Storskogen Group AB (publ)

presentation for 2026. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad.

Thank you for joining us for the presentation of Storskogen's interim report for the first quarter of 2026. I'm Christian Hansson, CEO, and with me today is Leanna Glader, our CFO. As we closed our last year, our message was clear. Operational execution remained our top priority. We have strengthened our balance sheet, maintained financial discipline, and navigate a continuously challenging macro environment. That work has put us in a strong position as we move into this new year. I expect an increased focus on growth in its broadest sense, whether it comes through organic initiatives, acquisitions, or the opportunity that arise when they both work together. How we will achieve this growth? We believe that the groundwork laid over the past years gives us the platform to pursue our capital allocation agenda with confidence. I will shortly share more details related to this topic and why we believe there's potential for an interesting year for the group. Storskogen is a diversified international business group with sales of approximately 33 billion SEK over the last year, and adjusted the EBITDA of about 3.1 billion SEK spread across our three business areas, services, trade, and industry. At the end of Q1, the group consisted of 113 business units with average annual sales of around 290 million SEK. Overall, I'm pleased with the developments for both industry and trade. Orderbook are strong for industry and trade continues its underlying positive trajectory from the second half of the last year. Services, however, is not performing where I want it to be. Turning to the highlights for the quarter, Q1 is historically our softest quarter with fewer working days, weather disruptions, and the tail end of the holiday period and weight on performances from the start. None of this is surprising, but it's useful context as we walk you through the numbers. Overall, the quarter didn't meet our expectations, in part due to the few isolated areas that I would shed some further light on. In contrast, there's also several areas that gives us confidence for the remaining of the year. If you look at the numbers, we have organic sales growth of 2% for the quarter, with negative organic EBITDA growth of 12%. The cash flow improved to 188 million SEK compared to 113 million a year ago. It's also pleasing that we are maintaining the leverage ratio at 2.3. We had FX headwinds on both sales and EBITDA, and the margin is down compared to last year. We completed two acquisitions in April with a combined annual sales of 103 million SEK. Operational focus continues to be key as the market continues to be uncertain, and this will remain our clear priority going forward to support our long-term growth alongside increased M&A activity. I'd like to turn to our cash flow performance that continues to be very strong. Even in a smaller Q1 period that we have just left behind, you can see that we are stronger in Q1 in terms of cash flow than in comparable periods for the past two years. On the right side of the slide, I'm pleased to note that the group continues to be very stable, trending at around 2.5 to 3 billion stake in cash flow on an LTM basis. The cash flow achieved over the past years reflect continued disciplined operational execution across the group, which remains fundamental to our business model in capital allocation. Quarterly performance naturally fluctuates, but diversification across industry, geographies, and end market provides relative stability over time, and as you can see on the right, showing our solid performance on a rolling 12-month basis. Even with ups and downs in underlying demand, the group breadth supports resilience, margins, and cash flows, which are key in the Storskogen model. which we will get into as we now take a high-level view of where we have focused our energy across the group in our three business areas. At the group level, our priorities are straightforward, driving organic sales and EBITDA growth, keeping the M&A pipeline strong, and ensuring cash flow resilience. In services, we're working to make our companies more efficient and scalable, standardizing some operations and improving digitalization to grow without unnecessary complexity. We are also improving cost structures and working to find the right balance between sales and profitability. In trade, we have a continuation of the initiatives that have been the focus in the past few years. Sales, cost discipline, and improving gross margins. We're also seeing ERP roll-ups to improve data quality and decision-making across the area. An industry beyond sales and cost efficiency work that mirrors the other areas, we're also realizing returns from significant CapEx investment made in the last two years, expanding facilities in several business units and rolling out new ERP systems. Across all three areas, the common thread is supporting businesses to be more structured, more scalable, and better equipped to grow profitably for the long haul. If you go into the business areas, in services, we have a net sales growth of 1%. The first time we have sales growth since mid-2023. EBITDA showed a negative 30% for the quarter year over year. As expected, Q1 is seasonally soft quarter. Digital service and logistic continues to deliver