Ferronordic AB (publ) ($FNM)

Good morning, everybody. Thank you for your interest in Ferronordic, and welcome to our Presentation of the First Quarter of 2026. Moving to Slide 2, summarizing the quarter. We saw revenue amounting to SEK 1.128 million, down 6% year-on-year, but up 6% in fixed currency. Gross margin improved to 17.7% compared to 16.3% last year. Operating profit more than doubled to SEK 37 million. EBITDA increased 49% to SEK 124 million, and net profit improved to SEK 32 million, supported by currency exchange gain and lower finance costs. Net debt at the end of the quarter amounted to SEK 1,957 million, up versus last year related to the integration of the Housby business that was acquired in January and the seasonal inventory and rental fleet buildup. Looking at the operations and the quarter from a group perspective, we saw clearly stronger earnings during the quarter compared to last year and continued progress. Activity was fairly good and improved through the quarter and then accelerated in March with good trajectory. Our efforts to increase the -- or improve the aftermarket business and work with operational improvements and broader use of technology and data across the group are starting to show. At the same time, we see significant untapped potential within our existing operations and our existing geographies and continuing these improvements will be the focus going forward. At the same time, we do evaluate selective bolt-on acquisitions. Revenue, as I said, was down in Swedish krona, 6% to SEK 1,128 million, but in fixed currency, it was up 6%, mainly then reflecting the weakening of the dollar year-on-year. Operating profit more than doubled, as said, to SEK 37 million, supported by continuously strong performance in the United States, positive operating earnings from Germany and good cost control across the group. EBITDA increased by 49% to SEK 124 million. Net profit improved to SEK 32 million, supported by FX gain and lower financing costs. And as I said, the net debt increased following the integration of Housby and seasonal inventory and rental fleet buildup as we prepare for the season to come. So all in all, revenue up 6% on a fixed currency basis, positive earnings in Germany and net profit improved SEK 32 million. Looking at the U.S., we saw strong demand in our territory, supported by continuous investments in infrastructure and increasing amount of projects related to data centers. The market in our territory was up 12% year-on-year. Now that includes dealer additions to rental fleets and not sold units, but still a sign that players in the market are positive. We see AI-related investments becoming a major driver of construction activity and equipment demand. Tariffs continue to cause some uncertainty and manufacturers are gradually increasing prices to cover increased costs, but we haven't seen this materially affecting the market activity. So in U.S. dollars, sales increased by 16% with equipment sales up 13%, aftermarket sales up 10% and rental sales up as much as 92%. Gross margin reached 17.5% versus 17.7% last year, in line with seasonal patterns. The underlying margins were stable, and we managed well to defend our margins. Operating profit reached SEK 47 million, more or less the same as last year in Swedish krona, but up 15% in local currency. EBITDA improved to SEK 112 million, so up 38% in local currency, driven by strong rental activity that has a bigger impact on EBITDA and EBIT as a large part of the rental revenue is going to depreciation. So comforting results in the U.S., continued strong performance. At the same time, we see -- we still see good opportunities to increase market share and aftermarket penetration. We continue the rollout of our new CRM. We are relaunching the automatic lead generation, and we are working to expand the rental fleet to gain market share and grow the business. We also successfully integrated the Housby business in Iowa into the ground operations, something we talked about when we reported the Q4, but the Iowa territory corresponds to roughly 10% of the market we covered in the rather legacy operations. It's very interesting geography, a lot of activity relating to data centers there as well. And over time, we expect Iowa to reach the same profitability as our other U.S. branches. All in all, revenue in the U.S., up 16% in dollars. EBITDA increased 38% in U.S. dollars, and we had an operating result of SEK 47 million. Going to the next slide, looking at Germany. Our efforts to improve the aftermarket business and reduce costs are starting to show results. And as a result, we saw positive EBIT in Germany of SEK 4 million despite a continuously weak market. Registrations in our territory nevertheless increased by 3% and the gradual market recovery seen in previous quarters continued, but at a moderate rate. Increased fuel prices make -- do make customers more cautious and are affecting the German economy in general, but the recovery nevertheless continues. More importantly, from an earnings perspective is that the existing fleets remain active, supporting continued demand for service and parts and also making sure that fleet renewals will be needed at some point or another. Sales in Germany amounted to SEK 337 million, so lower than last year, mainly due to truck deliveries that were postponed from Q1 to Q2 and the high comparison base last year. Aftermarket sales increased by 6% in euro, supported by higher productivity and good pricing. Gross margin then improved correspondingly to 18.2%, while gross profit increased by 9% to SEK 61 million. And following the cost reductions we implemented last year, SG&A decreased by 14%. And as a result, then we saw EBITDA improving over 100%, and we reached positive EBIT in Germany. Looking at Kazakhstan, we saw sales amounting to SEK 32 million, lower equipment sales, but relatively stable aftermarket operations. Margin improved to 16% and the operations were broadly breakeven. After having reduced older inventory during last year, we are now rebuilding inventory in Kazakhstan again, in line with the current demand. Our focus remains on operational improvements and continued customer development. So with that, I hand over to you, Erik.

