Nederman Holding AB (publ)

Good morning everybody and thank you for coming and listening to us. We are here to present the first quarter of 2024. If we start with a small summary, we say that we have had a quite positive start of 2024. We have had a good sales mix and that includes an increasing portion of service after market business. And we have by that come to a slightly better result. The margins are increasing. For the rest of quarter one, we have had a stable performance. And this is in an increasingly uncertain market. But we have been able to keep up the order intake. Healthy orders received. It's actually the second highest quarterly order intake ever. So we have good performance here. The margins are higher, solid cash flow. And we are continuing advancing with new product launches. And we do have a stronger presence in the growing industry. And we have also investment in increased capacity and efficiency in different areas.

If I move on to slide four and start my summary of the key financials. Orders received. Currency neutrally they increased .8% compared with Q1 2023, which was obviously a very strong quarter. Like Sven mentioned, it's our second highest quarterly order intake ever. Organic growth very slightly negative. We had the acquisition of Argard in 2023 that has contributed some of the growth here too. But currency neutral plus .8% and over that 1.5 billion mark. When it comes to sales, sales were lower than orders received. Just below 1.4 billion, 1.397 million, which is a decrease both currency neutral and organically. The main reason behind that, and this shouldn't be a major surprise in terms of the process technology division, is that they have had lower order intake in the last couple of quarters. And therefore they are the biggest contributors to the decrease. Like I say, over 100 million less in sales than orders means that our backlog of orders has obviously increased. Profitability wise, Sven mentioned the margins are improving. We've invested in production and logistics, which make a positive contribution to profitability. There's also a favorable sales mix, we could say between the divisions in respect that the most profitable divisions are those that are contributing more of the overall portion of sales. The final part is that the service business continues to grow, which is a more profitable part of our business as well. For the first quarter, adjusted EBITDA was 174 million sick versus 173 million last year, which gives an EBITDA margin of .5% versus 11.7%. Profit after tax, 90 million Swedish Krona versus 78 million in the same quarter last year. And that led to earnings per share of 2.57 Swedish Krona versus 2.22 in Q1 of 2023. When it comes to cash flow and net debt, cash flow from operations in the quarter, 95 million Krona, it was behind the Q1 of last, of 2023. But it must be pointed out, this is the second best quarter one for cash flow from operations that Nerdavang Group has ever seen. This is rather pleasing and some of that comes down to the order intake, where we have received some down payments on larger projects. Net debt is clearly significantly lower than it was at the same point 12 months ago. If we go into the divisions Sven, and we start with extraction and filtration technology. Extraction and filtration technology,

mid-size projects focusing on composting, wood, welding, other general dust applications, etc. Just for reiterating where they are coming from. The development during the quarter can say that we had better orders received and there has been several major orders. And that is including solutions in areas like green energy, transport, waste management. Substituting some of the weaker demand in the other industrial segments like welding and some base industries that are not so eager to invest at this time. Base business has been in line with the 2023 first quarter then. And what is very satisfying is we continue to build our aftermarket business also in this division. And we had double-digit growth also this quarter. The backlog remains high and that is a good foundation for sales development in the coming quarters. It is probably not taking too long because they are having one to two quarters visibility here. First orders booked in Americas for the energy saving system SAVE who is now getting more and more traction. And it differentiates us from other suppliers that we also have. Our digitalization is becoming an increasing part of our offer. We have continued of course to book also in the May. For different reasons we have not launched this in Asia and China since it is a key digitalization part of it. Radiance, EMEA, higher volume, positive sales make, efficient product delivers and all this together has improved the profitability and shown a bounce back to where we want to be. APEC orders, generally weak solutions grew somewhat with medium sized orders in China and in India. Still not on a satisfactory level. America as a whole so flat developing orders and sales versus Q1. But there is a solid order growth including the break forward of the Nerman SAVE system. Relocation of RoboVent, the company we acquired number one in welding in the US. We are moving the whole operation not a far distance it's in the same vicinity of Detroit. And we expect this to be completed during this quarter. It will increase capacity and efficiency definitely. But of course there is a hard pressure on the staff doing this exercise during Q2. Other key activities has been the launch of the MCP air purification tower. And it has generated a good interest from the market and we have already booked orders on that one. We have also started to get closer to the consultants by launching beam object platform. We have our pro quote system that helps us dimensioning the system and being more efficient. Another investment in digitalization and efficiency. Now we make it even easier for the consultants and architects to position our product in a facility by using beam object. We believe that that will further strengthen our position as the preferred solution.

