WindowMaster International A/S ($WMA)

Hello, and welcome, everybody, to this presentation of the annual report of 2025 of WindowMaster. Today, I have the pleasure to welcome Erik Boyter, the CEO; and Steen Sorensen, the CFO, who will take us through the presentation. As always, please ask any questions you might have in the chat, and I will put them forward in a moment. But we'll start with a presentation, which will take approximately 10 to 15 minutes, and then there's plenty of room for presentation. My name is [indiscernible], and I will be the moderator of today. Welcome, Erik. Welcome, Steen, and it's a pleasure to have you, and I'll now hand it over to you, please.

Thank you very much. I will start going through some of the main numbers of the annual report that was submitted yesterday. Of course, here, we have the normal statement on forward-looking statements, a general statement we do every time. And -- but let's jump into the numbers. The overall theme is actually there's not really any news on the numbers presented because this is the level as we indicated already during the guidance we have made in December and also in January on our 2025 performance. Revenue was down in '25 compared to the '24 numbers, and it was mainly what we saw in the first half of '25. I will show a little bit the graphs later on here. However, we did see an improvement in the margins, and that was driven mainly by a customer mix effect and also being able to deliver on our strategy, which we have -- we built on since 2022, where we focused a little bit more on being an integrator role and having more project sales. EBITDA was a -- as a consequence of the lower turnover also reduced as we have a firm belief in the future. So we have kept our fixed cost base at level, and that is deliberate. We want to be able to deliver on our growth going forward. And then we also had a small effect on one-off costs linked to a ransomware attack that we saw in May. This is also being illustrated in the annual accounts. Despite the lower turnover, we were able to deliver on a strong cash flow, and that's something we have seen before. We are able to follow the fluctuations in the turnover, also adjusting our supply chain, meaning that we -- once there is a fluctuation in turnover, we kind of don't burn cash in those times. So we are able to -- we have a business model that are able to quickly adapt to changes, which is a strong thing. And an overall comment, you could say, is that under the condition we have seen, we are satisfied with the performance. But of course, we are more ambitious. But we are confident that we have a good business model that we can build on for the future. The next slide here is our order intake, and that just illustrates a steady flow of orders. We have seen a good performance during the year. And that's, of course, also what we will deliver on here for 2026 and going forward. So we do have an order base that are close to 100% of the expectations for 2026. So here, we are -- we see that as a positive. Of course, execution of orders can be delayed, but they are in the books as we see it. The turnover, as already indicated, this illustrates the timing. So we did see in Q1 and Q2 last year, a lower turnover, and that came mainly from some projects and -- but also change in customer mix with -- where we didn't have a key customer in -- especially affecting the first half. We were able to see an upswing in our project turnover. That was what we saw in Q3 and Q4. And that, again, here directly illustrates in the performance in EBITDA and EBIT. We do see a strong second half of '25 with -- and also, again, supporting our business model and also our strategy because that's where we see the benefits of having the project sales and the project turnover in combination with service and product sales. And this is also the whole basis for our 2026 expectations. Again, here also, I think it's also a way to demonstrate that we see a model that are able to deliver on above 10% EBIT ratio, which is, again, our ambitions going forward. Finally, we have our ESG report, which was also submitted yesterday together with our financial report. And again, here, we see that we are -- we have improvements in all our KPIs that we report on. But I recommend you to have a look at the report. It's quite a significant work performed here. Lastly, from my side, again, we just have the guidance that we have communicated on back in December, but also in January. And again, it's unchanged compared to what we see in -- ahead of us. And again, there is a room for adapting to all the uncertainty that we do see around in the world, but that's something we have kind of lived with now for some years, both out of North America, but also now in the Middle East. But for now, we see we are able to commit within the ranges we have submitted here. And here, Erik, if there's any comments on the ESG or the guidance here, feel free to give input.

Thank you, Steen. Maybe on the slide on the ESG data, just going back to that one, then we are, of course, a science-based targets agreement. And there, we have set some targets back in time and from our baseline 2019. And we have actually more or less reached those requirements on our Scope 1 and 2 targets where we are totally, actually last year have reduced our emissions around, yes, 45%. And actually, the real target for the science-based target is actually 46% in 2030. And so we actually reached nearly that target on an early stage. But of course, we will continue this effort going forward. And basically, that is because of our introduction and full replacement of all cars, petrol cars to electric cars and [Technical Difficulty].

I think that we lost the line to Erik and also Steen just for a second. We will just -- in the meantime, I would like to encourage you all to put in all the questions you might have. I can see that there's a lot of questions coming in right now on especially the 3 subjects. First of all, the subject of the guidance, and then we will be back in just a second. We'll just take a short break. Thank you. [Break]

Welcome back. We're very sorry for the short delay here, but that's actually fits really well with going into the Q&A session. Thank very much, Erik. Thank you very much, Steen. And I think we'll kick off with the forward-looking questions into the market because obviously, there's been a lot of turbulence geopolitically in the market. So maybe you could take us through sort of your guidance is ambitious, 8% to 15%, doubling of the EBITDA. Where will the growth come from? What -- how do you see the individual markets? And I know that you have to go into the U.S. and also Germany, please.

