Nederman Holding AB (publ) ($NMAN)

Welcome to the Nederman Holding Q1 2026 Report Presentation, [Operator Instructions] Now I will hand the conference over to speakers CEO, Sven Kristensson; and CFO, Matthew Cusick. Please go ahead.

Good morning, ladies and gentlemen, and welcome to this presentation of Q1 for Nederman. Our headline has been resilient in a volatile market because it's been an eventual quarter again. And what we can see is that we are still strengthening our position in the world although it remains very turbulent. The first quarter, we continued to advance a position in a very volatile market. There is high activity across all divisions that all having good pipelines, less good order intake. Because we had lower orders received, although the activity picked up at the latter part of Q1 and continuing here in in April, we'll see what that means. We are strengthening our presence in a structurally growing industry. And by that, we mean that we are entering new fields like Food, Pharma and Life Science related, et cetera, and resulting in a lower sales and EBIT or profit margin.

If I move on to some of the key financials then, if we go on to -- on orders received, as Sven mentioned, for the quarter as a whole, orders received were weaker than a very strong Q1 last year. It must be mentioned 3 of 4 divisions in Q1 last year -- I'll leave it at 2 or 4 divisions in Q1 last year had their record quarters for order intake. I don't want to get into a debate on currency rates. But like Sven mentioned, order activity clearly picked up, particularly during the second half of March, negative currency impact. That's something that you analysts listening will have heard and we'll be hearing from lots of companies. It's around 9% quarter-on-quarter for us in Q1 this year. Orders ultimately were SEK 1.267 billion versus just over SEK 1.5 billion in Q1 last year. That's 6.7% down currency-neutral, 9.2% organic. The charts that we see on this slide for orders received, you can see that basically half of the drop in order intake is currency related. On the next slide, sales lower than Q1 2025, I put a comment in there, in line with Q3 2025's order intake, which gives a little indication on the sort of lead times. It's not the same lead times across all 4 divisions. But SEK 1.257 billion was approximately in line with Q3. Again, currency impact, minus 9% also on sales. Currency-neutral order sales were down 2%, so less of a drop than on the order intake and it's purely looking comparative-wise, organically minus 5.5%. Profitability, these lower sales volumes and are apparent -- we did have very strong gross profit margin. Something that's quite pleasing is the increased productivity in our factories. We had rather good utilization in the factories in the E&FT division during Q1, which Sven can come back to. Unfortunately, currencies also affect profitability. Approximately 12% SEK 12 million of the drop in EBITDA is pure currency effects largely due to the U.S. dollar, which was down quarter-on-quarter, nearly 15% compared to Q1 last year. Ultimately, what that meant was that the EBITDA for Q1 was SEK 117 million versus SEK 143 million last year. The EBITDA margin, 9.3% versus 10.1%. Earnings per share, SEK 1.31 versus SEK 1.69 in Q1 last year. Cash flow from operations, very slightly negative. It was a typical quarter 1, I would say, in the Nederman world. Typically, what we see in quarter 1 is that we've received some orders just before the year-end, and we've received down payments on those orders, and we start executing on those. So the working capital development is usually less favorable in the first quarter. We are still lacking some larger orders, which -- for which we received down payments, once those start coming in, that will boost the cash flow from operations rather well. On the net debt front, very little movement, we could say since the year-end. Division by divisions, Sven, we start with E&FT.

Yes. Extraction and Filtration Technology here, during the quarter, we had a bit low orders received and that was mainly due to very few larger orders in Americas, where we could see a new hesitation to sign. However, the base business, as we call it, the traditional small project, the ones that do not have to go to the boardroom, actually grew in the division. And there was a significant order intake growth for service as well. Since we have, over the last few years, put much effort in growing in especially European and the North American organization to have a strong service, which also prolong the relation with our customers. Profit margins increased versus Q1 and that is due to operational efficiency. We have been talking about the investments we've been doing, not only in Helsingborg, we have a new factory setup for RoboVent brand in Detroit area. We are continuously upgrading now, and we'll come back to that in Charlotte factory as well. And we had a decent capacity utilization in the factories, although there is plenty of room to grow that. But increased operational efficiency, maintain our margins. And if we go to European market, we had an increase in order to receive. And again, it was strong base business, midsize, small, midsized solution orders. And then there were 3 major orders and that was to commercialize manufacturing Defense actually Naval area and wood products. So that's what we see. If we look at the Americas, as you have noted, the orders received were significantly behind Q1, which in all fairness was a record year, a record quarter, but we've seen the hesitancy in U.S. market to put the pen to the paper. One major order was, however, secured and that was winter manufacturing. Base business grew. And again, several small midsized orders. And again, service where we have focused over the last few years, as mentioned before, also in the U.S. market grew. So currency neutral sales growth with strong service business. In Asia, lower orders received and sales-base business also weaker, and it's a challenging market environment. Some cost cautiousness has been taking in some of the Asian part of it. Key activities. We continue to launch new products. As you probably have seen last year, we spent almost 3% on R&D, and we see how that pays off. GoMax, I will not go into the details, but it was again we were again awarded a technological award and the reason of the -- how they formulate it was smart technology with an efficiency and sustainable design. Continued investment in operations in North America, we have started the further in-sourcing project in Charlotte for this division and that will further lead to efficiencies in our supply chain and in a further step also more or even less, even if it's very little that comes from outside U.S., 80%, 85% is local content in this division in U.S. We have launched new versions of the partner web shops. So we continue also our digital journey when it comes to being up-to-date.

