Earnings call transcript: Hexatronic Q1 2025 reveals steady growth

Hexatronic Group AB (HTRO) reported its Q1 2025 earnings on April 29, showcasing steady growth in sales and profitability. The company recorded a 6% year-over-year increase in total sales, reaching 1.882 billion SEK. According to InvestingPro analysis, Hexatronic maintains a "GOOD" overall financial health score, with particularly strong relative value metrics. Despite the positive financial performance, Hexatronic’s stock price fell by 3.1% in pre-market trading, reflecting investor concerns over future growth prospects and market challenges. The stock currently appears undervalued based on InvestingPro’s Fair Value model.

Key Takeaways

• Hexatronic’s Q1 2025 sales increased by 6% year-over-year to 1.882 billion SEK.
• EBITDA improved by 10% year-over-year, with a margin expansion of 40 basis points.
• The company’s stock fell by 3.1% in pre-market trading following the earnings release.
• Hexatronic’s data center business achieved record performance this quarter.
• Outlook remains cautiously optimistic, with challenges expected in European markets.

Company Performance

Hexatronic Group demonstrated robust performance in Q1 2025, driven by a combination of organic and acquisition-led growth. The company’s strategic focus on expanding its data center business and enhancing manufacturing efficiency contributed to its improved financial metrics. Despite challenges in the European fiber solutions market, Hexatronic’s diversified business model and global reach have positioned it well against competitors.

Financial Highlights

• Revenue: 1.882 billion SEK, up 6% year-over-year.
• EBITDA: 184 million SEK, up 10% year-over-year.
• EBITDA Margin: 9.8%, up 40 basis points.
• Gross Margin: 41.6%, up 1.1 percentage points.
• Net Debt/EBITDA: Stable at approximately 2x.

Market Reaction

Following the earnings announcement, Hexatronic’s stock price declined by 3.1% in pre-market trading, closing at 27.43 SEK. InvestingPro data reveals the stock has fallen significantly over the last three months, with a six-month decline of nearly 40%. This movement reflects investor apprehension about the company’s ability to navigate ongoing challenges in the European market and sustain its growth trajectory. Trading at a P/E ratio of 15.6x and price-to-book of 1.4x, the stock’s performance remains within its 52-week range, suggesting market sentiment is cautiously optimistic but tempered by external factors.

Outlook & Guidance

Hexatronic maintains a cautiously optimistic outlook for 2025, anticipating continued growth opportunities in North America and APAC regions. Analysts tracked by InvestingPro maintain a strong buy consensus, with revenue growth forecast at 8% for FY2025. The company targets acquisitions in the data center and harsh environment sectors to bolster its market position. Hexatronic aims for long-term financial targets of 20% annual growth over the business cycle and an EBITDA margin of 15-17%. For comprehensive analysis, investors can access the detailed Pro Research Report available exclusively on InvestingPro, covering all crucial aspects of Hexatronic’s business model and growth prospects.

Executive Commentary

Rikka Froebbe, CEO of Hexatronic, highlighted the company’s strategic focus: "The data center business continues to impress and had a record quarter." Froebbe also emphasized the importance of local decision-making: "We want the commercial decisions to be made as close to the customer as possible."

Risks and Challenges

• European Market Challenges: Continued difficulties in the European fiber solutions market could impact growth.
• Supply Chain Constraints: Potential disruptions could affect production schedules and cost structures.
• Competitive Pressures: Intensifying competition in key markets may pressure margins.
• Economic Conditions: Macroeconomic factors, including inflation and interest rates, could impact consumer demand.
• Regulatory Changes: Shifts in trade regulations may affect international operations.

Q&A

During the earnings call, analysts focused on Hexatronic’s pricing strategies and margin improvement efforts. The company confirmed stabilization in the U.S. duct business and reiterated its commitment to enhancing margins in the harsh environment sector. Seasonal patterns are expected to align with pre-COVID levels, providing a predictable framework for future performance.

Full transcript - Hexatronic Group AB (HTRO) Q1 2025:

Conference Moderator: Now I will hand the conference over to CEO, Reichard Froeburg. Please go ahead.

