Munters Group AB (publ) ($MTRS)

Good morning, and welcome to this presentation of Munters' Q1 2026 Results. My name is Line Dovarn, and I'm Head of Investor Relations, joined here by CEO, Klas Forsstrom, and CFO, Katharina Fischer. Klas and Katharina will go through the results of Q1, and then we will open up for Q&A. So with that, I will hand over to you, Klas.

Thank you very much, Line. And once again, good morning and very, very much welcome. A solid start to the year. So let me summarize the quarter like this. Good to strong demand across all business areas, a book-to-bill above 1 in all business areas. I feel it has been a well-executed quarter based on our plans, build, scale and accelerate growth step by step in Data Center Technologies, reset their tech and start to grow the base business, capture growth and continue to scale in FoodTech. Operational progress in line with the plan. All in all, a solid quarter. Our outlook remains unchanged. A stronger second half for the year is expected, though as for everyone else, [indiscernible] political and supply chain uncertainties are building up. So more in detail and well-executed start to the year. If I start with orders, continued strong order growth. Order intake, 49% organically, SEK 32. AirTech robust demand across all regions despite a larger project cancellation. Data Center Technologies, strong demand once again in Americas from both hyperscalers and [indiscernible] and FoodTech strong demand for controllers and software. The order backlog increased at 88%. Currency adjusted, I mean, close to SEK 100 million, mainly Data Center Technologies were orders to be delivered mainly in '26 and '27, a book-to-bill of SEK 1.3 million. Net sales affected by currency, 12% currency headwind with that the 9% growth. AirTech strong performance in Americas. Data Center building it up, but continued strong delivery based on our execution and on the order backlog and FoodTech, driven both by controllers and software in Americas. The margins impacted by temporary factors, the adjusted EBITDA margin and just shy of 11%. Data Center Technologies, the tariff headwinds of about 4 percentage points and then also the well-known product transition that is taking place. FoodTech remained robust, impacted by continued investments for growth and AirTech as plan improved mainly positive impact on cost savings and then also price increases and absence of the dual side cost. The EBIT margin 7.6%. We see favorable trends in several regions and end markets. And if I start with the -- on the regional perspective, 67% of our orders came in from Americas, AirTech market stabilization, pocket of growth are starting to show expanding in data center, rapidly continue to lead globally by AI scale investments and AI driven demands and FoodTech positive growth momentum. Moving to EMEA. 20% total. In AirTech, mixed demand environment, defense utilities are growing, pricing, to some extent, remains competitive. Data Center Technologies compared to last quarter, a slower quarter, not that we were slower, but generally speaking, the market was somewhat slower, but signs of pickup. Growth driven by North Europe and, to some extent, Middle East. FoodTech then, positive market outlook, driven by efficiency in animal welfare requirements. And then moving to APAC. And here, we can say that we start to see clear signs of improvements in China to continuous but high competition, but also Southeast Asia and India are growing as markets. Data Center, a good market outlook. And as you know, here, we have just started to move forward, and I'm positive to our future in this area. And here, we're also investing now in building up capacity in this region, both when it comes to manufacturing and when it comes to sales force. And finally, FoodTech, growing market, a mix of mature levels and the business practice. Drilling into AirTech then, robust demand despite the order cancellation of some SEK 280 million. Order intake increased. Americas growth in industrial, commercial and components outside batteries; EMEA, flat to growth in some industrial areas, mainly defense and pharma; and APAC, solid growth components, commercial, service and battery segments, you can say very strong in general outside and, what we call -- inside what we call the base business, and Clean Technologies, stable demand driven by EMEA and Americas. Order backlog, slight increase, book-to-bill about 1, and if I would back in then the order cancellation, a book-to-bill that is about 2 -- 1.2. I think this picture is one of the more important ones when it comes to AirTech. This battery, the icing on the cake, 10% approximately our total. Take a look on all the other segments, this is, for sure, now a clear trend that we are continuing to grow the other segments step by step. As several times said that we need to have a couple of quarters with a SEK 2 billion order intake and above. This then, if I back in the order cancellation, it was close to SEK 2.3 billion in order intake. That will give a base and filling up the factories. Batteries, regional differences, delays in some investments, but then also a continued push of orders in APAC. The other industrial positive development in most markets, I would say. Clean Technology continued stable development. The commercial growth -- good growth driven by supermarket in Americas. And also important, components, as you can see, is starting now to really advance forward, both when it comes to evaporative pads to 8%, but then also to some [indiscernible] replacement predominantly in Asia and service stable development. As per plan, we strengthened the margin. We had -- we delivered on the announced cost savings and Katharina will come back to that. We have no dual site costs. We were increasing the prices. And then, of course, we still battle for this quarter and a few coming quarters with some lower underutilization in the factories, and a somewhat unfavorable product mix. The sales increased organically. Americas were growing, EMEA declined to some extent, and APAC declined. So it is Americas that is starting to come back here in a good manner. They sent the technologies. First of all, demand