Nederman Holding AB (publ)

Welcome to the Netterman Holding Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now, I will hand the conference over to Speaker's CEO Sven Christensen and CFO Matthew Cusick. Please go ahead.

Good morning everyone and welcome to Nederman Interim Report Q3 2025. If we start with some short summaries we can say that we had good profitability and we continue to invest in our business. We say that we had a solid performance in a very turbulent market environment. Some of the key things during Q3 is that the order intake declined and it's mainly delays as we've been talking about for the last few quarters when it comes to larger and major investments. Especially we had a very slow summer, whereas it came back the business of the long summer holiday. It seems business came back in September in a strong mode and has continued so a little bit so far. The strongest two quarters before bode well for the currency neutral sales growth that we had and it's been the most profitable quarter of this year. despite significant negative currency and tariff effects. We have conducted further investments in product development and launched a few, and we have also focused a lot on operational efficiency. We have strengthened our leading position in industrial air filtration. And now, Matthew, some of the financials.

Exactly. If we start with orders received, as Sven mentioned, orders received did decline. These continued delays on the major investments was the main issue there. The base business was relatively strong, particularly at the end of the quarter. For the quarter three, total order intake was 1.25 billion Swedish kronor versus 1.44 last quarter. Same quarter last year. Currency neutral, that's a decline of 7.1%. The currency actually in itself has a 6% negative impact. It is, of course, the weakening of the US dollar, particularly versus the Swedish kronor. That's the major impact there. Year-to-date orders are 4.18 billion kronor, down from 4.38%. very nearly flat on a currency neutral basis minus 0.3 organically minus 3.2 so we have got some positive impact from the newly acquired companies all the companies we acquired since q3 last year that's olisem in denmark and euro equipped down in spain moving on to the sales um Currency neutral sales and sales growth and organic sales growth, both in the quarter and for the year to date. So we're very pleased with that. Sales, currency neutral up 7.5%. The currency effect very much in line with orders around 6% negative. Organic growth 2.2% in the quarter as well. Year to date, currency neutral growth is still at 4.3% and organically we've grown 0.5% despite this very challenging market with the the longer decision times on these major capital investments. If you see on the bar charts at the bottom, there is a clear 184 million of the sales reduction is purely down to currency movements, which is significant. It has less of an effect on profitability, of course, but it's still not an insignificant effect on profitability, which if I move on, one more slide onto slide seven here, Good profitability despite negative currency effects. The adjusted EBITDA in the quarter, quarter three, was 166 million Swedish kronor. That's up 5 million versus the same quarter last year. The negative currency effects were 19 million in the quarter as well. So this is extremely strong. If we look at the margin, the margin in the quarter, 11.6% up from 11.4%. We would have been clearly over 12% had we not seen this impact from the dollar. It's a lot of ifs and the dollar is how it is, of course, but it's important to have that in context, particularly when you're looking at comparative periods. Earnings per share, 2.27 Swedish kronor. That's up from exactly two kronor for the same period last year. For the year to date, adjusted to beat 468 million kroner. Margin down somewhat 10.9% now versus 12.2%. Earnings per share well behind following the weaker start to the year in terms of total profitability. Solid cash flow performance in the quarter was... was a clear positive. This stable cash flow is despite the negative impact that we do have. When we take these larger, particularly in process technology division, the larger investment projects, the larger projects within the net from a net amount perspective, they very often come with large down payments and we are very often cash neutral throughout these projects or even cash positive throughout these projects. There has been a lack of those and that does impact cash flow somewhat negatively. But despite that, we've got a good steady inflow of cash flow from operations and they're clear positive free cash flow for the quarter despite our continued expenditure on investments in R&D and in our operations around the world. Cash flow from operations, 123 million in quarter three versus 181, which is extremely strong in quarter three last year. Year to date, 198 million. So it's picking up now. Net debt position we have following in Q2, we saw an increase in net debt due to dividend payments. And we acquired euro equipped back at the very start of Q or the very end of Q1. That has come down somewhat significantly. We are nevertheless higher than we were 12 months ago. But we can see, excluding RFS16, the debt is reducing right now, despite significant investments. If we move on and take a little look division by division, Sven, we can start with extraction and filtration technology.