Rikka Froebbe, CEO, Hexatronic Group: Good morning, and welcome to this presentation of our first quarter earnings. I am

Unidentified Speaker: sorry.

Rikka Froebbe, CEO, Hexatronic Group: My name is Rikka Froebbe. I’m CEO of Hexatronic Group. And with me today are CFO, Panila Lindejen, and deputy CEO, Martin Orberg. As usual, we will start with a very brief overview of the Hexatronic Group. And today, we are a global business with operations in over 40 countries and sales in over 100 countries.

We have about 2,000 employees, and revenue last year was just over SEK 7,500,000,000.0 with an EBITDA margin of 10.6%. As you can see, we’re quite well diversified with three different business areas, fiber solutions being the biggest accounting for about two thirds of our revenue, harsh environment and data center are smaller but growing in importance. Just over half our turnover is from Europe, North America accounts for close to 40% and APAC sales are just over 10% of total. We have 18 production facilities covering the markets well with production in each of the continents where we’re active. And it has been for quite a while actually an important strategy for us to have local production set up to be close to our customers.

And obviously, this is extra important and a strength in today’s world where trade barriers are only increasing. So let’s get to the main event and take a look at the Q1 highlights. We’re quite pleased to present today a solid quarter with growth on top line and EBITDA level, driven by very strong performance in our data center business. Starting with sales, we landed at SEK $1,882,000,000, which is 6% higher than last year and also slightly higher sequentially, which is in line with the seasonality we were expecting. And in fact, this was the first quarter since Q3 twenty twenty three where we saw a modest organic growth.

EBITDA improved 10% year on year due to operational leverage and business mix, offset to an extent by higher freight costs. And EBITDA margin therefore was up 40 basis points and landed at 9.8%. As already mentioned, the main performance driver was the data business area, which had a record quarter and 41% sales growth. Fiber Solutions saw slightly lower sales with APAC up, Europe flat and North America was lower year on year, affected by some one off shipments in Q1 of last year. Our net debt coverage is stable at just under two times EBITDA, which allows us room for future investments, and we maintain our cautiously optimistic view for the remainder of 2025.

Some key events in the quarter. So first, I joined the team on March 1, so I have been here about two months now. It’s been a very intense induction and an absolute delight. I must say Hexatronic is a fantastic company and it’s truly a privilege to lead this team. We have also implemented our three business areas and the segment reporting now is therefore following that structure.

This gives us better transparency and is also well aligned with how we operate the business. We have, of course, seen quite a bit of volatility and uncertainty related to tariffs. I think it’s important here to note that Hexatronics direct exposure is quite low. It’s less than 5% of our total sales that are subject to The U. S.

Tariffs. Related to this and in line with our longer term strategy, we have decided to start manufacturing also of fiber optic cable in The U. S. And then after the end of the quarter, we were quite happy to lock in a refinancing of our bank loans. So here’s an overview of our three business areas.

Fiber solution is still the biggest one and today is about two thirds of group sales, but has a slight slightly lower margin, so the share of EBITDA in the quarter was just over 50%. Harsh environment is about 15% of total, both for sales and for profits. And data center now accounts for about one fifth of sales and one third of profits in the quarter. So we continue to see diversification and increasing weight of the focus growth areas of harsh environment and data center. This is what we expect to see, and this is what we want to see.

Just one note here is to remember the seasonality that we have talked about where, typically, fiber solutions has the weakest quarters in q one and q four, while data center has typically the strongest quarter in q one. Now let’s go through the business areas and starting with fiber solutions. Overall, we saw a 2% sales decline with growth in APAC, Europe was flat and North America declined. And the main factor of the North America decline versus last year is that we had some significant submarine cable shipments from Sweden in q one of last year. Sequentially, the sales in North America were higher than in Q4.

EBITDA margins saw a slight increase with business mix and capacity utilization as positives, and this was somehow somewhat offset by higher freight costs. We continue to view North America and APAC as growth opportunities, but we also note that the recent tariff debates are increasing market uncertainty to an extent. The bid program looks to be somewhat delayed. However, important to remember that the bulk of the market in The United States is limited. Europe continues to be a tougher market with an expectation of flat growth and continued price focusing here on operational efficiency and cost reductions.

