Munters Group AB

Good morning and welcome to today's presentation of Muntbash Q4 and 2025 full year results. My name is Lina Duvan and I'm head of Investor Relations, joined by our CEO, Claes Forsström, and our CFO, Katarina Fischer. So Claes and Katarina will begin with presenting the results and then we will have a Q&A session after that. Please go ahead.

Thank you, Lina, and good morning, everyone. Let me start with a few sentences to summarize the quarter and the year and then dig into the details. The year 2025 ended up with a quarter showing the strength of our leading offer across our prioritized end markets. All in all then, resulting in more than three times organic growth, I mean over 200%, a book to build of 1.6. I have to say an exceptional achievement by our teams. Earnings, weakened to 10%, primarily driven by dual site costs and underutilization in air tech. as well as temporary tariffs and transition costs when it comes to moving different products in and out of the DCT system. I'm not pleased with the result, but very confident that most of this will diminish after Q1. All in all, 2025 was a year to be proud of. Delivering record order intake, solid profit and strong cash flow. It was also a year building industry-leading capabilities to produce, to show stellar innovation and offer build-up paired with improved efficiencies. All this while balancing in a fast-changing world of trade conflicts and wars. I entered 2026 with a positive view on our end markets. Strong or slightly improving market demands across our segments. Even better is the momentum across monitors. Innovation is the core of a company. An innovation drive that is reaching a vitality index of more than 50%. Production capacity built for current and future growth. We're able to handle 50% more growth. And modern and forward-leaning digital food tech. Operational improvements in air tech. And accelerating this into 2026. And an order backlog that sets us up for record 2026 and beyond. After Q1, when short-term holdbacks will diminish, we are set to deliver at 2026 with historical high turnover and strong margins in H2. In a nutshell, 2026, a year to look forward to. So let's dig in a little bit into the details then. And as I said, exceptional demand while earnings weakened. Order intake, plus 191%, organically, 200%. Very pleasing, Airtek also delivered growth with a book-to-bill over one. Data center technology, significant increase. Of the orders received, about 5.7 billion was announced in orders before the quarter report. Foodtech organically declined, some lower software orders, partly offset by controllers, but we also met a very, very strong quarter here. Order backlog all in all increased with 53%, currency adjusted with 80%. It's mainly DCT, and orders to be delivered in 2026 and 2027, and as I said, a book to bill of 1.6%. Net sales declined. Airtech declined, lower sales in EMEA. As you know, EMEA had a few working days less, but it was a weaker backlog that we had to eat from. DCT increased successful execution on order backlog, but also here in DCT. I mean, we closed for a couple of days, as always, during Christmas. Food tech increased, driven by strong growth in controllers, and that was partly offset by lower software. All in all, for the full year, net sales increased with 8% organically about that. Adjusted EBITDA margin, 10% in the quarter. It's the tariffs that represents about 4% in DCT. When it comes to air tech, lower volumes and underutilization due to weaker battery market. That counts for about 2% units. And an adjusted EBITDA margin in the year of close to 13%, 12.7%. When it comes to regions, significant variations in between the regions. Americas stands for 86% of our orders in the quarter. EMEA about 11% and APEC 4%. Of course, it is DCT that stands out with 95% orders in Americas. But also very good to see 5% of the total orders in the quarter came in Europe. So we start to see a European data center market that is starting to grow and we are taking our share in that. And then when it comes to food tech and more call it normal balanced quarter. All in all, we look upon the quarter air tech soft with pockets of growth, pretty much in all the different regions, but clear signs of especially the base business, 95% of our business starting to show some growth moving forward. Data center continue to rapidly expand in Americas. It is a smaller market in Europe, but we start to win here in a good way. And then when it comes to APAC, a good market outlook, especially in Southeast Asia and the Oceania region. And food tech, very much continued positive market as such. Moving into Airtek, a book to build of 1.1. Water backlog stable. Pleasing to see that the water backlog did increase. And as you can see now, when it comes to the orders, about 90% in the year is outside battery. So it is a sign that we now are moving into capturing orders in a stronger market that is outside battery. And here I think it's very clear. This quarter is, water intake wise, one of the best, I would say the best quarter in the last eight quarters, with one exception. And if I take a look upon outside battery, it's for sure the best quarter in the last couple of years. Also important to see here, as you can see, there is an up picking trend the last couple of quarters. And so that is the reason why we are saying it is a market that seems to become stronger and stronger. When it came to net sales, a lower outcome, and that resulted in a lower profitability. All in all then, something that was very good to see, that is the share of service, 23%. And when it comes to