Earnings call transcript: Ctek AB Q2 2025 reports revenue decline

Ctek AB reported its Q2 2025 earnings, revealing a decline in revenue to SEK 197 million from SEK 212 million the previous year. Despite the decrease, the company improved its gross margin to 56.3%, aligning with InvestingPro’s analysis highlighting Ctek’s impressive gross profit margins. The stock responded by dropping 5.63% in pre-market trading, reflecting investor concerns over the revenue shortfall and lower-than-expected earnings per share (EPS). The company’s shares have shown resilience year-to-date, with a 13.49% total return.

Key Takeaways

• Revenue for Q2 2025 decreased to SEK 197 million, down from SEK 212 million last year.
• Gross margin improved to 56.3%, indicating cost efficiency.
• Stock price fell 5.63% in pre-market trading following the earnings release.
• Ctek AB plans to introduce new product categories in Q4 2024 to expand its market.
• The company maintains a strong position with over 50 premium vehicle manufacturers as clients.

Company Performance

Ctek AB’s performance in Q2 2025 was marked by a revenue decline compared to the same quarter last year. However, the company managed to enhance its gross margin, reflecting improvements in operational efficiency. The adjusted EBITDA stood at SEK 14 million, representing 6.9% of revenue. The company’s net cash flow was positive at SEK 31 million, and its net debt ratio remained below target at 1.8x.

Financial Highlights

• Revenue: SEK 197 million, down from SEK 212 million YoY.
• Gross Margin: Improved to 56.3%.
• Adjusted EBITDA: SEK 14 million (6.9%).
• Net Cash Flow: SEK 31 million.
• Net Debt Ratio: 1.8x.

Market Reaction

Ctek AB’s stock price fell by 5.63% in pre-market trading, reflecting investor disappointment with the revenue decline and lower-than-expected earnings. The stock’s last close was at SEK 16, and it remains below its 52-week high of SEK 23.4. This movement is in line with broader market concerns about revenue growth and profitability.

Outlook & Guidance

Looking ahead, Ctek AB is targeting significant growth by 2028, with a revenue goal of SEK 2 billion and an EBITDA margin of 20%. The company plans to introduce new product categories, including Premium Boosters and Power Solutions, in Q4 2024. InvestingPro data suggests positive momentum, with net income expected to grow this year and analysts predicting profitability, despite the company not being profitable over the last twelve months. The stock has demonstrated strong performance with a 10.53% return over the past six months. Additionally, Ctek AB is focusing on expanding its market reach in the UK and Germany, which are larger markets than its current ones.

Executive Commentary

Henrik Fagrenius, CEO of Ctek AB, stated, "We are tripling our addressable market in order to meet our financial targets." He emphasized the company’s strategic entry into the UK and German markets, which are expected to drive future growth. Fagrenius also highlighted the positive development in the client brand business.

Risks and Challenges

• Revenue Decline: The decrease in revenue poses a risk to achieving future financial targets.
• Market Expansion: Entering new markets like the UK and Germany involves execution risks.
• Supply Chain: Potential disruptions could affect product availability and profitability.
• Competitive Pressure: Maintaining technological leadership in a competitive market is crucial.
• Macroeconomic Conditions: Economic downturns could impact consumer spending and demand.

Q&A

During the earnings call, analysts inquired about the impact of a GM contract cancellation on the Professional division’s sales. The company acknowledged the challenge but noted stable online sales. Questions also focused on the low activity in the EV market and potential expansion in the UK and Germany, with Ctek AB expressing optimism about future growth opportunities.

Full transcript - Ctek AB (CTEK) Q2 2025:

Conference Operator: And the conference over to the speakers’ CEO, Henrik Fagrenius and CFO, Tom Matheisen. Please go ahead.

Henrik Fagrenius, CEO, C Tech: Thank you very much, operator, and also a warm welcome to the second quarter report review from C Tech. Today’s presenter will be myself, and I also have Tom Mathiesen, our CFO. And as usually, we will start with some background information about C Tech. C Tech was founded for over twenty five years ago by Benkt Valkwist, the inventor of the first ever battery charger to use electronic pulse technology, and this revolutionized the market. We are designing and developing and testing all our products in Sweden.