Moving on to harsh environment. This business grew by 5% in the quarter. The efficiency improvement that we have talked about primarily in Rochester cable are on plan. While we still have a lot more work to do, things are moving in the right direction with a profit improvement in the quarter of about one percentage point. And we’ve known for some time that Rochester would require a fair bit of work and also investment as it was an underinvested and and, I would say, somewhat neglected carve out acquisition from a larger corporate business.

The longer term outlook here for harsh environment is fundamentally favorable with defense and energy sectors expected to remain strong. And now we get to the star performer of the quarter, which is data center. So here, I’m going to hand it over to Martin who is leading that business area.

Martin Orberg, Deputy CEO, Hexatronic Group: Thank you, Rikka. As Rikka mentioned earlier, the data business area normally has a stronger first half year due to vacation periods in both the third and

Unidentified Speaker: the fourth quarter.

Martin Orberg, Deputy CEO, Hexatronic Group: In the first quarter, sales growth was 41% and EBITDA growth was 37%. And this is, compared to our first quarter last year, which was was also a record quarter. All businesses in the business area performed in the quarter. We had strong growth in both Europe and in The US. We grew both product sales and service sales, although we grow service sales stronger.

And this was expected since we have a stronger exposure to the fast growing cloud segment on the services side. The carve out of part of Icelandic Ender that we acquired in the fourth quarter of last year, contributed to a strong start to the year. For Exatronic, all these sales are, of course, accounted for as inorganic growth. But if you compare the sales of this business compared to the sales before the acquisition, they have more than doubled the sales in the quarter. And this is, of course, a fantastic start that we are very pleased with.

Moving over to the outlook. At the investor update that we did a month back, March 20, we zoomed in on the service market on the data center and customer segment. And just to quickly summarize the market outlook from research firms, the cloud segment is expected to grow at around 15% CAGR from ’25 to 2029, while the other parts of the businesses are expected to have a market growth corresponding to sales CAGR of two to 9% for this period. Overall, we expect market growth in all parts of the business area, but with the highest growth in the cloud segment. We’re actively working to diversify the business area regarding customers, offerings, and also end customer exposure.

In the quarter, we made good progress. We have a few promising new customers, which has a good potential to both diversify the business and contribute to growth and development of the business going forward. If we move over to m and a, we have talked about a strong pipeline in the data center business area over the last six to nine months, and several conversations have moved forward. And our ambition to make a few acquisition this year remains. We were a bit more specific on the investor update in March in terms of what we are searching for, and it is both within our current main focus area, which is ICT services, but it’s also to broaden our service offering to other areas such as electrical and security.

And to summarize, the market remains strong, and we hope to come back to you about acquisitions in the data center business area in the near future. And with that, I hand over to Panilla to summarize the financials for the quarter.

Panila Lindejen, CFO, Hexatronic Group: Thank you, Martin. Our total sales for Q1 was SEK 1,900,000,000.0 with an overall growth of 6%. That was driven by a record quarter for data center and harsh environment continued to develop positively, while fiber solutions were slightly down. Organically, we had a growth of 1% and a 4% acquisition driven growth mainly from the recent acquisition Endor within our data center business. And also, had a positive FX effect during this quarter.

If

Martin Orberg, Deputy CEO, Hexatronic Group: we’re

Panila Lindejen, CFO, Hexatronic Group: looking at our gross margin, we had a gross margin of 41.6, which is 1.1 percentage point above last year. And that is mainly due to manufacturing efficiency within fiber solutions and the harsh environment. Our operating costs were 28.6% of net sales in the quarter compared to twenty seven point five percent in Q1 twenty twenty four. And the increase of the operating cost to net sales is mainly related to increased freight cost and also the cost related to the change of CEO. Depreciation has increased compared to last year due to the capacity investments that we’ve made over the last years and in percentage of sales at 4.1%.

