Instalco AB (publ)

Welcome to the Instalco Q2 presentation 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Okay, welcome to this presentation of Instalco's report for the second quarter of 2026. And my name is Per Sjöström, I'm CEO of Instalco. And with me today is our CFO, Kristina Kasperger. And for the Q&A part, our head of IR, Matilda Eriksson. In short, I will say that we see the effect from the changes we have implemented and that Q2 is an important step for Instalco in the right direction. So, as always, I will start with a short snapshot of Instalco today. We are the leading installation Group across the Nordics with an established platform also in Germany, which I will get back to in this presentation. Our strength is our decentralization, local companies close to customers combined with common standards, tools and governance. And with over 6000 employees, we are exposed to market segments driven by long-term needs such as energy efficiency and electrification. Slide three. First, for a quick glance at our LTM numbers, where the majority are taking important steps in the right direction. Net sales amount to 14 billion, as you can see, and we ended the quarter with a backlog of almost 11 billion. This represents a steady book to bill of around 77%. And on top of that, we have our service businesses, which made up 35% of sales in the quarter. Our EBITDA for rolling 12 months amounted to 927 million, corresponding to a margin of 6.6%, a continued step up compared to Q1. And despite the somewhat weaker cash flow from operations in Q2, we maintain a high cash conversion at 90%. So let me start with a brief summary of the quarter. First, we delivered strong organic growth across all the segments. That reflects a market that is gradually improving, but also that we are executing better across the group. Profitability also improved compared with last year. We are seeing the benefits of better project selection, stronger execution and increased operational discipline. Our order backlog strengthened further during the quarter, giving us a solid foundation for the coming quarters. The market picture is still mixed, but activity continues to develop in the right direction. And finally, Instalco 2.0 continues to gain traction. The work we started last year is becoming part of how we operate every day, and we are seeing the effects in more parts of the business. And I think that was the big picture, Kristina. Let's dive into the numbers.

Thank you, Per. I will start with looking at net sales and order backlog development during Q2. Net sales grew by 10.3% to almost 3.9 billion. Currency had a slight positive impact on the outcome. Organic growth, on the other hand, remained positive and strong at 8.4%, and we saw growth in all three countries. When looking at where the most growth came from, we can see a strong increase from companies working with industrial clients. Geographically, the biggest sales growth came from west and south of Sweden as well as Norway. Our order backlog also reported even more growth of 17% or 14.8% organically. The backlog increase was primarily driven by Norway, but also came from Sweden. In addition to the backlog, service continues to provide a solid foundation for the business. In the quarter, it amounted to 35% of sales and we delivered growth in absolute numbers of 9% in our service business, driven by Sweden and Norway. Then moving on to earnings. EBITDA grew by 22% to 274 million, corresponding to a margin of 7.1% compared to 6.4% a year ago. Last year, Q2 had a one-off cost of 11 million. Adjusting for these, the comparison margin amounted to 6.7%, and still, this year is still better. The year-on-year development reflects both improved operational performance and the higher volumes in the quarter. Margins improved in most of our business areas. The biggest improvement year on year came from industrial facing companies, as well as the north of Sweden and our technical consultants at Intek. We are not yet where we want to be, but the quarter marked an important step in the right direction. Next, I will look into each country in more detail. First up, we have a look at Sweden in Q2. Overall net sales grew by 10% to 2.8 billion with an accelerated organic growth of 9%. The order backlog increased even more by 13.1% compared to a year ago to 7.5 billion. The EBITDA increased to 197 million corresponding to a margin of 7% compared to 6.6% last year. The stronger margin and improved earnings reflects higher volumes and operational improvements supported by a gradually improving market. The Swedish market continued to improve during the quarter and the signs of recovery are becoming clearer. Activity is increasing, especially in the larger cities where more projects are now moving into the execution phase. In Stockholm, this is especially true for somewhat larger projects. We are also seeing early signs of a recovery in the residential market, although from low levels. At the same time, development remains uneven across regions and customer groups. And now for a summary of Norway. Overall net sales were up to 625 million and organic growth amounted to 4.9%. FX effects impacted positively. EBITDA amounted to 42 million compared to 36 million last year. This corresponds to margin improvement from 6.5 to 6.8%. We are proud that Norway managed to showcase both growth and improved earnings despite experiencing delayed start dates in several projects. This is due to permitting and decision processes. This is a timing issue rather than loss demand. And our subsidiaries have managed to navigate these new projects to cover the other by slower utilization. Norway showed a continued very strong development of the order backlog, which increased by over 40% compared to a year ago, or 35% organically. The Norwegian market remains challenging, but we continue to see signs of a gradual recovery. Activity is strongest in Oslo and the southern parts of the country, supported by public investments in hospitals, defense, infrastructure, and data centers. The residential market remains weak, while commercial projects are developing more steadily. Competition is still high, but pricing has become more rational than before. And last but not least, a summary of Finland. Net sales grew by 8.6% to 432 million, organically by 9.3%, with a negative impact from FX. The order backlog decreased slightly by 3.8% compared to a year ago or minus 3.3% organically. EBITDA amounted to 35 million compared to 30 million last year. This corresponds to margin improvement from 7.3 to 8.1%. The improvement was primarily driven by a continued, fairly strong contribution from companies delivering projects for the industrial customers, while performance in the Finnish installation operations was more subdued. The Finnish market remains weak, but we believe it has reached the bottom. Residential construction and larger private investments are still at low levels while industrial projects and renovation continue to drive activity. We do not expect a broader market recovery in the near term, although market sentiment has improved somewhat. At the same time, investments in the energy transition, defense and digital infrastructure continue to support demand. Data centers are also becoming an increasingly important growth area in the Finnish market. Before I hand over to you Per, let me briefly touch on our cash flow. In Q2, cash flow from operations amounted to 104 million, which was weaker than the same period last year. The main reason is that more capital was tied up in accounts receivable, following the strong growth and high level of invoicing towards the end of the quarter. Importantly, we have not seen a corresponding increase in overdue receivables, which gives us confidence in the underlying quality of the receivables book. Strong cash flow and healthy balance sheet remain key priorities for Instalco and we continue to maintain a disciplined approach to working cap, capital allocation and selective investments. Yes, that concludes the financial review from my side, so Per, over to you.

