Welcome to the Dustin Q1 presentation for 2025-2026. 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 CEO Samuel Skott and CFO Julia Lagerqvist. Please go ahead.
Thank you. Good morning, and a very warm welcome, everyone, to our Q1 report presentation for Dustin. First of all, I want to say that I'm happy to be here today presenting my first quarterly report as CEO of Dustin. And with me here today, I have Julia Lagerqvist, our CFO here at Dustin. So let's start with the presentation. I'm glad to report the quarter with organic growth, improved profitability, robust cash flow, and reduced leverage. Net sales development was positive in the quarter, with organic growth of 18%. The performance should partly be seen in the light of a weak comparative quarter. But apart from that, the positive development was driven by our LCP segment and particularly the public sector. Gross profit increased slightly, while the gross margin fell to 13.1% compared with 14.3% last year.
The decrease in gross margin is explained by strong public sector growth, a high share of PC sales, and continued price pressure in the Netherlands. Adjusted EBITDA increased from SEK 21 million to SEK 83 million, driven by efficiency measures implemented, a weak comparative quarter, and higher sales volumes. The margin increased to 1.5% compared to 0.4% last year.
Cash flow from operating activities increased to SEK 381 million compared to a -SEK 42 million last year, and this is primarily driven by improved net working capital. Leverage measured as net debt to EBITDA dropped to 3.1 x, and this is to be compared to 5.2 x last year as a result of the strong cash flow. In the beginning of the quarter, we also updated our sustainability targets in line with the latest research and to meet customer needs, and the updated climate targets are approved by Science Based Targets initiative.
If we then go to the next slide, and as I mentioned earlier, organic growth development was positive at 18% in the quarter. If we look at this in more detail, around 8 percentage points of the organic growth are explained by weak comparative quarter that was affected by the implementation of the shared IT platform we have in Benelux. The effects of this will also be visible in the second quarter, since part of that lost sales last year was recovered in the second quarter last year. The signs of market recovery we have seen in the quarter have been particularly evident within the public sector, where the migration to Windows 11 is driving investment needs. The strong underlying LCP growth contributed to around 11 percentage points to group organic growth.
Demand within the SMB segment remained cautious, and that resulted in a slight negative contribution to group organic growth. If we look ahead, we see continued market uncertainty also in 2026, which is also related to the shortage of memory components that we expect. This could negatively influence market development, and it is yet too early to predict the full effect of this, but we take a prudent stance and want to be proactive and are already now having a close dialogue with both our customers and our partners to make sure to mitigate the situation. And with that, I would like to hand over to our CFO, Julia, to give you some more details on the financials.
Thank you, Samuel. Very happy to be here with you today, then we move to page four and look at the LCP segment, the large corp and public business, and sales in LCP was SEK 4.0 billion second quarter, or 24% + versus last year. The organic growth was 28%, so we continue to see a large negative forex impact from the strengthened second quarter. The growth was mainly driven by increased demand in the public sector and mainly related to the PC upgrades due to Windows 11 migration, as Samuel was just talking about. We saw strong growth in Benelux, both related to large rollout, but also the effect of the weaker comparison quarter as just mentioned. In addition, we had strong growth in both Sweden and Denmark, while the situation was more challenging in Finland.
As I said before, we do see large volatility in sales between quarters in LCP. The gross margin decreased versus previous year. The continued price pressure in the Netherlands had a negative effect on the margins. We also saw a continued effect on some larger contracts with low margins. On a global level, there was also a negative customer mix effect with a larger share of public customers that has lower margin on average, which then had a negative impact on the total average margin. We continue to see an increase in Takeback , which had a positive impact on both margin and EBITDA, and we also saw some positive development in our private label business versus last year.