When it comes to financials for E&FT division, orders received SEK 578 million in the quarter is 8.6% down currency-neutral albeit from, like Sven mentioned, a record quarter at that time. Q2 actually exceeded that, but this was a record at the time. Sales, SEK 592 million and an EBIT -- adjusted EBIT very nearly in line with the same period last year despite lower sales. So this is a little bit what we're talking about in terms of resilience. We've managed to keep the margin up. We actually increased the margin in this division to 12.2% from 11.6% in Q1 2025. Moving on then to Process Technology, Sven.

Yes, Process Technology. Here, we have significant larger orders and projects. And it's glad to say that we actually had order intake growth in the quarter. There were a few -- for several major orders secured. And again, a very strong aftermarket development with strong growth. And again, we see the result of a few years of focused activities. So again, we got a order backlog that increased. And if you remember our acquisition of Euro-Equip, they are giving a positive contribution, both orders, sales and profitability. So we are very pleased with that addition. The 3 parts, we start with Textile and Fiber. Here, we see the continuous overcapacity, but also a slight pick up. So maybe the Textile segment has bottomed out, but I will not promise that, but we'll see. But it's been couple of years with very low demand. Again, we have the energy saving as for textile plants orders have reached record levels. We passed 1,000 units here during the quarter. And again, we show the capability of technical leadership and new development and helping our customers to save energy in a world where energy prices are soaring. Foundry and Smelters. We actually also here had organic growth in order intake. There was a very large order for copper recycling in U.S. We have, over the few years specialized in our technology to be and are the technology, commercial leading partner when it comes to recycling of metals and materials. And again, positive impact from Euro-Equip, continued strong activity within the recycling. However, that is signed that they are a bit slow to take the decisions, but for a mid- to long-term recycling of metal will continue. The need of copper, the need of aluminum, we cannot have it on landfill, which is the case in U.S. and in Asia. In Europe, we are quite good, especially on aluminum, where we have 80% to 90% recycled material. Customized Solutions, stable development, new order in U.S. pharmaceutical industry. We are sort of moving in, as mentioned, to a little bit new territory. We have been doing it before, but we are more focused now on finding pockets of growth in this environment. We secured 2 projects in India, and that is geographical expansion. We are using our strong footprint in India for the Textile and Fiber. And from that bridge head, we are now increasing our capabilities and also taking in other areas from the division. Service business continued to grow. So again, key activities, sales of energy-efficient carbon bladed fans for textile plants exceeded 1,000 units, good milestone. We continue to invest in test center upgrades and ongoing improvement to existing product lines. Again, we show with our innovation capabilities where you can save energy and make your choice. So again, we are far ahead of competition when it comes to technology and integration of digital solutions.

Financials for Process Technology. Order intake was SEK 346 million in the year, which was even at prevailing rates growth, currency-neutral nearly 14% up. Euro-Equip, part of this currency neutral growth, but even organically, like Sven mentioned, we've gone up there 2.9%. Sales very slightly down to -- or slightly down to SEK 321 million, but adjusted EBITDA is increasing SEK 29 million is 9.1%. You see there that the boost from the growing Service business, for example, which has stronger margins. So 9.1% on rather modest sales figures is what we see from Process Technology in Q1. Duct and Filter Technology then, Sven.

