Indutrade AB (publ)

Welcome to the Indutrade Q4 presentation for 2025. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO Bo Amvik and CFO Patrik Johnson. Please go ahead.

Welcome and good morning on our behalf as well. Let's start with a summary of the year 2025. It was a year with market uncertainty and continued dampened demand, although conditions improved throughout the year. We improved operationally and financially gradually during the year, and we also further strengthened our long-term strategic capability as our new segment structure now is fully established. In terms of financial numbers, 2% total growth in order intake, organically also plus 2%. Net saves decreased by 1% in total, of which minus 2% organically, driven mainly by backlog reductions during 2023 and 2024. The EBITDA margin of 13.8%, excluding extraordinary runoffs in the year, the EBITDA margin came in at 14.1%. The cash flow was continued on a high level, and the financial position of the group is very strong. In terms of acquisitions, we acquired 13 well-positioned and profitable companies during the year, with a total annual turnover of 1.3 billion SEK. The board proposes a dividend of Swedish krona 3.1 per share. Looking at the Q4 highlights, Organic order growth of plus 3%, with positive development in many companies and all larger customer segments. Three out of five business areas grew organically, and the remaining two were stable from last year. More than half of the companies had organic order growth. The strongest demand from customer was within energy, water and wastewater, and infrastructure and construction. Net sales decreased by 1% in total. Organically, it was unchanged. The reported EBITDA margin came in at 13.3% compared to 14.6, the same period last year. However, underlying EBITDA margin was strong at 14.9%, excluding the extraordinary one-offs in the quarter. And this we will comment more on later in the presentation. Underlying EBITDA more than last year was 14.3%. Cash flow from operating activities amounted to 1.6 billion SEC in line with a high level last year, and there were continued inventory reductions from our companies. The acquisition pace was good in Q4 with four announced acquisitions, and the pipeline also remains good, both short and long term. Moving into order intake and sales trends, demand continued to improve and was stronger than last year with positive development in many companies, customer segments, and geographies. Development was generally positive in all larger customer segments, and the strongest performance was seen in the energy sector, water and wastewater, and for companies with customers within infrastructure and construction. Order intake improved in the majority of the companies and was up 3% organically. Order intake was in line with sales, which is good, as book-to-bill is seasonally weaker during the second half of the year. As you can see on the slide, currency has a large impact of minus 4%, which together with a minus 1% from divestments impacts total growth on orders and sales materially. Adjusted for currency and divestments, the underlying situation is clearly better with plus 7% growth in orders and plus 4% in sales. Organic sales development was strongest in the industrial and engineering business area, and also infrastructure and construction grew organically while it was weakest in technology and system solutions. Looking more specifically at the sales per geographical market, sales to Sweden was flat from last year and down in Denmark due to the high comparables from last year when we still had some deliveries to Novo Nordisk from the large order we received two years ago. Finland was stable from last year and Norway stronger. Development in Norway is mainly connected to flow technology products for water and wastewater, aquaculture, and marine applications, as well as other products for infrastructure customers. For the rest of Europe, sales growth was strong in Benelux, mainly due to good development within bands for power generation, and also single-use products for farmer production. UK Ireland and Germany was down as a result of the generally weaker business climate in those areas. Sales growth in Switzerland and Austria was strong, with good developments for companies with customers within infrastructure and construction and medtech and pharmaceuticals. Sales development in North America and Asia is normally slightly volatile, that was down compared to last year, and among other things related to companies within business area technology and system solutions having a weaker demand on the back of the tariff situation. Total EBITDA decreased 10% from the same period last year to 1.1 billion SEK, corresponding to an EBITDA margin of 13.3%. However, this quarter was strongly affected by extraordinary one-offs, primarily connected to two companies in the UK within business area technology and system solutions. Patrick will elaborate a bit more on this later in the presentation, but I want to highlight that they are non-recurring and extraordinary, and you shouldn't expect these type of items from Indutrade. Adjusted for the one-offs, the underlying EBITDA margin was strong. at 14.9% compared to the underlying EBITDA margin of 14.3% last year. The gross margin was continued at the high level of 35.4% and even stronger than last year if you exclude these two UK companies I talked about. Organic expenses is under control. As mentioned earlier, organic sales growth was strongest in the business area, industrial and engineering, with positive development in many companies, for instance, infrastructure, machinery, and railway rolling stock. Infrastructure and construction also had a slightly positive development, however, from low levels, as the demand has been dampened for many quarters. We saw, for instance, strong development in the water distribution segment. In life science, there was a strong development in several areas, for example, single-use companies and broadly in the medtech segment, but was offset by references connected to sales last year, as I mentioned earlier. Also, process energy and water had tough references in many companies. And the main reason for negative development in business area technology and system solutions relates to project revenue recognition adjustments linked to the UK situation I spoke about earlier. Without those adjustments, the organic development was minus 2% connected to the lower sales to the US. Moving into EBITDA margin development per business area. As mentioned, the total gross margin was strong, which is driven by multiple factors like mix and currency, but it's also a sign of quality in our product offerings and strong pricing power. Industrial and engineering improved EBITDA margin as a result of the strengthened gross margin, but also leverage on the organic sales growth. Infrastructure and construction was close to last year's level but was negatively affected by a lower gross margin in a few companies. Life science also improved EBITDA margin despite strong sales references from last year, mainly due to positive product mix with good sales development from some high-margin companies. Process energy and water and technology and system solutions had a weaker EBITDA margin compared to last year. as a result of the organic sales development and slightly higher expense levels. The one in technology and system solutions I mentioned earlier is recognized as group items outside the business area, so no impact on the beta from that in the BA. In 2025, we welcomed 13 profitable and well-positioned companies to the group. with a total annual turnover of 1.3 billion SEC. The acquisition pace was lower during the first half of the year, but increased significantly during the second half, with 10 acquisitions completed in the second half. In the fourth quarter, we announced four acquisitions, where the acquisition of ATM Group marked our first acquisition in Spain. ATM is a technical trading company specialized in single-use components for life science applications. We have many similar companies in the single-use area in other geographies in Europe. So, this acquisition is a good example of our ability to expand into new markets in a controlled yet optimistic way. We have gradually strengthened our acquisition resources, and our business areas work independently with different projects. This together with business segment leaders being more proactive in the acquisition work and internal pipeline generation is a strong platform to use in gradually increasing our acquisition pace going forward. The pipeline is good, both short and long term, and I look forward to announce the first acquisition in 2026 very soon. Looking at the longer term, We are stepwise increasing number of acquisitions, although number of acquisitions per year can be a bit volatile. Looking at the bridge effect from acquisitions over the last 12 months, we have added over 190 million SEC to the group's EBITDA in 2025. Furthermore, we can also see that the acquisitions are margin accretive with an accumulated EBITDA margin of 16% for the quarter and 16.4% for only 12 months. Good to know that this includes transaction costs, so the underlying margin is even higher. By that, I leave the word over to Patrick to comment more on the financial situation.

