Good morning, everybody, welcome to Framery's second quarter 2026 results webcast. My name is Kati Kaksonen. I am responsible for Investor Relations here at Framery. Good to meet you all. Today, as usual, we will go through the results. First, a mandatory disclaimer that I am sure that you have familiarized yourself with. Our CEO, Samu Hällfors, and our CFO, Lauri Isotalo, will go through the results, the key highlights and financial performance for the period, and we will follow that with a Q&A session. As a reminder, you can submit your questions throughout the webcast. With that, over to you, Samu. Go ahead.
Thank you. Welcome to follow the webcast on my behalf as well. We will jump into the results of quarter two. Starting from the revenue of quarter two, we hit the revenue of EUR 51 million, which was 3.7% down from the comparison period. However, the underlying revenue growth, excluding the largest one key customer, was up 7% compared to the year before. When going into the profitability, our adjusted EBIT grew to EUR 12 million, which was 23% of revenue. This was a significant improvement from the comparison period and a good result for the whole company. The good profitability was also visible in the operating free cash flow, which was EUR 14 million, up from EUR 8 million the year before. The earnings took an even larger leap, which was EUR 0.14 per share, up from EUR 0.02 per share the year before.
This was mainly driven by the profitability improvements, also the tariff returns that we got from the U.S. government, and also the interest rates in our financing and financing costs went down significantly. Similar picture paints the whole half one of this year. The revenue was EUR 110 million, which was down 1.9% from the comparison period, but the underlying revenue growth was plus 11%, being in line with our long-term and midterm targets. The adjusted EBIT was EUR 26 million, or 24% of revenue, in line with the half one year before. Same story goes on the operating free cash flow, which was EUR 19 million, up from EUR 15 million the year before. As for the quarter two, the earnings per share took a bigger leap to EUR 0.27 per share, up from EUR 0.14 the year before.
Overall, the whole quarter was marked with good profitability improvement, which was driven by our price increases conducted in the late 2025 and in the beginning of 2026. Now in this quarter, the full impact was visible in the numbers. If we take a look at the top-line figures and more in-depth the market areas, we can see a slightly more diverse picture. Starting from the positives and from the quarter two, our Americas revenue grew 4%, or in the underlying growth of 34%, which was especially strong and very satisfying. This was driven by good momentum in the whole market area. There's a slightly different picture with EMEA and APAC, which was slightly disappointing for the management as the revenue growth was -4% or underlying growth of -3%. In APAC, similar story, -21% in revenue or in underlying growth terms, -4%.
EMEA and APAC regions were impacted by the Iran war starting and some kind of a shock from there. Some orders postponing during the quarter two. On top of which, we have seen a slightly slower macroeconomic pace in the Nordics especially and in the German-speaking countries in Europe. The momentum hasn't been as strong as in North America, which was very strong. Now in the H1, full half year, the story is basically the same. In the North American market, growth was 25%, or in underlying growth terms, 44%. EMEA, -1%, both in absolute growth, reported growth and underlying growth. In APAC, -41%, or underlying growth of 3%. In APAC especially, the comparison period has had many deliveries to our single largest end customer, which is now explaining the difference there. A slight recap on our growth strategy.
We have continued to execute our growth strategy in all four projects that we are running. If I go briefly through the whole picture. Basically, our growth strategy is based on two different teams. The best smart pods and smart office solutions in the market, which is the offering part, which consists of two different projects. First of which is to further strengthen our leading product market fit in all market regions. Out of this project, the biggest highlight of this quarter is the launch of our new product line, which I will tell a little bit more later on. Secondly, to drive the adoption of smart office solutions to scale the SaaS business of Smart Office.
In this particular topic, we have now launched the API platform for our reporting, which means that our customers are enabled to build their own solutions on top of our data platform. We have started shipping our new smart sensors to end customers, which have gotten very good momentum and pace from the customers and attraction. The second topic of our growth strategy is the effortless global availability, which is then consisting of, again, two projects. Third is the drive growth through the tailored go-to-market strategies, meaning that we will target all of our measured 44 different market areas with tailored go-to-market strategies, implementing the growth strategy, optimizing the sales network in all of these markets individually. Fourth is to deploy the Framery Subscribed model globally with dealers. The subscribe model has continued to scale outside of the home markets of Finland and Nordics.
