Instalco AB (publ)

Okay, welcome to this presentation of Instalco's report for the fourth quarter and full year 2025. My name is Per Sjöström, I'm CEO of Instalco and with me today is our CFO Kristina Kasberg and our head of IR Mathilda Eriksson. The fourth quarter concludes a challenging year but also marks an important shift driven by our own actions. As always, I will start with a short snapshot of Instalco today. We are a leading installation group across the Nordics with an established platform also in Germany. Our strength is our decentralization. Local companies close to customers combined with common standards, tools and governance. With over 6,000 employees, we are exposed to market segments driven by long-term needs such as energy efficiency and electrification. Over to slide three. First, for a quick glance at our LTM numbers, which for the fourth quarter also represents the full year. Net sales amounted to 13.6 billion and we ended the year with a backlog of 9.5 billion, which represents a steady book to build of about 70%. Exactly where we want it to be. It allows us to be disciplined in the projects we take on, focusing on quality and profitability rather than growth for growth own sake. Our EBITDA for the full year amounted to 800 million, corresponding to a margin of 5.9%. When adjusting for one-off costs taken in the first and second quarters, this would amount to 875 million, corresponding to a margin of 6.4%. Despite the extraordinary circumstances around these one-offs, I believe that this is the cost of doing business in a project-based environment, and we have during the year taken several steps to take down our risk. With or without adjustments, we are, however, not satisfied with this level, but the quarter shows that we are moving in the right direction. Service remained strong and again accounted for 38% of net sales in the fourth quarter. The strong cash flow in quarter four also, as well as throughout the year, kept our LTM cash flow from operations above one billion, even despite the decrease in earnings showcasing our strong focus on improving working capital. Next slide, yes. Well, let's move on to a quick summary from the quarter. Our improvement initiatives are beginning to deliver results. For the first time in seven quarters, EBITA increased compared to previous year. We are proud of the progress, but not satisfied. The improvement is primarily driven by our own performance. Market conditions vary geographically and the installation market is late cyclical. We are not relying on the external environment. Instalco 2.0 is making a tangible difference in daily operations. Sharper priorities, clearer accountability and more consistent follow-up. A focused approach to doing the right things, collectively and with precision. Our financial positions has strengthened and our leverage has come down significantly. Improved earnings, improved population, and a clear focus on cash flow are reinforcing the balance sheet and increasing finances as well as strategic flexibility. So for next, and now I will hand over to Kristina who will take you through our financial development in more detail.

Thanks, Per. Let's start off with looking at how our net sales and order backlog has developed during the fourth quarter of 2025. Net sales grew by 4.4% to almost 3.8 billion. Currency had a negative impact on the outcome with minus 1.4%. Organic growth, on the other hand, turned positive at 4.9% and we saw growth in both reporting segments. Our order backlog also reported growth of 5.6% or 7.5% organically, again impacted by FX. Most of the growth came from Norway, but we also saw strongly increasing order intake from a few of our Finland-based subsidiaries that mainly work towards industrial clients. Especially for the Norwegian order growth, it is important to keep in mind that many of the projects taken have long durations. I would therefore caution against expecting it to quickly go to execution. In addition to the backlog, we saw our service business, which remains an important stabilizing factor. For the fourth quarter, service amounted to 38% of sales and at the same level for the full year. Then on to our earnings, EBITDA in both millions and margin. Q4 tends to be seasonally strong, with lots of projects wrapping up by the end of the year. This pattern continued also in 2025, though December saw activity going down for both ourselves and our customers due to the holiday period. In total, EBITDA grew by 39% compared to last year, to 272 million. This corresponds to a margin of 7.2%. The higher margin and improved result are explained partly by prior year items affecting comparability and partly by implemented operational improvements. The outcome breaks the negative year-on-year EBITDA trend observed over recent quarters. The adjusted EBITDA margin is unchanged year on year in the context of a market that has pressured margins throughout the year. Maintaining that level in Q4 reflects underlying operational improvements. It also marks a clear break in the pattern of year on year margin decline we have seen in recent quarters. The focus on margin improvement remains a key priority for the entire group. To break it down into more detail, over to a slide that summarizes segment Sweden in Q4. Overall, net