Lifco AB (publ) ($LIFCOB)

Welcome to Lifco Q1 Report for 2026. [Operator Instructions] Now I will hand the conference over to CEO, Per Waldemarson; and CFO, Therese Hoffman. Please go ahead.

Thank you, and good morning, and welcome to the Lifco Q1 conference call. We can start with moving in directly into slide or Page #2 in our investor presentation and take a look at the overall performance in the quarter. And if we look at Lifco overall, we are presenting a stable quarter with 4% growth in sales, 6% growth in EBITA and 8% growth in net profit. In the quarter, acquisition contributed with around 8% to our sales growth. We had a negative effect from exchange rates of around 5%. And organically, we grew with around 1% in the quarter. I think here talking about organic growth, we should also take into consideration the record high sales we had in quarter 1 2025 that we now had to meet, and we could not meet those numbers. And that has to be taken into consideration that we are having a decline in our sales in the Contract Manufacturing, which basically means that many companies in our industrial side had a better start to 2026 than the start we had in 2025. We will come back to that a little bit more later. And we can then move into Page #3 and look into the different areas. If we start with the Dental field, we had overall a stable development in sales and despite the negative foreign exchange rate also there, we have in the quarter a positive mix effect where higher-margin companies with own manufactured products developing stronger than the distribution companies, and this leads to better margins than last year. It's basically a product mix effect. Also acquisitions that we have carried out during 2025 and early '26 are contributing with slightly better margins. So that's the explanation for the EBITA margin ending up at 23%. If we then go further down to Demolition & Tools, sales was overall stable on the high level for the business area. We have obviously here also a negative foreign exchange effect on the sales levels. So we had a slightly decline of 3.6% overall in sales. I would like to highlight here. Also here, we had in Q1 2025, very strong margins in this area. In Q1 2026, the current quarter, margin is lower, in particular, due to weak market conditions in our demolition robot segment, which is resulting in a negative product mix in this area. I would also like to, as I usually do highlight that the margins in this area tends to be quite volatile between quarters. So we have seen that historically. But the key point here is that we had a weaker market development in Demolition & Tools, meaning that it was overall quite stable in sales for the other parts of this segment. In Systems Solutions, we have, despite also the negative foreign exchange effect, some strong growth of 9% in sales due to acquisitions and organic growth in all subdivisions, except for the Contract Manufacturing that I mentioned previously. And once again, Contract Manufacturing had somewhat of a record quarter 1 year ago. And we have now seen from the last, I would say, 12 months, somewhat weakening from the record levels we had. And this was also the case in Q1 2026. And I can already now mention that, unfortunately, we have limited visibility in this area. So we have to take a cautious approach going further into the year for this segment. If we go further looking at other segment Systems Solutions, we had a very strong development or strong development in Transportation Products, Environmental Products in the first quarter, which is very nice to see after some, I would say, weaker development during the whole 2025. We had some good starts there. Infrastructure and Special Products had overall stable development, but both of these segments had contribution from acquisitions, making them grow. So if we just end up the overall picture for Systems Solutions, if we exclude the effect from the volatility in deliveries in Contract Manufacturing, we're very pleased to see that the vast majority of the Systems Solutions companies had a better start of 2026 compared to 2025. We can then go further into Page #4 and just make a short statement on the information that was presented in our report this morning. We will -- from the next quarter onwards, we will organize ourselves into 5 business areas instead of 3. And this means that Environmental Technology and Transportation Products that has formerly been divisions within Systems Solutions will now be reported as business areas as of the interim report for the second quarter of 2026. And just a few comments. The change that we now are reporting 5 business areas comes after many years of strong growth in Systems Solutions, both through acquisitions and organic growth. And within Systems Solutions, the 2 divisions that we have currently, Environmental Technology and Transportation Products have become so material that they will reported and monitored internally in a new way. So we will actually lift them up like this. And just also would like to highlight that the Dental and Demolition & Tools segments will not be affected by this change. And the outcome of this is that Systems Solutions, obviously, going forward will then consist of Contract Manufacturing, Infrastructure Products and Special Products. And then we can go into Slide #8, and look very briefly at our financial position. And the financial position remains very strong. Interest-bearing net debt to EBITA is at 1.1x, which is the same level as 1 year ago despite a large number of acquisitions during the last 12 months. And total net debt to EBITA is also stable at 1.7x. And in that number, we also include the debt for options, future option payments of minority holdings. And this financial position means that we have plenty of room to continue doing further acquisitions. We are continuously increasing our capacity to both search and take care of new companies. The inflow of new ideas continues to be high, and I think it's increasing every year. But the exact timing of when acquisition can materialize will be a bit volatile. We have seen that historically, and we continue to see that. So we are working very hard, but we also remain very disciplined in terms of the quality of the companies we want to bring into Lifco, which is way more important for the next decade than optimizing acquisition short term. So it's always a balancing act in this matter. And then we can go into Page #23. And given that we will, from next quarter onwards, report Systems Solutions a bit differently with 2 new business areas, I think it would be nice to look at Page 23 now after 11, 12 years as a listed company. At the time of the IPO in 2014, Systems Solutions was a very small part of Lifco with at the time, some low-margin operations that were, to be frank, struggling going into the IPO. Those original company has done a tremendous job of improving their business, their market positions and their margins. So we have seen some very good organic development. And then on top of that, maybe even more importantly, we have, during the last 11 years, acquired a large number of very strong niche companies into the 5 different subdivisions that we have so far. Two of those divisions have now developed so strongly that we from next quarter onwards, then we will report them as business areas. And both Transportation and Products and Environmental Products are now areas with close to SEK 1 billion in profits, EBITA and with margins way above 20%. And as we will look into further on when we start reporting them more gradually from next quarter, you will also learn that we have some -- especially Environmental Technologies, some global market-leading positions in many of those operations. But also the remaining part of Systems Solutions, which means Infrastructure, Special Products and Contract Manufacturing have developed also very well over time and will together form the parts of the remaining Systems Solutions going forward. So with that final remark, I would like to open up for any questions. Thank you.

