Earnings call transcript: Hiab Oyj Q1 2025 sees stock rise on solid performance

Hiab Oyj reported its Q1 2025 earnings with a notable increase in operating profit, despite a slight decline in revenue. The company’s stock reacted positively, rising by 5.9% following the announcement. Revenue for the quarter stood at €411 million, marking a 1% decline from the previous year, while operating profit increased by 7% to €66 million. The company’s shares closed at €38.62, reflecting a €2.28 increase from the previous session. According to InvestingPro data, Hiab maintains a perfect Piotroski Score of 9, indicating strong financial health, while holding more cash than debt on its balance sheet. The company’s robust financial position is further evidenced by its "GOOD" overall Financial Health Score of 2.88.

Key Takeaways

• Operating profit increased by 7% year-over-year.
• Stock price surged by 5.9% post-earnings announcement.
• Revenue declined slightly by 1% compared to the previous year.
• The Echo portfolio sales grew significantly by 24%.
• Geographic order intake varied, with notable growth in EMEA and APAC regions.

Company Performance

Hiab Oyj demonstrated resilience in Q1 2025, showing a robust operating profit despite a slight dip in revenue. The company’s strategic focus on outcome-based innovations and an asset-light approach contributed to its solid performance. The Echo portfolio, a key product line, saw a 24% increase in sales, which now accounts for 35% of total sales. This growth reflects the company’s ability to adapt and innovate in a challenging market environment. With an EV/EBITDA ratio of 10.25x and a P/E ratio of 16.89x, the company trades at reasonable valuations relative to peers. Discover more detailed valuation metrics and 12+ additional exclusive ProTips with InvestingPro.

Financial Highlights

• Revenue: €411 million, a 1% decrease year-over-year.
• Operating Profit: €66 million, a 7% increase from the previous year.
• Operating Profit Margin: 16%.
• Gross Profit Margin improved by 1.4 percentage points.
• Cash Conversion: 170%.

Earnings vs. Forecast

The earnings per share (EPS) forecast for Q1 2025 was €0.6078, but the actual EPS was not disclosed in the summary. However, the company’s performance, particularly the increase in operating profit, suggests a positive deviation from expectations. Revenue surpassed the forecasted €387.98 million, reaching €411 million.

Market Reaction

Hiab Oyj’s stock rose by 5.9% to €38.62 after the earnings release, reflecting investor confidence in the company’s financial health and strategic direction. This upward movement places the stock closer to its 52-week high of €60.65. The market’s positive response indicates approval of the company’s operational improvements and future prospects.

Outlook & Guidance

Hiab Oyj maintains a positive outlook, with a full-year operating profit guidance set at a minimum of 12%. The company remains committed to its long-term targets, including a growth rate of approximately 7% CAGR and an operating profit target of 16%. The company is also focused on achieving a gearing target below 50% and maintaining a dividend range of 30-50% of earnings per share. Notable is the company’s impressive 20-year track record of consistent dividend payments, with a current yield of 3.11%. InvestingPro analysis reveals strong cash flows that sufficiently cover interest payments, supporting the company’s dividend sustainability. Get access to the comprehensive Pro Research Report for deeper insights into Hiab’s financial strength and growth potential.

Executive Commentary

CEO Scott Phillips stated, "We began 2025 with a strong start through excellent execution," highlighting the company’s strategic initiatives and operational efficiency. CFO Mikko Puwalaqa emphasized the company’s commitment to continuous improvement, saying, "It’s a continuous work... we are looking at savings pipeline, new ideas."

Risks and Challenges

• Trade tensions and economic uncertainty in the U.S. could impact future order intake.
• The restructuring of Italian assembly operations poses short-term operational risks.
• Supply chain vulnerabilities, particularly with less than 10% Chinese component exposure, could affect production.
• Market saturation in certain segments may limit growth opportunities.
• Fluctuations in currency exchange rates could impact financial results.

Q&A

During the earnings call, analysts queried the challenges in the U.S. market and the impact of tariffs on operations. Executives addressed these concerns, outlining strategies to mitigate risks, such as local assembly and implementing surcharges. The discussion also covered the anticipated €20 million cost savings from restructuring efforts and the strategic divestment of the MacGregor segment, expected to yield a €220 million cash impact.

