Welcome to Ependion Q1 Report 2026 presentation. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the speakers, President and CEO Jenny Sjödahl and EVP and CFO Joakim Laurén. Please go ahead.
Thank you very much. Welcome everybody to this Q1 presentation for Ependion. The headline of this report is Record Order Intake and Strengthened Profitability, as you have seen. As usual, it is myself and Joakim Laurén in the call, and the agenda is similar to previous times even though we have changed the format of the presentation slightly. I will start by giving a general business update and also looking into the two business entities. Joakim will dive more into the financials. Finally, I will give some concluding notes and outlook. After that, we will open up for Q&A as usual.
Summarizing the quarter, we have seen already in the fourth quarter of last year an increase in the activity level and increase in order intake, and we are very pleased to see that this quarter the activity level has strengthened further. We have an order intake increase of 41% to the record high level of SEK 778 million. I'm pleased to see that this is driven by strong bookings in both business entities across basically all our focus segments and all geographies. It's a broad uptick that we are seeing. Organically and in fixed currency, the increase is 32%. As you probably know, there is a lag in our business between order intake and sales normally.
Sales increased by 10%, but organically it was flat. The book-to-bill ratio that already last quarter was way above one is now 1.3 for this quarter. You have probably noticed that we have changed our result measure to EBITDA. Our EBITDA strengthened to SEK 75 million and an EBITDA margin of 12.5% compared to a rather weak quarter last year, 9.7%. The free cash flow in the quarter negative, of course, that's not how we want it to be, but we do see a seasonal pattern in cash flow. The negative level was due to increased safety inventories and also some higher accounts receivable towards the end of the quarter.
You have probably read in the papers there is a strained global supply situation, especially related to memory circuits driven by the AI boom that is driving up prices, and it's increasing lead times. We have full focus in both business entities, first of all on securing access to material but also of course offsetting the cost increases that we see due to this with price adjustments. We have done, as you all know, a lot of investments in recent years in both business entities in R&D with acquisitions with India establishment and so on. There is a really strong focus in across the organization now to really drive profitable growth based on these investments. Also, as everybody else is seeing, the geopolitical uncertainty remains. All right.
Diving a little bit more into the two business entities. If we start with Westermo, we have a record high order intake with an increase of 57%, that is without any major project orders in the quarter, and it's driven by all our key segments, so train networks, track side, energy, and also defense. The development was particularly strong in the train segment, which is also Westermo's largest segment, as you might know. Sales at + 21% driven by strong development of Welotec, and the book-to-bill in Westermo for the quarter is 1.28. Profitability-wise, we have a stable development, 16.6% on EBITDA level in the quarter.
We were talking about the defense segment in the last report, and you know there is a decision for Westermo to really go after this segment now. There is a lot of initiatives going on in the quarter towards this new focus segment. We do see with the European increase in spend and the focus on finding regional strategic suppliers, there is an incoming interest from several players in this industry. We have discussions ongoing and activities ongoing, even though, of course, we know that, you know, creating business out of this is of course going to take some time. We also have some very well-known customers already in this industry. That is developing in a good way.
Also the India market, very positive. The fact that we now have a strong local presence is very appreciated both by our existing global customers with the activities in India, but also, we see interest from local Indian players and new players as well. Positive development there, and we know that there is massive infrastructure investment happening in India, especially in metro expansions, in long distance trains, in freight locomotives and so on. The activity level is very high in India, so that's very good. The Welotec continues to develop very well as well.
Also I can mention, and we mentioned that in the report, we have initiated a strategy update in the Westermo business entity, and that is really to set the stage basically for the next growth phase, looking at our segments, looking at our playing to win strategy, and also looking at our sales organization, how we can make sure that we have the most effective sales organization going forward. Okay, let's move into Beijer Electronics. I'm very pleased to see that with all the work that has been going on within Beijer Electronics, with the strategy that has been put in place and executed over the last years in a business environment that has been actually very challenging.
