Systemair AB (publ)

Welcome to Systemera Q120 and 2627's 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 the President and CEO Robert Larson and CFO Anders Ulf. Please go ahead.

Thank you very much. So this is Robert Larsson speaking and with me I have Anders Ulf, of course. We are very pleased to have you here and we look forward to first making our presentation and then opening up for the questions and answers. So we are now on slide number three. Many of you already know Systema very well. The company was established in Skinskatteberg in 1974 by Mr. Gerald Engström, who is today remains as the main owner and vice chairman of the board. And during these many years, the company has grown and has now achieved annual net sales of 1.3 billion euros. Our core values, simplicity and reliability. We develop, manufacture and market energy efficient, high quality ventilation products. We are proud of our wide product portfolio and we're determined to meet our customers' expectations on reliability, availability, sustainability and quality. Today, we run our own sales companies in 51 countries and our products are available in totally 135 countries. 27 factories in 19 countries and 7,600 employees. Slide four, please. Oh, it has changed. Yes. Sorry. Sorry. In Q1, we are pleased to see continuing growth and improved profitability. This happens in an environment with uncertain geopolitical situation. There is some cost inflation for commodities and freights. and markets that can be described as mixed or in some cases I would say even weak. However, we are more and more often receiving signals that may lead to improved market demand in the future. Continuing on financials, in Q1 we reported adjusted operating margin of 9.9%, or up 0.6 percentage points compared with the same quarter last year. This makes us firmly believe that we have the long-term financial target of 10%, well within reach. Organic growth is of course always appreciated, but it is a bit extra pleasing with double-digit growth in North America and Eastern Europe. Our target to strengthen our presence in North America is built on organic growth, well above the average for Systemair Group. And then, if possible, add acquisitions on top of that. And in Q1, we were very happy welcoming Temspec employees and customers to Systemair. Today, we also sent out a press release about an order for a data center project in Finland, just like we should do for all larger orders. We see the global and diverse customer base of systemers as a key strength, and data center business adds to this. The major product release in Q1 was the new Geniox with integrated heat pump running with a natural refrigerant, making it a future-proof alternative for our customers. We believe the timing came out quite right for this product. Slide six, please. From quarter to quarter, we don't expect to see much shift in share between regions. Western Europe is continuing as our largest region with 44%. With the other four regions fairly equal in size, Anders will share more details about the development in each region later. It deserves to be repeated. One strength of Systemair is this global and diversified customer base. This gives us a solid foundation for profitable growth and also high resilience. With that, I hand over to you, Anders.

Thank you, Robert, and a very good day to everyone. Our first quarter of the fiscal year 26-27 is covering the months of May, June and July. Q1 and especially Q2 are, from a seasonality perspective, our strongest quarters of the year. As indicated in our last couple of quarter reports, we can still notice a bit of volatility between the individual months. The quarter started off a little bit slow in May, strong in June, and then more normal in July. Total net sales amounted to 3.28 billion compared to 3.09 billion last year. This corresponds to an increase in sales by 6%. The currency conversion effects were minor during the quarter. We can conclude that for the eighth consecutive quarter, we are reporting organic growth in a relatively slow market as Robert indicated. Next slide, please. A bit more details on the net sales development. We are happy to conclude on organic growth in all regions during the quarter. We completed the acquisition of Temspec in Canada on 23rd of July, but it will impact the income statement of the group. It starts from August. The acquisition of Nadi one year ago contributed 1% to net sales for the quarter. And then finally, currency effects. The strengthened Swedish krona resulted in a negative effect on sales by minus 1%. These effects come from several currencies, but the major part relates to the conversion of Turkish lira, Canadian dollars, and Indian rupees. Next slide, please. Then we come to the geographical breakdown, and I'll comment on the organic growth rates here for each region, starting with the Nordics, where we are happy to conclude on 8% growth in the quarter. Sales in Sweden saw the greatest improvement, but all countries in that region had positive development in the quarter. Western Europe, our single largest region, had an organic growth of 3% for the quarter. Within the region, we experienced a positive development, especially in Italy, Greece, and Ireland. In Eastern Europe, we had again a very strong organic growth of 11%. Sales were especially strong in Czech Republic, Poland, Azerbaijan, and Serbia. Then we come to North America, where we saw the highest organic growth rate of 15%. We have experienced several changes in the tariffs between Canada and US recently, leading to price increases, which explains part of this increase. From the beginning of April, the tariffs were increased to 25% of the total product value, but start of June, they were revised to 15% for most products. Our conclusion is that the latest change here from Section 338 will have a minor impact on our sales. Our ambition is still to forward any additional tariffs further on. The acquisition of Temspec will affect the group accounts starting from 1st of August. In Middle East, Asia, Australia and Africa, we had an organic growth in sales of 4%. We experienced a quarter with good sales development in Australia and Malaysia but slower in Turkey and Saudi. All in all, the total organic growth amounted to 6%. Next slide. Our gross margin showed a slight improvement up to 36.5%. We see this as a sign of strength, considering the recent price increases on several components and freight. As earlier communicated, we have introduced a price increase from 1 June. Overall, we are happy to see yet another quarter with strong gross margin. Our adjusted operating profit amounted to 324 million or an operating margin of 9.9%, which is 0.6% above Q1 last year. The adjustments in this quarter relates to our US operation and amounts to minus 13 million. Selling and admin expenses in comparable units increased by 5%. Next slide. Profit after tax amounted to 229 million compared to 193 last year. Net financial items for the quarter were negative by minus 5 million. Currency effects on bank balances and loans were positive and amounted to 7 million and interest expenses were minus 9 million compared to 12 million the last year. The tax rate for the quarter came in at 25.2 compared to 27.3 last year, same quarter. And then slide number 11, cash flow development for the quarter. We achieved a free cash flow of 69 million compared to 108 last year. Within the working capital, there was a significant increase in trade receivables of 173 million due to the increased sales, especially at the end of the quarter. Also our inventory increased affecting working capital negatively with 113. The increase of inventory is due to higher safety stock of certain components. Net investments of 114 million relates to production capacity investment made in Slovakia and Sweden. Our net debts increased to 1.1 billion which is 270 million higher than one year ago and the reason being is the acquisition of Temspec that has increased the debts. The leverage left up to adjusted EBITDA amounts to 0.65, and we have a strong balance sheet that enables us to further invest in organic and acquired growth. And then slide number 12, sustainability targets. On scope one and two emissions, we are aiming for a reduction of 42% by April 2031, compared to the starting point in April 24. In Q1 we achieved a reduction of 11% compared to the base year. We have continued to install solar panels and in this quarter we achieved a record solar power generation with an increase of 17%. Our actions to reduce work-related injuries are continuing to be successful and we achieved a 6% reduction in the quarter. And then finally, our target to achieve a minimum of 25% female leaders. We are currently on 23.2, and we will continue to launch different activities to improve this KPI. One example is the female mentorship program that was just finalized before summer, and the new one is planned for the fall. And by that, I hand over to you, Robert, and to finalize the presentation.