The growth there has been approximately 10% year-over-year now in the second quarter. Now jumping to the biggest highlight of quarter two in the growth strategy is the successful product line launch for North America and the product family of Framery Gradus. Framery Gradus is built on three different products, basically consisting of all different use cases that offices usually need. One person phone booths and pods, then One person workstation, which is completely new type of product for us, and then small meeting rooms that will help people in the offices to have one-to-one meetings or small group meetings in the office. These products were launched in Chicago in June, within one of the largest industry fairs in the world, NeoCon, in North America.
The product line was very well received by the end customers, and we have started to get orders for the products from both end customers and for the showroom units for our distributor partners in North America. The deliveries are expected to start in quarter three this year. Similar story goes for the production in the North American market. We started to ramp up our factory in Michigan already during the summer. When the first customer product will be shipped out from the factory, meaning the Framery Gradus products, that will mean also that the operation is up and running as planned in the North America.
This is a very significant and important project for us and to ramp- up the facility and the production there as the whole market area is growing rapidly and the strong momentum will be then supported by the new product line that is fully designed for the local design needs, the architect's preferences, and the end customer needs in particular. We are expecting the result in significant and meaningful numbers in the reporting earliest in the first half of 2027. Little bit about the market outlook going forward. Despite the current volatile environment and the macroeconomic softness in the EMEA and APAC, we are positive about the medium- and long-term outlook for our products. The fundamental drivers for product demand and adoption hasn't changed at all, and the North America especially has very good momentum going forward.
We are expecting to see positive numbers there and positive momentum in global scale as well. That needs to be said that while the North American market is doing good, as mentioned, the EMEA and APAC are affected by the macroeconomic situation, on top of which we have some additional uncertainty due to the Iran war and oil prices globally affecting the global demand in office furniture sector. We are remaining extremely positive and optimistic about the mid- and long-term outlook. With that, I will hand over to Lauri to go more in detail through the financial performance.
Very good. Thank you, Samu. If we start with the revenue, as Samu mentioned, the second quarter revenue reached EUR 51.4 million, so a slight decrease from last year. Of course, last year we had those extraordinary large shipments to that single large end customer.
The growth without that particular customer was 7% in the second quarter, and this despite the volatile market environment as mentioned. That meant that the first half revenue reached EUR 109.7 million. Again, slightly below the last year, but without the single largest customer, the underlying growth was more than 11%. The market is overall developing into the direction where we are expecting it, even again, as mentioned, in this environment. As we can see in the top right-hand corner picture, that paints a picture on how the overall market is developing in the last 12 months. In the EBIT and adjusted EBIT, quite a few things going on.
In the second quarter, the adjusted EBIT reached EUR 12 million and was driven by both the price increases we did, also the improved tariff environment, including the tariff refund we got, as well as on the more favorable exchange rates compared to year before. The second quarter last year, we had, of course, the U.S. dollar weakening significantly. That meant that the adjusted EBIT reached EUR 12 million compared to the EUR 10 million year before. Now when looking at the first half adjusted EBIT, we reached EUR 26.1 million or close to 24% of revenue. A slight decrease from year before from EUR 26.8 million or 23.9% of revenue. Of course, with that, again, the last 12 months adjusted EBIT percentage improving to 22.6%.
If we look at the KPI summary, here maybe especially highlighting the EBIT for the quarter of EUR 14.6 million or more than 28% of revenue. That shows on top of the aforementioned drivers, also again, the tariff refund, also the portion that was from the tariffs paid last year, which we adjusted out, but is of course visible in the EBIT numbers, as well as certain IPO and related costs from last year. Hence the almost tripling in the EBIT for the quarter. On top of that, if we look at the earnings per share, that increased percentage-wise even more, as that was also improved by the significantly decreased financing costs following the IPO and refinance done at the time. If we break it down a little bit to the different components, starting from the revenue for the second quarter.