When it comes to figures for extraction and filtration technology. Orders received were .7% currency neutral higher than Q1 2023 at 616 million SEC. Sales reached 636 million SEC. Giving an adjusted beta of 103 million Crona which is a .2% margin. Which is a clear improvement over the .5% seen in Q1 of last year. On to process technology Sven. Yes

process technology where we deliver larger projects especially the world leader in textile, foundries and smelters. But also in other areas like waste recovery and metal scrap recovery etc. During the quarter we had a drop in orders received but it was still very strong. It's something that we anticipated and talked about in earlier calls. As expected also the sales decreased compared with a very very strong Q1 last year. Profitability remained high with the positive sales mix and a good efficiency in execution of our project. And again our efforts to grow the service of the market business continued. And that helped to keep up the good margins. If we look at tech and fiber, orders received and sales decreased significantly compared to 2023. The capacity utilization in spinning mills is low and that is curbing the demand for new equipment. And especially so in China. It's the world's largest textile market but the demand currently is weak. India remains more stable

both

in India but also in the neighboring countries where we export them. The innovation that we launched in 2023 at ITMA continues to generate additional business. It delivers a significant energy saving and it's a part of our theme in the different divisions. Producing products that can save energy in different ways. And we've seen a very positive interest in these new innovations. If we go to foundry and smelters. For the segment as a whole orders received and sales declined compared to the strong Q1. However a strong sustainability trend is contributing to an increase in demand for solutions in example metal recycling. We are talking here about magnesium, we are talking mainly on aluminium but to a small portion also in ferrous metals. There was one major order booked for a smelter project in EMEA. When we come to customers, customized solutions we had a strong order growth. And it was quite a few orders that were booked especially in America. And we are talking here about recycling of material mainly. Activities we continue to strengthen our efficiency. Also in this division we have installed new equipment, sandblasting, painting in our main facility in Friesenheim, South Germany. And that will increase both capacity, efficiency and therefore also since we are using more automated processes, lower cost and making us even more cost competitive. The restructuring program in China has been completed.

Briefly on financials for the process technology division. Orders received were £486 million which is .7% currency neutral and organic down on last year. However still rather strong. I won't call it a surprise but pleasing to see. Sales as we have mentioned already clearly lower than Q1 last year as expected £392 million. We adjusted a bit due to the favorable mix with more service business and higher margin projects as well. It was £32 million Swedish kronor which gave a margin of .0% down slightly from .3% in Q1 last year. Now on to duct and filter technologies. Yes, duct and filter where

we supply duct work for specialty applications with heavy dust loads and suppression systems and also filter technology filters for our internal and external sales as well. For the quarter we can say that orders received and sales decreased slightly compared to the strong 2023. New orders were secured in what we call growth segment, battery manufacturing, food, green energy especially so that we are entering into this market as well. Profitability was strong and that's primarily due to improved manufacturing and inventory processes in the US factories. And that is a result of earlier investments especially in Norfals plant in Thomasville where you might recognize that we increased the building side. We have added new even more modern equipment and we have our solar panels making us the North Carolina's largest private supplier of solar produced electric energy. Leaving that and going into Norfals specifically, Norfals performed very strong as we say in orders and sales. EMEA and APAC were slightly weaker and profitability developed well following the investment in the production. And in early April the Norfals now concept was launched offering delivery of selected range within 24 hours. So we are adopting to the trend of the internet trade and so on and people not wanting to wait for that good. So we have a new concept and it's officially launched and it attracts good reviews from our customer base. In Menada orders received declined versus the previous quarter as well as versus first quarter in 2023 but remains on an historically good level. New orders were secured in competitive cement industry and also in some others. So the key activities during Q1 was Norfab now and it was officially launched on April 8th. The idea to quotation order to QTO was launched also in Australia. If you remember last year we acquired some and are building up our facilities also in Australia. The implementation of BIM object mentioned also in EFT will further help consultants, architects to make life easy for them. And that is something we continue making life easy for easy to do business with. We have internal saying that our target is to easy, Nerman should be easy to do business with. And we have also upgrading clamp production in Thomasville and there are more continuous improvement and investments going in there to further. Strengthen the manufacturing side and distribution.