The improved cost structure, mainly thanks to the restructuring program that is now fully executed, had a positive effect on our bottom line, and overall this led to a segment result of SEK 70 million versus the low SEK 11 million last year, and a segment margin that ended at 1.7% compared to 0.3% last year. As said, the last year EBITDA was impacted by the implementation of a new IT platform, which then shifted sales towards Q2. Then we move to the overview of SMB segment on page five, where sales landed at SEK 1.5 billion , or 5% below last year. Also here, we saw the negative forex effect, and excluding this, the decline in sales was 3%. We see some signs of stabilization, but customers remain cautious due to the ongoing economic uncertainty.
We could also see that our strategic decision to move away from the B2C business, which also meant less activities during Black Week, had a negative impact on our sales. From a geographic point of view, Sweden, our largest market, showed stable sales, while the other markets displayed declining sales. Looking at product mix, we saw that the share of software and services decreased in the quarter to 10.7% versus 12.4% last year. This mainly linked to our focus now on standardized services, meaning that we see a churn on non-standard services. Positive to note is that the gross margin improved last year in most markets thanks to continued price discipline. The improved cost base from the cost-saving program protected the segment result, which increased to SEK 53 million versus SEK 50 million last year despite the lower volumes.
All in all, the segment margin ended at 3.6%, which was an improvement versus last year at 3.2%. Moving then to page six, you have an overview of the development of leverage versus Q4. Leverage landed at 3.1 compared to 5.2 last year and 4.3 in Q4. Looking at the waterfall chart where we compared to Q4, you see a total improvement of 1.2, of which 1.0 was related to operational improvements, and 0.2 was related to an updated definition of net debt. More on this in just a few seconds. Looking at the operational improvement, here we see that the improved operational results that we have just reviewed led to improved leverage of 0.4. This then has been related to a very poor comparison quarter. We also had a positive effect from improved cash, which was mainly driven by improved net working capital.
This improved leverage with 0.5, and I will talk more about cash and net working capital in the coming slides. In addition, there were other small positive forex effects and slightly lower leasing that also contributed positively. That is the other effect in the graph. Then we have in the quarter updated the definition of net debt to exclude leasing related to service deliveries to our customers.
This effect is quite small, 0.2, but we have deemed this to be more in line with industry standard and better reflecting our financial risk. Overall, we're of course very happy to deliver this improvement and leverage after a period of higher levels and to be more in line with our target. Moving to cash flow and CapEx on slide seven, we see that the cash flow for the period was +SEK 289 million versus -SEK 149 million last year. So a great improvement.
Looking at the details, we see that the cash flow from operating activities before change net working capital was SEK 9 million. This is impacted by a settlement of old tax debt. Cash flow from change net working capital was SEK 373 million coming from a high level in Q4, and we normally have a positive seasonality effect in Q1 versus Q4, but this was also the result of some targeted actions.
We look more at net working capital on the next slide. In total, the operating cash flow was SEK 381 million in the quarter. Cash flow from financing activities is mainly due to repayment of leasing debt and was at similar levels as previous quarters. Looking at CapEx, we see that the investment in the quarter was SEK 46 million, out of which SEK 41 million affected cash flow. This was mainly linked to IT development investment and slightly lower than last year.
Coming then to page eight, we look at the net working capital. Net working capital landed at SEK 139 million, a clear improvement versus last year at SEK 267 million, and also a clear improvement versus the previous quarter, Q4, then at SEK 477 million. As said, we normally have a positive effect versus Q4 as Q4 is impacted by a negative seasonality effect, but also the result of specific actions to reduce the previous higher levels. The main driver is reduction of inventory with close to 300 million improvement. Here our actions to reduce are now giving effect, mainly linked to Benelux. We also had somewhat higher sales than expected in the last month of the quarter, which had a positive effect. We are now back to our target levels. Accounts receivable were stable versus last year despite growing sales, supported by actions to settle the old receivables.
As said before, we always have some timing effects in individual quarters, but our long-term target for net working capital remains to be around - SEK 100 million, and with that, I hand back the word to Samuel.