I'm very pleased to see that now we are starting to see the results of that, and we see an order intake growth of 20%, driven on one hand by the marine segment with lots of activities with our customers there, but also a high demand from customers within EV charging, and also in a growing niche segment that we are seeing, which is data centers, where Beijer Electronics products are used for UPS equipment that is then used in data centers, particularly in the U.S. market. Sales-wise, we are at - 6%. We have the last quarter now where we still had in the comparison quarter a small volume of phased out products, SEK 9 million .
If we look at the currency adjusted in fixed currencies, the sales development was actually +2%. Book-to-bill at 1.33 for the quarter, quite strong, and the most important part here, of course, is that we see that the profitability has moved in the right direction for sure with the increased gross margins according to what we were expecting from the new strategy with a more focused portfolio, and we came out at 11.4% the EBITDA margin in the quarter. The next, the new generation of HMIs, the X3 family, we do see a lot of customer interest still, and that is really, really good.
We have more than 200 customers now that have placed orders, and what I'm really pleased to see, and what we are also expected of course from this launch, is that some 20% of these are new customers, which is of course very promising as well. Beijer Electronics have also targeted the defense segment, and we have launched a version of X3 called now X3 Ultra towards the defense sector, where we have certified the, tested the product against military standards and are now talking to potential customers and also some existing customers in the defense sector as well. That was a summary of the two business entities. With that, Joakim, I will hand over to you.
Thank you very much, Jenny. I will go into the financials. I will start with some words on orders and sales. As Jenny said, the orders were up 41%, the level SEK 778 million actually. That is an all-time high record level. We have never been on the SEK 700 before, SEK 700 million before, so it is something that we are very pleased to note. Organically, as Jenny said earlier, 32% up. The acquisition of Welotec is contributing 19%, and we have quite a strong headwind when it comes to FX that is impacting with minus 10%. Together that gives us the 41%. Sales, as Jenny pointed out, no big uptake on the sales level yet, so organically flat. Acquisition is adding then the 16%, and also here the headwind of FX is impacting - 7%.
If we look at sequentially, we do see a strengthened order intake also from the good quarter in Q4 last year. That was well above SEK 600 million, so we're up 22% compared to last quarter. Sales is also improving somewhat. If we look at the profitability, the improvement is then 2.8% points from the low level in Q1 last year, now to 12.5% for Q1 this year. The main background to this uptick is that we have a definitely better performance by Beijer Electronics, as Jenny Sjödahl pointed out before. Also the fact that Westermo is delivering on a stable level, being a larger part of the group now with the addition of Welotec.
Two point, two folds on the profit increase, Beijer Electronics improvement and the fact that Westermo is the bigger part of the group. If we look at the income statement summary, we talked about the first two lines already. Should mention that in the quarter the impact of currency effects is negative, and it's impacting the EBITDA level with SEK 6.5 million. The main part of that is transactional variances. In between the EBITDA and EBIT, we have the depreciations and amortizations of excess values of, driven by the acquisitions. We had a larger impact of the Welotec acquisition already in Q4, and the level remains now in the first quarter this year.
The EBITDA margin came in at 11.2% compared to the 9% in last year. There is a relatively big difference on the financial income and expenses line, and that is driven by currency effects on financial items. Net profit increased with 27% to SEK 40.5 million for the quarter, and the earnings per share is up 15% to SEK 1.26. If we look at then the cash flow, and Jenny Sjödahl pointed out that we have impacts of increased inventories related mainly to increased safety stocks for some of the components that we now see some turbulence in the market. We believe that it's important for us to secure our delivery of possibilities and therefore we have increased our safety stocks. That is impacting.
Also our accounts receivables, phasing you could say. There is more of that by the end of the quarter. That gives us the minus SEK 9 million. However, if you look at the history, it is a seasonal pattern you could say. Last year we were around minus SEK 12. A negative start, but going forward, we are quite optimistic when it comes to the cash flow. When it comes to net debt EBITDA, we can conclude that we have a healthy balance sheet, and that provides confidence that we can continue the active M&A agenda that we are having in the group. That concludes the finance. Over to you, Jenny.
