Volati AB

Good morning and welcome to today's presentation with Volati. With us presenting today we have the CEO Andrea Stenbäck and CFO Martin Aronsson. We'll do a Q&A after the presentation. You can either type in your question using the form that's located to the right or if you're calling in like to ask a question please press star 9 to raise your hand and then star 6 to unmute. And with that said I'll give the floor to you guys. Please go ahead with your presentation.

Thank you very much, and thank you for listening to this quarterly presentation. Let's go directly into it. Just to start with Q3 in brief, this is another quarter in line with last year, which of course leaves me with the feeling that But I also feel that we are doing a very good job in our platforms, given the circumstances that we're operating under. We saw challenging market environments affecting four of our six platforms. But a very positive exception is at the Cata Group, where we saw a strong organic growth with 15% per quarter and improved margins up to 21% last whole month. And that means now that Etiketto has basically reached the same margins as before we started our acquisition journey with that platform, meaning that we have gone from an EBITDA of 50 million in 2019 to almost 190 million in the last 12 months. Our second business area, Salix Group, they deliver yet another strong quarter, given the circumstances. They're still operating in a declining market. However, they showed an acquisition-driven growth of 5% and margins in line with last year. And that means that for the second quarter now in a row, they have shown a stronger or improved EBITDA compared to last year. In industry, we have seen a mixed development. Corventa had a strong quarter and communication showed growth from a very low level in the yet slow market. And then we have St. Eric's. They are experiencing a challenging construction market, while the infrastructure segment is holding up well. So in Q3, we still met relatively strong comparables from last year, which we will ease up the coming quarters. And then our final platform just briefly gives my words on Tunum. They had a very tough quarter. This is a platform that can show quite some variations over time. And currently we're affected by the slowest market in Europe for farmers in many years. And this in communication with slower than anticipated deliveries in Spain on the back of a strong order book there that resulted in a very weak quarter. We do not expect any rapid changes to the market environment in the short term. But thanks to our long-term focus, we have a good cost structure and maintained our strength in our market position, our platform. So once markets improve, we will really see the effect from those market positions that we have achieved. Now, digging into the more detailed numbers. On the next slide, we can see that in the quarter, group turnover increased 4% to 1.9 billion Swedish crowns. The EBITDA came in slightly behind last year, so 6 million behind last year, but with a maintained EBITDA margin of 10%. The operational cash flow came in at 107 million, which means that we are now operating on a 94% cash conversion during the last 12 months. And then finally, the net debt, we're now at 2.8. It's still within our range. And if you take that into consideration in combination with that, we have the strongest cash generating quarter ahead of us that provides a solid foundation for continued add-on acquisitions. On this slide, we take a bit more long-term view on Volati. And I tend to say to you fairly often that we should be evaluated over time. And which can be seen, we're now operating under 7.7 billion of turnover and almost 660 million of EBITDA on an annual basis. That means that we have grown on average 18% per year since 2018, which is, given the poor growth the last couple of years, below what we could be expected of us. Since 2021, the growth has been below our financial goal of at least 15%. That's been mainly market driven. But we also expect the next year to compensate for that, the next years to compensate for that with accelerated organic growth once the market to operate in start to improve and volumes start getting back to normal level. One way of looking at it, I mentioned in the quarterly report, in 2021, we showed revenues of some 7.3 billion with an 11% EBITDA margin, which could then be compared to what we're currently showing. And if you then also take into account that we have acquired 1.7 billion of annual turnover since then that should leave us with the potential of at least 9 million and improve markets. So that is something that we're really looking forward to capture once market starts normalizing. With that, I leave the word to Martin.

Thank you, Andreas. So let's start with looking at our performance in relation to our three financial targets, starting with the EBITDA growth per common share during the last 12 months. And as Andreas mentioned, right now we have a market headwind in the QR platforms affecting the growth negatively. And we are now at minus 16% versus our target of 15%. It's worth noting, however, that our target is over business cycles and our five-year average EBITDA growth per common share is 19%. Our second financial target is our return on adjusted equity, which came in at 15% versus our financial target of 15%. So that is below our financial target, which is driven by a lower EBITDA growth during the year. However, during the past five years, we have delivered on average a 34% return on adjusted equity. And lastly, we have our capital structure, where our net FTA ratio came in at 2.8, which is within the range of our financial target ratio between two and three times. So that means that we still have financial capacity left to do the right acquisitions when they come. So let's move to our business areas and let's start with the Solix Group, who delivers a solid quarter. Sales increased with roughly 5% in the quarter, driven by acquisitions. And they continue to see a challenging market situation in the industrial and professional segments. But we do see some green sprouts in the consumer related parts of the business, even though we must say that that's early days still. And I guess that one of the million-dollar questions that we have is when the market will start to show growth. And what we see now is that external sector estimates point towards an overall construction market growth in 2025. And for Solid's group, despite lower organic volumes, they managed to keep the EBITDA margin at the same level as last year, and EBITDA in nominal terms came in at 4 million SEK above last year. For us, this means that this is a result of two years of Salix Group working actively with cost control, coordination benefits, and synergy realization, and also working with the market. So with the measures that we have taken or that Salix Group has taken, we are confident that Salix Group is in good shape when the demand recovers. So Etikettigroup delivers another strong quarter, so sales increased organically with 15% in the quarter. And we see a good demand in the business there with the solid order intake, especially in the Swedish business. And they're expanding the production capacity to meet the demand, both through investing in new machines, but also through increasing the utilization of the current machines. And we're happy to see that the upward EBITDA margin trend is continuing with a four percentage point higher margin in the quarter. And the last four months, the margin is now at 21%, which is a little bit of a milestone for Etiquette Group because that is now higher than the previous record year in 2019. And to us, that really shows that the strategy of acquiring companies with a lower margin and then working with extracting synergies and working with operation improvements is really paying off. And as Andreas mentioned, the EBITDA has now almost quadrupled from the 50 million in 2019 to the roughly 190 million that we have in the last 12 months. The business area is well positioned for further acquisitions. They're looking for acquisitions both in the Nordics and the rest of Europe. We see significant potential to grow in the business area. Let's move over to industry, who concludes another tough quarter, with an EBITDA of 50 million versus 91 million last year. The performance of the platform varies, but the drop in EBITDA is explained by Tonen Group and St. Eriks. Starting with Tonen Group, who is meeting a tough market due to low demand in the agriculture segment. And in this segment, the Toner Group is dependent on the farmers, who in turn are dependent on favorable grain prices and yield contributions, which both are not working in their favor at the moment. Toner Group also saw a lower contribution than expected from the Spanish business due to lower than anticipated deliveries. And Sanctiris continues to face a challenging market situation in the construction segment, while the demand in the infrastructure segment is quite stable. This market situation is not new, and earlier in the year, Sanctiris implemented a cost program that increasingly gave positive effects for the platform. And also, as Andreas mentioned, last year's quarter was quite strong, so Sanctiris is meeting tough comparables in the quarter. But from Q4 onwards, the comparables will be easier. As in Q1 and Q2, communications is meeting a slow market, but the platform improves EBITDA in the quarter compared to last year, and will continue to meet quite soft comparables in the next quarters. Our last platform Coroventa is performing well in the quarter, both through a strong performance in the base business, but also driven by floodings in Europe, which then, as we have talked about before, drives the demand for Coroventa's products for water damage remediation. So all in all, this concludes another tough quarter for industry with a few platforms performing below what we expect in the normalized market. But we're confident that we have taken the right actions to position our companies for when the markets return. And with that, I leave the word to you, Andreas.