Welcome to CTEK Q3 Report 2024. For the first part of the conference call, the participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to the speakers, CEO Henrik Fagrenius and CFO Thom Mathisen. Please go ahead.
Thank you so much, Operator, and a warm welcome to today's presentation of the Q3 Report from CTEK. So, I will start with some overall information about CTEK. CTEK was founded more than 25 years ago by this happy man and entrepreneur, Bengt Wahlqvist, in Vikmanshyttan, Dalarna. We are doing all our product development, design, and testing in Sweden, and then we have production in Asia and Mexico. We are chosen by the best. We have almost all premium car manufacturers as our customers, and here you can see a nice Lamborghini co-branded with CTEK. We are mainly having two technologies. One is the EVSE, which is chargers for electric vehicles, and the other is Low Voltage, where we are having chargers for consumers.
We have chargers for workshops, and as I mentioned before, for Client Brand, and also integrated solutions that could be in recreational vehicles or in blue light. Here we have tried and shown where we have an addressable market for our different products. If we start with the electric vehicles and the plug-in hybrids, where we can sell our EVSE chargers, but it's also demand for our pro chargers for the workshops, and also every EV and plug-in hybrid has also a 12-volt battery that might need to be taken care of. For the combustion engines, we have our 12-volt chargers, both the consumer version and the Client Brand, and the workshop. Then we have two other segments where we have more or less only dipped our toes so far.
It's the recreational vehicle and leisure, a segment I know from my previous work at Dometic, and there we have today different products, but there is much more addressable market to go into, and then we have industrial, that could be material handling or robots, where we also have products today, and so far quite a small footprint. There is more addressable market to gain. If we look at the way how we go to the market, we have two divisions. One is the P rofessional that are catering to the B2B. It's the Client Brand Low Voltage chargers, and it's also our EVSE chargers. Customers could be the big OEM premium car manufacturers like Ferrari, Lamborghini, Porsche, and also for the EVSE, it could be parking operators, CPOs like Vattenfall, APCOA, and others.
Our biggest segment or division is the Consumer, where we sell our consumer products in the Low Voltage, and their typical customers are retailers like Amazon, it could be distributors, and also retail chains like Jula and Mekonomen. There we are having sales in more than 70 different countries. If we then walk into the figures for Q3, it is a very stable quarter. We saw an organic growth of 15%. We increased our gross margin with 4.8 % units to 56.4%. Adjusted EBITDA, SEK 30 million, that was an increase to 13.6%. Q3 is our seasonally lowest when it comes to cash flow. We ended up in just minus SEK 3 million compared to minus SEK 14 million last year. EVSE share is 15%, and we have a solid financial situation with a net debt ratio of two times.
I'm happy to see that we are following our strategy, and in phase II, we are focusing on organic growth. This is the second quarter in a row that we can show organic growth for the group, and the organic growth was, as I mentioned, 15%. We increased our profitability, and we also saw the best ever third quarter for the Consumer division. If we talk a little bit more about Low Voltage, this was the fifth consecutive quarter with organic growth, and the four latest were double-digit. The reason for that is that we have seen higher sales in our pro chargers for the workshop. We also see that our premium chargers, CS ONE, are selling very well. We see also that we're growing in Client Brand by the OEM, and we see that the focus sales activities are paying off.
We are gaining new customers, we are growing with existing customers, and we are taking market share, among others, by the retailers. So, Thom, I leave it to you.
Yes, so some financials for the quarter. So I come to this very crowded slide with a lot of numbers, and I repeat a little bit of what Henrik just said. We are happy to see the 15% organic growth on the net sales, up to SEK 222 million for the quarter, and also, of course, happy to see that it has paid off in both higher gross margins, but also higher adjusted EBITDA from SEK 18 million to SEK 30 million , which compares to 13.6% versus 9.1% same quarter last year.