Thank you very much, Julia. So to summarize the quarter, organic net sales grew 18%, driven by strong development within LCP and the effects of a weak comparison quarter. Gross margin decreased due to strong public sector growth, a high share of PC sales, and continued price pressure in the Netherlands. The adjusted EBITDA margin improved primarily as a result of the efficiency measures implemented last year, a weak comparison quarter, and higher sales volumes. Cash flow was strong and our leverage decreased to 3.1 x net debt to EBITDA. Moving on to the market outlook, we have seen signs of market recovery with gradually increasing demand in the past two quarters, but we know that we continue to live in an uncertain global market that now also has some uncertainty coming from the expected shortage of memory components in 2026.
With that summary and before we go into the Q&A, I would like to take the opportunity to share some reflections from my first month here at Dustin. I've spent these two months meeting many of our customers, employees, and partners to get a really good view of where we are and what we need to do. What I see is that we have a strong position in all our markets and potential to move from there, but I also see that we have a long way to go to get to where we want and need to be. Several improvement measures have been taken during the past year, such as updating the strategy and implementing a cost-saving program, but we're still in a challenging situation, and as we've already mentioned, we continue to see uncertainties in the market.
So to improve results and to realize the potential we have here at Dustin, we will do that by focusing on strengthening the work we do with customers and sales, increase the pace in execution of our strategy where we have full focus on our B2B customers and shift our service offering to standardized services, and of course, continue to drive efficiency improvements. So with that and that presentation, let's open up for Q&A.
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 Thomas Nielsen from Nordea. Please go ahead.
Thank you for taking my question. Now, the Netherlands markets continue to face intense price pressure in specific framework agreements. What actions are you taking to improve profitability in the Dutch market, and when do you expect to see margins stabilize here?
Hi, Thomas. Thank you very much for the question. You're absolutely right. We see continued price pressure in the market in the Netherlands, and this is something we're working very hard on, and the way we do that is working even closer to the customers and customer by customer, contract by contract, being closer and working more diligently with that to improve over time, so that's one of the focus areas within the sales that I talked about. Exactly how and when that will yield results is too early to tell, and we're not going to guide to it, but it's definitely one of our focus areas.
Okay, thank you very much. A second question, perhaps. In SMB, we saw a decline organically of 3% this quarter. When do you expect SMB to return to positive growth?
Too early to tell. We see some stabilizing signs, and we actually see that in the upper end of SMB, there have been some recovery also driven by the Windows 11 migration. But it's too early to tell, and I think we also need to remind you that we have taken the strategic decision to exit the B2C market. It's a very small share of our total business, roughly 2%, but of course, that had some impact this quarter, and when we do comparisons in the second quarter, this will of course also have an impact. But we will tell you about that when we get there. But so that's what's happening, and a bit too early to tell. Some stabilization, too early to tell when we see the full turnaround.
Okay, thank you very much.
The next question comes from Daniel Thorsson from ABG Sundal Collier. Please go ahead.
Yes, thank you very much and welcome, Samuel. I have a question on the rising memory component shortage you mentioned. We can all see that prices are up 3x-4x in the market in the last six months, so that obviously means higher laptop prices and lower volumes. Any first signs or trends that you can share here?
No, I think that the trends we're seeing are exactly the ones that you are seeing. I mean, the first sign is that prices are going up. So I think that is happening, but it's happening differently across different products and vendors. I think that is the first sign. But except from that, too early to tell exactly how this will play out. But I think we can say we're not expecting another pandemic situation. This is not the case here. It's just that it's such a high demand coming from AI applications, cloud services, data centers built, which puts pressure on supply versus demand. So we see prices going up right now. How this will play out during the year, too early to tell.
But we take a prudent stance and a proactive stance, working very actively with our customers and partners already now to make sure we can mitigate the situation as good as possible.
Have you seen prices on the products themselves to go up already in November, December, or is that yet to come?
We're starting to see the first signs now.
Okay.
But that said, I think it's too early to tell exactly how this will play out. So what we're doing is that we're, as I said, taking a prudent stance, taking a proactive stance, making sure that we work with all our customers and our suppliers to handle the situation, and then we just need to go from there.