We are putting a lot of efforts to the quality levels, and we have about one third of our employees working in research and development in Farland, Nordschoping, and Shenzhen. We are also committed to sustainability targets, and we are focusing on reducing air freights and make our products more repairable and the use of recycled materials wherever possible. We are very proud to have more than 50 of the world’s most premium vehicle manufacturers as customer, where we are building their branded 12 volt chargers. Especially proud to be double branded together with premium brands like Lamborghini, as you can see on this picture. This has helped us to build a very strong consumer brand.

And with the passion and with the C family that we have, we have built a very strong global consumer brand as well. C Tech has mainly two technologies. Low voltage is the twelve and twenty four volt chargers for cars, and we sell them to consumers. We sell them to client brands. We sell them to workshops and also to other installations like caravans, lifts, etcetera, wherever you have a battery that needs charging.

The other technology that we have is chargers for electrical vehicles, and there we are focusing on destination charging. Our go to market strategy, we are divided into two divisions, consumer divisions that are selling directly to end consumers through retailers and through distributors and through online marketplaces. We have our professional divisions that is focusing on business to business, where we are selling low voltage chargers to OEMs, premium brands, and we’re also selling our destination chargers to parking operators and others. C Tech, we are focusing on niche customer segments where we find the ability to pay, willingness to pay higher. And, we are focusing on these niche segments for low voltage that could be sport cars, that could be motorcycles, and all of these users really appreciate the chargers and know that they are dependent on them.

For electrical car charging, we are focusing on parking operators, energy companies that are really appreciating high uptime and are also prepared to pay for that. In May, we presented our new financial targets for 2028 at our Capital Markets Day, and that consists of having a revenue of SEK 2,000,000,000 and an EBITDA margin of 20% and the net debt below three times. And we are aiming to have a possibility to divide 30% of our net earnings. We will do this by developing our existing business, but we will also introduce two adjacent product categories. The first one is premium boosters.

That is an emergency help if you have a breakdown and the battery is flat, so you can, start your car immediately and go back home and charge it with a C Tech charger. The other one is power solution that is focusing when you have a secondary battery solution, in, for example, a boat, a caravan, motor home, or a service van. This, we will introduce products in these categories and also in our existing charging category starting this autumn, and the big impact will come later this year, but mainly in the coming years, 2026 and onwards. So as you can see here, we will we will grow in our existing business, but we will also grow with premium boosters and power solutions. So with that, over to the quarter.

In the second quarter, we have seen a revenue of SEK 197,000,000, a bit lower than last year where we have SEK $212,000,000. We have seen growth in low voltage, but lower sales and revenues in EBSC mainly due to the GM contract being canceled. The gross margin was improved to SEK 56.3% due to the product mix. We have an adjusted EBITDA of 14,000,000, that is 6.9% compared to SEK 7,100,000.0 in the comparing quarter. We have increased the EBIT to SEK 9,000,000, that is 4.3%, and we have a net cash flow of SEK 31,000,000.

And with that, we end up with a net debt ratio of SEK 1.8. The key takeaways for this quarter, it was a very reluctant and hesitant start of the quarter due to the macroeconomical situation. A lot of our customers was hesitant to order for stock, but it turned out to be quite an improvement and recovery at the end of the quarter. I’m happy to see that we are continuing to grow within our low voltage business. And this quarter, it was mainly the client brand that has a very good quarter.

We also see good sales in the online. And I’m also happy to see that it’s the second consecutive profitable quarter for the Professional division on the EBITDA level. We’ve turned around that segment and are showing profit on EBITDA level. We have also seen some improved gross margins in our new EV charger CC free, Chargecom connected free. And we have also seen existing and new customer that are interested in

Tom Matheisen, CFO, C Tech: that one. And as I mentioned, we are working hard now to introduce our new adjacent product categories, and that will come at the end of this year. And I hope to see an impact

Henrik Fagrenius, CEO, C Tech: later on this year, but mainly 2026. So with that, I leave the word to you, Tom.

