Munters Group AB

Good morning and welcome to this presentation of Mönters Q1 2026 results. My name is Lina Duvern and I'm Head of Investor Relations, joined here by CEO Claes Forsström and CFO Katarina Fischer. Claes and Katarina will go through the results of Q1 and then we will open up for Q&A. So with that, I will hand over to you, Claes.

Thank you very much, Lina. And once again, good morning and very, very much welcome A solid start to the year. So let me summarize the quarter like this. Good to strong demand across all business areas. I booked a bill about one in all business areas. I feel it has been a well-executed quarter based on our plans. Build, scale and accelerate growth step-by-step in data center technology. Reset air tech and start to grow the base business. Capture growth and continue to scale in food tech. Operational progress in line with the plan. All in all, a solid quarter. Our outlook remains unchanged. A stronger second half of the year is expected, though, as for everyone else, higher geopolitical and supply chain uncertainties are building up. So more in detail, a well executed start to the year. If I start with orders, continued strong order growth, order intake 49% organically, 32 in a Swedish chrono. Airtek, robust demand across all regions, despite a larger product cancellation. Data center technology, strong demand once again in America from both hyperscalers and collocators. And Foodtech, strong demand for controllers and software. The order backlog increased with 88%. Currents adjusted, I mean, close to 100. Mainly data center technologies were orders to be delivered mainly in 26 and 27. A book to bill of 1.3. Net sales affected by currency, 12% currency headwind with that then 9% growth. Airtech strong performance in Americas. Data center building it up but continued strong delivery based on our execution plan on the order backlog. And food tech driven both by controllers and software in Americas. The margins impacted by temporary factors, the adjusted EBITDA margin, just shy of 11%, data center technology, the tariff headwinds of about 4 percentage points, and then also the well-known product transition that is taking place. Food tech remained robust, impacted by continued investments for growth. And air tech, as planned, improved, mainly positive impact on cost savings and then also price increases and absence of the dual side cost. The EBIT margin, 7.6%. we see favorable trends in several regions and end markets. And if I start on the region perspective, 67% of our orders came in from Americas. Air tech, market stabilization, pocket of growth are starting to show. Expanding in data center rapidly continued to lead globally by AI-scaled investments and AI-driven demands. And food took a positive growth momentum. Moving to EMEA, 20% of the topo. In our tech mix demand environment, defense and utilities are growing. Pricing, to some extent, remains competitive. Data center technology compared to last quarter, a slower quarter, not that we were slower, but generally speaking, the market was to some slower, but signs of pickup. Growth driven by North Europe and to some extent, Middle East. Foodtech then, positive market outlook, driven by efficiency and animal welfare requirements. And then moving to APAC. And here we can say that we start to see clear signs of improvements in China through continuous but high competition. But also Southeast Asia and India are growing as markets. Data center, a good market outlook. And as you know, here we have just started to move forward. And I'm positive to our future in this area. And here we're also investing now in building up capacity in this region, both when it comes to manufacturing and when it comes to sales force. And finally, food tech, growing markets, a mix of mature levels and the business practice. Drilling into Airtek then. Robust demand despite an order cancellation of some 280 million Swedish kronor. Order intake increased. America's growth in industrial, commercial and components outside batteries. EMEA flat to growth in some industrial areas, mainly defense and pharma. And APEC solid growth components, commercial service and battery segments. You can say very strong in general outside than what we call inside what we call the base business. And clean technologies, stable demand driven by EMEA and Americas. Order backlog, slight increase, book to bill about one. And if I would back in then the order cancellation, a book to bill that is about two, 1.2. I think this picture is one of the more important ones when it comes to Airtek. Battery, the icing on the cake, 10% approximately our total. Take a look on all the other segments. This is for sure now a clear trend that we are continuing to grow the other segments step by step. I've several times said that we need to have a couple of quarters with a 2 billion order intake and about. This done, if I back in the order cancellation, it was close to 2.3 billion in order intake. That will give a base on filling up the factories. Batteries, regional differences, delays in some investments, but then also continued push of orders in APAC. The other industrial positive development in most markets, I would say. Clean technology, continued stable development. The commercial, good growth driven by supermarket in Americas. And also important, components, as you can see, is starting now to really advance forward, both when it comes to evaporative pads, to data center, but then also to some rotor replacement, predominantly in Asia. And service, a stable development. As per plan, we strengthened the margin. We delivered on the announced cost savings, and Katarina will come back to that. We have no dual site cost. We were increasing the prices. And then, of course, we still battle for this quarter and a few coming quarters with some lower underutilization in the factories. And a somewhat unfavorable product mix. The sales increased organically. Americas were growing. EMEA declined to some extent. And APAC declined. So it is Americas that is starting to come back here in a good manner. Data center technologies. First of all, demand remains strong. We don't see any quality warning signs on a demand going down. Strong markets. Order intake increased substantially. We have a backlog of 15 billion now in data center. The chiller demand is particularly strong, reflecting AI development. And the order, as I said, increased. Deliveries mainly in this quarter targeted for 2026 and 2027. A book-to-bill impressive, I have to say. Once again, strong. 