Yeah, I see. Fair. And then a question on the market recovery signs that you mentioned. Outside of public sector within LCP, and you mentioned the higher end of SMB here where you see a positive Windows 11 migration effect. What other signs are you seeing in the market, especially in the lower end of large corp or the middle part of SMB? Any country in the Nordics that stands out with a positive growth this quarter, for example, or anything else to share?
Julia, if you want to take that one.
I mean, I think the only place we see it, like I said, Sweden, if you look at the smaller business, has been more stable, while in the other markets, we still see declining numbers also for the smaller customers. So no direct turnaround numbers there, I would say.
And I think otherwise, as we've said, we've seen demand clearly coming back in the public sector, and then gradually lower increase as you go down in size. But it's not only for public, of course. It's within enterprise and higher end of SMB as well. But most evident, the recovery has been in the public sector, and it has been driven by the migration to Windows 11.
I think, I mean, as you normally see for our smaller customers, they are much more linked to the economic situation in the market, and they can push their PC upgrades a bit longer normally. I think we're still sitting, that's still the trends that we're seeing there.
Yeah, okay, that's fair enough. And then I have two questions on the cost side here. The central costs of SEK 41 million in the quarter were about SEK 10 million higher than I had at least, but are there any one-offs in there, or is this the new normal level for any reason for the coming quarters? That's the first one. And the second one on cost is that amortizations are significantly lower year-over-year, SEK 39 million versus SEK 63 million last year, which means that other costs are higher. Is it anything specific in the amortizations, or is this a new normal level as well?
If we start then with the function cost or the group cost, now this is the level that we are at now. I mean, there's always smaller shifts between the quarters, but I would say that there's nothing that said that we should be coming down in the corporate functions versus where we are at the moment now. It's a similar level as we had last year as well. Then if you look at the second question, which was regarding the amortization, I would say that last year there were some one-off effects. So the levels that we see now is more where we should be. And it's not that, so if you look over the different quarters, I think that, if I remember right, last Q1 was very high with some corrections. And then linking to the new ERP system and clearing out old stuff.
So where we are now is where we're supposed to be. I hope that answered the question.
That's very clear. Very clear. Last one on the leverage, the new definition you mentioned, is that driven by you or by your banks? And, i.e., does it have any practical effect on the bank covenants or your interest rates?
It's driven by us. I mean, as you know, we don't disclose the details of our bank covenants. It's driven by us to be, or we think it's more in line with the market practice and more in line with showing a good picture of our financial risk.
Excellent. Thank you very much.
The next question comes from Mikael Laséen from DNB Carnegie. Please go ahead.
Yes, good morning. Hi, and welcome to Dustin from me as well . Okay, so first off, maybe a question on your last highlight there, focusing going forward, the three areas that you want to focus on. Can you maybe elaborate a bit more and provide a bit more detail what you mean with those three bullet points there on slide 10?
Hi, Mikael, and thank you very much. Of course, I can do that. I think it comes back both to short, but also short-term continue to move towards better results, but also long-term realizing the potential, and if we start with sales and customer focus, I think coming in, I see that we have a strong position. We have a lot of great relationships with our partners and customers, but given the hardship we've been through the last couple of years, I think we've become too much inward focused, and we need to be out and about much more, creating more business and creating more buzz around Dustin, so that's just a way of working which needs to improve to be more in best in class. The second bullet on executing our strategy, I think this is making sure that we get moving in the right direction.
As we've seen in the last couple of years, gross margins have come down, and that is partly due to price pressure, etc., but it's also due to the mix we have between customer segments and products, and here we have an updated strategy on being much more focused and solely focused on B2B, on making sure that our service portfolio is more standardized so that can scale better, etc. I think this is the right strategy. We need to get moving faster on it so we get moving. This is not a short-term journey. It's a long-term journey, but it needs to start moving, and therefore I want to increase speed in that. Last but not least, efficiency. This is something we always have to work with, and especially under times of market uncertainty, it has to be a top priority.
So those are the reasons for those three focus areas.
