HMS Networks AB (publ)

Good morning everyone and welcome to the presentation of Assa Abloy's Q3 report in 2025. My name is Björn Tebell, I'm heading investor relations and joining me here in the studio are Assa Abloy's CEO Nico Delvaux and our CFO Erik Pieder. As usual we will now kick off this conference with a summary of the report and then we will open up for your questions. So Nico that means it's over to you.

Thanks Björn, also good morning from my side. Q3 results, we can show strong numbers for Q3 with good growth and strong margins. We had a good organic sales development with a strong 3% organic growth, with good sales growth in EMEA, Antron Systems, Global Tech and Americas, and a sales decline in Asia-Pacific, mainly because of the continued challenging situation in Greater China. Good operational execution with record operating margin, highest operating margin since Q3 2015, 16.8% EBIT with excellent operating leverage offsetting our M&A and currency dilution. Also very strong cash flow, 10% up and a cash conversion of 125%. And then we completed five acquisitions in the quarter. If you look at the numbers, a sales of 38 billion SEC. Like I mentioned, 3% organic sales, a strong 2% price and 1% volume. a 5% net acquired growth, and then minus 6% from currency, mainly SEC, dollar related. So top line up 2%. Very strong EBITDA, record margin of 17.9%, and also record margin of EBIT of 16.8%. And then EBIT and EPS up 3%. EBIT in absolute value, 6.4 billion SEC. If you look a little bit on the world, I can perhaps summarize, because the picture is very similar as in Q1 and in Q2, where in our three main regions, as well in North America, as in Europe, as in Oceania, we continue to see very good momentum on the non-residential side. But also in all three regions, we continue to see more challenging market conditions on the residential side. We have seen also a slight recovery on the logistics vertical, which is important for entrance systems. Not a V-recovery, but a smaller but positive recovery. We have seen a plus 5% organic growth in North America, a very mixed picture for our Americas division where we have seen high single digit organic growth for the non-residential part and low single digit negative growth for the residential part. And then strong performance also for the other divisions with good momentum in all the different verticals. Also our spec business up double digit in the quarter. South America or Latin America plus one, where for the American division we have seen a small single digit negative decline, but then good performance for the other divisions. In Europe, plus two, same picture like I mentioned earlier on residential commercial, where we see in Sweden at least some recovery on the residential side, on the R&R side, but no real recovery yet on the new build. Obviously, the rest of Europe, which is more ECB-related, is later in the cycle on the residential side, but continued good momentum on the commercial side, also in Europe, double-digit growth of our spec business. Africa minus eight, it's a small continent, a small part of our business, and it's mainly related to a higher project business for HID. Last year, some more difficult comparison. Oceania plus three with good growth. performance as well in Australia as in New Zealand. And New Zealand is a bit in the same picture as Sweden. They also started to cut interest rates much earlier. And there we see good recovery as well on the new build as on the R&R side. And the last but not least, APEC minus four, a very mixed picture between, on one side, Greater China, where we continue to see double-digit negative growth, where market conditions remain very challenging on the residential side, where all indicators are down double-digit. And then the rest of Asia, where we have seen good momentum, good positive growth, as well in Southeast Asia as in markets like India. If we then look at some of the products we launched in the quarter, some digital products, we extended our Centrius product portfolio offering with a new mortise lock range. Centrius is our access solution for small and medium enterprises. We also launched in Latam a new range of digital door locks for residential applications with facial recognition. And InView launched a new high-security retail display system for phones, tablets, and wearables, giving much more hands-free, smooth testing environment for new tablets, phones in those high-end stores. Also interesting to see is that our electromechanical products grew 13% in the quarter. So we continue to see that shift from mechanical to electromechanical and digital. And that obviously also gives us the opportunity to get more recurring revenue. Our recurring revenue remains our strongest growth product or service offering. And today is close to 6% of top line. So continuing also in growing in relative weight. So now three consecutive quarters with good organic growth and that organic growth continues to be complemented with very good growth through acquisitions. Our sales 62% up versus 2020. And then our margins are well within the 16% to 17% bandwidth we aim for, a run rate of EBIT margin of 16.1%, and our EBITDA margin even above the 16% to 17% bandwidth at 17.1%. So good margins, increased top line, therefore also good bottom line. A record operating profit for Q3 and our run rate EBIT up 108% versus 2020. Acquisitions, we continue to be very active on the acquisition side. Five acquisitions completed in the quarter. Sixteen acquisitions completed year-to-date as of end of September. And those acquisitions represent an annualized sales of close to 5 billion SEK. Just highlighting one of the acquisitions in the quarter, Calmel, a Spanish manufacturer of smart cards, smart paper tickets and magnetic tickets. acquisition in HID. They are based in Barcelona. They will reinforce our offering within smart cards and they had a sales of around 330 million SEK in 2024. If we then zoom in into the different divisions, starting with EMEA, a very good quarter for EMEA, with a strong organic sales growth of 4%. There have been many quarters for EMEA since we have seen such high organic growth, so very happy with that. Strong sales growth in Central Europe and the Nordics. Smaller sales growth in Middle East, India and Africa. And then sales decline in UK and Ireland. That was mainly because some commercial projects are on hold because of some new government regulation. But we are confident that those projects will be released now in the coming quarters. And then also sales decline in South Europe. That's mainly linked to a more challenging residential market in France. Strong operating margin of 15%. You really see now through that organic sales, through that volume growth, that we also get very good volume leverage and therefore also better margins for EMEA. Operating average 40 base points driven by volume growth, positive mix and operational efficiencies. FX also helped us with 40 base points because of the stronger SEC. And then M&A was dilutive, 30 base points. America's organic sales of 3%. We have a strong high single-digit sales growth in the North America non-residential segment, but a small single-digit negative growth in the North America residential segment and in Latin America. where the residential segment continues to build a bit up and down, continues to be around that flat line and depending a little bit on quarter per quarter and the comparison with the quarter of the same year before, we see a small growth or in this case a small negative growth. An operating margin of 18.5%, excellent operating leverage, 70 base points. VEX dilutive, 20 base points, and then M&A continue to be strongly dilutive under 20 base points. That's still linked to the level lock acquisition. We then go to opening solutions, Asia Pacific, an organic sales decline of 4%, with good sales growth in Pacific Northeast Asia subdivision, and a significant sales decline in the Greater China Southeast Asia subdivision, where we have, like I mentioned before, that very mixed picture where Greater China is down double digit strong double digit and where we have seen good double digit growth in southeast asia so in all picks it's really greater china that brings that division down Nevertheless, a strong operating margin of 10.2%. Long time ago that we had a double-digit margin in this division. Excellent operating leverage of 260 base points. A VEX dilutive 30 base points and no M&A activity in this division. Global technologies, also strong quarter with an organic sales of 3%, with good growth in both HID and global solutions, and a very strong operating margin, I would say where all the stars are really aligned, of 19.8%. Good operating leverage, 20 base points. Dilutive FX 70 base points strongly dilutive I would say because of the weaker US dollar but then strong accretive on the M&A side 140 base points a little bit because of the divestment of Citizen ID but mainly also because of the acquisition of Inview which has been a very successful acquisition with very good accretion also bottom line wise. And last but not least, entrance systems. Also a very strong quarter again for entrance systems with an organic sales of 4%. Strong sales growth in perimeter, security and pedestrian. Good sales growth in doors, automation and industrial. So in all four segments, good growth. And also good to see that our growth in service has come back to a strong higher single digit level. Also strong operating margin of 17.4% with excellent operating leverage on the 30 base points. Dilutive have excellent base points and then still an important dilution from Ski Data on the M&A side with 80 base points. As you know, Ski Data is still very seasonal with very low sales in Q1 and Q2, a bit better sales in Q3 and then much better sales in Q4. With that, I give the word to Eric for some more details on the financial numbers.

