Street Calls of the Week
Instalco’s Q3 2025 earnings call revealed a slight decline in net sales to 3 billion SEK, down 3.7% year-over-year, continuing the trend seen in its trailing twelve-month revenue decline of 4%. Despite this, the company maintained its EBITDA margin at 6% and reported a 12% increase in cash flow from operations. The company’s stock dropped 6.34% pre-market, reflecting investor concerns over missed revenue forecasts and market conditions. InvestingPro analysis shows the company maintains impressive gross profit margins of 53%, significantly above industry averages.
Key Takeaways
- Net sales declined by 3.7% YoY to 3 billion SEK.
- EBITDA margin remained flat at 6%.
- Cash flow from operations increased by 12%.
- Stock price fell 6.34% pre-market.
Company Performance
Instalco’s Q3 performance highlighted challenges in maintaining sales growth amid a fragmented market and regional price pressures. The company reported a 3.3% organic decline, yet it managed to keep its EBITDA margin stable at 6%. The order backlog stands at 9 billion SEK, with a book-to-bill ratio of approximately 70%, indicating a cautious approach to new orders.
Financial Highlights
- Revenue: 3 billion SEK (down 3.7% YoY)
- EBITDA: 180 million SEK (flat YoY)
- EBITDA Margin: 6%
- Cash Flow from Operations: 133 million SEK (up 12%)
Market Reaction
Instalco’s stock fell 6.34% pre-market, closing at 24.82 SEK, as investors reacted to the revenue miss and cautious market outlook. The stock is trading closer to its 52-week low of 22.72 SEK, reflecting broader market concerns and sector-specific challenges. According to InvestingPro Fair Value analysis, the stock appears undervalued at current levels, with additional ProTips highlighting the company’s 7-year consecutive dividend growth streak. For deeper insights into undervalued opportunities, explore the Most Undervalued Stocks list on InvestingPro.
Outlook & Guidance
Looking ahead, Instalco focuses on improving its EBITDA margin to 8% while prioritizing profitability over volume growth. With current EV/EBITDA of 13.3x and a P/E ratio of 24.5x, the company trades at moderate multiples relative to peers. The company expects market stabilization in 2026, driven by operational excellence and strategic initiatives like Instalco 2.0 and the expansion of the Fabri platform in Germany. Get comprehensive valuation metrics and access to detailed Pro Research Reports covering 1,400+ stocks, including Instalco, with an InvestingPro subscription.
Executive Commentary
CEO Per Sjöstrand emphasized, "Margin, margin, margin," highlighting the company’s focus on profitability. CFO Christina Kassberg added, "We are prioritizing margins over volume," indicating a strategic shift towards sustainable growth. Sjöstrand also noted, "Our entrepreneurial spirit remains the core of Instalco AB," underscoring the company’s commitment to innovation and adaptability.
Risks and Challenges
- Continued regional price pressures could impact profitability.
- Fragmented market conditions may hinder sales growth.
- Dependence on major metropolitan areas for market recovery.
- Potential delays in market stabilization until 2026.
- Execution risks associated with strategic initiatives like Instalco 2.0.
Q&A
During the earnings call, analysts questioned Instalco’s capacity expansion plans and the impact of market fragmentation on future growth. The company confirmed a cautious approach to expansion and reiterated its commitment to the Fabri ownership agreement, focusing on internal efficiencies and market recovery potential.
Full transcript - Instalco Intressenter AB (INSTAL) Q3 2025:
Conference Operator: Welcome to the Instalco Q3 Presentation 2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing #KEY-5 on their telephone keypad. Now, I will hand the conference over to the speakers. Please go ahead.
Per Sjöstrand, CEO, Instalco: Hi everyone, and welcome to this presentation of Instalco’s report for the third quarter of 2025. My name is Per Sjöstrand, CEO at Instalco, and with me today is also our CFO, Christina Kassberg. In fact, this is my first time fully presenting a quarterly report since 2021, and I’m glad to be back. As usual, let’s start with a brief overview of our Instalco today. Instalco is one of the leading installation groups in Sweden, Norway, and Finland, and also with a presence in Germany. Our decentralized model is a core strength, empowering our more than 150 local companies to act independently while benefiting from strong governance and shared tools. With more than 6,000 employees across the group, we support the green transition every day. The demand for our services continues to be underpinned by powerful long-term market trends. Please switch slides.
