Earnings call transcript: Volati Q2 2025 sees revenue miss, stock dips 3.36%

Volati AB reported its financial results for the second quarter of 2025, revealing a 6% increase in net sales to 2.3 billion SEK, maintaining its consistent revenue growth trajectory with a 5-year CAGR of 6%. Despite this growth, the company missed its revenue forecast of 2.43 billion SEK. The market reacted with Volati’s stock dropping 3.36% in pre-market trading, reflecting investor concerns over the revenue shortfall and broader market conditions. According to InvestingPro analysis, the company currently trades near its Fair Value, with 8 key insights available to subscribers, including data on dividend consistency and profitability metrics.

Key Takeaways

• Net sales rose 6% to 2.3 billion SEK, but below the forecast.
• Stock fell 3.36% following the earnings announcement.
• First half of 2025 showed a 10% sales increase and 13% EBITDA growth.
• The company maintains strong cash flow and acquisition pace.

Company Performance

Volati demonstrated resilience in the second quarter of 2025, achieving a 6% increase in net sales despite a temporary market slowdown. The company’s strategic acquisitions, including the recent purchase of Hans Eggstrand, contributed to its growth. However, the revenue miss against the forecast highlighted challenges in meeting market expectations.

Financial Highlights

• Revenue: 2.3 billion SEK, up 6% year-over-year.
• EBITDA: In line with the previous year.
• Operating cash flow: Increased by 27% compared to last year.
• Net debt to EBITDA ratio: 3.0, within the target range.

Market Reaction

Volati’s stock price declined by 3.8 SEK, or 3.36%, to 109.2 SEK following the earnings release. This drop places the stock closer to its 52-week low, reflecting investor unease about the revenue miss and restructuring costs.

Outlook & Guidance

Looking ahead, Volati anticipates accelerated organic growth once market conditions recover. The company remains optimistic about its acquisition strategy and expects strong cash flow in the second half of the year. Future guidance indicates potential for further acquisitions and deleveraging if necessary.

Executive Commentary

CEO Andreas Stienbeck expressed confidence in the company’s preparedness for market recovery, stating, "Once the market returns, it’s gonna be a real fun journey for us." He emphasized Volati’s structural readiness and the expectation of rapid growth once conditions stabilize.

Risks and Challenges

• Continued market slowdown could impact sales growth.
• Restructuring costs may affect short-term profitability.
• Competitive pressures in the industry segment remain challenging.
• Macro-economic uncertainties could influence market recovery timing.

Q&A

During the earnings call, analysts inquired about the market slowdown in the Salix Group and challenging conditions in the Tonum market. The company provided insights on the Lund Manning project delivery and clarified the margin profile in the Ethiketo Group.

Full transcript - Volati (VOLO) Q2 2025:

Moderator, Volati: Good morning, everyone, and welcome to today’s presentation with Volati. With us presenting today, we have the CEO, Andreas Stienbeck and CFO, Martin Aronson presenting today. We’ll open up for a q and a after the presentation. And if you’re calling in or like to ask a question, please press star nine to raise your hand and star six to mute yourself when you get the word. You can also use a formal look into the right.

And with that said, please go ahead with your presentation.

Andreas Stienbeck, CEO, Volati: Thank you. And, also, thank you everyone for listening in today. Let’s get into the presentation. We’ll start with let’s see. Just a sec.

Here we are. So, yeah, so let’s start with the presentation. So looking at this slide, sales increased by 6% in the quarter to 2,300,000,000.0 sikh. It’s we do see a trend shift, a slight trend shift in the quarter with organic sales growth of minus 1%. And the graph on the right, we’ve showed you the last couple of quarters.

We did see trend shift late last year with organic growth. However, we’ve had a slight setback with regards to that in this quarter. It’s driven by a slowdown in organic growth in SOLIX, but we do still show positive numbers even though low in SOLIX. So the main reason for the negative number is some of the platforms within the in within the business area industry. However, I want to point out that we do see a a totally other market environment now compared to a year ago.

