Momentum Group AB (publ)

Welcome to the presentation of Momentum Group's year-end report for 2024. I am Olle Flulius, CEO of Momentum Group, and I'm here with my colleague, Niklas Enmark, Vice President and CFO, and we will guide you through our report. Our agenda today is to give you some information about the highlights from Q4, as well as sum up the year. We will round off with talking about the long-term perspective, now to the highlights in our report. The business situation in our main markets in the Nordic was as a whole somewhat more tentative during the fourth quarter. Behind this general description hides a relatively fragmented picture. After a stable development earlier in the year, we saw a lower demand in the automotive sector, which particularly affected our operations within power transmission and parts of technical solutions. At the same time, we experienced more favorable demand in our other customer segments, particularly for our companies in float technology. The Group's operations delivered stable sales growth of 12% during the quarter, with organic revenue growth of 1%. EBITDA did not increase, underpinned by various factors, as for example holdbacks in orders from various customers, particularly in power transmission and technical solutions, as well as extended holiday leave among customers in December. After the fourth quarter, our operational net loan liability amounted to 252 million SEK compared with 326 at the beginning of the year. The difference is largely attributable to cash flow from operating activities, acquisitions and dividends paid during the reporting period. Together with our cash and cash equivalents of SEK 859 million, including unutilized granted credit facilities, our cash flow provides us with security and bodes well for healthy financial flexibility going forward. As we sum up 2024, there's much to be proud about. Despite the challenging global environment, we have delivered organic revenue growth in all our quarters. We completed eight acquisitions and once again exceeded all of our financial targets. I think this points to the strength of our business, where our independent companies can parry and accelerate based on their specific conditions. And this creates opportunities for us at the group level to develop our business with profitability and profit growth. Another important ingredient in our business culture is the willingness to improve. During the year, we have seen some examples of our companies find ways to each other for collaboration opportunities. Since the listing in March 2022, we have almost doubled our turnover and welcomed 23 companies and more than 300 talented employees to our corporate group. With solid balance sheet, strong cash flow and available liquid funds of approximately, as I said, SEK 860 million, we have good conditions to continue a successful growth journey. We will continue to invest in our existing operation and implement value creating acquisition to strengthen our market position and create long term value for our shareholders. This once again demonstrates the strength of a decentralized business mob. Now I will hand it over to Niklas, who will guide you through our Q4 report.

