Nederman Holding AB (publ)

Good morning everybody and thank you for coming and listening to us. We're 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 the 2024. We have had a good sales mix and that includes an increasing portion of service aftermarket business, and we have by that come to a slightly better result. The margins are increasing. For the rest 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. 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 0.8% compared with Q1 2023, which is 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 the currency neutral plus 0.8% and over that 1.5 billion SEC mark. when it comes to sales sales were lower uh than orders orders received but just below 1.4 billion saying 1.397 million which is a decrease current both currency neutral and organically and the main uh reason behind that and this this shouldn't be a major surprise in in terms of the process technology division is that they have had a low they have had lower order in taking the back end 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 favourable 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 SEG versus 173 million last year, which gives an EBITDA margin of 12.5% versus 11.7%. Profit after tax, 90 million Swedish kronor 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 um the q1 of last of 2020 uh But it must be pointed out, this is the second best, again, the second best quarter one for cash flow from operations that Nerdemand 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.

we go into the divisions sven and we start with extraction and filtration technology yeah extraction and filtration technology a mid-size project focusing on composting wood welding other red dust general dust application etc just for its 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's 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 becoming an increasing part of our offer. We have continued, of course, to book also in EMEA. For different reasons, we have not launched this in Asia and China since it's a key digitalization part of it. Radiance, EMEA. higher volume, positive seismic, efficient project delivers, and all this together has improved the profitability and shown a bounce back as to where we want to be. APEC orders generally weak. Solutions grew somewhat with the medium sized orders in China and in India. still not on a satisfactory level. America, as I hope, saw flat development in orders and sale versus Q1, but there is a solid order growth, including break for the Nerman SAVE system. Relocation of RoboVents, the company we acquired number one in welding in 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 completing 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 objects 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 objects. 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 2.7% currency neutral higher than Q1 2023 at 616 million SEC. Sales reached 636 million SEC. giving an adjusted beta of 103 million krona, which is a 16.2% margin, which is a clear improvement over the 14.5% seen in quarter one 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 weight 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 marketing business continued and that helped to keep up the good margins. If we look at tech fiber, orders received and saved 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. The innovation that we launched in 2023 at ITMA continues to generate additional business. It delivers significant energy saving and it's a part of our theme in the different divisions producing products that can save energy in different way 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, for example, metal recycling. And then we are talking here about magnesium. We are talking mainly on aluminum, 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 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

uh since we're using more automated processes a 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 uh were 486 million which is 7.7 currency neutral and organic down on last year however still rather strong this is this is this is um I won't call it a surprise, but pleasing to see. Sales, as we've mentioned already, clearly lower than Q1 last year, as expected, 392 million kronor. The adjusted EBITDA, due to the favourable mix with more service business and higher margin projects as well, was 32 million Swedish kronor, which gave a margin of 8.0%. down slightly from 8.3% in quarter one last year. Now on to duct and filter technologies.

Yeah, duct and filter where we supply duct work for specialty applications with heavy dust loads and suppression system and also filter technology filters for our internal and external sites as well. For the quarter, we can say that orders received in sales decreased slightly compared to the strong 2023. New orders were secured in what we call in 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 U.S. factories. And that is a result of earlier investments, especially in North House Plant in Thomasville, where you might recognize that we increased the building site. 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 Nordfast specifically, Nordfast 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 Nord Fab Now concept was launched, offering delivery of selected range within 24 hours. So we are adopting to the trend of internet trade and so on, and people not wanting to wait for their goods. 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 the 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 NordFabNow, and it was officially launched on April 8th. The digital quotation order to QTO was launched also in Australia. If you remember that here 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 clam production in Thomasville and there are more continuous improvement and investments going in there. to further strengthen the manufacturing site and distribution.

External orders received decreased by 9 million Swedish kronor, 4.2% for the division in quarter one. Nordfaba, Minardi down is what we could say there. Sales, 207 million Swedish kronor, slightly below last year, 2% only down. But the adjusted EBITDA, due to the improved margins and efficiency in production, 42.6 million, a whole million Swedish higher than 2023 Q1 gave, and a very healthy EBITDA margin of 20.6%. On to monitoring and control technology now, Sven.

Yeah, monitor and control technology for surveillance as well as for monitoring particle 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 GT6000 Mobilis, New order securing biofuel industry and for the incineration of medical waste. Sales increased compared to 23 and that was a large growth scene in NeoMontos. Profitability was negatively impacted by more solutions and the less favorable mixing products. What also created problems was the finished drugs 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 GUSMET and NEO. There was a strong order in taking GUSMET, 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 APEC, 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 organisms 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 40 equipment back to Europe here. In Americas 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 Neomonitor's new redeveloped products. Sales grew from both NEO and Gassman, but AFS had somewhat of a decline. Key activities, investment in production capacity for NEO. We have passed emission analyzer certification field test that will further broaden the use and the applied market we can go to. Niermann Insight was renamed OTC and that's a 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 kroner is a 23% growth versus last year. Sales, hampered a little bit for a couple of reasons, which you've heard, 187 million kronor, still actually higher than last year. But this mix has impacted the margin and we ended, the adjusted EBITDA was 28 million Swedish kronor versus 33 in quarter one last year. That's a margin of very nearly 15% versus 19.3 last year. If we just look at the outlook and some other information, Sven?

