Momentum Group AB (publ)

Welcome to the presentation of Momentum Group's Q1 report for 2026. I'm Alfre Lyseau from Momentum Group and I'm here with my colleague Niklas Edmark, Vice President and CFO and we will guide you through our report today. The business climate continues to be hesitant where our customers have a strong focus on costs and where demand is generally sluggish. Adding to this, this last quarter brought an increased anxiety coupled to the geopolitical turmoil. This was especially apparent in the first half of March when the market was quiet. Later in the month, the situation bounced back, enabling us to somewhat compensate for the tough start. In this environment, our priority is to have a strong focus on costs as well as pricing and efficiency measures to mitigate the volatility in demand and volumes. At the same time, we urge our companies to maintain high customer activities in order to be well positioned to meet the gradually improving market demand as it materializes. We also continue to make selective acquisitions in line with our strategy. I'm pleased to see that despite that tough market condition that had a relatively large negative impact on our sales volumes, we have performed fairly well in all other categories. Our gross margin is improving and our cost base is decreasing. We have also completed two acquisitions in the start of this year and we have a good pipeline going forward. I will also give you a few words of the acquisitions made in 2026. Höglandet's compressor service is a specialist in compressor technology for industrial customers and was acquired during the quarter. Actuated Solutions in the UK was acquired after the period and marks our entry in the UK market and the first acquisition outside of the Nordics. The short-term market situation remains challenging and given the prevailing geopolitical uncertainty, we expect customers to exhibit a certain level of restraint also going forward. We continue to focus on what we can influence and with the actions that have been taken, we're well positioned to meet improved demand and be the best choice when business decisions are made. We stick to our long-term ambition to reach 600 million SEC by the end of 2030. even though we could have wished for a more comfortable start of that journey. But we have several more quarters left to continue to improve. I will now summarize market and sales for the quarter. On a total level, the group reported unchanged revenue during the first quarter of the year with good contributions from acquisitions. The sales from comparable units decreased by 6% as the business climate in the group's main markets in the Nordic region remained hesitant. Improved signals from the market at the end of last year gave the way to a more cautious customer situation at the beginning of this year, where we saw focus on cost control as well as restraint in investment decisions and maintenance among our customers. The Danish market was weaker than the other countries in the Nordic region, primarily due to lower activity in product-intensive segments. Demand in other markets was more stable, although variation continued to be noted between various customer segments. The period was dominated by varied demand, geopolitical uncertainty and periodically lower activity levels among customers. Seasonal factors had a relatively significant impact during the quarter, with lower activity in plain maintenance leading to lower capacity utilization in parts of the service operation. Several group companies noted a slight improvement in demand towards the end of the period after notable lower activity level at the beginning of March, likely as a result of the geopolitical tensions. Overall demand was cautious with geopolitical tensions weighing heavily. Sales fluctuated during the period, but the slight upturn in sales took place towards the end of the quarter. Acquired operations made a positive contribution to revenue and earnings. To date this year, Momentum Group has completed two acquisitions, one of which took place after the end of the quarter, with the combined annual revenue of approximately 80 million SEK. I will now hand over to Niklas for the Q1 report, and I will return to discuss Momentum Group's outlook.

Thank you, Ulf. Now I will go through the development for business area.

