Lifco AB (publ)

Welcome to LISCO Q1 Report for 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 five on their telephone keypad. Now I will hand the conference over to CEO Per Waldemarsen and CFO Therese Hoffman. Please go ahead.

Thank you and good morning and welcome to the LIFCO Q1 conference call. We can start with moving in directly to slide or page number two in our investor presentation and take a look at the overall performance in the quarter. And if we look at LIFCO overall, we are presenting a stable quarter with 4% growth in sales, 6% growth in EBITDA, and 8% growth in net profit. In the quarter, acquisition contributed with around 8%, our sales growth. We had a negative effect from exchange rates of around 5%. And organically, we grew with around 1% in the quarter. I think here, talking about organic growth, we should also take into consideration the record high sales we had in quarter one, 2025. that we now have to meet, and we could not meet those numbers, and that has to be taken into consideration that we are having a decline in our sales in the contract manufacturing, which basically means that many companies in our industrial side had a better start to 2026 than the start they had in 2035. We will come back to that a little bit more later. And we can then move into page number three and look into the different areas. If we start with the dental field, We had overall a stable development in sales, and despite the negative corn exchange rate also there. We have in the quarter a positive mix effect, where higher margin companies with own manufactured products developing stronger than the distribution companies, and this leads to better margins than last year, especially the product mix effect. Also acquisitions that we have carried out during 2025 and early 2026. or contributing with slightly better margins. So that's the explanation for the EBITDA margin ending up at 23%. If we then go further down to demolition tools, sales was overall stable on the high level for the business area. We have obviously here also negative foreign exchange effects on the sales level, so we had a slightly decline of 3.6% overall in sales. I would like to highlight here, also here, we had in Q1 2035 very strong margins in this area. In Q1 2026, the current quarter model is lower, in particular due to weak market conditions in our demolition robot segment. which is resulting in a negative product mix in this area. I would also like to, as I usually do, highlight that the margins in this area tends to be quite volatile between quarters, so we have seen that historically, but the key point here is that we have a weaker market development in emission tools, meaning that it was overall quite stable in sales for the other parts of this segment. We have, despite also the negative foreign exchange rate, some strong growth of 9% in sales due to acquisitions and organic growth in all subdivisions, except for the contract manufacturing that I mentioned previously. And once again, contract manufacturing had somewhat of a record quarter one year ago. And we have now seen, for the last, I would say, 12 months, somewhat weakening from the record levels we had. This was also the case in Q1 2036. And I can already now mention that, unfortunately, we have limited visibility in this area, so we have to take a cautious approach going further into the year for this segment. If we go further, looking at other segment solutions, we have very strong development or strong development in transportation products, environmental products in the first quarter, which is very nice to see after some, I would say, weaker development during the whole 2035. We had some good thoughts there. Infrastructure, special products had overall stable development, but both of these segments had contribution from acquisitions, making them grow. So if we just end up the overall picture of these solutions, if we exclude the effect from the volatility in deliveries in contract manufacturing, we're very pleased to see that the vast majority of the systems solutions companies had a better start of 2026 compared to 2025. We can then go further into page number four and just make a short statement on the information that was presented in our report this morning. We will, from the next quarter onwards, we will organize ourselves into five business areas instead of three. This means that environmental technology and transportation products that have formerly been divisions within two solutions will now be reported as business areas. as of the interim report for the second quarter of 2026. And just a few comments. The change that we now are reporting by these areas comes after many years of strong growth in SIS solutions, both through acquisitions and organic growth. And within SIS solutions, the two divisions that we have currently, environmental technology and transportation products, have become so material that they were reported and monitored internally. in a new way, so we will actually list them up like this. And then just also would like to highlight that the dental and demolition tools segments will not be affected by this change. And the outcome of this is that CISO solutions obviously going forward will then consist of contract manufacturing, infrastructure products, and special products. And then we can go into slide number eight and look very briefly at our financial position. And the financial position remains very strong. Interest-bearing net debt GBTA is at 1.1 times, which is the same level as one year ago, despite a large number of acquisitions during the last 12 months. And total net debt GBTA is also stable at 1.7 times. And in that number, we also include the debt for options, future option payments of minority holdings. this financial position means that we have plenty of room to continue doing further acquisitions uh we are continuously increasing our capacity to both search and take care of new companies um the inflow of new ideas continues to be high and i think it's increasing every year but the exact timing of when acquisition can uh can materialize will be a bit volatile we have seen that historically and we continue to see that so we are um working very hard, but we also remain very disciplined in terms of the quality of the companies we want to bring into LISCO, which is way more important for the next decade than optimizing acquisition short-term. So it's always a balancing act in this matter. And then we can go into page number 23. And given that we will, from next quarter onwards, report system solutions a bit differently with two new business areas, I think it would be nice We look at Page 33 now after 11, 12 years as a listed company. At the time of the IPO in 2014, SysSolution was a very small part of this group with, at the time, some low-margin operations that were, to be frank, struggling going into the IPO. Those original companies have done a tremendous job of improving their business, their market positions, and their margins, so we have seen some very good organic development. And then on top of that, maybe even more importantly, we have, during the last 11 years, acquired a large number of very strong niche companies into the five different subdivisions that we have so far. Two of those divisions have now developed so strongly that we, from next quarter onwards, will report them as business areas. And both transportation products and environmental products are now areas with close to 1 billion Swedish kronor in profits, Evita, and with margins way above 20%. And as we will look into further on when we start reporting them more grandly for next quarter, you will also learn that, you know, we have some especially environmental technologies, some global market leading positions in many of those operations. And also the remaining part of these solutions, which means infrastructure, special products, and manufacturing, have developed also very well over time and will together form the parts of the remaining six solutions going forward. So with that final remark, I would like to open up for any questions. Thank you.

