Volati AB

Good morning and welcome to this presentation with Volati. With us presenting today, we have the CEO, Andrea Stenbäck and CFO, Charlotta Nyberg. We'll open up for a Q&A after the presentation. And if you're calling in and would like to ask a question, please press star nine to raise your hand and star six to unmute yourself when you get the work. You can also use the form located to the right. And with that said, please go ahead with your presentation.

And I thank everyone for listening in this nice summer day in Stockholm and Sweden. I was very happy to have Charlotta today at my side. She's now finalized her first quarter as a CFO for Volati. But let's get into the presentation. Let's see here. We start by looking at some highlights from the quarter. It's a mixed, but I would say overall disappointing quarter when it comes to the EBITDA development. We have some highlights. We have Etiquetto performing more or less in line with expectations. Communication, I would say, performing very well with a strong EBITDA growth. And Coroventa also performing in line in, for them, a very small quarter. However, as you all can see, we have low earnings in St. Beric's Group and Tunen Group. And we will get into some more details about all the platforms later on. On the positive side, I would like to highlight the very strong cash flow that we have. And that has enabled us to maintain our acquisition pace and do two more acquisitions just the last couple of weeks. And that summarizes three acquisitions in total for the last 12 months and actually three acquisitions in 2026. We have also finalized the separate listing of Salix Group. Just before digging into our Q2 numbers, I would like to just summarize the separate listing very shortly. I think we through this have demonstrated that we can really create value through our platform development model. We acquired a company called Le Monde Industries for just over 500 million crowns. in 2015, so now 11 years ago. And we have developed that to a now listed platform, a standard platform, a cousin on the Stockholm Stock Exchange with a market cap in excess of 5.5 billion Swedish crowns. And this model we continue using and developing our five existing platforms that we still hold on to. So let's then get into the quarter in more detail. As one can see, we have showed a sales growth of approximately 11%. And in that, we have an organic sales growth of around 2%. The EBITDA development has been weaker than last year. And the reason for that is tournament sanctuaries, which I already highlighted. We've had a strong cash flow. I would say really strong cash flow given where we are and that has put us in a position where the net debt to adjusted EBITDA is at 2.9 and that is slightly lower than the same period last year. Looking at the LTM numbers, On this slide six, of course, we're not happy with the negative trends since 2023, when we had our last EBITDA peak. The development since then is mainly driven by tough end markets, and that's the main, it's a construction market for Sancterix, and that's the grain or agri-market in Europe for Tunum. And also that we've had a very dry last 18 months for Corventa. I still believe that 2023 is a representative year for what we should achieve in an average market. So that's definitely something that we should be able to achieve in a normal market. Looking at our financial targets, of course, as you can see, we are underperforming in terms of our growth target. We have now underperformed for quite some time, which means that in order to reach that goal, which is to have at least 15% growth over a business cycle, we have to overachieve our 50% growth target for some time. The ROE, the return on equity, is now at 18%. We do then adjust for the capital gains that we got from the separate listing of Solis Group. If you take that into account, the return on equity is actually 368%, but we do adjust for that. That return of adjusted equity will increase once we get the EBITDA growth going. The capital structure is where we deliberately want it to be. We are at the upper end of our range, but we are deliberately there because we continue doing acquisitions. So with that, I thought I would go into our now five business areas, one at a time, and we start with etiquette to group. So strong net sales development as expected, mainly acquisition driven, but we'll also have some organic growth, despite that we saw some material shortages in the quarter. We have also seen some material cost increases in the quarter because of the situation in the Middle East, which we have met with price increases. The margin development are, as expected, lower than last year, and that is driven by the acquisitions that we've done and that the companies that we acquire show lower margins than we do overall in the group. but operational efficiency, the synergies that we are able to achieve will over time increase those margins. We have finalized one add-on acquisition to Etiquette in Sweden, Nick Etiquette. It's an acquisition on the smaller side, 35 million Swedish crowns of revenue. But it's precisely the type of smaller add-ons that we want to do. They are very value-creating for us. And we are now able to do these kind of acquisitions in not only Sweden, we're also able to do them in Norway, Germany, UK and the Netherlands because of the geographical footprint that we've been able to achieve the last two years or two or three years. So that was that about Etiketto. If we then go over to communication, I would say that communication is performing very well in the quarter. It should be seen in the light of a slightly weaker quarter last year, but still we're performing very well. Demanding key markets was somewhat subdued, but we were able to compensate that with strong quality deliveries in other markets, for example, in Asia. And we have a global footprint or a very large geographical footprint in this platform, which enables us to capture these kind of growth opportunities when they occur. And I would also want to highlight that communication now after three or four years being owned by Asset Velocity are really well positioned to do acquisition and continue drive growth by acquisitions. Next platform or business area is then Corroventa. Corventa developing very much in line with our expectations. It's just another dry quarter, but it's also the by far smallest quarter of the year. So development very much in line with the last year. And I will later on in the presentation get into the acquisition that we finalized, which is now the first add-on acquisition to Corventa, which is really nice to see that we're able to complete that. St. Eriksdal. St. Eriksdal is one of KSA's developments in the quarter, more or less in line with last year. The construction and civil works markets are still challenging, while infrastructure, and I would, for example, want to highlight electricity, is developing stable or even strong. However, we see some signs of delays in the water and wastewater segment, which is important for sanctuaries. EBITDA development, significantly lower than last year. And the main driver to that is lower production rates and under absorption that has as a consequence. And during 2026, we have deliberately lowered the production pace below what is needed to meet the current market demand. And that we have done in order to reduce the inventory levels. And we can see that that works because of the very good cash flows that we've had in Sankt-Eriks, both actually in Q1 and now in Q2. During the second half of the year, we will gradually increase the production rates again to normalize them to the market demand that we see right now. We've also, early this year, initiated a cost reduction program that we did based on two reasons. One was to meet the shift that we're doing from a volume segment to the more high margin and lower capital need product segments. And the other reason is to meet a lower demand in the market. So this cost reduction program is now finalized. That has led to some non-recurring costs in the quarter. And we will gradually see the effects of that throughout the H2 or the second half of this year. So, and then we have 2NUM group. 