Full transcript - Hiab Oyj (HIAB) Q1 2025:

Akhi Vesikalie, Investor Relations, High App: Welcome to High App’s first standalone earnings call. In the first quarter, our profitability improved driven by strong execution in all divisions. My name is Akhi Vesikalie. I am from High App’s Investor Relations. The results will be presented in more detail by our CEO, Scott Phillips and the CFO, Mikko Puwalaqa.

First, Scott will go through the group level topics. Then Micke will dive deeper into the reporting segments, equipment and services, as well as financials and outlook. After Micke’s presentation, Scott will return to the stage for the key takeaways of the quarter. After the presentation, there will be a Q and A session. With that, over to you, Scott.

Scott Phillips, CEO, High App: Thank you, Aki. Good morning, everyone, from my side. In summarizing the quarter, I’d characterize it as Team Hyub delivered a strong start to the year. The team and our partner network continue to do a nice job of executing our strategic priorities around innovation, commercial and supply chain excellence and delivering our services and segment growth plans, all of which enabled Hyub to deliver strong results across all key KPIs. With the growing trade and geopolitical tensions, the level of market uncertainty is much greater versus the comparable period.

And consequently, our outlook for profitability remains unchanged for the year. And we’ll come back to that point later. So moving to group level topics. The end of the quarter marked the end of the formal program to restructure CargoTech into three separate companies due to the excellent work from our former group colleagues and many of our fellow Hyabers around the world. And as a consequence, we started the second quarter as a new member of the NASDAQ Helsinki.

With our focus on value creation first, customers next, we continue to be able to invest in differentiating capabilities to make our business operations and that of our customers safer. Our safety KPIs are on an all time best level, both for leading as well as lagging indicators. As our industrial injury frequency rate for the quarter was one point zero and we are on a level of two point three on a rolling twelve month basis. So great work by the team as this is a critical pillar of our people, culture and sustainability strategy. We continue to focus on outcome based innovations and one I would like to highlight is in our MultiLift brand as we progress towards a fully automated duty cycle creating a step change improvement in safety and productivity for our customers.

Now moving into the order intake picture. The demand story of the quarter was dominated by escalating trade tensions through the last two months of the quarter, which negatively impacted order intake in the Americas region, while all other regions increased versus the comparison period last year. As a consequence, order intake for the period remained or was roughly on a level of the last ten quarters, was EUR $378,000,000 versus EUR $386,000,000 for the same period last year. So as I mentioned, we’re roughly on the same level of average order intake since Q4 of twenty twenty two. Our rolling twelve months order intake remains on a level of EUR 1,500,000,000.0, and our order book now stands at EUR $6.00 1,000,000, which is 22% below the comparison quarter last year.

And in terms of segments, Defense Logistics were up versus comparable period, so we got nice tailwind there. And in constant currencies, order intake would have been approximately €375,000,000 so we benefited around 100 basis points from the currency translation. Now looking further into the geographic split of order intake, we saw a nice upward trend in Europe and the Asia Pacific regions, while The Americas was down due to the softening demand in The U. S. Europe, Middle East and Africa represented 54% of orders and was up €24,000,000 from 179,000,000 to $2.00 €3,000,000 or 13% compared to last year.

Americas, on the other hand, was down €37,000,000 from 182,000,000 to €145,000,000 or 20%. And APAC was up €5,000,000 from 25,000,000 to €30,000,000 or about 20%.

Johan Eliason, Analyst, Kepler Cheuvreux: Now moving into our sales. Our commercial and supply chain teams, together with our partners, continue to

Scott Phillips, CEO, High App: do excellent work in converting our inventory into revenues throughout the quarter. As a result, our revenues were down 1% in actual exchange rates from €415,000,000 to €411,000,000 and down 2% in constant exchange rates. Rolling twelve month sales ended Q1 at 1,644,000,000 so slightly below last year’s actual, so indicative of the normalization of our order book and the steadily increasing revenue curve of our services business, which increased in relative amount from 28% to 29% of sales. Now as we have a four to six month lead time in converting orders to sales, the geographic split of our revenues varied compared to the visualization you saw from the order intake. Therefore, EMEA was down $9,000,000 from $2.00 1,000,000 to $192,000,000 or 4%, while The Americas were up $11,000,000 from 184,000,000 to $195,000,000 or 6%.

