Netel Holding AB (publ)

Good morning and welcome to our presentation of our Q1 results. My name is Jeanette Rytterskjöld and I'm president and CEO of Nutell. With me today I have Fredrik Heleneus, our CFO. We see a financial development in line with our own expectation, a normal seasonal variation for this first quarter. We show that we continue to deliver on our strategy to grow with new and existing customers and in new geographies. We increased our sales organically by .7% in the quarter and had sales of 694 million. We have an adjusted EBITDA of 20 million with a margin of .9% compared to .8% last year. Our growing order backlog reflects both on our position and the strong underlying markets. In the beginning of the year we have strong tender season as many of our customers needs to start their product in springtime and before summer in order to be able to be done before winter. We continue to see many relevant requests from new and existing customers. Our main markets are in Sweden and Norway, which together account for approximately 93% of our sales. And our growth markets in the UK and Germany together account for 7% of our sales. Infraservices decreased sales in the quarter by .3% but compared to an unusually strong first quarter last year. We continue to see strong price competition in our market segments as players who normally target the housing market are looking for new customers and business. This has led to lower margins but our business is growing with both new and existing customers while expanding our geographical presence. We have already taken measures last year to optimize cost and resources and continue to develop the business for further profitable growth. In power we grew .8% in the quarter as a result of our strong development in Norway where we have gained new significant customers and broadened our geographical presence. The framework agreement with Glitternet Sør means that we are building a new organization in Mandal in Agder south of Norway. The framework agreement has a term of potentially four years and lays the foundation for our investment in Agder. In Telekom we decreased our sales by .8% and the court was largely affected by a higher proportion of products that were started up for future deliveries during this year. Not least within the new expanded framework agreements with among others Tele2 in Sweden and TeleNor in Norway. Probability improved despite the high proportion of product starts. We see that the margin raising measures that we took last year in Norway will continue to have an effect during the year. All figures in this presentation are reported excluding our operations in Finland which are reported separately as an asset held for sale according to our previous communication. Fredrik will later on go through the numbers in more detail. With our recently announced agreements we have demonstrated our ability to deliver on our strategy of growing with existing and new customers. For example Siktuna, Järfära municipality for our division in Infra services. We have also expanded our geographical presence both in Norway and in Sweden with Glitternet and Tele2 and have thereby strengthened our position in stable long-term market segments. The first months of the year are affected by starting up products for future deliveries. The first quarter for us is therefore normally the weakest of the year in terms of sales, profitability and cash flow. The financial development in the quarter is thus in line with normal seasonal variations. In January this year we announced our intention to sell the Finnish operations. The sales process is proceeding according to plan and the goal is to complete the sale this year. By divesting the Finnish operation we free up resources that can focus on our main markets in Sweden and Norway as well as the growth markets we have in Germany and the UK. Our new digital tools and systems are now implemented and the fine tuning of them has begun which will continue throughout the year. We see their potential and expect positive margin effects gradually during the year. Natel is not directly exposed to trade duties but of course we are closely following developments according trade tariffs and assess today that Natel will not be affected directly. We are currently protected by index clauses in our customer agreements and in many of our projects customers are