Storskogen Group AB (publ)

Welcome to the Storskogen Q3 presentation for 2026. 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 the CEO Krister Hansen and CFO Lena Glatter. Please go ahead.

Welcome and thank you for joining us for the presentation of Storskogen's interim report for the third quarter of 2026. I'm Krister Hansson, CEO, and with me is Lena Gader, our CFO. The third quarter was another solid quarter. We delivered positive organic growth in both sales and EBITDA, and profitability improved compared to a year ago. The positive development we saw in the second quarter has continued into the third, and I'm pleased that the growth is broad, with more of our business units contributing and with visible improvement in both sales and earnings. We also took an important step in strengthening our balance sheet in the quarter. putting us in a good position to use a significantly larger part of our cash flow for growth from 2027. More on that and details on the quarter shortly. But first, let's take a brief look at Storskoga. Storskogen is a diversified international business group with sales of approximately 34 billion SEK over the last 12 months and adjusted EBITDA of about 3.1 billion SEK spread across three business areas, services, trade and industry. At the end of the quarter, the group consisted of 140 business units with average annual sales of around 300 million SEK. So let's turn to the highlights for the quarter. Net sales in the third quarter amounted to 8.3 billion SEK compared to 8 billion a year ago. Adjusted EBITDA increased to 806 million SEK from 759 million and adjusted EBITDA margin improved to 9.7% from 9.5%. We delivered positive organic growth in both sales and EBITDA in the quarter, 3 and 2% respectively. Year to date, organic sales growth stands at 4% and organic EBITDA growth at negative 2%. In sum, the quarter clearly moves us further in the right direction. The positive development we saw in the second quarter continue in the third and our commercial and operational initiatives keep having an effect. What is particularly encouraging is the growth now includes a larger number of business units, cross markets and the visible improvement in both sales and earnings. Cash flow from operating activities was strong and more or less in par with last year. Our leverage ratio was 2.5 times at the end of the quarter, up 0.1 from a year ago. The slight increase follows the significant acquisitions of minority shares completed in the quarter. Lena will go through those in more detail. We completed six acquisitions, four in the quarter and two in October, with a combined annual sales of 377 million SEK. The market remains uneven, which continues to require the clear focus on sales, cost control and profitable growth. Next, let's take a closer look at cash flow. Our cash flow amounted to 646 million SEK, which, as I just mentioned, was practically in line with last year's 659 million SEK. As mentioned in Q2, higher June sales temporarily increased quarter-end receivables, with the effect expected to reverse in H2. We are now seeing this reversal in Q3, with a similar timing effect seen last year. Looking at the slide, the year-to-date figures clearly illustrate that we are on par with last year at 1.3 billion SEC. A quarterly fluctuations is to be expected, and it's also a reason why we emphasize the right side of the slide, where you can see the cash flow on a rolling 12 months basis. As you can see, it holds steady at around 2.5 and 3 billion SEK. Growth ties up some working capital, which shows in cash conversion of 80% in the quarter and 74% for the last 12 months. Over time, our cash flow remains consistent and it comes from disciplined operational work across the group. And it is what allows us to shift more capital towards growth. I will come back to that later. Next, let's take a look at sales and margin. The third quarter was a strong quarter. The adjusted EBITDA margin improved to 9.7% from 9.5% a year ago. Similar to our cash flow, quarterly figures will fluctuate throughout the year. But diversification across industries, geographies and end markets gives stability over time as evidence in the rolling 12 months figures on the right side of the slide. The quarter This quarter the rolling margin nudged up to 9.3%. It is a step in the right direction, however we are working hard to reach the target margin of over 10%. Organic sales growth was 3% in the quarter and the trend has been positive for five quarters in a row. This is also the second quarter in a row with positive organic EBITDA development. This matters because organic profit growth is prerequisite for reaching our target on average annual growth in adjusted EBITDA of 15%. Acquisitions add to it, but the base has to grow on its own. We work systematically with sales and productivity so that more of our business units contribute to growth. That means pricing, customer offerings, sales and efficiency, company by company. The work never ends, but we are seeing the effects from this continuous work across business areas. Next, let's take a look at each business area. Services reported net sales of about 2.4 billion SEK, up 7% on last year and adjusted EBITDA of 252 million SEK and margin of 10.7%. Both sales and EBITDA grew, driven by solid performance in business services and contribution from acquisition. Companies exposed to the construction sector in infrastructure services still face challenges in markets, even though we see early positive signs. That explains why organic EBITDA is still negative. Our focus there is clear. Improving profitability company by company through efficiency measures and sharper commercial focus. We made three add-ons with a combined sales of 46 million SEK. Looking ahead, the fourth quarter is normally stronger and we're cautiously optimistic with several companies entering their high season. Now let's turn to trade. Trade reported net sales of 2.3 billion SEK in line with a year ago. organic growth, acquisitions and FX contributed offset by divestments. Adjusted EBITDA was 230 million SEK with a margin of 9.9%. This was supported by FX, organic growth and acquisitions. This was a strong quarter. In absolute number, it is the highest third quarterly profit we've ever