If you look at this slide, you know, we have had minus 15 and minus 11% in q one and q two twenty twenty four. So, yes, it was a slight slowdown in the first quarter this year second quarter this year, but still, it’s the market demand is significantly better and improved. EBITDA came in in last with the last year. And two of the business areas, SOLIX and Etihadu, they’re showing a strong growth, 20, around 20% EBITDA growth, While the reason for us just meeting last year is the industry, and it’s two platforms within the industry that are lagging. It’s Corvanta, and it’s simply tough comparables for them.

They had a really good last year while we still see a challenging market in Tulum. And they’re also meeting somewhat tougher comparables compared to to last year in the second quarter twenty twenty four was decent and good for them. If you take a step back or if we take a step back, I think the first half of the year or 2025 is still okay. We had a sales increase of 10%. We do see an organic growth in the first half of the year, and EBITDA growth is 13%.

So so close to our financial target. I want to talk a bit about the structural measures that we’ve done and and that we’re now really seeing effect of what we’ve done the last couple of years. So we can see that in platforms such as Solix and ClearX and Communication where we have stronger margins even when we see low or negative organic growth. And for me, that’s a strength proof of strength that we really also now see in the numbers that we’ve had good actions in in the platforms. We’ve had some additional structure improvements in in the quarter, and we’d had, because of that, negative extraordinary costs of roughly $667,000,000 crowns.

And what does this mean? This means that we see good opportunity for further margin improvements and especially once we see the organic growth coming back. I think that will be accelerated. Also, when we came into the last year’s more challenging market environment, we had a very or have had a a low net debt to EBITDA. I think we’re also even slightly below our financial target with regards to that, and that has enabled us to continue making acquisitions.

And that has, of course, then lead to increased debt levers. In the last quarter, Solix did the acquisition of House Eggstrand. But if we look into the last twelve months, we’ve now acquired a little more than 750,000,000 of annual sales. That puts us in a net debt to EBITDA position of three point zero. So that’s within our targets, and it’s very much expected because of the cash flow profiles that we have over the year and the acquisition that we we did in in q two.

So and also during the second half of the year, that’s where we have our strong cash flow. Historically, we’ve showed that every year. So that provides a solid basis for continue doing acquisitions. That’s gonna give us acquisition room also for the rest of the year. And if we find the need to to deleverage, we also have the possibility to that.

So basically, what this means with the strong margins that we see and the structural measures that we’ve taken and the accelerated organic growth that we expect once the market returns, that means we will also gradually be able to reduce the net debt net debt going forward and still maintain a very good acquisition pace. So looking a bit into the numbers, net sales up 6%, as I already said. EBITDA in line with last year, and that do then include some EU cost linked to structural measures. Operating cash flow, strong in the quarter, 2027% up compared to the same quarter last year, and net debt at three point zero as I already mentioned. Taking a step back and looking at the the annualized numbers, we’re now at the $8.28200000000.0 Swedish crowns in net sales, a 700 billions of EBITDA.

And as said, that implies a 10% net sales growth at first half of the year and a 13% EBITDA growth at first half of the year. Also, looking at the the long term profile, we’re still, you know, ahead of our financial goals. That means basically means that we’ve doubled the last five years. However, as everyone can see on this slide, the growth pace went down from 2021 going forward, and that has created a growth gap, meaning meaning that we do see that we will close that growth gap once the market returns. With that, I leave the word to Martin.

Martin Aronson, CFO, Volati: Thank you, Andreas. So let’s look at our performance in relation to our targets, and let’s start with the EBITDA growth per ordinary share during the last twelve months, which is now at 6%, which is an improvement from the last quarter, so quarter one. However, this is still below our financial target, but it’s worth noting that our target is over business cycles, and our five year average growth, EBITDA growth per ordinary share is 15%. So moving over to our second financial target, our return on adjusted equity, which came in at roughly 17% versus our financial target of 20%. So it’s below our financial targets, but it’s driven by a lower EBITDA growth.