Thank you, Kristina. And let me put the rolling 12-month performance into the context of our long-term targets. Our financial targets are measured over a business cycle and we continue to make steady progress. The combination of stronger organic growth and improved profitability is encouraging and reflects that both the market and our own execution are moving in the right direction. As you saw, our EBITA margin improved further to 6.6%. While we are not where we ultimately want to be, the direction is clear. And we continue to see benefits from our better project selection, stronger execution, and the work under Instalco 2.0. We know that we can do better, of course. Cash flow was weaker during the quarter, mainly because more capital was tied up in receivables following our strong growth towards the end of the period. We remain focused on working capital discipline and continue to target 100% cash conversion over time. Our leverage remains somewhat over our own long-term target of 2.5 times net debt to EBITDA. As the end of the Q2, it sits at 2.6 times. The same as in Q1, despite us paying the dividend in May and the acquisition of TSM in April. And finally, our climate ambitions remain unchanged. Sustainability continues to be integrated in how we develop the business over the long term. Before we move to this quarter theme, I would like to spend a few minutes on the transaction we announced after the end of the quarter. As you might have seen, Instalco has increased its ownership in the German installation group Fabri from 24 to 51%. This makes Germany our fourth operating country and giving us a majority control of the business. This is not a new strategic direction. It is the next planned step in the partnership that we announced in late 2024. Our ambition from the beginning has been to build a long-term platform in Germany together with Fabri's founders and management team. And this transaction is an important milestone in that journey. So with that, to give you a bit of flavor, here we have two screenshots of Fabri's website, one from 2024 and one from yesterday indeed. Since we first invested, Fabry has doubled its size. The development has been driven by continued acquisitions and strong entrepreneurship within the group. More importantly, it reinforced our conviction that the decentralized model works well beyond the Nordic countries. And you know, Germany is Europe's largest installation market, and Fabry has established a strong regional platform with attractive local companies and an experienced management team. The transaction itself is straightforward. We have acquired an additional 27% of the shares, increasing our ownership from 24% to 51%. acquisition has been financed within our existing credit facilities and therefore fits well within our disciplined capital allocation framework. The ownership structure that was agreed from the beginning remains unchanged going forward meaning the founders continue to have a meaningful ownership stake alongside Instalco and I think that is very important. What is Let's move to the next slide there. What is perhaps most important is what changes and what does not. Fabry will continue to operate with the same local management, the same entrepreneurial culture and the same decent decentralized way of working that was made the group successful. What changes is that Fabry now becomes part of Instalkos Consolidating Reporting and we expect closer collaboration across the organization. Marcus Sybert, the CEO of Fabry, will also join Instalkos Group Management Team. We already see a strong exchange of experience between our Nordic companies and Fabri and becoming a majority owner gives us an even better platform for sharing best practice, developing capabilities and supporting continued profitable growth. So, Germany represents a significant long-term opportunity for Instalco, and together with the Fabri team, we look forward to continuing that journey. So, with that, I will say also, let's move into the CEO theme for the quarter. And before we move into Q&A, I'd like to spend a few minutes on the topic that we believe will become increasingly important for Instalco over the coming years. And one we have received a lot of questions on over the past few months, I promise you. AI is changing many industries. Most discussions focus on software or semiconductors, but much less attention is paid to what has happened in the physical world to make AI