Yeah, 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. Divisional performance remains positive. The recent high inflationary pressure and weaker economic outlook will impact customer investment decisions does remain, and it's also effective high cost inflation, salary inflation pressure around the globe. There's 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 through B-Market, ProQuote, the QTO, et cetera. So reasonably optimistic for the reminder of the year. Some other information, we committed to the science-based target initiative there, and doing this scope-free analyzes 99% of the Netherlands greenhouse gas emissions. emanates and are attributable to the user face 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 of July of this year, quarter three on the 22nd of October this year, and the year end report for 2024 is released on the 13th of 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 6 on your telephone keypad.

The next question comes from Lina from Bloom. Please go ahead.

Good morning, Sen and Matthew. This is Lina Bloom from Handelsbanken. Thank you for taking my question.

Good morning, Lina. 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.

Yeah, it's almost like Henry Kissinger says, who do I call when I want to talk to Europe? And... It's a 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 wood application and that is coupled a bit to less investment in furniture and some from private people so that has been so Europe is it's a mixed bag then if you go to some of the recycling if you go to yeah different more structural businesses That's a reasonably good demand, so I'm not too negative. It's been, I think, and now I'm not an 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, a green energy recycling. So 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 versus India during the quarter?

I can maybe answer a little bit on that. In APAC, our largest segment in APAC is the fiber and textile business, obviously. And that is 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 incentivizing investments in the textile industry as well. And 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. And that means that that was why we continued with strong growth in Asia, 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 U.S. right now.

China is to make 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 of the 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 textile 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 a supply chain in there. So it's a mixed bag here. They say very strong demand for the high, high end product that we have. They would probably like to have some of the products 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 their You had 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 um 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 via 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 that I mentioned, welding, wood and paper? Is it possible to say if we are seeing any recovery in these industries or is it too early to draw conclusions?

I think it's too early to draw a conclusion. We see that there is a lot of restructuring in Europe, for instance, they are putting factories 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 through, especially on the high end. On the low end, we are not there, but in the high end, we see that there's an increasing interest for what we call future-proof solutions with energy saving, control systems, efficient supply of the filters, etc. So 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 Netherland will come out stronger in this environment.

Super. And then in process technology, you report that geopolitical turmoil and weakness in certain markets, it's 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 division in the coming quarters process technology division still has a reasonable background they've had a very good call to this quarter so it's a little 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 uh 600 million plus quarters for sales for that division anytime soon, but they almost reached 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. We are growing the auto market very rapidly. We have a very interesting concept. Our combination of MCT and PT solutions is getting more and more known in the market. 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 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 we that part of our strategy is to continue to grow service business faster than the faster than the rest of the business over a sustained period of time that there can be volatility and luck booking large that doesn't mean we're going to say no to large projects when they come along either then then the other part is if 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 one 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's 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 in the over the last decayed in a Polish factory. We are Friesenheim 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 Roborund 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've 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 BIM objects and whatever. Using digitalization, it's a very wide expression but using the technology to be more efficient also in administration so it's it's small things but the simple so it was a very long excursion to say yes there is a 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 sort of 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 targets 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, actually next week with our sustainability manager. So we will be submitting within a week.

Maybe to next interim report.

By next interim report it will have happened, but then there's a validation process as we understand it. There's an awful lot of companies that are submitting these right now, so that can take some time. But I mean this doesn't change the work that we're doing anyway that there's 99% of our footprint is the customers CO2 footprint is customers use and we knew that this is. For us, this has been a key for a long time, this is why there's such a business benefit from reducing the energy that's utilized 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. And that's the key to achieving these SPTI targets, but it's not, necessarily because of the SPTI targets, but 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.

And that's something that's not new. That's what we've been working with over the last decade to do this. And it's also so that we have already, again, over the last decade, worked a lot to lower our internal use of energy. And it's 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. But so it's nothing new. This is more than an administrative thing that we, yes, we submit to this. It's been in our way of working as an environmental technology company. We are focusing in driving down energy use, be more efficient in all things what we're doing.

That's good to hear. That was all for me. So thank you a lot again for taking my questions.

Thank you, Lena. 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 and we will back in the same if you tune in in july and you will have the q2 report then so thank you everybody and have a continuous good day