TCM Group A/S ($TCM)

Good day, and thank you for standing by. Welcome to the TCM Group Interim Q1 2026 Report Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Torben Paulin, CEO of TCM. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and welcome to the presentation of the first quarter results for TCM Group. Presenters today are our Interim CFO, Hans Barslund; and myself, CEO, Torben Paulin. And we will comment on the business and the financial results, after which, we will hand over to the operator for the Q&A session. Let us start the presentation and turn to Page 2 for the business update. Sales in the first quarter of 2026 developed in line with our expectations with growth in both the B2B and B2C segments. Total sales for the quarter increased by 17.6% on DKK 362 million corresponding to organic growth of 8.2%. Revenue in Norway increased by 9.3% compared to Q1 '25, reaching DKK 71 million, continuing the positive trend from last year, however, from a low level. Overall, order intake in the quarter was above last year, driven by the B2C segment. Order intake in B2B in the quarter was below last year, primarily due to fewer large project orders. The gross margin improved in the quarter, gaining 2 margin points on Q1 last year, driven by the sales mix towards B2C and efficiency gains in the supply chain. Please turn to Page 3. Some financial headlines for the quarter. Reported revenue was [ DKK 362 million ] corresponding to a revenue growth of [ 17.6% ] and [ 8.2% ] organic. Adjusted EBITA was DKK 26 million compared to DKK 20 million in Q1 last year. Adjusted EBITA margin was 7.2% compared to 6.4% in last year. Net working cap ratio was minus 1.9% compared to a negative 0.3% last year. Cash conversion was 106%. Please turn to Page 4. As mentioned, revenue in Q1 8.2%, but with a year-on-year increase of 17.6% due to Celebert and the two owned retail stores. Revenue in Denmark, our main market, accounts for 80% of the group's revenue, increased by 20% year-on-year with an organic growth of 8%, supported by the modest growth in the B2C segment, while segments within B2B also delivered growth during the quarter. Revenue in Norway in Q1 '26 increased by 9.3% compared to Q1 '25, continuing the positive trend from last year. As a consequence of the addition of Celebert and the owned retail stores, we have added a retail segment that accounts for 23% of the group revenue. I will now hand over to Hans. Please turn to Page 5.

Thank you, Torben. Gross margin rose to 23.3% in Q1 compared to 21.1% last year, driven by higher B2C share of the revenue and efficiency gains in production and supply chain. The addition of Celebert and the own stores also having a positive effect on the consolidated gross margin. However, the addition of Celebert and owned stores increases revenue and gross margin, but it naturally also increases the SG&A costs. EBITDA in Q1 2026 was DKK 26 million compared to DKK 20 million same period last year. Depreciation and amortization in the quarter amount to DKK 11 million compared to DKK 9 million same period last year. Please turn to Page 6. The net working capital end of the quarter was minus DKK 26 million compared to minus DKK 4 million last year. The improvement is primarily due to higher trade payables. The increase in trade payables was in part due to the timing of payment around the quarter end and Easter, thus not of a permanent nature. Net interest-bearing debt amounted to DKK 372 million at the end of the quarter compared to DKK 322 million in Q1 last year. The increase is a consequence of the acquisition of Celebert. The leverage ratio was 2.6 at the end of the quarter and is in line with same period last year. The leverage ratio remains well within the covenants. Dividend of DKK 46 million is paid out in April and will influence the net interest-bearing debt in Q2. Please turn to Page 7. The free cash flow in Q1 was DKK 48 million compared to DKK 4 million -- minus DKK 4 million in Q1 last year, primarily impacted by the positive development in the net working capital. Cash conversion ratio measured over a 12-month period was 106%. I now hand over to Torben again, and please turn to Page 8.

Thank you, Hans. While we are encouraged by the positive performance in Q1, order intake remains volatile, and we closely monitor the potential negative impact of the ongoing geopolitical turmoil on consumer confidence and demand. Based on this, we maintain our current guidance for '26 and, thus, TCM Group expects full-year revenue in the range of DKK 1.4 billion to DKK 1.5 billion and an adjusted EBITDA of between DKK 120 million and DKK 140 million. This concludes our presentation, and we will now hand over to the operator for the Q&A session. Please turn to Page 9.

[Operator Instructions] Our first question for today comes from the line of Anders Christian Preetzmann from Danske Bank.