responsible for the purchase and delivery of materials. Natel also has no operations in or sales to the United States. Our services in critical infrastructure has a high priority for all the markets we operate in. Our business is a project driven in its nature. We have over time different types of projects and most of our business is weather dependent which leads to annual variations in outcome as well as the growing share of recurring service contracts and of course the market situation. Based on this we have revised our financial targets to better reflect what we currently expect to deliver financially in the coming years. We now expect annual organic growth of 3 to 5 percent and then annual adjusted EBITDA margin of 5 to 7 percent. The target for the capital structure remains unchanged and means that the net debt excluding lease liabilities in relation to adjusted EBITDA growing 12 months shall be less than two and a half. Last year we grew organically with about 3 percent and we delivered a margin of 5.2 percent but we were above our capital structure target. Under 2024 we had a one-off effect of earnads for around 125 million SEC and we do not have any earnads to be paid going forward. We believe that with our new strong order backlog and all the activities for improved margin and cash flow we will be able to deliver on these new financial targets. Our new financial targets are set to be seen as yearly achievements aligned with our strategy for profitable growth and enabling a more transparent view of our expectations for the business. We still expect -by-step margin improvement going forward. Now before handing over to Fredrik for more detailed comments on the financial performance I will give more details on some of the agreements we have recently signed. We are very pleased with the trust placed by Sigtuna Vatten och Renhållning, a company water and sewage network for the last three years. The agreement includes among other things the expansion and modernization of water and sewage network in Sigtuna. Sigtuna is located in the northern part of Stockholm County and has undertaken several initiatives in the water and sewage sector to improve and modernize infrastructure including the expansion of the water and sewage network. It is a three-year agreement with an option for two years expansion. Sigtuna municipality is yet another new customer and a new geographic area for us. And in power we have our power company in Norway, Nettjänster, where we have signed two key agreements with Glitternet in Norway. Glitternet owns and maintains the electricity grid in Agder, Buskerud and Hadeland, which are placed in southern Norway and has about 320,000 customers. The first contract is a framework agreement which includes planning, ground and construction work as well as high voltage installations. As a result of the agreement we established a new organization in Mandalf south of Norway. The framework agreement has a potential during our four years and lays the foundation for our expansion in Agder. We also signed an agreement with Glitternet to expand a transformer station in Spikestad southwest of Oslo. This agreement has a value of approximately 50 million. As part of the project we will plan and execute ground and construction work as well as high voltage installations. And in Telecom we have Tele2, who is one of Sweden's leading telecommunications operators, delivering broadband and communication services to millions of households and businesses. We have signed a new two-year framework which is more comprehensive than our previous contract. This new agreement covers both a larger geographical area and more services. As part of the agreement we are responsible for the installation, service and maintenance of Tele2's broadband in Sweden. We are responsible for installation from Skåne to Uppland and in terms of service and maintenance the assignment covers the counties of Stockholm, Uppland, Västmanland, Sörmland and Östergötland. The agreement runs for two years with the possibility of extension of an annual basis. Through this renewed collaboration we have strengthened our long-term relationship with Tele2 and consolidated our position as a leading player in the construction and maintenance of broadband networks. So now it's time to hand over to you, Fredrik, with a more detailed presentation of our financial performance.

