Studsvik AB (publ)

Welcome to Studsvik Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. 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 CEO Carl Tedin and CFO Peter Teske. Please go ahead.

Good morning and welcome to Studsvik's Q3 earnings call. So just a short brief update again. I guess many of you know us by now, but we are a truly international company. Last year we did around $100 million in revenue or 893 million crowns. We are in roughly 15 countries. We're a little bit more than 500 employees. Key markets are Japan. Korea is very big for us. We are big in the European marketplace, of course, and also in the U.S. and Canada. So we're truly serving the nuclear market with services and products. So we try to explain... how we operate and what kind of market segments there are in the nuclear and adjacent industries. And as you can see, we talk about new build, we talk about operating plants around a little bit more than 400 in the world. And we talk about the process of decommissioning sites as well. And the fourth one is other service that requires knowledge and expertise in handling radioactive material and isotopes. I think we serve this market with a lot of different offerings and some offerings are sort of obviously fit for different parts of this market. I think the big change we all have seen over the last couple of years is the new focus on new build, both in the European marketplace, in Asia and in the North American marketplace. That is very much driving a lot of investments. Many of those investments are in early days now. Those will be increasing year over year over the next 10 to 15 years. Maybe things that we have not spoken so much about is the operating plans and the huge investments going into lifetime extension or long-term operation of the more than 400 plants in the world. We see that in terms of material testing, new fuel types being tested, obviously upgrades of safety systems and all that. see numbers of up to one billion dollar per plant to make those plants extend their lives to 80 years and beyond. Decommissioning is part of the life cycle commitment that you need to have to nuclear power and we have a big business around that mainly in the European marketplace. And last but not least, there is an emerging services requirements for cancer treatment and other type of treatments in the medical industry where our expertise is very much in demand. So I'm going to go into the Q3 numbers. We delivered what I would say a solid quarter. We have basically a flat quarter in terms of revenue. But we continue, which has been the focus during this year. We continue to improve our profitability and we deliver strong cash flows. And it's significantly better to the same period last year. If we also look into the nine year period, we have more or less doubled the profits compared to last year. And free cash flow amounted to 55 million, which is an increase of quite impressive, 114, 150 million compared to last year. So we also should know that Q3 is a quarter where it's not our strongest quarter. We obviously have the holiday seasons and we have other some seasonal variation, which means that this quarter is not the strongest, but we still deliver a better Q3 than we did in 2024. Some key milestones for our Q3 numbers. We have a very strong drive and business in our business. There are fuel, materials and waste management technology. This is predominantly the services and products that we provide from our site just south of Stockholm, just a big site. And it's continued to have a positive market environment, which is, you know, to the point I made before, very much is driven also by lifetime extension discussions with customers, testing how material is behaving after maybe 20 years under irradiation in nuclear power plants, as one example. We also had the eyes on a new build and we signed an MOU with Blykalla, the AMR-SMR developer out of Sweden, and Evrock, a data center provider focusing on data centers for highly secure environments. And together with them, investigate the feasibility commercially and technically to build data center, AI data centers and SMRs at our site with our competence, with our site to develop an AI nuclear driven data center in Sweden. In a 10 year time frame, this is nothing that happens very quickly. The data center can come up earlier, but obviously the development of SMRs takes a lot. So very interested. This is obviously a development we have seen in the US. We will see that also now coming to Europe and we are in the middle of that development. In business areas like Scanpower, our software business out of the US, we saw momentum for the newly acquired Blackstar tech offering. Not huge volumes, but some very interesting orders that we have taken, which gives us confidence that we have demand and a competitive product. We are now building an organization to drive us further into 2026. And on October 7th, which was just after the quarter finished, there was a very important international event hosted by the Swedish and Finnish governments in Stockholm to discuss, focus on investments into nuclear, where the government hosted and invited a lot of high-ranked banks and also the industry in general. And we were obviously In the middle of that, I have a lot of interesting meetings and it's very clear that Sweden is one of the most investable nuclear markets in the world at this time. So we do believe there's going to be quite a lot of investments into nuclear new build into Sweden. So a little bit on our business areas. As you know, we have free decommissioning, fuel materials and waste and strategic scan power. So let me take a little bit of those. So the business air decommissioning radiation protection is a business air where we have struggled this year with our profitability numbers. It's been a very competitive market. Not the market that you don't have a market. It's definitely demand, but it's a lot of competition in the market. And there's been an important show in Dresden in Germany where I attended the contact decommissioning exhibition. We definitely have products and services that are of interest, but we need to do a fine-tuning organization and focus more on the higher profitability part of that market. To do that, we have decided to do some changes in the business area management team to basically increase the speed of the changes required to get that business into the profitability levels that we require. Mentioned shortly before, business area fuel, materials and waste technology, very strong quarter. We have a total change in both our sales and our profitability numbers here. momentum in the market we have a strong order book but also we now have also a very much more efficient organization and a high engagement which means that we actually deliver produce on time to a higher degree than last year and by that also can invoice our customers so we continue to view this business era very positively going into 2026 as well. Business area Studsvik Scampower is where we have our software business, some consultancy and then also the newly acquired Blackstar Tech. Here we have a little bit softer, it's very much seasonal variations in this business as the license sales that we do throughout the year when it happens has a big impact on revenue and not to say the least margins. Here we have a bit softer but we still see very positively on this business on the profitability levels and the outlook for this business area. With that I hand over to Peter Teske our CFO please.

