Indutrade AB (publ)

Welcome and good morning on our behalf as well. As usual, let's start with some overall highlights from the quarter. We can begin with the demand situation. Order intake continued to improve versus last year. Organically, the order intake increased with plus one. Good morning on our behalf as well. As usual, let's start with some overall highlights from the quarter. We can begin with the demand situation. Order intake continued to improve versus last year. Organically, the order intake increased with plus 1%, with slightly more than half of the companies showing a positive order intake. The strongest segments were medical technology and pharmaceuticals, energy, and parts of the process industry. Net sales were unchanged from last year, both in total and organically. Contributions from acquisitions improved compared to the last quarters and was at a good level. EBITDA margin came in at 13.3% in line with the underlying margin last year and we will comment more on this further on in the presentation. Operating cash flow was also in line with last year. Our companies continue to improve management of working capital Inventories are lower than last year, and the inventory in relation to sales is on a historically low level. In Q1, we managed to acquire two larger companies, and we also made one more acquisition in April, adding 625 million second revenue on a yearly basis, and the pipeline is continued strong. We are obviously not satisfied with the overall performance in the quarter. However, there are good progress in several areas, which I will comment more upon throughout the presentation. Looking more specifically at the order intake and sales trends, demand was stronger than last year, but still varied across companies, geographies and segments. Book-to-build is seasonally strong in Q1 for us, but improved from 105% last year to 107% now. As mentioned, companies with customers within medtech, pharma, the energy sector experienced a strong demand and also parts of the process industry. Order intake for companies with customers in infrastructure and construction and engineering was aggregated slightly down compared to last year. In terms of sales, acquisitions contributed positively with plus 5%, a sequential improvement from the plus 4% we had in Q4 2025. However, currency movements had a negative impact of 5% and organic sales was flat. leading to an unchanged top line development in total. We had a stronger order book coming into the quarter but the sales development was impacted by a weak start of the year mainly due to the challenging weather and also by the composition of the order book with a higher share of orders connected to the energy sector and the process industry with longer lead times in general. The sales development gradually improved during the quarter, starting with a weak January and ending with a strong March. Moving into sales per market. In the Nordics, sales was up in Norway, flat in Sweden and Finland, and down in Denmark. Float technology for marine applications, water treatment and the energy sector were drivers for the positive development in Norway, while the lower sales to Novo Nordisk was the main reason for the decline in Denmark. In the rest of Europe, starting with the Benelux, sales was lower within engineering and in some of the life science companies. UK, Ireland, was a good development within, for instance, railway rolling stock, and in Germany, flat overall, but slightly improved situation in the engineering sector. Switzerland and Austria was weaker, mainly due to lower sales within valve for power generation and within the construction segment. In North America, sales improved compared to last year due to good development within medical technology. In Asia, sales declined due to difficult references from last year in the marine segment. In terms of profitability, total EBITDA decreased 2%, corresponding to an EBITDA margin of 13.3% compared to 13.6% last year. However, in Q1 last year, we had some positive one-offs, so the underlying EBITDA margin was 13.3% in line with this year's EBITDA margin. The main reason for the EBITDA margin not being on a higher level is the organic sales development in combination with slightly higher expenses. Underlying expenses grew around 1%. But on top of this, we also had some non-recurring cost for downsizing. Patrick will explain more details in his presentation. But perhaps good to elaborate on the type of companies we have and why some of them haven't reduced more. If we go back to the situation late 2025, Then I would say that expectation was that in 2026 we would see better and better order and sales situations and this could be based on that we had an organic order intake improvement of plus 3% both in Q3 and Q4 last year. So most companies had a somewhat positive outlook I would say for 2026 and We have, as you know, quite a lot of trading companies and they are in general people lean. It's difficult to find qualified replacements. Hence, there was not sort of on top of their agenda to downsize. And there is some hesitation to downside if they don't really need to in order linked to sort of to the situation that it is difficult to find really good replacement employees. In addition to this, we obviously also have a lot of growing companies and they need to add people in order to manage their businesses in a professional way. So that's a bit of an explanation, I would say, to why we had a plus 1% expense increase year over year. Positive, though, that the gross margin was continued strong, amounting to 36%. Very well managed. There will be some more challenges going forward now in quarter two, raw material price increases. But I am optimistic that our companies will handle this in a good way. We have done that for very many years historically. Looking at the sales development per business area, two of them grew organically. industrial and engineering and life science, mainly as a broad result of the strengthened order book coming into the quarter. In industrial and engineering, for instance, railway rolling stock was a sort of positive situation with, they have had large orders from companies like Alstom, Porterbrook in the UK, They also had a good situation in terms of specialty chemicals. And I think it's worth to note that they had actually an all time high order intake in March in the quarter. In life science, particular companies within the medical technology had a good development. We usually comment on the single use business. I think that's still good. And we made a Spanish acquisition, our first company in Spain last year, and they are into single use. And the first quarter was all time high for them. So good start this year for them in Indutrail. Just to give some other flavors, we have a broad portfolio of medtech companies. It's everything from, we sell communication equipment to Swedish hospitals and that business has grown really well. We have a growing business in Poland. We sell medical equipment to hospitals, also consumables to hospitals. And that's also a growing situation. We have companies on Ireland which sell medical technology to large international customers and in the quarter now sold successfully to the US. So it's not sort of single companies, it's a broad base of companies doing well in medical technology. Infrastructure and construction and technology and systems solutions continues to be weaker due to demand being subdued on the back of the general market uncertainty and lower investment levels in some customer segments. Process, energy and water had a good order book coming into the quarter, but there are generally longer lead times within the energy sector and the process industry so the minus three percent is more of a timing effect they now have a record high order book and a good conditions for stronger development going forward and march was actually the second best month ever in terms of order intake for for process energy and water in general i would say that the challenging weather in the beginning of the year also impacted the sales development negatively mainly in infrastructure and construction and process, energy and water. If we then turn to profitability for the business areas, it was three business areas improving the EBITDA margin in the quarter. Industrial and engineering had the strongest margin development supported by the gross margin improvements, leverage on the organic sales and margin accretive acquisitions. Infrastructure and construction has for a longer time worked with restructuring measures and keep costs in a really good way and some divestments to improve its margin. In life science, the gross margin further strengthened due to good sales development within the MedTech cluster, as I mentioned, as well as margin accretive acquisitions contributing positively. Processed energy and water was impacted by the lower sales, as I talked about earlier. And the EBITDA margin development in technology and system solutions was mainly driven by lower organic sales together with slightly higher expense levels. Acquisitions, positive situation. So far this year, we have acquired three companies. of which two slightly larger companies for us, with a total annual turnover of 625 million SEK. We are very glad to have welcomed Bellman, Katarikambi and Axoton to the group. They have all good track record of sustainable profitable growth and are also margin accretive to the group. In 2025, the average company size was slightly lower than a normal acquisition year for Indutrade. And this year so far, it's slightly higher. This shouldn't be seen as a strategic shift. We are opportunity oriented, as you know, and we act on opportunities we believe to be accretive and successful. Consequently, there will be times when we have periods of larger acquisitions and periods with smaller acquisitions being made. The acquired EBITDA was in a high level in quarter one. as can be seen on the graph to the right, just over 70 million SEK. Also looking at the EBITDA margin of the acquired companies, it was on a strong level of 19.5% for the quarter and above 17% for rolling 12 months. Good to note that this includes transaction costs, so the underlying margin is even higher. Our business areas are successful in the acquisition work. being proactive and building pipeline. Our business segment leaders are spending more time on acquisitions now compared to a year ago. And the current acquisition pipeline is on a high level. By that, I leave the word over to Patrick to comment more on the financials.