Yeah, got it. But what's your view on the standardized products and where you are there in scaling those and improving margins through services growth?
I think we are at the, since we set this up, the strategy not that long ago, not even a year, actually. It's in one sense still early phase, but we are moving. So we are transferring customers on the old legacy types of managed services to the new standardized portfolio, and the only thing we're selling now is the standardized portfolio. This will, of course, short-term mean that we will be impacted as customers churn out, and we need to transform our organization. But mid- to long-term, this is absolutely the right thing to see, and we know it has a really good business case. So now it's just about execution.
Okay. Moving on to the quarter, I'm curious about the SMB segment. Sales remained weak, but the margins improved quite a lot compared to my estimates, at least. And can you talk to us about the margin uplift, what is driving that, if that is a sustainable level? And if it is any way related to the higher central cost?
It's not related to the higher central cost. I would say if you look over the last two years, I would say we had a period of a bit lower margin, which is where you're at least also in the comparison quarter of last year. But we are now at the same levels as we've been for the last three quarters, I think. So I would say that this is where we aim to be going forward. And as I said, we are very tight on our price setting in this segment. We have a very clear strategy for that, where we did not want to slip on pricing just because the volumes were declining. So it's been a choice that we made. So it's really down to the price discipline and the overall price focus that we've had.
All right. And also curious about the memory shortages impact. You haven't noticed anything so far, I understand. But how are you thinking about mitigating the risks? I think that last time you had shortages in the market, you managed this quite well.
Yes.
What do you mean this time?
I wasn't here then, so maybe you're good.
I wasn't here either, but.
But I know that we did a very good job, and I think that what we did then, to my knowledge and the things I talked with the organization, was the thing that we're doing now. And that is working very, very closely with our customers and our partners to make sure that we mitigate in the best possible way. And I think one has to realize that this is not the pandemic situation where we had big issues with supply dropping. Supply is coming as planned. It's just that the demand currently is very, very high, stemming from cloud, AI, etc. So it's a bit of a different challenge. But I think the recipe for success is to be proactive and prudent and work closely with customers and partners. And we did that last time, and that's what we're going to do this time as well.
And then the impact of it, too early to tell.
Okay, understand. And also, I'm curious about the Benelux development. You described the market as challenging, as expected. But has this situation stabilized or worsened during the quarter? And what do you see going into 2026 now?
I think from a sales perspective, it has stabilized, and we see, I mean, it's a weak comparison quarter, so we need to keep that in mind. But even with that, taking into conclusion, I think we can say it has stabilized. We've seen some really good demand and good sales in the public sector. So I think from a sales perspective, stabilized. From a margin perspective, we still have a lot of work to do and cut out ahead for us.
Okay. And if we theoretically exclude the Benelux overall, how is the profitability development in the Nordic region for you? Is it possible to say anything about that?
So it's breaking up, and I don't know if it's us or you, Michael.
Okay, maybe I have to repeat the question.
Please.
Hope you can hear me.
Now we can hear you.
Yeah, okay. I was thinking about the Benelux profitability. If we theoretically exclude that, how is the development in the Nordic region by segment?
I would say the Nordics.
From a margin perspective, I mean.
From a margin perspective, we are doing better in the Nordic region. Specifically, if you look at the large corporate side, we are better than a little bit better, maybe better. I would say if you look on the public side, we have a bit of a mixed picture between the countries, but also there we see some of the pressure on the margins coming from new larger contracts.
Yeah, okay. And my final one is on cash flow and the net working capital improvement. You're targeting -SEK 100 million. Do you see that as viable here in the near term, or is that still something that you have to work on over a long time?
I mean, if you look at our history, we have been there going back two years, I would say. So I would say it's not the, I would not say it's in the near term, depending on how you define that, but it's something that we need to work on a little bit over time, but it's still achievable.
Okay, thanks.
The next question comes from Daniel Djurberg from Handelsbanken. Please go ahead.