And overall EBITDA of SEK184 million, up 10% compared to last year or 9.8% of net sales. Financial net of SEK 31,000,000, and that is mainly related to interest expense. We had also a positive effect of exchange rate differences of revaluation of additional purchase price. Tax amounted to 30.3% compared to 32.4%, and the lower tax rate is explained by higher portion of deductible interest expenses. Earnings per share at If we then go over and talk about our fiber solutions.

Total net sales of fiber solutions of SEK1.2 billion in Q1 with an overall decline of 2%. Europe was flat compared to last year. Decline in Sweden was partly offset by growth in UK and Germany and continued strong growth in Finland and Austria. As Rick has said before, sales in North America declined with sales in North America lower than last year, but are increasing with the number we had a main submarine cables that was included in Q1. The U.

S. Duct business showed increased volume, but that was offset by lower prices than last year. And APAC and rest of the world increased with 16%, mainly due to orders to Micronesia and the rest of APAC. EBITDA of SEK167 million, a growth of 3%. Depreciation at 5% of sales, and that is 0.4 percentage point higher than last year, and that is due to the capacity investments that we have made over the last years.

And EBITDA of SEK105 million, 1 percent growth compared to last year or an EBITDA margin of 8.5%. And that is 0.2 percentage points higher than last year with a positive effect from higher capacity utilization in the factories, and that is partly offset by the increased freight cost. We had low CapEx investments in the quarter, only SEK 4,000,000 or 0.3% of sales, and that was mainly related to maintenance. If we move over then to harsh environment, we had a total net sales of harsh environment of million with an overall growth of 5%. And growth is mainly driven by sales to APAC and Rest of the World.

Europe was in line with last year year and North America was declining. But the companies within harsh environment have an international customer base and the majority of revenue is related to larger project, which is why sales per geography can fluctuate from quarter to quarter. EBITDA of SEK 39,000,000, growth with 13%, depreciation at 3.3 of sales. EBITDA of 29,000,000 or 15% growth compared to last year. And EBITDA margin strengthened compared to previous year as a result of the ongoing work with manufacturing efficiency within Rochester Cable.

CapEx investments in the quarter of 3.2% of sales, which is mainly related to maintenance investments in Rochester Cable. Data center, total net sales of $362,000,000 with an overall growth of 41%. And as Martin said, which is a record quarter for our data center business. And we are pleased to see that it’s a strong development for all units and a positive contribution from the Ender acquisition business. And we had a fantastic start with Ender that was more than doubling their sales in the quarter compared to last year.

We EBITDA of SEK72 million, growth with 35% and depreciation at 1.2% of sales. EBITDA of SEK68 million, 30 7 percent growth compared to last year or a margin of 18.8%. And in the data center business, the CapEx investments is quite low and the quarter was SEK 1,000,000 or 0.3 percent of sales, which is mainly related to maintenance investments. If we go over and looking at our cash flow, overall, our cash flow was not overall satisfactory. Operating activities before changes in working capital of minus 50,000,000.

We had a negative effect of working capital of SEK 192,000,000. Accounts receivable has increased with million during the quarter, and that is mainly due to increased sales and customer mix. Inventory has increased with SEK127 million, which is partly offset by increased accounts payable. Total CapEx investments of only SEK 14,000,000 or 0.8 of sales, and that is mainly related to maintenance investments. And as we have communicated earlier, after the heavy investment years of 2022 to 2024, we believe that we were able to grow for several years without any extensive investments in the fiber solutions business.

Group financing activities amounted to EUR 34,000,000, and that is amortization of lease liabilities. If we then are looking at our interest bearing net debt, which corresponds to net debt excluding lease liabilities, that amounted to SEK 1,900,000,000.0 at the end of the quarter, which is an increase of SEK 43,000,000 compared to with last quarter. And that increase is partly offset with increase of the rolling 12 EBITDA. So interest bearing net debt in relation to pro form a EBITDA on a rolling twelve months basis is stable at SEK 1,900,000,000.0 the quarter. At the end of Q1, we had SEK $499,000,000 of cash and an unutilized backup facility of SEK 1,300,000,000.0, which gives us a liquidity of approximately SEK 1,800,000,000.0, and we have a continued solid financial position.