Yes, thank you Bo. Total growth for orders and sales was plus 2% and 0% respectively in the quarter. Book-to-bill was positive as Bo talked about. Orders 7% higher than sales and on or above 1% in all business areas actually. Strongest performance in process energy and water. As Previously mentioned, our gross margin was strong at 36% compared to 35.4% last year. Total EBITDA declined 2%. Acquisitions had a strong positive impact of 7%. But this was offset by currency movements and slightly higher expense levels in combination with the positive one-offs we had last year. And these ones, they were primarily connected to earnouts. and amounted to net plus 27 million, which corresponds to around 2.5% on the EBITDA. If we comment a little bit more on the expense situation, then total increase in expenses, fixed currency excluding acquisitions, was around 45 million. corresponding to 2% on the total expense base. But underlying, as Bo already mentioned, it's only half of this, around 1%. We have had some one-offs connected to layoffs, personnel reductions in several companies. And also last year, the cost level was somewhat pushed down, actually, because of some LTI issues. provision releases we had. So underlying it is plus 1%. EBITDA margin came in for the quarter at 13.3, which is then the same as the underlying EBITDA last year. We are, of course, not satisfied with the margin, but it's important to note that Q1 is historically a seasonally low margin quarter for us. Going down further, the P&L finance net decreased with 18%, mainly due to lower interest rates. Tax costs actually increased 5%, but it's mainly due to some one-time effects underlying the tax rate, I would say, is the same as before. Earnings per share was down 4%. Return on capital employed declined slightly to 18%. Capital employed end of the quarter increased with eight percent because of the higher acquisition pace since second half of last year and slightly higher working capital also mostly connected to increased receivables at the end of the quarter cash flow from operating activities seasonally low also then in quarter one but was in line with q1 last year all in all group financial position is Still very solid with the net debt EBTA ratio of 1.5 at the end of quarter. So let's elaborate a little bit more on the cash flow. As mentioned, cash flow is seasonally low in Q1, which you clearly can see from the graph. But it was stable. And after CapEx, it was actually slightly higher than last year. Companies continue to show progress in the management of working capital. I think inventories are lower than last year and inventories in relation to sales on a rolling 12 months basis is actually now on a historically low level. Overall working capital efficiency is also then slightly better than last year. Cash conversion continue to be on a stable high level and even even slightly improved versus last year. Continuing to the EPS earnings per share situation that has developed in a bit weak way the last couple of years as you know. The driver has been a weak organic development, which is mainly due to the general weaker macro situation that we have experienced and the lower general demand from that. But also worth to note that the higher interest rates compared to a few years back and currency headwinds lately has also then have actually a significant impact on this situation. In the quarter specifically, EPS was down 4% because of the lower operational result and lower interest cost compensated slightly. And we are obviously not satisfied with this, with EPS development, but we are now fully focused on coming back to good growth levels in line with our targets. And with that, we will also for sure deliver EPS growth. And then lastly, the financial position, the interest bearing net debt increased versus last year and also slightly sequentially because of the increased acquisition pace. However, the net debt ratios are stable and low from a longer historical perspective. Net debt equity ratio at 45% versus 47% last year. Net debt EBITDA was slightly higher than last year at 1.5, but still on a comfortable level. And if you exclude earnouts, it was on 1.3 versus 1.2 last year. The financial net debt, which is then the part of the debt that relates to borrowing that needs to be refinanced, is also historically low on a level of 1. So all in all, in conclusion, our financial position is very strong and that creates a good foundation for continued value accretive acquisitions and also room for organic growth investments and initiatives. I think I end there and leave back to you, Bo.