strong results. Three areas are hyper putting pressure on the result compared to a year ago. First of all, business units in both infrastructure services and business services that are exposed to construction are faced with a general headwinds resulting in margin pressures. In addition to the general market weaknesses in construction, several business units were negatively affected by two additional isolated areas. An exceptional winter season affected operation more than usual, even in Denmark and in the southern part of Sweden. And lastly, the business unit active in construction of industrial buildings have not delivered as well as compared to a year ago. These businesses are, however, seeing improved market conditions heading into Q2. In sum, the general market conditions for construction and the two isolated areas explain an extensive part of the drop in the results for services when compared to a year ago. And I want to underscore that we are seeing early signs of recovery, but slightly suppressed margins. Final comment, in the middle of the quarter, Jesper Kronstam assumed the role as a new head of business area services. And for Q2, we are expecting a typically seasonally stronger quarter. Trade had net sales of 2.2 billion SEC, 4% lower than a year ago, with organic sales growth of 1%. Trade reported an adjusted EBITDA of 153 million SEC, 9% lower than a year ago, where roughly two-thirds of the decline can be explained by FX headwinds. The result was negatively affected by timing shift of sales from January into December, as mentioned in the Q4 earnings, in addition to lower demand from the Nordic health and beauty retail sector. That said, when adjusting for these factors, the underlying trend in trade remains consistent with what we saw in the second half of 2025. Professional products performed largely in line with last year. We've also completed a divestment of Perfect Hair, a B2C-oriented health and beauty business. This follows the same strategic logic as the Motavo divestment we communicated last quarter, concentrating our health and beauty exposure towards B2B-oriented business with stronger structural attractiveness. Even though we did see an FX headwind in the quarter, a stronger SIEC is margin supportive in the long term, as much of our purchases are made in Euro and US dollars. To conclude, the underlying trend seen as of second half of 2025 remains positive for trade as we head into the season with a stronger Q2. Turning to industry. We delivered organic sales and EBITDA growth for the quarter, and we are confident that the trajectory for the full year. Investments made in 24 and 25 are increasingly bearing fruit, driving sales growth across several business units. A strong example is a new paint shop at J.D. Pierce in the UK, a significant capital investment that has become a strategic advantage for the business and a key driver of the performance of industrial technology that deliver growth in both revenue and profit, especially outside of Sweden. Automation and product solution had a slow start for the quarter, though ending the quarter more strongly. Taken together, the business mix in the quarter was favorable for revenue growth, though it came with a slightly lower margin. The structural demand environment for industry remains good, especially in automation, electrification, and industrial systems. And this is showing up in strengthened order books as we head into the season with a stronger second quarter and beyond. Lastly, we completed an acquisition in the early days of April, which brings me to the next slide. During the quarter, we noted a degree of deal inflow volatility due to the ongoing macro environment uncertainty. However, the pipeline remains solid across most of our investment teams, especially in automation, digitalization, and health and well-being. Equally, we have a strong pipeline of add-ons to support industrial logic and synergies. We had one platform acquisition in the early days of April, Darlington EMS in the UK, a leading manufacturer of electronic parts and components that service a range of sectors, which are exposed to several of Storskogen's investment themes in infrastructure, health and well-being, and automation. And as I mentioned in the beginning of the presentation, our focus will increasingly be on growth in absolute terms, no matter if it comes from organic initiatives or through acquisitions. This slide illustrates our capacity to accelerate growth, specifically through acquisitions. And I want to emphasize that this is for illustrative purpose and does not include additional debt capacity from profit growth, which could support our leveraged headroom. The bars to the left and in the middle shows how we have allocated our free cash flow after leasing in 24 and 25. And as you can see, debt reductions, like blue, represented the largest share of cash deployment in these years. For 2026, debt reduction is expected to be close to zero, and as a result, the M&A capacity substantially improved for the year, which will support the growth agenda I mentioned in the beginning of today's presentation. Cash directed towards minority buyouts and earnouts will be substantially smaller in 2027, which will further increase the room for M&A beyond 2026. And with that, I will hand over to you, Liana, for more detailed financial review.

