CTEK AB (publ) (CTEK) Earnings Call Transcript & Summary

CTEK Q1 Report 2025. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Henrik Fagrenius; and CFO, Thom Mathisen. Please go ahead.

Thank you, operator, and a warm welcome to all of you to today's Q1 presentation for 2025 for CTEK. The presenters today is myself, Henrik Fagrenius; and our CFO, Thom Mathisen. And as always, I'll start with a short recap of CTEK. CTEK was founded more than 25 years ago by Bengt Wahlqvist, the happy guy on the picture. And he invented the first-ever smart charger with pulse technology. We are delivering -- we are developing and testing and designing everything in Sweden, and we have production mainly in Asia and China but also in Malaysia. We have more than 50 premium brands that are choosing CTEK as their charger. And I'm very proud to show the Lamborghini that is actually co-branded with CTEK, which is extraordinary and says a lot about our quality. CTEK has mainly two different technologies. We have the EVSE technology, where we are focusing on destination charging; and then we have our Low Voltage, where we are present in different segments as consumer, professional, workshop, client, brand and integrated solutions. You will find CTEK in a vast area of different usage alternatives for the electrical vehicles and plug-in hybrids. We can sell our EV chargers, of course, but also our 12-volt chargers and our workshop chargers. For the combustion engines, we have our 12-volt chargers and our workshop chargers. And for RV and leisure, like motorcycle, camper vans, et cetera, we have our Low Voltage and also our integrated solutions. And for Industrial, we have integrated solutions. We are distributing in mainly two divisions. We have a Professional division that is focusing on business to business. They have the OEM car brands and also big parking operators and charge point operators. And then we have a Consumer division, which are selling into retail and e-tail. So then over to the first quarter of 2025. We were growing for the fourth consecutive quarter. And the sales revenue came in at SEK 213 million, which is a growth -- organic growth of 5%. Gross margin ended up at 56.4%, very strong due to a good product mix. EBITA, SEK 19 million, impacted by nonrealized FX impacts; and cash flow, SEK 8 million. And we came in on a net debt ratio of 1.9, so very stable financial situation. If we look a little bit more deeper into the figures. We have a Consumer division, which was actually growing for the seventh consecutive quarter. Strong sales in North America, strong online sales. And so our efforts there is paying off. I'm very happy to say that the Professional division showed a positive EBITDA for the first quarter since we started that division. And that was due to growth in client brand, where we had good sales to Europe's biggest motorcycle manufacturer, and we also see better margins on our newly introduced CC3 EV charger. So with this, I think we are very good placed for soon entering into our third phase, and we would talk more about that in our Capital Markets Day on the 22nd of May. So with that, I leave over to you, Thom.

Thank you, Henrik. So some more words around the financials, and I go a step down to the divisions. And as you can see, the Consumer division on the graph on the upper side right, you can see that stands for more than 2/3 or around 2/3 of the turnover of the company. Here, we have grown again organically, with 7%, with a stable and good EBITDA margin of around 35%. So continuous good performance in the Consumer division. Coming over to the Professional division, which stands for 1/3 of the turnover of the company. We are happy to say that we have the first profitable quarter since we started the new organization in end of 2023 with a positive EBITDA of around 6%. That comes, as Henrik mentioned, both from the strong Low Voltage sales to the OE customers but also from improved margins on the EVSE side of the business. Around cash flow and CapEx, which is quite important areas, of course, for a company like CTEK. We continue to have a positive cash flow from operating activities, a bit less than last -- quarter 1 last year, but that is mainly reflecting some bigger payments in and out that is periodical impact of that. So as we mentioned a little bit later in this -- in the fourth bullet, we see long-term positive cash flow trend. That also means that we did an extra amortization of our loan with SEK 25 million during the period. CapEx, as we have said before, it's now coming back on the more normal levels, around 8% so far this year of the turnover. We, over time, see that being somewhere in the area of 6% to 8%. Net debt ratio, also an improvement versus quarter 1 last year from -- down to 1.9 from 2.2 at the end of quarter 1 last year. So by that, I hand it over to you again.

Thank you, Thom. So to summarize the quarter, moving back to the -- our strategic plan that we put together a little bit more than 1.5 years ago and we put it into 3 phases, where the first phase was to create stability and cost control. We left that phase a year ago. And we are now well into phase 2, which is profitability and focus on organic growth. We have now showed 4 quarters of organic growth and we are getting ready to talk about a more accelerated growth, which we will present at our Capital Market Day the 22nd of May. So most welcome, and I hope to see you all there. Going then into the quarter again. As I mentioned, fourth quarter of consecutive growth for the group and seventh quarter of consecutive growth for Consumer division. First ever quarter with positive EBITDA in Professional division, and that relates to high sales of client brand and also a better gross margin for our newly introduced CC3 EV charger. So we have a very stable financial situation and net debt ratio well below our financial targets. So we are ready for our next phase, which we will present on our Capital Markets Day, the 22nd of May. And with that, I open up for questions.