Thank you. So let's summarize some of the key takeaways before we open up for questions. The demand situation improved and the order backlog was further strengthened. Good acquisition contribution, but total sales were negatively affected by currency movements and the flat organic development due to a weak start of the year and longer lead times in part of the order back in part of the order book. EBITDA margin was in line with the underlying margin last year. The gross margin was on a continued high level, so we expect a good leverage on the organic sales growth when the market improves. Looking ahead, as said, we have the larger order backlog and we saw clear improvements throughout the quarter, which is positive. But the general market uncertainty remains on a high level linked to the geopolitical situation. We have a good momentum in terms of acquisitions and a strong pipeline, providing good conditions for a gradually increased acquisition pace. Finally, we are not satisfied with a quarter, but there are positive signs in many areas and we are fully focused and determined to deliver in line with our financial targets. By that, we end our formal presentation and open up for potential questions. Thank you.

If you wish to ask a question, please dial pound key five on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Oscar Ronquist from Seb. Please go ahead.

Thank you and good morning. So I have three questions. My first one would be on process energy and water, the longer lead times that you mentioned. Are those lead times longer than sort of a normalized situation? Thanks.

No, I would say that we have, as you know, a mix of companies in that business area. And the segment in the business area is the energy segment. And there we have certain companies who sell to power generation facilities and things like that. And that's a usual sort of lead time of companies. Minimum six months, I would say, to more 12 months and beyond. But that's a normal situation. We've had that for many years. Great, thank you. But that segment, I would say, has potentially grown more than other segments in the business area. So that's why maybe that there is a bit of a shift like this.

Perfect, thanks. And the next question on the post-development going forward. So if you expect to align volumes and costs in the coming quarters, I think you gave some comments about the Middle East situation. But as you see, you know, potential cost pressure on the raw matter, et cetera. But do you expect that to align more in the coming few quarters? Thanks.

We haven't seen much of those price increases in quarter one. Obviously a lot of suppliers have brought forward information about cost increases now towards the end of the quarter and early in quarter two. But as I said, I'm quite confident that our companies are prepared for this and will manage this and transfer those costs to price increases to the customers. So I'm hopeful that we will manage our gross margins in a good way also going forward. Was that your question?

Yeah, more on the operational expenses side as well, if you can see anything on that. I think on the gross margin your comment about the price increases was good.

