Idun Industrier AB (publ)

Hello and welcome to the conference call. My name is Carl Korsheden and I work as an equity research analyst here at the D&B Carnegie focusing on acquisition driven compounders with Eden being one of the companies I have the pleasure of of following with me in the studio. I'm joined here by Iduns CEO and CFO, Henrik Mella and Oskar Samuelsson, who will walk us through the quarter, which will be followed by a Q&A session. And during this Q&A session, you are very much encouraged to participate. We do have a chat function. So if you have any questions, feel free to type them in the chat and we will make sure to cover them here in the studio. So with that said, I'll leave the word over to you and the second quarter.

Thank you and welcome to this Q2 call for IDEN Industrier. A few quick words about IDEN Industrier. We are a growing group of industrial companies, 22 companies in total, with a net sales of 2.5 billion and a VITA of rolling 12-month 336 million. We have those two business unit manufacturing and service and maintenance companies and we, in terms of being an investor, we invest in market leading companies and for us the pilot school is very important to our business model. We are a primarily Nordic group of companies and more than 90% of our sales is generated in the Nordics. With that introduction, let's go to this quarter. So second quarter 2026, net sales growth 12.7% to 668 million, EBITDA growth to 96 million or up 7.4%. The organic sales growth was rather slow at about 1%. However, we had a negative organic EBITDA growth this quarter of 7.7% or 7 million. That is not something we were very happy with and due to basically a couple of companies performing worse than expected in this quarter. We had a solid cash flow of 74 million, slightly more than last year, and also good growing profit per share. In the quarter, we made two acquisitions, one of a company called AGB Service based in Kalmar. What they do is service and calibration of press tools for technicians What they call in Swedish VVS technicians. And the second one is a trading company Nordbergs Tekniska here in Valentuna, north of Stockholm. And they provide highly technical TECHNICALLY SPECIALIZED POLYMER MATERIALS AND ALSO MAKE SOME CONVERSION OF THEM TO VERY PROFITABLE AND WELL RUN GOOD COMPANIES THAT WE ARE HAPPY TO WELCOME TO EDEN. ONE MORE THING THAT IS WORTH MENTIONING ON THIS SUMMARY SLIDE IS THAT WE made an early redemption of our last outstanding bond loan of 220 million SEK and this we did end of June and in the coming 12 months this should save us almost 8 million SEK in interest. Just to give the overview, the growth is continuing. We used to say that we make two to four acquisitions of companies per year, and this is exactly what we do, and the journey is continuing. If we take a look at quarter per quarter, here we see the illustration to the right, where we see that we had 12.7% growth, but the absolute majority of this growth comes from the newly acquired companies. And if we take the same look and look at EBITA, we actually see that we had a nice development of the acquired growth, but the organic growth in the period was actually negative. And I mentioned this was due to a couple of company-specific factors. One of them was Stega Företagen, our car washing business. They had a quite strong 2025 and are meeting challenging comparison figures. Then we have the LME group of companies, where we have the company Interagro Skog selling products to protect the forest for damages, and here we were actually affected by the spring storms, and we sold less of a quite profitable product, and that actually had an impact on that quarter, because the second quarter is a very important one for that company. Finally, we had Ekab, our business with service technicians in high-voltage electricity in the greater Stockholm area. This is normally a company with very stable profit levels, but as you say, in Swedish, even the sun has spots. And this was a quarter where Ekab had... did not earn as much money as they did in the Q2 2025. I should say that for none of these three companies, we have no worries in terms of the long-term development and not even when it comes to the development in the fall. With that, yes, I will show this slide as well with rolling 12 minds figures for sales, gross profit, EBITDA and also the gross profit and EBITDA in percent. And we like to show this because it really gives a sign of the stability of the Eden business model because as you can see here, it's the growth, we keep growing and the margins are very, very stable over time and We intend to continue with that development. And I should say that the recently acquired companies, Meab, the add-on acquisitions to V-Barrier, and also Tricobi, Muldex, AGB, and Nordbergs, they will contribute positively in the next quarters. And if we add those in the... the rolling 12 months, or the coming months, those recently acquired companies will contribute another almost 50 million EBITDA on a yearly basis. So with that, over to you, Oskar.