Well, thank you, Christer. So over to the financial review. And let's begin with the financial performance for the first quarter, adjusted for items affecting comparability. Now, here is the income statement, of course, on this page, adjusted, as I said. Net sales came in at 7.85 billion, representing a 1% decline compared to Q1 last year. Organic sales growth was 2% positive, and I'll show a detailed sales bridge on the following page. Adjusted EBITDA decreased by 8% in the quarter, on the back of a 2% increase in cost of raw materials and goods. EBITDA fell by 9% to 639 million, representing an EBITDA margin of 8.1% compared to 8.8% in Q1 last year. The key drivers behind the year-on-year EBITDA decline are, of course, the mentioned negative organic growth, most notably in business area services, but also currency effects. And I'll come back to that also on the next page. EBIT for the first quarter was 471 million, down 10% year-on-year. However, the past two years' work on refinancing and reducing debt continued to pay off. Our net financials were 21% lower at 156 million, supported by lower interest margins, but also lower absolute debt compared to a year ago. Our tax line declined by 11%, leading to an unchanged adjusted profit after tax at 236 million Swedish kronor for the quarter. You will find the reported income statement as an appendix and, of course, in the report. Worth mentioning are items affecting comparability in the reported results that are excluded on this page. They were in total minus 65 million in the quarter of 26, in the first quarter of 26, related to capital loss from the divestment of Perfect Hair in Switzerland. And last year in Q125, they were minus 20 million related to revaluation of earn-out liabilities at that time. And then turning to the financial KPIs below, apart from the EBITDA margin that was already mentioned, our adjusted earnings per share was unchanged at 13 Swedish euro per share. Our return on equity on a rolling 12 months improved to 6.4%, while return on capital employed declined slightly to 10%. Return on capital employed excluding goodwill was 24.9%. As we've said before, our ambition is to show a steady improvement of these metrics. And then let's turn to this sales and EBITDA bridge on the next page. Here we break down the contribution from organic growth, structural changes and currency effects for the first quarter, starting with sales. Organic sales growth for the group was plus 2% in the quarter with positive or flat organic growth in all business areas. The largest driver being industry with plus 4% organic growth in the quarter. M&A or the net of acquisitions and divestments had a neutral impact on sales growth in Q1, while currency continued to be a headwind, reducing sales by 3%. Then moving to EBITDA to the right there. Lower central cost had a positive plus 4% contribution to group EBITDA change. Of this, around 3% is attributable to a fair value adjustment based on recent market transactions of a shareholding related to the large divestment we made back in Q3 2024 of the portfolio that we divested then. M&A contributed by plus 3%, while currency translation affected EBITDA by minus 3%. But finally, organic EBITDA growth. This was down 12%. Of that, minus one is currency transaction effect, all of which effect, the currency transaction effect hit business area trade in the quarter. As mentioned before, the largest negative contributor to organic growth, apart from the currency transaction effect or 1%, was business area services that had a stable top line development, as Christa mentioned, but headwinds on the cost side as a result of delayed projects, cold weather and a continued slow construction market. Business area trade also saw some negative organic EBITDA growth, but the largest part, as Krister said, was also explained by currency transaction effects there. Then let's move over to the cash flow statement for the first quarter. Q1 cash flow is typically a bit lower, as was mentioned, driven by seasonally lower profit levels, usually higher paid tax in Q1, and some working capital tie-up. This quarter did nevertheless hold up pretty well with 67% year-on-year growth in cash flow from operating activities, summing up to $188 million in the quarter. Paid tax was $254 million, which is more than last year, but also more than offset by lower change in net working capital. Of the change in networking capital item, inventory and receivables in work in progress in particular increased as is anticipated ahead of the sales-wise stronger Q2, while payables also rose, which contributed positively. Then turning to investments of the 125 million in net investments in non-current assets in Q1, CapEx represented 106 million. And this corresponds to a CapEx to sales ratio of 1.3%. Acquisitions and divestments totaled only minus 23 million in the quarter, and all of this relates to buyback of minority shares in existing subsidiaries and some paid earn out, as no acquisitions were made during the quarter and the divestment was cash neutral. Cash flow from financing activities, including leasing payments, was minus 204 million. And putting all of this together, net cash flow for the quarter was a negative 163 million, which left us with a cash balance at the end of March of 1.2 billion and total available liquidity of close to 4.5 billion Swedish krona, including cash and unutilized credit facilities. Cash conversion was 60% in the isolated quarter compared to 39% a year ago. As I said, due to seasonality in this KPI, we like to look at the rolling 12-month cash conversion instead, which I'll show on the next page. So continuing here, let's look at the operating cash flow and cash conversion, which as you know, is one of our key financial KPIs. The bars show our EBITDA based cash flow that our cash conversion is based on. So this is not the same as the operating cash flow that Krista showed, which is also after tax and after interest. This is purely operational here on this page. And it's been at a good level between three to four point five billion on a rolling 12 month basis over this period since Q124 that we show here. Our group target for cash conversion is at least 70% over a 12-month period, illustrated by the dotted line. And as you see, over the last 12 months, our cash conversion rate was 79% by the end of March, so well above this target and also an improvement from 74% at year-end. Two years ago, our cash conversion was around 100% as a result of the strong balance sheet focus that successfully rendered significant reductions in networking capital and hence positive cash flows during this period. Now we are at more normalized levels with networking capital sales around 15%, which is significantly lower than what they were two, three years ago. and also capex around 1.5 to 2% of sales, which is a normalized level. Our focus nonetheless remains firmly on growing profits while maintaining working capital efficiency. And then let's move to the balance sheet. Our total balance sheet amounts to 42 billion, around the same level as last year. Since March last year, so during the recent 12 months, our total interest-bearing debt, including leasing and pension liabilities, but excluding liabilities from minority options and earnouts, has decreased by 258 million, and our net interest-bearing debt is down by 357 million, supported by good cash flows. During the quarter, net interest-bearing debt increased by only 16 million, so that's fairly unchanged during the quarter. If we include liabilities for minority options and earnouts, like Christian showed on the bars just recently, our net debt reduced by more than 600 million over the past 12 months. I would also like to highlight that our equity ratio has continued to improve now at 50%. And here on the following page, we show our interest bearing net debt and leverage ratio and how that has moved over the past nine quarters. Our interest bearing debt at the end or net debt at the end of the quarter stood at 9.5 billion SEC, which is essentially unchanged from year end, as I said, but down from 9.9 billion a year ago. And the leverage ratio was 2.3 times, which is unchanged from a year ago, but also unchanged from year end and comfortably within our target range of 2 to 3 times. I'd like to repeat that our ambition is to keep it below 2.5 times, and that remains unchanged. This is also the level that we've been since the end of 2020 for us, you see. And then finally, a look at the debt portfolio. We have, as many of you know, over the past years worked through our entire debt portfolio to reduce refinancing risk by distributing and prolonging our maturities. On the bank facility side, we have during the first quarter extended both the revolving credit facility where we have 3.3 billion unutilized commitments still and the term loan facility and both were extended by a year to the first half of 29 and second half of 28 respectively. We have, as you see, no maturities this year and a 1.25 billion SEC bond maturing in the second half of 27. So essentially, a refinancing risk remains low for the coming years, which puts us in a comfortable place when it comes to maneuvering external uncertainty while keeping our eyes on operational performance and value-adding M&A growth ahead. And with that, I hand the word back to you, Krister.