With the last year's EUR 53.3 million in revenue, we did ship quantity-wise less pods, hence the slight decrease from there, but that was compensated by price increases. It needs to be said, though, that the full impact of the price increases was slightly muted by less favorable product mix. That's volatile or changing from quarter- to- quarter. With that, the revenue excluding the exchange rate effect was EUR 51.6 million, and with the slight decrease from the exchange rate impact reaching the EUR 51.4 million. On adjusted EBIT, there's quite a bit more going on. If we walk it item by item.
Again, the combined impact from the volume price and the mix changes was EUR -1.8 million, but at the same time, the materials and services used was less by about EUR 0.8 million, hence compensating, as well as the tariff impact, which is the second material and services there, was EUR 1.3 million less than the year before. We had significantly less employee expenses of EUR 5.5 million, but most of that, or EUR 3.9 million, was from last year's one-off incentive programs and hence adjusted out from the adjusted EBIT. On the operating expenses, altogether, expenses were EUR 1.4 million larger, meaning that there was again certain IPO-related costs visible there.
Lastly there, we booked the tariff impact that was from the tariff cost from last year into the other income, hence quite a bit more there, but again, adjusted out from this quarter's and this half's adjusted EBIT, hence the EUR -2.7 million there. Altogether, the adjusted EBIT, excluding the exchange rates, was EUR 10.3 million, and as mentioned last year, the second quarter had a negative development there from the U.S. dollar. This year, that explains the EUR 1.7 million more to the result of EUR 12 million. Quite a few items there, but still, even with all that, the EUR 12 million well represents our current profitability level for the quarter. Very similar story when looking at the full first half. Again, a slight decrease from less pods shipped, but that was compensated and more by the price increases compared to the last year.
Reaching the revenue before the exchange rate effect of EUR 112.4 million after the exchange rate effect of EUR 109.7 million. Very similar bridge there when looking at the first half adjusted EBIT compared to year before. Slight increase from the combined effects of volume, price, and mix. More impact from less cost of materials and services, meaning the cost of goods sold. Slightly more tariffs paid as, of course, last year's Q1 didn't have the tariffs in force yet. The aforementioned employee benefit, both the adjustment and the expense line. The operating expense is more than last year slightly. Again, the tariff refund now into second quarter visible there. All that bringing the adjusted EBIT before the exchange rate impact to EUR 25.1 million, with the exchange rate impact to EUR 26.1 million. Just to open up the tariff refund a bit more.
Starting from end of Q1 or February, when the U.S. Supreme Court made the decision that at the time, which was enforced, was the 15% IEEPA tariff, which was declared unlawful and to be returned to the importers with interest. We applied for the refund and received it at the end of the second quarter, totaling EUR 4.7 million. Out of that, EUR 1.7 million was the tariff cost, which was booked for first half of this year, and as such, the EUR 1.7 million of the refund was used to counterweight that. EUR 2.7 million was the tariff cost from last year, and as such, that was booked to the other income adjusted out from the adjusted EBIT. Additionally, EUR 0.2 million was used to decrease the remaining landed cost of the inventory, whereas there was still this particular tariff.
Additionally, as mandated by the Supreme Court, we also returned interest from the U.S. government or customs of EUR 0.2 million, which was then booked into the finance income for the quarter. This return now covered more than 99% of the total claim, not much more is expected from that. There were also changes in the U.S. tariff environment after the quarter. Now on 24th of July, or last Friday, the temporary tariff of Section 122 ended, but was immediately replaced by the Section 301 tariff, which effectively didn't change much as the tariff rate stayed at the 10%. Hence, at least for now, the tariff environment from our perspective remains stable. If we look at a bit more on the cash flow. A very positive cash flow for the quarter of EUR 14.4 million, compared to EUR 7.5 million year before.
Driven especially by the good profitability, the tariff refund, and also certain networking capital fluctuation. Networking capital fluctuation is rather typical for the business. Compared to June 2025, when the networking capital was rather high, then to the December 2025 when it was quite low, and now somewhere in between. That sort of a fluctuation is very typical for the business. That also explains in part of the cash conversion of 106% compared to the 65% year before. When looking at the first half operating free cash flow, we reached EUR 18.8 million compared to EUR 15.4 million year before.