[Operator Instructions] The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

I would like to start off in the Demolition & Tools business area. You said now that you've seen some weaker market developments in the quarter. I'm wondering if you could elaborate a bit more on what you're seeing and what the drivers behind the weaker markets are?

Thank you, Zino. Well, if we talk specifically for the quarter, we see a relatively better performance in our attachment side compared to the machinery side, which typically is an indication of sentiment change in the market, meaning that customers are still willing to invest in lower-ticket items, but more hesitant to invest in more expensive CapEx investment for them for the customer perspective. So that's what we see now. Obviously, the situation has been now for years and continues to be very difficult now with the global situation that we are facing and the uncertainty that continues to be high in this area. So we also see -- if you go back the last 3 years, there's been some volatility up and down in this segment, and it continues the uncertainty, you can say, given the situation we have now in geopolitics, et cetera. So -- but in the quarter, just to be clear, we -- overall sales for the area was quite okay, but the mix effect in this quarter was the key thing.

The next question comes from Dan Heimer from SEB.

A couple of questions from my side. Maybe starting a bit on the motivation to break out Environmental Technology and Transportation Products out of Systems Solutions. I suppose it's more of a way to increase external transparency rather than changing anything on how you operate internally. Is that a correct way to read it here?

Yes. I mean, yes and no, I would say, as you know, you have been following us for quite some years, we have -- we are operating with a number of senior leaders in Lifco that are taking care of the governance of the portfolio companies, and that will not change at all because of this. So it has partly to do with the external reporting. But also we have to acknowledge that these areas and now looking back, we have now been able to find very interesting add-on opportunities in this area. It's also part of the motivation that we can also internally monitor how we are developing a bit clearer when we report on this. But you're right, it won't change how we operate internally from next quarter onwards. We still use the same type of -- same people will be doing a great job like they've been doing in the past. Yes.

The next question comes from Gustav Berneblad from Nordea.

It's Gustav here from Nordea. I thought maybe just to ask a question here on the margin uplift in Dental if we look year-over-year. Is it possible to give any more color on what is the contribution from previously announced M&A here? Or -- and what is the contribution from the mix effect? And also, I guess you don't want to guide, but is there anything in terms of the mix that points towards a more negative mix going forward?

Well, if you take the first part of the question, we see the effect is strong both organically margin because of the product mix effect and the acquisitions. So it's a combination of both, I would say. And then you're right, we don't guide going forward. So this is one quarter. Hopefully, we can continue to see increasing margin in the future, but we don't celebrate victory from one good quarter. So time will tell. But in general, I can -- in this regard, just mention that over the last decade, we have gradually step-by-step increased our exposure to own manufactured products, own proprietary solutions. And we kept our distribution business, and they've been doing a great job in their markets, but the mix effect has been gradually changing like this. So now in this quarter, it became a little bit bigger effect maybe than normally, but that trend has been there for years. And we continue to have a higher appetite for more differentiated type of companies in all areas, but also in Dental.

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Yes. One more question from my side. When I'm looking at the tables on Transportation Products and Environmental Technologies, there seems to be some variations in the margin. And I'm wondering if you have anything you want to send our way that could be helpful around how to think about the margins in these business areas.

Can you be a bit more specific? Sorry, [indiscernible] I'm answering the question in a correct way.

Sorry, could you repeat that?

Zino, can you just explain what variation are you referring to just so I can answer it more specifically what you're looking at.

The quarterly variations in the new business areas where you have highlight or shown the EBITA margins on a quarterly basis?

Yes. Okay. No, no. But this is true for -- in general, for Lifco that when it comes to quarterly margins, our companies, they are operating without thinking about the quarters. So that can be varying. And then, of course, in -- then on top of that, you also have some acquisition effects that can come in different quarters as well. But -- and then in some areas like in Environmental Products technology, for example, we have -- in certain areas, we have some more deliveries with larger size that can also move around between quarters and impact the quarterly margins. But if you look over time and take the annualized situation, then if there is a variation in margin, then it has more to do with if the market has had a more tougher year. Like in 2025, for example, we had a slightly more difficult year for many of our Systems Solutions company, including, I would say, Environmental Technology and Transportation Products. So that's -- but between quarters, it can be volatility. Yes, that's correct.

The next question comes from Dan Heimer from SEB.

Another question as well, maybe touching a bit on Contract Manufacturing, which we have touched upon for many quarters now. But now, of course, have very difficult comparisons. Q2, you had a little bit of easy comparisons. But would you say the level you're at right now on the sales level, is that sort of representable, although I acknowledge that it can vary a bit between quarters here.

It's a very difficult question, Dan, because as you know, we have been -- it went up, I think, summer of '24 and then it sort of peaked first quarter 2025, and then it was a bit up and down or a little bit weaker level in end of '25, and now we're starting a bit weaker. But it's very difficult for us to give a forecast. Maybe we can say that the peak levels that we saw a year ago, we don't expect to see in the next few quarters, basically. Does it mean that it can improve or go down a little bit from where we are now? We don't know. So that's the best estimate we have right now.

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

Yes. I'd like to thank everyone for listening in, and thank you for the questions, and I wish everyone a nice Friday. Thank you.