External orders received decreased by 9 million Swedish kronor, .2% for the division in quarter one. Norfab, Menada down is what we could say there. Sales 207 million Swedish kronor, slightly below last year, 2% only down. But they adjusted a bit due to the improved margins and efficiency in production. 42.6 million, a whole million Swedish kronor higher than 2023 Q1 gave. And a bit, very healthy a bit, a margin of 20.6%. On to monitoring and control technology now Sven. Yeah,

monitoring and control technology for surveillance as well as for monitoring particles, gases, etc. So if we go for the development during the quarter, it's been the highest ever order received for a single quarter. And it's been particularly strong with GASMET. We had very good traction with our latest launch, the portable emission analyzer DT6000, Mobilis. New order securing biofuels industry and for the incineration of medical waste. Sales increased compared to 2023 and that was the largest growth seen in Neomontos. Profitability was negatively impacted by more solutions and less favorable mixing products. What also created problems was the Finnish strike that made life more difficult for us. And there were also things we can find all kinds of explanation of Easter blocking some of the things in Norway. But if we look at EMEA, orders received increased both GASMET and NEO. There was a strong ordering taking GASMET particularly in our setup in UK and Germany. And we have also good sales growth. But as mentioned, the strikes in Finland generated issues for us in March. In APAC, orders received increased again versus last year's Q1. However, the sales were flat, partly due to supply issues here. Work to develop the division distribution of sales organs in China is generating clear results. We are about to set up a service center, we are about to set up a test center so we do not have to send the 40 equipment back to Europe here. In America, we have noted slightly lower orders received but another strong sales quarter. We participated in Houston for the petrochemical industry and saw good interest for Neomontos' newly developed products. Sales grew from both NEO and GASMET but AFS had somewhat of a decline. Key activities, investment in production capacity for NEO. We have passed emission analysis certification field test that will further broaden the use and the applied market we can go to. Neomont Insight was renamed OTC and that's the preparation for new product generation have

started. Financials for monitoring and control technology. As Sven mentioned, orders received the highest ever single quarter for orders received. 234 million kronor is a 23% growth versus last year. Sales hampered a little bit for a couple of reasons which you have heard. 187 million kronor is still actually higher than last year. This mix has impacted the margin and we adjusted the beta to 28 million kronor versus 33 million kronor in quarter one last year. That's a margin of very nearly 15% versus .3% last year. If you just look at the outlook and some other information Sven. The

outlook we would say that demand and orders received remain fairly solid while our base business and strong digital rates enable us to assert ourselves well in the current market. The visual performance remains positive. There is a high inflationary pressure and weaker economic outlook will impact customer investment decision does remain and it's also a high cost inflation salary inflation pressure around the globe. There is a growing geopolitical uncertainty and of course if you want to be negative that could increase to further protectionism and so on. But in view of our large order backlog and our ability to increase our share of sales in the industries with good structural goals. We take a cautiously positive view of opportunities for the year and we see that we are continuing to strengthen our position. We have a very good offer, attractive offer, a mix of digitalization, a mix of efficiency creating solutions, easy to do business with through B market, pro quote, QTO etc. So recently I've permitted for the reminder of the year. Some other information we committed to the science-based target initiative and doing this scope free analysis 99% of Netherlands greenhouse gas emissions emanates and are attributable to the user phase. That means that product innovation and collaboration with customers will remain the main focus moving forward.

Shortly on the financial calendar the annual general meeting is tomorrow the 26th of April 2024 for those who have registered. The quarter two report is released on 12th July of this year, quarter three on the 22nd October this year and the year end report for 2024 is released on the 13th February 2025. And with that I think we can open up for any questions that listeners may have.

If you wish to ask a question please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question please dial pound key six on your telephone keypad.

The next question comes from Lena from Bloom. Please

go ahead.

Good morning Sven and Matthew this is Lena Blume from Handelsbanken. Thank you for taking my questions.

Good morning Lena. Morning.

So my first question is related to demand. It seems like the momentum that you have in America or more specifically the US is continuing to be strong. What is your current view of the development in EMEA demand wise and maybe if you could talk a bit on if you have any expectations of that going forward?