While the investments did increase to EUR 2.6 million from EUR 1.8 million year before, following the launch of the Gradus family, as well as the beginning of the manufacturing operation, as well as the expansion of the Framery Subscribed fleet, that just goes to show how asset light the operation is, even when expanding like that. That also brought the cash conversion for the first half to 64.8%, up from 51.8% year before. Certainly, the same story continues when looking at the return on capital employed. High level with continued good profitability, low fixed assets, and even when including the certain networking capital fluctuations, still high at 104.2%. The capital employed steady from Q1, although increased from year before. Currently at EUR 47.8 million, compared to EUR 39.7 million year before. That brings us to the current financing status.
The very low leverage and the strong financial position continues. Of course, noteworthy is that we did pay the dividends now in May, but even with that included, the leverage was at 1.2x. The net debt, of course, decreasing from year before to EUR 69.4 million. To conclude, as Samu mentioned before, we remain very confident in our mid- and long-term financial targets with growth of more than 10% annually on average using last year as the baseline, and the midterm target of 25% in adjusted operating profit or adjusted EBIT in the midterm, and the leverage to stay below 2x. As seen, there's quite a bit of headroom there.
Thanks to the excellent cash flow, we also keep the dividend policy as is, where we will pay 70%-90% of the earnings, and part of which may be executed through the share buybacks going forward. With that, I think we are ready for the questions.
Thank you, Lauri. Just as a reminder, if you still have more questions, please submit them through the webcast. We'll start with Daniel Lepistö, Danske Bank. Did the project-related delays due to the Iran war already resolve during the quarter, or is there any spillover effect to be expected for Q3 or Q4?
Yeah. When the start of the Iran war showed an delay or hesitation. None of the project cancellations that needs to be highlighted. Of course, during the quarter, the situation improved significantly. Now we've, of course, seen a bit of increased volatility there in Iran again. Remains to be seen how long the war continues and what the impacts are for the full quarter. Much will depend on how long the war continues.
Yeah. Thanks. We'll continue with Miika Ihamäki talking about the Americas' growth rate in Q2, especially on a strong underlying basis. Can you describe it in a bit more detail how the activity and the pipeline looks like in North America in general? Has there been any surprises to our initial expectations? Maybe I'll jump into the follow-up, because there's quite a few questions in the same line. If you want to start with the Americas-
Yes
in general.
Yes. Americas in general, we have seen a strong momentum for already couple quarters and even longer time period. We are expecting the good momentum to continue as it's not coming from any single source, but actually quite broadly from the whole market area. What we are expecting to see is the adaptation of pods to offices to continue at same pace or the growth rate to be very good in the future as well. Now the new product line that we launched is very targeted to also meet the different expectations and different needs from internally, from different areas from the U.S. The architectural design to fit to more and more diverse offices. We expect the good momentum to continue, and we've seen the good momentum to continue already for a few quarters.
Great. Maybe talking about the manufacturing and scaling up the Michigan site. Can we give a little bit more specifics on the timeline on the expected full scale of operations there and any potential impacts on profitability and potential gross margin differentials between the U.S. and Finnish pods?
Yeah. On the initial, it's going very well on plan, and we are already producing the first pods there. We are able to ship them, as Samu mentioned earlier, from the Q3 onwards. As for the question, it's more about how the demand develops than about our supply capability. We are very confident that we can supply the needed amounts already. Well, this year and especially more visible starting from first half next year. As for the GM levels or more specifics, we are not going to give the specifics at the time, but we expect the margins to be in line with the current portfolio.
Very good. Jumping to Daniel Lepistö from Danske Bank. Can we elaborate a bit on the cautious EMEA outlook and weaker macro? Are we seeing any changes in the customer behavior, and how big is that impact compared to earlier this year or later last year?
The macroeconomic environment, as we know, has been quite challenging in the Nordics especially, not just in our industry, but in many other industries as well. No specifics about the fact, but usually the macroeconomic environment is affecting the amount of office renovations and office movings happening in the market area. That being said, we are seeing already in all of these markets, positive momentum, in particular in our customer base and in our niche market area where pods are being implemented to offices despite the not so strong office furniture market.