Yes. Duct and Filter. Here, we've seen, and it's very much based on the U.S. side, where the majority of the sales come from. Development in the quarter, we had a bit of a decrease versus the record Q1. So the year started very slowly, but it picked up later in the quarter. And again, of course, based on this, there is very limited backlog, the sales decrease versus Q1 2025. But we do deliver solid profitability with very good factory efficiency. As you remember, we have now invested in the 2 parts of -- and fulfill 2 parts of the manufacturing in Thomasville. We have automated. We have invested in in new technology in both standard sizes and also now inaugurated the XT, which is larger dimensions. And we see how that, despite the fact that the volumes, are a little bit slow can maintain good gross margins. Again, of course, massive negative currency effect since most of the business is in U.S. dollars. Nordfab, which is deducting we saw increased activity in March, and that was actually giving us organic growth for the quarter as a whole. Project wind battery manufacturing made significant contribution to the order intake. And that was very much so that EV battery factory are now converted into battery factories for storage, et cetera. So we say maybe some of that business is rebouncing and coming back. EMEA orders resales increased slightly compared to last year's Q1. Menardi, which is filter banks had a very slow order intake, but saw a slight recovery in March. EMEA performed well, but it's a much smaller portion of that subdivision. Launch of BIM Toolbar, US and Europe, launch of HygiDuct Australia, Thailand. Solar panel installation Thomasville is providing significant reduced environmental impact and also cost impact. The sun is shining in North Carolina, a significantly more than here in Helsingborg. Continued investment in tools and equipment to enhance product quality and streamlined manufacturing. And as you've seen, we are seeing positive effect of the automation and the significant investments we have made in manufacturing and logistics. It's not only the manufacturing, it's also the setup with Nordfab now, which is giving us capability of balance and have more efficient manufacturing. We have started the project where we have subs, where we have possibility to have shorter lead times. So we have started opening in Texas, Dallas warehouse. We are only shipping the emergence in part directly, the rest we take from a warehouse. And again, we have been able to have 100% delivery accuracy despite the hike in orders in late March, very positive for the market, and we are getting new distributors who want to work with us.

Financials for Duct and Filter Technology. External order intake was SEK 180 million in the quarter, down from the record Q1 last year, SEK 224 million that's 7.4% currency neutral. Obviously, as Sven mentioned, the currency impact on this division is very high sales. SEK 194 million, down from SEK 241 million. Adjusted EBIT of SEK 37 million is 18.9%. And we think, again, this is showing resilience. Last year, Q1 was 22.1%, which is the highest quarter for this division in all of history. But 18.9% still rather pleasing on somewhat more modest volume levels. If we then move on to final division, Sven, Monitoring and Control Technology.

Yes. Monitoring and Control. Here for the quarter, we had real decrease in orders. Revenue was also decreasing, but there were very big variations between the different business units. And of course, the low sales volume, the profitability was reduced. If we look at NEO Monitors, the total order intake was slightly reduced there, and that was due to Asia. That hold a little bit in the quarter. We have seen growth in the U.S. and we have over years have seen significant growth for NEO Monitors in the U.S. market where we were a very small player a few years ago. But by the investment in Houston, our sales office and service organization, which is now consisting of up to, if I remember correctly, 12 persons have given us direct access to the petrochemical industry in in the area. And we also see that it leads to major orders, and we are deepening our cooperation with the large one since we now are located with a strong service team in the neighborhood. The European orders and sales grew organically and they had a stable demand. We have significantly increased the production efficiency, all of the real manufacturing going on in Oslo, and we have restructured from a small almost, call it, startup manufacturing site and electronic assembly site that is much more efficient much more quality and that work is continuing. Gasmet, the order intake reduced and it was partly on a nonrepeat major order, but it's also punishing the the large dependence on public sectors like customs, police, universities that is a base business and that has impacted, especially in U.S. and Asia, where there has been reduced spending in these sectors. But we have also received new orders from new customers in Singapore and South Africa. Auburn, based in outside Boston in Beverly, saw organic order intake growth. We could definitely see that the order intake picked up in March. What that means going forward, we don't know. We had slightly -- sales slightly behind this very strong Q1 last year, but the orders are coming back. We have reviewed and updated the product portfolio, and that continues, and we are hereby getting the permits, the , et cetera, and strengthening our platform for expansion in India, China, but we're also having other activities to go outside the U.S. market that is dominant for Auburn's product. We have added a product like PM Laser to upgrade, and that has given a new boosting interest on the U.S. market, where we have a very strong position, but we want to also grow that in Asia and in Europe. Our activities in Asia were halted, but we are restarting them. They were halted due to the difficulty to sell from U.S. to China with 100% custom tariffs which was the case in a period. But we are now restarting those activities. Again, key activities, launch of PM Laser, new technology from new application particle monitoring. We have established sales offices in Korea and Singapore. We have continuous improvement to existing product. We are also increasing the integration between Insight and Olicem, also here an increased awareness with customers, and we are linking these products together. Ongoing new product certifications and that's partly what's needed to bring in larger volumes of our Auburn products to Europe. We also doing preparation for capacity and efficiency investment in Gasmet facility in Finland. And that is linked to and is similar to what we've been doing in Auburn and in NEO.