We are, believe it or not, cost conscious in our culture and It's a weighing situation for primarily, I would say, our trading companies. So as I said, towards the end of last year, I think most of them had a more positive perspective outlook on 2026 and hence sort of refrain from certain downsizing. Even if there is now uncertainties, linked to the geopolitical situation, there is still some sort of underlying optimism that the markets are improving slightly. But obviously we will be sort of engaged from the boards in our companies to manage overhead cost situations actively so it's definitely not if anything it will improve from sequentially from Q1 I would say understood just a final short one but yeah you say that the strong M&A pipeline but just wanted to hear about the new political turbulence that has

made any changes in the appetite for M&A as we saw like last year following the liberation day?

We take every case case by case but in general we we are not in general hesitant right now, I would say. So the plan is to continue, obviously being professional, obviously being cautious in case by case, but it's as it looks now going to be a high activity level in quarter two and onwards.

Perfect. Thank you. That was all for me.

Thanks.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Johan Dahl Dahl from Danske Bank. Please go ahead.

Yes, good morning, everyone. Just, Bo, a question on sort of the outlook you presented in Q4. You know, when you presented the year-end numbers, you talked about the harvesting phase in in Indutrade late January and you conclude now that January was a disappointment to you guys. Are you able to sort of box in exactly in the beginning of the year, what was the disappointment? I mean, invoicing is what it is, but was that on cost or is that isolated to some certain events or was it more broad based?

Well, it was a very slow market from a sales perspective in January and I think you can relate to that also. It's not in the trade specific, at least not in my perspective. It was quite broad in the industry that it was a harsh winter, I think, and bad weather in large parts of Western Europe. Installation companies delaying projects. So for some reason, altogether, then sales in January started out very slow. So it was slower than the general market underlying need, I would say. So it was unexpectedly slow in January. And that created a very weak result. And we weren't able to catch up completely from that situation in February and March. But as you probably have understood by the presentation, March ended in a really strong way, both in terms of order intake, sales and profitability. So yeah, it's a good trend to have into quarter two, I would say.

Got you. Just to follow up on the one-offs you talked about in the fourth quarter, 25, Were you able to sort of box those in towards the end of the year? Has that had any follow-on effects here now during the beginning of the year? And could you also talk possibly about sort of quantifying cost savings that you have carried out here in the first quarter?

Yeah, I would say that those one was where they are boxed in, but It was linked to two specific companies. And when you experience a situation like that, we have changed management, as I've said. Obviously, the situation in those two companies is slower, weaker. They need to... restart and and we have definitely done that we we have helped them with everything from restructuring to to to strategic analysis to strategic activity prioritization growth oriented activity basically a new business strategy. So the new MDs are coming in towards a fairly served table in terms of what to do going forward. So we have lost momentum, but compared to what it could have been, I think the momentum going forward will still be a lot better based on all that activity we have done So, yeah, that had some impact on our technology and system solutions business area. Now, what was your other question, Johan? Sorry.

If you can talk about sort of how much cost you've taken out in terms of sort of a rolling 12-month basis, if it's measurable at all.

Can you comment on that, Patrick?

No, we are continuously working with... We've cost a number of employees in entities that are struggling with demand. So that we are doing, I don't know if I have a sort of a relevant number on that, but I think we have in those, on the rolling 12-month basis since sort of mid last year, we have taken down you know number of employees in these type of entities with around 200 people then which is uh you can always do more but i mean it's small companies and and and and so on so i think and and we have some more coming here in quarter two then so we are continuously pushing uh pushing on uh on these parameters all right thank you go back in line thanks

The next question comes from Zeno Englund-Ricciuti from Handelsbanken. Please go ahead.

Yes, hello, and thanks for taking our questions. I joined a bit late, so sorry if you have answered these. But looking at a high level on the order book, which you have been building up, could you say something about how the composition looks now and what your expectations are in terms of converting it to sales?

Yeah. So we have a relatively higher share of the order book linked to the energy segment and some longer lead time life science segments. But you will see sort of positive release effects from this in quarter two. and the further improvement step in Q3 and onwards this year. So it's about to happen. A positive step in Q2 and an even bigger step in Q3.

And if I add, if you elaborate a little bit on the order book sort of development and compare it to last year, we have seen order book increases in process energy and water, life science, and also technology and system solutions with the highest increase in process energy and water. And it's basically flat, you could say, in the industrial business area. And infrastructure and construction has actually a lower order book than they had last year. So this sort of this mix change, you can say, then prolongs a little bit the lead time of the order book.

Understood. And just on the similar topic specifically in TSS, which saw a bigger step up in the order intake, if it's possible to get some color on expected conversion of that.