Thanks, Bo. So, let's dive a little bit deeper into the data. Total growth for orders and sales in both the quarter and for the full year was plus 2% and minus 1%, respectively. Positively, book-to-bill is at one in quarter four and above one for the full year. And as mentioned earlier, there is a seasonality in the book-to-bill where the first half of the year is normally stronger than the second. In quarter four, the gross margin was at 35.4 versus 35.7 last year, but impacted by the one-offs in the quarter. Excluding the one-offs, it was higher than last year. And for the full year, the gross margin remains ahead of last year, even including the one-off section. Expenses not in the table, but they are, as I said, under control and increased organically only marginally with around half a percentage point excluding one-offs. Edita decreased with 10% in the quarter and 5% for the full year as a result of the one-offs in the quarter. And talking about the one-offs then. We had the non-operational one-offs connected to earn out and goodwill write-downs as we have from time to time. And then the net effect of those was small, minus 3 million. But then in addition, we had an extraordinary one-off items of in total 125 million from two UK-based companies in the business area technology and system solutions. Where we identified the need to reassess the project, in terms of cost estimates and also degree of completion. Particularly related, actually, to a few large projects with long lead times that have both new complex technology and custom application areas. Excluding these one-offs in the quarter, the underlying EBITDA margin improved to 14.9 versus 14.3 last year. Moving further down into the P&L, finance net decreased by 5% in the quarter and 14% year-to-date because of both lower interest rates and lower debt level. Tax cost decreased 10% in the quarter and 1% year-to-date. Earnings per share was also impacted by the one-offs in the quarter amounting to 1.72 SEK in the quarter and 7.03 SEK for the full year. Return on capital employed declined slightly to 18%. Also, that's mainly due to the one-offs in the quarter. Operational cash flow was unchanged from the very high levels last year, and I will elaborate some more on that on the coming slides. Net debt EDTA end of the quarter, end of the year is at 1.4, a low level, same as last year. So, let's move on to the cash flow. the cash flow, and that is, as I said, in line with the record high levels of last year, amounting to 1.6 billion in the quarter. Improvements versus last year, last year, less than the strong underlying results in combination with continued good working capital reductions. I think it's good to note that the one in the quarter had no impact on the cash flow. It's a bit of sort of proof that they are truly one of costs. The organic inventory levels continued to decline sequentially and in relation to sales. And the ratio is now at a very good level, almost historically low levels. As we mentioned before, our companies are relatively capitalized, and there is a continuous strong underlying cash flow reflected in a good cash conversion. as you can see also from the slide. And it continues to trend on a rolling four-quarter basis on above 130%, which is the ninth, actually ninth consecutive quarter with a cash conversion on that high level. The working capital efficiency also continued to improve. Moving on to looking at the earnings per share development over time. And for the quarter, it decreased 14% to 1.72, mainly due to the one-offs we have spoken about. For the full year, it amounts to 7.03, which is a decrease of 7% versus last year. And we are obviously not satisfied with EPS development. Besides the one-offs, it is, of course, related weaker demand and result development the last two years. Full focus is now to come back on good growth levels and momentum is, I think, is good. Good growth levels in line with our targets and also with that deliver earnings per share growth. And lastly, commenting on the financial position, the interest-bearing net debt decreased both sequentially and versus last year from 8.2 billion to 7.6, driven by the strong operational cash flow. Our net debt ratios are stable and low from a longer historical perspective. Net debt equity was 44 versus 49 last year. Net debt EBTA was, as I said, 1.4 in line with last year. And if you exclude earn outs, they were at 1.2 compared to 1.3 last year. And if you look at the financial net debt, which is the part of the debt that relates to borrowing that needs to be refinanced, that is historically low at 0.9. And in the quarter, Issued a new five-year bond loan of, in total, 1.3 billion at the margin of 1.13 against three months , which I think shows our strong position in the credit markets. So, in conclusion, our financial position is very strong, creating a good room and opportunity for value acquisitions and also organic growth initiatives going forward. So thanks from my side, and I leave over back to you, Bo.