Volati AB

Good morning everyone, and welcome to today's webcast presentation with Volati. With us presenting today, we have the CEO, Andreas Stenbäck, and CFO, Martin Aronsson. We'll open up for a Q&A after the presentation, and you can type in your question using the form that is located to the right. Or, if you're calling in and would like to ask a question, please press star 9 to raise your hand, and then star 6 to mute yourself when you get the word. And with that said, please go ahead with your presentation.

Thank you. And thank you everyone for listening in today. I thought we would start directly at page three, summarizing our Q4 result. Firstly, I'm very happy about our sales development in this quarter. I feel we really see some signs of recovery after many years of tough market conditions. So sales growth grew with 11%, and we also actually returned to organic sales growth of 3%. And this is the first quarter since Q1 2022 that we also see organic sales growth in all of our three business areas. I'm generally happy with the margins that we show across the platforms. That is much thanks to the structure measures that we've taken throughout these three last years, meaning that we are now able to perform good margins overall. However, as described here in our Q4 report, we have one platform within business area industry, and that's Tunum Group, where we haven't showed the results that we should. It's mainly because of two reasons. One is that we're still facing a tough market in Tudum and secondly that we've had some low margins projects that we've had to handle in this last quarter. And that, you know, in a fairly small quarter for Volati as a group, that has a greater effect than it should, meaning that our EBITDA came in line with last year. Positively, it's also that our earnings per share increased 30% in the quarter, and that If we turn to the next slide, that the cash flow was very strong. And it's actually, you know, the Q4 cash flow was strong in itself. It also summarizes very good cash flow for the full year of 2024. And it's actually the second year now in a row when we have cash conversion in excess of 100%. And that also enabled us to continue doing acquisitions. We've done two very nice acquisitions since the end of last quarter. Solix Group acquired Timberman in Denmark, and then we had Etiketto Group that acquired Clever Etiketten in Germany. So both of these two adding approximately 700 million of yearly revenue. And if I just allow myself to summarize a bit, so we've had now three years of challenging market conditions, which means that we also created ourselves a growth gap. Our financial goal is to grow at least 15% annually. That means that we should double every fifth year. We haven't been able to do that the last three years, and that's been purely market-driven, I would say. We've been facing some market headwinds in a number of our platforms. However, we have also taken the opportunity to work with long-term structural measures in this platform, meaning that we have prepared ourselves for the market recovery when it comes. We also, thanks to two things. Firstly, we went into this period with a fairly low net debt to EBITDA levels, but we've also been able to generate really good cash flow. So these two in combination have enabled us to continue making acquisitions. So we've done 15 acquisitions totaling 2.2 billion of yearly revenue throughout these three years. So, of course, what does this mean? The long-term structural measures that has placed our platform in a really good position in combination with the acquired growth that we've been able to achieve the last couple of years puts us in a position that when the market starts normalizing, I expect to see an accelerated growth, meaning that we will also be able to close that growth gap that we have created. Looking at some details on some numbers, and I already said that, so net sales up 11%, and even more better than the organic growth is back 3%. EBITDA in line with last year, and as said, operating cash flow really strong. And it's also summarized a really good year in terms of cash flow, which also enabled us to reduce the net debt to adjusted EBITDA from 2.8 to 2.6, despite that we actually did acquisitions also. Zooming out a bit, looking at the long-term development, I think these slides tell me two things. One thing is that we have been able to actually outperform our long-term financial growth target or our financial growth target. If you look at it over a period of time, we have been able to achieve it. From 2018, the annual growth has been 17%. But it also tells me that when you look at this, that from 2021 and the last three years, we haven't achieved the 50% growth target. And that is the growth gap that I've been talking about earlier. So 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. And let's start with the EBITDA growth last 12 months for the ordinary per common share. As Andreas mentioned, we do at the moment have a bit of a headwind in a few of our platforms, affecting the growth negatively. And despite that we did see a small EBITDA growth in the quarter, we are now at minus 11% EBITDA growth during full year 2024, and our target is 15%. But it's worth noting, however, that our target