remains strong. We don't see any, call it, worrying signs on a demand going down, strong markets. Order intake increased substantially. We have a backlog of SEK 15 billion now in data center. The [indiscernible] demand is particularly strong, reflecting AI development and the order, as I said, increased deliveries mainly in this quarter targeted for 2026 and 2027. And book-to-bill impressive, I have to say, once again, strong, 1.6. And perhaps, let me also look into a little bit of the customer segments and the solutions. First of all, a good balance in between the hyperscalers and co-locators. As you know, it is, in general, always the hyperscalers that are driving the general demand, but some of it, we're selling to co-locators, and some were selling directed to hyperscalers, but a good balance here. And when it comes to product categories, as you can see, chillers representing then on a rolling well, 42%, and here, that we gradually will start to pick up the profitability. And then as you can see, then when it comes to the other categories also a well-balanced spread. So it indicates that we have a strong portfolio across all the different product categories. Margins, as expected, temporarily impacted coming from 2 main areas. First of all, the tariff headwinds, the 4%. So back that on in, it's 4% more. It is the product transition and it's our strategic growth initiatives. We have been driving price increases, and we are compensating cost increases in components and so on with continuous price increases on each and every project order. If I take -- lean back a little bit on how do you scale a business. And you've heard me say this several times. If you set up a new product, if you set up a new factory, in the beginning, you have to invest, you have to build and then you start to produce. When you produce there, you have a lower profitability, and you don't get out so much. Then the next step that is to increase the output, still you are not efficient enough because you have to learn, you have to improve, you have to work with lean principles, et cetera, the more you produce, the better it becomes. And if I go ahead then, this is what will happen then during this quarter, step-by-step moving up and in the second half then, then we have a production that is up and running that delivers both the volumes and also the efficiency and thereby the profitability. The normal industrial pickup when you put together a new factory. The order backlog continued, as I said, to increase. We have also highlighted here, approximately SEK 2 billion order that we published just a few days ago. And as you can see, that is also then to be delivered during '27 and '28. I've talked about the things on the right side, but it's practically securing critical components. I think everyone working in data center and in the electrical area, it is about constantly work with components and securing that. It is for us to scale up staffing and operations and engineering. It is to add when needed, if needed, extended shift to drive throughput through, and then, as I said, it's about expanding manufacturing and assembly footprint now for us also moving in and investing in Asia. Step by step, that is the mantra. FoodTech, continued strong demand, well spread across the order backlog also here and the book-to-bill above 1. Software-generated growth driven by broader and layer, controllers, strong growth driven in by Americas, so stable and very pleasing development. A little bit weaker ARR development linked to several things. One that is we are scaling up and we are upgrading our systems and then also, I mean, very often, it comes in waves. But we should be about 20%, maybe up to 30%. But [indiscernible], I think it is a good quarter but not an excellent quarter in ARR growth. Net sales increased across the line, especially nice to see controlled growth in America from broiler and layer segments. The EBITDA margin remained robust. We are investing to continue to support growth. We are driving through price increases and initiatives to balance that. And despite Q1 being from a seasonal perspective for controllers, a weaker, we delivered a strong growth also in controllers during the quarter. What I think is important to remind ourselves, we are building a business here that is more or less 100% digital. We have gone from being nonintelligent equipment to now being very much digital-driven. We are building a unique capability. And we are closing in the run rate of SEK 2 billion in a year. A lot of our growth has come from organic growth, well-targeted innovation, well-targeted customer expansion, but it has also come from, I have to say, a proven M&A execution. I'll give you 3 examples here. First of all, AirTech in the Clean Technologies what we acquire, the Airport tech towards volatile organic compounds, a very interesting growth area for the future. So that is one of our focuses to continue to grow in Clean Technology. Data Center to become a full solution provider, expanding our footprint, expanding our offer, and here, [indiscernible] is a good example. And FoodTech then, the shift towards controllers and intelligent equipment combined with software. And as you can see then, structural growth, order intake of what we have acquired generates 13% and net sales, 9% growth. Adjusted EBITDA, 8%. But what we have to remind ourselves on that is we drive commercial synergies. We drive operational efficiencies, technology integration, and we are strengthening the market position. So this, of course, will improve over the years. The other thing we need to remember that is, and I take your [indiscernible] example here. business that were about SEK 400-plus million in sales when we acquired them and has now generated order intake of SEK 6 billion. That is not counted into the organic order intake. That is counted into our growth in Americas. So at the end, I think that looking back, [indiscernible] must be one of the very, very best M&As done, at least in Munters' history, I think, across many different industries. With that, leaving ourself on a high picture, I hand over to you, Katharina, and take you through the financial highlights.

