Cavotec Group AB ($CCC)

Welcome to Cavotec Q1 Report 2026. [Operator Instructions] Now I will hand the conference over to CEO, David Pagels; and CFO, Joakim Wahlquist. Please go ahead.

Good morning, and welcome to Cavotec's First Quarter Presentation 2026. I am David Pagels, CEO of Cavotec. And together with me today, I have, as usual, Joakim Wahlquist, my CFO at Cavotec. I would like to start with a short introduction of Cavotec. For those of you who are not familiar with us yet, Cavotec was founded 50 years -- more than 50 years ago by 3 entrepreneurs in Sweden. Since the foundation, Cavotec has focused on delivering innovative engineered solutions that enhance safety, reliability and performance in areas such as ports and other industries where our electrical cable reels or radio remote controls are needed. Our products enables decarbonization of ports, mines and other industrial applications. As part of its global expansion, Cavotec moved to Switzerland in 2007. But last year, we successfully completed the move back -- of our registered office back to our roots in Sweden in Stockholm. As part of the transaction, we have -- we are relisted on Nasdaq Stockholm with our new Swedish parent company. These moves bring us closer to our shareholders -- shareholder base in Sweden and will enable us to become more efficient in Asia. At present, we are across the globe, roughly 700 employees. As you know, we report 2 business segments. Our service offering is reported into those 2 segments. So the first segment is Ports & Maritime, provides world-leading solutions for ports, ships and other marine applications. We have a unique system, for example, automated mooring, shore power, crane electrification and connection and charging systems. All those systems and solutions contribute significantly to improve environments and working conditions in ports worldwide. Our customers include shipowners, operators, ports and terminals, port equipment manufacturers and shipyards. Ports & Maritime is our largest segment and represents the majority of the group's sales. The other segment, Industry has a unique selling point with its ability to drive productivity and contribute to the customers' operational efficiency, electrification as well as occupational health and safety. The products include motorized reels, hose reels, radio remote controls, power connectors, spring-driven cables and hose reels. We have customers in a wide variety of industrial sectors such as cranes, energy, processing and transportation, surface and underground mining as well as tunneling. As mentioned before, service is an important and growing part of our offering and now stands for approximately 30% of the group's revenue. It is an integrated part of our business segments, and we have service engineers across the entire globe. The service offering includes system integration, maintenance, sale of spare parts, inspections, refurbishments as well as round-the-clock service agreements. So our underlying markets remains strong, driven by the need to reduce greenhouse gas emissions, improve port environments and increased customer efficiency. This, in turn, is driven by the strong megatrend to electrify society that we all are aware of. At the same time, we see an increasing awareness globally to reduce noise levels in, for example, ports. The need to electrify society and improve the environment in, for example, ports also manifest in the regulations and governmental requirements that affect our customers and drive their demand for our products. Over our 50 years, we have built a strong expertise and experience in these areas, and we have a strong and attractive offering based on leading technology. This gives us the ability to grow with both new and existing customers and thereby expanding our installed base. We have built long-term customer relationship where we work together with the customers to develop the best solution for their unique application. The installed base is important because it provides us the opportunity to offer a comprehensive range of service activities. As we have said before, we operate in a large market with stable underlying growth. Everyone knows that we go to more and more electrifications. Around 60% of our business is in Ports & Maritime sectors and 40% in the -- other 