Thanks. We will start with manufacturing that covers two-thirds of our sales and EBITDA, roughly. Net sales is up 15.3% to 435 million SEK. And the margin came out at a similar level as last Q2, 16.8% compared to 16.7%. As Henrik already mentioned, we had lower sales within the sister company of LMI, Interagroskog. And on the positive end, we see that Viberger and Fredal Rydéns continue to deliver strong performance. Tricobi Knitted Technical Textile acquired in December continued to add a good contribution to EBITA and EBITA margin, though on a lower gross margin than the group. and can also mention in service and maintenance we had a small decline in organic sales but here in manufacturing we had a positive organic sales and EBITDA were down just a few percent. So in line with last year and can continue to develop in a good way. Service and maintenance, we had a setback. Sales is up 8.1% and it's driven by the two new group companies Moldex acquired in January and AGB acquired in May. and they will help us to improve margins and EBITDA going ahead. Sadly, we had both a decline in sales and EBITDA organic and around 3% down in sales and then double digits on EBITDA declining. And the main drivers for this, as mentioned, was Stiga Företagen that has had comparable in 2025 due to good volumes in car washes with good gross profit and EBITDA margin. And also ECAB that had a somewhat weaker Q2 compared to a strong Q1. And if you look at the figures going back even to 2024, we can see that we have increased sales. from that period but at the same time lowered EBITDA with more than 10 million. And what can be added that in 2024, we had a really good economic environment for Storthög Amateknik, heavy maintenance for Swedish industry. The same were for POL Nordic. learning system for both school but the process industry here in Sweden. And also Elema Miljöanalys had a great 2024, where they had a lot of assignments going in 2024. So we see a decline from the peak in 2024, I think in that year we had a beta margin in service and maintenance of around 16.5% and now on a rolling 12 months basis we are on 14.1% and of course we want to improve from this level and hopefully we will see that the customers will continue and improve their investments level from where we stand today. Going to cash conversion and leverage, we have a cash conversion of 58%, 225 million, rolling 12 months or 74 million. We have increased our net debt to 1 billion and 70 million SEK from Q1. That's an increase with 131 million and it comes from the acquisitions made in the quarter. But on the other hand, we have the full balance sheet in place, but then we will be able to, in the next 12 months, add just under 50 million in EBITDA. So we will go from a leverage of 2.8 down to 2.4. We had a bit increased interest cost in the quarter due to the early redemption of the bond. But going ahead, we will be able to save another 8 million CX with the new bank financing in place. Just quickly on our financial targets, nothing has changed. We want to increase EBITDA growth by 15% over a period of time, where we see that 5% should come from organic growth, which we have succeeded in. during the last five or even a longer period of time so we feel comfortable of achieving even we are not there today. Net depth divided by EBITDA less than 3.5 and where we today on pro forma basis are at 2.8 and then the dividend should be a maximum of 10% of the yearly profit.

So, last slide and to summarize some key takeaways from this second quarter. Net sales growth almost 13%, EBITA up 7.4% to 96 million, earnings per share increasing from 4.2 to 4.4. We made two investments in the quarter, AGB Service and Norbergs Tekniska. Also, we made an investment We increased the ownership in one of our subsidiaries, Noratec, from 65% to 77.5%, also another investment. If we look ahead, we do see continued uncertainties. We are not completely out of the woods, and perhaps especially for those of our group companies which sell to the the heavy industry in Sweden. But we do see some positive indications from group companies, and we believe that the operating margins should be able to increase in 2026. And we are quite confident with our strong and well-positioned group companies that they will be able to adapt to the market conditions going forward.

Thank you very much for that. So let's continue with the Q&A session. And again, if you have any questions, feel free to type them in the chat and we will make sure to cover them here in the studio. We received a couple of questions already. Starting off here, maybe on a question, a little bit on acquisition pace and the current depth. Thank you very much.

So we have made in the last 9-10 months for Eden quite a few investments in the new group companies that we are very happy with those investments. As a consequence, our debt level is slightly higher so that I understand the question. We will We will continue to look for investment opportunities. We are an investment company, always looking for investments. And if we find really good and interesting companies, we will find a way to handle that. But having said that, we are probably in a period in the coming quarters where the acquisition pace will be slightly slower.

Great. And another one question here on... IF YOU COULD ELABORATE A LITTLE BIT ON THE COST REDUCTION IMPACT OF EARLIER COST ACTIONS AND ALSO IF YEAH THESE ARE ALREADY SORT OF FULLY HELPING THE P&L HERE IN Q2 OR IF YOU SEE MORE IMPACT FROM THOSE COST INITIATIVES GOING FORWARD NOW THOSE COST INITIATIVES THAT I MENTIONED WILL HAVE MORE IMPACT IN Q3 Q4 ACTUALLY AND GOING FORWARD SO

We are, the way Eden is run, 22 group companies, and they are quite different. So when we talk about cost reducing initiatives, they are really company specific. So for example, none of the three companies I mentioned where the Q3 results were not as good, They are not in a situation where it would make sense to look into cost reductions. But we do have some other group companies where we have made those and the majority of those cost reductions will come going forward.

That's clear and another question here if You would mind helping us understand the one of type of impacts here impacts in here in q2 Allowing you to continue expecting margin expansion during the second half of the year Well

There was, I think I mentioned already in the LME group with the company Interagro Skog, where we did have a weather-related situation which impacted actually quite substantially that company, and not so much to do about that. Maybe a part of it we will be able to capture going forward, but the bulk not. So that's one thing. If we look at Stega Företagen, it's also the case in the car washing industry, they are the type of machines to a new machine from the supplier WashTech. And of course, what happens when you introduce new machines, there are a little bit more teething problems where you need to maybe, because this is a service organization, right? And we charge for technicians going out there making service. And if a x percent of those service visits are on the guarantee level or because there's a new machine, you have that impact. And that is what we partly also could see in Q2. more that we had some companies in one company we had to make we changed managing director and of course with that you have a recruiting you have an interim solution and we have additional costs impacting this was Sherberg's I can mention so we had a couple of those one of costs that actually impacted this quarter.