We have an item of affecting comparability of SEK 4.7 million, and that is only related to what we announced in last quarter, that we are moving our head office from Vikmanshyttan to Falun. We still have it in Dalarna, but on another place. Coming to some more information from the divisions, as Henrik mentioned, we have a very strong quarter again for the Consumer division, which stands for 2/3 of our net sales, now coming up to SEK 150 million for this quarter in net sales, and a good adjusted EBITDA of 40%+ for the period, and again, continuous growth quarter- on- quarter. Coming to the Professional division, obviously then standing for the 1/3 or the other part of the net sales, it is an organic growth, even though on a lower pace for this quarter.
We are still, of course, not happy that we have a loss on the EBITDA level, but worth to mention here is that, as you recall, we did this reorganization to two divisions and formed the Professional division in the middle of quarter three, quarter four last year, and as you can see on the graph on the bottom part of the slide, you can see that we have a constantly improving margin from low levels, but even so better, without having any help from the volumes. So with higher volumes in the Professional division, we will turn this to positive numbers going forward. Some words about cash flow and CapEx, obviously very important for us to keep under tight control. As Henrik mentioned, the quarter three is a seasonally tough quarter for the cash. We are, however, improving from minus 14 last quarter three to minus three this quarter.
You can see that we have cash and cash equivalents going from 144 to 98. That is actually just because we have amortized SEK 100 million earlier this year. So it's number by number, actually an improvement, I say. And that also shows that we have now refinanced during quarter three our credit facility with Swedbank, and that is in the same amount as before, SEK 600 million, with a three plus one plus one year validity. And on the down graph, you can see that the CapEx, as we have said before, we have been on very, very high levels. We are going back now to more normal levels that will probably maybe continue to go down another percentage or so going forward. But it's still high. It should be high because we are a company that has to develop new products all over time.
So by that, I hand it over back to you, Henrik.
Thank you, Thom. So, as I mentioned, a stable quarter, second consecutive quarter of organic growth for the group, increased margins and a solid net debt ratio, strongest third quarter ever for the Consumer division, and first quarter with organic growth for the Professional division. And that makes the fifth consecutive quarter of organic growth for the Low Voltage business. So this picture I've shown a number of times before, this is our three phases that we're following. The first was stability, where we got our cost under control, and now we are moving within the phase two, where we have a focus on profitable growth, and this is the second quarter that we show organic growth, so we are well into that phase.
Then later on, we will enter phase three with more accelerated growth geographically and product expansion, and also investigate M&A possibilities and moving into other segments. With that, I open up for questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Johan Eliasson from Kepler Cheuvreux. Please go ahead.
Yes, good morning, Henrik and Thom. Johan at Kepler Cheuvreux here. Just a question a little bit. I mean, you once again had the strong numbers, as you point out, for the Low Voltage part. As I remember it, it sort of kicked off last year with a very cold and early start of the winter period in the northern hemisphere. I mean, that means that from a weather perspective, you have a bit of a tough coat. How does it look into Q4 as of now? Will you still be able to grow in this quarter?
Yeah, good morning, Johan. As you mentioned, in Q4 last year, there was some very cold weather, which we are happy for, so it is tougher comps, but we see a stable business, and we are, as you know, not guiding for Q4, but we see a stable business, and we are a better company right now. We have worked with our sales force. We are increasing our sales force. We are having made better processes, and we are gaining customer and momentum.
Excellent. And as part of those actions, are you seeing that you are sort of taking market share in the U.S., for example, on the Low Voltage side?
If we look at the total group, we can see that we're growing with 15%, and there is no detailed market share analysis for the Low Voltage segment. So we know that we are gaining market share among some retailers, where we have a little bit higher visibility. We are gaining new customers, and we are growing with existing customers as well, and North America, we just moved the production to Malaysia to avoid the tariffs, and we have hopes that we will expand in North America the coming quarters.
But the good growth is not necessarily North America now. It's sort of in your traditional markets where you're expanding.
