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

Welcome to CTEK Q4 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 so much, and good morning to all of you, and welcome to the Q4 report from CTEK. With me today, I have Thom Mathisen, our CFO. And as always, we will start with a small presentation of CTEK and then before we dig into the Q4 results. CTEK was founded almost 30 years ago by bank Bengt Wahlqvist, the inventor of the Smart Charger, and that's the invention that we have built the company on. CTEK has mainly 2 technology areas. We have our heritage, the Low Voltage. And now for this quarter, we have also introduced boosters -- premium boosters. Our heritage product is the Premium Chargers. And now we have introduced an adjacent segment that is Premium Boosters, which is as big addressable markets as the chargers. The other technology area is chargers for EV, electrical vehicle cars. And there, we are, as we speak, introducing 2 new products as well, but I will come back to that later. We are going to the market in 2 different divisions. One is the Consumer Divisions where we mainly sell our Low Voltage technology and it's focused on retail, big retail change and e-tailers, and we are targeting worldwide. The other division is our Professional division. There, we are also selling our Low Voltage products to mainly OEMs and also our EVSE chargers, the chargers for electrical vehicles to mainly parking operators and charge point operators. More than 50 premium vehicle manufacturers have chosen CTEK to be their supplier of charger solutions. But speaks a lot about the trust we have earned and the quality in our products. We are providing premium products to a lot of different segments and many niches. In a lot of the segments, we are selling many of our different products, as you can see here. There are synergies in the sales channels. There are many sales channels. And when we now are introducing a new adjacent product category like Premium Boosters, we are aiming to the same sales channels as we already are in with our premium chargers. It's also worth to note that also hybrid -- plug-in hybrid and EV cars are needing our Low Voltage products. So then into the Q4 results, I'm happy to see increased margins and a very good cash flow for the quarter. That shows the quality in our business. The turnover are impacted by but we have ended the business with General Motors, but we had a big order -- last buy order in the comparable quarter. We also have an effect of currency, and we have a somewhat weaker North American market. But other from that, we see strong underlying base business, and we have a full year of organic growth in Low Voltage segment. If we dig a little bit deeper into the turnover, the ended contract with General Motors has an effect of 46 -- minus SEK 46 million, if we compare with the comparable quarter. The currency headwind is about SEK 10 million impact and a weaker softer sentiment in North America due to tariffs and consumer sentiment is another SEK 10 million. So that is mainly describes the drop from the comparable quarter. We had a very good quarter when it comes to cash flow, and we are now down to a leverage of 1.2x, that creates a lot of flexibility for us to go forward. And as I mentioned, we also have introduced adjacent product segments and also a lot of products in our Premium Charger segment. So for the full year, we can see it's about 5% organical growth in Low Voltage business. So it's -- I think in this market condition, it's a good growth. Then I hand over to you, Thom.

Yes, to give some more details on the financials. And starting with both divisions we have. And the first is the Consumer, standing for 3 quarters of our turnover. Organically in this quarter, it was a decline from SEK 184 million to SEK 159 million. And as Henrik said, that is mainly related to currency impact on the softer market in U.S. related to the tariffs that are in place right now. However, you can see on the EBITDA that we have increased EBITDA percentage from 38.1% to 40.4% despite this lower volumes. So it's still a stable and very profitable division. Coming to the Professional division, that includes around 25% of our turnover. We have both Low Voltage products and EVSE products in this division. So the net sales declined as much as 45% in this quarter, and that is, as Henrik just mentioned, almost entirely related to the ceased business with GM on the EVSE part. We are still working with General Motors on Low Voltage. And also here, even from a little bit lower levels, we have turned the negative EBITDA to a positive of SEK 1 million in this quarter, compared to minus SEK 10 million last quarter. And for the full year, we are now on a plus 3% EBITDA level that is compared to minus 6% for the full year. So even if we still have to do improvements here, it's going in the right direction from a profitability point of view as well. Cash flow is as important as always. And if I start on the lower part of the slide on CapEx, we have said before, we repeat it now that we are now coming back to more normal levels on the CapEx in relation to net sales. And we don't foresee any increase from those levels going forward. So we are we have sufficient of the amount to do good product development going forward as well. So the CapEx from operating activities was as high as SEK 131 million compared to SEK 59 million in last quarter 4. And if you look at after investment activities, our net cash is on SEK 180 million, which is a really good quarter for us. So we see now that we have created, as Henrik said, a good situation from a financial stability, and we have lowered the net debt ratio to 1.2x is quite far below our financial target of 3. So with that said, I hand it over back to you, Henrik.