sales grew to 2.6 billion with an organic growth of 6.6%. Acquired growth contributed with 1.3%. The order backlog was down by 3% compared to a year ago to 6.6 billion. This however represents a sequential growth of 300 million compared to the end of Q3. The EBITDA amounted to 180 million corresponding to a margin of 6.8% compared to 5.5% last year. The stronger margin is the result of the segment no longer being burdened by last year's one-off costs combined with operational improvements. Improved margins and earnings are evident across the majority of geographical areas. At the same time, performance continues to be weighed down by a persistently challenging market. When adjusting for the one-off costs of 54 million, adjusted margin for the same quarter last year would have been 7.7%. The Swedish market is showing early cautious sign of recovery, particularly in the major cities where new projects are starting to move forward. At the same time, decision-making remains slow and conditions are still challenging in parts of the country with pressure on pricing in some regions. Demand within technical consulting, automation and digitalization continues to strengthen, providing early signals of gradual improvement despite a mixed industrial backdrop. But as always, it is important to keep in mind that installation is late cyclical. And now for a summary of the rest of Nordic's segment. Overall, net sales were down slightly to 1.1 billion due to FX effects. Organic growth amounted to 1.2%. The EBITDA margin amounted to 7.8% compared to 5% last year or 6% last year if adjusting for the one-off costs. The improvement was driven by both countries, but primarily by Finland and in particular by projects for industrial customers. The segment showed very strong development of the order backlog, which increased by 33%. As I mentioned a few slides ago, this was primarily driven by Norway, which saw some for us larger orders come in during the year, but also in the quarter. In Norway, the market has stabilized following a weaker period with early signs of recovery, particularly in Oslo and the south regions, supported by public investments in infrastructure, defense, healthcare and education. Competition remains intense and the macro environment is still somewhat uncertain, with inflation and interest rate expectations affecting investments decisions. Overall, the market is gradually stabilizing, but any recovery is likely to be gradual rather than fast. In Finland, activity remains subdued, with the residential, construction and larger private investments still on hold. Demand is mainly driven by renovation work, industrial projects and longer-term investments linked to the energy transition, defense and digital infrastructure, while a broader recovery is not expected in the near term. And finally, a reminder that this segment will be split up in our external reporting starting from January 1st, 2026. We will publish historical numbers according to the new segment reporting before our Q1 report. Then on to the cash generation in the quarter. In Q4, cash flow from operations amounted to 451 million. The slight decrease is attributable to last year's much higher adjustments for non-cash items related to the run-off costs taken in Q4 2025. Q4 tends to be a period where we build up working capital due to the typically increased invoicing at the end of the year. So was the case also this year, but I'm happy to report that we did so to a lesser extent than a year ago, despite our increased top line and earnings. Taken together with a strong development throughout the previous quarter, this means we ended the year with a cash conversion of 108%, which is above our target. This is the result of improved earnings and improved POC ratio and a clear focus on cash management within the full group. In total, the cash flow performance give us confidence in the direction and the quality of our execution. This cash flow profile strengthens our financial foundation and increases our flexibility going forward. Then let's have a look at our performance on a rolling 12 months basis in relation to our financial targets. Our targets are defined over a business cycle and in the current market, we continue to prioritize profitability and disciplined project selection over pure volume growth. Despite this, we ended the full year 2025 with a negative net sales development of only minus 0.7% and a organic development of only minus 0.3%. The EBITDA margin came in at 5.9% or if adjusted at 6.4%. It remains below our long-term ambition. We are not satisfied and are taking actions. These actions are making an impact as can be seen in the quarter. Operational cash flow was again strong with a conversion rate of 108% above our target, supported by ongoing improvements in working capital efficiency. Our leverage remains somewhat over our own long-term target of 2.5 times net debt to EBITDA as its currency sits now at 2.8 times. This represents a significant delay leveraging compared to 3.3 times at the end of Q3. The board proposes a dividend of 0.5 sec per share based on the current numbers of shares which amounts to 133 million. And of course we remain firmly focused on delivering on our climate commitments as part of our long-term targets. By that over to you Per.