Okay. Thank you, Klas. As you have heard, Klas comment on, in the first quarter, business areas delivered positive organic growth. Although the reported net sales was impacted by currency headwinds of minus 12%. The margin, the profitability temporarily impacted, resulting in a lower net income, but cash flow remained stable. And we also significantly improved our operating working capital to net sales ratio to well below our target range then of 10% to 30%. I will now go into more details then. So as we said, if we look at the margin development in first quarter, the volume had a slightly positive impact then across the business areas. And this was also coupled with positive net price increases, mainly in DCTs, a positive to see that. At the same time, we also had some headwinds in terms of tariffs in DCT, the 4 percentage points, as Klas also mentioned. And we have also seen a negative product mix in AirTech. Operationally, the underutilization then in antegrade on the margin and then also the new factory ramp-up in this city. We continue to invest in our strategic initiatives where we continue to scale and also advance digitalization and automation to really strengthen our footprint and also support long-term growth. At the same time, we also saw positive support from the cost-saving measures in AirTech and I will come back to those in just a while. If we look sequentially on the margin development, we saw an improvement then in Q1 versus Q4, and this was mainly driven by stronger volumes, but also the positive impact from the cost savings measures in AirTech. So here, you can see the good development in our cost savings program for AirTech. So the 2025 initiated measures has been completed and delivered more than the planned SEK 100 million savings. So this reflects strong execution by the AirTech business area. Looking into 2026, those initiatives are expected to give us annual net cost savings in the range of SEK 250 million to SEK 300 million, with the full effect reached by the end of the year. And so far, we have reached over more than SEK 50 million than in the first quarter. And these initiatives is a combination of different activities. Of course, we have looked at the footprint, and we have also tweaked the investments that we are making, making sure we balance capacity, but also safeguard key competencies. We are also optimizing the workforce, and we are also working with increased efficiency initiatives then to cost optimize but also driving lean improvements. And we are also having a more focused approach on the commercial side. So overall, this is a very important program for AirTech to restore their profitability and it will position them very well for continued efficient and scalable growth in the future. Looking at cash flow then. In the quarter, we had a stable cash flow from operating activities. The lower operating profit was mitigated by positive changes in -- changes in operating working capital, and that is mainly due to the advances in DCT. In the investment activities, we saw an impact from the remaining shares that we bought from MTech. So the 20%, the USD 18.5 million. And then CapEx was a bit lower in the third quarter than in the fourth quarter, so remaining at a controlled level. And overall, the total cash flow was minus SEK 133 million. We remain to have a very disciplined approach to capital allocation, where we do prioritize investments in the areas that support long-term growth and value creation. So in the quarter, our level of investments and also on a rolling 12-month basis was 5.5%. So here, we are continuing to invest in all our prioritized areas. And looking ahead, DCT remains a priority area for us. You know that we are scaling and ramping up the production facility in Virginia then to support the demand in the U.S. market. But also, as Klas also mentioned, in Asia Pacific, we will continue to invest to expand our presence there. And looking ahead in terms of CapEx outlook, that remains to be broadly in line with the level that we had in 2025. Also I want to mention our strong progress in the working capital area, where we have now reduced that further to 6.5% of net sales, so well below our target range. Looking at leverage then, leverage increased to 3.1% from 2.9 % at the end of the fourth quarter. This was a result of lower operating earnings. That was partly offset by a strong cash flow generation, but also a result of the contingent consideration then paid for MTech, the USD 18.5 billion. We remain a very diversified funding base that is priority for us, of course. And while we do not have a fixed leverage target, our ambition is to be in the range of 1.5x to 2.5x over time, and temporary deviations above that is not a concern to us since they are due to strategic investments than in growth areas that are then strengthening our competitive position. Looking ahead, we see that leverage will gradually improve as we go into the second half where we have stronger volume and margin to support the leveraging. Turning then to sustainability. Here, we are continuing to strengthen transparency and execution. And I'm very pleased that we, in the first quarter this year, then published our first annual and sustainability report under CSRD where we have raised the level of transparency in data quality and governance across the whole organization. And we are making really good progress across our key sustainability indicators. In 2025, then the renewable electricity increased to 91% across our own production sites and also the renewable energy increased to 49%, which then lowers our exposure to oil and gas price volatility, but also, of course, lower our operational emissions. We have also improved the resource efficiencies with more waste reused or recycled and that has then led to reduced landfill volumes, which is now 20%. Our safety performance continues to be strong, as indicated by the workplace accident rate that is low and 0.8. And then we see Service & Components continued to grow. In the quarter, it amounted to 26% of total net sales, leading then to improved resilience and long-term growth and value creation. Our ambition for the group is to be above 1/3 of net sales. Sustainability is at core of our strategy. Of course, it helps us strengthen operations, also manage risk and deliver long-term results. So with that, I'd like to thank you and turn it back to you, Klas.