And the Asia Pacific region was down from $29,000,000 to $24,000,000 or 18%. We were really pleased to see that the book to bill was positive in the quarter for both EMEA and the APAC regions And also pleased that our Echo portfolio sales were nicely up from 115,000,000 to $142,000,000 or 24% and constituted 35% of total sales versus 28% in the period last year. Now turning your attention to our earnings on the EUR $411,000,000 of sales. We continue to benefit from the implementation of our strategy actions biased towards profitable growth. As a consequence, our profitability has improved for the period for each of the past three years, so nicely moving from $53,000,000 in Q1 of twenty twenty three or 12.2% to $61,000,000 last year or 14.8%.

And then, of course, where we land on the quarter this year at €66,000,000 versus €61,000,000 last year or 7% increase, and that’s despite the slight reduction in revenues. And as Aki mentioned in his opening, the contribution comes from all divisions focusing on reducing material and conversion costs most notably. The improved profitability enabled a good development of our operative return on capital employed. And moreover, the team delivered excellent results in reducing our net working capital and combined with the improved profitability, enabled HYAB to deliver 170% cash conversion, which Mika will elaborate on further during his presentation. Now, as we know, there are many questions regarding the tariff and trade situation with The U.

S. We thought it would be helpful to provide you with a graphical representation of our supply design of products that we provide to our U. S.-based customers. So looking at the visualization left to right, where we are most exposed to the current trade situation is in our loader crane business as they are assembled and primarily sourced with suppliers based in Europe. Next,

Johan Eliason, Analyst, Kepler Cheuvreux: moving

Scott Phillips, CEO, High App: to the right, we have our truck mounted forklift offering with design and sourcing primarily in Europe with assembly of all U. S. Demand fully in place in The U. S. Next, we have our fully U.

S.-based businesses for both demountables and tail lift under the Golfab and Walthco brands, with some sourcing exposure from component suppliers in both China and Mexico. So we think that we’re extremely well positioned, geared to scale in The U. S. Market and are executing plans today as we’ve talked about for each of the past four or five years, in fact, to expand our exposure to our very important market in The Americas. Now wrapping up the Group section, we wanted to provide an update on how we are progressing towards our long term targets we shared last year.

So recapping what we shared earlier in the year during our Q4 earnings report, our growth over the cycle, return on capital employed and sustainability ambitions remain unchanged from what we communicated in our Capital Markets Day last year. Our operating profit, now that we have clarity on our starting point as a stand alone company, has been adjusted to 16%. Further, we targeted gearing on a long term basis to be below 50% and a dividend range of 30% to 50% of earnings per share. Therefore, Q1 this year, we believe we’re still on track to achieve our long term targets as a rolling ten year compounded annual growth rate is approximately 7%. Our last twelve months operating profit is 13.7% and the last twelve months operative return on capital employed is 29.6%.

So with that, I will turn it over to Miko to take you through the financials and then rejoin the stage later for a brief wrap up and Q and A. So thank you.

Mikko Puwalaqa, CFO, High App: Good morning also from my side as well. Next I will describe the quarter one performance of our two very freshly established reporting segments, Equipment and Services. And let’s start with the Equipment business first. As a reminder, our equipment segment consists of loader cranes, demountables, tail lifts and truck mounted forklift divisions. Equipment orders declined 6%.

The decline came from delivery equipment and in particular from The U. S. Market. Lifting equipment orders were flat during quarter one. During quarter one, most of our deliveries came from the 2024 order book.

Therefore, the lower order intake in The U. S. Was not visible yet in quarter one sales. The operational execution from all our equipment divisions was really good. Despite lower sales, as you can see, all equipment divisions improved their profitability.