Revenue for the business area industry decreased by 2% to 431 million SEK compared with the same quarter of last year. Revenue for comparable units measured in local currency and adjusted for the number of trading days decreased by 3% compared to the previous year. That's the same change that we saw in the previous quarter. EBITDA decreased by 10% to 57 million SEK corresponding to an EBITDA margin of 13.2%. The EBITDA margin thus meant a positive change compared to the 10.8% we reported in the last quarter of last year. The quarter-over-quarter improvement attributed to high gross margins, reduction in costs, and strong contributions from acquisitions. The business area's profitability measure as return on working capital amounted to 63%. Power transmission sales fell slightly with a somewhat lower EBITDA margin, but with strong gross margins. Demand bounced back to positive in the pulp and paper and mining industries, but decreased again in the automotive industry. The performance in other customer segments varied. Activity levels shifted during the quarter with a generally weak start followed by gradual improvement, but likely affected by geopolitical turmoil causing volatility in demand and sales with an overall dampening effect. Within specialists, sales and EBITDA margins declined for comparable units. The business unit noted a sluggish demand for systems and projects for the manufacturing industry in general and in Denmark. demand was markedly weaker than in the previous year, primarily due to lower activity in larger projects, as we also commented on last quarter. During the quarter, acquired operations contributed revenue of 10 million SEK with a strong contribution to earnings. Quarter over quarter, the business unit improved markedly with higher gross margins and lower costs as actions have been taken to mitigate the effect from lower sales volumes. Revenue for the business area infrastructure decreased by 4% to 360 million SEK compared to the same quarter of last year. Traditionally, Q1 is a quarter below revenue, which is then due to the structure of the businesses involved in this business area. Revenue for comparable units measured in local currency and adjusted for the number of trading days decreased by 9% compared to the previous year. That's the worst performance than in the previous quarter. Besides a generally cautious market likely affected by the EU political situation in the business area, we also saw more pronounced seasonal effects, partly caused by company mix effects, but also partly by harsh weather conditions affecting the service businesses within the area. EBITDA decreased by 4% to SEK 22 million, corresponding to an EBITDA margin of 7.0%. Improvements were seen in both gross margins and reduced costs compared to the corresponding period of last year, which was then not fully able to compensate for relatively large drop in sales for comparable companies. All in all, acquisitions gave a slight positive contribution to earnings. The business area's profitability measured as return on working capital amounted to 62%. With inflow technology, sales for comparable units declined slightly, but with increasing earnings, especially due to strong gross margins. Demand was impacted by a more cautious market, especially affecting the inflow of projects. The product sales trend was positive in Sweden, but significantly weaker in Denmark. service utilization was somewhat lower during the quarter. During the quarter, acquired operations contributed revenue of 29 million SEK with a strong contribution to earnings. Within technical solutions, sales and earnings for comparable units declined. The performance was impacted by lower capacity utilization in parts of the services operation, driven by the seasonal effects and also customer restraints. The measurement and control operations reported improved earnings despite lower sales volumes. Acquired operations contributed revenue of 12 million SEK unit quarter, which was characterized by low activity levels resulting in a negative earnings contribution.

Coming back to the group again and some comments on the earnings and profitability performance.

EBITDA during the first quarter decreased by 8% to SEK 17 million. During the quarter, we had a positive contribution from acquisition, which was then not able to compensate for the lower EBITDA for comparable units. Looking at the latter, we increased the gross margins and lowered costs in absolute terms, but could not fully compensate for the drop in organic sales volumes. The EBITDA margin of 9.5% was lower than last year, but was also a small increase from the previous quarter. Besides the operational comments per business area that I gave, EBITDA and EBITDA margin was also affected by higher depreciations than last year by 3 million SEK. Positive to note is that we continue to increase our gross margins in the group, despite the fact that there is a high degree of attention to costs and prices among our customers. Operating profit was 56 million SEK, corresponding to an operating margin of 7.6%. Operating profit is affected by higher level of amortization with an effect of 2 million SEC compared to the previous year. Last year's operating profit was charged with costs affecting comparability of minus 3 million SEC. Rolling 12 months, we continue to increase our revenue now by plus 5% to 3.1 billion SEK. Included in this are contributions from acquisitions by 288 million SEK. Per business area, net sales decreased by 1% within the industry business area and in infrastructure, net sales increased by 15%. Our EBITDA increased by 2% to 331 million SEK with an EBITDA margin of 10.7%. For business area, infrastructure increases EBITDA with 22% with increasing EBITDA margins, whereas industry saw its EBITDA decreasing by 7% with slightly lower EBITDA margins.

Earnings per share stood at 3.7 SEK per share.