Yeah, extraction and filtration technology and a little bit of the highlights during the quarter. As you've seen in figures, the orders received declined after two very strong quarters in the beginning of the year and it was especially during the summer months. It picked up as mentioned before in September and we hope that that will continue. Strong order intake in Q2 led to a sales increase. So we had a good sales in the quarter and we had a profitability improvement with the higher sales and also with the operational efficiency we had been talking about earlier. If you go to EMEA, there has been a bit of a weaker base business. And contradictory to that, a number of major orders that has been discussed earlier, they came in in September, and especially a large defense order in the region of Spain. Americas had order intake slowing down. It's been mainly in U.S., which is obviously the biggest market. It picked up again in the latter part of the quarter. APAC, slow base business growth. Some of the distributor channels saw some growth and Australia, where we are investing in new personnel and new structure, we've seen a continuous stable development. Some of the key activities was participation in Schweizer & Schneiden. It's a world leading trade for cutting coating technologies. We also participated in the AWFS trade in Las Vegas. And we were showcasing especially the Nerman Save. It's our digital system saving energy. And it's an innovation that has given us some rewards, not only rewards from different trade fairs, what you call it, competitions, but it's also selling very well. We have continued to invest in the innovation center at the new facility here in Helsingborg, and it's fully booked for the coming six months. So we've had to increase the number of employees there. And we have also continued our development product and investment in new product development which has been launched and there will be further launches later in this year and during the first half of next year.

Some financials for extraction and filtration technology, then order intake, as Sven mentioned, did decrease in the quarter. It picked up in September, but it nevertheless is its currency neutrally down 12 percent versus what was a very strong quarter three last year. It must be pointed out. Sales, nine percent. Even at prevailing rates, we actually increased sales by over 20 million to 655 million Swedish kronor. The currency neutral growth is actually 9%, which is very good. And a beta increased to 91 million versus 78 million there. This is the division that's impacted most in in in absolute terms by uh the currency impacts there's there's of course the translation effect of currencies in for that impact every division but in in enft we actually produce in and in some of what we produce in europe is sold in america it's not a it's not a major part of our american sourcing that comes from particularly sweden but it does impact negatively they were a down to the tune of around 7 million kroner in the quarter, just purely on currency. Despite that, the margins increased to 13.9% versus 12.4% last year. We see more efficiency in our operations. We've invested in our factories in Poland, here in Helsingborg, at Robovent in the US as well. And we're definitely seeing margin improvements due to that. So overall, a very, very strong quarter for the division. if we look year to date the beta is it has even increased there that we're up to 266 million versus 260 at the same point 12 months ago again despite significant negative currency effects margin still in line and and uh clearly right now better for the last three months than it was 12 months ago moving on sven on to process technology division yeah process technology and for the first we had