Thank you very much, Henrik. And I pick up with a little bit more detail on the income statement and the performance across the segments. Starting where you left off or where you started actually. Total revenue, SEK 1.1 billion, down 6% in Swedish krona, but fixed currency basis, we were up 6%. And just to be clear that what we're doing is then leaving the foreign exchange rates as they were in the comparative quarter, meaning in the first quarter of 2025 when we convert the segment currencies of this quarter, first quarter 2026. If we look at the mix of revenue between the segments, 67% U.S., so 2/3, more or less exactly 30% Germany and only 3% Kazakhstan at its current level, but we do see a lot more potential there as we do in our other segments also. When it comes to the revenue mix, important for the gross margin, that's to a large extent driven by the revenue mix, but also the product mix within equipment sales. We were at 53% of sales of equipment and trucks. That includes both new and used and also conversions from the rental fleet in the United States. If we compare that a year ago, that was higher, 57%. Aftermarket, so this is service and parts, the maintenance work we do such a big focus area of the work that we do as a company. That was at 39%, a little bit higher than a year ago. It was at 37% in the comparative period in '25 and then 8% rental. Gross margin improved, and that's mainly driven by the meaningfully higher gross margins in Germany and Kazakhstan, which as it were, to a big extent, driven by that revenue mix that I referred to in those 2 segments. SG&A, so our overheads and operating expenses were down 11% to SEK 173 million. And as a percent of revenue, which is an important KPI for us to track, it decreased to 15.3% from 16.2% last year. That reflects both some of the cost cutting that we have been doing and initiatives to rein in on costs and to some extent, also foreign exchange effects. Operating margin increased to 3.2% from 1.1% and the operating profit increased from SEK 13 million to SEK 37 million, following strong performance in U.S. and Germany, especially. The biggest delta compared to last year would be the improvement in Germany and also a reduction in group costs as we'll see in a subsequent slide. Net profit increased to SEK 32 million, some help there also from foreign exchange and also lower financing costs. Moving on to the balance sheet. We have a bigger property, plant and equipment year-on-year, and that's mainly reflecting the seasonal buildup of rental fleet in the United States. If we look at the United States specifically and its working capital and then look quarter-on-quarter, so not year-on-year, but we compare it to Q4 of 2025, then we do see an increase, and that's related mainly to the acquisition of Housby, which was completed at the end of January, so in this first quarter of 2026. And also the aforementioned seasonal buildup of inventory that Henrik has referred to. In Germany, working capital also increased quarter-on-quarter from 6% to 13% of last 12 months revenue. There are more temporary factors. We had some truck deliveries to clients postponed from first quarter to second quarter and are confident that they will come through in the second quarter and that working capital will then come down in Germany. In Kazakhstan, a picture also, if you remember last year, for those that follow us, we cleaned out old stock from our inventory. We've been now ordering new inventory with high demand in the local market. And as that being delivered, we see a buildup in the working capital, while the market itself was quite slow in the first quarter. So an increase in working capital that we expect to come down as those machines are sold to customers going forward. Net debt as a result of these factors, but also, to some extent, currency effects was up quarter-on-quarter to SEK 2 billion, again, reflecting that increase quarter-on-quarter in working capital, but also quarter-on-quarter, the currency worked against us year-on-year, it was the opposite effect, but over the quarter, the Swedish krona weakened. Equity/assets decreased quarter-on-quarter. It was flat year-on-year, so also capturing some of those dynamics on the balance sheet. Looking at the key drivers or again, delta year-on-year, we see starting from last year's EBIT performance at SEK 13 million. Again, a strong performance in the U.S., but close to where it was last year, whereas Germany picked up from minus 9 to plus 4. So a big delta there, a big improvement. Kazakhstan roughly where it was. And then we also had, to your far right there, cost savings, mainly on personnel and travel in HQ. So group costs coming down, leading to that overall improvement in our operating profit performance. Moving to -- looking at on a quarter-on-quarter basis as well. Here, we see then after a very strong finish in the U.S. a decline, whereas in Germany, we had some one-off costs related to those cost savings that we now see fruits from in this year. So a big improvement quarter-on-quarter, whereas Kazakhstan, again, less of a delta there. And again, some difference in the head quarter performance there also driven by some of the adjustments of provisions that we had in HQ. With that, I move over to next slide, which gives our traditional overview of our balance sheet. So you'll see the big assets on our balance sheet. Starting from the left, you have our real estate, that's both owned properties that is our workshops and leased in IFRS 16. And then the biggest item being our rental fleets, mainly in the U.S., the red part of that bar, but also in Germany, in Germany, capturing both diesel and electric trucks. And I would then jump all the way to the inventories there being a big piece on the balance sheet, again, biggest in the U.S., reflecting the bigger scale of those operations and also in Germany, and then we have the trade and receivables outstanding from customers. And quickly on the liability side of the balance sheet, we have the trade and payables being the interest-free part of the balance sheet and then the bank loans. And thirdly, the big item would be the supplier financing that we have for our -- both inventory and rental fleet arrangements. So with that, we get to our NAV at SEK 1.4 billion and which translates into about SEK 93 per share. Moving over to our financial objectives, where we stand with regards to revenue, we are at 0.92x, partly affected there by currency development since we set these targets and especially then, of course, the dollar, which has weakened against the Swedish krona. Operating margin last 12 months at 2.2%. So reminder that we reached 3.2% in the quarter, but this being trailing last 12 months, standing at 2.2%. Net debt to EBITDA at 3.8x, up from 3.4x in the previous quarter for the reasons that we have looked at in this presentation, so mainly Housby and seasonal buildup of inventory and rental fleet. And with that, Henrik, I pass back to you for an outlook before we hand over for questions.