Now I will hand over to Richard again.

Rikka Froebbe, CEO, Hexatronic Group: Thank you, Panila. And let’s go to the summary here. So again, if I summarize the highlights of Q1, it was a solid quarter with sales growth of 6% and EBITDA growth at 10%. The data center business continues to impress and had a record quarter. And this growth is helping with our diversification and more than offset the slight decline in fiber solutions.

We have a solid balance sheet and look to continue acquisitions to further drive growth and that’s primarily in data center and harsh environment. And recapping our outlook and guidance. For Cyber Solutions, we do expect Europe to continue to be rather challenging with price pressure and limiting growth in 2025, but we see opportunities to offset in North America and in APAC. Harsh environment, we expect a continued and gradual margin improvement. Data center continued strong performance, albeit probably not on the same level as quite in Q1.

And we are, as you heard, quite hopeful to execute one or a few acquisitions in this year. And all in all, we therefore maintain our cautiously optimistic view of 2025. And with that, we’re wrapping up the presentation part for today, and we will move on to taking some questions.

Conference Moderator: The next question comes from Max Baco from SEB. Please go ahead.

Max Baco, Analyst, SEB: Yes. Good morning. I hope you can hear me. Nice to hear your voice again, Richard. So basically, two questions from me.

First, starting with Cyber Solutions in North America. As you said, the majority of the decline explained by a one off shipment here in Q1 last year. So guess, you perhaps add some flavor to what you’re seeing in Hexatronic U. S. Within the fiber system sales?

And then also within the duct business, I guess, Diamond Industries and also Kaina to some extent, you said higher volumes but lower prices. And that has been the case now for a couple of quarters, if I remember correctly. Just on prices there in the duct business, are you seeing some kind of stabilization sequentially? Or is it continue do you see a continuous decline? So two questions basically, Hexatronics U.

S. And then the DAC business.

Rikka Froebbe, CEO, Hexatronic Group: Yes. So first of all, a few things here. So one, the numbers that we’re presenting here is North America, and that includes Canada. Canada was a low quarter. We’re rather concentrated in the customer base in Canada.

So there’s one or two customers and if they play big orders in the quarter or not, it makes a difference and Canada was low in the quarter. But in The United States, in particular, as Pernilla mentioned, we see volumes actually increasing, but pricing is lower than a year ago. So that’s right, Max. We’re seeing sequentially, though, I’m seeing at least for the duct business, that pricing seems to have stabilized versus prior quarter, but we still have one or a couple of quarters where we’re lapping last year that were lapping what was higher prices last year.

Max Baco, Analyst, SEB: Okay. Understood. Perfect. And then one question on harsh environment. I mean, as you alluded to at the Investor Update, the clear ambition here for 2025 is to improve the profitability, which we saw here in Q1 already, up some 60 basis points, I think it was.

So just wondering your ambitions here for 2025, for the full year for the harsh environment segment. Is it I mean, the magnitude of the improvement that you are aiming for, is it a similar level as we saw in Q1? Or do you hope to see an acceleration here throughout the year in terms of profitability?

Rikka Froebbe, CEO, Hexatronic Group: Yes. We’re definitely working for a continued, I would say, slow and steady improvement, higher than what it was in Q1. But there’s a lot of work still remaining there. And as you mentioned, Max, this year, we are we see growth opportunities, but we’re really focusing on the margin improvement. We think in the short term is the most important one for shareholder value.

But longer term, we also see good growth opportunities. The market is definitely there.

Conference Moderator: The next question comes from Adrian Galani from ABG Sundal Collier. Please go ahead.

Unidentified Speaker: Yes, hello. I’d like to start off with a question just on the data center segment. And given that we only have limited historical figures on the new segment structure, can you talk a bit about sort of how lumpy sales and earnings are in data centers? Because Q1 was obviously a very strong quarter, but was there anything unusual in this? Or are these figures that you think you can be able to sort of replicate going forward as well?