is over business cycles, and our five-year average growth is 19%. Our second financial target is our return on adjusted equity, which came in at 16% versus our financial target of 20%. So it is now below our target, driven by a lower EBITDA growth. However, during the past five years, we have delivered on average a 32% return on adjusted equity. And last financial target is our capital structure, where our net FTA ratio came in at 2.6, which is an improvement from the 2.8 times that we had in Q3. And it's now then also in the middle range of our financial target ratio of between two and three times. So as Andreas mentioned, this is a good development driven by strong cash flow and also considering that we acquired Timberman at an enterprise value of 3 and 10 million during the quarter. So with our current leverage, we feel that we have the financial capacity left when the right acquisition target comes our way. So let's move into our business areas and see how they are performing. And let's start with Solix Group, who saw a sales increase of 17% in the quarter, which was mainly acquisition driven. But we're also very happy to see that they had an organic growth for the first time since Q2 2022. However, they're continuing to see a challenging market, but they do see some early green sprouts, for example, within the building hardware store customers. If we allow ourselves to zoom out a bit to full year numbers, we saw a 5% sales growth in Salix Group and then EBITDA in nominal terms increasing with 4 million SEK. Margins for Salis Group came in almost in line with last year, despite significantly lower organic volumes compared to one year back, which really shows that the hard work that they've done during the past two plus years, working with cost control and coordination benefits and working with synergies in acquiring businesses is really paying off. Regarding the market, of course, everybody else is looking at external sources and they are predicting a construction market growth in 2025, although that is from quite low levels. But we feel that with the actions that we've taken in Salix Group, we are well positioned to capture that growth. We're also happy to see that in the quarter, the Salix Group acquired Timberman, which adds flooring products predominantly to the Danish market to the Salix product portfolio. So let's move over to Etiketter Group, who continues to deliver another strong quarter. Organic sales increased with 16% in the quarter and 9% during the last 12 months. And this is driven by a good demand and the solid order intake, especially in the Swedish business, where Etiketter Group is now expanding production capacity to meet this demand, both through investing in new machines, but also through increasing the efficiency in the current setup. The APT margin increased further in the quarter and is now at 21.4% during the last 12 months, which is three percentage points higher than last year. And this now marks the ninth quarter in a row with increasing in the last 12 months margins for the business area etiquette group. And to us this shows that the strategy of acquiring companies with a lower margin and then working with synergies and operation improvements is really working. And the EBITDA since they started the acquisition journey has quadrupled, increasing from 52 million in 2019 to about 200 million in 2024. During Q1 2025, Etikettigroup established a new platform in Central Europe through the acquisition of Cleveretiketten. Andreas will say a few more words about this acquisition in a minute. And let's move over to our last business area, which is business area industry. And the quarter four marks another tough quarter for industry. Although revenues increased with about 4% where half organic, the EBITDA margin declined to 7% versus 10% in quarter four last year. The performance of the platform varies in business area industry, but the drop in EBITDA in the quarter is explained by Tonu Group, who is facing a low demand in the agricultural segment across Europe. At the moment, farmers are quite reluctant to new investments, given that the grain prices are unfavorable and that there are some delays in the year contributions. And also for Tonen Group, they had in the quarter, they were also negatively affected by a few products with lower profitability in the Spanish part of the business. And moving over to St. Eriks, they continue to face a challenging market situation in the construction segment, while the demand in the infrastructure segment is stable. And communications, they had another good quarter, performing well, increasing EBITDA, both due to improved demand, but also to some extent due to soft comparables in the quarter. Lastly, Corventa is performing well in the quarter, both through strong performance in the core business, but also driven by floodings in Europe, which is driving the demand for Corventa's products for water damage remediation. However, all in all, this concludes another tough quarter for industry, with a few platforms performing below what we expect in the normalized market. But with the actions that we've taken, we're very confident that we are well positioned to take the growth when the market returns. With that, I'll leave the word to you, Andreas.