Thank you very much, Katharina. So let me start to summarize it before we move into Q&As. I'm very pleased to see that we are continuing to progress towards our financial targets. If I start with the top performer of the quarter, the 6.5% operating working capital per net sales, well ahead of the target, the EBITDA margin in what we predicted, it should be around just shy of 11%, indicating that the second half of the year will be an improvement, and then currency adjusted growth of 9% in the quarter. Also here, we're very confident that the year then will drive us up to be ahead of our targets. And if I summarize that, what we see for 2026, no change in the outlook. The status in AirTech improved order intake across several segments, one of the strongest quarters when it comes to base business in Munters' history, a positive book-to-bill and ongoing efficiency programs. In Data Center, showing clear evidence that the wide product portfolio supports continued growth. The order backlog is now up to SEK 15 billion, and the U.S. chiller ramp-up is progressing as per plan. FoodTech now a fully digital offering, new regions being brought in and we continue to invest for future growth. So summarizing status, bang on the plan. The market outlook remains flat to positive for AirTech. And I can say, we saw clear evidence that, that is the case in the quarter. Data center positive, I would say, I'm even more positive in the market for Data Center moving forward. And FoodTech, I mean, here, it's us basically driving it a positive market, a good interest on what we offer. And many customers are saying, we are bringing something into the marketplace that is unique. It is -- it connects intelligent equipment with capabilities to draw conclusions through software and AI. And the business outlook, to summarize it, net sales growth expected to develop positively supported by the strong backlog. It will be with high probability, the best year ever in Munters history. Adjusted EBITDA margin is expected to improve in H2 driven by the order backlog and DCT margins and improvements in AirTech, also when it comes to margins. So all in all, we look forward to an excited second half of this year. With that, it's over to all of you, and welcome back, Line.

Thank you. Thank you, Klas and Katharina, for presenting. And we are ready for questions. So we will hand over to the telephone conference and start there.

[Operator Instructions] The next question comes from Adela Dashian from Jefferies..

Let me start on one on DCT margins and expectations for Q2. Can we just confirm that you will no longer import the finished goods from Europe by the end of Q2? And also maybe in terms of timing, is there any way you could be a bit more specific on when the localized production has actually started to ramp up, like has it already been from the first of a Q2 or like timing-wise, when should we start to expect to see chiller production in the U.S.?

You're correct. The plan is that by end of Q2, the remainder of the imported chiller produced in Italy should be gone. It could be, I mean, 1 or 2 then if I put it like that. But the plan is by end of Q2, it should not be importing from Europe. And in the same way, then we are now scaling up production. So beginning of Q3, if the word is full production ahead, but we have then all the capabilities to produce chillers in U.S. at the speed in order to deliver on the backlog that we have bought into the U.S. order stock, so to speak. So gradually improving during the quarter and reaching full speed ahead than beginning Q3. .

