Volati AB

Good morning, everyone, and welcome to today's webcast presentation with Volati. With us today to present, we have CEO Andreas Stenbäck and CEO of Salix Group, Martin Hansson. After the presentation, there will be a Q&A. So if you're calling in and want to ask a question, please press star nine to raise your hand and then star six to unmute yourself when handed the word. You can also submit in questions via the form to the right. And with that said, please go ahead with and start your presentation.

Thank you and thank you everyone for listening in today. This is most likely also my last call with SOLIX as part of VEVOLATE and I'm very happy to have Martin Hornsson, the CEO of SOLIX Group at my side here today to give you some more flavor about the strong development in SOLIX. But let's get into the presentation. Velotti creates value by developing our today's six platforms, growing them both organically and for acquisitions. From this quarter, Salix Group is considered discontinued operations. while the remaining five platforms are now reported separately in our segment reporting and as then separate business areas and that will then be the remaining volatility of the potential separate listing of SOLIX Group. But we will get into more details about more all of these six platforms later on in the presentation. If I start by summarizing the quarter, mat sales increased by 3% and EBITDA came in 3% behind last year. So I do not typically talk about items affecting comparability or extraordinary items, but in this quarter, I think it's justified to do that. The reason being that we have significant costs related to the separate listing process of Solix Group. And that is also in the quarter where we have, because of the seasonality over the year, relatively low EBITDA. So these extraordinary items are affecting us more than usual. So if I adjust those, the EBITDA increased with 4% compared to last year. And what's the main reasons behind this growth? We have another strong, very strong quarter by Solix Group, growing with 37%. And that is now, I think, the fifth very strong quarter in a row from Solix. Etiquetto also showing a nice growth of 18%. Communication and Coraventa coming in in line were actually slightly better than last year. While we have two platforms, Synthierix coming in lower than last year, and Tuning Group actually quite significant behind last year. We will get into more details behind all this later on, but that I would say summarizes the situations among the platforms. We show very strong growth in profit after tax and earnings per share. And I'm also very happy about the cash flow that we see in the quarter. And this cash flow has enabled us to complete two acquisitions so far this year, adding roughly 930 million Swedish crowns of annual turnover. So we have had a good start of the year when it comes to acquisitions. And lastly, the separate listing process with regards to SOLIX Group are developing as planned. And we have an important meeting later on today. It's our annual general meeting, which will then hopefully decide upon proceeding with that process. Looking at the numbers a bit more in details, I'm not planning to discuss them actually in detail, but what one could see on this slide is also that the net debt to EBITDA ratio is now at 2.9. It's in line with last year and it's in the upper uh part of our uh net to uh ebda adjusted abda range uh but that's a very very deliberate decision by us to to to be there Looking at the figures on an LTM basis, our sales are up 4% while our EBITDA is up 3%. However, what I think is strong on this side is the operational cash flow, which has been very strong the last 12 months. And that's one of the key drivers behind why we have been able to also keeping up our acquisition pace. Our financial targets last time with SOLIX group most likely included. So again, behind on the EBITDA growth, we have discussed this now for actually a couple of quarters. We are currently operating under our EBITDA level, which we should achieve in a normal level. That has created our growth gap, the growth gap that I usually talk about. Once the market normalizes, I expect to close that gap. We've already actually seen it in Solix Group, while we have some of our platforms still behind. But what that means is that we will grow at levels exceeding our financial growth targets for some time once we see that happening on the group level. The return on equity, RUE, is back where it should be. It should be in excess of 20% and it's back now. And I actually expect that to continue to increase in the coming quarters and not that the BTA already touched upon. So with that, I leave the word to Martin who will tell you a bit more about SOLIX Group and the development there.