First, for a quick glance at our LTM numbers: net sales amounted to SEK 13.4 billion, and we ended the quarter with a backlog of SEK 9 billion, which represents a steady book-to-bill of close to 70%. That’s exactly where I want to be. Our order backlog, as I mentioned, is about 70% of our revenue, and I think that’s very good. The reason why I think so is that you should not be, so to speak, fully booked when there are early signs of a market return. When adjusting for one-off costs taken in the past three quarters, our EBITDA amounts to SEK 863 million, corresponding to a margin of 6.4%. As you might know, we are aiming for an 8% margin, and we are driving the business in that direction. In Q3, service remained strong and accounted for 37% of our net sales.
The strong cash flow in Q3 kept our LTM cash flow from operations above SEK 1 billion, even despite the decrease in earnings, showcasing our strong focus on improving working capital. With the next slide, please. Moving on to a quick summary from the third quarter. In summary, we are reporting numbers below last year’s. On the positive side, we report strong operational cash flow, and order intake is stable despite our cautious approach. To speak frankly, it’s not good enough. Internally, I have been very clear that I have three priorities right now, and that is margin, margin, and margin. Margin is, as you know, the basis for high cash flow, low net debt EBITDA, but it’s also a good sign of high quality, efficiency, stability, and last but not least, it gives pride among our team members.
Margin improvement is our highest priority, as I said, in the short term as well as in the long term. In the quarter, we also introduced a new country-based organization, and we are working on an updated operational model. I will come back to that, by which we are creating a clear management structure, governance, and follow-up. As I said, this I will come back to later in the presentation. For now, I will hand over to Christina Kassberg, who will take you through our financial development in more detail.
Christina Kassberg, CFO, Instalco: Thank you, Per. Let’s start off with looking at how our net sales and order backlog have developed during Q3. Net sales were down by 3.7% to SEK 3 billion, with an organic decline of 3.3%. Organic growth was down in both reporting segments, but more in Sweden. Currency had a negative impact of 1%, primarily due to the weakening of the Norwegian krona and the euro. On the other hand, our order backlog grew by 6.4% organically, with the biggest contribution coming from the rest of the Nordics segment. There, primarily Norway, with several, for us, larger projects coming in. Several of these are planned to run for years. The market is fragmented and still characterized by clear regional differences. Activity increased somewhat during the quarter, particularly in metropolitan areas.
This is important as these regions tend to be the engines for demand in the other areas of the countries. Price pressure remains in several segments, but the increased supply of projects provides better opportunities for selection and a focus on profitability. In addition to the backlog, we have our service business, which remains an important stabilizing factor. In our service business, we saw growth of 2% in absolute numbers in the quarter. This resulted in service making up 37% of sales. Onto our earnings, EBITDA in both millions and margin. Q3 tends to be seasonally weak due to the summer holiday period, and this was the case also this year. We saw a weak July and August, but a stronger September. In total, EBITDA amounted to SEK 180 million, corresponding to a flat margin of 6%. No one-offs were taken in the quarter.
The earnings were up in the segment rest of Nordics, but down in Sweden. In the former, we saw increasing sales and results in Finland, primarily due to the projects for industrial clients. Norway, however, reported somewhat lower sales, but a strengthening margin. In Sweden, we saw improvements from low levels in areas such as, for example, west, south, and Stockholm, but a decrease in the middle of Sweden and the industrial discipline. As Per has made very clear, we are not satisfied with this margin level, and getting our margin back up is a key priority for the entire Instalco group at the moment. To break it down into more detail, over to a slide that summarizes segment Sweden in Q3. Overall, net sales were down somewhat to SEK 2.1 billion, with an organic development of minus 5.7%. The order backlog was down by 2% to SEK 6.3 billion.
The EBITDA margin amounted to 5.1% compared to 5.5% last year. The Swedish market shows early signs of recovery, especially in major cities with several large projects starting up. Technical consulting is strengthening, with more automation and digitalization projects emerging. Conditions remain weak in parts of central and northern Sweden, with low pricing and some overcapacity. Industrial activity is mixed. Power and defense projects are stable, with larger investments remaining delayed. Now, for a summary of the rest of the Nordics segment. Overall, net sales were down slightly to SEK 968 million, with an organic decrease of 2.2%. Acquisitions contributed with a growth of 0.1%. The EBITDA margin amounted to 7.7% compared to 6.9% last year. The segment showed very strong development of the order backlog, which increased by 29.9%. As I mentioned a few slides ago, this was primarily driven by Norway.
