Troax Group AB (publ)

Hi everyone and welcome to Trovax Group's interim report for the first quarter 2026. My name is Martin Nystrøm and I'm the president and CEO of the group since close to two years. Without further ado, we will dive into the report and after my presentation we will follow up with a Q&A session which we will moderate. If we start with the first quarter highlights, I'm very happy and very pleased that we had a record order intake in the group's history. This growth is driven by mainly by our acquisitions. So in total, we had an order intake growth of 18% in the quarter. Also our net sales increase, but not as much. And also the net sales was driven by our recent acquisitions. Our order intake decreased year on year. However, it improved versus the fourth quarter. So sequentially, we saw a slight uptick also in our organic order intake. During the quarter, we had declining organic invoicing, mainly due to our project to close down our Chicago facility and ramp up our new facility in Nashville. This meant that we during the quarter were making the move and also ramping up and down and during the quarter we have not reached the full pace at the beginning of the quarter. So for the full quarter we were not invoicing as much as a normal quarter so to speak. We also saw our price increases that we put through in the fourth quarter due to raw material and energy and transportation. They have also started to come in positively both to the sales number as well as to the margin in the quarter. I will get back to that through the presentation. On the market side, I would say their markets overall remain soft and demand remained weak. I would also say that due to the macroeconomics and geopolitics, it's very difficult to assess. And this is largely as we saw with the previous quarterly report. On the positive note, I would say that we saw the demand improving through the quarter. So the year started relatively slow, but month by month, the demand improved through the quarter. So March was better than January. And I would say very positive after a few bleak years on the warehousing side that we now start to see activity that we had in the second half of last year turning into orders, particularly in Europe and North America. Also, we're now seeing the automotive challenges that we have mainly in Europe and Asia, and this now impacted Trowax Group in the first quarter of this year as well. So all in all, our order intake grew by 18% and our total sales grew by 6%. If I move over to the EBITDA and our profitability, our profitability came in at 10.1 adjusted EBITDA margin. And here the main drivers for this is our low organic volume, but also the ramp up challenges that we've had both in North America as well as in Sweden after the move of our shelving facility from Poland to Sweden. I'm very happy to see that our gross margin came back and was in line with last year, and it's also a sequential improvement versus the fourth quarter. We did have increased sales and marketing costs, but on this side, I would say all of that stems from our added businesses on acquisitions. And we have now started to identify additional cost synergies as we now move through and into the acquisition integration processes along the year. On the operational side, there are many moving parts in the group. So the North American factory transfer is in its most intense phase with the move commissioning new equipment, training teams, etc. So we're very busy with this move for the time being, both in the first quarter and in going into the second quarter. We also, as part of this process of ramping up the new facility, we started the year relatively slow with a variety or a set of issues, but we gradually through the quarter improved our ability to deliver to our customers, which means that we left the first quarter with a good run rate of our deliveries. During the quarter, we've also ramped up our production in Sweden. So the first mesh is off the line, so to speak, after the transition from Poland. So here we've done a lot of good work and we re-inaugurated our factory during the first quarter. But here I'd say there is still a bit more on the efficiency side as well as adding volume to this until we're fully up and running and fully where we need and want to be longer term we have also done a strategic review of our commercial partitioning business with the with the manufacturing in the uk and after this strategic review we concluded that this is not we are not a good owner and this does not 50 group portfolio which means that we have closed down this product line and this assortment and we've also closed the manufacturing of this product line during the quarter the cost for the cost for this were taken during 2025. If I move a little bit more into then the group, I would say it's very clear that the recent three recent acquisitions that we made during the fourth quarter have strengthened both the portfolio as well as the growth potential. So we concluded and closed the Vish net or Vish acquisition in January 2026 as planned. And we do see strong, solid demand, both for the flexible barrier side, as well as for the data center safety solutions, which these three acquisitions contribute well with. It's also clear that there are opportunities not only on the sales synergy side and sales side, there are also opportunities to work with cost as well as capital synergies as we move through the integration process. And the contribution of the acquisitions in the fourth quarter were 21% of the group total. So significant contribution, both strategic as well as financially to the group. If I then move a bit more into the transformation activities that we have, as I said, we have ramped up the production unit in Värnamo after the transfer from Poland with the promising start. There is more to do on bringing more volume into this business, as well as bringing even more efficiency into this. And this is a work that has been going on through Q1, but will continue into Q3 and Q4. The commercial partitioning business, as said, it is continued during the first quarter. The production transfer from Chicago to Portland is progressing at high intensity. And in relation to the results and the performance of our North American operations, we've also during the quarter decided to make a leadership change in Americas to secure that we have focus on sales and operational execution and performance. If we then go more into the North American side, on the picture here, you'd see our new North American facility. It's located close to Nashville in Tennessee. It will start operating and produce the first products planned in May. And we've now, during the first quarter, made sure that our delivery operations, our picking and packing operations to support our customers have been or has been ramped up. It's been a bit more problematic than we first foresaw, but we made good progress during the first quarter, which means that we move into the second quarter at pretty much full pace and where it should be. At the same time, it means that we have not invoiced as much as we should have in the first quarter, and this will then come in the following quarter. The longer term aim with this is, of course, that would improve our competitiveness. So North America is currently the only place where we're not running fully automatic and fully automatic in our business means more automation, less manual touch points, and for sure, a lot more cost efficiency into the manufacturing of our products or mesh products, I should say. And the other reason why this is a very important strategic initiative for us is that we also need