Nolato AB (publ)

Hello, and welcome to today's presentation with Nolato, where CEO Casey Wahlquist and CFO Paolo Holmström will present a report for the first quarter of 2026. After the presentation, there will be a Q&A. So if you're calling in and want to ask a question, please press star nine to raise your hand, and then star six to unmute yourself when handed the word. You can also send in questions via the form to the right. And with that said, I hand over the word to you guys.

Thank you, and welcome to the presentation of Nolato's first quarter of 2026. Chris DeWalker speaking here and starting on page two. The first quarter, during the first quarter of 2026, we saw growth in both our business areas, despite a very volatile geopolitical situation. The total organic growth, if we adjust for currency, ended up at 3%. And it was a little bit stronger on the medical side with 5% and 1% on the engineer side. That summarizes to an EBIT A of 260. And of course, the EBIT A was strongly affected by currency headwinds as we calculated 7%. We kept our margins on 11% and sustaining them in a good way. And, of course, our strong financial position with very good possibilities to execute our acquisition agenda remains. Turning to page three, summarizing the Nolato group, the group consists of two business areas, the medical solution at 57% of the total and the engineered solution at 43%. Of course, it's two different markets, but behind the scenes, we are doing similar things, of course, with some different growth drivers and the different key needed things. But the two business areas create synergies by combining them to the customer interface. Then we jump to page four, summarizing the first of the medical solutions. And here we can see a 20-year graph of our development. And we are, of course, continuous sustainable growth with global expansion as a target. If we look in behind the scenes on page five, we summarize the different focus product areas. And, of course, then we can start with the in vitro diagnostics, which this quarter had good growth and ended up at 18% of the total business area. This therapeutical areas is a long-term growth market that we think has good potential for the continuous years going ahead. The second one is cardiology, ended up also growth. 7% of the total in this area. This is, of course, the area with the toughest quality demands. Then we have pharma packaging decreasing as a share of the total, 11%. And this is an area that we entered into because we wanted to build ourselves strongly into the drug delivery area. And then, of course, we see the drug delivery increasing from 16 to 70% of the total. This is long-term potential with delivery devices for the large molecules within pharma. Then we saw endoscopy and general surgery decreasing as a total of the total group, ending up at 20%. We saw some stock changes in that market. And then continence care is a high-volume market building for future. Jumping to page six, focusing on the performance first quarter of medical. As mentioned, we increased the sales with 5% adjusted for currency. And as I mentioned before, we saw growth in in vitro diagnostics, higher proportion of new products. We saw a continuous upbeat performance of the drug delivery. We saw, as mentioned before, surgery contracted due to inventory adjustments, and other markets had stable volumes. The margin ended up at 11.8 percentage points. We saw some negative impact in the quarter from growth in newer products that have not yet reached the planned volumes. And, of course, resources for starting up new projects have some negative impact on the margin. The expansion in Hungary linked to the large customer program within the drug delivery systems is proceeding according to plan, and the validation deliveries was during the quarter according to plan. And late in the second quarter, we expect to have our first commercial volumes in that program. Moving to page seven on the engineered solution side. And, of course, here we are advancing our high productivity manufacturing on a global scale, adjusting the customer base and growing in new areas. If we look on page eight, the focus different areas here, we saw consumer electronic grow as a share of the total, ending up at 11%. Here we are doing advanced products for smart homes, so strong growth in that area. The automotive was stable at 23% of the total. On the hygienic side, we saw some stock movements decreasing the share of the total to 13% from 15% before. Others also had some headwinds on the white goods side and also some on the forest equipment. Materials had very strong growth within the quarter. This is, as mentioned, a little bit premium margins, and as a share of the total, it was growing from 18 to 21%. Summarizing the business area's first quarter, we saw 1% adjusted growth, very strong growth for the materials, a full 15% adjusted for currency. We saw, as mentioned before, strong growth in the consumer electronic market where the smartphone products are growing, lower volumes within the hygiene affected by inventories, as mentioned, and stable volumes for automotive. So the margin ended up at 10.6%, and, of course, it was affected by the favorable mix with a higher proportion of materials.