If I may start with a question on the different segment tiers that you have. I was wondering if you could share some flavor on the different performance in those segments? Has there been any tiers performing better than others?

In the quarter, we have seen improvement in total. And so there's actually not a lot on the revenue side, a big difference between the segments. If we then look on the order intake, then we are missing out in the project sales, the big project orders, whereas the other segments with the housebuilders is still growing.

Okay. And for the different brands you have, have there been any abnormal activity there in terms of better activity for, say, the higher-end brands or the low-end?

Not really. But if we should say something, since we utilized the Tvis brand, they have been on a very positive journey, and they are still continuing that. So the Tvis brand is growing in the portfolio. Albo celebrated their 40 years anniversary last year and had a very successful campaign in the month of March that they didn't have this year. So they came out a little bit lower in that month. But it has probably less to do with the market and brands and more those specific initiatives. So we see growth in all in the total market.

Excellent. Another question on the efficiencies in the supply chain that you mentioned as a driver for the gross margin improvement here in Q1. Could you maybe just share an example of what sort of improvements you've made here?

Yes. You know about one of the things already. We have discussed that also earlier that we last year invested in a new lacquering facility. And last year, in the first quarter, we were installing that, and we were still working a lot more manually and also to meet demand, we had a lot of extra hours in that department. So this year, the new lacquering facility is just working as it should, and that helps out. We have other initiatives also that should optimize production efficiency. And then it's also always in our company because we use a lot of manpower, how successfully we are in managing capacity compared to demand. So when that -- when there is a good match, then efficiency is better than when we are not hitting it in bull's eye. Just to mention a few of them.

Yes. If I may continue to a question on the OpEx for Q1 here coming in higher than last year, at least at almost DKK 64 million. And that's basically attributed to the inclusion of Celebert and the acquired retail stores. But are you maybe able to share what the run rate could be going forward for the OpEx cost? And how much of these stores attribute an additional cost so we know what to take out for the coming quarters since you've sold one of the stores?

It's a good question, but it's harder to answer because we do not wish to disclose the interim results on the individual units. But of course Celebert is a part for itself. And of course, that you can -- can be official accounts that you can see -- and also it's for you on the retail stores individually. So -- but we have -- the majority of the cost on the retail side is, of course, the Celebert. And then the second biggest part is the Svane stores in Aalborg and Hjorring and we will have them in the books for the full year. We expect to be able to sell off the Kolding store in the second part of the year.

A question on the input cost inflation that you mentioned. I mean, can you share maybe what you've seen so far? And how much do you expect to pass through to customers?

Yes. It is significantly a single-digit percentage. So it really reminds us all back to the situation in 2022 when we had the Russian invasion in Ukraine. We -- as a rule, we will pass everything on to the market. But with a delay, there are certain notice periods that we need to respect towards our partners and their customers or our common customers. So it will come with a delay. But in the end of the day, everything will be passed on. And it is a single-digit percentage, but significant. So it's more than the normal general price increase at year-end.

Yes. So should we expect -- I mean, you mentioned this notice period, et cetera. So we should not expect any significant price increases from Q2. So is there a headwind to the margin here for Q2 expected? Or what do you...

Yes. Q2, Q3 will -- Q2 will be hit, Q3 will partly be hit, and in Q4, we should be back on track.

Okay. A final question from me. You mentioned, of course, that you're very observant of the potentially negative impact from the geopolitical turmoil and price increases, et cetera, what effect that will have on consumer demand and confidence. But what have you seen so far in Q2? How are customers reacting?

Yes. I think the best and short answer is that it is really volatile. We see big fluctuations between the individual weeks. And -- but -- and then if I should say something more, as you can see, we keep our guidance for the year. So when you add all the weeks until today together, then we are still confident with the guidance. So it is up and down, but the total result so far is that we are in line with our guidance. And then it was quite interesting to see the report yesterday on cars sold that was up more than 10%. You could say that that is positive because it shows that people are willing to spend money even with the low consumer confidence. On the other hand, they can only spend the money once. So if they spend -- use them for a car, they cannot use them for a kitchen. So -- but I think it's still more positive than negative, and that is also how we see it right now.

[Operator Instructions] It seems like there are no further questions. So I will hand the call back to Torben Paulin for closing remarks.

Thank you. Thank you, everybody, for joining in today. Thank you for your time. We wish you a very good day. This concludes our conference. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.