This is thanks to the commercial and sourcing actions, which Scott referred already earlier. When looking back the past performance of equipment business, the profitability has been actually quite stable with this kind of quarterly sales of roughly €290,000,000 You’ll see the profitability dip in quarter four twenty twenty four. And as you remember, we booked 15,000,000 non recurring costs during that quarter. Most of that was related to the Italian operations restructuring, where we expect the benefits to materialize in the second half of this year. As you can see also from the right hand picture, the gross margin improvement has been the main driver for the equipment business strong quarter one profitability.

This improvement stems from the decisive commercial and sourcing actions what we have put in place already in 2024 and now harvesting the benefits from that. These are no kind of onetime actions, but really continuous improvement and really an integral part of our strategy execution. Then looking at services. Services orders grew actually very nicely 8% and this came from recurring services like spare parts and maintenance and to some extent also from installations. This growth is actually the result of our service strategy execution, for example, growing the number of connected units and service contracts.

Last year, we had roughly 48,000 connected units already and 20,000 service contracts, so really nice growth from 2023. Sales was on last year’s level. Basically the recurring services sales increased while we delivered during this quarter a bit less installations compared to last year. Services profitability has been very stable over the past quarters as you can see from the left hand picture and also quarter one was no different from the history. Sales volumes measured in constant currency were slightly down as we delivered a bit less installation services compared to last year.

Next, let’s have a look on the total High App financials. And these are High App’s financials excluding the Magre Corso continuing operations. As you saw from Scott’s presentation, the quarter one performance was very solid. As mentioned already in few instances earlier, commercial and sourcing activities are the main contributors to the 1.4% unit improvement in our gross profit margin during quarter one. This improvement has more than offset 1% sales decline as the graph on the right hand side shows.

When we look the lines below operating profit, first of all, our average interest on loans is fairly low. It’s 1.99% per annum and the company has also sizable cash position. So it’s quite natural that the interest expense has remained on a low level. Our tax rate was 28 during quarter one. High balance sheet continues to get even stronger.

If we look the balance sheet excluding MacReC or High App’s gearing was minus 12%. This gives some €630,000,000 headroom if we think our objective to keep the gearing below 50%. We repaid a €100,000,000 bond in January 2025. And as you can see from the right hand picture, we do not have any major debt maturities coming up anymore this year. There is still €150,000,000 bond and that will mature in 2026.

Like Scott mentioned already earlier, we had a really strong cash flow during quarter one. And just for the high up, the cash conversion was around 170%. Net working capital declined significantly. Our inventories declined by €15,000,000 And then we have been able to release also significantly money from other net working capital elements like VAT receivables from quarter four level. MacGregor is still included in our total reported cash flow, but as mentioned already earlier, most of the quarter one cash came from High Concerning our outlook, we maintain our outlook for the year 2025 I.

E. The continuing operations in practice, the standalone higher comparable operating profit is expected to be above 12%. We have defined this outlook in early twenty twenty five, already taking into account the potential uncertainties in The U. S. And also outside The U.

S. Arising from the recent trade tensions. And with that then I hand over the back the presentation to Scott to summarize the key takeaways. Thank you, Mikko.

Scott Phillips, CEO, High App: Let’s see if I can get the right one here. There we go. So as mentioned earlier, we began 2025 with a strong start through excellent execution from our entire team and our partner network, so we remain confident to reach our long term targets. Further, I believe we are exceptionally well positioned to deal with the market uncertainty with the resilience we have designed in our business in terms of how we operate through our decentralized organizational design, our asset light approach to make versus buy decisions, our people and culture focus from our people strategy, employee first, customers next in order to secure our ability to deliver superior customer experience and our portfolio management philosophy of prioritizing value creation before growth. With market uncertainty, we believe it is prudent to keep our outlook for the full year as we’ve shared previously.

And as Miko stated, as we communicated, that’s intended to be where we thought at a minimum level at 12% And we’ll provide more details on that as we progress through the year. So with that, I’ll hand it back over to you, Aki.

Akhi Vesikalie, Investor Relations, High App: Okay. Thank you, Scott, and thank you, Mikko. Operator, we are ready for the Q

Operator: The next question comes from Antti Kansanan from SEB. Please go ahead.

Antti Kansanan, Analyst, SEB: Hi guys, it’s Antti from SEB. A couple of questions from me. And if I’ll start with the demand and order side of things. So maybe a bit more color on the situation in The U. S.