Perfect. Thank you, Connette, and good morning, everyone. Looking at the financial performance in the first quarter we, of course, first and foremost note the evidence seasonality where we generate slightly lower volumes and as a consequence both lower margins and lower cash flows. The start of the year implies time to start new projects and in our case this time new clients or regions. Still, we managed to utilize on the increase of the backlog reaching a growth of 2.7%, a growth mostly driven by power in Norway and telecom in Germany where we continue to see positive contributions from new projects. We delivered sales of 694 million in the quarter compared to 676 million last year. With a few interesting new contracts in combination with updated views on our existing contracts we grew the order backlog from year end and remain above 4 billion here in quarter one. We continuously work with new interesting projects and search for new interesting tenders and with the existing order backlog we estimate that we have around 2 billion for the remaining nine months of 25. Looking at the profitability in the quarter, this graph on the slide clearly shows our seasonality pattern where Q1 is the weakest quarter of the year. As said, we tend to generate lower volumes as we use a lot of time in the beginning of the year to start new projects and work with lower volume activities as we focus on the preparations in the project to get ready to ramp up production during the coming seasons. The adjusted EBITDA however increased to 20 million or .9% with a few adjustments for restructuring and the process of divesting our finish operations and telecom contributed with a positive margin here in Q1. We still expect to improve our position and profitability over time, yet Q1 is a low volume quarter where we have limited possibilities to perform within the higher profitability range. Again, we notice slight improvement compared to previous first quarters and we continue to see some value effects from, for instance, the better and more efficient solutions within telecom, our new organizational structure and new contracts throughout the entire year. The lower volumes in the first quarter implied a slightly negative earnings per share of 0.08. Turning to the cash flow, we note that the cash flow in the first quarter is improved from 0.08 last year, yet still negative with minus 29 million. Finland was more or less neutral in the quarter and the cash flow from excluding discontinued operations was from the discontinued operations was minus 1 million. We are focusing a lot on seasonality today, but it is a very important characteristic for our business as we need our capital when ramping up new projects and need to reach certain achievements before we are entitled to invoice or ultimately generating cash flows. The quarter benefited from the timing with the inflows from invoices sent in December and we believe the outcome to be in line with expectations for the start of the year. Yet as seen historically, we expect to improve our cash flows throughout the year as we finalize the production and are able to benefit from the cash release towards the end of the project life cycle. In addition, and as Gannett mentioned, we paid roughly 125 million in earnings during 24, payments that were scheduled for 24 and obviously we do not expect the same cash out here in 25. We close the quarter with around 10% net working capital in relation to sales, which we believe is within expected levels for our business and our first quarter. And it is just a slight increase from year end as we start new projects and engage in activities in new areas and start new partnerships with interesting customers. We have, as we have said before, achieved improvements within our projects and certainly increased the cash flow awareness across the group. But this will continue to be on our focus and we will still have room for additional improvements and thus strive for our potential going forward. Effectively, with the seasonality and the working capital need, we remain above our capital structure target on net leverage, being around 3.0 times in comparison to the target of 2.5. But we continue to have a solid liquidity and with the yearly cash flow cycle, we do expect to improve the position towards the later part of the year. We have proven our ability to generate healthy cash flows in the past and with the limited outflows here in 25, meaning the new earnouts, our focus remains on improving our net debt position and decrease the leverage ratio towards our financial target here in the end of 25. As previously announced, we decided to initiate the process of divesting our capital flows in June 25. We are working swiftly with the process, according to plan, together with our set of chosen advisors. The business performance in Finland is in line with expectations and once again, very much about the start of the year and seasonality in Q1. Ramping up production and the relatively lower volumes impacted the margin also in Finland, but we have a good position and we are working closely with the management to further develop the business in Finland alongside the ongoing divestment process. The business in Finland generated sales of 34 million with a slightly negative margin. If we turn and have a look at the divisions and looking at the performance across these three divisions in the first quarter, InfraServices firstly delivered sales of 144 million and decreased 11% against a good Q1 last year where we saw additional projects running over the year end. Vice versa, this year we saw fewer projects continuing since last year and focused on the start for new projects. Profitability wise, InfraServices delivered a result in line with Q1 expectations or an EBITDA of 4 million or 2.6%. In addition to the seasonal pattern, we still noticed a relatively higher competition within our markets and expect that to remain during 2025 before we start to see improved possibilities as the housing market provides additional alternatives. We believe that we have a good position and that we see good opportunities for InfraServices as well as we do for our other divisions. We continue to evaluate our new orders and tenders in order to contribute to the group's improved financial performance. Within Power, we note a growth of .8% driven by Norway as we increase production towards new clients in new areas. Power generated 252 million in sales compared to 204 million last year and Norway continued to contribute with both our Power Service contracts as well as from projects. Sweden was roughly on par with last year and the division delivered a decreased profitability with 7 million in EBITDA with a .8% margin. The margin is partially impacted by costs in relation to our expansion into new regions and with new clients and also due to the project mix and face with fewer substation projects running at the same speed as we did last year and those projects have historically been providing margins in the high range. As I said before, Power remains as a very interesting market. We have had two profitable years for the divisions with good performances and we continuously evaluate tenders and market possibilities trying to utilize on this momentum that we see in the underlying market for Power. Lastly, we have Telecom where we deliver just below 300 million in sales in the quarter with a single digit negative growth of approximately 4% as we noted the start for many new projects, for instance with Telenor in Norway and with Teletoo in Sweden. With the multi-year framework agreements that we have, we have a good position in our order backlog and we look forward to evaluated progress as we get up to full speed in our production. Our growth markets in Germany and UK combined came in a few millions below last year but we continue to work for new interesting volumes and evaluate tenders in addition to those already published. The EBITDA for the division was 2 million or .8% in the quarter. It is low yet positive and improved. We were not satisfied with the margin for 24. However, as we go on and increase the production now during the year, we continue to improve our new tools for efficiency within bigger service contracts we have in Norway. We repeat our expectations for this step-wise improvement going forward. Telecom is our biggest division with above 40% of sales and we are into leverage on our order backlog and new contracts in order to increase the profitability. And with that for Telecom, I believe that I can hand back over to you, Gennett, for a few concluding comments. Well,