Thank you Andreas. I would like to present some results from Salix Group. So who are we? We are a growing B2B trading and distribution platform with an active M&A agenda. On the right hand side, you find a graph showing the sales development since 22, as well as the EBITDA margin. We landed sales a bit over a billion in the first quarter, which equals some 3% organic sales growth. And organic growth remained positive across several markets, although some segments continue to face some challenging market conditions. EBITDA grew, as you heard Andrea saying, organically with 37%. We now have eight consecutive quarters of growth, with five of them with some stronger growth, but eight consecutive quarters of growth in total. The EBITDA margin grew from 8% to 10%, leading to an LTM of 10.6%. So if we go back to the right hand side of the graph. It's our view that our relevant market have lost some 25 to 30% in volume since 22 to 24 when the decline bottomed up. And our sales held up in this period mainly due to sales price adjustments combined with eight acquisitions. And we believe that we are in a strong position to further grow in the period ahead of us with this market ahead of us. So the EBITDA margin improvements was mainly driven by favorably currency effects, product mix and implemented price adjustments. And as you can see in the bottom of the chart, our return on capital employed landed on 39%, strengthening from last year and further showcasing our capital efficiency. In the end, acquisition of Leidex, we are very happy about that. And I will comment and say a few words about that in a moment. This slide shows the EBITDA development per quarter since 2022. And as you can see, Solix experienced a negative earning trend from Q2 in 22 to 24, with acquisitions then partly offsetting the decline. We have had a strong earnings momentum since Q1 2025 with five consecutive quarters of substantial growth. And if you look into the details of the chart, you can see that we have eight in total of growth quarter by quarter. A few words about Leidex. That was our last acquisition, acquired first of April, and we are very, very pleased about this acquisition in Ireland. The company is called Leides, as I said, and the company is a market-leading building materials provider in Ireland. So Leides is closely aligned with the other SOLIX businesses in many ways, and we have a revenue of around 480 million with a reported EBITDA margin of around 13%. So this company provides a scalable platform for us for continued organic and acquisition driven growth in Ireland, which we find very, very exciting and I hope to build further on. So this will then give us a 10% share of turnover roughly overall in Ireland compared to the overall solids turnover. So it's in a good position to sum up. Solix is in a good position to further grow sales when the market turns. We do see strong favorable trends and drivers in our segments going forward that points to positive market trend in the future to come. And we are really looking forward to have Ladix on board. contributing both to growth and also performance for us in the coming quarters and years. So thank you very much to the Salix team and for a good quarter. And thank you, Andreas, for these couple of times when we have presented Polatia Salix together. Thank you.