Tom Matheisen, CFO, C Tech: Thank you, Henrik. So then I will do some deep dives into the financials for quarter two and starting with some more details around the divisions. So first, the consumer division. As you can see from the graph, it stands for around 65% of our revenues. And the net sales were lower in absolute terms, hundred twenty eight versus hundred and thirty five, But organically, without any FX impact, we actually grow with 0.3%.

EBITDA amounted to 42,000,000 SEK, which is 43% EBITDA margin. However, that margin is it’s it’s a high margin still, but a little bit higher than but a little bit lower than last comparing quarter, and that is due to somewhat lower margins, but also to a mix impact from geographies that we have had higher mix of high margin markets, last year. And then last, also, prioritization of our performance marketing that has had an impact. So still good margins, a little bit lower than last quarter, but in in the the basis, it’s it’s stable and good margins. And I go over to the professional.

Sorry. I turned two slides there. Professional division. It stands then for 45% of our volumes. Here we saw a decreased volume with 6% organically, and these decreases, as Hendrik mentioned before, mainly related to that GM contract has ceased as from this year.

The EBITDA level is, however, increasing to the second quarter in a row with a positive margin that is we are very happy to notice going forward. Cash flow and CapEx, as Henry mentioned, the CapEx is big part of our business. One third of our team are working with developing new products and maintaining the ones we have. And from the graph on the lower end of this slide, you can see that this CapEx has been on a very high level back in 2223. And as we have earlier communicated, it will go back to more normal, but still high levels.

We are now on 8%, and we foresee that that will continue down to the in the range of 5% to 7% over the years going forward. So our cash flow from operating activities is now €31,000,000 compared to 22,000,000 in the comparable period. And from net cash, we have increased now from four in the last year to 50,000,000 this year, in this quarter two. We have, as Henrik also mentioned, net debt ratio now at 1.8. It’s an improvement versus a similar quarter last year, and that’s well below the free time that we have in our financial targets.

So with that, I hand it over back to you, Henrik.

Henrik Fagrenius, CEO, C Tech: Thank you, Tom. And the summary then for the quarter, key highlights, strong recovery in the end of the quarter, started a bit hesitant, but then we saw that our customers were more confident at the end of the quarter. Continuous growth within low voltage. I think we have eight quarters now with growth in low voltage business, and that is, of course, very good. This time, it was driven by a good demand from client brand, both existing and new customers and also online sales.

And second consecutive quarter of profitable growth profit not growth, but profitability on EBITDA level for the Professional division. And improved gross margins for our new Shardstorm connected free EV charger and new contracts rewarded as well. And as I mentioned, we are focusing very hard now on the new two new adjacent product categories that we will, start to show by the end of this year and then have focus on for the coming years to come. And with those new product categories, we are tripling our addressable market in order to, meet our financial targets. So with that, back to you, operator, and we open up for questions.

Conference Operator: The next question comes from Sofia Soerling from DNB Carnegie Investment Bank. Please go ahead.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Hi, this is Sofia from DNB Carnegie. Can you hear me?

Henrik Fagrenius, CEO, C Tech: Yes, we can. Yes, absolutely.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Thank you. Great. Okay. So my first question is related to the Professional division. So can you please give us some more detail of how much of the sales decline in Q2 in this division was related to the General Motors EVSE sales?

Henrik Fagrenius, CEO, C Tech: Yes, we can do that. We have in the comparable quarter, I think the sales to General Motors was SEK 15,000,000, about SEK 15,000,000.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. Yes. Thank you. And if I can challenge you a little bit on the profitability level in this Professional division, since this GM orders are now not included anymore, why isn’t EBITDA margin higher than 3% in this quarter, given also that it was actually 6% in Q1? If you can give some more details on that.