How did you kind of see the customer activity and orders trending, let’s say, late into the quarter and sort of the second quarter? And maybe I wanted to better understand, when we look at kind of the comparison periods regarding order intake, is the Q1 twenty four a good representative for the other quarters of last year as well? What was the share of Americas, India total order intake? Just to get the potential pressure right on the group level estimates. Thank you.

Scott Phillips, CEO, High App: Shall I start or? Yes. Yes, sure. Morning, Antti. Thank you for the good question.

In terms of the demand picture, as we think about how did it develop through the quarter and then I think in particular in The Americas, the story is similar to actually what we were talking about prior to the current trade situation and that was around with the inflationary environment that had preceded this time and high interest rates, we experienced slower decision making. I’d say it’s a similar effect. As we progressed through the quarter, I’d say that as you would naturally expect, would have intensified moving from January into February through the March. So we did see a bit of a step down, if you will, driven by delayed decision making in The Americas. And then I think in terms of the percent contribution, if you compare to the comparable period last year from The Americas, I think that last year probably represented a pretty fair representation of what we saw throughout the year.

Antti Kansanan, Analyst, SEB: Okay. Maybe if I interpret it right, then you kind of enter into Q2 maybe a run rate which is a little bit slower than Q1 on average and the comparison figures are pretty much the same. I just wanted to get a maybe better clarity then on Europe. Is the sentiment there kind of accelerating? Or did you kind of see also the trade tensions maybe taking a little bit of the improvement away in late to the quarter?

Scott Phillips, CEO, High App: Yes. If we speak just about first quarter, the demand sentiments in Europe were obviously more positive than the prior year comparison period, both in terms of our leading indicators as we look at the entire opportunity funnel from our CRM as well as the absolute order intake. And then I’d say in particular on Defense Logistics. Having said that, I’d point out two additional segments. If you think about Waste and Recycling, we see a nice level of stability in our demand that’s enabled from that segment.

And then Construction, I would say, still remains on quite a slow level. So we’re anticipating that to pick up.

Tom Skogman, Analyst, Carnegie: All right. Then I would

Antti Kansanan, Analyst, SEB: also wanted to ask about the profitability that and I mean the Q1 EBIT margin is in line with your kind of 28 targets. Obviously, it’s only one quarter. But when I listen to you, seems like there’s nothing very extraordinary on the Q1 performance. So you target 16% with, I guess, a notably higher sales levels in 2018. The starting point is 16%.

You’re guiding for 12%. So just wanted to better understand what are kind of the negative impacts aside from volume that are potential for the coming quarters? And was the 16% now on Q1 a clean performance? Or was there something extraordinary, which is difficult to repeat, let’s say, term?

Mikko Puwalaqa, CFO, High App: Yeah. The quarter one was clean in that sense that like we said already earlier the decisive actions what we have taken in the past to improve the commercial activities to improve the or implement sourcing activities. Those past actions have been contributing now to the quarter one and continue to also contribute to the coming quarters. So like you elaborated already earlier, the volume is perhaps the main kind of negative headwind what we could see from the for example, from The U. S.

Slower order intake.

Antti Kansanan, Analyst, SEB: Is there a meaningful gross margin difference between equipment sales The U. S. Versus rest of the world?

Mikko Puwalaqa, CFO, High App: Basically, if there are some fluctuations between the markets, between the product categories, between the different route to market approaches. I would say perhaps that in The U. S. We have so far most of our revenues coming from the direct route to market which takes the gross margin perhaps a bit higher than in some other regions. So that might be the perhaps the bigger differentiator compared to some other markets when we look at The U.

S. Region.

Scott Phillips, CEO, High App: Yes. Just two additional points of color perhaps for Yonti. One being much more related, as Mikko said, to the channel strategy or the route to market. So a little difference whether it’s through a network partner or direct. The second piece is that our equipment tends to be configured slightly different depending upon the region, so it has a slight impact, but more to do with the combination of equipment configuration and then route to market.

Antti Kansanan, Analyst, SEB: All right. That’s very clear. And then the final one is just a housekeeping question about Kreger. Any updates on the potential timing of the deal and the impact on your cash or net debt?