Thank you, Erik. So we are optimistic about our U.S. operations and the market environment ahead. As said earlier, infrastructure spending remains at a high level across our territory. The need to repair roads and develop infrastructure bridges and so on continues at the same pace as last year. At the same time, we see that this is increasingly complemented by large-scale data center investments. The scale of planned IE (sic) [ AI ] related investments in the U.S., be it data centers or semiconductor factories is really unprecedented, and we have several projects within our territory that are expected to support construction activity and equipment demand for several years to come. The customer order books, they are solid and underlying demand is robust. Now we have Housby integrated, and we continue to invest in rental, CRM and lead generation. And with that, we are well prepared for -- to take more market share, increase our aftermarket penetration and that way, improve our operational leverage in the U.S. further. In Germany, we expect the recovery in the market to continue as fleet renewal needs continue to build despite higher fuel prices linked to the conflict in the Middle East that had uncertainty. Importantly, demand for service and parts remains strong. And as new truck sales improve, that demand for service and parts should grow further. So with a lower cost base in Germany, a better aftermarket business and still with an organization that is able to handle larger volumes, we are well positioned for higher sales and improved operational leverage in Germany, too, as the market normalizes. In Kazakhstan, we see good opportunities, particularly in mining and road construction. We have a new management in place and focus on improved operational execution. And in Kazakhstan, too, we are very well positioned to grow revenue and profitability over time. That concludes our presentation. Thank you.