3 fall under our Industry segment. Ports where we need to -- where the need for global trade is only increasing year after year. So electrification, safety, productivity are key, since we cannot really be more global with a large installed fleet of vessels and continuous growth to meet future needs. In addition to that, the mining industry has a clear agenda to become more sustainable and automated for tomorrow's increasing need for minerals. Within the industry, the mining industry accounts for around half of our business. Construction, another growing segment with high ambitions to electrification and increased efficiency. General Industry, a bit everywhere from our products can play an important role in supporting electrification, safety and automation. So in summary, the segments where we have been operating in over the last 50 years are now more relevant than ever. In Cavotec, we have four areas for our strategic priorities. Ports & Maritime. In Ports & Maritime, we intend to keep and achieve a leading position for our core products, increase innovation in existing products and develop new products and launch them in order to complete our portfolio. We have also focused on growth strategies for prioritized product groups. Within Industry, we want to grow with a more proactive approach and innovation co-developed together with our customers to step in early with our customers to design something that really fits perfectly into their products in the long run is the way to go. We also strengthened our strategic partnerships, and we have focused on growth strategies for prioritized product groups. So Services. In Services, Cavotec will grow the offering and realize the full potential in service from our large installed base of Cavotec installations worldwide. Platform for acquisitions. We have and we are now creating a platform for acquisitions that can enhance our market position, strengthen our operational capabilities and drive innovation. So during the quarter, going into a little bit of Ports & Maritime here. During the quarter, we have presented several significant contracts in Ports & Maritime that demonstrates the strength of our offering. An order signed for the supply of MoorMaster automated vacuum mooring systems for a special application in North America, one of Ports & Maritime's largest orders ever so far valued at approximately EUR 13 million. However, we have complex products and it takes time to deliver. So the deliveries for those are planned to take place in October 27 to March 28. Our MoorMaster system increased safety, speed up ship handling, reduce emissions and help ports and marine applications to increase the capacity. With this important order, we strengthened our position as a leading supplier of automated vacuum mooring solutions in North America. We have also signed an order for shore power systems to be deployed across several ports in Southern Italy, valued at approximately EUR 3 million. The system enabled crews and container and roll-on ships to connect to shore power while at birth. By enabling ships to switch off their diesel generators when in port, the system will contribute to reduce harmful emissions and improve air quality. So Industry. Now we can look into the -- some recent business wins within Industry. In the beginning of the quarter, we signed another order with Australian construction and engineering company, Civmec, for the supply of motorized cable wheels and hose reels for Port Hedland in Western Australia, one of the world's largest iron ore export ports. Receiving another order from the same customer reflects the confidence that our customers have in Cavotec's technology, proven expertise in demanding industrial environments. After the end of the quarter, we also announced a significant order with a leading engineering company in India for supply of 14 motorized cable reels, cable and hose reels. The reels are part of the customer's first project for ship unloaders and will be used for unloading bulk materials such as coal and limestone from vessels to shore. The order demonstrates our ability to deliver reliable, high-performance solutions for very demanding industrial applications. So by this, I hand over to you, Joakim, for more commercial comments and the financial performance in the quarter.