Thank you Ulf and good morning everyone. For the fourth quarter of 2024, our net sales increased by 12% to 745 million SEK. Out of this, about 12% or 81 million SEK derived from acquisitions and 1% from organic growth. The quarter had one less reporting trading day. Compared to last year, however, in reality, there were probably even fewer trading days due to holiday leave around Christmas and New Year's Eve among customers. As we commented on in the report during the quarter, we saw a generally stable demand situation, though with variations across segments and geographies. The background is a decline in demand in the group's aftermarket operations for the automotive market, which makes up a bit less than 10% of revenue, together with the continued low level of product sales, which we have seen during the year. To counter this, large segments such as metal mining as well as electricity and heat production had a positive development during the quarter. Besides this, the industrial market in Finland continued to remain cautious, while the Danish market continues to be positively impacted by segments such as pharmaceuticals and green technology. Among the business areas, infrastructure was the area that grew most during the quarter, especially due to recent acquisitions. Both business areas reported organic growth of 1% each, despite the challenging market situation. Overall, the companies in the group displayed good delivery capacity during the quarter, with only some minor delays related to suppliers. The good delivery performance is especially pleasing, given that Momentum Industrial was preparing for the relocation of their central warehouse during the quarter. Purchasing prices and costs continue to increase at a relatively moderate rate. Looking at the earnings situation in Q4 of last year, our EBITDA was flat at 70 million SEC compared to last year. The EBITDA margin reached 9.4%, down from .5% the previous year. The lower margin was attributed to a bit lower margin in total among comparable companies and then especially those affected by the volume drop in the automotive segment. This was then compensated for by earnings in the acquired units, but not to the same extent as we had in Q3 of this year. Operating profit decreased to 53 million SEC, corresponding to an operating margin of .1% down from 9.1%. The decrease is partly explained by items affecting comparability of 5 million SEC that relates to relocation costs of Momentum Industrial's central warehouse, but also higher charges for amortization of intangible non-current assets related to acquisitions. Profit of the financial act in total of 45 million SEC, down from 58 million SEC the previous year, impacted by higher financial expenses than last year, which was caused by negative currency translations and changes in the value of, among other things, acquisition-related liabilities. Earnings per share was .65% for Q4. For the full year, our revenue increased by 25% to a bit south of 2.9 billion SEC, with growth in comparable units of 3% and where we delivered organic growth in all quarters, despite the challenging market situation. Acquisitions added 518 million SEC to full year net sales. The number of trading days were the same compared to last year. Our EBITDA increased by 22% to 322 million, corresponding to an EBITDA margin of 11.2%, whereas operating profit rose by 15% to 273 million SEC, corresponding to an operating margin of 9.5%, once again affected by the higher amortizations arising from acquisitions. Acquisition-related expenses had an impact of minus 4 million this year. Profit of the financial items totaled 240 million. Earnings per share increased to 3.60 SEC for the period. Now for some comments on the business areas. First, the business area industry. It says some earnings in the business unit power transmission within the industry business The power transmission then consists of the company Momentum Industrial. Here we saw that sales and also earnings declined during the quarter. During the quarter, lower demand was then noted from customers in the automotive segment. On the other hand, demand in the metal and mining industries developed positively and remained stable in paper and pulp. The company is currently relocating a central warehouse from Allingshorst to Ullisenhamn. During the fourth quarter, a lot of preparation work was conducted and the company recorded relocation costs of 5 million SEC. The move has been very successful and operations at the new site have been up and running for a couple of weeks now with no effect on operations. All in all, some 30,000 articles have been moved. Unfortunately, during the quarter, we made a provision for expected customer losses related to Northwalt for our remaining outstanding receivable of 1 million SEC. The business unit specialist posted increased sales with stable profit levels in comparable units. In addition, acquired businesses contributed sales of around 50 million SEC with a positive contribution to earnings. The Swedish operations noted generally stable demand, but the situation remained cautious in Finland related to a generally soft business cycle while demand in Denmark was stable. Revenue in all rose by 3% to 439 million SEC compared with the same quarter of last year and revenue for comparable units measured in local currency and adjusted for the number of trading days increased by 1% compared to the previous year. EBITDA decreased by 5% to 54 million SEC corresponding to an EBITDA margin of 12.3%. The business area's profitability measured as return on working capital amounted to 68% Turning to the infrastructure business area, the companies in business unit flow technology done within this business area generally performed well during the quarter with favorable sales growth and also margin development for comparable units. Overall, demand was good in Sweden and continued to strengthen in Denmark during the quarter driven by the pharmaceutical sector and investments in green technology. In Finland there was a slight increase in activity but from rather low levels. Acquired businesses contributed revenue of 23 million SEC with a positive contribution to earnings in the quarter. In the business unit technical solutions, reduced sales and lower earnings for comparable units were noted during the quarter. The capacity utilization in the workshops was negatively impacted by lower activity among some customers particularly in the automotive sector and towards the end of the quarter also by holiday leave. Demand in the measurement technology and control operations remained positive during the quarter and the companies are experiencing a good business climate with numerous customer dialogues also regarding larger systems. Acquired businesses contributed 43 million to revenue during the quarter with healthy margins. All in all, revenue rose by 26% to 312 million compared with the same quarter of last year for the business area. Revenue for comparable units measured in local currency and adjusted for the number of trade units increased by 1%. EBT in the business area increased by 18% to 26 million SEC corresponding to an EBTA margin of 8.3%. The business area's profitability measured as return on work and capital amounted to 60%. Looking at some profitability and cash flow metrics, our return on working capital in the group was at 59% which is well above the financial target of at least 45%. Our return on equity was 27%. For the reporting period, our cash flow from operations before changes in working capital increased by 31 million SEC to 311. For the fourth quarter, we delivered a strong cash flow from operations with 109 million which is our highest yet for a quarter since the listing in 2022. For the full year, our cash flow from operating activities increased to 323 million, an improvement with 63 million or 24% compared to the corresponding period of last year. Cash flow from investing activities for the reporting period amounted to 160 million. This cash flow includes acquisitions of a total of 105 million including settlements of deferred payments regarding acquisitions of 12 million and net investments in non-current assets of 11 million SEC. Our financial position continues to be strong. The group's operations net loan liability amounted to 252 million compared to 326 million at the beginning of the year and 381 million at the beginning of the quarter. Our net debt to EBITDA ratio was around 0.8 at the end of the period. Total cash and cash equivalents including unutilized approved credit facilities amounted to some 860 million SEC at the end of the quarter. And now I will hand over to Ulf who will give you some words on our long-term development.

Thank you, Niklas. Now I'll give you some input about our development over time. During our first year as listed company in 2022, our traditionally largest customer sectors, metal and mining, pulp and paper, general manufacturing and automotive represented some 55% of net sales. Today these sectors are still a large part of our total business making up some 45% of sales. During the same period we have established a new large customer segment in electricity and heat production as well as increased share of sales to pharma and medical devices and water and sewage. This is in line with our philosophy of making incremental steps into new markets, especially via acquisitions, where we see there is a good opportunity to the long-term growth. Looking at our largest product segments, there is similar change where VALS is now our second largest segment increasing from basically zero a couple of years ago. A very important factor in being able to keep a high acquisition pace is that we can generate a good cash flow from our operations. Our financial target for profitability of working capital is a simplified measurement of cash flow, meaning that if we can derive good after-tax profits from our business and be stringent in our working capital measurement, we should generate a good cash flow. Looking at these last three years, we have generated close to 600 million in cash flow from operations, also increasing incrementally year by year. Of this money, about 10% has been invested in working capital, a bit simplified to fuel our organic growth. Around 5% has been invested in CopEx as a reference to our asset-light operating model with a low amount of fixed assets. Around 27% has been distributed to our shareholders, either as dividends or via share buybacks. That leaves around 630 million we have spent on acquisitions. This is of course a large number and higher than the cash flow generated. This also means that we have been required to increase our net debt during the period, but to a still very healthy level, and that gives us a reinvestment ratio of 109%. Thank you for your time and interest listening to our Q4 and year-end presentation, which are available with the report on our website. If you have any questions or specific requests, do not hesitate to contact us through our ER mail or by phone. Thank you very much.