Lifco AB (publ)

2025. 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 five on their telephone keypad. Now I will hand the conference over to CEO Per Waldemarsson and CFO Therese Hoffman. Please go ahead.

Thank you and good morning everyone. We can move directly into page number two in our investor presentation where we look at the group's overall financial performance in the first quarter. And it was overall on the group level a mixed quarter with mixed outcome in various parts of LIFCO. But overall on the high level, solid performance for the group. We had a 15% growth in sales. driven by around 8% organic growth, particularly strong growth in sales into solutions, which we'll come back to in the next slide. We have also strong growth in acquisitions of 8% in sales. If we go further down and look at the EBITDA, we grew that with 17%, and we had slightly higher EBITDA margin compared to the previous year. And this EBITDA margin is driven by very strong performance and demolition tools, and offset by slightly lower margin in system solutions. And the profit before tax grew by around 20%. Cash flow only grew 3% in the quarter. Cash flow obviously is more volatile between quarters. And this first quarter, we have slightly higher tax payment than compared to last year, and also some working capital buildup. We can then go into more details in page number three in the presentation if we go down into the different areas. In dental it was a quite normal quarter, low single digit growth both in terms of sales and profit. We had here some positive effects on a later Easter in this year compared to last year which had some impact on the growth. If we then go further to demolition tools, we grew sales with 10%, which was a combination of organic growth and some acquisition growth. We had a very strong margin of 25% in the quarter, which is basically due to organic profit improvements in several parts of this business area. And EBITDA overall then grew with 37% in the quarter. And just to continue commenting on demolition tools, we actually saw after a quite long period of time of what I've called weak market conditions now, we saw some first indications of slightly improving market conditions in this first quarter of 2025. Having said that, we have to keep in mind that the first quarter took place before the most recent turbulence relating to tariffs, et cetera. So we just have to wait and see how this plays out going forward. We don't have more visibility around that than anyone else. But at least good, so far so good, you could say, in terms of, and I'm talking about slight improvements, you know, we're not in a, in the situation we saw in 21, 22, where the markets were very strong, but improvements from the quite low level we had in 23 and 24. In terms of solutions, we had a very mixed performance in the first quarter, if you go further down in that segment. Overall, the business area grew with 24%, but EBITDA only grew with 15% due to some you know, mixed effects of growing stronger in slightly lower margin areas. And also some weaker profit levels in three of our subdivisions, environment technology, transportation products, and special products actually had a little bit lower organic profit development compared to last year. If we then also make a specific comment around contract manufacturing, we have now, during the second half of 2024, we had very strong deliveries coming out from contract manufacturing. That also continued in the first quarter. And we have, however, now in early April, some indication that this is now turning back to more normal levels again. But the visibility here is very low. So we cannot say more than that. We have not a long order book in this area. So it's related to what happens before. But we see some indication of going back to lower normal levels in this quarter. And once again, the lower margin then of 21.6% in this business solution is a mixed effect of lower margin in contract manufacturing and some weaker organic profit development. If we then go into page number six and look a little bit at test flow, I just want to highlight that we have updated page number six with some updated data. It's measuring the free cash flow per share after capex and before dividend acquisitions. And they still do that, but we have also now deducted in all time, in every year here in this graph, we've deducted also dividends to minorities. We have in our companies some minorities, and when we pay out the dividend to them, that should of course be deducted in this graph, and that has now been updated. The cash flow per share must obviously be measured over long time periods, as cash flow can vary between quarters and even years. It has been on a little bit stagnation level the last two years. And the main reason for this low growth is, of course, that we did experience quite weak market conditions and demolition tools in 23 and 24. If we then go further into page number seven and just quickly look at our debt position, we are staying now at 1.1 times interest-bearing net debt to EBITDA, which is a very healthy level. And we stay there despite quite a large number of acquisitions in the last 12 months. Obviously, we still have plenty of room to continue making acquisitions when we find the right opportunities. And I repeat myself from previous calls, we remain very disciplined in terms of quality of the business we decide to acquire. and also the valuations. And as always, the exact timing on when different deals materialize is always difficult to forecast. But we continue to work very hard and actually expand our search for great companies all around Europe. And then we can go into page number eight and just take another step back and look at the long-term historical performance of LISCO. And once again, we can conclude that we are coming out of two years of quite difficult market conditions for demolition tools, which has led to lower than I would say historical growth in 23, 24 and so forth. And we saw some indications of some improvement market conditions for demolition tools in the first quarter. But once again, the situation, the global economy now is, of course, very difficult to forecast going forward. But I think you can also conclude from this graph that despite this situation, we've been able to grow our profits also in 23 and 24, which is a strong indication of, you know, we have a great diversification in the group. We also have, maybe even more importantly, very strong management throughout the LIFCO system that is steering the companies and the portfolio in the right direction. And if we then go to page number 13, I'd just like to also... a little bit, take a look at what we're actually doing with our portfolio. I just want to remind everyone that we have been, since the end of 1990s, developing a very strong operating model on how we steer companies in lift growth. It all starts with having hundreds of motivated and very action-oriented, result-oriented managers in all our companies. And equally important, we also have a quite large team nowadays of very experienced former managers that are now taking the ownership representative roles in all these portfolio companies that govern this process going forward. That's extremely important and something that takes many, many years to develop. And I just would like to mention the great work that takes place throughout the LIFCO system and how crucial that is for our performance. The other points on slide 13 is just also a reminder for everyone. We continue and we have always focused on, you know, going up in margin, becoming more differentiated and not focusing on the volume segment. We do that in all our businesses across LIFCO. And we've done it for many years and we continue to do that. That's also one reason why we've been able to expand our margins over the last decade. We continue to run LIFCO in a very simple way. Despite being a quite large company overall, we keep the entrepreneurial spirit in all our companies. And we make sure that the most important people in the subsidiaries can shine in such a model. We are focused on outsourcing wherever it's possible. So basically only doing what's necessary in-house and have the focus on typically the product development and the sales. And then sometimes we have to do a little bit of production because of the situation in that specific niche. But in general, it's important. And then cash flow is a strong focus in all our companies. Also, when we acquire companies, it's a very important part of our screening to ensure that we can own the company for a very long period of time with strong cash flow generation. And we do all of this with a very long-term perspective and try to do things a little bit better every year. So with that sort of overall comment, I'd like to open up for any questions.

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