Thank you, Thom. So as a summary, we are continuing to follow our strategic plan. We have built a very strong and profitable platform. And we have, during the quarter, launched many new products. And I think it's very important to stress the Premium Booster, which is a new product category for us, but double the addressable market. has the same size and possibilities as our Premium Chargers. The profitability increase is strong as the cash flow and the low net debt ratio creates a lot of flexibility for us going forward. At the Capital Market Day, we had in May last year, we presented or we have taken this picture to present our journey towards our financial goals. During the fourth quarter, we took a big step in increasing our profitability. We have also now launched a lot of new products, having a foundation for growth in 2026, and we are according to plan. We have introduced products in new segments in our Premium Charger segments and also in our EVSE segments. So we are looking very positive into 2026. And with that operator, I open up for questions.

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

Mattias here. I wanted to start off by asking a question regarding the proposal from the EU to remove that 2035 target for the sales of internal combustion engine vehicles. Obviously, this can be considered as a headwind for EV adoption. And given that you have 2 business areas, both EVSE and Low Voltage sales, how do you view this impact of this policy on your business with regards to both the business segments but also different time perspectives short and long term?

Good morning Mattias, and thank you for your question. It is a hard question to answer, of course. We are very well vested in our different product areas. And if we take this possible change, I think it will be more plug-in hybrids in that case, and that is positive for us because plug-in hybrids need both our Low Voltage chargers, and the EV chargers. I would say that the new registration of EV cars, we are not that dependent on that. We are more dependent on how the infrastructure is developing. And I think that will continue. And we hope that, that will pick up during the years. So I would say that we are very well prepared for every scenario that comes. We have seen many of our premium clients, they need our Low Voltage chargers for the plug-in hybrids, because if I don't charge the plug-in big battery, that will be a problem, so they need the Low Voltage chargers to come back. So we have many projects with our premium brands in that area. So I would say that we are not that dependent on the decision. And our Low Voltage business is developing strong and that business will be there for a very long time, independent on if everything is going to EV or not.

Okay. But in the short term, do you see any impact on your customer investment appetite for charging infrastructure, for instance, you have -- I mean you have fleet operators, property owners and public charging networks as well. Do you think that they become a bit more hesitant to make their infrastructure investments in the short term?

I think there has been a hesitation already now. We didn't see a very good year 2025. I don't think this change will have an impact because I think what we will drive is mainly that plug-in hybrids will increase. And plug-in hybrids are actually very good for AC charging and destination charging. So I think that is good. I don't see any short-term problems with us.

Okay. You mentioned in the report that your lower debt levels expands your scope for making add-on acquisitions to accelerate your progress. Could you shed some additional light to this? I know you mentioned it in the Capital Markets Day earlier in May, but how has this work progressed in the last quarter?

We are continuously monitoring the markets. As we mentioned at our Capital Market Day in May, we are primarily looking for acquisition objects into the Power Solution area, and that could be both regarding technology or geographies.

Okay. And I know it's a difficult question to answer. But in terms of size on the top line, could you share any insights to that or what geographies or so on?

No, I unfortunately can't share that you have to wait and see.

Okay. Sounds exciting. Final question from my side, maybe a difficult one to answer, and it's not related to this report specifically. But do you have any insights into which end customer segments performed well during 2025 in your Low Voltage business? I mean you have different chargers, obviously, in terms of ampere, can you see based on the models that you're selling that specific models have been strong throughout the year, for instance, to cars with -- that could indicate for instance, that hybrid cars are going strong compared to older vehicles with smaller batteries? Or do you see any trends in your end customer group, so to speak?

We see during 2025, we saw a very strong trend, continuously a very strong trend from our e-tailers -- our big e-tailers. We are selling of our big sellers. And since our product can be used in many different user cases, it's hard for us to know exactly where they are ending up. And in many case, people are -- and our customers are using them then for both their car, their boats, motorcycle, lawn mower, et cetera. So unfortunately, we do not have that kind of information that we can share, but we do see an increased interest from our premium OEM manufacturers like Ferrari, Lamborghini, Mercedes, AMG, et cetera, into hybrid vehicles. So we are working on projects with our premium OEMs when it comes to hybrid vehicles.

Okay. Okay. Interesting. And also just going back to my previous question a bit regarding aftermarket sales or when it comes to, let's say, cables or accessories to your products, how much do they account for in total sales in relation to your Low Voltage chargers?