Will you start answering that one, Steen, and then...

Yes, you can say that the baseline for our performance in 2026 is actually the performance we have already seen in the second half of '25. So we are building on what we already have done. So it's not -- yes, it's not like a big change in strategy or in a lot of new orders that we just have to find. It's something that -- it's again the pipeline, it's order intake. And again, it is the solid performance we have seen in our main markets. We still believe in a strong growth in North America, and we also see some upside again in our -- in more or less all our main markets. But it's not like a big expectation for specific customers or a specific region.

Okay. But a little bit more perhaps into the U.S. market, Erik, perhaps you can explain us a little bit about how do you see this market because there's so much turmoil going on and what's WindowMaster's position into this?

Yes. You could say that our ambition is to have around 5% turnover originating from the North American market. It's both U.S. and Canada. And we are nearly there. And of course, we also, you can say, have grown over time. And expectation is we would maybe in a certain period of time from 3 to 5 years, we'll see 10% of turnover coming from the North American market. What we -- what drives it is, of course, that we are seeing also a lot of refurbishment coming along, even though that building or construction industry have been a little bit sluggish because of the high interest rates that still are in place in the U.S., for example. Then -- but on the other hand, we do see activity in buildings that need, you could say, more sustainability approach. And there are very big pockets around in the U.S. where that is still going strong. And so we are optimistic. We have a good pipeline, but one of the things you really need to have with the North American market and U.S., both and Canada is you have to have patience. It doesn't come from one day to the other because a lot of sales work specification works has to be in place. And that's why we have our own subsidiary and also our own salespeople in the market to get the specification in the pipeline. So we are expecting that to grow over time with the numbers I've put forward. But of course, there's also a growth in other areas, other geographies around in Northern Europe, for example.

Yes. that's a good continuation going into Germany. And of course, [indiscernible] was out with a big plan to invest heavily in Germany. And have you seen the early signs of this? Or how do you see the German market for WindowMaster?

Yes, I can answer this. We are quite optimistic about the German market. And you can say it's also a big market for WindowMaster because our production, of course, is in Germany, and now we have a sales subsidiary in Hamburg, and we have an organization in place to do sales, service and project execution. We have not really seen anything pick up yet, but there is -- we are optimistic about this is going to -- at the end of this year and into '27, we'll see a pickup. What we know is there's more activity going on, especially among, you could say, specifiers. And that's the early signal that things are going on for our solutions in the market. So we are optimistic, and we are also willing to allocate more resources going forward in the German market, yes, and especially with our strategy work going forward.

And the EU Green deal, which you have been referring to sometimes, maybe it's also good to comment on that.

Yes. We see things come, but it's not really -- it takes a long time. EU legislation takes a long time to implement because you can make a deal in Brussels, but it also has to implement it around in all the countries. And many of the things have not been actually implemented in, for example, in Denmark, yet, we have an EPBD that is saying you need to refurbish 3% of the public buildings. And today, it's 1%. And that has to be implemented in Denmark also. And especially this one, we'll see a lot more refurbishment going on in the European context, which will be good for WindowMaster.

Okay. And back to the Nordics, you lost a strategic client in Q1, Q2 last year. Is there any -- was that a structural thing? Or is it just -- was it just a postponement?

To be in more detail, we still have the customer, but -- and it's still a very good customer, but they had a decision to go a different way for an inferior product for the market because of price -- so we could not be in the space and deliver to the customer going forward on that. But it's still a good customer, yes. But we're also talking about a lower-margin customer because it's, you could say, OEM, and that's why it doesn't impact fully on the profitability, yes.

Okay. So to sum it up, growth is coming from a diverse range of markets, and you see this as a continuation of the second half of 2025. Is that a fair way of looking at it?

Yes, that's correct, yes.

Okay. So that covers a lot of the market questions, I think, that you will see that. And then maybe let's take some of the strategic questions before going into some of the more detailed financial questions. You are referring to a new strategy or a strategy update for '27 and '30. What have driven you to comment on that, say that? And how will we see that as investors?

We have, of course, a strategy in place that's called Accelerate Core. And originally, that was kind of set as a target to end in '25. But we have actually said that we want to look at it and revise it in '26. And that is something we are working on and especially we'll be working on in the second half of the year. So we are ready for a new budget year in '27.

So investors should expect this in the second half of the year, just to be clear?

Yes, correct.

Cool. So then there's some more sort of questions about your communication to the market where there's quite a few who wants to have Q1 and Q3 releases. I know this has been on the agenda many times. But maybe you could just comment on this as -- because I think what people wish to see is, of course, your momentum continue and then that's a good news. I think that's the assumption. But the question is, do you see that? Do you consider that?