1.6 then. And perhaps let me also look into a little bit of the customer segments and the solutions. First of all, a good balance in between the hyperscalers and co-locators. As you know, it is in general always the hyperscalers that are driving the general demand, but some of it we are selling through co-locators and some we are selling directly to hyperscalers. But a good balance here. And when it comes to product categories, as you can see, shillers representing them on a rolling 12, 42%. And here that we gradually will start to pick up the profitability. And then as you can see, then when it comes to the other categories, also a well-balanced spread. So it indicates that we have a strong portfolio across all the different product categories. Margins, as expected, temporarily impacted, coming from two main areas. First of all, the tariff headwinds, the 4%, so back that on in its 4% more. It is the product transition and it's our strategic growth initiatives. We have been driving price increases and we are compensating cost increases in components and so on with continuous price increases on each and every project order. If I lean back a little bit and How do you scale a business? And you have heard me say this several times. If you set up a new product, if you set up a new factory, in the beginning you have to invest, you have to build, and then you start to produce. When you produce there, you have a lower profitability and you don't get out so much. Then the next step that is to increase the output. Still you're not efficient enough because you have to learn, you have to improve, you have to work with lean principles, etc. The more you produce, the better it becomes. And if I go ahead then, this is what will happen then during this quarter. Step by step moving up. And in the second half then, Then we have a production that is up and running that delivers both the volumes and also the efficiency and thereby the profitability. The normal industrial pickup when you put together a new factory. The order backlog continued, as I said, to increase. We have also highlighted here the approximately 2 billion order that we published just a few days ago. And as you can see, that is also then to be delivered during 27 and 28. I've talked about the things on the right side, but it's practically securing critical components. I think everyone working in data center and in the electrical area, it is about constantly work with components and securing that. It is for us to scale up staffing and operation in engineering. It is to add when needed, if needed, extended shifts to drive throughput through. And then, as I said, it's about expanding manufacturing and assembly footprint now for us also moving in and investing in Asia. Step by step, that is the mantra. Food tech. Continuous strong demand, well spread across. The order backlog also here and the book to bill above one. Software generated growth driven by broiler and layer. Controllers, strong growth driven by Americas. So stable and very pleasing development. A little bit weaker ARR development linked to several things. One that is we are scaling up and we are upgrading our systems. And then also, I mean, very often it comes in waves. But we should be about 20, maybe up to 30%. But 15, I think it is a good quarter, but not an excellent quarter in ARR growth. Net sales increased across the line, especially nice to see controller growth in America from broiler and layer segments. The EBITDA margin remained robust. We are investing to continue to support growth. We are driving through price increases and initiatives to balance that. And despite Q1 being from a seasonal perspective for controllers a weaker, we delivered a strong growth also in controllers during the quarter. What I think is important to remind ourselves, we are building a business here that is more or less 100% digital. We have gone from being non-intelligent equipment to now being very much digital driven. We are building a unique capability. And we are closing in to a run rate of 2 billion in a year. A lot of our growth has come from organic growth, well targeted innovation, well targeted customer expansion. But it has also come from, I have to say, a proven M&A execution. I give you three examples here. First of all, air tech in the clean technologies. What we acquire, the air protect, towards volatile organic compounds, a very interesting growth area for the future. So that is one of our focuses, to continue to grow in clean technology. Data center to become a full solution provider, expanding our footprint, expanding our offer, and here Geoclima is a good example. And food tech then, the shift towards controllers and intelligent equipment combined with softwares. And as you can see then, structural growth, order intake of what we have acquired, generates 13%, and net sale, 9% growth. Adjusted EBITDA, 8%. But what we have to remind ourselves on, that is we drive commercial synergies, we drive operational efficiencies, technology integration, and we are strengthening the market position. So this, of course, will improve over the years. The other thing we need to remember, that is, and I take geoclima as the example here. A business that were about 400 plus million in sales when we acquired them and has now generated order intake of 6 billion. That is not counted into the organic order intake. That is counted into our growth in Americas. So at the end, I think that looking back, geoclima must be one of the very, very best M&As done, at least in Manters history, I think across many different industries. With that, leaving ourselves on a high pitch here, I hand over to you, Katarina, and take us through the financial highlights.