Martin Orberg, Deputy CEO, Hexatronic Group: Thank you, Adrian. It’s Martin here. So as I said, I mean, it was it’s a very strong quarter. I think we talked a bit about the seasonality that we have the strongest first half year, and especially q one has been the strongest. If we look longer term, a few years back, we have provided that during the investor update, and it has been steady growth.

So we say I mean, underlying, the expectations have continued to grow, but we expect to have the same pattern with a stronger first half year than the second half year.

Unidentified Speaker: Okay. Understood. And for my second one, I might be reading too much into this, but previously, you included a reminder on seasonality in the outlook statement saying that Q2 and Q3 should be at a higher level compared to Q1 and Q4. Now that’s not included here, but should we still expect that there should be just a seasonal uptick into Q2? Or are you more pessimistic about that now?

Rikka Froebbe, CEO, Hexatronic Group: No, we think that seasonal pattern still remains. And the one that you’re referring to, Adrian, is for fiber solutions in particular.

Unidentified Speaker: Perfect. I’ll jump back in the queue. Thank you.

Conference Moderator: Next question comes from Stefan Ward from Pareto Securities. Please go ahead.

Stefan Ward, Analyst, Pareto Securities: Thanks. I have a couple of questions also sort of tagging along previous questions here. On the price situation in The U. S, were you referring to lower prices year on year? Was that for the duct business alone?

Or is it also for fiber solutions broader?

Rikka Froebbe, CEO, Hexatronic Group: That was mostly for the duct business.

Stefan Ward, Analyst, Pareto Securities: How would you describe fiber solution pricing environment in The US at the moment?

Rikka Froebbe, CEO, Hexatronic Group: It’s it’s more of a system cell, so it it’s not as clear cut there. I I don’t see it moving really clearly either up or down.

Stefan Ward, Analyst, Pareto Securities: Okay. Great. Thanks. Then you mentioned in Europe fiber solutions, I read it as stable demand but continued price pressure. Is that the correct interpretation?

Or would you add some

Rikka Froebbe, CEO, Hexatronic Group: I think that’s correct.

Stefan Ward, Analyst, Pareto Securities: Okay. Then also on this referring to the seasonality that Adrian spoke about just recently. Last year, you had a sequential increase of 14% in the second quarter. I understand that we can’t perhaps comment exactly on the figures, but is it similar to that magnitude of seasonality that we can expect also in this year?

Rikka Froebbe, CEO, Hexatronic Group: Yes. You’re right. We’re not going to comment on the exact figure. What we have said is that we expect both for data center that has a different seasonality that we did show quite clearly, I think, at the investor update. And for fiber solutions, we expect that the pattern to be similar.

Stefan Ward, Analyst, Pareto Securities: So the pattern will be similar to last year?

Rikka Froebbe, CEO, Hexatronic Group: That is our expectation, and that pattern is similar to what we saw prior to COVID.

Stefan Ward, Analyst, Pareto Securities: Okay. Just a final question, if I may, on data center business. It’s almost onethree or it is onethree of group EBITDA in Q1. And it’s growing stronger than the rest of the group. Even though there is seasonality in that, is that like a likely framework to have for the full year that that data center can become one third of of group earnings?

Martin Orberg, Deputy CEO, Hexatronic Group: I think what we for I mean, if you look at the season pattern, I mean, data center has this year and also last year, the strongest q one, while we see that q one is a weak quarter for the fiber solution. So so based on that, we wouldn’t say it would be a start.

Stefan Ward, Analyst, Pareto Securities: Okay. Thanks.

Rikka Froebbe, CEO, Hexatronic Group: We’re checking if

Conference Moderator: Next question comes from Max Baco from SEB. Please go ahead.

Max Baco, Analyst, SEB: Yes. Hi. Thank you. Max here again. Perhaps taking the opportunity to ask a bit more high level question.

I mean, Rifed, you have been on the job a couple of weeks now at least. And of course, you touched upon this during the investor update. But it would be interesting to hear your impressions once again. I mean, I know that you have traveled around quite a lot and met many of the subsidiaries and so on. And it seems to be some efficiency work that can be done within the group, I mean, fiber solutions in Europe and, of course, harsh environments and so on and so forth.