It's not that long in that business area. So it basically relates to what I said earlier in a bit of a step up in Q2 and then even more in Q3 and onwards. So it's the same for that specific business area as well, I would say.

very clear and just a last question on the gross margin which continued to be strong it would just be interesting to hear more about the drivers behind that.

I mean it's been strong for many many years and stable slightly increasing and it's part of the industry DNA to really work with pricing and try to manage potential cost increases from suppliers and transfer that to customers and watch that situation and step by step work more and more and more with value based pricing versus just some sort of more simplified pricing approach. So, I also talked a little bit about that the war in the Middle East will drive up and has driven up oil prices, which will affect plastics and other raw materials. So there is going to happen even more in this area, I think, in quarter two and onwards. But I'm quite optimistic that we will continue to manage this situation in a good way.

Sure, thank you. I'll get back in line.

Yeah, thanks.

The next question comes from Gustav Bernebled from Nordia. Please go ahead.

Yes, good morning. It's Gustav here from Nordia. I thought maybe just to follow up there on the development in technology and system solutions. Was the margin weakness basically only driven by the weaker volumes and should we then sort of expect them to jump back up now and we see volumes pick up in Q2 as you comment on?

I think they will sequentially improve Q1 to Q2 but it's linked to that They are suffering, I would say, as a business area from cautious demand from industrial customers broadly, internationally. So it's not going to be a drastically quick pickup and they suffer a little bit from a difficult situation in these two UK companies and so on. Obviously, we have done the restructuring, as I said, and so on, but it will go take some time to improve the situation there to be you know above average in the trade levels again but sequentially improvements but but not very quickly. Don't expect that they go from 14 to 18 in two quarters. That's not going to happen, I don't think, but they will improve.

That's very helpful and then maybe on the topic of medical technology life science here I mean you comment on the single use products being quite solid I mean those sounds more recurring I would assume so it sounds like the margins here would be rather sustainable unless there are any larger orders you want to flag.

I think that's a good assumption.

Is it possible to say anything regarding start to Q2? It sounds like it was a slow start to Q1 and then finish very strongly. Should we anticipate that April started quite solid as well?

We ended the quarter one in a really good way. Usually Q2 is seasonally a good sort of demand quarter for inter-trade companies.

You have a lot of holidays in April and May, which sort of makes the situation a little bit foggy. But we have no real news of a sort of a demand change. We hope and believe that sort of March levels will continue with the sort of reservation for holidays, etc.

That's perfect. Thank you very much for taking my questions. Thank you.

The next question comes from Victor Force from SB1 Markets. Please go ahead.

Hi, good morning. Thank you for taking my questions. So just starting off with the non-recurring downsizing costs, just wondering if you could break down the split by business area and maybe comment on whether most of those costs are in technology and system solutions, or if they're spread across the board?

Thank you. No, not that much in technology and system solutions, to be honest. It's a little bit spread out. I think the most part of that is actually in life science. Even though they are trending in a good way, I think they have All business areas have a few companies that need to work with costs. So those particular one-offs I talked about, they are mostly actually in life science. And then the LTI costs I mentioned, but those are on group level. So that's part of the reason why there's a sort of a deviation compared to last year on group level.

Okay. Thank you. And should we expect any more of this going forward? Or are you sort of done with the larger part of it?

There will, I assume, always be some smaller restructurings in a difficult market. I don't expect them to sort of increase at least, if anything, on a smaller level, I would assume.

Okay, perfect. And then just back to the two UK companies and technology and system solutions. Just wondering if we look at the greater picture is essentially all of the margin pressure coming from those two companies still, just given the 4% organic order growth, or is it sort of spread across the entire segment?

No, there is not like a delta between 14 and 18 coming from those two companies, but they have a significant sort of impact, but then there is a broader set of companies who have more of a flat flat I would say sales situation and weaker EBITDA margins than normally but I'm optimistic as I said that they will step by step improve during this year and onwards and the plan ambition commitment from that management team is to come back to the to the previous levels for sure.

OK, thank you. And just a final one on acquisition multiples, because I mean, in 2024 and 2025, we saw some acquisitions coming in at higher multiples. And then looking at the acquisitions here in Q1, it seems like you're back on the sort of six to seven range. Just any commentary on future multiples would be helpful.

Yeah, we are where we are, as you said, now. And as we predict right now, I think we will be on that level for... Yeah, that's where we can close successful deals currently. And I don't foresee any big... multiple level increases in the short or medium term.

Okay. Great. Thank you.

Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you for listening in and asking relevant and good questions. We close the conference and wish you a great day.