Thank you, David, and good morning, everyone. We start with summarizing the quarter a bit on a higher level. And the first quarter of 2026, we had a very strong order intake, but lower revenue due to the weaker market in 2025. Order intake increased over 100% in the quarter to almost EUR 60 million and order backlog increased 30% year-on-year, landing on EUR 151 million. We have now had 2 good quarters in a row when it comes to order intake, and that's setting us up for a better continuation of 2026. Revenue decreased 15.3% to EUR 32.8 million, affected by the cautious approach among especially Ports & Maritime customers in 2025. The EBIT declined to minus EUR 2.8 million, where Ports & Maritime contributed negatively to this, while Industry was slightly lower than the same quarter last year. In light of this, we have started a cost adjustment program that was initiated already in 2025 in the connection with the relocation of the headquarters to Switzerland -- from Switzerland to Sweden, and we are now increasing the speed of that program. We'll come back to that a little bit later in the presentation. So let's start then with the order intake. The order intake was, as said up, 109% with a healthy growth in both Ports & Maritime and Industry. Ports & Maritime signed, as David said, one of the largest contracts ever with a value of approximately EUR 13 million or equivalent to SEK 140 million. The order includes the delivery of MoorMaster automated vacuum mooring systems for special application in North America. Deliveries are planned to take place from October 2027 to March 2028. It's also good to see that the Industry showed a positive order intake, mainly driven by the demand for motorized cable reel system. Order backlog increased up to EUR 151.1 million, 30% compared to the same period last year and 21% -- almost 22% compared to the fourth quarter 2025. Revenue decreased to EUR 32.8 million, mainly reflecting the slower order intake in Ports & Maritime last year caused by the uncertainty in the market and following a very cautious approach by the customers in 2025. Industry had only a slight decline in revenue as the lead times are shorter, and they were also less impacted by the uncertainty in 2025. Geographically, we can see that the majority of sales in Q1 was EMEA with 66% and about 1/4 of the sales came from Asia Pacific and only a smaller portion, 10% from the Americas. There is a slight impact from currency, minus 2.4% during the quarter. So let us move on to EBIT. As said, as a result of the lower revenue in the quarter coming from the uncertainty last year, EBIT decreased to minus EUR 2.8 million and the EBIT margin decreased 10.5 percentage points to minus 8.6%. Ports & Maritime here contributed negatively due to the lower volumes. Industry had a positive impact on EBIT and profitability in the quarter. What we can see here is that it's been mainly January and February that pulls down the results in the quarter, and we're already back on good levels according to plan in March. Now over to the net results. Net result decreased to minus EUR 4 million and earnings per share decreased also as we can see. And in light of the result 2025 and we have intensified the scope of the cost adjustments we initiated already last year with the move to Sweden. And the cost savings measures that we are taking now, they will be fully implemented during 2026 and will reduce our cost base by approximately EUR 3 million. Some of that effect will already come in the second half of 2026, and we will have full effect early on in 2027. The measures include, among other things, optimization of the organization structure and efficiency in improvements in IT and administrative systems. The cost measures, as we said, is totaling EUR 3 million and will be taken ongoing during 2026 and reported as items affecting comparability starting in the second quarter of 2026. We move over to cash flow. The operating cash flow and financial position were affected by the sales and profitability development in the quarter. We continue, though, to have a very strong focus throughout the organization on profitability and capital employed and the cost savings measures will -- are also aimed to improve both. Net debt amounted to EUR 8.8 million, unchanged compared to the end of 2025. And the leverage ratio, although a bit higher than previous quarter, is still at good levels at 1.58x. Let us now look quickly into the 2 segments performance in the quarter. We start with the largest segment, Ports & Maritime. Order intake there increased with 243% to EUR 41.2 million, mainly driven by the good demand of shore power solutions in Europe and motorized cable reels in Asia and Europe. Due to the strong increase in order intake, order backlog increased with almost 40% to EUR 128.6 million. And up almost 24% compared to the fourth quarter 2025. So a very strong development. Revenue decreased 25.7% to EUR 16.5 million reflecting the slower order intake that we could see from last year in the beginning of 2025. Currency had a negative impact of 3.1% and EBITDA decreased to minus EUR 2.1 million. The margin also decreased to minus 12.9%. What we have to remember here, obviously, is that Ports & Maritime is a -- has a very project-driven nature and the beginning of 2025 was -- Ports & Maritime got impacted quite a lot by the uncertainty in the economy. Moving over to Industry. The Industry segment order intake increased with 11.7% to EUR 18.5 million. Growth was mainly driven by a good demand for motorized cable reels in the mining industry in Northern Europe as well as an improved service business. That said, the order backlog decreased with 6.8% to EUR 22.5 million, and revenue decreased with 1.4% to EUR 16.3 million compared to EUR 16.6 million for the same period last year. No big impact of currency effects in the quarter. EBITDA amounted to EUR 0.8 million compared to EUR 1.3 million last year. The margin declined slightly with 2.5 percentage points to 5% compared to 7.5% last year. And although Q1 profitability was below last year, we believe that industry is really improving long term and that increased customer focus and customer activity will continue to deliver good results here in this segment. We still obviously have more to be done here in the Industry segment, but we're very pleased with the development, and we continue to see a big market potential in industry. With that, I hand back to David for some final remarks.