Thank you, Carl. I will start to present our financial from our three segments and then go to the consolidated group numbers and at the end talk a little bit about our financial targets. We start to look at the business area decommissioning and radiation protection services and the sales for the quarter amounted to 19.7 million and for the first nine months, 266.7 million. which is a local currency, is a decrease of 2.4% in the quarter and 1.9% for the first nine months. The operating profits for the quarter amounted to 4.4 million, which represents an operating margin of 4.9%. For the first nine months, the business area operating profits was 10.7 million. The third quarter and the first nine months of the year were characterized by continued tough competition in the market and a strong cost focus among our customers. These conditions limited statistics opportunities for additional sales. As a result, margins were lower in both the third quarter and the first nine months compared to the same period last year. To strengthen the business area, Group CEO Carl Thedén has temporarily assumed responsibility for the business area, and a strategic and organisational review is currently ongoing. If we then move on to fuel, materials and waste technology, Sales for the quarter amounted to 79.5 million and for the first nine months 284.5 million, which in local currency is an increase of 17.6% in the quarter and 8.3% for the first nine months. Operating profit for the quarter amounted to 9.3 million and for the first nine months 42.9 million. The business era demonstrated good progress in the customer projects, supported by improved productivity and a favorable mix in production portfolio. These developments contribute to a stronger competitiveness and improved profitability. Margin increased also due to the implemented cost-efficiency program, improved purchasing routines, and the streamlined delivery organization. Together, This resulted in an approved operating margin for the first nine months to 15.1% compared to 5.4% in the same period last year. And if we move on to Studsvik Scampower. And as Carl mentioned, Studsvik Scampower sales are subjected to seasonal variations, which we saw also during the third quarter. Sales decreased in the quarter to 38.7 million. And for the first nine months, we see an increase to 120.5 million. In local currency, this is a decrease of 7.3% for the quarter and an increase of 5.5% in the first nine months. The increased sales contributed to improved earnings for the first nine months, and we see that the underlying business continued to demonstrate a stable profitability. The operating profit increased in the quarter to 7.8 million for the first nine months and increased to 21.4 million, representing an operating margin of 20.3% in the quarter and 17.8% for the first nine months. And we also have a positive effect due to the quarter three. We recovered six millions from the fraud that occurred during Q3 2024. And this had a positive impact in both operating profit and the cash flow. We see now in total that the financial impact of the fraud that occurred Q3 2024 is now minimal for the group. And if we then go to our consolidated group numbers, and if we start up and look on the third quarter over the past year, we see that the development has been quite stable. We see an upward in trend and a solid and consistent performance. And the net sales in the third quarter 2025 increased to 205.8 million compared to 208 million last year. and an improvement of just over 2% or more than 5% when adjusted for currency effects. The growth in Q3 2025 was mainly driven by a strong performance in fuel, material and waste management technologies. And if we look on the first nine months of the year, the sales amounted to 660.4 million, up from 645.8 million last year. In local currency, this represents a growth of above 4%. And here we see good effects from both static scan power and fuel materials and waste management technology. And if we move on to our operating profit, And also here we start up a look in the past over the years. We see a strong performance in 2022, and that was mainly driven by license sales in Stuttgart Scampower. And in 2023, we had some land sales in FMWT. And that followed up by a dip last year as a result of the fraud that we talked about earlier. And also we had some disruptions in the FMWT. But if we then look in 2025, we see that operating profit has improved in the third quarter, rising to 13.2 million compared to a loss last year of 0.5 million. This corresponds to an operating margin of 6.4%, and that's a clear turnaround from the negative margin of 0.3% last year. And we see that improvement was mainly driven by a strong result in the fuel materials and waste management technology, and of course, supported by the repayment of the six millions related to the 2024 fraud case. For the first nine months operating profits is more than doubled to 50.2 millions up from the 25.2 millions last year. And that is operating margin increase from 3.9% up to 7.6%. And then we take a look at the cash flow The cash flow from operating activities in the third quarter amounted to 26 million compared to 38 million in the same period last year. Free cash flow showed a strong turnaround, improving to 17.3 million from a negative 18.4 million a year earlier. The improvement is mainly driven by higher operating profit, lower investment levels, and the complete acquisition of extreme bar and soak technique that was made during 2024. For the first nine months, cash flow from operating activities strengthened to 65.7 million, up from 21.2 million last year. Free cash flow improved even significantly to 55.6 million compared with a negative of 59.3 million in the previous years. This substantial year-over-year improvement reflects stronger underlying earnings, lower investments, activity and acquisition, as I earlier mentioned. Worth note is that during the same period this year, we have amortized 25.3 millions of our debt and distributed a dividend of 16.4 millions. And finally, a short look at our financial targets and year-to-date performance in 2025. We have a growth target of 6% that we did achieve during 2024 And we see that we are a little bit lower during 2025. And that's mainly due to the challenging market situation we see in Germany. But also we have the seasonal variation in Atstuttsvik's scam power sales. We see a strong improvement in the operating margins that go from 3% 2024 to now 7.6%. And in the equity to asset ratio, we see an underlying positive trend, but still we are on the same level as 2024. And with that said, I will turn over to Carl Thedin.