Yeah. Thank you for that, Joakim. With that, I will try to summarize this and conclude the call. Again, the geopolitical uncertainty is bound to remain as it seems right now with potential impact on our business in the short term. It's really hard to predict right now what's going to happen, but that's how we see it. Very pleased to see an increasing activity level among our customers in all our key segments and across all our geographies. It's also very encouraging to see the improved profitability level in the first quarter.
As I mentioned before, across our organizations, there is a very strong focus now on driving profitable growth based on the significant investments that we have made in recent years in the X3 series, in the Welotec acquisition, in the India establishment, and of course also the general R&D spend, the new product development that we are continuously doing in both business entities. As we have said before, medium and long term, we are confident about our ability to continue our profitable growth journey because the segments and areas that we are in, are driven by very clear global trends such as digitalization, electrification, sustainability and so on. Regardless of business conditions, we are of course committed to creating value regardless of the market conditions. All right.
The financial targets. You have seen this before. The growth, we are targeting an organic growth level of at least 10%. That has been a struggle of course in the last years with the business conditions that we have seen. Now we are looking at a little bit more stronger market development going forward. Profitability level, the EBITDA measurement that we have now introduced should be at least 15%. We are moving towards that target now, and that's what we are, you know, committed to achieving going forward. We shall be a dividend paying company. When it comes to the outlook, as I said, we do operate in attractive markets with strong underlying growth over time, although it has been a bit sluggish in the last couple of years.
Medium term, we do see a possibility, a good possibility to achieve both growth and profitability targets. Geopolitically, economically, the uncertainty will remain. We are cautiously optimistic regarding our development now in 2026. With that, we would like to 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 Daniel Lindkvist from Danske Bank. Please go ahead.
Hi. Just a few quick questions from my side. Congratulations to begin with on a really strong report in all senses. My main question is basically on the duration of the order book. If we look at Beijer Electronics and Welotec specifically, what can you say about the order book duration for those two entities?
You wanna take that one, Joakim?
Yeah. Hey, Daniel.
Hey
When it comes to Beijer Electronics, we have an order book on, of the level of one to up to three months, in the backlog normally. The orders that we have received, in general, I would say is within that range. We did write in the report that there is a small portion of the volume, of customers prolonging their order horizon. We mention in the report SEK 15 million, and that is related to some customers, placing orders that is longer than the horizon that I just said, with the ambition to secure their volumes, given the turbulence on the component side.
When it comes to Welotec, they had a good quarter, and their position or their backlog is looking healthy for the targeted sales in 2026. Quite stable.
A longer duration on the, on the Welotec order system.
Say again. Say again.
A long, a longer timeframe for the deliveries of the Welotec.
They have a three-.
backlog then.
They have a three to six months backlog horizon in Welotec.
Shorter typically than the average in Westermo, you can say, but still, quite reasonable.
Perfect. I mean, we've gotten used to a bit of the fluctuations in the train orders, so really nice with this one, safeguarding quite some future then, I would guess. Was there something else to keep in mind with the order intake in Westermo this time around?
I think what stood out was the strong order intake in the train segment. As we have been talking about before, there are quarters where we have very low bookings in the train segment, and there are quarters where we have strong bookings, and this was a particularly strong quarter. But what was encouraging to see is that it wasn't just that, it was also the energy segment picking up nicely, strong order bookings in Welotec, of course, contributing to that. Also, track side and to a smaller extent, of course, because it's still a small segment, also the defense sector increased. It was broad across all our key focus segments.
Excellent. Just the final on Welotec, and then on Welotec combined with your energy offering. On Welotec, you had some postponements from Q4 into Q1. Should we expect that the full postponements was delivered in Q1?
We had a little bit of delays, in Welotec in Q4. That's correct. All of that has been delivered now in Q4, Q1, so I don't expect any effect on Q2, so to say, in that sense.