Very good. We have six questions from Antti Kansanen and SEB. I'll start with the first one and then break it one by one. The impacts of the war in Iran were momentarily visible, but customer behavior normalized during the quarter. That is direct quotation from our report. Can we quantify the impact in Q2, and would we be expecting a recovery in Q3 or second half of the year in EMEA and APAC from this impact in general?
First maybe on the quantifying. Of course, very hard to say any specific numbers. How we analyzed that, we had a moderate impact of EUR single digit millions, but that would be the ballpark. As for the normalization, that very much depends on how the actual situation develops in Iran. As we all know now, the oil price has increased again, and uncertainty continues, but for how long, that's a bit difficult to say.
There's a second question is the large referring to the larger client in H2 last year and regarding which regions the sale contribution was most substantial. You can actually see it from the slide breakdown of the underlying growth on a regional basis, but anything that you want to expand on.
Yeah. On the next half, it was more based in the Americas.
Great. Jumping into the European demand or weak macro. Has the demand environment worsened throughout the first half or second quarter and is it substantially below last year's H2 levels?
Again, very much situation remains volatile. Even in EMEA, it's a bit region-based. Like say the macro in Nordics and in the German-speaking Europe has been weaker than, for example, in the West Europe. Difficult to give such a short-term guidance on a specific market at this point.
Yes. Talking about the order book development in Q2, how did that compare to the Q1 situation?
Overall, the market regions performed, as Samu mentioned, with the better results in the Americas than EMEA and APAC. Of course, comparing Q1 to Q2 from that perspective, we also need to take into account certain seasonality that we see. Typically, there's more in Q2 than in Q1. We are not giving out specific order books as a part of the financials.
Super. Talking about the Gradus product line introduction in the Americas, do we expect to see any temporary negative impact on the product launch? I'm meaning clients waiting for the new product to come in and postponing orders for that reason.
That's not expected. As usually in our market, the product is specified to a specific project, usually six to eight months before the actual project deliveries. In our case, we are now basically able to take orders and ship the products if customers so choose. It's more about our products getting first to dealer showrooms, then the architects speccing them into the new upcoming projects, and then the projects realizing in approximately six to eight months from the speccing moment at the dealer showrooms. Usually, this is how it turns out. Customers usually don't switch to one product to another or wait for another product to come, because usually these products are delivered as part of a full office renovation project, and thus they are usually not willing to wait for any specific products.
Great. Finally, last question from Antti regarding the profitability. Should one expect further improvement in net of inflation pricing during the second half of the year? Are price increases visible on gross margins of Q2? Is there any more tariff refunds expected in one-offs in the second half of the year?
Yeah. Starting from the tariff refunds, we know we don't expect any significant tariff refunds anymore for the second half. As for the price increases, they are well in the Q2 figures already. Hence the margins more driven again by the revenue than things of that nature.
Very good. Moving on to Thomas Westerholm from Inderes. How would we estimate the overall market development in our category during the second quarter in the EMEA and APAC regions? Is the declining underlying growth a sign of market share losses or solely market level shrinkages and weakness of demand?
Our estimation is that the market as whole has now performed under our expectations in EMEA and APAC region. We haven't seen any significant changes in our own performance compared to competing manufacturers. We estimate the market as whole to be performing below our expectations at the moment.
Yes. Not a competitiveness issue, but a weak demand environment in general. Jumping into Miika Ihamäki question regarding the order book. What does the order book look like for the second half from the largest single customer? I guess this is a question whether the underlying basis is moving when we go into the second half of the year. Secondly, is our broader customer base compensating sufficiently to sustain the double-digit underlying organic growth, excluding the largest customer impact?
Yeah. When talking about the largest end customer, they keep on ordering, and we keep on shipping to them. It's just that the levels are more normalized to the level of any big end customer. It's more about the last year, which was the exception, than this year. As for the other customer base, like we saw in the first half with the underlying growth of 11%, we do see that keeps on. That's the same driver for the mid-term targets of more than 10% growth.
Very good. Jumping back to Thomas from Inderes on customer behavior. Based on our discussions with customers, is the return-to-office trend still ongoing, or has it stabilized?