However, during the past five years, we have delivered on average 33% return on adjusted equity. And our last financial target is our capital structure where our net debt to EBITDA ratio came in at three point zero, which is within our within the range of our financial target ratio of between two and three times. And we now also put half year one behind us, which is seasonally the low lowest regarding cash flow for Vollati. And we now have quarter three and quarter four in front of us where Vollati normally generate a strong cash flow. And this, as Andreas mentioned, gives us the potential to do further acquisitions and also a potential to deleverage if if need be.

So let’s also talk a bit about our business areas, and let’s start with the Salix Group. And Salix Group saw a total net sales growth of roughly 10%, which mainly came through acquisitions, but also through organic growth. EBITDA increased with 20% compared to last year, and the margin increased with roughly one percentage point in the quarter. And this is really showcasing the great work that Solid Group has done with working with cost control and synergies and the coordination benefits. And we also saw some market improvement in the quarter, however, at a slower pace compared to previous quarter, showing that improvement rarely is linear.

But we’re confident that Salix Group is well positioned to capture the growth once the market returns. We completed the acquisition of Hans Eggestan in the quarter, and we also see significant potential to grow further through acquisitions in in business area Salix Group. So let’s move over to Ethiketo Group, who continues to deliver another strong quarter. Sales increased with 36% in the quarter, mainly through the effects of the acquisition of Clever, but also through continued the continued trend of strong organic growth. EBITDA in nominal terms increased with 19%, which is mainly driven by organic improvement.

But that said, margin declined in the quarter with two percentage points. But this is as expected as the newly acquired ClearAthecathen competes with roughly 2025% of the total ClearAthecathen group sales, but at a low margin. And the integration of Cleaver is progressing well, and the work with extracting synergies and operation improvements has started. And the ambition long term is to lift the margins to the same level as the rest of Ethiketo Group. And also with Cleaver as a new home market platform to grow from in Central Europe, where we see a significant potential to continue acquiring labeling companies in several geographies.

And lastly, business area industry, who concludes a tough quarter. Revenue declined with 7% in the quarter, and the the day margin declined with 1% points, where the development is mainly explained by Tuna Group and Coraventa. And as previous quarters, Tuna Group is still facing a historically weak market market, but it’s meeting softer comparables in the second half of twenty twenty five. And our platform Corvanta did not see any significant effects from from floodings in the quarter and was also facing strong comparables from last year’s second quarter. Sancterix faces a similar market situation as previous quarters with a weak demand in the construction segment while the demand in the infrastructure segment is is stable.

And lastly, communications, it performed well in the quarter, increasing the pay compared to last year. And that said, this is despite the lower deliveries to The US market. With with that, I leave the word to you, Andreas.

Andreas Stienbeck, CEO, Volati: Okay. And then we’ll get into acquisitions. This slide you’ve seen before, but so so since 02/2020, we’re now down 27 acquisitions, adding 4,200,000,000.0 of annual sales to Velocity. And the last twelve months, we’ve done two add on acquisitions to Solix Group and one add on acquisition to EthiCAT Group. Looking at how we’ve been pacing our acquisitions the last five years or four and a half years, one can see that we had a drop in 2023, but have since been fairly stable at roughly 700,000,000 SIRCO annual sales that we’ve added.

And then looking into the last acquisition that we did and Solix Group, To start with that we added to Solix Group, but it was add on add on acquisition we did in q two. Sales of roughly 45,000,000 sik. It’s complementing Solix Group’s consumables trade and agriculture unit very well, and in particular, the consumables trade unit of businesses. And it do broaden the overall offering of the unit, but it’s also an example of an acquisition where we have large potential synergies, not the least in the logistics flows and optimizing that. So this is a very good example of a good add on acquisition to Solix Group.

And looking at the graph to the right, I think you recognize the sales and EBITDA margin from previous, but we also added the number of acquisitions and the accumulated acquired sales that we’ve shown since 2020 in Solace Group. And what this says to me is that we’ve been able to maintain the acquisition pace in Solace Group despite that Solid Group have faced quite tough market environment at least the last three years. And, of course, you know, this tougher market environment also create good acquisition opportunities, and we’ve been able then to take advantage of these. So we’ve done roughly, you know, one to three acquisitions a year. And over the course of this period, we’ve added 1,800,000,000.0 of annual sales to to Solis Group.