Thank you, Lena. So to bring it together, here are the key takeaways. We delivered organic safe growth in the first quarter. The quarter, however, didn't meet our overall expectations on earnings. Operational excellence therefore remains our most important focus area to ensure that we will achieve profit growth across all business areas. Underneath all of this sits a solid foundation, a stronger balance sheet, a more focused portfolio, and a management agenda with clear direction. And looking ahead, we see an attractive M&A pipeline across most of our investment teams with the capital allocation capacity to act on it. Thank you for your attention. And with that, we are happy to take your questions.

If you wish to ask a question, please dial pound key 5 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 Anton Ingves from Nordia. Please go ahead.

Thank you, and good morning, Christian and Lena. A couple of questions here from my side. So starting off in service here, Organic sales growth was flat year over year while EBITDA fell 36%. Could you perhaps give some more flavor of the split between the different factors you mentioned here in the report affecting the margin? And would you also say that price pressure has increased since Q4 here in service segments?

Thank you, Anton. I would say that if you look at the overall headwind, I think we are on the same level as in Q4 for that general headwind in construction. But if you look at the two things that I kind of have on the isolated areas, first of all, exceptional cold weather, which affected a lot of businesses in the southern part of Sweden and even in Denmark with frozen grounds, that is one big part. And also a big part of this construction of industrial buildings. I would say that the isolated, it's hard to give an exact, but I would say that the isolated factors, the two of them probably explains about half of the decline in services in the quarter. And then the rest is then the kind of the general headwinds on the construction side.

If you look at the sub-verticals, the organic, of course, sales growth was pretty much the same for both infrastructure and business services. But on the EBITDA side, it was infrastructure services that was hit much harder than business services.

Okay perfect and then on the volumes here that you mentioned in service affected by the cold weather are these projects mainly shifted into Q2 or later parts of the year or have you actually lost a lot of these projects?

What happens is that the cost side increases when the volumes could be pretty stable, but it costs more to do the projects when you have the frozen grounds. So it's more that the... That is what happened on that side. And if you look at the construction industrial buildings where we have a significant cost for startup, startup cost in projects, that is actually pretty positive because we're going into Q2 and onwards with a better situation for that sector. But it was affected this quarter of high startup costs.