Mikko Puwalaqa, CFO, High App: No changes in the cash and net debt like communicated already earlier. We anticipate €220,000,000 cash flow impact positive cash flow impact and the closing latest by July 1. We are working on the competition authority process that has been going on smoothly. But for example, the separation activities, IT separations and all that kind of activities have been mostly completed already now. So looking solid from the divestment point of view.

Operator: The next question comes from Ponu Leitenmarki from Danske Bank. I

Ponu Leitenmarki, Analyst, Danske Bank: have a few questions. Firstly, starting from the guidance. So I kind of understand that it’s a floor, but it’s still quite low compared to Q1 level. So I mean, what are you seeing going forward? And what would it require for you to kind of upgrade it?

How much visibility do you need to say it’s, let’s say, more than 13% instead of more than 12%?

Scott Phillips, CEO, High App: Yes. I can get started then. I’m getting the look from me, Karela. Let me start, Panu. Thanks for the excellent question.

And as we’ve stated before, we’ve got with our order book coverage roughly five point five months of visibility. So we have a good understanding of the margin potential of the open order book. The picture gets a bit more fuzzy once we get beyond the five, five point five month range. So at this point in time, what we’d like to see is yet another quarter of stability on the demand picture. And then it might make sense to make an adjustment to the outlook.

But given the level of uncertainty, think now after quarter one results, we’ll wait at least another quarter to see if that level of stability continues.

Ponu Leitenmarki, Analyst, Danske Bank: Okay. Thank you. Then on the tariffs, did I understand correctly that you aim to assemble more of your products in The U. S. So that you would produce most of that locally?

Scott Phillips, CEO, High App: Yes, that’s been a it’s been a long term plan on our part and we’ve been executing step by step on that plan as we’re currently configured much different than we were perhaps when we first met. And we continue to execute on that strategy, both in terms of assembling our own product, but then also enabling a greater portion of the products to be sourced in the region as well. It just makes sense long term in terms of the currency exposure.

Ponu Leitenmarki, Analyst, Danske Bank: Okay. Thanks. And finally, just so I understand it fully. So there is kind of geographical difference in markets and U. S.

Is probably high and then U. S. Volumes coming down, so that’s diluting. But what about kind of you said that direct sales has higher margin and you aim to expand in The U. S.

Through dealers. So is that kind of a, let’s say, structural headwind that’s something you’ve baked into your long term target?

Mikko Puwalaqa, CFO, High App: Yeah. This is something what we have taken into account when we have been setting the long term target that there can be a certain small dilutive impact from the route to market channel. But on the other hand then we have higher volumes and better leverage on the fixed costs. There are I mean 6070% of our revenues are coming from the dealer channel. So it’s really a very important channel for us and offers a good growth opportunities not only in The U.

S, but also in the other regions. So nothing what we would not like to execute in the future.

Ponu Leitenmarki, Analyst, Danske Bank: Can I still squeeze in a final one? How much was defense out of your orders in rough terms in Q1?

Mikko Puwalaqa, CFO, High App: We have had in the past, we have had defense representing roughly 6% of our revenues. So I would say that it has been on that kind of level. Okay.

Ponu Leitenmarki, Analyst, Danske Bank: Thank you.

Operator: The next question comes from Johan Eliason from Kepler Cheuvreux. Please go ahead.

Johan Eliason, Analyst, Kepler Cheuvreux: Hi, Scott, Nico and Aker. This is Johan at Kepler Cheuvreux. I appreciate your picture on the tariff situation, so we know where products are made and assembled for The U. S. Market.

But can you give some feel for I mean, is a relative game. Is there a for any of these categories that you are worse or better positioned than your competitors locally?

Scott Phillips, CEO, High App: Yes. Given the level of insight that we have on our competitors locally, where we have best visibility, Johan, would be in our tail of business, where we have a Walthco brand for The U. S. Americas market. And we’re situated similarly to our biggest competitor, if you will.

Both us have some exposure to tariffs through sourcing and at the same time, then both have complete manufacturing within the region. And then with the balance of the then of course, our Golfab brand as well on demountables, we’re similarly situated as the market leader, the number two player and then we’re probably number three. And then with the balance of the portfolio on the lifting solutions side, we’re probably similarly situated not knowing more details about how some of the competitors all of us are non U. S.-based companies providing knuckle boom solutions within The U. S.