So I mentioned it previously, but, you know, looking at this and seeing how Solis Group have been able to protect and even improve their margins decline despite the tough market environment the last years and and not the least, the last quarter and still being able to add acquisition. You know, once the market returns and we start seeing organic growth, it’s gonna be a real nice journey to follow. And in order to make acquisitions, you need cash flow, and you need a decent net debt to EBITDA ratio. So looking at this slide then, the operational cash flow increased with 27% in in q two with which was, you know, good, much in line with what we expected. We have a cash conversion in the last twelve months of 85%, which is now, I would say, very much in line with what we what where we want to be.

So very much as expected. We had that increase in q two. And as said, firstly, the cash profile of of q two is not as strong as as the operational cash flow profile is not as strong as as the second half of the year. But also, we have the dividend outflow in q two, which affects the overall cash position. So but, again, we expect a strong cash flow in the second half, and that means that we will still get some acquisition room to take care of for the rest of the year.

Summarizing this quarterly report. So slightly negative organic sales trends sequentially, but we need to remind ourselves that we’ve got a still significantly better off compared to a year ago. So there is still an underlying positive trend or momentum. Q two EBITDA in line with the last year, but in particular, satisfied with the growth that we see in in SOLIX net capital, 20% roughly EBITDA growth in those two business area. We do see the effects of the long term structural measures in platforms such as solid, like, like, communication where we have low or even negative organic growth.

We’re still strengthening strengthening the overall market margins. And we’ve been able to maintain the acquisition pace. The last twelve months has been roughly 705 750,000,000 that we’ve added, but that’s very much in line with the growth pace through acquisitions that we’ve had the last years. And we have a strong foundation to continue doing acquisitions. I very much thank you to the thank you to the cash flow profile of the second half of the year.

And we are really waiting for that accelerated organic growth, which we know will come once the market starts to recover. And and now this quarter has been somewhat delayed, but once we see that, it’s gonna be real fun for us. So with that, I leave for any potential questions.

Moderator, Volati: Thank you very much for that presentation. And, yes, let’s open up for a q and a here. If you have a question and calling in, please press 9 to raise your hand and star 6 to mute yourself when you get the word. You can also use the the form log in to the right. And we’ll give the word first to Carl from Carnegie.

Please go ahead. You have the word.

Carl, Analyst, Carnegie: Yes. Hello there, Andreas and Martin, and thank you for taking my questions. If we start on Salix here, you mentioned that demand took a step back here after a quite strong uptick we saw here in Q1. Could you elaborate a bit more here if there were any variations across the quarter, I. E, if there were if you would say that it was a similar demand profile throughout the quarter as a whole?

Or if it perhaps started or ended on a weaker or a or a better note? Thank you.

Andreas Stienbeck, CEO, Volati: No. I think it was thank you for the question to start with. So, it’s we’ve seen a market slowdown in q two compared to q one. I think when you turn to our other actors on the market, they’ve seen a similar profile. When it comes to, you know, interquarterly variations, there are no big variations.

So so I think it’s not worth, you know, mentioning anything with regards to that. Yeah.

Carl, Analyst, Carnegie: Got you. Thank you. And and on Tonum, you mentioned they are still facing very tough market here and that there are isn’t really any sign of improvement any terms any any time soon here. Could you speculate perhaps, I mean, what what what you would need to see for that market to start improving? Is it is it still like a green price issue or an an aid issue, I.

E. That the subsidies towards farm farmers are at a too low level currently, or is it something else that you would like to to highlight here that you think is hampering you?

Andreas Stienbeck, CEO, Volati: Yeah. So I I think with regards to to Tulum, it’s somewhat of a perfect storm. So we have subsidies, as you mentioned, that are not coming out in the individual markets as a pace as they should. We have grain prices, which are at the lower level or have come down in levels. We have a general market on secure on security, much related, I would say, to what’s going on with tolls and and things like that.