Looking at some profitability and cash flow comments, our key financial metric of EBITDA over working capital remained relatively stable during the year at 56%. The slight decrease is due to the somewhat lower EBITDA margins during the rolling 12-month period. Our return on equity stood at 24%. Cash flow during the quarter was highly affected by the large shifts in sales and invoicing. As the later part of March saw an increase in sales after the slowdown in the beginning of the month, accounts receivables were high at the end of the period, thus affecting cash flow. During the period, inventory levels continued to decrease, now by 5 million SEC. Cash flow from operating activities was 64 million SEK, and after working capital changes, 57 million SEK. For the rolling 12-month period, cash flow from operating activities was 312 million SEK. Operational cash flow also includes positive IFRS 16 effects of accumulated 95 million SEK, which is then met by the same negative number in financing activities, making the net amount zero. Cash flow from investing activities for the reporting period amounted to 34 million SEK and this cash flow also includes acquisitions of 21 million SEK and also settlements of acquisitions that is earnouts and call options of 9 million SEK during the period. Our operational net loan liability amounted to 356 million at the end of the period. The operational net debt to IFRS adjusted EBITDA ratio was 1.0 at the end of the period. And with that, I hand back to you, Ulf.

Thank you, Niklas. Now I'll give you some input about our journey and priorities coming years. We have a long history from the start in 1996, the foundation of Momentum Group, which was bought by Berman & Behaving in 2004. Momentum Group's favorable development since its listing in 2022 has been driven by the consistent application of a business culture and work methods. We want to acquire leading small and medium-sized specialist companies and help them to grow and develop in a positive direction. We consistently invest the cash flow we generate in new, well-functioning and profitable businesses and thereby finance our growth ourselves. Since a spin-off in March 2022, we have increased revenue by about 1.1 billion SEK and completed 31 acquisitions, two in 2026, with nine being bolt-ons, while maintaining strong cash flow and capital discipline. Operationally, our organization model based on decentralization, clear management by objectives, continuous improvement and simplicity is therefore well established. We apply our capital allocation model in a disciplined manner, which eats subsidiary working towards earnings and working capital targets, supported by Momentum Group in its capacity as an active and committed owner. The model fosters a sense of responsibility and challenges our companies to identify growth and development opportunity at all levels. Our acquisition strategy is another important factor in our success. In recent years, we have given our business units greater responsibility for acquisitions and strengthened the organization to support acquisition at subsidiary level. This has had the desired effect and it's reflected in the number of quality of acquisition opportunities we evaluate. We have also seen that our way of developing companies attract entrepreneurs, which instills confidence in our ownership concept with Momentum Group acting as a permanent owner. A very important factor in being able to reach this goal is to keep up a high acquisition pace. That is why it's important for us to generate good cash flow from our operation. Our financial target for profitability of working capital is a simplified measure 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, which is fundamental to reach the earnest growth target. This autumn, we transitioned to the next stage, fostering organic growth within our current businesses by enhancing both value and efficiency, expansion and strengthening our position across the value chain and product verticals. and evaluating opportunities to expand our geographical footprint as well as building a stronger M&A organization. The objective for the next phase is to achieve a further doubling of EBITDA targeting approximately 680 million SEC by the end of 2030. This aligns with our goal of expanding profits by 15% annually over business cycle. We are very aware that this was not the best start to reach our next five year goal, but we have three more quarters this year to improve and 19 to reach the goal. Turbulent times call for a warm heart and a cool head. Compassion combined with clear judgment and culture, we intend to continue along the path we have established with the focus on earnings growth, a controlled balance sheet, strong cash flow, and continue to use a capital allocation model. This will create the condition and organization improvements for further value-adding acquisitions, thereby increasing our profit and earnings per share over time. Our decentralized profit responsibility, proximity to customers, and ability to adapt to changes in our operating environment will continue to be a strength over time. Thank you for your time and interest listening to our Q1 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 e-mail or by phone. Thank you once again.