Good afternoon, Per-Ola Armstrong, CFO, and group financial highlights on page 10. Net sales was in the quarter, the 3% growth ending up at 2,357,000,000. Currency headwinds of 7%. Operating profit amounted to 260 millions compared to 271 millions last year, again affected by currency. We had an unchanged EBITDA margin of 11%. Tax rate was within expected range of 22%. Cash flow from operating activities rose to 225 millions compared to 135. The change of working capital was lower than last year. Net investments affecting cash flow decreased to 193 millions compared to 271. mainly because last year included an operating property in Poland of 69 million. Return on capital employed for the last 12 months was 14%. Net financial liabilities in relation to EBITDA on a low level 0.5 times, securing flexibility for expansion.

Turning to page 11, some development on the sustainable side. We have had a very long-lasting focus on sustainability, which we feel support our business offer to the market. So it's creating opportunities for us. We have, during 2025, operated all plants with 100% renewable electricity. We have then eliminated Scope 1 and 2 emissions. meaning that the Scope 3 now accounts for 99% of our total carbon dioxide footprint. We have also launched very ambitious sustainable targets for 2030 that are guide developments in climate circularity. So it's a very long-term focus, and we are ahead of our competitors and feel that this is gaining market positions and possibilities for us if we turn to page 12 focus on the current situation for our business area first of course we see on the medical side continuous growth strategy very high market activity a lot of focus on innovation sustainability we have in our base a very broad customer base with very close, long-standing customer relationship. We are expanding, so establishment of operations in Malaysia, and this expansion in Poland is ongoing. On the NGNF solution side, we are advancing our market positioning, not least in the consumer electronics, and we are on a good way establishing positions in new product areas. We see success in new products, new technologies, mainly data centers. That is very positive for the material side. And we are expanding our operations in Malaysia. And on the overall, we have a very good possibility and focus on acquiring and adding new technologies to our portfolio, creating synergies to our customers. Thank you. We are now opening up for questions.

Thank you so much for the presentation here. As you mentioned, we will now open up for questions. If you're calling in and want to ask a question, please raise star 9 to raise your hand, and then star 6 to unmute yourself when given the word. The first caller here is Adrian Gilani from ABG, if you have the word.

Yes, hello. I would... like to start off on a question since you mentioned data centers in the report, which is probably the hottest theme around right now. I feel I have to ask if you can quantify the exposure you have towards data centers and perhaps how much that part contributed to with growth in Q1.

Yeah, I would say that it's still very limited numbers in a group perspective, but of course it's supporting the growth rate very much, and it's coming from almost very limited sales in that area. So it's standing for a substantial part of the growth.

Okay, I understand. And then on the sort of, I guess, risk of rising input costs, and I appreciate you move these on to customers with some light, but... You have to get a picture of this since you have a lot of petrochemicals on the input cost side, and it's always difficult to track exact prices since there are so many different grades. Can you help us with a rough indication on how much, with current price levels, you would expect material costs to rise going forward?

We have exactly, as you say, exposure to that, and We do see a lot of changes going on right now, and it's a daily change. But we do anticipate that in the near time, we would see an increase of the pricing to us between 5 and 10%. That is the range we do anticipate.

Okay, that's very helpful. And then if I remember my numbers from the last time in 2022 when we had an oil price spike, at the time I think you said roughly 60% of your total material costs were linked to oil in some way and you had roughly three to six months lag on moving this forward. Are those rules of thumb still valid or have things changed since then?

Yeah, I would say that that is an overestimate of the... the fuel impact in our bomb. I would say it's more, if we look on the things that is going on right now and what's increasing substantially, it is more 1.6 billion to 1.7 billion of our cost base that is subject to this 5-10% price increase in the near time scenario. Okay. Thank you.

That's very helpful.

One thing in addition to that Adrian is that as you say this is something that we pass on to our customers and we have been exposed to this from time to time, and we can see that we have a good track record of being able to pass on this to our customers and coming out in the same shape when it comes to margins. But as you say, there is a time lag, and that might be around three, four months that we are affected by not having

transferred all of that yeah I understand and a final one from my end on medical and you mentioned these new products that aren't quite reaching the planned volumes that you had expected can you go into a bit what the reasons are behind this and if there's any structural issues we should be afraid of or if this is just temporary

It should be a little bit nigh on that. The ramping is, of course, a little bit delayed, but during a normal ramp, you see those lower volumes during a period, so it's not off track. It's more the ramp is ongoing and not on profitable volumes yet. So there is no structure, no change in that.