Great. If we then think about the 4 percentage point tariff headwind. It was the same now in Q1 as it was in Q4. I mean, would it be fair to assume that a total mitigation of that effect is not going to happen in '26? Like I would assume that you are still, to some extent, dependent on potentially component suppliers from Europe and so on? Or have you already been able to create those sort of relationships with localized suppliers in the U.S.?

Adela, you're well read on. And what I mean with that, that is everyone that produces anything based on metals and components that is not manufactured in U.S., and that is quite a lot of that. We'll, of course, have a sort an effect of tariffs than always. That is for us, that is for our competitors. So when it comes to the direct finished goods on chillers, I mean, as we talked about, that will be gone then by this quarter. But when it comes to the rest, of course, that will be there. We are gradually improving. That is also why we talk more and more of vertical integration. We have a strong base. But even our subsuppliers in U.S., of course, they are also importing certain components. So it is -- the reality for everyone working in U.S. that they will have a, call it, direct or nondirect tariff hit then in their production. But when it comes to the products produced in Europe and imported to U.S., that will then finish away. Anything to add on that?

Would you start to feel more comfortable raising the prices of chillers once you have the localized production setup? Because obviously, you haven't been doing that given the European setup.

But -- and it's good that you bring this up as well. I mean, we are constantly rising our prices. We have been rising prices in U.S. in many different areas. Each and every project order is then a new price point being given based upon cost and based upon estimations moving forward. When I started to talk about, I mean, what is the market price, when we enter the U.S., I mean, then we priced it at the level of price performance in the market at that place. And then the tariffs came and that was a negative impact. So I'm not correcting myself, but perhaps I'm clarifying myself. We are constantly working with pricing, but we need to price it in the context of the U.S. market. I hope that clarified.

Definitely. If I can just squeeze one last in before getting back into the queue. I mean you've been guiding for DCT order intake of roughly SEK 1.5 billion, SEK 2 billion per quarter from here on. I mean, how should we think about this now with you already announcing that you have a SEK 2 billion order in the second quarter. Is this just an incremental on top of this, I guess, small to medium-sized order intake? Or yes, like how should we -- I guess just if you could give a clarification on the guidance here.

But it's also a fair question. And please understand the right. Whatever has we give now will sort of bite me in the tail, so to speak. Yes, we maintain, if we call it, the normal order flow that should be in the range of SEK 1.5 billion to SEK 2 billion. And then on top of that, on and off, we will have larger orders like this. So of course, it is clear that in this quarter, it will definitely be ahead of SEK 2 billion then. . I cannot say another number, but I can say like this. I'm confident in what we see in the market. We are continuously winning with our broader portfolio. So if we are able to win smaller large orders to substantial large order as the last one, I mean, then we will be a high probability about SEK 2 billion per quarter. But we maintain this SEK 1.5 billion to SEK 2 billion, call it -- and now the forbidden word comes, as the base business, there is no base business, but you know what I mean. .

Other business .

Great, Klas, I'll get back in queue. Congratulations on the [indiscernible].

We can take another caller from the telephone conference.

The next question comes from Carl Deijenberg from DNB Carnegie.

So could I ask firstly on a little bit of phasing or maybe taking a step back, I mean, in conjunction with the Q4, you were guiding for at least 30% organic sales growth for DTC for the full year? And I guess first question, given yes, the comments around the phasing year and the ramp-up and so forth. Do you still expect that full year assumption to hold?

Yes, in between 30% to 40%. And then it can shift in between quarters, but that ramp up that I expect, yes. And with the Clear, it is the second half, you will see a big inflow. .

Yes, because that was on to my second question. I just wanted to ask a little bit if you could talk about the phasing here going into Q2 on the invoicing. Would it be possible to say anything? Now you were at 1.4%, and I believe you were at 1.35% on the net sales in Q4 in the city. And with the comments around the ramp-up and so forth, do you expect a similar invoicing pattern for Q2 as well and then they ramp up from Q3 and onwards? Or would it depend to say anything on that? .

The simple answer is that we will stepwise ramp it up then. And in earlier calls, I used the description and saying what will happen then when you are building up capacity, when you're building up a new product production. First, you start with a smaller volume, and then you at the lower efficiency and lower profitability. Then you push the volumes upwards. You are still not efficient. So I mean the margin on each and every product will not be as good. And then you push up your efficiency, et cetera. So simple terms, then we will increase volume during the coming quarter, but we will not have the effect of the profitability drop through. And then in Q3 and Q4, we will have, if I use the expression, full effect of the volume drop-through and the efficiency and the profitability. It follows pretty much the pattern that we had in early ramp ups, et cetera. So a gradual ramp-up on output and a gradual uplift on margins then. But in the beginning, not the margins that we would have when we have full speed ahead.