It really depends on the market area that we are speaking. It really happens in different phases in different markets, even different phases in different industries. As whole, it has stabilized in global aspect quite well to two to three days from office. That being said, the mandates or the shifts within individual companies keep on going as we are seeing different companies to react and adjust their working habits through the organizations. Maybe U.S. market being the most actively now doing these changes and pushing towards working hybridly or more from the office as well.
Very good. Maybe continuing on the first customer impressions from the Gradus line, how is the initial demand looking like, and do we expect Gradus to be a clear growth driver in the Americas region? More of a margins hedge against the volatile tariff situation?
The new product family was very well received by the architects and dealers and end customers who visited our showroom in Chicago during the launch fair. We had hundreds or more than 1,000 people coming in and checking the product from the industry, so it was a super successful launch. We are expecting to see good momentum for the product. That being said, it is still early to say the full performance and timeline of the launch as the market really reacts to products first getting into dealer showrooms, then getting tested by the end customers and the architects, and then being specced to the projects. We are very confident of the success of the full product line. It seems to be a successful product.
Excellent. Then jumping back to Miika Ihamäki on the underlying cost base development. Are we seeing any material inflation pressure there that would require further pricing actions going forward? Secondly, how should we be thinking about the R&D investments related to the North American product launches, and were these costs already expensed throughout the P&L in Q2? Is there any further negative impact coming in in the second half of the year?
Yeah. If we start with the material inflation, certainly, it is a part of the life. Of course, some components or materials are more energy-driven, so hence the Iran war might have a impact through there. Still at the bigger picture, we see that that is a normal business in a way that we typically are in the industry. Typically, the price increases are done once a year at the beginning of the year. We do not see at the moment any, let's say, extraordinary inflation that would require something else.
Yeah.
On the question of-
The R&D
the R&D.
Yeah.
When it comes to the R&D, of course, most of the costs are our own R&D personnel, and those are expensed as they come, so the impact is already visible in that sense. As for the investments, of course, the overall investment level needed for the new product family as well as the new manufacturing site is rather low considering the volumes. Most of that has already come in. Considering that, of course, we are taking orders and beginning shipments shortly.
Yes. Majority of the impact came in already in the Q2 numbers, and you can also already see that there's no further meaningful negative impact coming in in the second half of the year, right?
Yeah.
Coming back to the impact of the Iran war. Did the project delays already resolve during the quarter, or is there any spillover effect to be expected in the second half of the year?
As mentioned, we did see the situation normalize as it seemed that the Iran war would come to an end. Now that it has sort of reignited, we haven't seen any immediate effects. If it prolongs and oil prices stay high, it's very possible, or it's a risk that we see those delays coming back.
Very good. A question regarding the inventory development. The inventory levels have increased quite a bit from a year ago. What kind of impact do we expect to see from the new U.S. assembly plant coming online? Is there any impact on the working capital from that as well?
The inventory levels do fluctuate from quarter- to- quarter, depending on in which markets we see demand, and overall on the current forecast. As for the Gradus specifically, of course, the U.S. manufacturing means that there's less inventory we need to ship from Finland to U.S.. Once it's up and running, we do expect a certain inventory, and with that, net working capital reduction, but that more in the next year.
Final question through the webcast at the moment, unless you still have a burning question on your mind. You still have a couple of seconds' time there. Have we faced any resistance from customers on accepting the price increases? Do we think that they've had any impact on the demand whatsoever? Is the softer product mix in Q2 temporary, or should it be extrapolated for the future as well?
Well, maybe on the price increases, no, we didn't see any resistance or let's say that we've seen any projects getting canceled or losing more, because we did our price increases well in line with what the market and the competition did as well. That's all good. As for the product mix, there is some quarterly fluctuation rather than a trend that we are seeing. Certainly we can sometimes see the fluctuation again, but not that that should be taken as the baseline.
Very good. We don't have any questions from the webcast at the moment, maybe over to you, Samu. Any final words?
Well, thank you, and thanks for the great questions in the webcast. We are confidently going towards the end of the year, and we'll see again next quarter and the results then. We are super excited about driving the growth strategy and the business forward. Thank you for joining today.
Thank you. Have a good day