Thank you, Nico. And good morning also from my side. I will just repeat a couple of numbers when it comes to the sales. We were up 2%. Organic growth was up with 3%. Acquisition acquired growth was plus 5%. But then you see a strong dilutive effect of the currency, of the FX of minus 6%. If we look on what it looks like today on the period end versus last year, then if you look for Q4, we expect an even higher negative impact of minus nine. And since it's mainly related to the SEC versus dollar, we will also have a clear dilutive impact on our margin. Operating income as well as income before tax, net income and EPS, they were all up with 3% versus the same period last year. As mentioned by Nico before, we had a strong cash flow. We were up in the quarter 10% versus the same period last year. And if you look on year to date, we're almost at the same level as we were a year ago. Return on capital employed remain on the same level at the 14.2%. If we look into the bridge and dissect it a bit, the organic sales, it was a strong two when it comes to price, which leaves, I would say, plus minus a bit, 1% in organic volume growth. The flow through as seen was at 41%, so it continued to be strong 41%. Of course, it's related to the price versus cost, but we also have strong operational efficiencies. We have, like this quarter, we have savings from the MFP projects of roughly 240 million SEK, but we've also done other operational efficiencies in order then to be able to perform such a good flow through that we have. currency was negative with 20 base points and then you see the dilutive impact on the m a that comes predominantly then from Skidata and Levelock. However, remember that we bought those two companies last year in September, so they are in for two months in the acquisition column and then they're in for one month in the organic column. And then, as mentioned before by Nico, we had a strong performance of Inview in the quarter. If we look on the cost breakdown, direct material was 80 base points better than the same period last year. Of that, roughly one third comes from positive interdivisional mix, which leaves, let's say, if I call it the true price versus cost, is about two thirds. So let's say almost at 60 base points. it is starting to go down and we can expect it to continue to be slightly lower in the quarters to come. Conversion cost was also positive versus the same period last year. You have the higher volumes and then the operational efficiencies as I talked about on the last slide. And then SG&A slightly worse than a year ago minus 40 base points there we have sort of you have the inflation is impacting as well as we continue to invest in r d as well as in sales so that's the reason why it's slightly negative Operating cash flow, as mentioned before, it's up 10% versus the same period last year. As mentioned before by Nico, the cash conversion was a strong 125% for the quarter. It's driven by the strong earnings as well as reduction in our working capital predominantly within receivables as well as within inventory. That sort of leaves, if you flip a slide, that you can see that the net debt to ABDA went from 2.3 the same period last year down to 2.2. If you look sequentially on the gearing, we went from 70% in Q2 down to 65% in this quarter. So we have actually reduced the actual debt. with about 4 billion SEK in the quarter. That comes from, I would say, the strong cash flow, as mentioned before. So all in all, we have a very strong financial position and we can continue with our acquisition strategy. Last but not least, from my side, the earnings per share, as mentioned before, they were up with 3% versus the same period last year. And with that, I hand it back to Nico for some concluding remarks.