Okay. And anything on why it's slower than expected, or is that just, you know, always an uncertainty? Is it within normal estimate risk, so to say?

I think it's... Close to according to plan, so it's more linked to the sort of introduction to the final markets.

Okay, I understand. In that case, that's all from me, so thank you. Thank you.

Thank you so much for the questions. And the next caller here is the cell phone number that ends with 1008. You have the word.

Thank you. This is Oscar Enriquez from SEB. So my first question, I just want to continue on Adrian's question on the potential mortgage pressure in the near term. So first of all, I think you said the three to four months. So I mean, Q2 obviously will naturally have like a lag effect where you don't have a lot of price increases. Is that how to interpret it so you should see, you know, Q3 more of a sort of normalized effect on the beta level?

Yeah, I think the timing would be more that the effects during April is very limited, actually, and that we will see a spillover into Q3 instead. So that is more the timing we would see.

All right and then just also just to clarify the five to ten percent price increases how should we from that is that across the board or is that a number sort of or a share of your total sales that you're going to push the five to ten percent price increases to customers?

The five to ten percent price increases that is what we are facing from our suppliers of the actual raw materials we are buying, hit by the fuel pricing. And that is an average. It's, of course, different percentages, high ones, low ones, and that is our estimated average we do see going forward the next coming months.

All right, so when you refer to 1.6 to 1.7 billion, that would be the plastic wall mat, I suppose, and you're going to increase, or that you have an increase of like 5 to 10 percent, and those will be passed to your customers. That's how to interpret it. Right, exactly. All right, perfect, thank you. Then I just had a question on the GLP-1 ramp from late Q. I think you previously mentioned that you were sort of breaking even when you started with the validation sales. So just wondered if you could add some comments to the incremental margin profile of the commercial volume. So will you have, you know, a very high drop through or does, you know, cost increase a lot when these commercial volumes are shipped?

Like we have explained earlier, we don't see any large negative effects going forward. But, of course, we won't have the margins expected at more full-scale operation. But we don't see that the margins would turn down dramatically based on that startup. That project is of course one that we're explaining the margin in this Q1 as well because we already have most of the cost base we are going to use to produce that in larger volumes as well. There is a certain negative effect in the start, but we don't see that to be any substantial negative effects going forward.

Got it. That's helpful. Thanks. And then just finally, sort of a broad question, I suppose, but given that you have, you know, very broad exposure in terms of offering and also geographically, just want to hear your thoughts on the political uncertainty. Has this caused, you know, a big shift in demand from your customers, which, you know, could potentially affect volumes near term or Do you feel like you're resilient even in the engineered segment?

It's interesting. We've seen some volatility over time from different segments and markets. Some are in some periods a little bit cautious. Then again, a short time later, they are sort of afraid of some lack of supply, so then they increase. So as an overall, I think it's been volatile but stable underlying. But it could be looking forward. It could also affect maybe single quarters with some stronger or some weaker sales. So there will be some volatility going. connected to this geopolitical situation.

All right. Perfect. That was all from me. Thank you very much. Thank you.

Thank you for the questions. And then we'll go ahead to the next caller, which is a cell phone number that ends with 886. Please go ahead.

Okay. Can you hear me? Sorry about that. Yes. Perfect. Hi. It's Anders at Nordea. I wanted to ask some questions, firstly, on sort of the materials exposure that we discussed. I mean, with quite solid growth in the quarter, it would be interesting to hear you elaborate a bit more on sort of the durability of this growth. I mean, is it mainly a result looking specifically maybe at data centers? you know, mainly a result of specific customer programs, or should we view it as more broad-based exposure in, you know, sort of this end market?

Yes, I think it's a good question, and I think it's a situation where we are going into and have been going into new markets for some time, and it's not connected to a single customer. It's a broad growth across different sectors. Of course, we talk a little bit about the data centers, but it's also some defense. It's across different customers and different markets. And we feel that, of course, it was a very strong growth on a high level this quarter, but we see good potential for continuous growth within this area.

Okay. Very good. Thank you. Sort of just taking data centers as an example, are you able to share anything sort of in terms of how many customers you're selling into in that sort of vertical?

We have numerous customer, numerous different smaller projects that adds up to this. Okay.