Few large orders, as we've said, there's a hesitancy to book the larger project, but we have had a solid base of small, mid-size orders, and what's also very pleasing, we continue to have double-digit growth in our service business, and that also secures that we have a good relation with our customers but it's a known pattern if you're not doing your major large investment you have to keep your existing factories up running and we are doing very well here and you can see some of these things that are happening is that we are old steel mills and us are refurbished etc so some things happening from tariff orders and sales and profit were very positively impacted by euro keep it seems to be a good integration in the business and where we have strengthened our position especially in the the ibericas and also a little bit in south america on these recycling and also other parts of this hot air application that they are working with and they have been a partner for Nedermann for a long time and get their supply mainly from our German factory. If we look at textile and fiber, there is definitely an overcapacity currently in spinning mill and we see that we are taking market share. There are some of our competitors that are declining rapidly and that is due to our new more modern systems. So the order intake grew but from a low level. Foundry and smelters activity in there such as scrap metal smelting and battery recycling are improving. All types of recycling business is interesting for the moment and here we have technologies and we've had it for decades we are using that so the long-term outlook for metal recycling is positive but again we don't know when they will do the larger investment but it's more likely that they will come with the interest in the circular economy. Evaluation of relocation, sourcing and manufacturing of some product lines in certain markets is ongoing and that means that we will maybe manufacture more in Asia for the Asian markets. In customized solutions there has been a slight increase in orders received and we have executed on a major green steel order that we got in Q2 and it's been getting attention in the market with our new more modern solution to this and it might lead to more orders in the future or we believe it will so. The key activities we have... increased the production rate for energy efficient farm for textile plants and amid continued order growth and it's been an enormous interest of this little engineering success where we save a lot of energy for these big spinning mills, weaving mills etc. We have a continued development of the service business and including the digital product range. And we've seen significant success here as well, where they see possibilities to modernize that. Also, they're existing not only on the new green fields.

When it comes to finances for process technology, orders received increased currency neutral by 3.4%, a 4.6% organic growth decline. So Euroequip, the acquired company, contributed positively there. Sales 11.5% up versus the same period last year, currency neutrally. Again, Euroequip contributing there. Adjusted a bit slightly lower than the same period last year. There is some currency impact even for this division. 43 million versus 46 million last year is 10.2%. which is behind 11.4%, which it must be pointed out is extremely good, was an extremely good quarter last year. In Q3 last year, we did close out a number of projects at very good margins that boosted the margin. 10.2% for the quarter is still clearly higher than the average for the year to date. So it's heading in the right direction there. 8.5 percent for the year to date and you can see for the past 12 months we're still we're still at 9.3 percent a bit a beta margin which is very good for this division one of the main things that boost this is the good strong service business sales which continue to grow move if we move on once more to duct and filter technology Sven yes for duct and filter the highlights of development we had

decline versus last year Q3 in order intake but it was an increase from a week of Q2 this year so it moves in the right direction. It was of course negatively impacted by low overall activity and the weakening in US dollar customers appetite to commit major investment project remains dampened and we see that the small mid-sized business is running but we are lacking some of the large projects we have had over the last few years If we look at Nordfab, US orders received and sales increased. We had some new orders secured for EV battery manufacturers and in EMEA orders received were behind. Again, 2024, but exceeded last quarter. So it's moving a little bit in the right direction. And as we've said for the other division, activities increased in the last month of the quarter. APAC saw lower total orders in Q3, though Australia developed positively, and we are now moving forward. in the right direction in Australia. Monado's orders received in US started to grow again and we had a large framework order received as well as large orders from the steel industry. I mentioned that before that it's a bit contradictory. Old steel mills in US are due to the tariffs being more profitable to upgrade and keep going here. So if it's good for the world economy, I doubt, but it's good for our business here. We've got some significant order. Key activities, the new production and warehouse facility in Thomasville is now ready for use. It will increase the capacity for large diameter pipes. It will definitely increase efficiency and we have ordered the new 420 MWh solar panel facility and that will be installed on the roof of the new building and that means that we will when fully installed have a facility that is nearly carbon neutral. Preparations are underway for the establishment of a central warehouse for Nordfab in Texas and this is a project that is based on the Nordfab Now where we then can service our customers in Texas or not only Texas, but in the southern region significantly better than we can to do. And we expect that this is up running. We will have very short lead times also in the southern region and that will bode well for further growth in our orders.

Financials for Ducton Filter then. Orders received, as you mentioned, it declined versus the same period last year, but increased versus the previous quarter. 6.2% currency neutral growth. The net is negative in the quarter. Sales very nearly 0.6% down currency neutral. There is a currency impact with a large chunk of the sales in this division being in North America. The adjusted EBITDA 37.4%. million versus 44.9 in the same quarter last year. There's, again, a negative currency effect that's not insignificant. It's around four million on this division too. So approximately half of the reduction is currency related. The margin is still at 18.6%, which is, it must be said, historically speaking, rather strong albeit behind what we've seen in the most recent quarters. It's largely volume related. We have got good efficiency in the factory and operations here. But nevertheless, 18.6% and then 19.8% for the year to date. On to the fourth division, Sven, monitoring and control technology.

