Ratos AB (publ)

Welcome to RADO's Q1 Earnings Call 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO Gustav Salfordand and CFOIR Anna Vilaguric. Please go ahead.

Good morning everyone and thank you for joining us today. I will begin with a brief overview of the quarter and then Anna will go through the financials in more detail. Overall, we delivered solid growth in what continues to be a mixed market environment. Net sales increased by 3.4% and adjusted EBITDA came in at 460 million SEK, corresponding to a margin of 9.3% and an EBITDA growth of 21%. Adjusted earnings per share was 67 öre, an increase of 81% compared to last year. We had a strong start of the year in our industrial product companies. Diab and HL Display both posted healthy growth. On the industrial services side, the quarter was more challenging. Both Nitec Group and Aledo faced softer demand and tougher market conditions. Our results for the quarter was negatively impacted by two main factors. First, lower volumes and gross margins among our technical consulting businesses. And secondly, at speed, we continue to invest in automation to increase capacity and efficiency over time, which temporarily affected profitability as we absorb these investments. During the quarter, we also launched our strategy Rotos 2030, The strategy reflects a clear direction. Ratos is returning to its roots as a focused long-term investment company, owning both majority and minority stakes in Nordic companies. For the 26-28 period, we have three strategic objectives, and I'll walk through each one and highlight what we delivered in the first quarter to support them. Firstly, we're building a more focused Ratos. In Q1, we launched a new strategy, provided greater clarity on the portfolio, as you also can see in our Q1 report, and also exited Expin Group. Steps that reinforce our focus and where we allocate our time and capital. Secondly, we're driving profitable and capital-efficient growth through organic initiatives and add-on acquisitions. And in the first quarter, we saw significant orders for Able, TFS and Precise Infra. We delivered organic growth and we generated a robust earnings contribution. We also completed HL Display's add-on acquisition of Dynser, which supports both growth and value creation in that business. Thirdly, we'll further develop our ways of working as a company, and during Q1, we increased our external presence on portfolio company boards, including the appointment of Daniel Körberg Siraj as chair of the board for Precise Info. We have clarified how we categorize our portfolio and where we'll focus going forward. The purpose is to create a clear and more transparent structure for how we manage the companies and how we track progress against our financial targets. At the high level, we now distinguish between core and non-core companies. Our core portfolio is where we will concentrate ownership attention and capital to drive profitable capital efficient growth over time. And if we now turn to our companies, and especially the companies in the industrial products, we saw that performance developed well this quarter, especially for Diab and HL Display, and all companies delivered organic growth. Diab delivered a strong 16% organic growth in the quarter, supported by increased demand from defense customers, and profitability improved on the back of the higher volumes, combined with lower depreciation. We also saw strong development in return on capital employed. HD Display reported 4% organic growth and we saw positive sales development in North America. And as mentioned earlier, the acquisition of Dynastar was completed during the quarters, strengthening our offering and supporting further growth going forward. Ladille delivered 1% organic growth driven by the indoor business, while outdoor business continued to face a more subdued market environment. Turning to our industrial services companies, the quota was more challenging, reflecting a cautious market environment and low utilization in parts of our consulting businesses. a later reported a negative minus four percent organic growth and the market remained cautious and utilization was lower which affected performance at the same time we continue to strengthen our offering and we were awarding a contract to deliver a new ai based platform solution which is an encouraging step as we build capabilities for the future nitech delivered a negative minus two percent organic growth We saw utilization challenging driven by uncertain market conditions where customers continue to be cautious with new product starts. Speed grew 12% organically, supported by continued momentum in our logistics solutions and new customers. And profitability was impacted during the quarter as we progressed automation projects. That our investments we believe are important to improve capacity and efficiency over time and prepare for growth and modern improvements. TFS delivered 18% organic growth, primarily driven by an increased share of pass-through revenues, while service revenues were down. Importantly, we received a major order of approximately 350 million SEC, supporting a stronger development of the business going forward. Moving to our infrastructure companies, PrecisInfa delivered 2% organic growth in the quarter and profitability was somewhat lower, mainly driven by product mix and timing effects. But we continue to see a robust order backlog, which supports good visibility for the coming quarters. And now moving on to our minority holdings. Starting with Abel, the company was awarding a major framework agreement with Equinox. The agreement has a fixed duration of five years with options for extension, and the total value is estimated at around 20 billion Norwegian kronor over the fixed period, an important win that supports long-term developments. For Sentia, the share price has increased by more than 40% since the listing in June 2025, We also expect to receive a dividend from Sentian Q2 of approximately 220 million NOK, corresponding to Ratos share. And lastly, a brief update on our non-core consumer companies. KVD delivered minus 3% organic growth impacted by lower used car volumes. At the same time, Forsberg Fritidscenter performed well with a strong order backlog and solid sales and results. Oase Outdoors reported 12% organic growth and the business unit built inventory ahead of the peak season in the second quarter, which is consistent with normal seasonal preparations. And Plantagen delivered 4% organic growth with growth in both the Swedish and the Norwegian markets. And the profitability was impacted a bit by product mix and higher energy costs during the quarter. And with that, I would like to hand it over to Anna for the financials.