It's almost like Henry Kissinger says who do I call when I want to talk to Europe and it's very scattered picture where you have reasonably good demand in some countries. It's been weaker especially in Germany and in Scandinavia, Sweden for instance you've seen the economy has not been growing that well. Having said that we have seen also in some areas a wood application and that is a couple of bit too less investment in furniture and so on from private people. So Europe is a mixed bag. Then if you go to some of the recycling, if you go to different more structural businesses there is a reasonably good demand. So I'm not too negative. It's been I think and now I'm not a national economist but I think that there has been in Europe a pushback for industry serving the consumer and construction industry. And that we've seen lower demand and in structural areas like green energy, recycling and so on we see very good demand. So it evens out a little bit here. I'm not too worried about it in the medium term.

Super, that's clear. Thank you. And then you report weaker development in the APAC region. Could you give us some information on China vs India during the quarter?

I can maybe answer a little bit on that. In APAC, our largest segment in APAC is the fibre and textile business obviously. And that is rather different between India and China right now. For a number of reasons I think it's down to some domestic demand issues in China. But then also the Indian government had been incentivising investments in the textile industry as well. So that has meant that there's a rather different picture there. When it comes to other parts of our business, monitoring and control technology continue to perform rather well. This is where we have high tech products that have no local competition. We are measuring for example at much lower concentrations on certain gases than any other companies can do. That means that that is why we continue with strong growth in APAC for monitoring and control technology division. So a little bit of a nuanced picture. But China certainly not, from an industrial perspective, is certainly not as hot as the US right now.

China is a mix that there is a significant overcapacity in all manufacturing in China for the moment. Which has generated difficulties for China. We are however very small in the Chinese market and we should be able to do a little bit more. But there are also restrictions we put on ourselves that we are not launching some more advanced digital solutions for reasons of legislation in China. That could generate a significant problem for us on IP rights etc. So we see that it's a mix of weak techs where we have the strongest position. Very strong demand for measuring technique and MCT. We could sell even more if we could get the organization up fast on a supply chain in there. So it's a mixed bag here. They say very strong demand for the high end product that we have. They would probably like to have some of the digital product that we have which we will not sell. So it's again India very dependent on the development in our fiber technology, textile. And they are doing quite well both in India and in the surrounding areas. We have a very solid performance in our business there. We are working also with some of the other areas how to handle that. You have the same problem as you have had in other areas with India and that is make in India. And that means that they have strong borders when it comes to custom tariffs. And then they support the manufacturing in India. And since we have a large manufacturing base for the textile segment that goes very well. We are contemplating how to get inside in some other areas as well. But it's something a lot to be considered here. But we are also building out the engineering capacity in India. So we have engineering capacity that is supporting especially process technology on a global. Draftsmen doing a lot of the generic work that's needed for larger projects. And by that we are both increasing the competency in India. But we are also saving costs not going by any consultancy firms. So again it's a mixed bag here.

Super, thank you. And then it seems like the demand is continuing to be strong in industries such as green energy, battery manufacturing and recycling. But what is your view of the demand in the more traditional industries such as textiles as I mentioned, welding, wood and paper. Is it possible to say if we are seeing any recovery in this industry or is it too early to draw conclusions?

I think it's too early to draw a conclusion. We believe that we see that there is a lot of restructuring in Europe. For instance they are putting factories in, they try to concentrate on fewer sites. But that is not all bad for us. We sell the same concept, we get in for the aftermarket and so on. But I would say the demand is so-so. But we believe that we are increasing our positions here. Especially on the high end, on the low end we are not there. But in the high end we see that there is an increasing interest for our what we call future proof solutions with energy saving, control systems, efficient supply of the filters etc. I think it's very difficult to say but I don't think we will see a dramatic downturn. I think we will maybe wobble a quarter or two in this. But I'm very positive that Nedoman will come out stronger in this environment.

Super. And then in process technology you report that geopolitical turmoil and weakness in certain markets is expected to yield lower orders over the next few quarters. Should we interpret this as you expect lower organic sales growth or even negative organic sales growth in the division in the coming quarters?

Process technology division still has a reasonable back front. They've had a very good quarter this quarter so it's too early to be too depressed on there. They're not at the high levels that they were 12 months ago so you can't expect 600 million plus quarters for sales for that division anytime soon. But they almost reach 500 million in orders in quarter one. We saw that as positive and so in the short term it's not too bad. There's less long term visibility in process technology however than there was 12 months ago.