had in trade. demand improved in professional products with a margin uplift contributing to the entire business area. In consumer products, demand continues to be somewhat affected by lower retail activity in health and beauty. The business area focus on sales, pricing and cost efficiency continue to contribute to the result and the underlying trend remains positive in most areas. We made three acquisitions in trade, including two in October, with a combined annual sales of 331 million SEK. Looking ahead, the fourth quarter is typically stronger in terms of sales, with the May holiday period ahead. Industry reported debt sales of about 3.6 billion SEK, up 6%, and dusted EBITDA of 363 million SEK, with a margin of 10%. Organic growth in the quarter was positive, both for sales and EBITDA, which leaves the year-to-date figures at 5 and 8% for sales and EBITDA respectively. The business area developed well across all three verticals, supported by demand in several industrial niches as well as FX. Industry's strong market position and exposure to long-term structural trends such as automation, digitalization and the energy transition continues to create good conditions for profitable growth. We've also invested in capacity over the past few years and many of those investments are now paying off. Two examples I gave last time was investments made in L&S and J&D Peers. Another example is a German business unit SF Tooling that produces various type of die casting for electrical vehicle and aerospace industries. Apart from the manufacturing sites in Germany and the US, it has also invested in its own factory in China, which is now paying off well. As a last remark, I want to mention that the order book for industry as we go into the fourth quarter remains solid. Before we turn to acquisitions, I want to highlight an important milestone for our balance sheet. As I mentioned at the start, an important step in the quarter was that our minority-related liabilities are now moving towards a more normal level. Over the past few years, we have improved profitability and cash generation, streamlined the portfolio and reduced and refinanced our external debt. The minority liabilities are the last major piece of that work. Those of you who joined us last quarter will remember that the commitments from our acquisitions in 2021 and 2022 were approaching their end. We are now more or less there. You can see in the bars on the left, in 2024 and 2025, debt reduction took the largest share of our cash flow. This year, a large part has gone to minority buyouts and earnouts. In 2027, the share comes down. A substantial part of our cash flow, the dark green selection, can be allocated to growth. The bars are for illustration only and do not include any new debt. Buying back minority shares also contribute to higher earnings per share for Storskogen's shareholders. And it frees up capital for organic initiatives as well as acquisitions. On the right side, you can see that the pace of acquisition is already picking up. In 2024, we made only add-ons. We restarted in the second half of 2025, and this year we have so far completed 10 acquisitions, two of which we announced just last week. That brings me to growth. At our Capital Markets Day in late 2024, we presented our capital allocation model. It starts with the capital we have available, generated by our operating cash flow. From there, we allocate into two directions. The first is organic expansion, CAPEX and OPEX that strengthen operations and drive sales or efficiency in our existing business units. The second is acquisitions, either new platforms or add-ons that broaden the offerings of the business units we already own or unlock synergies. Our acquisitions are guided by five investment themes, health and well-being, automation, energy and sustainability, digitalization and infrastructure. These investment themes span all three business areas and are rooted in a global megatrends. These are themes where we already have a solid experience and where we see strong long-term growth potential. At the Capital Markets Day, we also said that we would seek acquired growth mainly outside Sweden to decrease our substantial exposure to the Swedish economy. This is what we are doing, as you will see on the next slide. Here you can see what we have added since we've ramped up acquisitions in 2025. In total, we have completed 17 acquisitions, seven are platforms and 10 add-ons. We've combined annual sales of about 950 million SEK. On average, they have an EBITDA margin around 20%. So they lift the group's margin. And we have stayed disciplined on price, averaging around six and a half to seven times EBITDA. In services, LEP and DAC provides digital service to health care sector. Carey Gently in the UK is a transport specialist similar to our business unit Stop Start. And Safi in Asia works in fire safety, which is a growing market for equipment and servicing. In industry, Darlington EMS is a specialist manufacturer of electronic components, serving customers in automation, infrastructure and health care. In trade, Frameda in Finland completed our Nordic footprint in professional hair care, where we now are by far the largest distributor in the region. Verdante Norway adds premium hair care brands into this offering, and we see a clear potential for further collaboration across the Nordic businesses. After the quarter, we acquired Duratec in Germany. a distributor of components and system for laboratory analysis. It has a high share of recurring revenue and a strong position in the fragmented market, which of course gives room for further adults. And just last week, Båstadgruppen, one of the Nordic region's leading supplier of professional workwear, acquired Haviodo in the Netherlands. Haviodo is a longstanding partner and now gives Båstadgruppen its own export hub in continental Europe. Båstadgruppen has grown from about 230 million SEK when it joined us in 2019 to about 620 million in sales last year after four add-ons and investment in a state-of-the-art distribution center. So discipline ramp up mainly outside Sweden and within our investment team as we set out to do in our capital market stay in 2024. With that, I will hand over to Lena for more detailed financial review.