We saw some, for us, larger orders come in. In Norway, the market has stabilized with early signs of recovery, especially in Oslo and the south. Public investments continue to drive demand, while housing shows cautious improvement ahead of next year. In Finland, activity remains weak, but is stabilizing slightly in Helsinki, with energy and defense projects expected to support demand over the medium term. As announced end of August, this segment will be split up in our external reporting starting from January 1, 2026. Next, onto the cash generation in the quarter. In Q3, cash flow from operations increased by 12% and amounted to SEK 133 million, despite the lower earnings. Almost all components of working capital improved in Q3 compared to the same quarter last year, primarily driven by accounts receivables and contract assets.
Further down the cash flow analysis, we find the major expected outflows during the quarter: SEK 160 million in payments related to buyback of minority shares in a few subsidiaries, in line with previously agreed option structures, and SEK 67 million in payment related to Fabri, which is a performance-related payment fulfilled for step one, where we acquired 24%. Once again, we are showing that disciplined execution pays off. The strong operational cash flow in the quarter reflects our continued focus on efficiency and working capital management. Next, let’s go over to our performance on a rolling 12-month basis in relation to our financial targets. Our targets are defined over a business cycle, and in the current market, we continue to prioritize profitability and disciplined project selection over pure volume growth. The adjusted EBITDA margin came in at 6.4%. It remains below our long-term ambition.
We are not satisfied and are taking actions. Operational cash flow was again strong, with a conversion rate of 112%, supported by ongoing improvements in working capital efficiency. Our leverage remains above our own long-term target of 2.5 times net debt to EBITDA, as expected following the payments in the quarter and typical seasonality fluctuations. The new credit facility agreed last quarter demonstrates continued confidence from our banking partners and secures long-term financial flexibility. Of course, we remain firmly focused on delivering on our climate commitments as part of our long-term targets. By that, I’ll hand over to you, Per, again.
Per Sjöstrand, CEO, Instalco: Okay, thank you, Christina, and special thanks for your hard work with the cash management. Very well, I’m very satisfied with that. Going over to our subsidiary in Germany, Fabri. The momentum in Germany remains strong. Fabri has now reached 20 companies, adding three new members to the group since our last report. Each of them fits the model perfectly: entrepreneur-driven, technically skilled, regionally anchored. Together, they contribute close to €19 million in annual sales and expand both Fabri’s technical scope and geographic footprint. It is another clear sign that our platform strategy in Germany is working and that the market continues to offer compelling opportunities for profitable growth. Please, next slide, and we go on to the quarter’s CEO theme. Instalco 2.0 is our vision of the next Instalco.
It’s about taking what has made us strong and refining it, sharpening how we work, how we lead, and how we deliver results. This is not a single change but a broader concept that ties together everything we are doing to take Instalco to the next level. We are building on our strength, but with an updated approach, a clearer structure, and higher ambition. Let’s move to slide number 13. In recent years, performance has not fully met our ambitions, and we are taking decisive actions to accelerate the business and realize our full potential. Since Instalco was founded, we built a reputation as the best-in-class company with strong operational discipline, translating into solid margins. Of course, the macroeconomic environment has been challenging, but our ambition to be the best in class goes beyond external comparison. It is about continuously raising the bar for ourselves.
Our goal is to become a world-class company in operational excellence, driving ongoing improvements at every level of the organization. By delivering on this, we will increase margins, strengthen our balance sheet, and ensure sustainable, profitable long-term growth. I think we can move over to the next slide. Since I rejoined the company in an operational role in August, we have worked with focus and urgency to define the next phase of our journey. When I commented the Q2 report, I showed you this slide, and it remains just as valid today. Our operational priorities are clear, firmly addressing underperforming business units, increasing operational efficiency, and strengthening our organizational capabilities. We are in the process of launching a target program designed to sharpen execution and accelerate progress toward our strategic goals. I will now outline some of the key initiatives underway.
To address underperforming companies, we are introducing a new framework designed to provide more tailored support for our businesses. We evaluate each company both financially and operationally, taking a hands-on approach that is mindful of their specific needs and maturity. We are also establishing an operational baseline in key areas such as costing and pricing, ensuring robust processes while preserving local flexibility. This is not about central control, it’s about reinforcing our decentralized model by setting clear standards that enable consistent high performance across the group. The goal is to reduce person dependence and create a shared language around performance and excellence. The framework applies to all Instalco companies, while allowing each to leverage its entrepreneurial strengths and local context. The strongest units may see little day-to-day change, but all will benefit from shared tools, benchmarks, and insights.