As we have -- we took a sort of strategic decision for the Investor Relations side that we will communicate only first half and full year. And that was to limit the cost and so on for us to really make a proper quarterly report because it also takes a lot of effort to do it because if you do it, it has to be done correct, yes. And you're not -- you can't just put some numbers out and say this is just an indication, you're not allowed to do that. You need to do a full P&L for that reporting. And we have actually decided to -- that was too costly for now in the setup we are now on First North. We would expect that if we are on a main market one day, we would expect to go to quarterly reporting.

Good. And continuation of your strategy, there's a question on your -- you have announced 3 partnerships in the last year. And I think the question goes on an elaboration of those partnerships.

Yes. It's -- since the beginning of this -- beginning of the year, we have actually launched 3 partnerships, but they are a little bit different. You can take the one that we announced last week in Australia, which is, you could say, exclusive partnership with one Australian company that is going to promote and our solutions on that continent. It's because we used to have several partners down there. But when we are very much in a specification market with projects, it is better to be with one because that company is making a lot of work for the future, and they don't want to miss out on the opportunities they have created. So that's why we have gone exclusive. And I was also down in Australia last week, very exciting to be there. And it's also a continent where EU actually have made a trade agreement just this week. And that's also why we look into that market. And it's a market we've been in for some years now, yes. That's the first one. And then there is a smaller one, and it's more to do with an EN certification and partnership with a window manufacturer. And I don't see that, that is a quite normal thing we do, and we have several of these. That's not a big one, but it's an important one for us. But then the third one is our collaboration with Fieger, which is a louvre manufacturer. And here, we have actually agreed with an exclusive partnership where we can, on an exclusive basis, sell their solutions together with ours, in our structure in the U.K. and Ireland, in North America, in the Nordics and the Baltic countries. And we actually already sell some of the solutions together with our -- it's -- we sell into projects, and that is part of the value proposition now that we also sell the louvre solution together with our control systems and so on. And in those louvres, our motors also sit. So we expect quite a lot of this over the next couple of years. And you can say it is in our guidance also that we have. You can say that will hopefully bring us up to the higher levels in our guidance.

Fair enough. If I may ask some more detailed financial questions, I think that is also fair enough. And I'll just simply read them. Look like you have spent or activated an amount of almost DKK 6 million on software in 2025, up from DKK 1 million in '24. Is this a new level? Or are there something one-off impacting '25?

I can comment on that. It is, you could say, the first step or part of our digital journey on optimizing processes and having a solution around that. But it's for sure not a level that we expect going forward. There were some one-offs to be done, and we are now at a level from an investment point of view where we will be at a lower level, but we will continue working on our digital journey.

And there's a question on your balance sheet, and it goes with -- it looks like you have repaid DKK 15 million of debt you added in the first half. Can you share your thoughts about this, please?

Yes. This is our -- we have a very close cooperation with our banks, and that is -- we have facilities as also illustrated in the accounts. And this is a normal way to run the business there. As we normally see, first half is not as challenging as we saw last year, but normally, we see a little bit lower cash flow effect in that part. But it's part of our way of running the business. It is the second half where we generate normally all our cash in the setup because that's also where you finalize projects and can take a lot of the turnover into income and also, get money as cash. So very, very classic.

Very classic, fine. And I think the same question goes on your financial cost, which was DKK 7.5 million in '25. And there's a comment that that's a lot considering your market cap. And then the question goes, will that reduce with the down payment of your debt will then reduce your financial cost.

For sure, it will reduce, but I think it's also important to remember reading the note to the accounts that there is tax loss -- sorry, losses on exchange rates, but also gains and because we are exposed to a lot of exchange fluctuations. But again, when you split it up as cost and income, yes, then you see the -- not the net, but the effect. So that will most likely maintain or be maintained also going forward. But yes, the finance costs will be reduced with the lower debt.

Yes. And then perhaps one of -- there's a few more questions about your cash position in 2026 because, of course, if you add your EBITDA to the cash position, you will sit in a much stronger financial situation, but also with a lot of cash on your balance sheet. And I think the question goes on how do you perceive this cash position? Will you use it for investments? Will you return it to shareholders? What is your sort of thinking about your strong financial cash position end of year?

I would think I would like to answer that one. One -- we would like to also generate some bit of [indiscernible] it's in our strategy to do acquisitions. And there, we are -- and we constantly also look for good opportunities. And with this cash in hand, then we are able to make acquisitions as they come. Sometimes they come a bit opportunistic, but it's part of our strategy to do that. So that will just give us the possibility to grow also nonorganic and utilize our platform as the company is today to further growth organic and nonorganic.

Good. With that, we have concluded all the questions, Erik and Steen, thank you very much for your participation. Sorry about the small delay in the middle, but I hope we came back doing well. I wish you a very good day. Thank you for participating. If you have any questions, please go to the website of WindowMaster and you can check all the information there. So thank you, Steen. Thank you, Erik. Thank you.