components, 19. Here we have a shift in components. So we have more evaporative pads than what we have than desiccant wheels. When I look upon our innovation pipeline, and you have heard me say that we have a vitality index of more than 50% now, I think this is an important slide to talk about. When it comes to Airtek, Airtek is exposed to many different end-user segments. You drive energy efficiency and customer value to primarily two different components here. It is material science and technology leadership when it comes to the media. And then it is how you use and how you control your equipment. And if I take a look upon this, I mean, what I see that is the material science and the new media gives opportunities for customers to increase, improve their energy efficiency in between 10 to 20 percent compared to old versions. And if you take the connectivity and using artificial intelligence and better controlling the setup, it is a similar value, 10 to 20% more improvements. And if you combine this, I mean, then you can have up to 40% energy efficiency. What is also clear, that is, that in some of the underlying segments here, as pharma, defense, and service, I mean, we see continued upgrade and higher demand coming forward. Also important to see that is when it comes to what we call clean technology, air quality and pollution control, we also see a strong underlying market as such. Moving over to data center. an exceptional order intake in the quarter. Demands across both co-locators, hyperscalers, very much driven by artificial intelligence related investments, but really across the full type of board. We announced orders of 5.7 and we reached 9.2 in total orders. The order backlog increased and here we talk about deliveries into 2026 and then carry in to 2027. The book to bill in the quarter was impressive of 7%. Also, what I think is important, if you take a look upon the circles there, I think that exemplify the product transition that is taking place. The 38% where we have the split system that is represented in the past, very much by cycle, in the future, very much of split system based on, as an example of Schiller's. Now we're building up Schiller capability, and when Schiller capability are then increasing, that we can produce it more in an industrial way, the Schiller profitability will increase in the same way as we showed with cycle. The main effect of the margins in this quarter came from tariffs. And here we deliberately decided that it's better to take market share, establish ourselves in the US even before we have full-fledged production of shillers in the US. If I would bring that back, I mean, we would be in a range of around 18%. And if I then add also the changes in the product mix, etc., I mean, we would be in the 19% range. But all in all, I mean, I'm very confident moving forward that we will continue over a period, over a year to be in the high teens range. But this and also next quarter will be affected by tariffs. We are filling up the order backlog and we are building up capacity. and capacity you build up by building factories, driving efficiencies, driving the way you produce, but also how you interact with customer, how you pre-plan, how you actively secure critical components and so on. And if I take all that then on the right side here on the slide, that we have now capacity to be able to take 50% more orders moving forward. And that gives me very good confidence. Of course, it varies in between the different factories. In some factories we have not much more to gain, in other factories substantially more to gain. This is also why I say that with this backlog, I mean, I'm extremely confident that we will have a strong invoicing year in data center. And what type of products are we then bringing in? I think the best way to describe it, that is across the board. Some cases, it is more dedicated cross, custom-designed cross that have high efficiency. In other cases, it is shillers. And yet other examples, it is more what I would call it hybrids, where you combine chillers, custom designed CDUs and cores. And for me, that is the strong point of Manters today. We can cater all different type of product demands and all different types of cooling demands there is in the market. Also very pleasing that we took a sizable order in EMEA. That includes your climate chillers and cross. And this puts us in a very good position also for a strong fill rate in our EMEA factories. On and off, I and we get questions about, I mean, what is driving the success in data center and how, what about the market? You have heard me talk very much about, I mean, we have evolved from being a niche specialist to now having a comprehensive, very wide cooling portfolio that can expand into many different type of data centers. That has been driven by the innovation engine. Innovation through own innovation and combining with acquisitions that we then have brought into the system. They accelerated the time to market for next generation cooling systems and I think that we have a current and a world leading time to market when it comes to new systems. They are also in parallel strength in the service setup. I mean with own personnel, but also contractors and partners. So gradually we are expanding the service coverage also. Capacity. We have built up capacity and we never take and accept orders that we cannot deliver on promise. We have been building capacity ahead of the plan i.e. that generates some cost in the beginning but we have also proven that when we have scalable footprint we can also generate the bottom line. And then the discussion about