Perfect. Just the Welotec, you've discussed earlier that the Welotec acquisition has also strengthened your energy offering in Westermo. Could you elaborate on that and if that has any effect in this quarter?
Yeah. I think it has had, it has not yet had a huge effect on, you know, our sales or even our order intake as such. As we know, there are long, relatively long business cycles in this industry so that the activities that we are doing now will typically result in orders in, you know, six to 12 months or even longer. What is very positive is to see how the teams are collaborating, how we are visiting customers together with a broader offering, using the relationships that Welotec came in with, very strong relationships with several large system integrators, also grid operators, both in Europe and outside of Europe.
Also the Westermo relationships, how we can leverage from that combined, those combined customer relationships now in a much better way. I think the teams are collaborating extremely well and we see a lot of opportunities arising from that in the medium term.
Perfect. Once again, congratulations on this report. Really strong data points in my view. I'll get back in line. Thank you.
Thank you very much, Daniel.
The next question comes from Markus Almerud from DNB Carnegie. Please go ahead.
Yeah. Hi. Hi Jenny. Hi Joakim. It's Markus here from DNB Carnegie. My first question is on the train side. It sounds to me like when you're describing it that it's quite broad-based, there are no big orders which are driving this. Is it anything that any market customers et cetera that sticks out? Is it India which is driving it, or what do you say about underlying demand? Has demand changed, or is the strength just the normal course of business?
I think it's several things. We are seeing India starting to contribute with new business, so to say, on the rail side, which is very positive and again, massive investments happening there. We are also seeing, you know, the projects are moving ahead in Europe and in other places. You can ask yourself, you know, what has happened because nothing has changed in terms of the geopolitical situation. I think that, you know, you can only push projects that long, so to say. At the end of the day, we still need infrastructure upgrades and so on and so forth.
I think that is what we are seeing, that projects are finally moving ahead, getting financed, and that is driving the increased activity level that we are seeing.
You wouldn't say. Because we know also that train orders are very bulky and have been very bulky, but it feels like this is more of a bigger movement, that it's kind of If you talk about projects which are moving ahead, that we're kind of reaching a new level, or it's catching up to demand. Is that the right interpretation, you think?
Yeah, that is of course what we are hoping to see and what we are to some extent seeing now. But again, we know that the order intake in the rail segment, train segment can be quite bumpy from quarter to quarter. You need to look at it, you know, longer term, how it is kind of gradually increasing, you know, year by year rather than quarter by quarter.
Follow-up on Daniel's question on the duration of the order book. The duration in Welotec is about three to six months, which is lower than the average investment. What would you say is the average investment length?
6 to 12 months, that is what we.
Yeah, 6 months-12 months.
Yeah. six to 12 months is you could say, the average.
Perfect. On Welotec, how is integration in Welotec? I assume it's continuing well, but the cross-selling that you started to see some of, is that accelerating as well or is it moving along, yeah, what are you seeing in terms of cross-selling opportunities and progress?
No, I definitely think that the cross-selling activities are increasing all the time as we get to know each other, as we, you know, start to figure out where we have customers in common and where we have, you know, customers that Welotec know well and customers that Westermo knows well. I think that the collaboration has been strengthening all along actually since the acquisition, since the closing in June of last year. I think that we are seeing that the Welotec offering to some extent when it comes to digitalizing substations is attractive to customers. It's a door opener to a larger extent actually than the networking equipment that Westermo originally was offering.
It is clear that we now have a much stronger combined offering and a better way, an easier way, you know, into the big grid operators, for example, getting to the table and actually talking about the whole Westermo offering.
Would you say it's a key factor to the energy segment growing nicely?
Uh-
Is it too early?
I think it's a little bit too early to say. Of course, Welotec is, that was the whole idea actually of the acquisition, is adding nicely to that. I don't think that we have seen a big effect as of yet of the cross-selling because again, the business cycles are quite long. Customers need to test solutions and so on. It's looking positive.
On the strategic update that you mentioned in Westermo, if I read you right, it is an offensive strategic review rather than to save cost.