Thank you Kristina. Let's talk about Fabri for one slide here. And first of all I want to point out momentum in Germany remains strong. Our German platform Fabri continues to develop well and has made two further acquisitions during the quarter. This means Fabri has now reached 22 companies in total, underscoring the steady progress of the platform. As with previous editions, these companies are a strong fit with the Fabri model. They are entrepreneurial led, technical skilled and firmly rooted in their local markets. Together, they strengthen both the platform's technical capabilities and also its geographic reach. The collaboration between Instalco and Faber is built on a long-term agreement and the next step in ownership under our multi-phase model is gradually approaching. At the same time, execution is very much about timing and preparation. And based on our current assessment, step two is expected to become relevant in the second half of 2026. Overall, the development in Germany continues to confirm that our platform strategy is working and that the market offers attractive opportunities for long-term profitable growth. And then I have a theme here on the next slide, I think. I wanted to do a brief look back at the year we have just added to the books. As I said in the beginning of this presentation, the fourth quarter concludes a challenging year, but also marks an important shift driven by our own actions. 2025 was a challenging year in the market, we all know that, with uneven demand and limited visibility at times. We also started the year with setbacks, including Northvolt. But what really defines this year is not the market we were given, but the choices we made within it. We deliberately reset the fundamentals of the business. A lot of focus went into Instalco 2.0, which we introduced to you during our Q3 call. This includes better follow-up, planning and execution, and more structured way of driving improvements across the group. Getting the basic right matters, especially in a decentralized project business like ours. We also choose discipline over volume. We are not chasing growth at any price, but focusing on margins, risk, and the right projects with the right customers. That is both a profitability choice and a risk management choice. And this focus on discipline has also shaped our approach to expansion. Execution comes before expansion. That applies to organic growth, but also to M&A. We completed the one acquisition during the year, Alfnäslands eltjänst in Ursula's week. This was a very deliberate choice. The region is seeing positive momentum with several major upcoming investments and Alfnäslands eltjänst gives a strong local platform. It strengthens our position in the region and our multidisciplinary offering, allowing us to deliver more complete solutions to customers locally. At the same time, we have remained selective and patient elsewhere. On the strategic side, we took several important steps during the year. In March, we took possession of our minority stake in Fabry, giving us exposure to a new market while keeping risk balanced. Over the summer, we extended our credit facility to a total of 3.4 billion SIC, securing financial strength and flexibility in a time when that really matters. Taken together, this has been a year of deliberate choices. Choices to focus, to be disciplined, and to make sure we execute well before we move on to the next step. And those choices are now starting to shape where Instaco is heading next. While we have made a lot of changes during the year, our focus has of course remained on our core business. Day in and day out, our subsidiaries are out in the market competing for and delivering complex installation projects. These slides show a small selection of four important orders secured during the year in a market that has been anything but easy. What they have in common is not size, but quality. They are technically demanding projects, often multidisciplinary with long-term customers and high requirements of execution, planning and collaboration. They also reflect the parts of the market where activity continues even in a downturn. such as healthcare, public infrastructure, retail with scale and secure or specified facilities. And for us, these orders are a clear confirmation that our model works. When the market is challenging, it is the subsidiaries with strong local positions, technical competence and discipline that continue to win the right kind of business. I'm assuming most of you have seen this slide before, so I won't go through it in detail again. But in STALCO 2.0 is the core of where our efforts have gone during the past few months. So it's worth a short recap. At its heart, Instalco 2.0 is about protecting what has always worked for us, and that means local entrepreneurship, closeness to the customer and fast decision making, while being more deliberate in how we run and support the business. We are raising the bar on one day-to-day execution, building stronger capabilities across the organization and taking a clear, more hands-on approach where performance is not where it should be. The goal is of course, stronger execution, more predictable outcomes, and a more resilient group over time without moving decision-making away from the subsidiaries. It's very important. Slide 16. The slide illustrates how Instalco 2.0 has progressed over the past two quarters. During Q3, the focus was on setting the direction of defining the framework, aligning the operation and model and establishing common principles. That work was about creating the conditions to execute in a more disciplined and consistent way. In Q4, the focus shifted to implementation. Parts of the framework are now being applied in daily operations, and we are working systematically on rolling out across the group. This is not about launching a new process or sending out material, but about gradually changing ways of working and how performance is followed up. We are seeing tangible effects in better visibility across all levels of the organization, earlier identification of deviations in results and projects forecast, and a more disciplined approach to risk and working capital. Issues are surfaced, challenged, and addressed rather than postponed. While we are still early in the journey, we are starting to see these improvements reflected clearly in the operation and, to some extent, also in the numbers. And importantly, STALCO 2.0 is not a one-off initiative. The ongoing phase is about maintaining momentum throughout or through continuous improvement, structured follow up and capability building, including targeted training and leadership initiatives. This is about establishing a new way of working for the long term, not delivering a short term project. Okay, I think this is the last slide and a summary. So let's return to the quarter and look at the key takeaways. As we have mentioned, for the first time in seven quarters EBITDA is growing, which marks an important shift after a prolonged period of pressure. At the same time, market conditions remain varied across geographies, which continues to require a disciplined and selective approach. Operationally, we deliver strong cashflow and further strengthen our financial positions, reflecting improved control and focus in the business. In Stalco 2.0 continues to progress according to plan. The rollout is ongoing and we are starting to see clear effects in daily operations with sharper priorities, clearer accountability and more consistent follow up across the organization. The focus is on doing the right things together and with precision and reinforcing these ways of working over time. All in all, we are taking steps. We are taking steps in the right direction from a stronger financial position. So, and with that, I would like to thank you for joining on this call, joining in on this call and now open up for questions.