And we hand over to the operator for questions, please?

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

This is Albin at ABG. So if we start with Germany, we see the equipment sales being down quite a bit, yet we saw an earnings recovery driven by the strong gross margins of some 18% in the quarter. So do I understand it correctly that this was primarily driven by a strong aftermarket, which was up 6% organically, I believe? And how much of these gross margins and this improvement here is structural, would you say?

The improvement year-on-year is definitely driven by the aftermarket. That is a correct understanding.

Yes. I would say, I mean, when you say structural, Albin, I think that I would put it the following way. I mean, our core strategy is to grow the aftermarket. So we'll continue to do that in Germany. We think we can increase penetration and take a bigger share of the aftermarket that is out there, service more trucks. So that we expect to continue to grow. And also when we look at the economy, while there are concerns about the pace of the recovery in Germany, we see continued utilization of trucks. So the trucks are being used and our strategy is to take more share of the aftermarket there. Then you have the new truck sales, which tend to be more volatile. It will vary from quarter-to-quarter. In this quarter, specifically, we had, as we mentioned, some of the deliveries delayed from the first quarter to subsequent quarters. So you would see a decline there that is maybe not typical. But I think the way to look at it, and we want to see, we're careful to give guidance, as you know, but is to see that aftermarket continue to grow. We -- it is stable as trucks are being utilized, whether new trucks are sold or not, and we are leveraging our organization and reaching to take more market share there. But the new trucks, of course, we need to replenish that population. We need to build population. But the sales from one quarter to another is going to be more volatile. Over time, we definitely see potential to take market share in that as well. So structurally, I think, yes, we want to see that aftermarket remain at least stable, and we see the potential to grow it from where we are now. And then I think, yes, the truck sales that will be more volatile from quarter-to-quarter, but the trend should be upwards. And as I think we stressed even if the recovery is taking some time, customers always using the trucks, so they will have to replace those trucks. That's when we refer to the pent-up demand that fleet renewals has to happen. It has happened.

I see. Yes. When I say structural, I was referring to perhaps structural versus the seasonal patterns where you've had strong Q1 gross margins before. But all right. And you also talked about the favorable product mix within the equipment sales. Are there any particular products that have been especially accretive or you mentioned perhaps?

No, I don't think anything really sticks out. I mean we had good in the U.S., good activity when it comes to converting machines from the rental fleet. That typically has higher margins than when we sell new equipment out of the box, so to say. And that contributes to the revenue mix. But all in all, as I said, we -- underlying margins in different revenue streams are fairly stable despite competition still being high, and I think we are doing well in defending our margins.

All right. That's clear. And we also saw OpEx coming down in Germany due to the cost savings that you had flagged before the quarter, SG&A being down 14%. Would you say that you're at the cost floor now? Or are there further reductions possible? Or do you have further reductions planned?

Well, I mean, we always look to optimize costs. But our focus now in Germany is really to grow the service and parts business and to drive that and then be in a good position to capture the market when it comes back.

All right. Understood. And moving on to the U.S. then. You talked about the AI and data center construction here is an accelerating demand driver going forward. Could you perhaps split out how much of your U.S. territories active projects are data center related? Is that possible?

No, I don't think it's possible to give a number on that, but it's clearly an uptick in the number of projects being quoted and the number of deals we're involved in relating to data center. I mean, these projects are enormous in the sense that the territory or the land that you need to build one of these data centers is so big and you need to move so much dirt that it just requires a lot of articulated haulers and excavators and wheel loaders to do that.

Yes. Understood. And of the U.S. organic growth then, how much did the acquisition of Housby contribute here?

We don't give the exact split, Albin. But I think maybe if you go back to sort of the press release of what we saw Housby being approximately 10% of revenue. And then I think we are integrating the assets that's going well, but it's taking some time to get things up and running our way. So probably lower than that in the start. That's what you can assume. And we're -- yes, putting everything in place to make sure it gets up to full potential, both in terms of revenue.