what type of cooling solutions are there and what is then affected cooling. I think you have to come from two perspectives. First, you have to have very dedicated type of data center cooling setups, but then you also have hybrid readiness. in the very best liquid cooling data center, there is still need for in between 20 to 25% air cooling. So you need to have the width on this. So all in all, I think we have an extremely strong platform for continued growth and profitable growth moving forward. If I go back to food tech, the first thing I think is important to recognize is that we have completely shifted what food tech is now compared to a year ago. Now it is 100% digital and software driven. there is when we have increased the number of controllers or the sales of controllers still a seasonal effect that the controllers are sitting in the farms etc etc so in quarter four and quarter one there is a weaker controller demand but all in all it is a more stable business area compared to the past a strong market outlook moving forward Margin remains strong. What affected margins was our continued investments to support growth, a shift in products that we have more controllers this quarter than we had software. And then on the positive side, price increases and efficiency initiatives. But all in all, a strong underlying margin. I predict that we will continue to grow over years in between 20 to 30% when it comes to the ARR. This quarter, slightly lower, but that is very much due to the comparables of last year. For me, this is one of the most important pictures of the future in food tech. It is about the full value chain and data-driven connected supply chain. Our products and solutions are very much focused on the growth segment, where the chickens, the swines, the animals, the plants are growing, but it is also handling data and help the customer manage the full value chain. And this is something that is extremely sought after. Of course, it takes some time. If you start in the middle, you have a unique offer there. combining controllers with software it takes some time to sort of expand out in the full value chain but what I see that is that our customers are very attracted to this and if we talk about the software side Churn, low churn is important. And we have a very low churn, about 2% and below. And then, as I said, the ARR then expected to be in between 20 to 30% year by year. This quarter, a little bit lower due to very strong comparables last year. With that then, I leave it over to Katarina.

Thank you, Claes. So, starting with the fourth quarter, net sales declined 8% or remained flat currency adjusted, primarily reflecting the lower volumes in Airtek. The adjusted EBITDA margin declined, and this was mainly due to the temporary tariff effect in data center and the lower volumes and underutilization in Airtek. Net income declined, and this was due to the lower operating earnings, but also due to the increased items affecting comparability in the fourth quarter. They amounted to 174 million SEK. The driver of this was a contingent consideration of 98 million SEK due to recent acquisitions. So this was mainly related to the 20% holdback of the transaction price for the acquisition of the remaining shares in the EmTech systems. And that was closed in March 2025. And this amount then has been paid in full now in January this year and was fully accrued at year end then. Looking at cash flow was very strong. I will come back to that later on. Sorry, I should also say on the items affecting comparability, we also have restructuring charges of 77 million. They related to air tech. And here we are progressing according to plan on the cost measure activities that we announced in Q3. If you recall, we announced then that we will take a charge of 150 million in total over Q4 and Q1. We also had a very strong operating working capital to net sales ratio in the quarter. It improved further, so that reflects our strong discipline in this area. Looking at the full year, net sales increased 8% or 15% currency adjusted. And this was then driven by the continued strong growth in data center and food tech, and partly offset by weaker development in air tech. And the adjusted EBITDA margin declined due to lower volumes and the continued dual site cost and underutilization in Airtek, as well as the tariffs then in data center. And also for the full year, the net income declined then for the full year due to the lower operating earnings and the increased items affecting comparability. And this continued considerations effect was then almost 200 for the year then. And stable cash flow for the year and also, as I said, very strong operating working capital. Then looking at the margin, the margin declined in the quarter. While this was below our ambitions then, it was due to temporary effects such as the tariff impacts and the lower volumes and utilization in Airtek. The volume then had a negative impact, what's mainly due to Airtek in EMEA, partly offset then by DCT and Foodtech. I'm very glad to see that we continue to have a positive net price impact, both in DCT and Foodtech. However, the margin was negatively impacted then by the temporary tariff headwinds in DCT and also a negative product mix across all business areas and also an adverse regional mix in tech. From the operational excellence perspective, the underabsorption in AirTag weighed on the margin and also the transition to new products in data center had a negative effect on the margin. We continue to invest in our business, of course, to scale the business and also to digitalize further and automate