Yes, and again, the highlight, development during the quarters. The orders received declined a bit and that's burdened primarily by the development in America. It's very much so that some of the technology chains and the new products they are working and are received very well but we are still lacking some large orders here as well. We have also seen the difficulties between Canada, U.S., and also the close down since GASMAT has a lot of public customers, universities, customs officers, police, etc. And their ability or willingness to invest has been difficult during the quarter. We've seen a strong sales growth, especially in APAC for Neo Monitors. We have also started work to strengthen business model through reviewing supply chains and optimizing production setup. And that is a work that continues. In EMEA, we had good order intake driven by customers winning a number of major orders. We have also enhanced production efficiency near monitors and we've seen that it gives good results. It improves our margins and it improves our supply capability, which also helps the sales when we have not so long supply times, especially to Asia. Again, our, in November, acquired Olusen received large software orders. In APAC, we had good growth, as mentioned before, for NeoMonitors, and we have also the technology hub in Shanghai that we started a few months ago, almost a year now. continues to attract strong customer interest here we can do service we can do special shows we can again show our capabilities and that has shown a good result in the market In America, orders received did decline. The process of auditing and certifying Auburn's product line continued, and it will give an improved platform for Auburn's expansion in APEC and in media. Currently, we have halted some of the... plans that was to further strengthen our position in China but as you have probably heard seen more than you like that with 100 125 percent tariffs on American stuff going to to China um It's been a bit difficult to grow the business currently, but we are planning for that and we are also setting up capabilities in South Korea to expand in the region. Key activities, the launch of Orbion Pimpulse Portable Test Unit, launch of the OLSM Data Hub, and final phase of expansion of Orbion's Boston facility with more streamlined manufacturing and also higher capacity and new product line.

financials then for monitoring control technology order intake down versus the same quarter year last year 177 million versus 208 this division did see a pickup in the same way as enft this division saw a big pickup in september versus very slow uh july and august so uh again the question is will that continue and if it does uh we can be quite confident that that will impact profitability positively Sales currency neutral grew by one point three percent in absolute terms, down to one hundred and eighty two from one hundred and ninety million and a beat. Twenty nine million versus versus 30 last year. It's currencies that make a slight impact there. Margin maintained at 15.8% despite a drop in sales is quite pleasing. That's a result, not least of, for example, these improvements we've made in the production efficiency in NeoMonitors. For the year to date now, the division is at 16.3% EBITDA, and that's versus 16.6% for the same period last year. So if we just take a minute or two on the outlook then, Sven, going forwards.

Yeah, the demand has been and remains dampened. The backlog is slightly lower than 12 months ago. Our base business, growing service business, strong digital range enable us to assert ourselves well in the current turbulent market. We are gaining market share. Orders received picked up significantly in September. And if that trend continues, that would lead to positive results for development in Q4. We continue to invest in our operational efficiency and development of our product range. But again, in the world, we're growing insight into the damage that poor air cores near a month has a key role to play and a strong potential continued growth.

We've released some dates for next year. We will release the year end report on the 12th of February, 2026. The other dates there, I will not read out. I will not bore you by reading out, but they're available for everybody. They're published in the report and also in this presentation. But with that said, then, I think we can open up if there are any listeners who have questions they would like. Please go ahead.

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. There are no questions at this time, so I hand the conference back to the speakers for any closing comments.

Then thank you. And apparently it's been crystal clear or crystal clear as copper sulfur, as my own chemistry teacher said. So thank you for taking the time listening to us. And we'll be in touch again after the next quarter. Thank you.