possible. For us, AI is not just a technology trend. It affects both the demand for technical installation and how we run our own business. And let me explain directly what I mean. The first perspective is the market. AI requires physical infrastructure. Data centers need electricity, cooling, ventilation and advanced control systems. Higher electricity demand also drives investment in grids and energy infrastructure. Data centers are a growing end market for Instalco. We already deliver projects in this area and see good opportunities to grow further. We evaluate every project based on the right balance between risk and return. And I will say there is another important effect. Large AI investments absorb installation capacity across the market, no matter which company is doing the installations. That improves market conditions in many other types of installation projects as well. So AI creates opportunities in two ways. Through growing demand for data center projects and by strengthening up the broader installation market. The second perspective is our own organization. We believe AI can remove friction from everyday work, allowing our employees to spend more time on activities that create value for customers. It can support the entire project lifecycle from analyzing tender documentation and planning projects to administration, documentation and follow up. So during June, we launched Instalco AI across the group. It provides a secure common platform together with both general and specialized assistance that are available throughout our decentralized organization. The important point is that this is built to support our people, not replace their professional judgment. Our project managers, engineers and installers remain the ones making the decision. And before we move on, let me make one personal reflection. I've worked in this industry for almost 45 years. I've seen the introduction of computers, CAD, CAM, BIM and many other technology shifts. But I can honestly say that I have never seen a development with greater potential than AI. This is exactly why we decided not to wait. We wanted Instalco to move early, learn early and build capabilities early. I want us to be among the companies shaping this change, not reacting to it afterwards. And that brings me to the third point. AI can support our business, but it cannot install a ventilation system, connect an electrical panel or commissioning a building. Installation work remains local, physical and increasingly technically advanced. As buildings become more complex, the need for skilled professionals actually increases. So, while AI changes how buildings are designed, operated and used, it also increases the importance of technical installation expertise. We see this as an opportunity from two directions. It supports demand in our markets and it helps our people work smarter every day. Together, that strengthens Instalco's long-term position. So with that, let me finish with a few concluding remarks. In Q2, we delivered strong growth together with improved profitability. It is encouraging to see that all segments contributed with organic growth, while our focus on execution continues to strengthen margins. The market recovery is gaining momentum, although it remains uneven across geographic segments and customer groups. At the same time, our order backlog has strengthened further, giving us a solid foundation for the coming quarters. Instalco 2.0 continues to gain traction. The work we started last year is becoming increasingly embedded in our daily operations, and we are seeing the benefits in more parts of the business. During the quarter, we also launched Instalco AI across the group. We see AI as an opportunity both to support productivity in our operations and to benefit from the long-term demand it creates for technical installations. And after the end of the quarter, we took the next strategic step in Germany by becoming the majority owner of Fabri. It's a natural continuation of the strategy we presented in 2024. and strengthens our platform for long-term growth. Overall, we leave the first half of the year with a stronger business than we had a year ago and with confidence that we are moving in the right direction. And with that, I would like to thank you for listening in and open up for questions. First from the telephone conference, but those of you following via webcast can submit written questions as well that Matilda will read out.