Thank you, Christer, and good morning, everyone. Those are some really good acquisitions that you just showed us there, and they do bring value. You can see in both margin expansion and growth. But let me first take you through the financials for the third quarter. The figures on this page are adjusted for items affecting comparability. The reported income statement you'll find in the appendix and of course in the report that we published this morning. Startinging with net sales for the quarter 8.33 billion Swedish krona up four percent on Q3 last year and sales growth was mainly organically driven but I'll walk you through the sales bridge on the next page. Adjusted EBITDA rose 6% to roughly 1.1 billion. After depreciation of 275 million, our adjusted EBITDA was 806, which is up 6% year on year. And this corresponds to an adjusted EBITDA margin of 9.7 compared with 9.5 in Q3 last year. After amortizations of 175 million, our adjusted operating profit or EBIT was 631 million, up 7% year-on-year. Worth mentioning is that operating profits last year had a negative currency transaction effect, while this year we had a small currency gain from revaluation of balance sheet items. The net financial items were minus 171, which is more than minus 138 in Q3 last year. However, our interest costs were unchanged at 160 million, which is essentially the same as in Q3 last year. But the increase in the net financial are related to positive currency items and interest income in Q3 of last year. Profit before tax was up 2% and with flat taxes year-on-year, our adjusted net profit after tax grew 3% to 348 million. And then for completeness, items affecting comparability which are excluded on this page amounted to minus 11 million in the third quarter. And these consist of earn-out revaluations and minor capital loss. while the comparable quarter last year carried a positive 10 million related to earn-up revaluations. And turning to the financial KPIs at the bottom of this page, adjusted earnings per share grew 4% to 0.19 kronor for the quarter and 0.74 kronor on a last 12-month basis. Our adjusted return on equity improved somewhat to 6.6% from 6.4 a year ago while return on capital employed was 10.1% down from 10.3. And we've stated before our ambition is to show steady improvements in both of these measures over time and we are not particularly happy with the levels they are now but it is the incremental improvement from these levels that we will focus on going forward and continue to focus on every day. Let's turn to the sales and EBITDA bridge here that show the key drivers of this year-on-year development. So we started with sales. We had sales of 7.98 billion in Q3 last year. Organic growth contributed 3%, acquisitions added 2%, and currency translation another 1%, while divestment reduced sales by 2%. And this is divestments that we made in the end of Q4 last year and beginning of Q1 this year. Altogether, this brings sales to 8.33 billion in the third quarter of this year, which is an increase of 4.4%. and then turning to the adjusted EBITDA to the right here. EBITDA was 759 million in Q3 last year. Acquisitions and divestments together had a net positive impact of 6% on EBITDA. But the difference in contribution from M&A to EBITDA compared with the contribution to sales reflects the significantly different margin profiles of the businesses that we have acquired versus those that we have divested. So the divested operations had low single-digit margins in Q3 last year, while the acquired businesses generated EBITDA margins above 20% in Q3 this year. Organic development added another 2%, and this is supported by transactional currency effects from the revaluation of operating balance sheet items that I described just before, and they were slightly positive in this quarter compared with a negative contribution last year. This is all included in organically growth. Currency translation shown as FX here added 1%, while group operations reduced EBITDA by 3%. And this reflects a cost reversal related to long-term incentive programs in the comparison quarter. And this brings adjusted EBITDA to 806, of course, for the quarter, which is up 6.2% year-on-year. and then turning to margins this slide shows the year-on-year development by business area our adjusted EBITDA margin as we've said before increased from 9.5 to 9.7 in Q3 which is an improvement of 0.2 percentage points of this industry to this industry was the main contributor adding 0.3 percentage points actually to the group margin and margins improved across all three verticals in industry with the strongest improvement in industrial technologies. Trade added a further 0.1 percentage points. Both consumer products and professional products improved their margins, with professional products showing the larger improvements. Services had a broadly neutral impact on the group margin, where the positive contribution from business services was offset by a negative contribution from infrastructure services. And then group operations reduced the year-on-year margin improvements by 0.2 percentage points. This mainly reflects the already mentioned reversal of long-term incentive