Thank you. In sort of surgery, you mentioned some inventory adjustments, particularly early in the quarter, as I understood it. Clarify a bit sort of if we should view this, if you think we should view this mainly as sort of channel inventory normalization, or, I mean, is there any sort of end demand softness here?

We think it's volatility in the supply chain still going on.

And then why do you kind of, how do you arrive at that sort of view, just so we understand that?

Yeah, of course, we monitor the sort of end market movements and what kind of, end products our deliveries are going into, and then we monitor them, and then we compare that with our deliveries, and then we see volatility. So in some period, we are delivering more volumes than the end market is the sellout to the end market, and in some periods, we are selling less than the end market movements, and then, of course, that is movement in the supply chain. All right.

You're doing your homework, in other words. I mean, this is a question that more sort of the rationale, so we understood that comment. Thank you. Finally, I wanted to ask a bit on sort of you talking about IVD growth and sort of newer products taking larger share. We discussed sort of the novo ramp up in Europe, but with some volumes not yet at commercial levels, I mean, Could you break down a bit more what you're seeing, not just in terms of the previous discussion, but by end market sort of IVD, drug delivery, surgery, and what needs to happen for the new product ramps to move from sort of margin dilution to supporting the margins over the next couple of quarters? Is it mainly a factor of volumes, or is there anything else sort of in that ramp up that's important to consider?

Of course, during the early volumes in the new program, we have some additional cost because we are then, of course, making sure that the quality is working in all levels, so we have some extra cost to make sure that we are not delivering anything out of specification. Then, gradually, when the volumes and time elapses, then we can reduce our cost base of producing, and, of course, we get some efficiency of volumes. So that's a normal thing, and now we have quite large programs that are expected to ramp. Of course, it's heating in this quarter. Yeah.

Okay, very good. I appreciate the answers. Have a good afternoon. Thank you. Thank you.

Thank you for the questions. We will now go ahead with the next caller, who is Mikael Elastén from Carnegie.

Yeah, can you hear me?

Yes.

Okay, great. Thanks for taking my question. Yeah, I also have a follow-up on this surgery market area and the inventory adjustments. You've had that quite some time. It would be great if you can talk to us a bit more about this volatility and maybe comment the product pipeline quality and the underlying market growth, what you're seeing there, and also your market position in this area to get an understanding of the underlying factory.

Mm-hmm. So starting in, we entered into this market some years ago with the view that there is changes coming in the market. more robotic surgery coming and so on and so forth. And that change has been a little bit slower than we expected at that time. But of course, we think that change is something that is positive. That's why we entered. The volatility, it's very long supply chains in the cervical market. And then you can have swings with different um inventories in different levels in the supply chain so it's been more volatile than than we expected and it's we could see that for some time coming as well okay um all right uh we have to accept that i guess uh going forward um and uh one thing about the silver input cost that you had

with a bit in Q4. How did that develop, and have you taken care of it on the current silver prices?

Yeah, I think you could say that it's been handled with a lot of work during the first quarter, and we did see effects of that in the beginning of the quarter. at the end we do think that most of that has been taken care of either by adjusting pricing or by having a discussion with the customers of changing materials to other metals that are not that involved in the pricing of the silver materials.

Okay I'm just curious about the How much is volume and price and mixed effects in that 15% growth that you're talking about?

Of course, there are some effects coming from the price effects. But I would say that the larger part of the 15% is definitely coming from volumes.

Okay, good. And the final one is on TACSEC, if you can update us on what to expect for 2026 and maybe also for 2027.

Yes. We commented that after Q4 being 650 to 700 million for the full year 2026, we are still at that expectation, so 650 to 700.

Okay, good to know. Thank you.

Thank you.

Thank you for the questions there. There were all the callers we had, but we have also had a question sent in to us. Can you clarify what impact higher input material prices had on Q1 profitability? Also, what magnitude of impact should we expect in Q2 and onwards? And how does the impact differ between engineered and medical?

Yeah, we have explained the maths behind it and our best assumptions. The effects during Q1 were very limited, and it's an onward effect. We did say most of that is during Q2, and some will spill over into Q3 if it stands where it is right now. So I think that is the explanation we can give in uncertain areas.

Thank you for that. That was all the questions we had. So thank you to Nolato for presenting here today, and thank you all for tuning in and sending in questions and calling in.

Thank you all for your interest in Nolato.

Thank you.