Okay. Very well. Then I just also wanted to ask on AirTech on the order cancellation. I appreciate the comments you gave there that they seem to be fairly customer-specific. But could you say anything more what is behind this? Is this a full cancellation of the project? Or has anything changed in the overall market that's been triggering this?

That, first of all, no, nothing has changed in the market. This is a specific project and a specific customer. And the way we look upon it, it has been communicated as a delay in the buildup, but our interpretation is that, that delay is going to be for such a long period that so that we treat it as a cancellation. And then we work with the involved parties how quality -- how we should swap that out. But in reality, it has nothing to do with our activities. It has nothing to do, generally speaking, with the market. It is one customer that has substantially delayed its build-out of a certain project, and we treat it as a cancellation. And I would like to add on that then if -- and that we deduct on order intake in this quarter, if I bring it back, I mean, the underlying order intake in this quarter is SEK 280 million more than what you see on the real numbers, so to speak. So this is one of our strongest order intake quarters in ad tech for several years.

Okay. Great. Yes, that also explains my second question. I think I was -- yes, that was everything from for now.

Thank you, Carl. We will take another caller.

The next question comes from Anders Roslund from Pareto Securities. .

I just have a couple of questions here. Your DCT expectations of 30% to 40% sales growth for this year, as the first quarter and what you know so far on the second quarter, are you closer to 30% or closer to 40%. Any changes in this?

No changes. As you know, and now into the details. First of all, I mean, the monetary value was affected by, if I remember it right, 12%, 13% currency. The invoicing on order intake, it was up to 17%, so substantial, call it, than currency effect. With that said, my expectations on the year remains 30% to 40%. So -- and then you can say how much I would like to go out on what I call the plank. I mean if I go out, then it's closer to 40%, if I'm a little bit more, let just to pick it then, let's say, the average, 35%. That is not the prediction, Anders, but in between 30% to 40%.

And also on the margin development, you indicated here that the margin will still be impacted by the ramp-up of production. But could it be even lower than the outcome in the first quarter? Or should we expect about the same level?

We don't give detailed questions on each and every quarter. What I'm super confident about that is the second half of the year will deliver results that both myself and Stefan will be very pleased about in data center. During the first half of the year, we will have weaker [indiscernible]. Some of the tariff effects will ease off during the second quarter. We will not have full impact on the volumes and the efficiencies in the quarter, but a normal ramp-up procedure. That is the best advice I can give, Anders.

Yes. But why I'm asking this is technically, you could start to -- in an investment phase, we don't put on depreciations and et cetera. So could it be that you get sort of lower margins due to the ramp-up here of production that it will be slightly confident? That's for it. .

In simple terms, the ramp-up will drive lower margins than when we have, call it, more stable production. So yes, if -- so that's the case, yes. .

Yes. And then my last question about AirTech. Adding back the -- the order, means that you had extremely strong. Could you elaborate where we have seen this strong growth?

It is, first of all, fairly good across all regions, generally speaking, stronger in Americas that was very pleasing, but also strong in Asia, China. It is about 9% of the orders are outside the batteries. So coming back to the icing on the cake, that is battery. So about 90% of our order intake is outside that, a substantial improvement in components driven primarily by the wet pads, i.e., also data center in this case, one of our strongest component quarters in quite a long time, good development in service. And then in the particular segments, you can say like defense, even if it's small numbers, I mean, a couple of percent, but defense is moving upwards. Pharma and food processing, it's also -- so a wide spread of stable to stronger markets then? Anything on top of that, Katharina that you see on different segments there?

No. Some increased rotor sales in Asia as well.

And that is factory there.

That's -- I mean, to sum up here in AirTech, that means that you should start the year with a significantly better underlying order intake and providing that your...

That is correct.

That means also that your sales development should relatively quickly reflect it? I mean, there shouldn't be orders for 1 or 2 years ahead?

No, no. If I analyze it, as you know, I mean, when it comes to AirTech, it is half a year to 9 months generally. Some of the components are actually, I mean, you get it in 1 quarter and you deliver it in another quarter. I have to give one tweak on that. And when it comes to the strong demand in wet pads. I mean that is Data Center that is driving that. And to some extent, they are they are ordering ahead because, I mean, we are one of the few providers of large capacity then in wet pads in North America, and that is appreciated. So there, it could take a little bit longer.