Financials for Monitoring Control Technology. Orders received SEK 163 million in the quarter, down from the record SEK 249 million in Q1 last year. Remember in Q1 last year, we had 2 orders in this division that alone combined almost reached SEK 50 million, but nevertheless, 28.5% down currency neutral. Sales, SEK 168 million versus SEK 198 million. That's down 8.2%. And we see the impact of the margin -- on the margin of the volume drop on this division. Adjusted EBIT to SEK 20 million is 12.1% versus 18% last year. If we move on then, Sven, to the outlook.

Yes. Demand remains subdued in many sectors, but the growing Service segment and a very strong vehicle offering means that we are performing very well in the current uncertain market. Following a very weak start, activity picked up towards the end of the first quarter, which, if continues, will bode well for performance in the quarters ahead of the year. The pipelines are strong, but the order intake is low. At the same time, there is considerable uncertainty in the market, very difficult to forecast broader recovery in demand. However, when that gains momentum, we are extremely well placed to improve our profitability. With a strong balance sheet, we continue to invest in operational efficiency and in continuously improving our offering. That means that we will be able to continue to strengthen our position, regardless of the market situation. But in a world where awareness of damage that poor air quality does to people is growing. Nederman, with its leading offering in industrial air filtration has an important role to play and a good opportunity to continue to grow.

Briefly on the financial calendar. Then we've got our Annual General Meeting next Tuesday, at 4:00 p.m. The interim report for Q2 is released on the 16th of July and the Q3 is released on the 21st of October. The year-end report will be released on the 12th of February next year. And with that, I think we can open up for any questions that people listening may have for us.

[Operator Instructions] The next question comes from August Flyning from Handelsbanken.

Two questions from my side, please. To start off with, you mentioned that activity picked up towards the end of Q1. Could you give us some more color on what drove that improvement in the final weeks of March and whether it was broad-based or more concentrated in terms of both divisions and regions.

I can say across the divisions, it was rather widespread. Process Technology is more volatile, as you know, August. So, their large orders come in when the Board decision happens, the large projects come in. But we did see in Monitoring and Control Technology, in E&FT and in Duct and Filter, we definitely saw a pickup in it. So it was rather the broad range. Regional-wise, not so much -- there's no reason it picks out one way or the other in that. APAC is still slower, and we think that is likely to do with what's going on -- it can have something to do what's going on in the Middle East right now.

That's very clear. And on tariffs then, I know you guided to approximately SEK 5 million in quarterly tariff costs going forward. Could you perhaps elaborate a little bit more on kind of products or shipments that primarily relates to now given the fact we have an updated here Section 232 on steel-based products.

Yes, that may benefit us. We are also -- and we're not doing this in order to -- so that, first of all, that will likely benefit us somewhat assuming we don't change anything in our production flows. On the other hand, we're also investing in the production in the U.S. in Charlotte, which will mean that slightly less then transatlantic, but this is still rather a small impact for us, is not -- we're not changing anything strategically down to based on the tariff. And we will not do in the foreseeable future either.

The next question comes from Anna Widstrom from DNB Carnegie.

So firstly, I just wanted to ask because I know that the number of employees is down. So could you maybe elaborate a bit on basis relating to cost savings or any effect from something else?

Number of employees is largely related to production sites. It's not -- there are -- we have made some cost savings in APAC, but that's relatively small relative to the number of -- relative to the number of reduction. There are -- we do have some temporary employees that fluctuate over time. And at the moment, obviously, with less volume, we are able to adjust the production capacity accordingly. But it's not something a major restructuring that you're seeing there or a major focused reduction.

And we also have the fact that with the automization in the different factories, you have here and there, you have 2 less needed because you have it automated with AGVs, as you have 2 less are and so on. So that's an ongoing process. It's not we have not seen the need for a larger restructuring.

Okay. Perfect. My second question is on how -- if you maybe could give some details on how we should view the Duct and Filter Technology margin, just given that we probably have a lot of FX effect. So maybe some sort of guidance on how that specific margin would look if we didn't have the U.S. dollar.

Yes, the margin in itself in percentage terms isn't massively effective for that division because the vast majority of the -- so there's not an awful lot that's going transatlantically. The Swedish krona is -- when we translate is the main issue with that division. We are margin-wise on that division, like I mentioned, we're rather pleased with the 18.9% they do. And that does show that, for example, the where we've introduced these AGVs into the factories and a little more automation. We have seen a reduction in the direct labor percentages for that division, which is making -- even on modest volumes, we quite -- we got we've got rather good margins. So some volume increase or to give even more leverage in that division.