2NUM, we had a very tough Q1. Q2 has developed slightly better actually than Q1, but we still saw a decrease of 8% on top line. And we are operating in a very challenging market. It's characterized by low grain and pulp prices, which affects our overall demand. We also seen that the war in the Middle East continues to weigh on order intake. We also see some delays in projects and in order intake. but the underlying investment needs remains, but it's being deferred. The order backlog is on the positive side, slightly stronger than last year. So we have that with us for the rest of the year. EBITDA declined as the main reason for that is the lower net sales development. But we also see some continued pricing pressure on the market. We are meeting the pricing pressure with the modern improvement initiatives. And as we already highlighted in Q1, the Q1 report, we're also meeting the lower demand with cost adjustments that has now been implemented. And we expect to gradually see the effects of that during the course of this year. On the next side, and this is more of a summary, I would say so. We do spend a lot of focus and priorities on improving profitability in tournament sectarics and this slide is a way of kind of summarizing and highlighting that. Again, the emphasis on activities and key priorities to drive the profitability in these two platforms. And if we look at Tuning Group, we need to deliver on the order book that we have, that again is stronger than last year, but we also need to capture new volumes in a market that is slow and is very competitive. We need to meet the price competition, the price pressure with selecting projects very selectively and also working with margin improvements. And as a group, slightly larger group than many of our competitors that we meet, we are able to do that in a good way. and we need to strengthen execution and operational efficiency. And we have previously highlighted that we have some challenges with one of the acquisitions that we've done in Spain, for example, and some of these measures relates to that. When it comes to Sanctiris Group, what are the key priorities there? We need to restore the profitability in division infrastructure. That's where we see an unsatisfactory profitability. That's where we have the more volume dependent segments. We need to improve that. Also when it comes to the profitability division infrastructure, we will get some help of now increasing the production pace again during the second half of this year. We also need to improve the product mix. We have a structured shift away from the volume, some of the volume related segment and towards high margin products. We need to continue that. And we also need to work on production efficiency. And then we've done a very, very good job, I would say, during the first half of this year with reducing the working capital and then made the inventory levels. but we still have some work left with that. So again, this summarizes some of the measures and key priorities for tuning group and sectors. Then, This slide is now highlighting our five platforms, our five business areas. It is proof of the add-on acquisition model that we have, acquiring companies to our existing platforms that works. So we've done three acquisitions during 2026, highlighted on this slide. Two in Etiquetto and very nice to see the first one in Coraventa. So now we've done add-on acquisitions on all of our platforms. Just a few words on the acquisition of Tromex then. Tromex is a very nice family-owned company based out of Ireland. We've known that company for I would say many years and they were now willing to initiate the dialogue with us about the potential sale. It's a premium provider of moisture measurement solutions. You can see one of the picture here on this slide. And basically, these moisture measurement, you use that when you enter a site where you have some flooding, where you have a problem with the moisture. You enter first to identify where the moisture is, and then you use these kind of devices, Tromex devices. Once that has been done, you leave the site with a Coroventa machine to take the moisture out. So this is a very complementary product to our offering. Our customers are using both Tromex and Coroventa products. The company shows sales of 90 million and a VTM margin of around 20%. So as you can understand, it's a very nice, profitable company, very similar to the characteristics of Corventa. So this, again, this marks the first acquisition for Corventa and it complements us both in terms of products, but also geographically. Tromex are present on some of the markets that Corventa isn't and the other way around. The acquisition pace then, what one could see is that from, I would say from 2023, 2024 and 2025, we had a slightly lower acquisition pace in what is now the remaining Volati. We prioritized growing with acquisition in Salix Group. I would say that the last 12 months, now we're back at remaining Volati. Roughly 600 million of acquired turnover is okay. But of course, now when we don't have SOLIX Group anymore, we need to make sure that we maintain that position pace in the remaining platforms that we have. And we are very well positioned to do so. One important factor to do so is that we have the cash flows and that we have the net that we adjusted with EA. And I already highlighted that we had a very good cash flow in Q2. The last 12 months, the cash flow has been, the cash generation has been 86%. So that's okay. But it was very strong in Q2. And the net debt, of course, have decreased significantly. And that is mainly or that is more or less solely because of Solis Group repaying their internal debt costs. So now we have a net debt to EBT rate of 2.9 and the ones that could listening to Solic's presentation yesterday saw that they also had a net debt to EBT rate of 2.9. So that was something that we wanted to achieve with the separate listing of these two entities. So, a few words summarizing. Strong performance in communication. They've done a very good job, while Etiquette and Coravante is also performing well in line with expectations. We have the weaker earnings in St. Eriks Group and Tuning Group. We are meeting them with continued profitability improvement initiatives. The operational cash flow is there, which means that we can continue doing acquisitions. And we have finalized the separate listing of Solix Group this quarter, which I think shows the type of long-term shareholder value that we can achieve with our platform development. So with that, I open up for questions.