I would say it's broad over our core markets and the whole company.
Okay, excellent, and on the Malaysia move, are you expecting the same sort of gross margins that you have today, or is there any negative or positive effects without these tariffs today?
When we're looking historically, we have been a little bit too highly priced compared to our customers. We should have a premium price, but that has been a little bit too high in North America, so we will adjust the price level so we are getting more competitive in the North American market, and I foresee that we will keep our good gross margins going forward.
Okay, excellent. And then just on the, you mentioned here that you will have an additional 20 million from the GM contract related to the earlier version. Can you say anything about the sort of newer version you are supposed to sort of continue to sell in the years ahead?
We have very low visibility about that, so I would have to refer you to GM's communication there. And even if they sell EVs, then the dealer also needs to sell the chargers. So we are not in control of that.
Okay, thank you very much.
Thank you.
The next question comes from Mattias Ehrenborg from Redeye. Please go ahead.
Yes, hello, Henrik and Thom. Mattias Ehrenborg here from Redeye. Just a few questions here from my side, but I want to start off with the North American market, and especially with the big customer there, General Motors. I noticed in the quarter that they had very steep sales growth within EV and also in Q2 as well. Have you seen any impact from this from your end, or what's your view on that?
No, we still have very low sales in North America.
Looking forward then, do you see launching new car models, especially premium, where you are sort of tilted towards? Do you expect any, I don't know, significant movements in order intake from that, or is there anything you can share on that?
No, we have, as I mentioned, we have very limited visibility about that, so I can't guide any direction there. However, for the North American market, we are looking forward for the Low Voltage now with our production moving to Malaysia.
Just to relate to that, you expect to, you obviously have a big portfolio of some really big brands in the car spectrum. Do you expect to gain some new customers related to this, or is it more expanding on the existing ones but in North America?
I would say it's both. And I think when it comes to cars, we have almost all the premium car manufacturers in the world as today. But I'm happy to see that we gained one of the biggest European motorcycle manufacturers in the quarter. And I think there we have more motorcycle manufacturers worldwide to approach and to sell to.
Just related to that, do you expect to see any significant sales from this new motorcycle contract, or is it more a testament to CTEK's offering, so to speak?
I would say that we will see sales in Q4, and then it's always depending on what is significant or not, but we will see sales already in Q4 for that customer.
Also, just looking into the professional segment, which you posted some very solid improvement in the EBITDA during this quarter. Is it primarily due to the sales mix, or is it also OpEx that comes into play here that you have reduced, or what does it look like underlying?
Yeah, the main reduction of OpEx we did beginning or end of last year and beginning of this year. So I would say it's the sales mix. We see that the client brand, Low Voltage, is selling very well, and that helps, of course, the gross margin in the segment. So I would say that's the main factors.
Can you tell us anything about the ongoing, yeah, you launched the CC 3 earlier this year, and especially in the U.K.? What has been the development during this quarter, especially in the U.K. market, would you say?
You mean the CC 3? Yeah. No, since it's a very slow EVSE market overall, we have been focusing on selling out our old model, CC2, and we have delivered some of the CC3, and the customers are really happy, but it is generally a slow EVSE market, so we are focusing on getting out the stock of the old products.
Okay. And just a final question from my side then. Obviously, a very strong report, especially with regards to the Low Voltage sales and the Consumer segment. But you already touched on this earlier, but the underlying demand during Q4 this far, could you give us some sort of sense of what it has been like? Someone mentioned earlier, quite tough comps here in Q4 relative to last year, but the underlying demand, what would you say it has been like?
Yeah. We are happy with the changes that we have done and the focus that we have put into the organization and all the improvements that we have done. And we are not guiding, as you know, but we see a stable development.
Excellent. That was all for me, and congrats on a solid report.
Thank you. Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you, Operator, and thank you all for participating in today's webcast, and I wish you a very good day and talk to you soon again. Bye.