Will it be possible to put any numbers into that? I mean, if you take the full quarter itself, if you can say anything in terms of either the sort of organic top line growth or organic EBITDA growth, maybe even better, that was... Yeah, I guess due to this more one-off kind of factors, how that would look like if we would try to strip out those sort of items from that number?

Well, I could at least say if we would strip out what we call the one-offs, we would have had a positive organic growth. I can say that without giving a specific number.

And that's on the EBITDA level?

I'm only talking EBITDA level, yes.

Yeah, that's clear. Yeah, also a question here on ECAB. If you could elaborate a little bit more on that, what has occurred this quarter and what one might expect for the upcoming quarters. Were there something specific here in terms of project mix or similar that made this quarter a little bit messy from a...

I would say that ECAP continued to deliver strong results year on year and has done so since we acquired the company in 2015, I think. So if you look on the long trend, you'll see that it continued to develop in a very nice way. In the beginning of the year, in Q1, we had better sales and EBITDA in the company, and now We had a bit lower here in Q2, but if you look on the half-year figures, it's still a decline, but I would say that it's a mix of assignments that has been carried out and time when you invoice the customers and so on. So I wouldn't accept ECAP to have a decline going ahead.

That's clear and yeah I think you touched upon this a little bit already but as for the net depth coming up a little bit what would you say is a good level for you or a more normalized level where you aim to be?

Well, we have our financial objectives, which is below 3.5, so I guess we shouldn't communicate any new targets. But I think on that question, both of us have said before that we do think that we will probably try to keep below 3, where we are at 2.8 now. But we are not changing our financial targets.

Yeah, that's clear. And I think you actually also answered this one already, partly at least. But if we look at the sort of one-off stuff in interagro impacting the quarter here, how much of that would you expect to be recouped already in Q3? So should we expect now that... You have the normal volumes for Q3 and on top of that we should model the volumes that didn't come through this quarter from Q2 or is that optimistic?

That is probably a bit too optimistic. You could definitely expect the normal and healthy profit development of these companies within L&E. There are three of them, Eleminor, Atec, and Interagro, really good, solid companies. There could be partly, absolutely partly, it could be a bit more that we can get back what we lost, but no, it would be too optimistic to think that all of that could be recaptured, actually.

That's clear. Let's see if we have any more questions here. We do have a question if you could quantify the sort of cost savings initiatives you are expected to take care of going ahead. If you can put any number on that, say on an annual level, how much of OPEX are you expecting to strip out?

No, I would not like actually to put the specific figures. A couple of millions, of course, but it's... No, we haven't given those kind of estimates or figures before. I would just repeat that we are... Since we are not the kind of company with one structure and one business, it looks so different from company to company. So in a couple of companies, we are taking out some cost and some personnel, but in many of them, we are not doing so and it would not make sense.

Yeah, and I also noticed there in the outlook comments, they were, I guess, a little bit mixed. On the one hand, you are stating that you're seeing improvements in certain markets and foresee that to also... take effect or see the impact of that already in H2 but you're also I guess talking a little bit about that you're not expecting to see a broader improvement until 2027. Would you say that your internal expectations for the second half of the years has changed anyhow now after the Q2 report relative what your expectations were following Q1 or is it fairly stable?

No it's stable it has not changed we still expect that it quite good results in Q3, Q4.

Yeah, that's encouraging. And as for comparisons overall, you obviously mentioned Stegra. I think you mentioned also that they had a strong performance throughout the 2025 as a whole. So presumably still a little bit of tough comps there in H2. Correct me if I'm wrong. Is there any other companies that you would like to highlight that either has more favorable comps or tougher comps that's worth highlighting for modeling purposes?

I guess you could mention for the full year, Triton is a company that was in a challenging position before and are now performing better and turning it around, which is positive. That is probably the company on a year-to-year basis to mention. We are often not commenting so much specifically in the results for individual companies.

Yeah, that's clear. And I had another question here about exposure towards the process industry. Is it possible to specify which companies in particular that's affected by weakness there?

Well, there are quite a few. Let's see then. We have P&L Nordic. We have Stort Höga Emma Teknik. We have Moldex. We have Triton.

And to some extent, Ilema.

And Ilema, yes.

Many of the companies within service and maintenance has exposure to the process industry, but it differs from the companies and we see, for instance, that the Stortöga sees some positive signs from last year's levers and so on. But it's a mix.

And another question here on M&A. Are you looking at acquisitions outside of the Nordics and Baltics?

We do look at those opportunities outside the Nordics and Baltics. But as I also mentioned, given that we have recently made quite a few investments, there would need to be a really perfect investment for us in the short term to make such an investment. But of course, if it's a perfect eating company out there, you never know.

Yeah, that's clear. I think... Those were all the questions we had at the moment. So yeah, maybe we will start to wrap things up if you have any final remarks.

No, we think overall it's okay, a quarter. We do think with increasing profits, increasing profit per share, increasing cash flow, it was the negative organic EBITDA development that we were not happy with and taking measures. But overall, we think it's okay, and we look forward to the second half of the year and feel confident about that. So thank you for listening.

Thank you. Bye-bye.