Green Landscaping Group AB (publ)

Good morning and welcome everyone to this conference call regarding Green Landscaping's report for the second quarter of 2026. My name is Thomas Bergström and I am chairing the Green Board of Directors since May of this year. and around the microphone this morning is also Johan Åkström, Marcus Holmström and Klein Johansson Ullenvik. I'd like to start by repeating yesterday's factual information when we announced that the board and Johan have agreed that Johan will step down as CEO effective today. At the same time, we have agreed with Klein, who is the director of the board, to step in as acting CEO, also effective today. while we initiate a recruitment process and search for a new long-term leader of the group. While decisions and discussions like these are not easy, we are confident that we have an excellent interim solution in claim and that the company will be in good hands with him, the rest of the management team, all the strong leaders in the group and also with active support from the board. We will and have in fact already started to work as a team with a high degree of energy and determination. You can never be certain, but I do not believe this transition will slow down the continued development of the group. It is important to say that we see no overall change to the strategy of being a home for entrepreneurs and of becoming a European champion when it comes to urban outdoor landscaping and maintenance in order to create greener, safer, climate ready and nicer cities and villages where people want to live and work. With that said, we obviously have ideas on how we can develop and strengthen the group over time. During the Q&A session, I'm happy to take any questions on the announced leadership change. Before we go into the report, followed by a brief introduction by Clayne and finally the Q&A session, I would also, on behalf of the whole board, like to thank Johan for his efforts and contributions to the group. During 11 years, he has been instrumental in building up the group of today, and he has navigated the company through both good and more challenging times. I am looking forward to another type of relationship with Johan as the third largest shareholder. With that, I hand over to Johan and Marcus to go through the report, followed by an introduction by Klein, and then a Q&A where we will jointly try to answer any questions you may have. Johan, over to you.

Thank you, Thomas. As always, let me put the financial report into a larger context to begin with. So for the last few years, we have actually faced, not significant, but we have faced market headwinds, particularly in Finland, Sweden and Norway. And as we know, our report in the second quarter of this year, we are kind of happy or pleased to see that we have returned to organic growth. And that is, in comparison to last year, I think we were at minus 9%. and this year we're reporting an overall organic growth of 6%. So that is on the positive side. When we are in discussions with the local managing directors of the companies, what they are reporting is that they actually see fewer bidders in the processes when they are bidding for new contracts, and also they are reporting stronger order books. So from that perspective, we can see that there's to say that it's an early sign of recovery, but it's too soon to say that we have reached a turning point. I think that's the main conclusion when we look upon. So the market is looking better and we see early signs of recovery. And of course, the organic growth in the quarter is quite strong. In terms of financial performance, The overall financial performance in Norway and Sweden are not up to our expectations. We have worked a long time improving the situation in Sweden in particular. We see that they are improving, but not really at the pace that we would hope for. Situation in Norway is slightly different. We had the market headwinds and we had basically two companies where we communicated that we have difficulties with. And one of them is actually improving in a quite significant way. So that's on the upside in Norway. And then the other main part of this quarterly report, I would say, that is the development of ADI Europe, that it shows a continued strong performance. And also I would like to highlight that we have the operation in Lithuania with Stävlep and their performance is quite important to the company. They are having a high profit margin and we have communicated that those contracts would be renegotiated during the second quarter of this year. and we're very happy to report that we have re-won the majority of all those contracts and we have re-won them at a profit margin that is higher than we previously have communicated. So that's a very positive development at the state of the company in Lithuania. So let's move into the report. and that is basically that we are a green landscaping group. We are operating in a very large and attractive market with structural growth need that we are taking care of the urban environments in the cities And then of course, we have talked a lot about the strategy, how we work, what does it need to be a decentralized company. That really means that we are operating in six countries with 60 entities, and each one are led by their own local management directors. And that means they are able to change with the market, they are close to the customers, and that has proven to be a very effective strategy Both when times are good or when times are bad, that's an effective one. And also, of course, we are a serial acquirer as we are investing in other entities and have done so quite successfully over the last few years. In terms of the long-term performance, as I mentioned, the last few years we have seen a negative organic growth and we have had a quiet growth. That means that the total growth over the last two years has been kind of flat. even though we are seeing, as was mentioned, early signs of market recovery with high performance in terms of revenue in the second quarter of this year. Profit-wise, as we have held, I would say, kind of firm in terms of revenue, the price pressure, in particular in Norway and to a large extent also in Sweden, have meant that we are filling up the order books, we are having the work, that we are doing that at significantly as being a structural change, as I heard about Norway, as the Norway market would recover. We do expect the companies in Norway to recover to previous or healthier profit margin than we see today. So it's not a structural change in the marketplace, according to my opinion. So that's about that one. And then to sum up the second quarter, as I did mention, And we had an organic growth of a fairly high 6% and we had a total growth of 50%. So that's a really strong number. And then of course, profit wise, we are at 130 million and that compared to a year ago, that's a decrease of 10%. But nonetheless, we see strong performance in other Europe and And then, of course, if you look upon the cash flow, we had a very high focus for the last five, six weeks on the cash flow generating as that has been weak for the last few quarters. And I think we typically, the second quarter is a quarter where we tie up capital because we are starting up all the new projects. There is a high in revenue. And typically that means we have a negative cash flow. And this year we were able to have a fairly good release and that means And then, of course, in terms of the leverage, we are 3.4 times, and that's a fairly high number. We are really not happy with that one, and we are focusing on making sure that that will come down as we move into the following quarter. Next slide. As we have been communicating that we have for a year and a half been focusing heavily on improving the financial performance in Sweden, meaning that we have divested or closed a couple of companies. And that means we have a decrease of 2% of revenue while organic growth was actually 4%. So we see organic growth in the remaining entities while the divested or closed entities And then, of course, we came in at an EBITDA by 26 million. That gives us a margin at 4%. So we are at the tail end, I would say, of what we refer to as a turnaround of Swedish entities. And those are at large progressing according to plan and will be finalized more or less during the third quarter this year. In Norway, as we can see for the second quarter, We are reporting an increase of 9% organically, and that's a very high number for us. So the market again is early signs, we're not saying we're at the turning point, but they did really good work on keeping up their revenue. And then in terms of profitability, they achieved 29 million and a margin of 4.1%. so what we have been reporting is that we have continued challenging market conditions but we actually do see a size of improvement and then other Europe and they will have a very healthy increase of 55% so it's a quickly growing and that's where we have been spending time and effort in terms of the acquiring companies and adding those to the of EBIT-A to 85 million, and that gave us a very healthy margin of close to 17% EBIT-A margin. And on the average, it's a strong performance across all the companies in that region. And I did mention that, I would say not extraordinary, but a very good achievement of Stäbler who rewound the contracts So by that, I think I hand over to Marcus, our CFO.