to bring higher capacity to our North American operations since we've outgrown our facility in Chicago. Moving over to shelving or racking the footprint optimization. So we're completed with moving our machines and operations from Poland to Sweden. And we've done that to improve the efficiency as well as simplify the offering and make it easier for the customers to pick and choose us. We are ramping this up and the communicated annual savings of the 5 million euro expected after ramp up are still valid and we're on a good way to. To. Make that to come to fruition and on the picture here you see a picture from the inauguration that we held in the first quarter where the governor of. Of this region was cutting the ribbon, so I thought that was a nice. Way to depict a a project that were very close or even have managed to finalize. If I then move over to the market side of this and on the picture you'd see the market development and here we have depicted the organic order intakes of the year on year comparison and we have excluded FX. So in total we had minus 5% on the organic side 18 in total as I said before. If I start from a geographical point of view, Europe, 67% of our geographical exposure. So we have a mixed picture between Northern Europe, which was down significantly, driven by the automotive sector directly and indirectly. Very positive to see in the Northern Europe also that we have our warehousing segment growing for the first time in a quite long while. If we then flip to Southern Europe, which was up 10% during the quarter, automotive was also challenged in Southern part, but also here warehousing construction was up. So in total, we were up in Southern part of Europe. If we move to what I think is the exclamation point of the quarter is Americas, which is by now the smallest geographical region we have, but very strong order intake, 36% up. driven by both warehousing as well as construction, and I'd say also general industry. So I would say it's a solid start of the year in Americas. And also in Americas, I would say that automotive, which is a challenge for us in Europe as well as in APAC, in Americas automotive is flattish and not really down. Last but not least, in APAC, which is now 21% of our sales, we were down 31% in the quarter. Here I would like you to note that we had a strong comparable quarter in the first quarter last year. And also here, the decline is driven mainly by China Automotive, which after a very busy year last year, is having a slower development. If I then move into the different elements, so if we look at the order intake, it grew from 69.5 to 82 million euros in the quarter. And if we look at the bridge, we had minus 5% of that coming from organic price volume, 25% structure, and we had a negative FX effect of minus 2, taking us to 18% in total on order intake growth in the quarter. If I move over to sales, which has a slower development on the organic side, we moved from 68.3 to 71.8, so with an uptick of 5%. Here, the organic portion of this is minus 14, mainly driven by our North American shortfall on the invoicing side, but also the fact that we, throughout last year, saw lower order and slower market in Europe. So a combination of So lower volumes in Europe as well as ramp up issues in North America are the key drivers for the minus 14%. Here we are the structural component from our three acquisitions of 20% on the day on the net sale side and we also here had a an exchange rate rate effect of minus two in the quarter. If I flip over to the EBITDA development, we came in at 10.1. And here I would say that if we start with the gross margin, I think the gross margin in the quarter was fairly strong given the organic volumes. And I think we're in striking distance with our informal target despite the low volumes. I'd also say that our acquisitions contribute well to the overall group gross margin. If we then look to this from a profitability point of view, the lower volumes and the ramp up issues also put pressure on the EBITDA margin. Definitely the Americas transition had a decline to the performance. And if I look specifically to Americas, we had several issues in the fourth quarter, and we reported some 300 bps in the fourth quarter due to operational issues, transfer plus price. This gap has now shrunk to roughly 150 bps instead of the 300. So we're trending in the right direction in the first quarter. Given the low organic sales volumes, the sales and admin costs are relatively high in relation to net sales. But it's pleasing to see that the underlying organic SG&A as part of this is now coming down and declining as per the savings projects that we initiated as well as concluded during the last year. If I move to operating cash flow, we had an operating free cash flow of 4.5 million euros in the quarter. First quarter for us is usually a seasonally weak quarter for different reasons. Driving this downwards is the US situation where we add some more working capital in terms of inventory to be able to complete the move. And I'd also say that the structural component also runs at a relatively higher working capital. So this is something that we are planning and working on to getting more in line with where the group has been historically on the structural side of this. But 4.5 million euros of free operating cash flow in the quarter. Moving over to the net debt development and here we came in at 2.7 for the quarter and the net debt increased as a consequence of the three acquisitions we made during the fourth quarter at the same time as we have our rolling EBITDA measure coming down as as the business shrunk last last year so both these two things contribute to the 2.7 uh performance in the first quarter our target remained to be below 2.5 over time on this one and if i then try to conclude the the financials for the first quarter uh Order intake sales adjusted EBITDA and net debt to EBITDA I've already gone through. On the EPS suggested we came in at 7 cents versus 10 in the comparable quarter.

If I then

and with looking ahead i think i'd like to reiterate that the market conditions remain remain uncertain i i do think we have saw some green leaves during the first quarter and we are actively working with preparing to adopt whether this will now take off or whether we will continue to be in a more challenging situation so we're actually working to prepare and adopt for either scenario I think our strategy for profitable growth is unchanged. We are keeping the course. And I think it's a good proof point to look at the order intake in the quarter, looking at it from a total point of view. I also think it's good to see our broader portfolio focused on safety. I think that through the acquisitions, it's good to see strong demand, both on the flexible barrier side, as well as the data center safety solutions that we got included from the acquisition of VishNet. So very good start and strong, solid demand on those. We are seeing the optimized factory structure starting to come through. We are seeing this in Europe and we will in a not too distant future also see the benefits of the factory move in North America coming through as well during the second half of the year. And we are continuing with our decentralized operation and continue to work on our processes and our tools to make sure that we are well positioned now and we're also well positioned to grow when the market turns. So with that, I would like to conclude the presentation part of this call and we will now move into Q&A. As usual, raise your hand and we will make sure to unmute and unmute you and let you in. And I see the first hand from Johnny Yin at SCB.