So there is somewhat of a and and and still, you know, now interest rates are coming down, but there has been some insecurity at least in the beginning of the year with regards to that. So so there is somewhat of a perfect storm with regards to Tulum. I know what we’ve seen in the past is is things shift fairly quickly in in in that market. If one of these or a couple of these factors change in dynamics, our customers gain confidence, and there are there is investment need. And and what has happened over the last couple of years is that some of those investments has been pushed.

So so once we see a shift, it typically goes fairly quickly. However, where we are right now, I have to be honest and say that we don’t really see that. So so we’re waiting for it. We haven’t seen seen that shift, but, you know, we expect when when it comes, it’s what typically happens is then then that shift comes fairly quick. And it’s I think that’s that’s, you know, true for also some of the other business areas and platforms that we have.

You asked about Solix before. So we had a good, I would say, organic growth in q one. Now it’s slowed down a bit in q two. It’s a bit volatile right now. Hard to predict.

But but, you know, once it once the growth start coming back, we know there is a big growth gap to be closed, not only for Velotti. It’s also for, you know, the general markets. And and and once that positive momentum comes, I think it’s it could potentially be go fairly quickly.

Carl, Analyst, Carnegie: Yep. Understood. And if we could perhaps get a bit more into the Lund Manning project here, which you mentioned contributed positively to TUMMUM here in the quarter. Could you perhaps just help us here in with regards to like how much of the project that has been delivered to date and how the delivery trajectory looks throughout the remaining, I guess, duration of the project?

Andreas Stienbeck, CEO, Volati: I think what we said or what I said in the CEO letter is that we’re gonna continue delivering on that a bit into 2026. So we still have, what is it, like, nine months to go or something like that. But I think we’ve been going on for roughly nine months as well. And and the profile is typically that you have a peak in the middle. And then it’s so it’s it’s you have a start when it’s gradually picks up in terms of deliveries, and then it slows down towards the end.

So so I think that’s the information that I can give you regards to that.

Carl, Analyst, Carnegie: Yeah. Fair enough. Thank you. And and just on on the extraordinary items you have taken in the quarter with that restructurings. Could you say something regarding which platform this refers to?

And also, if you could provide any color there on what measures have been taken?

Andreas Stienbeck, CEO, Volati: Unfortunately, we do not give that that specific information, what platform it is. But I think, you know, the comment to that is that we continuously work with operational improvements and doing these more, you know, long term structured measures. And I think we’ve had extraordinary items related to this maybe every third quarter or so. So now we’ve had some in q two. I actually expect us to get some in q three as well.

But this this is more of you know, it’s it’s continuous work improvement. In this particular particular case, it’s restructuring or reorganization of of an operation unit.

Carl, Analyst, Carnegie: Yeah. Thank you. Fair enough. And and just finally, from my side and on Epic Capital here, could you perhaps say anything on how the sort of underlying margin profile has developed here year over year if we would adjust for the acquisition of Clever? Would you say that it’s still is it up year over year excluding for Clever, or is it flat?

Or how should we how should we think of that?

Andreas Stienbeck, CEO, Volati: I think it’s it’s we don’t see any shift with regards to the margin profile of the online business. And so it’s I think it’s more or less in line with the q q one or in line with what we’ve seen in the past. So the shift in margin profile for the overall business area at Ticatu is solely connected to the dilution from from the acquisition.

Carl, Analyst, Carnegie: Yeah. Fair enough. Thank you. That was all my questions.

Moderator, Volati: And that concludes our q and a session here. And I’ll hand over to you, Andreas, for some concluding remarks.

Andreas Stienbeck, CEO, Volati: Okay. Thank you. So I thought I took take the opportunity to this time turn a bit inwards and thank all the colleagues of Allate. You’re really doing a great job. We are or you have put us in a really good position.

We are structurally very well prepared. And now we’ve seen somewhat of a delay in the market recovery, at least related to what I expected or hoped for. But once that comes, we will really get the benefit as or see the benefits of all the hard work that you’ve done. So it’s gonna be a very fun journey once we get there. So thank you, everyone.

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