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 Oskar Ronkvist from SEB. Please go ahead.

Thank you and good day, everybody. So my first will be some details just on the fabric acquisition. So first of all, just on the margin side, the... The 125 million turnover, is that sort of coming with a 12.7% margin as in 2025? Should that be a sort of a reasonable assumption? And then just on minority, etc. I assume that you will report, you know, the 49% as a minority and not any sort of put call options, etc.

Matilda, are you ready for that question?

Hi, Oskar. We haven't published any margins apart from what was press released yesterday. And the 125 is a performer from Fabry's website, including an acquisition they made a couple of weeks ago. But I mean, Fabry has reported impressive margins. They're operating in a slightly different market than we are in Nordics. And of course, we're hoping that they can maintain a level like this, but we're not making any promises. When it comes to minority interests, I think Kristina is the best to answer on that one.

Hi, we will consolidate the Fabry now when we have the 51% in the group and the minorities of 49% will be a non-controlling item. So according to IFRS, nothing else than that expected.

Perfect, thank you. Then just... regarding the data center comments you say that you know obviously it has an impact on market pricing as capacity is tied up in data centers from either you or your competitors so if you look at the or the backlog which was you know developing quite nicely in the quarter so have you seen this shift in pricing already or is it more that you expect to see that going forward thanks

I think we have seen it. Maybe we have seen it already. As you said, it ties up a lot of resources. And I think also when we talk about data centers to participate, we have scaffolding, we have ventilation, we have heating and plumbing. Maybe there is a huge demand for or efficient, of course, in a data center to install all the equipment and you have to allocate a lot of resources. Maybe it should be a little bit more cautious around that. But on the other side, we are willing to participate in those projects and we have a discussion around that, of course. So the answer is yes, we can see changes already in the market due to data centers.

Got it, thanks. And just regarding your capacity on delivering on large data center orders, is that, are you in those procurements? I'm just thinking of the larger ones that maybe have been announced from a competitor, or are they a little bit out of your scope, would you say?

No, it's not out of scope. I mean, we are partners. If it suits us, we are definitely a partner in those discussions. So we have a dialogue around data centers and with the colleagues in the construction market.

I think I can add on, just reiterating Per's comments from before, that we're, as always, evaluating every project on our risk-reward basis. So we will only go for projects that suit us and our capabilities.

Perfect, thanks. Yeah, I had one question on the Finnish margin. Obviously been very, very strong over the last three quarters, took a little bit of a dip in this quarter, albeit obviously stronger year over year from the 7% last year. So could you just add some color? Do you think that you saw some sort of dip? Was the 11.5% elevated or any sort of comments on the sort of run rate we have?

I mean, Finland still come in above 8%, and I'm satisfied with that. I think that's great. And, you know, Finland is also our smallest segment, one billion a year, and of course it can go a little bit ups and downs there. They are very focused on the industrial, the more heavy industrial part in Finland. So I think I'm satisfied with 8% or above. So I'm not worried, but it can fluctuate a little, that's for sure, from quarter to quarter.

Yeah, got it. And then, sorry, just a last question, if I may. The cash flow you talked about, you know, stronger end, I suppose, with the, you know, receivable tie-up in June, if I interpret it correctly. Is it fair to assume that you had a strong acceleration towards the latter part of the quarter? I think you made some comments about that.

Yeah, you are totally sure about that. We tied up more capital around accounts receivables in the end of the quarter. And it's no problem to say overdue accounts receivables. So we are comfortable.

Yeah, got it. That was all from me. Thank you very much.

Thank you.

Okay, it looks like we currently have no more people in the queue for the telephone conference. No, we just got one.

The next question comes from Carl Boakvist from ABG Sundahl Collier. Please go ahead.

Yeah, thanks. Good morning or soon good lunch. So I'm just curious on the Swedish development here. When we have had these comments for a couple of quarters now with improved market activity, more projects becoming available, you're doing a lot of things internally as well and we've been talking about how we need to get a few things in place so to say before margins really start ticking upwards because of contracts taken earlier in time and so on and so forth. So when we now look into the next perhaps six to twelve month period can you now say that the orders that are to be executed upon are on a better level?

