Sdiptech AB (publ)

Yes, hello everybody and welcome to our Q3 report 2026. I'm Anders Mattsson, CEO of Stiptik and I will present today together with our CFO Bengt Lægström. I start with a short introduction to Stiptik for any new listeners. Stiptik acquire, develop and create a long-term home for niche companies within attractive infrastructure segments. Today we consist of 35 companies, that's two more than last quarter, and we operate in a decentralized structure and each company is responsible for the day-to-day operation. We divide the group in our four business areas and each business area has clear underlying growth trends for the future. On the rolling 12, Stiptic as a group has 4.9 billion SEC in revenues, roughly 1 billion SEC in adjusted EBITDA, and an adjusted EBITDA margin of close to 21%. And these are numbers excluding all companies being divested during the last 12 months. Coming into the third quarter, I start with some highlights. On a strategic level, we experience a continued solid demand from our diversified portfolio. Our focus on the infrastructure segment is truly a strong driver for us as a group. We work actively with our businesses to balance the growth opportunities with the working capital requirements and also the CAPEX requirements when we are growing at this pace. We have a continued good M&A pace, two acquisitions in Q3 and last 12 months we have acquired five companies. Looking at the financial, we had a strong demand resulted in an organic net sales growth of 13% and a total net sales growth of 19%. We also see a positive momentum for the profit development with an adjusted EBITDA growth of 11% and organic adjusted EBITDA growth of 6%. Cash conversion of 62% in a quarter and last 12 months at 81%. We have fluctuating cash conversions over the quarters, but it's important for us to stay between 70 to 90% for the rolling trend. And we had a little bit lower cash conversion in the quarter. It's primarily due to inventory build up for a good order position. And we will come back to that later as well. On a final note, it's positive that all our four business areas are growing organically in Q3. So looking specifically at our net sales development in the quarter, net sales came in just about 1.3 billion SEK, which is 19% growth in the quarter. We had a strong organic sales growth, so 13%. In the quarter, we had a positive currency effect for the first time in a while with 1%. And then approximately 5% of the growth is coming from our M&As. In the quarter, all our four business areas showed a good sales growth and a strong demand, especially from supply chain and transportation and energy and electrification. Supply chain and transportation had some specific large orders in a quarter that boosted the sales figures. And I will talk more about that under the supply chain business area. And if looking at a company level, the majority of our companies showed organic net sales growth, which is a positive indication of the good demand overall in the portfolio. If we're looking at our geographic distribution of the sales is no significant change there. It's the UK, our largest market with around 49% of the sales. Preparatory products is 68% of the total sales and the service and installation are then as we always say primarily on our own proprietary products. Continue to our profit development in the quarter adjusted EBITDA amounted to 261 million SEC which is 11% growth in the quarter. It was a solid organic growth of 6% and the currency effect was flat so approximately 5% is coming from the M&A growth. In the quarter all business areas showed adjusted EBITDA growth and especially strong development in supply chain and transportation and safety and security. The growth in supply chain is mainly driven by the acquisitions. Water and bioeconomy reported a minor growth and it's positive with an improved performance from this business area as well. Coming down to the margin, adjusted EBITDA margin amounted to 20.0%. That's down from 21.3% last year. And there are primarily two reasons for the decline in the margin. The first one is our sales mix with a high net sales growth. The mix has changed quite a lot in this specific quarter. The second reason is specifically in supply chain and transportation where we had the largest decline or roughly 2.5 percentage point. And the main reason is a large drop in margin from a specific company in the business area. And I will talk more about that as well later when I come into the supply chain part of it. And by that, I hand over to you Bengt.