and also do more investments in the footprint. If we compared to the Q3 margin of 13 and a half percent, the margin then declined. And this was the primary drivers for that was the increased tariff headwinds, but also lower volumes and changes in the product mix. In addition to this, we also had currency headwinds, which impacted the quarterly results then negatively. Looking at the cash flow, we had a strong cash flow from operating activities in the quarter. So even though the operating earnings were lower, we were able to offset this with positive contributions from operating working capital. And this was mainly driven by advances in TCT. In the investment activities, we had an impact from business acquisitions. So these were then retention payments or holdbacks related to acquisitions of Geoclima and AEI, which were closed during 2024. So there were some remaining payments for those two. And then we have also bought the remaining shares, 40% in the Brazilian company, Inobra. Looking at year to date, we have a stable cash flow from operating activities, a little bit lower, but due to the operating earnings and also a less favorable development in working capital for the full year. Looking at cash flow from investing activities, it was impacted by lower capex and also lower cash flow from the business acquisitions during the full year. Looking at investments then, our capital allocation principles remain disciplined and selective, so we continue to focus our investments where they create sustainable growth and also create long-term value creation. And in the quarter, the ratio was 7%. So this reflects a higher level of activity than where we continue to invest in competencies, upgrading operations, doing more digitalization and optimization in our business. For the full year, this number was 5.8%. Looking into 2026, we continue to invest in DCT footprint, and the Virginia production facility, including the test lab, will be up and running in the second quarter of this year. And efficiency improvements and volume ramp up will take place gradually, of course, and with the main improvements to be seen in the second half of the year. Looking at capex for the full year, we expect it to remain broadly in line with the full year number for 2025. Operating working capital, then, as I mentioned before, very strong number if you look at the chart there. So at 7.3 right now. If we look at leverage, the leverage ratio remains stable at 2.9 compared to Q3, slightly up there, reflecting lower operating earnings. However, we had this very strong cash flow, which then enabled us to manage this acquisition-related payments during the quarter. And if you compare to the leverage at the end of Q4 last year, the increase is driven by increased lease liabilities. While we do not have a fixed leverage target, we do have an ambition to be within 1.5 and 2.5 over time. And we are not worried by temporary deviations above this level, as they are then related to strategic investments that support our future growth and also increase our competitive position. Diversification of financing and strengthening our funding basis is, of course, also important. During the quarter, we have issued a bond of 400 million, and we have also increased our outstanding commercial papers. Also want to highlight then that during the first quarter now this year, we have then paid the remaining, the holdback 20% for EmTech, the 18.5 million US dollars. So that payment was done in January this year. Turning to sustainability then, we continue to have a very focused agenda that we execute diligently on and that spans across climate, social aspects and responsible business practices. And if we start with climate, we during 2025 inaugurated our new flagship factory then in Amesbury in the US. And if we look at our ambitions for 2030, Our scope one and two for the year increased 3%, and if we look at scope three, emission intensity, it increased with 19%. And this increase in scope three was related then to higher activity in regions where the emission intensity is higher and also a different product mix. But, of course, this highlights that we, as many others, need to continue to focus on delivering on our decarbonization roadmap. And in parallel, we also continue to develop products that are more energy efficient, products and services, and we also work with our customers to find renewable energy solutions. Looking at gender equity, here our ambition is very clear. We want to achieve the 30% of women leaders and women in workforce, and we drive many different initiatives linked to this, where we have and support inclusive employee networks. We also drive initiatives to promote interest in technology-related fields and so on. And we also aim to broaden the talent base through very focused training programs and defined goals. On the responsible business side, we are aligning with the CSRD, and we are, of course, also preparing for the upcoming CS Triple D. This is then underpinned by us continuously upscaling our workforce, where we have many different trainings in human rights, anti-corruption and related topics. And of course, this is very important with these training programs, because we really want to make sure that we have consistent standards in our day-to-day decision-making across operations and our supply chain. And then finally, you know that we have this service and components ambition to be above one third of net sales. And during the full year, these net sales grew organically and we achieved a percentage of 25%. And with that, I would like to thank you and hand it back to you, Claes.