Thank you, Johan. I will cover the main financials as usual. The second quarter showed strong net sales growth of 15%, totaling at 1.8 billion, bringing our rolling 12 months sales to 6.6 billion, a total growth of growing 12 months now at 8%. As said, we are very pleased to see the organic growth in the quarter, 6% positive for the second consecutive quarter, and we have organic growth in all segments. Reported EBITDA amounted to 130 compared to 145 last year, is moving in the right direction and we're seeing that the actions implemented are yielding positively. However, the market headwind is negatively impacting. Segmental Europe continues to positive development and we see a good sign of positive development in all regions. The EBITDA margin in the quarter came in at 7%. For rolling 12 months, the EBITDA margin is at 6.3. And we're not satisfied with the overall outcome and are strongly focused to return to positive EBITDA growth in Sweden and Norway. I will go through more details around cash flow in the next coming slides, but the cash flow from operating activities came in at minus seven, which was an improvement compared to last year, and financial leverage came in at 3.4. We are very pleased from a market perspective to see that the order backlog is increasing in the quarter to 8.0 billion. However, it's important to know that we shouldn't use the water backlog as a short-term indicator, but in the long term, it's very positive to see the growth. And as Johan mentioned, we're particularly pleased with the water intake in Luthiena in the quarter. Earnings per share in Q2 came in at 1.29, which was an increase compared to last year, which was largely driven by the reversal of revaluation of future earn-out liabilities of 27 million reported in the financial net of our P&L. I also want to highlight in regards to that revaluation, the acquisitions continue to perform well in line with our investment case. However, with the short remaining part of the earn-out period, we no longer expect them to reach the maximum level of the earn-out. And looking at cash flow, second quarter is typically a quarter where we build working capital. And as we also deliver strong organic growth, we're extra pleased to see that the cash flow is improving in the quarter. We're having operation cash flow at minus seven compared to minus 77 last year. and improvements reflect the strong focus we have had on working capital management and cash flow generation across the group for many quarters now. And it's a sign that our improvement measures are starting to yield results. We have had continuous efforts focusing on improved timely invoicing, timely collections and improving our commercial conditions in the operational contracts. As a portfolio, we see improvement in large portion of our entities and we're staying close to the ones that not yet achieved the progress as we have expected. And this effort will continue with high focus in the third quarter. Looking at the cash flow bridge in the quarter, cash flow from operating activities, as said, minus 7 million. Then we had total earn-out payments of minus 20 from financing, offering investment activities. We also had CapEx and other lease amortization totaling at minus 83. We did not repurchase initials in the quarter, totaling the total free cash flow at minus 110 million in the quarter. Having the negative total cash flow in the quarter, financial leverage came in at 3.4x, which is above our financial target. Our ambition is to return to target driven by improved operational cash flow and earnings. However, I would like to underline that we maintain headroom to meet our financial components in our funding agreements. And the key priority for us going forward is to improve our cash flow generation. Looking at the loan majority profile, we did a lot of actions in this area during last year. We secured and broadened our financing base with having refinancing our bank debt, which is financed through SEB, D&B and SEK. And we also last year issued our first loan. We have a well-balanced loan portfolio with additional options to extend the bank financing one plus one year in addition to the timeframe we're seeing on the slide. And per quarter end we have cash and cash equivalent amounting to 483 million and unutilized credit facilities amounting to 342 million. On our financial targets, we are closing into our growth target, rolling 12 months at 8% compared to the target of 10. EBITDA margin below at 6.3 and we're putting significant effort and focus to improve the organic margin development in Sweden and Norway. Financial leverage at 3.4 as said, it remains above the target and it's a key focus for us to strengthen our operational cash flow and prioritize to reduce our indebtedness. And finally, we have also a fourth financial target in terms of dividend. And at the Annual General Meeting in May 2026, the shareholders decided that no dividend should be distributed for fiscal year 2025, which is in line with the decisions from previous years. And with that said, I want to hand back to you, Johan.