Troax Group AB (publ)

Hi, everyone, and we're very welcome to this first quarter presentation for the Troax Group. My name is Martin Nyström, and I'm the CEO and president of the Troax Group. Together with me, I have Anders Eklöf, who is the group CFO, and together we will walk you through the quarterly results, give some extra color to this, as well as open up for a Q&A towards the end of the call. Before we move into the topics, I'd like to make a comment on how we report the numbers from 1st of January. And we have launched a slightly revised organization starting from the 1st of Of January and the we really aim them to to put to decentralize the tracks group to further extend. We aim to put a bit more of decision making as well as empowerment closer to our customers with the aim that things will go quicker, smoother and. contribute to more growth. This way, we think we can cater for different customer preferences as well as also keeping our global standards well together. And this way, we also believe that we will become more agile going forward in terms of balancing supply and demand as the world moves different in different parts of the world. So starting from this quarter, we'll then report our order intake and sales in adjusted regions. So EMEA, we will have North and South. For Americas, which consists of North and South America. And APAC, we look at Asia, excluding Middle East, which then belongs to EMEA. And I'd say this reorganization is not a revolution. It's more of an evolution to create Troics 2.0. So with that, I'll move into the summary of the first quarter. And I'd say that the picture largely remains from the fourth quarter, which means that we have a mixed market. We have a slower Europe. We have a slightly stronger Americas and we have a stronger Asia. So you could say the developments that we saw towards the end of the year last year continued also into the fourth quarter. If we start with North Europe, we continue to develop and it continues to develop weaker. This is mainly driven by the construction segment in the Nordics as well as general industry in Central Europe. We also noted that the demand started slower in the beginning of the year and it was a little bit slower than usual. But we also saw that we had improvements through the quarter and out of the quarter, so that was good to see, at least from a sequential point of view, in the quarter. We also had Americas with solid growth, this time mainly coming from the warehousing segment, and we have not noted any significant change in how the Americas market develops for us during the quarter, given the macroeconomics as well as uncertainty. Last but not least, we had a very strong start of the year in APAC with significant orders both in the automotive as well as in the warehousing segments with very strong growth number. If we move on to the bottom line, instead we had a lower EBITDA margin and I'd say this is predominantly driven by the production volumes in Europe. And I'd also say that the EBITDA margin is on the low side, as well as a bit of a disappointment also for us. If we start with what drives this, we will continue to have a solid gross margin. And I'd say for a first quarter, it's also well in line with our informal target, despite the lower volumes overall. If we move over to SG&A costs, they continue to be in line with our long-term strategy and our plan. But at the same time, I think it's also fair to realize that given the headwind in the European market, we are having too much sales of admin cost short-term, given the volumes. I'll come back to that, I think, later on in the presentation. Then I think we also kept working capital discipline, which meant that we, for a quarter one, kept our cash flow reasonable, even though we would always like to enjoy stronger cash flow. And it also means that our net debt is stable. And I think we have continued to be disciplined when it comes to managing our inventories. as well as how we manage our accounts receivable, as well as accounts payable. So I'd say very stable development on accounts receivable and payment and payables, and a job well done by the team on how we manage our inventories. And of course, given the net debt level and that being stable, our balance sheet is still a strong balance sheet, which enables us to grow further when the market allows. During the quarter, I think we've also done a few, really, and passed a few good milestones on our strategic journey. Our factory in the US, which we have announced before, we can now gladly say that this will be located in Tennessee, and also that the project progress is very well according to the plan, and we're on the plan to open up our new facility while shutting the current facility down in Illinois, Chicago, and we will be up and running mid-2026. Equally good is that we continue to see good progress within the active safety segments, which continues to grow well for us. As you know, it's not our biggest segment, but at the same time, it's a strategically very important niche for us to be successful within. So that also continued in the first quarter. Summarizing this all in all, it takes us to minus 5% on order intake, 14.0% EBITDA margin, and a net debt to EBITDA ratio of 0.9%. If we then move into the market development and here you can then see our new geographical segments and their share of sales 2024. The ordering take change and then also the directional development in the five different segments that we operate in or the clusters. If we start with Europe being the largest of our segment, we see a weakening order intake year on year with 12% and 13% respectively. If we look towards driving that, that's mainly the warehousing market that continues to be weak. We continue to see the construction market in the Nordics continuing to decline, and then I'd also say that the general industry climate, especially in the northern part, is also weaker than when we compared to last year. Perhaps if there is a glimpse of a positive in Europe, we do see the automotive business still continuing on a relatively strong level, but also keep in mind that our business is relatively late in the cycle. Moving over to Americas, which grew by 7% in the quarter. We had good orders from the warehousing segment in the quarter, and we also saw some nice orders in the automotive sector, while the rest is more or less stable. Then I'd say we come to the exclamation point of the group in the first quarter with APAC growing 94%. Very good development in the automotive segment. Very good development in the warehousing segment, which took the whole region up by 94%. So very, very happy to see the development in the APAC market. I'd say also here it's good to see all the main countries contributing to the growth. Then with that I'll hand over to you, Anders, to run through some numbers in more detail.

Yes, thank you very much, Martin. I will give you a short update with some hard numbers here. And we start with the order intake. We reached 69.5 million in orders for the first quarter, which is 4% down compared to Q1 of last year. And that consists of 5% decline in organic growth. And we gained 1% in FX during the quarter. If we look sequentially we can see also that we are up in Q1 now versus both Q3 and Q4 of last year and we are on par with Q2 of last year. So from a sequential standpoint we are doing better than we did in the second half of last year.

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