costs last year. Overall, we're pleased to see margins moving in the right direction, of course, but we still have work to do, as Krister said, to reach our target of at least 10%. This target remains unchanged and further margin improvement remains a key operational priority for all of us. And then let's turn to the cash flow for the third quarter. Cash flow from operating activities remained fairly stable at 646 million as Krister mentioned, compared with 659 a year ago. Over the past 12 months we generated 2.45 billion in operating cash flow and this has also been very stable in recent quarters. Looking at the main components behind the operating cash flow, reported profit before tax, and note that this differs slightly from the adjusted numbers that we just showed. This was 449 million, down 2% year-on-year. Non-cash adjustments amounted to 430 million, while tax payments were 142 million. Swedish Krona and the higher paid taxes mainly reflect favorable temporary effects in the comparison period. Working capital tied up 92 million and this is broadly in line with last year and consistent with the expected seasonal patterns. Turning to investments, net investments in non-current assets increased to 133 million from 75 a year ago. The cash outflow for acquisitions and divestments was 843. This is quite a substantial amount with minority buyouts accounting for most of this. As previously communicated, we invested around 730 million in the quarter. in buying out minority shareholders in subsidiaries. But we also spent 104 million on acquisitions during the quarter. So total cash outflow from investing activities was close to a million Swedish krona, 976. The reported net cash outflow for the quarter or cash flow for the quarter after financing activities was minus 241 million. We ended the quarter with 1.19 billion Swedish krona in cash balance and total available liquidity of approximately 4 billion. This includes undrawn credit facility and it gives us continued flexibility to pursue our acquisition agenda. Finally, cash conversion was 80% in the quarter, unchanged from a year ago. And given the seasonality in cash conversion, we focus on the rolling 12-month figure on the next page. Here we have operating cash flow and cash conversion on a rolling 12 month basis. Operating cash flow here is defined as adjusted EBITDA after changes in networking capital and capex as a percentage of adjusted EBITDA. The bars show operating cash flow for the last 12 months which amounted to 3.1 billion Swedish krona at the end of the third quarter. Adjusted 12-month cash conversion again 74% unchanged from previous quarter and down from 82% a year ago. And we hereby remain above our target of at least 70% of our rolling 12-month period. As we've been clear about in recent years, we placed a strong focus on cash conversion across our businesses. And this focus will continue as we grow earnings and maintain discipline in working capital. And then a few words on the group's balance sheet on the next page. Total assets amounted to 44.3 billion at the end of September. This is up 5% from 42.3 a year ago. Most of this increase came from current assets, which rose by 10% to 14.8 billion. But FX had quite a significant impact on the overall balance sheet in the quarter, increasing the numbers by more than 2%, or actually closer to 3%. Total equity increased by 7% to 21.9 billion. This represents the largest year-on-year movement on the equity and liabilities side of the balance sheet. Our equity to asset ratio was 50% up one percentage point from a year ago. Worth highlighting on the balance sheet is the reduction in liabilities related to minority interests. These decreased by a net of roughly 650 million. during the quarter and were 460 million lower than in September last year. However, higher short-term liabilities and FX offset this reduction, so it's less visible in the aggregated figures shown here, but we have more details in the quarterly report. Finally, our leverage ratio stood at 2.5 times, and this is, of course, measured as interest-bearing net debt to EBITDA. And on the next page we have this in more detail, net debt and leverage ratio. Interest bearing net debt was 10.4 billion at the end of September compared with 10.2 a year ago. and 9.9 billion at the end of the second quarter. The increase during the quarter reflects acquisitions and minority buyouts as already mentioned as well as slightly higher lease liabilities and the currency translation effect. Our leverage ratio was 2.5 compared with 2.4 a year ago and at the end of the previous quarter. And worth mentioning is that minority buyouts added approximately 0.2 times to leverage. So without those, it would have been at 2.3 times. We remain within our leverage target range of 2 to 3 times and we expect leverage to decrease towards year end. Our ambition remains to operate below 2.5 times. Our balance sheet and strong cash generations, together with lower remaining minority commitments, give us the flexibility to increase the pace of acquisitions to support returns, profit growth and margins. And with that, I'll hand the work back to you, Krister, for key takeaways.