Henrik Fagrenius, CEO, C Tech: Yes. I would say that is volume based. We have the right cost base now and we also have the right profitability in the products, both in the low voltage, of course, but also in the EV products. But now we need some more volumes to make it even more profitable.

Tom Matheisen, CFO, C Tech: Then basically more in the WAM business is good. The low voltage business is good in professional, but the EVSE business, we need more volumes.

Matthias Ehrenborg, Analyst, Redeye: Yeah.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. Yeah. Because that was actually my following question, what what actually needs to happen ahead for you to increase profitability, but then it’s more the volumes in EDSE segment in this division then?

Henrik Fagrenius, CEO, C Tech: Yes, absolutely correct. We see a very good development in the client brand business. We are gaining new customers, and also our existing customers are developing very nicely. But when it comes to EV business, we still see a very low activity on the market, and and that needs to change to have some more volumes there. And of course, we are also increasing our focuses on The UK market and later this year, we will also have a product for the German market.

So that of course will increase our addressable market for the EV side as well.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. So the German market, when do you expect this to have a reflection in sales?

Henrik Fagrenius, CEO, C Tech: We will introduce the product late this year. So I will say it will the impact will mainly come 2026.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. And since we and what would you say is EBITDA margin level? What is possible here within the Professional division in the long term? Or what are you satisfied with?

Henrik Fagrenius, CEO, C Tech: We haven’t said anything, but we and I believe that the Professional division should support our financial targets to have an EBITDA level of 20%.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. Yes. Let’s see. Maybe you mentioned this a little bit, but can you give some more details on how the sales the CC3 charger is progressing, feedback from customers? And also, if you can comment, is there any need for another updated version near term or midterm?

If not, why?

Henrik Fagrenius, CEO, C Tech: I would see I would say that with this ShoreStorm connected free, we have a market leading product when it comes to technology. It’s prepared for all the new v12s and whatever that is coming in the future and also have a very high cybersecurity level. We will update it later this year with the display and the iShrecht for the German market. And its display is mostly to comply with the AFIRI regulation. But after that, I see that we have a product that will be very future proof.

Then you never know about legislation and how that will change, but as it is now, it will be a very future proof product. And I see that the customers that has bought it so far has we have received very good customer feedback. It’s easier to install, very reliable, high uptime as also the, c c two had. So overall, very good feedback. But as I’ve said, the activity in the whole business is a bit low at the moment.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. Let’s let’s see, no, sorry, you already answered the new product categories. Yes. And just a comment on this financial targets. You had a good page there about how C Tech will reach its financial targets.

But it seems like the EVSE segment is expected by you to have quite of acceleration during 2027 and 2028. And do you expect that I guess my question is, what is your market assumption behind these numbers? Do you expect that it will come back to the, I would say, previous market expectation of around like 30% CAGR? Or what is your assumptions behind your own numbers?

Henrik Fagrenius, CEO, C Tech: The assumption is mainly that we are entering into both UK and Germany, which are much bigger than our current markets, main markets, that is Sweden and Nordic. And but of course, we also foresee that the very hesitant market situation that we have right now will easeen up and come back.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. Final question from my side. You had you mentioned that you had a very strong financial situation at the moment or financing situation. Do you see any potential M and As ahead?

Henrik Fagrenius, CEO, C Tech: As we said at our Capital Markets Day in May, we do see M and A as a possible accelerator to reach our financial goals. And the financial stable financial situation that we have right now makes that possible for us to look into to m and a. Yes.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. Already near term, or is it more of a a midterm horizon here?

Henrik Fagrenius, CEO, C Tech: That depends on how and when we find suitable subjects.

Sofia Soerling, Analyst, DNB Carnegie Investment Bank: Okay. Okay. Thank you for all your answers.

Henrik Fagrenius, CEO, C Tech: Thank you,

Conference Operator: The next question comes from Matthias Ehrenborg from Redeye. I

Matthias Ehrenborg, Analyst, Redeye: think a lot of my questions have already been answered, but I’m curious to hear what you think that needs to happen within the consumer segment for your customers to become a bit less hesitant. Obviously, you’ve been mentioning the current macroeconomic situation, but is it more than that? Curious to hear what you think.