Thank you very much for that presentation. Yes, let's open up the Q&A. If you're calling in and would like us a question, please press star nine to raise your hand and star six to unmute yourself when you get the word. You can also type in your questions using the form to the right. And we'll start with a written question here. Could you provide more color on the company's growth outlook for the second half of the year?

I think it's always hard to describe our outlooks without getting into the individual platforms. But to put it very shortly, we have at the cap, though, which should be able to or will be able to achieve acquisition driven growth because they still have acquisitions rolling in and they are operating in a stable market. In terms of communication, I think the telecommunication market is somewhat there. So I don't expect any big shifts there in relation to the longer term trend that we've had now for one or one and a half year or so. We have Corventa again dependent on dependent on floodings, but with additional Tromex, that brings some additional stability. They are not as dependent on floodings as the remaining, the rest of the Corventa. And then the big question marks are to Sankt-Erik Santunum, where we are in both those entities working under tough market conditions. We do not expect any big shifts there either, meaning that we will still face tough markets. Sankt-Erik has been fairly stable now for the last year or so. So the main challenge there is to increase the profitability. And when it comes to Trunum Group, again, we have a strong order book. But it's also about delivering on these orders and not getting them delayed. But I would say it's good to have that order book in place.

Thank you for that answer. Now we'll give the The next person have a question with a phone number and with 2, 9, 9, 1, please go ahead. You have the word.

Seems to be on mute still. Yes, now.

Yes.

Hi, I think I'm not from.