Okay, perfect. Very clear. And then looking into trade here, is it possible to quantify the net effect from the stronger SEC during the quarter? And maybe how to view the effect for the rest of 2026 here, as I assume there's a lag here between the stronger SEC and what you actually see in your numbers.

Yeah, I mean, it was what affected them in Q1. We had a pretty significant effect, as we said. Going into Q2 and onwards, we think that the negative effect would be less if the SEAC aren't on this level. But it's really hard just to put a number of it. But going forward, we believe that the headwinds will be less. And probably... go the other direction if SEAC is continued on this level.

It was, as we indicated on the call just now, you have translation effect in trade, which is roughly minus 2% on both sales and EBITDA. And then you have transaction effects, so balance sheet items. And that was roughly closer to minus 5% actually of the 7% organic decline in EBITDA.

Okay, and I assume the stronger seek on your buying of inventories within trade, is that effective? How long is the delay?

That will come from Q2 and onwards, I believe, because we are less effective, as I said, less effective from hedges that were made last year. So I think that we will see a continuous strengthening of the margin from Q2 and onwards. if CX stays at this level. Volatility is, of course, the big problem. But if we have a pretty stable situation for currency, I would expect that to be positive for trade.

We're talking, of course, mostly euro is the largest exposure, but also dollar. Yes.

Yep. Perfect, very clear. One final for me here, if I may. In terms of M&A, you kind of touched up on this during the presentation and obviously closed the acquisition here of Darlington in April. But looking for the full year 2026, do you expect to accelerate the M&A pace in terms of added sales compared to 2025?

Yes, we do believe that. So, I mean, Q1 we didn't do, but that is more kind of on sometimes it's just, you know, doing acquisitions. Sometimes it's just prolonging the closing of a deal. It can be from one month to the next. But I do foresee an increase in M&A coming, you know, during Q2. and onwards, and we definitely believe that we will have a higher M&A than we had last year.

Okay, perfect. That's all for me. I get back in the queue.

Thank you, Anton.

The next question comes from Dan Heimer from SEB. Please go ahead.

Yes, good morning. Good morning. Good morning. Maybe starting a little bit on general momentum and demand throughout the quarter. You spoke that it improved in March versus January. Was that both in terms of earnings and organic sales growth? I think you had 2% organic growth for the quarter, but was it better than that in March

January in January just so we can get a better feeling on yes for all three business areas it was a better pick up in in March so March was strong and and January February was weaker so in all areas we saw it pick up in in March in both sales and in both sales and earnings yes so in on both levels

Perfect, very clear. I guess so far we haven't seen much impact from the higher geopolitical uncertainty here in April, for example. Is that the correct way to read it?

No, I mean, but it's, of course, very, very hard to foresee. It's hard to make predictions, of course. But so far, we haven't seen higher cost prices on a big level. Of course, there are certain sectors, but not on an overall big level still. But that can, of course, come. But we haven't. So it's more the uncertainty that people are talking about and how it will affect kind of the consumer side. So it's more than that, but not seeing in kind of in the numbers, not in March and not what we're seeing in April.

Of course, there are some effects from higher freight costs and fuel and energy prices, but it's not material. But of course, we are affected by those kinds of increases. Some of it we can, of course, push forward to customers as well.

Understood. And a couple of follow-ups as well, maybe following up on... M&A here. Can you say something about the valuation multiples you paid for those two acquisitions? Is it in line with what you paid last year, given that it's quite good profitability?

Yes, in line with what we paid last year, so below the seven and continue to do margin increase. So yeah, we continue the same journey that we started off last year.

Good. And following up on services, just from my understanding, can you explain a little bit of the mechanics of the startup of previously delayed projects? I guess you take cost now in the startup phase, and then you get higher profit contribution in Q2, I guess. But what sort of the duration? Do you take most cost now in Q1?

completing q2 or is there an impact also yeah in coming quarters first of all there has been a lot of delays in projects in this sector from from last year and when it now starts up uh we see a kind of a higher cost situation in q1 for those sectors that will improve uh for for the coming quarters when the kind of the projects gets better more uh relative to to hand over to the customers, so to say. So we will see a, and we have also seen a better order book built up even in the quarter. So it looks promising for the next period to go ahead.

And, of course, hopefully, given this strengthening order book, we will have some startup costs, of course, going forward as well, needless to say, in new orders that are being started up. But that's only positive as we view it.

Okay. Thank you very much. That was all from my side.

Thanks, all. 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.

Thank you all for participating in this Q1 call. I hope you all have a good day and the rest of the week. So thank you from us here at Storskogen.

Thank you.