Market.

Johan Eliason, Analyst, Kepler Cheuvreux: Good. The second question regarding this, how is the rough sales split between these categories in The U. S? Or does it differ significantly from your overall sales split?

Mikko Puwalaqa, CFO, High App: We have certain delivery equipment is perhaps more represented in The U. S. Compared to the other regions delivery equipment, meaning day lifts, truck mounted forklifts and the mountables products.

Johan Eliason, Analyst, Kepler Cheuvreux: Okay. Excellent. And then finally, just a question again for you, Micky, on MacGregor. So nothing changed there. You will receive SEK $220,000,000 at the latest of July 1, if I understand it.

But I also noticed the net cash position of MacGregor seems to be 144,000,000 So the delta when you receive the $220,000,000 is basically €76,000,000 in cash. Is that correct?

Mikko Puwalaqa, CFO, High App: That’s roughly right. Of course, MacGregor’s net cash balance lives depending on the for example advances and other net working capital elements. So depending on how advances for example are coming or being used now during the coming month or months, the net cash position may still change for Macrecor. But roughly $220,000,000 is still holding.

Johan Eliason, Analyst, Kepler Cheuvreux: Yes. But that basically means if the deal would have been concluded now at the March, the net cash received for you would be sort of SEK 76,000,000, which is way off the SEK $480,000,000 in EV you announced.

Mikko Puwalaqa, CFO, High App: Yes. Like we have said already earlier, the advances received are treated as debt in the calculation the sales price calculation. So that’s something what will fluctuate.

Johan Eliason, Analyst, Kepler Cheuvreux: Absolutely. Thank you very much.

Operator: The next question comes from Tom Skogman from Carnegie. Please go ahead.

Tom Skogman, Analyst, Carnegie: Yes. Hello, this is Tom from Carnegie. I wonder about the share of Chinese components in

Johan Eliason, Analyst, Kepler Cheuvreux: the product that you sell in The U. S. As a total?

Scott Phillips, CEO, High App: Yes. As a total, it’s actually quite small, Tom. From a percent basis of the bill of material, it’s not material. But of course, given the level of tariff, there’s some impact.

Tom Skogman, Analyst, Carnegie: So it’s less than 5% or what is it?

Scott Phillips, CEO, High App: Less than 10%. That’s less than 10% and just to redirect a little bit or provide a bit more color, there are two product lines then that would be impacted there. And that would be the Wallsco brand and the Golfab brand. So it’s not you can’t don’t do the math where you would back solve for the entire quantum of the cost of goods sold versus the revenues in The U. S.

But relative to just those two product lines.

Mikko Puwalaqa, CFO, High App: But it’s also good to note that as a response for the tariffs we have also introduced the surcharges, which are aiming at offsetting the tariff impacts not making us to earn more or less, but just offsetting the tariff impact depending on which country the component imports would be coming from.

Tom Skogman, Analyst, Carnegie: And this is where I’m heading of course, the pricing of this. How do you I mean, it is that you compensate for that, but there might also be surprising kind of calls from suppliers that actually we use a sub supplier that we have found out has sourced from China as an example, etcetera. I mean, do you deal with this, with getting new information all the time regarding supply prices and prices, you don’t get in a bad situation?

Scott Phillips, CEO, High App: Yes. I’d say with the work that we’ve done over the past several years on the responsible sourcing as well as on the overall category by category sourcing strategy, We’re actually in pretty good shape of having good visibility, Tom, to not only Tier one suppliers, but then Tier two and Tier three. I can’t say there isn’t a possibility of some surprise in the future, but we’ve got, at this point, pretty good visibility. I think more of the issue will be as the tariff picture changes than having the ability to adjust.

Tom Skogman, Analyst, Carnegie: So no surprising bad calls from suppliers so far that they

Scott Phillips, CEO, High App: yes.

Tom Skogman, Analyst, Carnegie: Yes. And then on just pricing generally, what do you see in the market? If demand is softening in The U. S, coming back a bit in Europe, your competitor has a lot of debt, etcetera, and it’s vertically integrated, what do you see in pricing at the moment?