Henrik Fagrenius, CEO, C Tech: Yes. Thank you, Matthias. I think what we saw in the beginning of the quarter was mainly our distributors and retailers that were a bit reluctant to take on stock. And that is, of course, due to the macroeconomical situation. We have, throughout the quarter, seen a stable demand from our online sales channel, where we more directly see the end consumer demand.

So that has been stable throughout the quarter. So I think the main hesitation was among our distributors and retailers if they would take on stock. So what I would say is if we get more certainty when it comes to tariffs, that will probably increase the consumer demand and also make our customers more confident to take the necessary stock for the quarters to come.

Matthias Ehrenborg, Analyst, Redeye: And you mentioned there that the online sales have still been solid and improving also. Is it possible to shed the next light on this? What are your expectations going forward for online sales?

Henrik Fagrenius, CEO, C Tech: The online sales is a very important channel for us, and we see that, that has been developing very, very strongly during the quarters, and we continue to see that as a strong development going forward.

Matthias Ehrenborg, Analyst, Redeye: Okay. Also, you mentioned that the geographical mix has had a negative effect on the gross margin in the consumer segment. Is And it possible for you to share what markets are more high margin and vice versa?

Henrik Fagrenius, CEO, C Tech: Yes. We last in comparison quarter, we had high sales to Australia due to some new product introduction into Australia at that time. And Australia is a high gross margin market. And then we have other various generally, we have very high gross margins in all our market for consumer, but there are some variation, and Australia is a positive variation. So

Matthias Ehrenborg, Analyst, Redeye: Okay. Yes, Just one question regarding the EVF segment. Obviously, the Professional segment as a whole, a very strong development in the quarter, primarily driven by the low voltage sales then. But I think you maybe have answered this question earlier, but U. K.

In this quarter for the EVSE, what was the development in the region? Because now your CC3 has been available for the market for quite a few quarters, I believe. So I’m curious to hear what the development looks like.

Henrik Fagrenius, CEO, C Tech: We see development, slightly positive development from very low figures and not really vibrant, but we see an interest from customers in UK. We also see interest from our existing big global parking operators that are active in UK. So we see a positive trend, but from low numbers.

Matthias Ehrenborg, Analyst, Redeye: Okay. And a final question from my side. As you mentioned on your Capital Markets Day, you will launch a couple of new product areas now in H2. Are there any markets in particular that you are excited about going into the second half of this year, launching products in those markets? For instance, I noticed that your DAC sales in this quarter was once again very strong and continued to grow year over year.

Is that a market that’s particularly interesting or what do you think?

Henrik Fagrenius, CEO, C Tech: That is definitely a big market for us and a market of continued interest. And if we look into the two different adjacent product categories, boosters, we will, of course, sell in all our existing channels and all our existing markets. When it comes to power solution, that’s also the long term plan. There might be some certification delays to some of our products. But of course, Germany, especially with a lot of RV manufacturers is and will be a very important market for those kind of products as well.

Conference Operator: There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions.

Henrik Fagrenius, CEO, C Tech: Thank you. And we have two written questions. The first from Johan Eliason. Your new product, will they drive up CapEx a lot in second half year? The question the answer to that is no.

We will keep our CapEx budget. We will not increase. We are reallocating focus on our existing CapEx on that one. Second written question is from ST. Given your comments on retailers and distributors’ willingness to take on stock and the improvement in the end of Q2?

Do you expect a bounce back in demand in Q3 when then or is your judgment that inventory levels are normal again? We it’s very hard to guide, and we do not guide for the future, but I see it more as a normalization from low levels to a normalizations. And at this point in time, we do not see any possible bounce back. And that was the two written questions that we had so far. And if there’s no further questions, I would like to thank you for listening in, and wish you a good day.

Thank you very much from our side. Thank you.

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