And then we'll go into the continuous operation, as it is called. What we mean by that is the five business areas which will remain with Volati. And as said, these are now presented as separate business areas, which also means that I will be able to give you some more details about their overall development. However, before we go into the separate business areas, I would just like to say a few words about the overall development in continuous operations. Looking at this slide, Firstly, what can be seen is that we had a very strong development up until 2023. However, this graph also shows very clearly the growth gap that I earlier referred to. That has been created then because of the poor development after 2023, mainly market-related. So just stopping for a short time at 2023, I think that is a good year to just, and it's a good indication of where our four platforms that were earlier included in business area industry as a combined entity operated at the normalized level. While Etiketto since 2023 has grown in acquisitions. So they are currently operating at levels above 2023. What does that mean? That means that the continuous operations should, in a normal market, operate at least at 2023 levels, I would say beyond those levels. And that is the growth gap that I'm referring to. And in order to get back there, to those levels, we need to show an organic accelerated growth. And that growth need to be in excess of our financial pocket for quite some time in the future. So, Then talking about the development in the individual business areas or platforms during the quarter, we start with Etikettogrupp. So Etikettogrupp showed very strong sales and that was both acquisition driven. We have done two acquisitions that are still rolling in, but it's also an organic growth. And that is much thanks to the demand on the important Swedish market, which is now back on track. EBITDA growth of 18%, and that's been driven both by acquisitions, but also organic growth. The EBITDA margin is as expected decreasing, and that's because of the dilution that the acquisitions that we've done creates. However, in our business model, we increase the margins of the companies that we inquire, which means that we will over time also increase the overall market in the Etiketto Group. So that was that with regards to Etiketto Group. If we then get to the next business area, communication, Sales were down in the quarter. That's because of generally lower market activity in our core markets. However, we mapped that with better margins, two percentage points better to be more specific. And that's mainly because of two reasons. One is the deliberate move towards more profitable segments. And the other reason is that we have a generally lower operating expenses. So, given that, I would conclude the development and the beta development in communication to be quite satisfying at the time being. Looking at Corventa, we actually met somewhat tougher comparables when it comes to sales and profit for that sake as well in the first part of the quarter and that was because we had floodings late part of 2024 with rentals lasting into 2025 so the first months of 2025 which we then met in this quarter. We have, however, I would say successfully compensated that with core sales. So we still had another quarter and I would say that 12 months now of extraordinary dry weather. But as all of us know, after the sun shines, we typically see rain. So that means that we are now meeting easier comparables. But if the patterns will be similar in the future as it's been in the past, we will hopefully see some better market circumstances for Corofenta going ahead. I would like to conclude with Corvanta that this is a very nice company to own during dry times, and that can be seen in the financial that we are presenting, but it's also an extraordinarily strong company to own when we get the help out of our clients. Next platform then, that is Sankt Eriks Group. Sankt Eriks showed a net sales up of roughly 7%, and that was despite an unusually cold weather during January and February in Sweden. EBITDA margin, however, declined, and that was mainly because of the lower production rate, which means that we had a lower cost absorption. The lower production rate was a deliberate shift or deliberate decision. It was because of mainly two reasons. One reason is that we're shifting weight from the volume segment. And the second reason is that we are releasing capital, tidying capital or capital employed. We have taken cost measures in St. Derricks to meet this lower production pace as we foresee that it's going to stay that way for the foresee in the future. We also have some cost adjustments related to the segment shift that I talked about. When it comes to tuning group, We've seen significantly lower volumes in the quarter. That is mainly due to industrial projects. The most important and significant one is land panel that we have not been fully able to offset in the quarter by new volumes. That has also, despite the lower cost base, led to a significantly lower EBITDA. I think it's 27 million below last year. We see some positive signs on the market. We do gradually fill the order book and offset the decline in the contribution from land planning. So looking at the course to come, I'm a bit more optimistic than what we've seen in this last quarter. Nevertheless, we have taken cost measures to meet lower volumes to ensure that we can show profitability also at these very low volumes that we are operating at right now. Again, I would like to really put the emphasis on that this is market related. We have one of the toughest markets and markets during our ownership period within Tornen Groups that is at least in the last 20 years. So that was the business area updates. Next section is to tell you a bit about the acquisitions. We've done two acquisitions the last 12 months, and that also concludes two acquisitions this year. So it's Laidex and Intercat Group. I did tell you a bit more about Intercat Group in the last quarterly call, and Martin told you a bit more about Laidex this call. Looking at the acquisition pace, we're now at 930 million Swedish crowns of annual turnover, so I would say that that's at a good pace. And we have a very good acquisition activity across our platform. So that remains high. So the trick now for us at Volat is really to balance the pace of acquisitions against the debt leverage. And as we've said before, we are still comfortable operating at the upper end of our target rate when it comes to net debt EBITDA. So given that, we still believe that we have room for making acquisitions. Cash flow. Q1 is a negative cash flow quarter for us. Nevertheless, we have had, compared to last year, a stronger quarter. Our operational cash flow, our cash generation is now at 90% during the last 12 months. That's at a good level. And we have, as I said, a net debt to BTA at 2.9 times. Now we have a more or less neutral cash flow quarter in front of us. And then, as always, our second half of the year is the cash flow strong quarters, quarter three and four. So that means that we will increase our or expand our acquisition room during the rest of the year. And then to summarize, so another strong quarter for Solix Group with EBITDA up 37%. We have the acquisition of Laidex supporting further growth in that business area, in that platform. We also saw profit growth in etiquette and communication, both actually showing 80% up compared to last year. And we've had a negative development in St. Eriksson and Tornum compared to last year. However, we have additional cost measures initiated in both of those platforms to meet the lower volumes. Good cash flow generation. That has enabled us to complete two acquisitions in 2026. So the acquisition pace is there. And we are also well positioned overall for accelerated organic growth once the markets improve. And then, as already concluded, the preparations for a potential separate listing of SOLIX Group. That's progressing according to plan. So with that, Martin and myself leave for any potential questions from the audience.

Thank you so much for the presentation here. And as you mentioned, now we'll carry on with the Q&A. So if you're calling in and want to ask a question, please press star nine to raise your hand and then star six to unmute yourself when given the word. And you can also send in questions via the form to the right. And the first caller here is a cell phone number that ends with 8904. You have the word. Please go ahead.

Hello Andreas and Martin, I hope you can hear me. Just a couple of questions from my side. If we start with Salix, is it possible to disclose the organic growth rate here in the quarter and also if you have any comments on how demand is developing throughout the quarter and also maybe if you have any early indications for the start of Q2?

So sales growth in the organic growth of sales in the quarter, was that the question?

Yes, exactly.