thank you, Fredrik, for this presentation. I will finalize today's presentation with some concluding remarks on our growth strategy and how we can build a stronger Natel going forward. Natel celebrates 25 years this year. We started our operations in Telecom and have over the years developed our business in power and infrastructure. We have also developed our own power and infrastructure services. Through both acquisitions and the ability to grow organically, we have managed to develop our business over the years. Underlying this, we have strong mega trends of electrification, digitalization and modernization of water and sewer systems as driving market forces for our business. We have successfully delivered on our strategy and continue to strengthen our position in our markets. Every day, I receive proof of the strength Natel has in all our competent and motivated employees. We have a sharp team with a common clear goal to make Natel even stronger. This means that I'm confident in our ability to deliver on our financial targets and grow with profitability. And with that, we open up for questions.

Yes, good morning, Jonathan and Frederic. A couple of questions, if I may. First, looking at the outlook you described for this year, it sounds like you are seeing quite a broad-based growth base anyway, and maybe with a little less in the in-front, slightly more in power and telecom. Is that how you want to also perceive your view at the moment?

Yes, that's correct, Carl-Johan. We see a high growth for power during this year and both in telecom due to both the contracts that we won last year, the end of last year, of course, but even the new ones this year. We expect to see some growth even in infrastructure services, but as we have said for some quarters now that we see the same market situation, 25 as we did 24, due to the competition for infrastructure services. But we see a strong development for power and telecom.

Do I understand your comment, Frederic, on the order backlog, that if it's about two billion to be delivered out of the order backlog, that this looks very healthy. You have now started to have maybe slightly longer duration of the order backlog than you have had historically.

Well, first, I think that we have had several interesting multi-year framework agreements in the past as well. We do so now. And yes, you are correct. We stated in our last call that we had roughly half of the order backlog for 25. We basically repeat that comment now, being a bit more precise, saying that we have roughly two billion in the backlog for the remaining nine months of 25.

And when you, I think the updated financial targets, they make clear sense to me, so no question there really. But how do you see them being broken down by your business verticals and geographies? So I guess that's quite a big mix difference between the different business areas. And could you really push these kind of targets also in the telecom area? Is that logical or is it going to be, say, a mix making you end up in these kind of financial targets?

Well, it is a mix for us as a company as a whole, as the financial targets is communicated now. And as you can see in the numbers, of course, we have a journey to do with our division telecom in order to be more profitable and increase our margin there. So, but in the end, we see and we are aiming all the activities we are doing is that all the divisions should deliver on our financial targets further on.

Also for telecom, it would be logical to talk about five to seven percent margin. And I guess also there it's very much a different mixing for you if it's a lot of fiber rollers and your historic level has obviously been up there.

Yeah, I would say it's a longer journey for us to reach for the telecom division than the other divisions. But we will see a step by step improvement for that division further on as well.

And finally, looking at Finland, would you expect any, what kind of financial consequences would you expect of disposing of that? Is there any more things needed to be cleaned out of your balance sheet on the on the finalization of a transaction? Or if it comes to closure instead, would it be a large cost related to it?

Now, as we said in the fourth quarter, we believe that we have that we have made our assumption and updated estimates on our finished operations in order to have a relevant target to to put out in the market. And our focus now is on the process. We will provide updates when we do have a good progress in that in that process, meaning a closing of the transaction. What we said before and what we still can sort of comment on is that we we try to be quite cautious in our financial estimates on on the process. And believe that we have an interesting position now for the for the rest of the process of succeeding with the completion of the closing of that investment.

And it looks like you have already stabilized the operation to be fair. So I guess it's more an interesting asset for somebody to look at and then it might have been historically.

That's correct.

Excellent. Thank you very much and all the best out there. Thank you.

Thank you.

If you wish to ask a question, please dial pound key five on your telephone keypad. More questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you everyone for listening in and we look forward to see you all for our presentation of quarter to results in July the 11th. And wish you a good day.

Thank you everyone. Bye bye.