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 Zeno England Ricciuti from Handelsbanken. Please go ahead.

Good morning, Per, and thanks for taking our questions. I would like to start off in the demolition and tools business area. You said now that you've seen some weaker market developments in the quarter. I'm wondering if you could elaborate a bit more on what you're seeing and what the drivers behind the weaker markets are.

Thank you, Tino. Well, if we talk specifically for the quarter, we see a relatively better performance in our attachment side compared to the machinery side, which typically is an indication of sentiment change in the market, meaning that, you know, customers are still willing to invest in lower ticket items but more hesitant to invest in more expensive CapEx investments for them, for the customer perspective. So that's what we see now. Obviously, the situation has been now for years and continues to be very difficult now with the global situation that we are facing and the uncertainty that continues to be high in this area. So we also see, if you go back to the last three years, there's been some volatility up and down in this segment, and it continues to uncertainty, you can say, given the situation we have now in geopolitics, et cetera. But in the quarter, just to be clear, the overall sales for the area was quite okay, but the mixed effect in this quarter was the key thing.

The next question comes from Dan Heimer from SEB. Please go ahead.

Good morning, Per. A couple of questions from my side. Maybe starting a bit on the motivation to break out environmental technology and transportation products, I suppose it's more of a way to increase external transparency rather than changing anything on how you operate internally. Is that the correct way to read it here? Thank you.

Yeah, I mean, yes and no. I would say, you know, as you know, you have been following us for quite some years. We have you know, we are operating with a number of senior leaders in LIFCO that are, you know, taking care of the governance of the portfolio companies, and that did not change at all because of this. So it has partly to do with the, you know, external reporting, but also we have to acknowledge that these areas, and now looking back, you know, we have now been able to find very interesting added opportunities in these areas. It's also part of the motivation that we can also internally you know, monitor how we are developing a bit clearer when we report that piece. But you're right, it won't change how we operate internally from next quarter onwards. We still use the same title. Same people will be doing great job like they've been doing in the past.

Yes. 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 ask a question here on the margin uplift in dental if we look year over year. Is it possible to give any more color on what is the contribution from just previously announced M&A here, and what is the contribution from the mix effect? And also, I guess you don't want to guide, but is there anything in terms of the mix that points towards a more negative mix going forward?

Well, if you take the first part of the question, you know, we see the effect is strong both organically margin because of the product mix effect and the acquisitions. It's a combination of both, I would say. And then you're right. We don't guide going forward. So this is one quarter. Hopefully, we can continue to see, you know, increasing margin in the future, but we don't You know, we don't celebrate victory for one good quarter. So time will tell. But in general, I can, in this regard, just mention that over the last decade, we have, you know, gradually, step by step, increased our exposure to own manufactured products, own proprietary solutions. And we kept our distribution business, and they've been doing a great job in their markets. But the mix effect has been gradually changing like this. So now in this quarter, it became, you know, maybe a bigger effect maybe than normally, but that trend has been there for years, and we continue to have a higher appetite for more differentiated type of companies in all areas, but also in dental.

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

Yes, one more question from my side. When I'm looking at the tables on transportation products and environmental technologies, there seems to be some variations in the margin, and I'm wondering if you have anything you want to send our way that could be helpful around how to think about the margins in this business area.

Can you be a bit more specific, sorry if you don't understand all that I'm answering you, Sorry, could you repeat that? Sina, can you just explain what variation are you referring to, just so I can answer it more specifically?

Yes. The quarterly variations in the new business areas where you have highlighted or shown the EBITDA margins on a quarterly basis.

Yeah, okay, no, no, but this is true for, you know, in general, when it comes to quarterly margins, our companies, they are operating, you know, without thinking about the quarters, so that can be varying, and then, of course, in, then on top of that, you also have some acquisition effects that can come in in different quarters as well, but, and then, you know, in some areas, like in environmental products, technology, for example, we have In certain areas, we have some more, you know, deliveries with larger, you know, larger sites that can also move around between quarters and impact the quarterly margins. But if you look over time and take the annualized situation, then if there is a variation margin, then it has more to do with, you know, if the market has, you know, had a more tougher year. Like in 2035, for example, we had a slightly more difficult year for many of our business solutions companies, including, I would say, environmental technology and transportation products. But between forces, it can be volatility. Yes, that's correct.

The next question comes from Dan Heimer from SEB. Please go ahead.

I just think that Yeah. Hi, Per. Another question as well, maybe touching a bit on contract manufacturing, which we have touched upon for many quarters now. But now, of course, we have very difficult comparisons. Q2, we had a little bit of easy comparisons. But would you say the level you are at right now on the sales level is that sort of representable? Although I acknowledge that it can vary a bit between quarters here.

It's a very difficult question, Dan, because, as you know, we have been, you know, it went up, I think, somewhere around 24, and then it sort of peaked first quarter 2035, and then it was a bit, you know, up and down a little bit with the level in end of 25, and now we're starting to be weaker, but it's very difficult for us to give a forecast. Maybe we can say that the peak levels that we saw a year ago, we don't expect to see in the next few quarters, basically. Does it mean that it can improve or go down a little bit from where we are now, we don't know. That's the best estimate we have right now.

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

Yes, I'd like to thank everyone for listening, and thank you for the questions, and I wish everyone a nice Friday. Thank you.