Yes, we don't specify it, but I think we can say that most of the growth in Q1 came organically, that's correct.

Yes. Okay. And when do you expect the Housby margin to be aligned with the Rudd EBIT margin perhaps?

I don't really want to speculate too much there, but it's a market that covers 10% of the market we used to have. And there's no reason why we should have a lower share in Iowa compared to other territories over time. And there's no reason why our profitability should be lower. So when exactly that will happen, I don't want to speculating. But over time, it should be the same as we have in our other U.S. branches and just sort of contributing to operational leverage in the U.S. business.

Yes. All right. That's clear. And if we move on then to the net debt coming up a bit in the quarter, both sequentially and year-over-year. And this is, of course, partly, as you mentioned in the presentation, part of a seasonal pattern as well as due to certain lower equipment sales in the quarter perhaps than expected. I suppose this is Housby related as well. Is that correct?

Yes. I mean there are 3 things driving this. I mean, one is the acquisition of Housby, where we -- I mean, everything we more -- almost everything we paid for was actually equipment and being added to rental fleet and inventory. On top of that, you have a seasonal buildup of inventory and rental fleet in the U.S., which I think -- I mean, it's a sign of the statement we make in the outlook. We are seeing very high demand, and we are building inventory and rental fleet to cover this demand in the season. And then on top of that, we have these truck deliveries in Germany that were postponed from Q1 to Q2. So that drives net debt as a whole. And as you saw, I mean, leverage also came up somewhat during the quarter and I mean this is -- the net debt increases immediately when we add inventory and rental fleet, while the EBITDA that we are expecting to get from these investments come with a somewhat of a delay. So over time, we are working to delever the company.

Yes. Yes. Do you think that you will be below the leverage target as we end 2026?

Again, Albin, you're in -- on guidance. And I think I mean we set these financial targets as long-term objectives. So I don't want to skip the time line there. But I do think we are saying that I mean, if you look at these effects, we have Housby, we have the delay of some of the deliveries in Germany, and we have a seasonal buildup in the U.S. All of those should normalize over the year. And then there is a structural part where we keep investing in the rental fleet in the U.S., but that should also come with higher EBITDA from that investment. So I would at least say all those factors speak for that ratio coming down.

No, I hear you. All right. Yes. And just a final question, if I may. On the group costs, they have been lower now for 4 quarters in a row compared to the previous period. I sense a pattern of normalization here within this cost range. Is that correct?

I think it's correct. It is -- I mean, not only temporary. We have reduced costs on a group level. So there is a structural component there. And I think if you look quarter-on-quarter, for example, in Q4, there were bonus provisions that were reversed. So you had actually negative costs if you see in positive contribution. So that reduced cost in Q4. But yes, I mean, we have worked on the cost on the group level, and we continue to do so. So I think you can probably look at the current level as more indicative.

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

Two questions, Henrik coming into us over mail. I won't state any names because I'm not sure they would want that. So one question is on working capital. So I think we've addressed this if the increase that we've seen is more temporary or structural. And I think we just touched on that, that we do see it as more temporary given the seasonal factors and the buildup related to Housby. And we are comfortable with higher working capital when it comes with higher revenue. So looking at working capital as a percentage of revenue, that we want to normalize and come down, and we will always want to keep high capital turnover and good returns on capital. The second question, Henrik, I'll leave to you, it's related to what we say about the potential for further bolt-on acquisitions. So the question is, should we expect any such acquisitions in 2026?

Well, as we state, we continue to evaluate opportunities. We have a very strong platform in the U.S., particularly for bolt-on acquisitions. And over time, we are positive about finding such, and that's in line with our strategy. But whether or not we have concrete cases, that is not something we will share.

Thank you. And that was it what I had on e-mail. So I turn back to the operator. We have no more questions here. If there are no more questions from the audience. If not, then we thank everybody for their interest in Ferronordic, and I hope you have a great rest of the day and the week. Thank you.

Thank you.