So if you could just talk about how you will approach this. Will it work in a different within the group compared to how we have done it before and so on and so forth? If you could elaborate a bit on that.

Rikka Froebbe, CEO, Hexatronic Group: Yes. Sure. We have a decentralized structure and a decentralized philosophy. I think that’s quite important. We want the commercial decisions to be made as close to the customer, close to as close to the market as possible.

I don’t see that changing. At the same time, we are working quite actively and and have for some time with how do we extract the the benefits of being part of a almost 8,000,000,000 sec group when it comes to purchasing volumes and skills and so on. So I I think there are further opportunities there when we’re talking about things like reducing scrap in our factories where we see that those levels are different between the different factories when it comes to being world class in how and when we purchase things like resins and other raw materials. So I think those are are some of the main opportunities, that we want to drive.

Max Baco, Analyst, SEB: Okay. Understood. I guess we will hear more about it in the future. Thank you.

Rikka Froebbe, CEO, Hexatronic Group: Thank you, Will. Thank you, Max.

Conference Moderator: Question comes from Stefan Ward from Pareto Securities. Go ahead.

Stefan Ward, Analyst, Pareto Securities: Yes, I have a question regarding the financial targets. We now had we have the Q4 report before you came on board, Rick. But then we had also the C and D update, March and now the Q1 update. And you haven’t done any changes to your financial targets, which is annual growth of 20% over a business cycle and EBITDA margins of 15% to 17%, if I remember correctly. Are these still valid, would you say?

Or are they under review? Or can you comment anything on because I’m a little bit we haven’t got any hard sort of guidance for 2025. So this is what we have to rely on then.

Rikka Froebbe, CEO, Hexatronic Group: I I I

Stefan Ward, Analyst, Pareto Securities: thought this would be helpful.

Rikka Froebbe, CEO, Hexatronic Group: Stefan, I would say, yes, they are still value valid. And, yes, they are also under continuous review as with any company. And and as you pointed out, that those targets are over a business cycle, and they also include m and a, which we haven’t done in a while. And I think we’re, know, in the in the cycle, I think we’re we’re still in the more challenging part of the cycle, although we’re hopeful that that won’t be too much longer.

Stefan Ward, Analyst, Pareto Securities: Okay. And regarding the profitability, that is also what we should expect from the company going forward?

Rikka Froebbe, CEO, Hexatronic Group: Those are our targets.

Unidentified Speaker: Thanks.

Conference Moderator: More phone questions at this time. So I hand the conference back to the speakers for any written or closing comments.

Rikka Froebbe, CEO, Hexatronic Group: Yes. I think we have one written comment.

Panila Lindejen, CFO, Hexatronic Group: So good morning. A question on cash conversion. You have done a good job in stabilizing EBITDA with an EBITDA of SEK184 million, yet operating cash flow is negative SEK5 million. It has been an increase of SEK127 million on inventory and also the accounts receivable. Can you give a little bit more highlights on the reasoning?

So when it comes to receivables, that has increased due to that we’ve had higher sales, but also it’s a it’s a change of mix of customers. Some of the large customers that we have have a little bit longer payment terms and hence why the number of days have increased slightly. We’re talking about where that we are somewhere between 55, 50 eight, something like that. We are a little bit higher today. We are at fifty nine, sixty days, and that is mainly due to the customer mix.

And when it comes to the stock, that is we have partly increased it due to the seasonality, but we’re also say also a little bit higher than we want to be, so we will continue to to work to reduce it. We have another question here. What should we expect in CapEx for 2025 and and going forward? We have earlier communicated that our ambition is to be with within three to 4% of sales for the full year, which is one to 2% is maintenance and the rest is capacity. If we’re looking at our fiber solutions business, we are saying that the main investments will be in maintenance, but also then some small CapEx investments overall.

So we’re saying three to 4%. Harsh environment, our ambition is to be around 5%, and there is also maintenance and capacity, and then data center less than 1%.

Rikka Froebbe, CEO, Hexatronic Group: Okay. I think that’s it for the questions. So once again, just we we will wrap things up here, and thank you everyone for calling in today.

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