It's not material at the moment, but we see an increasing trend, and we are also putting more effort into that. And you might not have seen it yet, but I recommend you to go into ctek.ce, where we have launched our new web shop for Sweden. And there we are promoting accessories in a better way, and we see a small take-up rate because of that. Thank you. And operator, we have received some e-mails, some questions from Sofia S�rling, DNB Carnegie via mail because you have some problems to log into the the call. So the first question, I'll read the questions, and then we will try to answer them. Have you started selling your EVSE products in Germany now? And how is the feedback? Obviously, the gross margin has been weak within your EVSE segment before at what level will the gross margin be now also when entering Germany? We have just as we speak, introduced our [ CC free Eichrecht ], which is compatible with the German market. We haven't yet installed, but I know about in February, we will have our first project together with a big international charge point operators in Germany. Regarding the gross margins, we have seen good improvement with the CC Free platform. Have we revealed about the margins or ...

Not really on gross margin level, but we are at least in the same neighborhood as other EVSE players in the market, and it's significant improvement during '25 versus '24. And that will continue with new products, of course.

Yes. Next question from Sofia S�rling is, could you say anything about the EVSE business in the U.K.? How is it progressing? And what is your expectations into 2026? Yes. As you can see in our figures, 2025 was not really a good year for EVSE. I'm happy to see that some of our older customers have come back to us after testing other products. So we have seen some repeat orders from old customers. And we are focusing on the U.K. market, and we have, of course, higher expectations for 2026. Next question from Sofia S�rling is the Professional division is EBITDA breakeven, indicating the Low Voltage business within this division is not that profitable either. Can you talk a little bit about this segment within this division? What needs to happen here in order for you to improve the EBITDA margin? I would say that the Low Voltage business in that segment is highly profitable. It's the EVSE business that we are struggling with. We have done a lot to cut costs. We have also improved the gross margins. So now it's about volume. We need more volume to get the EVSE business profitable, but the Low Voltage OE business is highly profitable. Next question is the EBITDA margin in the Consumer division is strong at 40.4%. What are the drivers behind this margin and given the launch of Premium Boosters 2026, is this sustainable margins level? Or do you expect margin dilution here? Yes, the margins are very strong in Consumer. It can depend a little bit quarter-by-quarter depending on country mix and product mix. But we saw a good mix in Q4. We also see that the launch of the new products, not only the booster, but the booster is very important, but also with the NXT series, we are increasing the price point because we have a better product and we are also increasing our margins. So if something will happen to the gross margins with the new products, it's -- they will not dilute the margins in any way.

And we can also add to that, that during the second half, we have also raised the price levels in general a bit, all other place. So that in conjunction with good cost control on the product level, but also on the OpEx levels that has helped up the margins on the Consumer division as well and we expect that to stay on rather high levels with some fluctuations during the year, but rather high levels.

Yes. Next question from Sofia is how will you enter the Power Solutions segment? Have you any product in your pipeline, but will be launched soon? We have launched our first AC/DC charger into that segment. It's a small enter. And in our pipeline, we are looking for a broader assortment but that is a bit early to say exact timing, but it will be by the end of 2026. And then the question in conjunction to that, how does the Power Solutions segment differ between Low Voltage, Premium Boosters in terms of customers, sales channels and perhaps R&D and production? It is based on the same technology. It's also some sales channels are the same in the aftermarket. It's very close to our Premium charger business in that sense that it's both pointed at the OEMs and to the aftermarket. So we will have connections with OEM, caravan and mobile home producers and also to the aftermarket. And I must say that CTEK is very known name in the business of caravans and house mobiles because when you put away your house mobile during winter, you normally put CTEK charger on the battery so that you when the sun is out and during Easter and you want to go out camping and you have no problem to start your mobile home. So some channels are the same and it's the same logic, both OEM sales and aftermarket sales. When it comes to R&D and production, we will not increase our total R&D costs. We are now finishing up our EVSE product portfolio. So we have future safe EVSE portfolio. Of course, there will be some development and some going forward as well, but not as massive as we have had in the past. We will redirect some of our R&D capacity into Power Solutions and has already done. And when it comes to production, it will be the same as for our -- all of our other products. We will not do the production in-house. We will do with design and testing, et cetera, but we will have partners that are producing the products for us. So Sofia, that was your questions. I hope I've understood them right and that you're happy with the answers. So back to you, operator.

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

Thank you, operator, and thank you for listening in and have a great day. Thank you so much.

Thank you.