Thank you, Claes. As you have heard Claes comment on, in the first quarter we had all business areas deliver positive organic growth, although the reported net sales was impacted by currency headwinds of minus 12%. The margin, the profitability was temporarily impacted, resulting in a lower net income, but cash flow remained stable. And we also significantly improved our operating working capital to net sales ratio to well below our target range then of 10 to 13%. I will now go into more details then. So as we said, if we look at the margin development in first quarter, the volume had a slightly positive impact then across the business areas. And this was also coupled with positive net price increases, mainly in DCT, so positive to see that. At the same time, we also had some headwinds in terms of tariffs in DCT, the four percentage points that Claes also mentioned. And we have also seen a negative product mix in Airtek and DCT. Operationally, the underutilization then in Erteg weighed on the margin and then also the new factory ramp up in DCT. We continue to invest in our strategic initiatives, where we continue to scale and also advance digitalization and automation to really strengthen our footprint and also support long-term growth. At the same time, we also saw positive support from the cost-saving measures in Airtek, and I will come back to those in just a while. If we look sequentially on the margin development, we saw an improvement then in Q1 versus Q4, and this was mainly driven by stronger volumes, but also the positive impact from the cost savings measures in Airtek then. So here you can see the good development in our cost savings program for Airtek. So the 2025 initiated measures has been completed and delivered more than the planned 100 million savings. So this reflects strong execution by the Airtek business area. Looking into 2026, those initiatives are expected to give us annual net cost savings in the range of 250 to 300 million. Will the full effect reach by the end of the year? And so far we have reached over more than 50 million SEK in the first quarter. And these initiatives is a combination of different activities. Of course, we have looked at the footprint and we have also tweaked the investments that we are making, making sure we balance capacity. but also safeguard key competences. We are also optimizing the workforce and we are also working with increased efficiency initiatives then to cost optimize, but also driving lean improvements. And we are also having a more focused approach on the commercial. So overall, this is a very important program for Airtek to restore their profitability and it will position them very well for continued efficient and scalable growth in the future. Looking at cash flow then, the quarter we had a stable cash flow from operating activities. The lower operating profit was mitigated by positive changes in operating working capital and that is mainly due to the advances in DCT then. In the investment activities, we saw an impact from the remaining shares that we bought from Emtech. So the 20%, 18.5 million US dollar. And then CapEx was a bit lower in the first quarter than in the fourth quarter, so remaining at the controlled level. And overall, the total cash flow was minus 1.33. We remain to have a very disciplined approach to capital allocation where we do prioritise investments in the areas that support long-term growth and value creation. So in the quarter, our level of investments and also on a rolling 12-month basis was 5.5%. So here we are continuing to invest in all our prioritized areas. And looking ahead, DCT remains a priority area for us. You know that we are scaling and ramping up the production facility in Virginia then to support the demand in the US market. But also, as Claes also mentioned, in Asia Pacific, we will continue to invest to expand our presence there. And looking ahead in terms of CAPEX outlook, that remains to be broadly in line with the level that we had in 2025. Also want to mention our strong progress in the working capital area where we have now reduced that further to 6.5% of net sales, so well below our target range. Looking at leverage, then leverage increased to 3.1 from 2.9 at the end of the fourth quarter. This was a result of lower operating earnings that was partly offset by a strong cash flow generation, but also a result of the continuing consideration then paid for Emtech, the 18.5 million US dollars. We remain a very diversified funding base that is a top priority for us, of course. And while we do not have a fixed leverage target, our ambition is to be in the range of 1.5 to 2.5x over time. And temporary deviations above that is not a concern to us since they are due to strategic investment in growth areas that are then strengthening our competitive position. Looking ahead, we see that leverage will gradually improve as we go into the second half where we have stronger volume and margin to support the leveraging. Turning then to sustainability, here we are continuing to strengthen transparency and execution. And I'm very pleased that we in the first quarter this year then published our first annual end sustainability report under CSRD, where we have raised the level of transparency and data quality and governance across the whole organization. And we are making really good progress across our key sustainability indicators. In 2025, then, the renewable electricity increased to 91% across our own production sites, and also the renewable energy increased to 49%, which then lowers our exposure to oil and gas price volatility, but also, of course, lower our operational emissions. We have also improved the resource efficiencies with more waste reused or recycled and that has then led to reduced landfill volumes which is now 28%. Our safety performance continues to be strong as indicated by the workplace accidents rate that is low and 0.8. And then we see service and components continue to grow. In the quarter, it amounted to 26% of total net sales, leading then to improved resilience and long-term growth and value creation. Our ambition for the group is to be above one third of net sales. Sustainability is at the core of our strategy, of course. It helps us strengthen operations, also manage risk and deliver long-term results. So with that, I'd like to thank you and turn it back to you, Claes.