Excellent.

Thank you. We can take another caller.

The next question comes from Gustav Berneblad from Nordea.

Yes. Good morning. It's Gustav here. I thought maybe just to build on what you just said here about the wet pads. Is it possible to quantify how much of the order intake in AirTech is related to data center today? And also, if you can give a bit more color of the 6% organic growth that we see in orders during the quarter despite the 200 -- $28 million cancellation. How much of the growth is driven by Data Center?

That I don't have on top. I take a look here and try to calculate it fastly, but you can say that about 60%, and please correct me, component sales, maybe a little bit more than 60% of the components sales is driven by data center today. .

Wet pads.

Wet Pads. And then it's a split then, but it's more in data center than call it another.

Yes.

So maybe the ballpark is out to 50% on data center growth.

Of components.

Of components.

No, that's very clear. Perfect. And then just sort of just on the ramp-up here in Data Center or the new production line of chillers. Just I guess you will start off with -- and correct me if I'm wrong, the chiller order of SEK 775 million here. Is it possible to just give ballpark figures or how much this will be divided between Q2 and Q3? .

Not in detail. If I once again take a look here, you can see when we have expected it to deliver. It starts in Q3, and then it's well, call it, evenly spread during the coming quarter. So don't take this as an exact instrument but 1/3 of a quarter that will be a good average. .

Perfect, perfect. And then just on the CapEx, you comment a bit on the data center in APAC. How should we think about the CapEx level going forward? Will it be just small adjustments where you utilize current facilities? Or are you exploring or thinking about greenfield?

No, the CapEx level is projected then to remain broadly at the same level as 2025. So we will expand from the existing base that we have in Thailand.

So the step, as Katharina said, we will expand the Thailand operation, the one that we acquired through Geoclima, and that is the base built up. If we need to do more, I mean, we will pursue either utilizing Airtech facilities or expand even more. We have learned a lesson that is you take it gradually per market, and then you expand the -- we will -- I know Katharina will keep a close eye on me and Stefan then when it comes to managed capital here. So we will spend it wisely where growth is generated. .

We can take another caller.

The next question comes from Lacy [indiscernible] from Bloomberg Intelligence.

Just 2 for me and you can at the working capital, I mean, I think we've touched on margin and growth and because that trades on the orders there. But just thinking about that [indiscernible] capital. So should we think of the Q1 inventory build is mainly supporting that local DCT capacity expansion? Or is it a bit broader than that? And then I guess, secondly, related to that, I think you talked a lot in the release about the customer advances in DCT, how sustainable is the elevated level there. Is that now kind of a normal feature of the DCT business model? Or is it more large project specific? Just a little bit more color there would be really helpful.

And please bear with me if I didn't pick up. It was a little bit of a broken line here. But -- if we talk about the order pattern, I think that was the first one. I mean, in an AirTech context, pretty much all orders within DCT would be viewed as a large order. I -- we talk about very sudden below a value of SEK 100 million. And then it moves itself up to sometimes about SEK 2 billion then. Very often, the SEK 2 billion larger orders, they are either then orders that will go into, call it, larger sites, so multiple sites, but it's one d1 customer orders it. And then it will have a prolonged delivery time, and we indicate all the larger orders in our report and in our presentation material when we start to deliver it and when it when it comes. It is very seldom, I would say, hardly unknown that a provider can accept an order and deliver it faster than, let's say, 9 months. So from order to first delivery in 9 months, sometimes it could be if it is the same customer, it could be a shift in between projects, et cetera. So in a nutshell, all orders that we take from now on, they are to be delivered '27 and '28. As the SEK 2 billion we recently released, that is to be delivered mainly '27 and to some extent, '28. I think that covered the first question if I interpret right, but please add on if...

About customer.

Yes. customer advance. Yes. And in this case, Normally, I've said several times, then that we receive in between 10% up to 30% in customer advances from customers that continues to be in that range. So we have worked out a model that we are more or less balancing the cash flow in a project that we get advanced payments, when the order is placed, not from all customers, but from the majority of customer that is in the range of 10% to 30%. And normally, we receive that, let's say, within 60 to 90 days. And then per delivery, it is then spread out over the project. .