Thank you, Gustav. And without further ado, let us dig into some more details. So really on the positive side, this quarter, again, a second quarter in a row now, we displayed positive organic growth, just about 3%. But also if we look at the 12 months rolling trend, this also now is in a positive trajectory. Also, another quite positive item in this quarter is that our EBITDA improved by 21%. This is from a meaningful impact of the Sentia contribution. And we will come into more details from that, but just a reminder that this Sentia holding was not part of our Q1 2025 numbers. So here we will break down the net sales and adjusted EBITDA in different components, starting with the organic one. As mentioned, 3% organic growth. Unfortunately, it was a negative contribution on our EBIT. And this stems predominantly from two components. One is being speed, for which we do see these automation investments, which we are taking through the P&L. And the other one is Nitech Group, which actually had organic decline. And here we see a high drop through straight to our bottom line. Moving into M&A components, which actually was margin accretive, we do see Dynser effect, even though it was small. It was just one out of three months, while the other two were actually some disposals and acquisitions within Classis Infra. out of which that disposal actually was loss-making, hence a really strong contribution from the M&A side, which we do not expect to see in the coming quarters. Moving into FX, as seen in the previous couple of quarters, we still do see negative impact on the top line, stemming from both US and Euro strengthening towards these currencies. On the EBITDA side, on the other hand, it was quite neutral, even though we should remember that our global companies, Diab and HL Display, actually did see quite a negative impact on their EBIT from FX, predominantly strengthening towards US dollar and euro. And here we can clearly see that meaningful Centia contribution, which is 150 basis points accretive to our margin. Also, what surprised us positively was Able. We are moving towards a year for which we, based on the project that we have, do expect Able to come in lower in revenues in 2026 versus 2025. On the other hand, we did see good project execution in Q1, and hence a bit more in revenue recognition for the quarter, supporting us positively in the bridge. And here we have now increased our transparency. So we are reporting company by company in our interim report. So bear with me. It's a lot of moving parts here. And I would just make a couple of comments. I would say again, industrial products doing really well, both HL Display and Diab. And again, remembering that we do have a currency headwind in both of these companies, which is quite significant and still a very good contribution to the EBITDA. We also see this highly negative impact in Nitec Group in speed. For TFS, just one comment worth making here. We see a healthy top-line growth, plus 31 in Net Sales Bridge, however, a negative contribution to EBITDA. And as Gustav mentioned, we see good growth in so-called pass-through revenues. What that is, is us providing third-party services to our customers for which we are not getting any EBITDA contribution for. Our service business is actually down and hence then lower profitability stemming from that. When it comes to consumer companies, KVD, Plantage and Oase Outdoors, as you can see, not a lot of movements in there, quite neutral for the full quarter. And again, our peak season is in Q2, so that's something to look forward to. And one last comment is that we saw a positive effect coming from the corporate line. It's a twofold explanation. One is that we have dismantled the business area level. Hence, we are running at the lower cost rate currently. And the other part is actually coming from lower transaction costs this time around versus previous previous year. Looking at networking capital, I would say stability is the name of this game. If we look at both absolute and relative terms compared with last year, we are quite flat. When it comes to sequential development, we do see inventories as a preparation for the peak season in Q2 for many of our companies. Inventories are up quite significantly on sequential basis, but they were offset by other receivables and payables. Hence, the net working capital in absolute terms was quite close from the level we saw in Q4. And that effect in other receivables has to do with us preparing for our dividend payment. Looking at the cash, I would say that this is probably the thing that we are least happy about in this quarter for Q1. It has to do with a couple of differences, and we do have the comparison difficulties versus the same period last year. as Q1 in 2025 did, of course, include Centia. And also there were some reconstruction effects from Plantarsen in that number. But quarter isolated, I would say, some normal behavior when it comes to networking capital buildup for some companies. We also had some timing issues when it comes to our industrial services companies. And on top of that, we did get a negative effect from our currency loan hedges. And that had to do predominantly by Norwegian krona strengthening in the quarter versus SEC. Looking at the LTM trend, however, as you can see, it is a quite healthy cash conversion. Net debt, quite similar from previous quarters when it comes to leverage, 1.6 times. We see again normal seasonal pattern for which the Q1 is a step up. not least due to the cash situation I just described versus previous year. It's a slight decline in overall net debt. And again, we are at the lower end of our targeted range of 1.5 to 2.5 times. And just as a reminder, we do not include our shareholding incentive in these numbers. If we would just theoretically and mathematically include those, our leverage would be 0.3 times, hence indicating a very stable and solid financial position, which gives us a lot of maneuverability going forward. Looking at return on capital employed, which is one of our external financial targets, if we first turn to the golden line, We see definitely an impact of us disposing or listing Sentia. As you might remember, Sentia as a construction company, it's more volatile when it comes to cash flow and networking capital. Hence, we have become much more stable when it comes to those metrics. On the other hand, we did have quite nice return on capital employed, and that's the effect you can see from Q1 and onwards that it's declining. But I would rather us comparing like for like, which is then the bottom line. And as you can see, the trajectory is positive. We are, of course, still not happy and our ambition is to do even more. But this time around, it is nice to see that it's actually moving in the right direction. And last, but what it all boils down to is, of course, the EPS. I think also it's nice to see that we have EPS accretion throughout the P&L. And if we first turn to the left-hand side graph, this is based on group total. That is how we historically looked. And we see a very healthy EPS growth from Q1 last year to Q1 this year, more than 80% growth. But also if we look at the LTM line, that's also a 16% improvement, which is great to see. And then if we look at the table on the right hand side, here we've tried to do it like for like, just so you understand where this improvement is coming from. So this is based on continuing operations. And again, adjusted EBIT, a double digit improvement. Net financial items, we also see a double digit improvement as we have lower financing costs and looking at taxes, another item actually highly supported this quarter around. Even though I just want to warn you, you shouldn't see this tax rate of 10% as a normalized tax rate. I would say our effective tax rate is estimated to be somewhere between 17 and 19. So unusually low tax rate for the quarter has to do with not least growing and having good profits in countries where we have large tax losses carried forward. So all in all, it's a substantial EPS improvement, and this is a testament of value creation this year versus past year. And with that, I would like to hand over to Gustav to take us through a summary.