So we have a 3% organic sales growth in Q1 compared to last year. So I believe that the underlying market still is... We see some growth in the market and I think we should be pleased with our sales growth of 3% compared to the market development. So 3% organic sales growth in the market. And when it comes to the next quarter, that's not for me to comment on today. But organic growth in the quarter.

Yeah, that's clear. And do you have any comments on how demand shifted or varied maybe across the quarter? I've been hearing from maybe some peers to you that January and February might have been a little bit slower, partly, I guess, for the colder weather and that we saw more of an uptick in Mars. Is that also the situation you're seeing?

Yeah, so we had, from our perspective, as you say, in February, we had a couple of cold weeks that actually slowed the sales down a little bit. And as you say, it started to pick up in March. So I think you answered the questions by asking it. So we have seen this pattern as well, of course. So we are following the weather and wind is also impacting us to some degree. But overall, I think that was leveling out throughout the quarter. So even though we had a couple of weeks with cold weather, we kept to that sales a little bit later.

Yeah, that's clear. Thank you. And if we move away from Salix and just look at the group overall, you mentioned non-recurring items here related to the IPO. Is it possible to quantify those maybe? And also if you expect to see any further IPO related costs in the, I guess, Q2 or the upcoming quarters overall?

So what can be seen is, so we do specify in the quarterly report, we do specify the non-recurring cost or the items affecting comparability. Under Note 5, you will be able to see how much of those Items affecting comparability that was attributable to Salix group and the vast majority of that number is attributable to the separate listing process. And to answer the next question, I would foresee that there will be additional costs also in the coming quarter connected to the separate listing. If we get to go ahead from the annual learner meeting later on today.

Yeah, all right, got it. And yeah, we talked a little bit about your expectations for SiteERX going ahead. You obviously mentioned that you've been doing some efforts there. Do you foresee that taking effect and resulting in margins improving a little bit already next quarter or is this more of a long-term project to increase those margins?

We typically don't give these kind of like forward looking statements, but what I can say is that we've taken measures during this quarter and we will see the effects gradually kind of coming in during the coming, I would say, six to nine months or two to three quarters. So we will see effects already in the next quarter from that. But then with regards to the overall margins, that's of course also dependent on the demand and the top line and the turnover.

We talked a little bit about this during the last quarter, but are you still observing some sort of delays related to deliveries in St. Eriks? We obviously had a The weather being quite cold here might have impacted you negatively, I guess. Is that something you're still seeing, and do you feel you still have sort of a delivery backlog that's yet to be seen in the P&L for that business?

I would say that, yes, we had some delays in Q4. And then we had a very cold start of Q1, similar to what you talked to Martin about. January, February was very cold. and that affected psychedetics as well. I think we picked up some of that in March and overall we showed a turnover growth which was good. Some of those delays I believe we kind of caught up in Q1. We have some of them with us in Q2, but I wouldn't say that they would, you know, have any major effect of the future development.

Yeah, that's clear. And yeah, maybe if we turn to Toolnum for a second and just... Yeah, it would be interesting to hear your comments there or what you're seeing in terms of market dynamics, but also how we should view the comparison going ahead here, given the absence of similar volumes from the Lantmannen project. Is it going to be, I guess, a little bit challenging for the upcoming quarter before hopefully getting better? Or if you have any general thoughts on that would be helpful.

Yeah, so I guess the general comment on that is that we weren't able to compensate in Q1. That is very clear when you look at the turnover delivered. We are also meeting volumes from Lantmannen and its industrial projects, mainly in Q2 and Q3. I would say that we have had more time to compensate for those volumes. And I think I said that also during the call that I'm more optimistic of meeting those volumes. in Q2 and Q3. So I do not expect the same deviation as we saw in Q1. And then also more importantly, we have taken additional cost measures, which similar to what I said with regard to Sanctierix, that's something that we will see effects from in the next six to nine months. So we are also meeting potentially lower volumes with cost reductions. And this is also driven by that we do not see any significant shift in the market short term. We see some positive signs. We also see that it's not getting worse, but we do not see any significant signs of any significant shifts. So that's why we have decided to take these additional measures. Again, Tunum, we are very well positioned for once the markets really come back, once we get back to close to what we've had in historical levels, then we're very well positioned to show good profitability in that platform.