Thank you Anders. and I will continue with details on the cash flow to start with sorry where's the slides are jumping cash flow generation and we have as under said then we are in the middle of our preferred span of 70 to 90 percent on the last 12 month basis however it was weaker in the quarter 62 percent and the main effect are two you could say we paid in comparable terms more taxes in Q3 than we typically do so we paid less earlier in the year but looking at year to date or the last 12 months we're actually lower than last year but in the quarter we are much higher so that affects the cash flow on that line item and then the major though contributor to the weaker cash flow is the build-up of working capital And we have some strong seasonal companies in the group. Our Finnish Hill Tip with their snow plows and salt spreaders. And they are of course building inventory in order to sell as much as possible now when they are in season. And they also had some big orders coming in and building up both working capital and accounts receivables. And all in all we have a good momentum in the sales, especially in the later part of the quarter in September and that built accounts receivables as well. So that's really the main contributor to this weaker cash flow. But the good thing about that is that it's because of increased sales in the group. Looking then at the free cash flow and the difference is that then we also consider the capex spending and the leasing amortizations. So that free cash flow is lower than last year and that's because of what we saw on the previous slide, lower cash flow from operations. but also slightly higher capex. But we have said previously this year, and we repeat that, that we are investing in a number of companies, not the least in the water and bio, but also in other companies in other business areas for operational efficiency to meet a higher demand. And also like many others, I guess, we invest in IT systems to keep up with that as well. So that has been driving capex. We are slightly above our level of roughly 3% of sales in CapEx. So far this year we are 3.8. So a little bit high, but still it has its reasons. Looking at the earnings per share that improved compared to last year. last year but it could also one which is obvious in the chart as you see is that quarter four last year was pretty high and we still benefit from that so you could expect that last 12 months earnings per share perhaps will not increase as much in the next quarter looking on the last 12 months basis But still we think that's a good development and it's the profit generating of course, which is the backbone of that. And I could perhaps also say lower interest rates. And then that all in all effects then of course the leverage ratio which increased a little bit to 2.95 in this quarter and that's because again of the weaker cash flow and the build up of working capital, but also that we made two acquisitions in the quarter, which we will come back to and present. They represent roughly 40 million SEK in a run rate profit, which is roughly some 40% of what we have expected for this year, but it's only one quarter. So of course, that makes a little bit of a hike in the in these numbers since we only count the profit since they joined us in August and September respectively but we put the full debt in this equation so but we have said that as well that it may jump a little bit up and down through the quarters and that we have our ceiling of three and a long term slowly but steady decrease of Looking on the right-hand side of the chart, you see some return KPIs. To start from the top, we have the classic profit over working capital. And that has been going down slightly since last year. And again, because of the buildup of capital employed through working capital, but still at the high decent level. Our operational row C, which is the return on capital employed in the companies so that's excluding any goodwill or other immaterial assets at the acquisitions at 60% same reason there why that's a little bit lower and then finally at the bottom you have the total capital employee and the return on that one and that's increasing And we said already a year ago when we announced that we should divest a number of companies that the return on capital employed will increase because of that, but also to have a stronger, more stable portfolio. So that's slightly improving and will continue to improve slowly but steadily. And as an extra note, you could say on the balance rates debt items since we have done some activities on the debt portfolio during this year, how that has changed in this chart since 2021 then that First of all, you could say that as it feels in this chart that the earn-out debts, the provisions for future earn-out payments have lowered both because we were a little bit low on acquisitions a few years ago, but also that we reduced the use of earn-outs in the acquisitions. and have that in the shorter term than five years which we typically have had but now perhaps more three or four but also to a lower amount. So that's good but it has been a very good tool for us to fund our acquisitions through the years. Now we have the capabilities of our financing so that becomes a bigger part of it and pay them upfront instead and so we have reduced that and then as you remember in March this year we redeemed the preference shares 175 million in nominal value which of course means that the earnings dilution becomes less so more earnings per share and we also repurchased some of the outstanding bonds at that time and 250 million of that 800 in total In September this year we redeemed or bought back the remaining part of the bond, 550 million, and that has affected our profit after interest rates paid in this quarter since we had to pay a penalty fee of doing this early redemption. But pure mathematics said that that was rational to do since the interest rates are much lower on the new bond that we issued and we also issued a lower volume, only 400 million. but we could reduce the margin on that bond from 490 basis points on the old bond to 200 basis points on the new bonds or less than half. So that was easy math to make it a value for everyone to make an early redemption and then come up with a new one instead. So all in all that means lower interest rates for the group going forward. Right, then I hand back to Anders.