It's more of an offensive strategy, yes. Looking more on the front end side of things rather than the back end. In the back end when it comes to supply chain and all that, I think we have been doing and are doing quite a lot of activities to, you know, to optimize our footprint and so on. That's ongoing. This is more market front end looking for sure.
Then on electronics and on the X3 orders, we talked about last quarter about most orders were still small, and they were mostly for evaluation purposes, and you hadn't really seen the volumes or volume orders taking off yet. Are we still there? We still no volume orders, but still the same kind of orders.
I don't know. I think as we move along, you know, the customers that placed the orders early to test have now been placing, you know, larger orders, so that we can see that customers are moving towards, you know, replacing X2 or new customers starting to use X3 to some extent. Step by step we are seeing that pattern, so to say, as we move ahead here. I think the launch and the introduction of this product range is really going according to plan, I would say.
Okay. Perfect. That's all for me right now. Thanks.
Thank you, Markus.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Henrik Alveskog from Redeye AB. Please go ahead.
Hello, well, congrats on the very strong numbers. First of all, I'm interested to hear if you have seen any, like, shift in market sentiment lately, considering what's happening in the Gulf, the Persian Gulf?
If we have seen any effects from that?
Well, yes, in terms of, I mean, you described basically the strong order bookings during the quarter, but considering how you usually refer to macroeconomic uncertainties and market hesitation, I'm interested to hear if you've seen that coming back a little bit now?
Well, I think we can say that of course the war in the Gulf is not helping in any way because it's, you know, it's keeping the geopolitical uncertainty high. On the other hand, this has been the case now for quite some time, and despite that, we are seeing an increased activity level in basically all geographies and business segments. The Gulf crisis has not had any direct impact on our business. We do very little. We don't have any organizations in that area. We do very little business in general in that area. From that perspective, it's neutral for us at this point.
However, of course, we are following the development, you know, when it comes to cost increases, and so on and so forth.
Yeah. Mm-hmm. Great. Then just a couple questions on Beijer Electronics. You mentioned the charging infrastructure, as, well, one segment that has been positive for you lately. Is this relating to rollouts in specific countries, or is it, like, in general in several countries?
We have a few customers that are delivering into their market. They are having a positive volume development, and the demand for our panels to them is increasing. On what particular markets they are successful, that is a bit uncertain for me, actually.
They are active on a global market, actually. Yeah, Asian-based companies, active on a global market.
Yeah. Okay. Then, well, the Beijer Electronics business in the U.S., I'm interested to hear if you. I mean, the industry there is, well, moving towards Buy American, Build American suppliers, and if you could just say something about that, how it possibly is affecting you, if you see anything that coming for those reasons. Also, you have said before that you have raised prices there to, well, mitigate the tariffs. Is that? Have you been able to compensate fully for the tariffs? Or, well, if you could elaborate a little bit on that.
Mm-hmm. If we start with the tariffs, as you probably know, they are hitting the Beijer Electronics products, not Westermo. Beijer Electronics have, you know, right away, implemented price increases to mitigate that. We don't see any major pushback from our customers regarding that, and we don't see any effect either on our volume. I think that has worked quite well. When it comes to the Buy America impact, of course, this is a discussion that is coming up more and more, I would say, in discussing with the North American customers. So far there, you know, have been ways around it. With our customers, it hasn't been a big issue.
It's not preventing us from selling in any way, but it is, of course, a factor that we are monitoring and looking at, to see if and when, you know, we need to do, take some measures, because of that. If that answered your question, Henrik. Hello?
Maybe we lost, Henrik.
Yeah, yeah.
There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Yes. Thanks for that. We do have one written question here. How large is your data center business? Today it's actually a relatively small business, and it's Beijer Electronics that are one of their or a couple of their customers that are active in this industry. We all know that it's a growing industry, especially in the U.S., we see a big interest. We expect this business to grow going forward, and we can grow with our existing customers there. There are no more written questions. With that, we will conclude this call. Thank you all for listening in, and have a great evening.
Thank you.