Over time, this will form a true goldmine of best practice, our Instalco toolbox, enabling every company within the group to learn, grow, and perform at its best. I say the culture will sooner or later become a so-called change management culture, meaning that the company will stay solid and firm through all kinds of market outlooks. Okay, operational efficiency. A business model defines what we do and why, how we create value and make money. For Instalco, this is clear and established. Our operational model, on the other hand, is about how the processes, structures, and capabilities we use to deliver that value every day. Every company has an operational model, consciously or not.
What’s new is that we are now taking a step back to review and define ours, to see where it may need to evolve and to ensure we share a common understanding of how we do things across the group. Our value creation is ultimately done in each subsidiary, but it’s through Instalco’s operational model that we control the company’s model, which is why we must start there. There are some clear guidelines for us in this work. We will protect the entrepreneurial drive and local ownership that defines us, but also make sure roles and responsibilities are crystal clear. Efficiency and financial performance come first, and our way of working must be adaptable, clear, and easy to apply across all markets. We have identified four boxes, which are all up for review.
When it comes to developing the company’s portfolio, we are moving towards only doing acquisitions that create business value where one plus one is greater than two. How we strengthen and develop our existing companies to their full potential is where we spend most of our time and resources at the moment. From the 1st of September, a new country-based organization is in place. We now have three main countries: Sweden, Norway, and Finland, alongside our fourth unit, tech and consulting. The change gives us a clear structure and shorter decision path. It strengthens local collaboration and allows us to be more hands-on in following up on operations. Each country has a Country Manager with overall responsibility, supported by a CEO who drives operational excellence and supports the subsidiaries in improving performance.
I think this setup keeps the strength of our decentralized model while giving us better control and alignment where it matters. It also gives our companies more opportunities to share experience and best practice within each country. From the start of next year, our external reporting will also follow this new structure. In short, the country-based organization is a key step in making Instalco AB more focused, more coordinated, and better equipped for profitable growth going forward. To wrap up, this is a slide also from Q2, but still relevant and worth reminding of. Our entrepreneurial spirit remains the core of Instalco AB, and as you can see from the guideline from our work on one of our previous slides, we are not abandoning the decentralization that is a hallmark of Instalco AB. With that, let’s return to Q3 and look at the key takeaways.
We can clearly see a seasonal pattern or an ongoing market pressure in the numbers, but also that activity has picked up, especially towards the end of the quarter. Our absolutely top priority, as I have mentioned several times now, remains margin. That’s where all our focus is right now, closely followed by continued discipline in working capital management. Cash flow, once again, was strong, supported by solid operational performance and active working capital measures. Our service business and backlog keep growing, providing a good stability. In Germany, our platform Fabri continues to expand and now includes 20 local companies, a great example of the momentum we are seeing there. Finally, we are entering the next phase of our journey with a new country-based organization and a refined operational model that will strengthen execution across the group.
With that, I would like to thank you for joining in on this call and now open up for your questions.
Conference Operator: If you wish to ask a question, please dial #KEY-5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #KEY-6 on your telephone keypad.
We do have some written questions we could start off with. The first one would be, has the seasonal pattern in Q3 been more or less noticeable than in previous years?
Per Sjöstrand, CEO, Instalco: I don’t know. I wasn’t so close to business last year, but what you say, Christina Kassberg, is that maybe so?
Christina Kassberg, CFO, Instalco: I would say that the seasonal pattern this Q3 is very similar to Q3 previous year. Q3 is weak given the summer vacation period, and that was the fact also this year. July and August were especially weak, but a stronger September.
Per Sjöstrand, CEO, Instalco: September was very strong.
Thank you. Another question. Your competitor, Bravida, is much more cautious in market outlook compared to Instalco. Where you are commenting improvement, they are more cautious. Is it due to different exposure of the companies?
I will say yes, yes, yes on that question because I think they are more into, you know, infrastructure maybe, but also maybe larger major projects than we are. We have also a 37% now in, as I mentioned, the backlog or a backlog or a book for 70%. We can add to that also service, of course, and I think they have a little different mix. Maybe they are a little bit more cautious about the market or the market outlook.
Thank you. We have more written questions. Are you planning to increase capacity in order to meet the market turnaround?
Increase capacity, I don’t know. We are very cautious with overhead costs, I will say. I think also we have been building up this tech side with Intech. Maybe you can call it that, some kind of, but it’s a company-by-company decision, I will say, or country by country. I think we are not addressing it from the headquarter in some way.
We have a final written question. Fabri seems to develop well as far as we can see. Are you confident in following your previously announced plan regarding ownership in Fabri? You state over time in your Q3 comments.