And starting off in the. in Sankt Eriks, obviously quite challenging quarter and still some costs to be taken out here, but you allude to a sort of gradual improvement here in H2, but can you give a bit more flavor on that than sort of the building blocks toward 2027 as well here?

Okay, thank you. So firstly, very much with the profitability in St. Eriks that relates to the production rate. That's why we've been talking about that. And now what we did in H1 is that we have produced lower than the current market demand to release inventory. We will shift that during the course of this fall or H2. So again, increase the production pace, which means that the under absorption that we've we've seen will at least be much, much lower. So I would say that that will be the main building block of increasing profitability in St. Eric's. I think the second building block is the cost measure that we did last in Q1. We took most of that and also in Q2. But all of those cost measures have now been executed and we will see the effects of that during the second half of this year gradually as well. Also, when looking at Sankt Eriks, I would say that we're meeting somewhat easier comparables, especially in Q4, but also somewhat in Q3. So that will also kind of support the profitability trend in Sankt Eriks. Going into 2027, I think the measures and the structural measures, the things that we're doing now, that of course puts us in a lot better position into 2027. But we first have the remaining 2026 to deliver on.

Perfect. That's very clear. And in Etiquette, you mentioned some constraints in the supply chain and some price pressure here. Would you say that those problems have picked up during Q2 compared to Q1? Yes, I would say so.

Maybe we had some of that in Q1, not much, but it picked up in Q2 and it was more fierce in the beginning of Q2, so it's actually eased up a bit towards the end of Q2. And we've seen that before in the labeling segment in that industry. It's extremely important to be able to deliver those labels to the customers because they're integrating the production of our customers. So what happens when you get the signals of a shortage in raw materials, you get the, You know, the company starts building stock and that, of course, and also that hits kind of their supply. So that's what happened in Q2. And that has led to that we have built order book. a bit in the quarter. We haven't been able to deliver as much as we would have been able to do if we had all the raw materials. And it's also meant that we've had some increase in prices. But I think we're confident that we will sort that out during the course of this year.

Okay, that's fair. In terms of price increases, what are you looking at in Etiquetto?

We don't give that specifically, but what we've been able to prove in the past, we've always been successful in transferring these price increases to the customers. We haven't in the past been stuck in between, and we're confident that we'll be able to do that this time as well.

Okay, perfect. And lastly, an etiquette, obviously margin pressure from the the two acquired units here. But how's the integration process proceeding here? Is it going as planned? When do you expect to see the full benefits here?

In order to answer that question, I think we have two major acquisitions that we're still working on integrating. We have the acquisition of Cleaver that we did in Germany in 2025, and we have Intecat, which is actually more or less four entities that we acquired at the beginning of this year. So these are the companies that we're integrating and the companies that we're working with operational efficiencies and synergies from. If we start with Cleaver that we did last year, I would say that that integration is somewhat delayed. We are a bit behind schedule there. Nothing to be worried about, but it's taking a bit more time than we anticipated. On the other hand, the Intercat acquisition that we did at the beginning of this year, we are before schedule. So we are before plan. And the market that we're really working in with regards to operational efficiency is getting them to work with etiquette. Where you're working, that's the German markets, which the management team of Etiquette and the supporting functions are working very actively with now is the German market. That's where we see the largest operational efficiency effects going forward.

Perfect. That's very clear. Thanks a lot. That's all for me.

We'll take one final written question here. Can you elaborate on the growth strategy and market expansion plans for the upcoming quarters?

I think I pretty much answered that in the sales-related first written question. It's very hard to kind of address that, was have to address that for the five different platforms. So I would leave that answer to the first question that I received earlier today.

Thank you for that. And that concludes the Q&A. Thank you both for presenting with us here today. And I will now hand over the word to you, Andreas, for some closing remarks. Yes.

So thank you again for listening in. And also a big thank you for the colleagues at Volati. It's a very mixed quarter. We have platforms that are communication, for example, which are delivering very well, where sales and EBITDA development has been with us. And we also have platforms like Tournament, like TRX, which are facing headwinds. But I also know that all colleagues out there, independent on where where you are within the group, independent on which platform you're working, you're all doing a very, very good job. And I hope, as most of us are based, many of us are based in Europe, I wish everyone a nice holiday. And we're going to come back after that with some extra energy. Thank you very much.