Okay. Perfect. Then also a specific question for Gasmet. Just thinking now when public spending seems to go down quite a lot, are there any specific customer segments that you sort of try to increase your sales efforts towards?

Yes. They have a handful but it's mainly to start more having broader geographical base for the existing that is something ongoing. They have a growing cooperation with Olicem and hereby also increase the after-market capabilities in that area. So it's Energy and it's APAC that we need to further grow. But it's also a problem. We don't know what will happen in the U.S. spending because that is a significant part of it that has been universities, other school, It's been customs authorities, police, and so. And their spending has gone down dramatically over the last 6 months, I would say. But I think we will -- I can't give you a promise that it will be a boom within the couple of weeks, but we are working very strongly to find, as we have been doing in other areas. If you look at the EFT for instance, when we acquired -- when we acquired RoboVent, 85% of our sales were auto-related. And the downturn in that market would have given us a significant downturn of our sales. But by using the knowledge in using these applications in food-related, other areas we have now been able to maintain the volumes there. Although both you and I would have liked it to be icing on the cake that we grew it and still had a significant auto part. But now we see that maybe the auto industry is starting to reinvest again. We see that there's a lot of service orders coming in, and that's the first time that they are reopening their lines.

Okay. Perfect. Just 2 more from my side. So firstly, looking on the product mix that you have in the order intake. Is there something that we should be aware of in terms of like margin impact for the quarters ahead?

Not really, you could say, if I take Process Technology, they're still doing very well on service, so that we expect there rather good margins will continue to be solid. E&FT, a little bit growing in the Service business as well. So that also helps. Monitoring and Control Technology, one of the issues we have there and why we were a bit lower is, some of this public spending is on these portals units, which do have extremely good margins. So that is less solid. But I would say, Process Technology in E&FT have got healthier margin backlogs than they had 12 months ago, albeit lower in our [indiscernible]

Okay. Perfect. And my final -- sorry, go ahead.

But if you could also Duct and Filter has also very -- since we, as mentioned, we had very low portion of personnel cost. It's extremely low, and that is several percentage units down since we made the investment over the last 2 years. So that means that an increase in volume or recovery in volumes will have also in that division, very strong impact.

Even a modest increase across the group in volumes will -- should increase the margin quite significantly, we think.

Perfect. Just a final one, if you could tell us a bit on if you've noted any impact yet from the Middle Eastern conflict in either costs but also perhaps activity from the oil and gas customer. I mean you mentioned one order, but that doesn't sort of related to this.

The impact is very hard because the biggest impact is the hesitation and what we've seen, the hesitation to sign larger contracts. And it's the same as when we had what they call Liberation Day. It's not a tariff, it's such -- it's more the unsecurity among our customers, and that means that they are some sort of holding back on doing the large investment. And part of the problems in -- or the overcapacity in Textile and Fibers related to the uncertainty also how can you ship things over the ocean. And what is happening, and where should you invest. Should you invest in Carolinas Guatemala or should you continue to do in India and so on. So more the uncertainty that has an impact. Then there is, of course, potentially an issue as we had during COVID period on shipment capacity and so on. If we get vessels stuck around in Hormuz Strait or in Suez or wherever. So, I wouldn't say...

I'll try and pull out one positive out of the Iran conflict. Might be, but we have -- and like you said, we haven't seen this at all yet, and you may be hinting at this. If this drives investments in oil and gas.

Petrochemicals...

Petrochemicals or anything around the new investments if countries decide themselves, they need to invest themselves more, that could mean a macro boost for those sort of industries, which would be good for example for NEO Monitors, Gasmet, in particular. We've not seen it yet. But that would be -- if I'm going to put one positive out of it, there are -- like at the moment, this hesitation is the key issue for us though. As you say, a it's been hesitation.

Okay. So you've yet to see sort of actual cost increases for you that you need to sort of offset to what customers...

There has been -- there is some, of course, that will come on plastics and so on and polymer, steel has gone up a little bit due to the energy cost and so on, and they are seeing some increase. But that is so straightforward, so that you can handle and you can make a sort of -- this is -- if you can go on a plane, you will see on your ticket, we have added a surplus for energy costs and so on. And that's not a big issue to handle. It's more the uncertainty and the lack of volumes that is problematic.

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

Thank you for taking time listening to us and we will have the Annual AGM meeting on Tuesday, and we will have a short comments from that as well next week. And after that, we will be back for the second quarter in July. Thank you for taking the time.