Yeah, thank you, Bengt. I will go through then our business areas. Start with supply chain. It's been a lot of happening in the business area. It was a good momentum with 27% growth in adjusted EBITDA. And several of our largest companies in the BA, including GH, who's making the refrigeration, the transport refrigeration units, ELM, making the specific attachments for forklift, Certus, our port automation company, and Hiltip, winter snow maintenance products. All of these four had a very good development in the quarter. From a sales perspective, the growth of 27% is of course high, and we have two main reasons for this. The first one is for new acquisition coming into the business area and adding top line growth. Then we have Another reason is in Hiltip. Hiltip has, during the year, entered into a new product segment for highway salt spreading equipment. Primarily, they've been working a little bit more on the smaller roads, parking lots, etc., and now entering the higher or the bigger product for the highway segment. And that segment is growing quite a lot. And Hiltip partly delivered a large order, including salt spreading equipment and the truck itself. And that of course boosted the sales number in the quarter. This big order will continue to be delivered in quarter four, but long term we don't foresee to always include the truck as part of the equipment sale for these kinds of highway salt spreading equipment. The margin, if we look at that, it declined from relatively high 21% to 18.5%. One reason is the larger order in Hiltipersvej affecting margin down slightly. But the main reason is Mekno. It's our Italian company. And one part of the business model is to sell fully equipped train. including specific, unique grids and tramways. And these trains, they are big and complex, so it takes usually one year to build, and the cost for these key components has increased significantly during the year. And unfortunately, we have not been able to charge that to the customers, so it's been affecting the margin a lot. But the company is of course learning from this, taking action to improve the situation for the future. But that's affecting the margin in the quarter. And as Bengt also mentioned, we have had an inventory build up and this is specifically in this business area. Hiltip has been building inventory and that is not only for the new segment, but it's also for a strong order book in general for Q4. And Certus, our company within the port automation, they have also increased inventory for future deliveries. And there is a specific reason for that because it's a risk of a component shortage of a specific camera. So they needed to buy that for stock in quarter three. I'm also glad to present that we have welcomed two new companies in the business area AUT and Vale Engineering during quarter three. AUT is a company based in the UK, annual revenue of approximately seven million pounds and a stable profitability. The company design and offer customized wheel and caster solutions for many different specific logistic applications. An example in a cold storage You need a specific solution due to the specific material for frictions on the floor, for example. And they do all these kind of customized specification and solutions. They have a strong position in the UK and they are primarily selling domestic. Another good thing about the company is that they have a pretty stable revenue and profitability pattern over the year. And that is good for us as a group. Another company then was Vale Engineering that we welcomed into the group, also based in the UK, annual revenue of approximately £5 million and a good profitability. They develop and manufacture equipment for road and infrastructure maintenance. The good thing here is both for the winter maintenance, but also for summer needs. They also have a strong position in the UK and primarily they are servicing municipalities all around the UK. And we got to know Whale thanks to our ownership of Hiltip. They offer more summer products and they also have a primarily a trailer mounted solution as you could see on the picture. And that is different. It's a different application what Hiltip sell today. So that's a good thing as well. Then we're leaving supply chain coming into energy and electrification and they had a very strong development or they have had a very strong development over the year and they continue to perform good in the quarter. 17% growth in sales and 9% growth in adjusted EBITDA. And we experienced continued strong market drivers which creates this good momentum for growth. For example, phase three continues to perform very strongly and they are benefiting from increasing demand for reliable power distribution. They also, of course, have a little bit of a positive effect from the data center growth, but overall steady growing in other applications areas as well. And Rolex is also performing good. They are supported by the ongoing electrification of the infrastructure and the vehicles and primarily selling their business to business solutions, the product, the service, the software attached as more of a to the business customers. The decrease margin in the business area in quarter three compared to last year is mainly due to one company. Our Swedish company Unipower had a one-off project last year with a very high margin in that specific quarter. Then we're moving into water and bioeconomy. That was a positive quarter with a net sales growth of 6% and adjusted EBITDA growth of 2%. We have had a number of quarters with declining profits, so it's positive to see that we now return to a profit growth in the quarter. A company that is performing well is our largest company in the business area, Augur. Augur is a specialist provider of drainage water mains services, primarily towards insurance customers in the UK. And as we reading and we see a lot the challenges with the water and drainage systems in the infrastructure today continue to raise. And we also see that so we have a 12% growth in profits for this company in the quarter, which is very strong. As we said previously as well, we have invested in several companies in the business area to strengthen the foundation for the long-term growth. It's too early to say that we now from this quarter three and onwards only will see growth, but we are in a much better situation now compared to one year ago and the companies are much more healthy to explore and take advantage of growth potentials in the market. Then we're moving into the last business area, safety security. They continue to deliver very strong results even in quarter three. They have done that for the full year. In quarter three, we have a 9% sales growth and a 31% growth in adjusted EBITDA. And we experience a strong demand in pretty much all safety verticals. Our products within clean air applications in hospital is doing good. So that's Medicvent. Our perimeter security for data center, but also for airports and other government building, it's doing very good. That's Eagle performing strong. And secure communication is also developing strong for Cryptify. And the strong margin at high 36% and improved profitability versus last year is due to a number of reasons. One is that we actually see scaling effect here in the business area. So when volume grows, we actually see that the margin is growing as well.