect this to continue?

Yes, these orders are about what you can see on the picture. They are about our Reutek solutions, where we are a distributor for all of North America, Canada, US, Mexico, for Reutek mining solutions. It's radar solutions to make sure that the slopes in open pit mines are stable, that you can drive and continue to develop that mine. One of the orders was for... to an existing customer for one more system, one more solution that we are expected to deliver, that we have delivered in Q1. And the other order was for a service agreement, a three-year service agreement, because these radars, they need to be maintained, practically maintained, and also emergency maintained. And our office in Utah, we have three service technicians that continuously maintain and service these solutions. So two big and important orders in Q1. I think I said that in the presentation, but important last year, the business was really slow for us, partly because of the 40 percent import tax to import solutions from South Africa to the US. And that is now down to 10 percent. So this market has opened up again for us. That is really positive for us.

Next, two questions are on the same topic. So first, great to note your growth in the defense market. What are your plans moving forward in this growth market? And also, the second question is, was this according to your expectations? Mm-hmm.

Yes, the defense sector is obviously a growth sector. So, of course, we are looking into that very, very much as well. And we were really happy to sign the OEM agreement that we did end of last year with a partner in that industry who wanted to integrate our solution into their, our components into their solutions. And we think that was a very good way of addressing this market because we don't have the sales channel ourselves towards that market. To join forces with that type of partner was strategically a good fit for us. And that partnership has turned out really well so far. And as I said, we got multiple orders from them in Q1. And as if you remember last year, we got orders from them before even before signing the partnership agreement. So we are on track with our expectations here. And I think that's a good example of how we address the defence sector. But then we also get the direct customers like the armed forces that we signed a frame agreement with in December last year. They did a purchase and now we've seen another purchase in Q1. So again, when we sign these agreements, we expect revenue to come and it's pleasing to see that it also is being executed on. So our plan is to continue on the direct sales and also to go through these partnerships, OEM partnerships for the defence sector.

And last question right now is what triggered your reconstruction in the US and what is your expected outcome?

Yes, we have been thinking about this for quite some time. It is a small team in the U.S. and having three offices, I think everyone can see that that is not the most efficient way to organize it. But what triggered this was an employee change. One of our service technicians for Eben Manalo wanted to try out new jobs for employees. she moved to our Utah office to start working with the Roytech business instead. So that meant that we were decreasing the number of people working from our South Carolina office. So we thought that was a good timing to actually close down that office and consolidate office to Colorado, which is our main office in the U.S. So... That was the timing reason. We have pretty high hopes on this. There's always some turbulence when you do this type of consolidation, but we know that this will strengthen the team to be working from one office together. both product lines, sales, warehouse, service and support and admin in the same office. When you are a small team, that matters. So it will strengthen the team. It will increase our internal efficiency. And of course, we expect a cost reduction because we are shutting down a pretty large office.

And I think that finalizes the questions.

All right. Thank you for listening in and see you again for the next quarter.