Lifco AB (publ)

Welcome to LIFCO Q2 Report for 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 and welcome to everyone. We can start with page number two in our investor presentation and take a look at the overall numbers for the LIFCO group. And if we start with the second quarter on the sales line, it was a softer quarter where some segments faced more difficult market conditions. We will come back to that shortly. Overall, the sales grow with roughly 3%. with a slight positive organic growth around 0.5%. We had negative effect from foreign exchange rates of 4.4% and around 7% growth from acquisition in the quarter. In the quarter dental had somewhat negative effect in the second quarter from a later Easter this year compared to previous year. overall if we go further down and look at profit and margins we can mention already here that in general the areas with slightly higher margins had weaker development than the areas with slightly lower margins in let's go we will come back to that in different areas later on and this led to a negative product mix effect in the quarter both in solutions and also in demolition tools had similar effects So the EBITDA declined by 2.8% because of that. And also this product mix effect had negative impact on the EBITDA margin, which declined from 23.9% in previous year to 22.5% in this quarter. I'd also like to mention in the cash flow line, it declined 8.5%. which partly has to do with a small decline in EBITDA, but also due to working capital build-up, mainly in the contract manufacturing subdivision within System Solutions. For the six-month period, looking at a little bit longer period, we had organic growth of 4%, but lower EBITDA margin also there due to the negative product mix effect in Demolition Tools and System Solutions. And overall for design, nine six month period sales grew with nine percent and the beta grow with six percent and then we can go into page number three and take a little bit deeper look on different areas in the dental area in the second quarter sales decline with around two percent and a beta with five percent the lower development here mainly had to do with the negative effect from Easter, and also we had negative effects obviously in foreign exchange rates in this area. If we then go further down to demolition tools, the sales grew with 2% in the quarter, where we actually had some organic growth that was offset by negative foreign exchange impact. The margin in the second quarter declined from 26% in 2024, to around 25% in 2025, and then obviously EBITDA declined with 2%. And here in Demolition Tools in the first quarter, as we mentioned in the last call, we saw some small indications of slightly improved market conditions. And then we also mentioned in the last call that uncertainty obviously increased in the beginning of April with the tariff situation. If we now then round off the first six months, We can conclude that the business area has stabilized on a demand level. And also mentioning here that given the fairly low order books we have in this area, the numbers we present in the second quarter is a pretty good indication of how the market was in the second quarter. I'd also like to mention here in Demolition Tools once again that we experienced negative product mix effects where areas slightly lower margin developed stronger in terms of sales than slightly higher margin areas. But also in Demolition Tools, I think it's important to mention that we have historically had variations in margins between quarters. So a variation of one percentage point up or down is nothing unusual for this business area. And then if we take a look at the six month period for Demolition Tools, we have developed well with 5.5% sales growth and 13.7% growth in EBITDA with increased margins for the first six months. If we then go further down to system solutions, we did experience somewhat weaker development in the second quarter. Net sales grew with 7%, but the growth engine was once again coming from contract manufacturing subdivision. Obviously, the growth rates went down significantly from previous quarters. Just to mention here, we had 95% growth in contract manufacturing in Q1, and this now went down to 17%. This is something we also indicated that we saw lower volume in April in the last earnings call, and this now translated into 17% growth in the quarter. But still, it had impact on sales in the growth numbers of this area with 17% growth. If we go further down and look at the beta, it declined 2.8% in the quarter. And this mainly has to do with weaker market conditions in several parts of the business area. A beta margin declined from 25.1% to 32.8%. And this is a combination of the negative product mix effect that we see here, but also some areas, obviously, that are declining sales organically. which led to lower margins like for like in those areas. In addition to the above effects, we also experienced almost a percentage point, 0.9 percentage points lower margin in the business area due to what we called onward invoicing of surplus material within contract manufacturing. And this is an effect of the growth rates going down significantly in this area. which led to too much material coming into LIFCO in entities from sub-supplies. And there we can then invoice those materials without any margins to the customers. And I also would like them to round off by saying the areas where we saw the weaker market conditions in Q2 were within environmental products, transportation products, and special products. And these areas have exposure to many sub-segments. But there was, I think, in this quarter in general, a lower willingness from our customers to make decisions to invest in our products and solutions in the second quarter compared to the first quarter. And then we can go into page number seven and just take a little bit look on the financial position. The net debt to EBITDA remains stable at 1.3 times interest bearing net debt to EBITDA. And this means that we continue to have a very solid financial positions and are able to make or to continue our stripe for making more acquisitions in profitable and interesting niche companies. We continue to gradually increase our capacity to be able to every year evaluate more opportunities. But once again, the actual outcome of when acquisitions materials will and should always be a bit volatile. We should only acquire great companies when we feel comfortable about those synthesis and when the valuations are at reasonable levels. And then we can go into page number eight and take a little bit longer perspective on LIFCO. We have now for quite some time had a little bit slower growth in LIFCO in 2023 and 2024. They were difficult years for us mainly due to our construction exposed businesses within demolition tools and in the first six months of 2025 at least we see stabilization and even some growth in those areas from quite at least from lower levels. And after six months in 2025, we have grown our EBITDA with about 6%, which is obviously lower than what we strive for and lower than our historical average. But we work very hard to, once again, try to achieve our target to increase our profit every year, even if the market situations were not the best in some areas during the second quarter of this year. If we then go all the way down to page number 34, We can just have a quick look at the outcome of our acquisition work in this year. We have announced nine acquisitions so far this year. It's once again a good mix of high margin niche companies and in total these acquisitions had net sales of slightly more than one billion Swedish krona. And with that I'd like to open up for any potential questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Carl Ragnarstam from Nordia. Please go ahead.