Thank you, Joakim. So let me just quickly summarize some key points before we open up for questions here. In summary, we are targeting good solid markets, and we have taken actions to lower our cost base with approximately EUR 3 million. In the first quarter, both of our divisions demonstrated a strong order intake. And among the business wins we have announced we have stressed the Ports & Maritime record order intake of EUR 13 million. However, our performance in the first quarter, which is normally a relatively weak quarter, when it comes to top line and profitability, was impacted by the slow market development in mainly Ports & Maritime last year. As you know, we have long lead times on our -- especially on our Ports & Maritime activities. We see that our markets are good, driven by the strong megatrends such as electrification, automation and regulations. At the same time, we lived in a world impacted by a high degree of uncertainty, which might impact our customers' decision also in 2026. In light of the continued uncertainty and the fact that we have largely project-driven business with long lead times, it takes long time to build our equipment, between order and final delivery, we have taken measures to reduce our cost base to shape a stronger Cavotec, and we will be better equipped to create value as volume increases. So with this, I would like to open up for questions. You can ask questions through the teleconference or sending us questions online.

[Operator Instructions] The next question comes from Albin Barnevik from ABG Sundal Collier.

This is Albin at ABG. So if we start off with the soft margins within Ports & Maritime, you mentioned that this is due to the lower volumes in the quarter and low capacity utilization, I assume. So what fixed costs here can you adjust going forward? Because as I understand it, the cost saving program is mostly OpEx. Is that correct?

Yes, that is correct. So the cost saving program is mostly operating expenses. But having said that, we have shown a pretty good volume flexibility in cost of goods sold also in over -- and we have improved that over the last couple of years. So we're continuously working with the flexibility in our production to maneuver lower volumes whenever that would happen. On top of that, obviously, we have a quite well-established cost-out program where we are working with all our products, including the Ports & Maritime products to continue to strengthen the margins.

All right. Yes. And given the strong order intake within Ports & Maritime, how should we think about the path to margin recovery here if we look at the coming quarters?

I think -- I mean, first of all, there is -- obviously, you can't push forward your replacement need too long either. I mean there's been a bit of hesitation in the market last year, obviously, but there is a replacement need. And there is a very active market within Ports & Maritime. So it's good to see that the customers are now starting to take decisions, both in Q4 last year, but also in Q1 now. So good to see that the market is taking off again.

Yes. And if we perhaps move over to the margins within industry then, we saw quite a contraction here as well on a sequential basis because there has been a strong development in Q3 and Q4 '25 within Industry, now declining. Are there mix effects behind this? Or how should we understand it?

Yes, partly mix effect. And then obviously, the Industry segment is also volume dependent. So we have an installed capacity that can handle bigger volumes and Q1 is quite a low quarter, usually is a low quarter also for Cavotec.

All right. And on the large North American MoorMaster order that you received at the end of Q1 now, have you started to see -- and the Italian one as well for that matter, have you started to see an inflection point now in demand picking up within P&M?

I would say so, yes. As Joakim mentioned, it was uncertainty in 2025. And everyone can understand the uncertainty when tariffs are fluctuating more or less on a daily basis, making a little bit of difficult for them, for our customers to decide if they're going to invest in a certain port or another port. However, I think we need to understand it's going to be and it's going to remain a little bit of uncertainty happening over the next year or so. But at the same time, when you're changing flow of goods over the world globally, then of course, there are certain areas where there are a little more uncertainty, but there are other areas where the goods need to come in different directions. So I think we see a solid demand and an increasing activity on upgrading certain ports, expanding certain ports, and that's what we now see the effect on.

Right. And can you perhaps specify a little bit regarding the special application that you mentioned in the press release for the North American order that is?

Yes. It's an inland project in U.S. And if you are sailing vessels from one lake to another big lake, you need to transport the ships in systems and our application is for those systems.

All right. Yes. And regarding the shore power order to the ports in Southern Italy, what is the approximate time line here of delivering those systems?

I would say -- and this is important to understand that we have -- between industry and ports, we have different lead times. And when I say lead times, it's not lead times of ordering material really. It's a matter of, it takes time to actually build the products. So within Industry, we have certain products which are complex, like we just mentioned the orders to Australia with Civmec, et cetera. That's also a little bit of a long lead time item. At the same time, there, we also have what we call the flow business, which is our goods that we deliver to our customers, Epiroc and Sandvik, for instance, where there is more of a serial flow of the production. When it comes to Ports & Maritime, it's the nature of the business is that it takes longer time to actually build those products. It's complex machines, in many cases, customized for various applications and requirements. And at the same time, if you talk about the MoorMaster installation, for instance, with 20 or so MoorMaster vacuum units, the customer, of course, don't want to have it delivered one by one, they want to have it delivered in batches, and that also then increases and extends the lead time. So that's -- there is a little bit of different natures of those two business areas.

Yes, I understand. And on the order for motorized cable and hose reels in India, you described it as the customer's first project for ship unloaders. Is there a reason to believe that there are more incoming orders from this particular customer? And also perhaps if we can get a ballpark figure of the value of deals like this just between the...

I would love to give you a figure, but at the same time, we have some agreements with our customer in this case that we're not disclosing certain values there. But you're definitely right. If we have a new customer, and of course, we are optimistic that that's going to lead to more business because we all know that the bulk handling and the shipping of goods over the world is just increasing. So yes, for sure, we are expecting more things on the same -- with the same customer.

And also to David's note there that we are seeing very good activity in the Indian market also where we have now established production and expanded our sales efforts. So we expect that to continue to grow.