Absolutely, 100%. We have an agreement, and we will follow that agreement. That’s in our, absolutely. We see a strong momentum, as I mentioned, in Germany, and I think that’s a very good investment.
I believe we have questions on the call.
Conference Operator: The next question comes from Thomas Blixted from Pareto Securities. Please go ahead.
Thomas Blixted, Analyst, Pareto Securities: Yes, thank you, and good morning. I was just wondering on sort of the margin and growth strategy here going forward. There was some deterioration when it comes to organic growth, but also we see some positive signs and a stabilizing margin profile. I was wondering, considering the outlook, what’s your view on deteriorating organic growth going forward versus margin improvement expectations? Thank you.
Per Sjöstrand, CEO, Instalco: I can start if you want to add something then, Christina, but we are, as I mentioned several times, we are focusing fully on margin improvements. Organic growth, you can always have organic growth if you lower your price, but I don’t want our staff out there lowering their price on projects. We are focusing on margin, and that is our main focus. Of course, it takes some time. With that said, maybe the organic growth is not in some kind of focus areas for us now. More focus on margin development, operational excellence, and everything else that I have talked about. I don’t know if you want to add something.
Christina Kassberg, CFO, Instalco: I can only add what you already said. We are still prioritizing margins over volume, and the real organic growth will most probably come back as the market improves. We are prioritizing the margin level in our strategy.
Thomas Blixted, Analyst, Pareto Securities: Yeah, perfect, thank you. Just a quick follow-up in terms of the strategy towards the margin target or long term. How much do you think, I know it’s difficult to quantify, but how much do you think you can gain from just internal improvements, and how much are you dependent on then volumes returning back to sort of get some proper margin expansion here?
Per Sjöstrand, CEO, Instalco: That’s a good question and a million-dollar question, I would say as well. I think it’s important to see it like, you know, of course, we will focus on margin with a more efficient way of working, operational excellence, as I mentioned. Maybe this is the new normal market, not as low as this, but I think coming back to 2015 or something when we had a really, really bull market, I’m not so sure about that, that we will do that. What we are doing, we are trying to see this as a new normal market and develop our margins and companies and everything else due to that fact. Of course, we will, and I think the market will recover in 2026, maybe Q2 or something, and that will gain us, but we are not sharpening up our capacity, our abilities, our skills, and so on to meet that.
It’s a mix. I can’t say what is how much it is, but I think that improving margin is a mix between, of course, what we are doing, but also if we can, I mean, strengthen up our ability and everything else now, when the market comes back, we have a double-sized possibility, I would say, to grow and also to increase margins. It’s so dependent on each other, but we have to think this is the way, this is the new normal situation right now. What can we do? What do we have to change in our company to reach full potential and come back to 8% plus margin?
Thomas Blixted, Analyst, Pareto Securities: Thank you, it’s very good. That’s all for me. Congratulations and good luck going forward.
We do have some more new written questions. The first seems to be in line with the previous one. Do you have a timeline for this new focus on margins?
Per Sjöstrand, CEO, Instalco: I start right now, but the timeline goes forever. Hopefully, as I mentioned also, we can reach a culture in the company with what I call change management, that we always, always will improve, thinking about what can we do better. That’s the culture, and the culture will slowly change, hopefully, and that takes a rather long time to reach your full potential, but I think it starts now.
Another question regarding how you see margins near term. It says, in my opinion, the Q3 margin is weak, especially in Sweden, given the comparable from last year. In Q4, do you believe it’s possible to improve the margin year over year for the group?
It’s always possible, but I can’t promise anything. It’s always possible, and we are working very, very hard with it on a daily basis and full focus. If that gives a result in quarter four, okay, fine, but it’s a long-term work and incentive for us to work with this.
A question that says, I believe this refers to the earnouts. The $10 million revaluation, does it impact Sweden or rest of Nordics?
Christina Kassberg, CFO, Instalco: I can comment on that. The $10 million in revaluation, the same level as previous quarter, so Q3 compared to Q3, the same level. It’s a mix. We have made acquisitions in all countries in both segments, so it’s actually a mix. We don’t split it into details.
The final written question we have at the moment is how much cash is expected to go out in Q4 for earnouts and minorities?
We don’t comment on that specific number, we continue our focus on strong operational efficiency when it comes to cash management. As we look at it, we don’t have any numbers there to calculate on and give flavor on that will give effect in Q4.
Conference Operator: There are no more questions at this time. I hand the conference back to the speakers for closing comments.
Per Sjöstrand, CEO, Instalco: Okay, thank you very much, everyone, and looking forward to the next quarter four report. Thank you.
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