But I don't think you should be overly negative in this. So we are growing the after market very rapidly. We have very interesting concept. Our combination of MCPT solutions is getting more and more known in the market. And we also see that there are a pipeline of some large projects that might go ahead. It's more that people are sitting and waiting to put the pen to the paper. I wouldn't be too depressed. I think we will have a balance but might maybe not reach the height we had last year.

Super, thank you. And then on the profitability. You reported better profitability in this quarter compared to the first quarter of last year. Are there further room for improvements on the margins? And what will be your main focus going forward to reach your target on EBITDA margins? And would you say that the better sales mix with the larger service business is sustainable going forward?

Service business, part of our strategy is to continue to grow service business faster than the rest of the business over a sustained period of time. There can be volatility. That doesn't mean we are going to say no to large projects when they come along either. Then the other part is if we look a little bit more short term we could say for a number of reasons monitoring and control technologies sales were not quite as high as they ought to have been. Had they been higher that would have helped the margin further. So that's probably where the short term is. But those are the two main arms, growing monitoring and control technology faster than the rest but also the service business to grow that faster over a sustained period of time.

But I think it's a mid term long term answer to this. There is obviously since we have a target of 14% there is obviously room for improvement. It is a mix of course of growing sales. It is this value based pricing that we are continuing to develop and not being shy getting paid for our superior solutions. It is also all the investments we have made and are continuously making in the supply chain both manufacturing but also how to handle better the logistics. And we see the very good development in investment over the last decade in a Polish factory. We are in Frinsenheim in the European, we are adding capacity also in Danish, we are moving to a new more efficient site in Helsingborg. We are moving as we speak the Robovand plant from a three divided site into one modern facility. We are continuously investing now in automatic storage in Thomasville for the Nordfab business. So it's a mix of small, it's not one big revolution. It is what we have been doing over the last decades, small incremental changes in the direction where we can push up getting better paid for our product as well as having a better efficiency. We shouldn't forget the efficiency internally with the pro-quote, the different BMRBX and whatever. Using digitalization, it's a very wide expression but using the technology to be more efficient also in administration. So it's small things but it was a very long excursion to say yes there is room for more. Having said that I do not promise that to come next quarter but we are moving gradually forward.

Thank you, that's very clear. And then more generally speaking is it possible to say what share of sales that are new customers and what share is replacement of already existing products?

No, we don't have an answer to that. That would be too much of a guesswork.

Okay thank you. And then just one last question from my side. We are happy to see that you have committed to the Science Based Target initiative. Could you go over the process for you going forward or sort of how close are you to actually submitting a target and so on?

I can answer that one. We are very, very close to submitting the targets. I have a meeting next week with our sustainability manager so we will be submitting within weeks. Maybe to next

interim report.

By next interim report it will have happened. But then there is a validation process as we understand it. There is an awful lot of companies that are submitting these right now so that can take some time. This doesn't change the work that we are doing anyway. 99% of our footprint is the customer's use. For us this has been a key for a long time. There is such a business benefit from reducing the energy that is utilised by our filters and our solutions. These fans in process technology for example. The energy saving extraction and filtration technology. We are going to keep working with that. That is the key to achieving these SPTI targets. It is not necessarily because of the SPTI targets that we will be doing that. Of course it helps contribute towards it but it will also contribute towards our business becoming more profitable as well. We give our customers better solutions that use less energy. They are happy and so are we.

That is something that is not new. That is what we have been working with over the last decade to do this. It is also so that we have already again over the last decade worked a lot to lower our internal use of energy. It is in fact so that for the last 10 years we have decreased our own internal use of energy, electrical energy with 70%. 71% I think it was. It is nothing new. This is more than an administrative thing. Yes we submit to this. It has been in our way of working as an environmental technology company. We are focusing on driving down energy use to be more efficient in all things that we are doing.

That is good to hear. That was all for me. Thank you a lot again for taking my questions.

Thank you Lina. Thank you.

As a reminder if you wish to ask a question please dial pound key 5 on your telephone keypad.

There are no

more questions at this time so I hand the conference back to the speakers for any closing comments.

We thank you for taking the time listening to us. We will be back in the same if you tune in in July and you will have the Q2 report then. Thank you everybody and have a continuous good day.