Scott Phillips, CEO, High App: Yes. It’s the same environment that as we’ve talked about this topic before, it’s always competitive. We have extremely professional buyers, tough negotiators. And so therefore, it’s important that you sell on the value that you provide not only in the equipment solution, but then also the service solution. So that will always be a factor.

And then we’ve seen the competitive landscape also making price adjustments relative to the tariff picture as well. Some higher than what we’ve gone out with given our exposure, some slightly lower probably as a consequence of their exposure as well. To me, it appears as across the board, we’re all trying to find a way just to offset the impact.

Mikko Puwalaqa, CFO, High App: And then like mentioned already earlier, we do a lot of actions in the sourcing area, design to cost activities, collaboration with suppliers and like Scott said, the aim is to have a net positive impact on the prices. So it’s not only about the pricing, but also how we manage the cost of goods sold.

Tom Skogman, Analyst, Carnegie: Yes. And that’s my kind of last question about this savings in commercial and supply chain activities. Can you quantify what was reached in Q1 somehow out of it what you announced for the savings in Q4? And what the savings will be in the coming quarters and in full year 2025 as well?

Mikko Puwalaqa, CFO, High App: Yes. If we separate two elements, one is the restructuring program which we initiated last year. We booked that €15,000,000 1 off costs to that related to that and majority of those savings are related to our Italian assembly operations restructuring. And like I said, those will be mostly visible in the second half of this year. And then if we think this kind of commercial and sourcing related activities, actually you can see quite well in our gross profit margin 1.4% units better with quite similar volumes compared to last year.

So that’s the contribution from those actions.

Tom Skogman, Analyst, Carnegie: But the question is how is this in coming quarters? Have you already reached kind of the full potential from these sourcing savings? Or will be better for each quarter or how is it?

Mikko Puwalaqa, CFO, High App: I guess it’s a kind of continuous work. It’s not something what starts and what ends, but every year on rolling basis we are looking savings pipeline, new ideas how we can optimize the component base. So it’s a component cost base. So it’s a kind of continuous work.

Scott Phillips, CEO, High App: Yes. I can’t give you an exact figure, but also bear in mind, most of our direct sourcing is as a contract pricing. So there’s not typically a month to month fluctuation. We did see some of that early COVID period. But we generally speaking have rolling contract pricing for a good majority of our direct sourcing.

But as Mikko said, we are constantly having workshops with our supplier partners working through design for manufacturability, design for cost opportunities. And those are being executed quite nicely.

Tom Skogman, Analyst, Carnegie: And then building a bridge for these effort savings in H2 this year and for 2026, can you give an update on that?

Mikko Puwalaqa, CFO, High App: Basically the assembly operations consolidation has progressed well. We have been moving most of the assembly operations to our main Italian site in Bologna. Bologna and as said, we anticipate that benefits start to then become visible in the second half of this year.

Tom Skogman, Analyst, Carnegie: But the money you save?

Mikko Puwalaqa, CFO, High App: We have said basically overall from the last year’s restructuring, we are anticipating €20,000,000 cost savings this year and that’s holding. Not all will be visible in the SG and A costs. There are quite a lot savings happening above the gross profit and part of that is also visible in this 1.4% year on year improvement already.

Tom Skogman, Analyst, Carnegie: So the savings are €20,000,000 on a rolling basis by the end of this year, but the P and L savings are €10,000,000 this year and another €10,000,000 next year. Is that how we should read it?

Mikko Puwalaqa, CFO, High App: Most of basically most of the savings should most of the €20,000,000 savings should be in 2025 P and L.

Antti Kansanan, Analyst, SEB: Okay. Thank you.

Operator: There are no more questions at this time. So I hand the conference back to the speakers.

Akhi Vesikalie, Investor Relations, High App: Thank you for the great questions and for the great answers and presentations, Mikko and Scott. So just a reminder, we have a site visit coming up September 18. So you can register through the link on this presentation or through our website. We will publish our second quarter results on July 23. So stay tuned and thank you.

Scott Phillips, CEO, High App: Thank you. Thank you.

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