Yeah, that's super helpful. And just lastly, from my side and moving on to the acquisition pipeline, and I'm curious to hear more about Etiketto specifically you've obviously done a couple of larger acquisitions there recently but if you have any comments on the acquisition pipeline within Etiketto and how we should think about that I guess throughout 2026 can we still despite these larger acquisitions taking place quite recently can we still expect more to be done there during this year or is you Or are you going to be more into now, I guess, an integration phase and value creation phase and increasing margins in those already acquired businesses before we see a resumed M&A activity there?

Good question. So two comments on that. Firstly, when it comes to Etiquetto, yes, we are able to do more acquisitions. So the two acquisitions that we've done lately has created new platforms for us to grow from, meaning that we now have platforms of our geographical markets. I would say Germany and the UK be the most significant ones. And we are prepared already during this year to add acquisitions to those geographical markets. And that's also the reason we have now created a platform with a capacity, a big enough platform with the capacity to both kind of do acquisition, build pipelines, integrate them and do that at a more constant pace than we've been able to in the past. So if we find the right target, if we find the right acquisition to Etiketto, we will be able to do that during the course of this year. The second comment to the acquisition pipeline is that it's broader than that for us. So we want to do add-on acquisitions to all of our platforms. So we are also looking into add-on acquisitions in the other platforms. So I would expect to, in the next 12 months or so, that we also will see acquisitions in some of the platforms that we haven't done acquisitions in during the last one or two years.

Yeah, that's good. Maybe just a quick follow up on that. When you look across the platforms constituting former industry, which platforms do you see the greatest M&A potential in? And also if you maybe look at your current pipeline on where most opportunities are currently existing.

That's a short-term and long-term answer to that question. Long-term, I see a good potential in all of them. Short-term, as one could understand, we have St. Eriks and Tornum being a bit more internally focused right now, while communication and Corventa... are more in a position to also short-term handle an acquisition or a more sizable acquisition. So short-term, I would say that it's mostly likely in those two, communication and Proventa. But long-term, we've done several acquisitions in both Sancterix and Tudum, and I foresee that we will continue growing these platforms with acquisitions also going forward.

Yeah, that's super helpful. Thank you very much, guys. I'll get back in line.

Thank you so much for the questions there. We'll now go ahead with some questions that have been sent in to us. What was the key growth drivers for Volati Q1 2026 and how does the company plan to expand its business going forward?

I think we touched upon that. A very short answer to that is that Salix and Etiquetto were the main growth drivers in the quarter, but also Cytair has contributed to the growth. in Q1. With regards to the other question, the question what segments we envisage growing within, our clear strategy is to grow in our platforms, meaning not expanding into new segments or new platforms, but rather focusing on growing the existing ones, both organically, which we've done very successfully, for example, in SOLIX, at the CATO and SACDERIX this quarter, but also we'll add on acquisitions.

Thank you. With SOLIX not being a part of Volati going forward, Do you see any risk of not being able to fund the dividend to the Volati preference shares if you want to continue the M&A pace?

No, not at all.

Thank you. Are you fully prepared if we're still heading into slower times? Seems like a recovery is expected near term, but what if it's not?

Yes, I would say that we are prepared and I would say so when it comes to Tunum, for example, which we have talked a bit about this quarterly call, we are not expecting a short term significant shift. We are rather preparing for the market to remain for yet some time. However, we are also confident that the markets will come back. And when they come back, that is where we will show that accelerated organic growth.

Thank you. Moving on to the last question here. How should we think about growth and margins for the remaining businesses post-Alex spin-off?

I think we've tried to be a bit more helpful about that. So we do now have a target margin for each and every business area or platform. So these are the long-term goals that we believe that those platforms, the EBITDA margins that those platforms should operate under. So that's a good indication of where we believe the margins to be in the long term.

Thank you. That was all the questions we had. Thank you all for calling in and answering our questions. I will now hand over the word to Andreas for some concluding remarks.

Firstly, thank you, Salix, for a great contribution. Not only this quarter, but the last couple of quarters. Let's see what the annual meeting decides later on today. But if the process continues as planned, we will be two separate companies for the next quarterly report. And that leads me to the remaining Volatiland, which I'm extremely excited about. We have had some headwinds in the remaining Volatiland and in some of the platforms, but I'm also extremely proud about how our leaders out there are handling that every day. And I'm also very confident in the position that we are. And I expect to continue working also with the new management team of Volati, the extended management team now, to continue developing Volati. So thank you, everyone.