[Operator Instructions] The next question comes from Johan Eliason from Kepler Cheuvreux.

This is Johan at Kepler Cheuvreux. I have a question just regarding your North American exposure. You mentioned that as a growth driver in this quarter. How big is North America for you today now when the GM contract is out of the numbers? And how do you supply it basically? That's my first question.

Johan, thank you for your question. North America was last year, without GM, a little bit less than 10% of our total sales. We moved the production to Malaysia for 80% of our total -- of 80% of our products to Malaysia. And the tariff is hard to foresee. But my judgment today is that we are in a pretty good spot. I think it's neutral due to competition because I do not believe that there is anyone producing locally in America and all our competitors are producing in Asia. And with the move to Malaysia, I think we are in a relatively good spot as it is today.

Just a question, that you say 80% Malaysia, is that for the North American sourcing? Or is that for your total sourcing?

That is for the North American sourcing.

[Operator Instructions] The next question comes from Mattias Ehrenborg from Redeye.

Mattias from Redeye. And first off, I just want to congrats on a solid quarter. A few questions from my side. Could you share if there's any main driver behind the positive EBITDA in the Professional segment? Or is it more a general result from your cost savings, and I guess, overall solid demand in all product categories and customer groups?

Mattias, yes, it is -- we have reduced the cost quite significantly in that division. And as we mentioned previously, it's up to getting volumes now to get a positive EBITDA, and that we managed to do in the first quarter. So it was a good growth in client brand, which is the low voltage chargers for our premium customers. But we also had a stable sellout of our EVSE destination. So if we remove the GM contract, we have a stable sell-out of EVSE destination with a better margin, which also helped to have a positive EBITDA.

Okay. And did you have any positive one-off effects from the discontinued GM contract in this quarter?

No, not at all.

Okay. Excellent. I think this already has been answered a bit in the previous question, but could you describe your U.S. business in the quarter and your -- and how your customers are feeling in the region?

If we start with the quarter, it was very good sentiments. We had high sales especially on our online channels. We -- with the move, we managed to reduce our pricing a bit with kept margins, but we saw positive take-up from our customers in North America. So as I mentioned before, 80% we have now produced in Malaysia. And at the moment, the tariffs from Malaysia is 10%. We don't know how that will develop, but it's relatively good for us compared to some of the competitors, I think. So we look positive at that. Then, of course, it's very hard to say anything about the future and the sentiment of our customers and consumers in North America at the moment.

Yes. Understood. If we just look at the Q1 numbers, you had SEK 17 million roughly in sales from Americas and you had SEK 21 million in Q1 last year. If we remove the GM volumes from last year, what would be representative number, you say?

In North America specifically?

Yes, exactly. So if we remove the GM numbers from the SEK 21 million.

We don't reveal on that detail. But I can say that we had a good sales development if we clear for GM activities.

Okay. Okay, excellent. And if we move over to the DACH region, it grew by, yes, I think, nearly 60% year-over-year, which looks very high. What are the reasons behind this development in the quarter?

We had also a very, very strong online sales, but also our professional workshop chargers are developing really, really nicely and especially in the DACH region.

Okay. So it's not -- there aren't any timing effects to that and the Q4 last year, for instance, instead of going into Q1? Or it's just pure demand driven, would you say?

It's very hard to say if it's timing effects because you always have -- there could be timing effects between the quarters. But we are, of course, closely monitoring the underlying sellout at our -- especially our big online or e-tailers. And we see a very healthy growth in those figures.

Okay. And just regarding the development for the CC3, especially in the U.K. then in the quarter, what was the development like? And what do you expect now heading into the summer months?

We -- if we take CC3, our Chargestorm Connected 3, it has been very well received by the customers. The U.K. sales have not really taken off yet. So it's hard to say. We are working closely with our customers in U.K. and also in Scandinavia. And later on, we will also launch it in Germany, as you know. But so far, we have seen a stable demand in a very turbulent times.

Okay. Understood. And just a final question from my side. Could you expand a bit on the Q1 net finance of minus SEK 13 million as it looked quite high.

Yes, I can take that question. Yes. So it's actually -- we are impacted both in financials -- finance net and on the operating result of nonrealized FX impacts. When the krona has been stronger against both U.S. dollars and euros, we have some impact on that. And on the finance net, it's primarily that we have quite a lot of euros on our accounts, and they are evaluated to SEK 1 less per euro than during the quarter. So that is the main impact. So around SEK 8 million, SEK 9 million of that impact is just nonrealized FX impact.

No more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much for listening in to our Q1 report, and looking forward to see you with 22nd of May in Stockholm. Thank you so much. Bye-bye.

Thank you.