All right. And just a final one, if I may. On the cost saving measures then, is it possible to quantify the one-off arising now in Q1 following this restructuring.

Yes. The restructuring -- the implementation cost for the program will be EUR 3 million, so the equivalent of the yearly savings. So that will be taken during the next 3 quarters.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Okay. We have a number of questions in our chat here So let's start with the first one. The order backlog grew strongly. What are the lead times in the order book? And when will the order book be delivered? I think David took part of that question already. He answered to Albin here, but it depends quite a bit depending on the type of orders and within the different segments. So in the Industry segment, we have usually between 3 to 6 months if it's not bigger projects. And in the Ports & Maritime segment, we have a little bit longer lead times with up to 1.5 years. Okay. Do you have any upcoming product launches in the pipeline to get excited about?

Yes. Yes, we have. And I think I'm pleased to see that we have really increased our efforts on product development over the last couple of years. And therefore, we are launching -- I think we launched all-time high number of products last year, we're going to continue in the same pattern to launch new products also for the coming quarters here. Worth to mention as well is also that when we have launched -- where we already presented, we present our new radio design for next-generation radio, which has been very, very well received by the market, and we have a lot of orders for that. However, you should know that when we are delivering an order for radio equipment to a customer, they want to have a couple of prototypes. So first, series of units first so that they can test it before they go into serial delivery. So therefore, it takes time to launch new products before we actually see them in the market. But as soon as the customer is pleased and satisfied, then all of a sudden, the flow business ramps up in the serial delivery. But we will have -- keep your eyes open. We will have new products to be launched within the quarters to come, also 2026.

Next question here is many mining companies has had good growth. What is your exposure to mining?

I think you mentioned that roughly before half of the industry is mining and industry is roughly 40%, so 20%, you could say. And we have a very tight relationship together with the main mining OEMs where they produce it. So we are on board developing our equipment to fit into their machines of tomorrow. At the same time, we also then produce and sell and deliver based on their order intake forecast and their predictions there, which is, of course, the way you should work. The tighter we are working with them in order to optimize our designs, it fits into their customers' needs. We will -- and we have created and shown it many times. We will create this win-win-win that everyone wants to have win for the customer, win for our customer and win for us. And that is only achievable when we are opening up and sitting close with our engineers and their engineers to solve a specific technical issue or concern or problem.

Okay. See we have one more question here. Can you comment more on the Industry segment and what you expect from the changes and improvements that you are making?

I can say I'm really pleased. And if you look back now a few years, for you who have been around, we had the segment was called Airport & Industry. We sold off the Airport business, which was the right thing to do differently. What we then discovered is that we had the mining industry, which get better visibility and better attention. What we have done since there, we have headed up a new management on the industry side. We have also hired and also increased our activity on the sales network with sales activities. And I must admit, I'm impressed where we are going in and interacting with customers, there is a strong need for our products. And the more you work together with the customer, the more they open up for similar or surrounding applications or problems, which our product can help them to solve. So we are working on solutions with our motorized reels. We have also other applications there for everything when you want to twist a cable into applications such as production lines or whatever when you need to have a cable turning more than several turns, then there are different solutions there, which we are actively working on. And not mentioning as well, of course, again, the radio business where we see a clear and a strong activity and momentum and interest for our products. So I must say I'm really pleased with the development we've seen, and I'm also pleased with what I see in the pipeline and the activity that we have also for the Industry segment going forward.

Okay. One last question here. What do you expect from the continued development in 2026 and the results? I think we have a number of good things in pipeline here. We have had 2 good quarters of order intake. We can also see now that after a little bit weaker January and February, we're really up to plan in March. We have a good order book in hand. We have the cost savings program that we're implementing, and we're going to see effect of already here in 2026. And there's good activity in the market, like David said, here also. And obviously, also the customers cannot postpone the replacement needs forever either. So both David and I believe here, looking quite positive on the remaining quarters of 2026, and we still believe in the plan that we have for 2026.

I think we are -- we have the right setup. We have the right momentum in the organization. We have the right interaction and contacts to our customers. And we also then have -- due to the fact that we have developed new products, we have the right offering to our customers, which is important. So yes, quarter 1 usually is a weaker quarter for us. At the same time, I'm confident for the outlook and for the 2026 going forward, definitely. But -- so that's -- I think we are well positioned for a good 2026.

Okay. I think that was all the questions we had today. If there was no other questions, then we thank for your participation.