We have another caller. .

The next question comes from Matt Liss from Kepler. .

Just to get a feel about the order momentum here. I mean, could you say something about the development during the first quarter there, it maybe started out somewhat slower and then you gain momentum towards the end of it. And maybe also if you can say something there but well, the clients being more cautious now and maybe try to secure order -- well, deliveries due to the political risks, et cetera. .

If I start with data center, Here, we have not seen any change in order pattern, the normal. I mean, a couple of medium-sized smaller orders and then on and off than larger orders. And one example is the 1 that we recently then announced here. So there are no change. And I'm please interpret it right when I say this, I think it is a strong to even stronger demand market there. But with that said, it is also an industry that is under quite substantial pressures. It is pressure from some of the customers, their build rate. I mean the end user, it is component supply, et cetera, et cetera, when it comes to CPUs and stuff like that. So it is a constant positive battle in the marketplace in order to gain orders on those you trust and then to deliver to the customers. And so no change, but a tougher market situation if I was like that in data center. On AirTech, we remain with our view, flat to positive. If I'm optimistic, I would say that there are positive signs emerging in Asia. And there are early positive signs in U.S. margin, and then I refer mostly to data center and the web pads that has increase is too strong, but has a stronger momentum in deliveries at the end of the quarter then. And in FoodTech, it is we that are driving the market. And normally, the first quarter is weaker quarters. I was very pleased about the controller order intake, positive and the controller installation, but a strong market. Anything that you pick up Katharina from our reviews.

I think you covered this well .

Great. And just if you could just say something there about data center. And I guess, Americas is the large order demand, and then Europe, could you say something about the opportunities there? .

Yes. The main driver is U.S., and that is good for us. We have a high reputation. We are building up capacity. I'm super excited that we are getting repeat orders of several products from existing customers, but we are also expanding the customer base. So I mean, strong market as such. The normal, call it, bottlenecks in U.S. I mean it is power grid. It is building rates, et cetera, et cetera, but a strong underlying market. In Europe, last quarter, as you remember, we had a good progression rate as we had a good progression in a market that has started to ease up. And in this quarter, I mean, we didn't -- in our customer base and what we see in the customer activities, it was not much to pick up, so to speak. So Europe is gradually improving, but it's far, far away from U.S. build rates then. I'm positive when it comes to Europe moving forward. I mean, more and more, call it, legislation, more and more governments, et cetera, understand that this is a security issued base. If you need to own your own data center space within your borders. And when it comes to Asia, positive underlying market. And here, it is each and every order we take in Asia, just underlying, that is 100% market share. So if we grow -- if we have 5% or 1%, both are 100% market share in Asia. So I'm very positive when it comes to Asia, but it is a buildup phase there.

Okay. And just finally, I mean, energy prices are booming now, hopefully, not too long. But I mean your core is somewhat to offer energy-efficient solutions. Do you see that customers are sort of starting to appreciate that more?

I can comment a little bit on what we see by customers. And then maybe, Katharina, you can add a few comments on, I mean, what about our energy cost increases and how is that. But you're absolutely right, Mats. Even if we, generally speaking, are not liking energy price increases, I mean, that drives the need for energy efficiency. Honestly, we don't see that Data has instant impact, but everyone is more and more concerned how to drive efficiency and especially energy efficiency. So in the long run -- even if I hate energy price increases in the long run, it talks to our value proposition if that is the customer base. But we don't see any new orders coming through Q2 distant, but if we move over to our situation. .

No, what we can say is that our regional strategy in the region for the region, then where we produce in the region. That provides some resilience of course. But in some buckets, we do have, of course, more longer-term freight and so on. So there we could see a limited impact. In terms of energy prices, some of our energy prices are also fixed for a period of time and then as I talked about earlier, we are then focusing more on renewables, so we are less exposed also to some of the price volatility .

And then just even if this is not a blockbuster, but I think it is an important indication. As an example, in Brazil, in some of our facilities there. We are 100% self-providing when it comes to energy.

And I think we have to cut it there. I think we've taken all callers on the telephone conference, and we have a few questions here that we will get back to you. Thank you very much, Klas and Katharina. .

Thank you. Thank you very much

Thank you.

Thank you, everyone, for listening in, and please reach out to us at Investor Relations if you have any further questions or would like to meet up with us during the quarter, and we will see you back on the 17th of July when we present our Q2 results. Thank you.