I think overall we can say that, but of course, I mean, we have several cases here. The risk assessment that we have done, I think it's better today. That means that we have taken in more stable orders or less risk in the orders. I think that is one thing. We see an improved market activity, as we mentioned. And I will also say that execution, what we have worked with so much in STACO 2.0 is also, you know, So I think it's a combination, but I'm rather comfortable around the Swedish market as well as what we can achieve in the Swedish market. So it's a combination as you can hear, but I think we are where we want to be right now. And also one thing I think we can now see in the larger cities like Stockholm and increasing this is increasing activities and that is very important. I mentioned it before because that is the engine of the construction market in Sweden. So that's also something to add on to add to this discussion.

All right, and then in Norway, when you say that some project starts were postponed due to external permitting, et cetera, and that represents a delay, of course, maybe there are several projects and they are kind of stacked time-wise a bit differently, but when you have these comments in the report, are we like talking about a six-month delay or two-month delay? just thinking about growth opportunities here?

It's very much project by project basis. Some have been moved into 2027, others have been moved for two to three months. So it's very hard to give an average.

Okay. All right. That's, yeah, just this might be difficult, of course, but when Fabri now enters the business, and you say that it's similar in a couple of ways and of course much better profitability but is the German business in any way different in how they work with working capital and the net contract assets and so on?

I would say no, but I'm looking at Kristina here. I mean, they are very strong local companies. I think they have a very close relationship with the customers. I mean, they get paid in time. I don't know if there is any...

In general, the CFO answer would be on that question. We will consolidate Farby according to IFRS, like the other Nordic business. So in that sense, it's installation, but in another country. But of course, let's see how everything develops in the coming quarter when we consolidate and take the question very well there.

Alright, that's all from my side. Thanks.

Thank you. We do have a couple of written in questions from the webcast as well. I think if we start with the first one is how has the market developed during the quarter?

Yeah, I think we have mentioned it several times now, but overall, I mean, we are positive. That's for sure. But still, large differences between regions and markets, as we have also mentioned several times. So I think, I mean, looking into Sweden, clear improvements. Norway, challenging, but stable. Finland, weaker market maybe, but I think... they will recover in short. So improved market conditions, absolutely. But it's a slow development, I think. And what we mean with improvements is that there are more and more projects to calculate or be offered. So I think we are rather optimistic.

Thank you. Another quite nice one for you, Per. Mr. Sjöstrand, how are you able to motivate and do such an impressive turnaround since August 25 and so quickly? Would love to implement saying into my own work days in management.

Oh, once again.

Essentially, I think he's asking, how did you manage to complete this turnaround in such a short time?

It's my job. It's my job. But of course, I will underline this. This is a team effort. It's not just one person. Maybe I can introduce a lot of things and I can... come up with ideas and you know, but it's a teamwork and everyone has been so enthusiastic around what we have now launched. So I think it's like a piano that plays itself. So yeah, that's my simple answer.

Thank you. Next question is around Fabry again. It says, can you afford more M&A after Fabry Step 2? And what is the pro forma leverage after this transaction is completed? And I can just add that that's, of course, in Q3.

I think, Kristina, you're one there.

I would say we are comfortable even accounting for cash outflow now in the next quarter Q3 for Fabri consolidating step two as we call it. We maintain good headroom on the stated bank accounts and remember In our external reporting, we don't need to, we don't include Fabris EBITDA for the last 12 months, but in bank covenants, you do that. So we get the pro forma numbers in during Q3 also. So continue M&A. We maintain a selective approach to capital allocation, just like before.

Okay, I currently have no more people in the queue, and we have one final written question as of the moment. Intech has had margins above the group for several quarters. How does it look in Q2?

I mean, Intech still continues the trend to deliver above group margins, as you said, and I think the trend in the... I think it's also that we are you know always always I will say that we are taking on a lot of new startups all the time. So, of course, it affects us. But starting up a company or a group, of course, is costly. But with that said, also, our estimation is that they will still have double-digged numbers. And I think that also the consulting industry should exceed what we talk about when we talk about installation margins. So I think that there's no reason to believe that they will not still ongoing exceed our margins from the installation part.

All right. We have no further questions at this moment.

Okay. Thank you very much for joining in and have a great summer. Thank you very much, everyone.