Thank you, Operator, and good morning, both of you, and welcome on board. Skott's many good questions asked, obviously, but I could continue a little bit on the cash management, sorry, that was strong in the quarter, although it gives a snapshot, obviously, of the balance sheet. Can you, Julia? You spoke about some of the specific corporate cash management actions linked to Benelux and so on. Can you give us some more colors on what you're doing here, if it's about business acumen in deal-taking and how to get to this targeted level of working capital of around -SEK 100 million? Thanks.
Thank you for the question. If you start then with the actions taken, if you look at inventory levels, I would say last year when we had been implementing the new ERP system in the Benelux, we increased our levels a bit for safety reasons, and then we were sitting on that for a bit longer time than needed, and that is something that we worked very clearly on now in this quarter to come out of that, so that is one of the sort of clear targeted actions, and we also noticed that we had a bit of change in payment processes, so payment terms, and that we have also worked on during this quarter.
Going forward, I think it's for us as well to make sure that we deal with the right suppliers and the right distributors where we have the best payment terms, and then also again on the customer side to work more on the payment terms. As I said, the inventory is now, at least for now, where we deem that we can be to be effective with our customers. Of course, we can always work more on that over time. Again, we have the discussion on the component situation, which also actually can impact inventory levels going forward. Again, as Samuel has said now many times, we wait and see how that's going to play out for us.
Yeah, yes, obviously. On the Windows 11 impact, obviously driving good growth. Can you comment a bit if there are any late adopting companies left out there that will continue to give growth from this, or if you've seen most of the substantial impact up to November?
I don't think it's possible to give an exact number on where we are in the process, but we definitely see a continued runway of these migrations in all.
Perfect. So it's not a total stop. That's good. And on the public sector, we have obviously a lot of investments going into defense, civil defense as well. Can you comment on your possibilities if you have the right agreements in place and so on in countries like Sweden, Finland, and Denmark? It needs to do quite a big lift-up?
We don't comment on specific customers in general, and specifically not in these areas, but we are strong in the public sector. So if public sector grows, wherever it grows, we will be able to capitalize on that.
Perfect. And do you have a bit of opportunity to sell into NATO, the criteria they have on statistics, etc., to the war?
But I think, I mean, NATO is built up by each and every country's organization. So that is, I mean, it's part of the ongoing public business for us.
If I remember right, I think Atea did announce they had taken a share there, a partner contract. We don't, at least up until now, not advertise new contracts in the same way as they do.
Okay, fair enough. It's still some kind of trigger as well. On the capital expenditure for IT development, I think it was some SEK 152 million or something during 12 months, down a bit in Q1. Can you comment on where we are now in this, I guess, about implementing ERP, both in Benelux, but perhaps also later again here in Sweden, and where you are in this process and the run rate when you will live 2026, more or less, ballpark?
If we go to the ERP implementation, I mean, we have done Benelux. That was really troublesome in the last year. And the biggest investments and the biggest hardship of that, I think, is over, but we still are working on it. And then, of course, I mean, over time, we will have to, we need to evolve our tech stack also in the Nordics, but that is something that we're not guiding for right now, and we'll have to come back to when it's relevant.
Okay. And finally, on non-recurring items, some SEK 37 million due to the severance package and some civil case. Can you comment on the non-recurring items you expect in 2026, or if you have any cost actions or other actions given that you're entering the company here in 2026 or in 2025?
We don't obviously guide on the future and on recurring items, and Samuel will come back to talk more about any future plans, I would say.
Yeah, yeah. As said, the focus areas are clear: drive higher momentum in sales and customer work, increase the pace in the execution of our strategy, and to continue to work with efficiency measures. Whatever that will lead to and when, we will inform, but it's not something we will guide on.
I guess that's the case. Okay, thank you very much and good luck here in 2026.
Thank you very much.
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 written questions or closing comments.
Okay, thank you, Operator. So with that, we can conclude this Q1 report presentation from us here at Dustin, from me and Julia and the rest of the team. Thank you very much for listening in, asking questions, and have a great day.