Hello, my name is Malin Siberg and I am the CEO of Guideline Geo. I'm here to present the Q1 report for Guideline Geo, but I will start with a very brief introduction to the company for any newcomers on the call, and then we will walk you through the Q1. Please type any questions you may have in the chat and we will respond to them in the end of the call. Guideline Geo, what we do is that we map and model what is below the surface using geophysical methods. We have three main applications. One is the groundwater management, that using our solutions we can find groundwater reservoirs, we can monitor groundwater for pollution or saltwater intrusion. It's a growing need worldwide.
Ground investigation, that is regardless if you want to build, if it's a tunnel, it's a railroad, it's a power plant, you need to know your ground prerequisites. Ground investigations using geophysical methods is key here. Our third application is utility locating. Finding pipes and cables just below the surface is key to any roadwork. Our customers are both in the private sector, contractors and consultants, and in the public domain, both governments like water authorities, but also academia research institutes. If that is what we do in very brief, this is who we are. We are stock listed on Nasdaq First North Growth Market. Last year, 2023, was a record year for us. We had net sales just about SEK 200 million. Our EBIT, our profitability, was SEK 19.2 million and we had a positive cash flow.
For a company our size, we have a true global footprint, our global reach, both through our direct sales, direct channel, that is mainly North America, part of Europe, but mainly more than 70% through our indirect channel, our distribution partners. We pride ourselves to be innovative, to lead this industry, and innovation is part of our DNA. We are made in Sweden, we have our headquarters in Stockholm, we have our manufacturing up in Malå, in Västerbotten, and our R&D, our brilliant innovative R&D in Umeå, in Västerbotten. And we celebrated 100 years last year. We go to market under two brands. It's ABEM, or ABEM, that was founded 100 years ago, and MALÅ, which is the name of the city where we build our instruments. That was in very brief about the company. Let's deep dive into the Q1 report and results.
Q1 was a weak quarter for us. Both sales, net sales, and order intake was weak. SEK 34.1 million in net sales and the order intake was SEK 36.4 million. Higher but still a weak quarter. There is a seasonal variation in our industry. You've heard me say this many times before, and I will deep dive a little bit more into that in the next slide to tell you why it's so. If you compare the Q1 numbers on net sales and order intake with Q1 last year, it's a big difference. The comparison is also because Q1 last year was a very strong Q1 for us, exceptionally strong. With this net sales, of course, EBITDA and EBIT is also showing negative numbers. The weak sales is what drives the negative profitability.
The cash flow is SEK +1.7, and I'll go into more details about the cash flow and the reasons behind the SEK 1.7 in a few slides to come. But overall, a weak quarter. What do I mean when I talk about the seasonal variations? This chart shows you our quarterly net sales from 2020- 2024. The red bars are the Q1 net sales results. As you can see, year by year, the Q1 net sales is the weakest quarter in the year, apart from or except last year when it wasn't. But typically this is what we see. Why is that? One thing is that we have a pretty large part of our sales through public tenders. Public tenders in many parts of the world, they really tend to boost up in the end of the year.
We close many of the public tenders in Q4, around Q4, and we ship before the year ends. So there is a variation in our customers' buying behavior, specifically in the public sector. There is also our end users are surveying, surveying subsurface. And when there is a cold season in part of the world, it gets harder. So there is not as strong need for new instruments in the colder season that also affects or counts as a seasonal effect. Then there is a seasonal effect that is internally driven, that we could impact ourselves. We had a very strong end-of-year push last year. A lot of things happened, a lot of instruments. We shipped gear from Malå in high volumes in Q4. So there was a strong internal end-of-year push internally at Guideline Geo and through our partner network to close the year in a good way.
We could see that last year. If you look at the bars, when we've had really strong Q4s, we typically see that we have weaker Q1s. That was definitely the case this Q4 to Q1. On top of that, we typically did yearly increases. This year we did a price increase from January 1st. That helped boost the end-of-year push, but it also perhaps helped create a drive, a weaker Q1. If I want to highlight a few things around net sales in Q1. If you look split net sales up in regions, what stands out is a weak Q1 in EMEA. APEC is doing pretty okay and America is more or less flat. But EMEA stands out as the weakest region for us in Q1. Again, if you compare to Q1 last year, EMEA had a very strong year.
Many of our large tenders happened in EMEA in Q1 last year. Those of you that have followed us might remember the large Pakistan order in Q1 last year. So Q1 last year was very strong. Q1 this year, we didn't have any of the larger tenders happening in EMEA. If you look at market and products, the groundwater sector and the ABEM product line, we saw pretty strong or solid sales here, while it's the MALÅ side that was weak in Q1. And I'll show you a bit more details on that in the coming slide. We are an export company. We sell almost everything in U.S. dollars or euro. And last year's Q1, we had a pretty strong tailwind from the currency effect, SEK 3.5 million on the net sales of the company. And this year it was still a tailwind, but it was SEK 0.8 million.
Weaker impact of the currency, a weaker positive impact of the currency in this Q1. If we turn our eyes to order intake, again, EMEA stands out as a weak region for us. APEC is okay and America is pretty strong growth. One thing to highlight is that we got a really large order that we sent a press release around from the U.S. around our RockTech solutions. We got the order in Q1 and the customer expects us to deliver in Q2. You've heard me talk about our sales strategy and our channel strategy. In Q1, we developed our sales channel. We continue to develop our sales channel. We held two regional partner conferences, one in APEC that we held in Indonesia in early March. The week after, we held one for our Latin American partners in the U.S., in South Carolina, in Spanish.
We think these types of events are really key to engage our partner network, to train them how to sell, train them on our products, train them on our customers' applications. So it's a really efficient way of driving sales. We could see an impact that both Latin America and APEC had pretty strong Q1 sales. So this is working for us. During the quarter, we also signed one new distributor in the U.S., specifically for utility locating, which is a big market in the U.S. For those that have followed us, you've heard me talk about adding new distributors or changing distributors in a pretty high pace during the end of 2023. So there's been a strong effort to actually get these new distributors, support them to get up to speed and up and running as fast as possible on our new solutions.
End of last year, we announced that we were about to acquire our distributor in Australia, in Sydney. January 15th, we completed that acquisition. That happened this quarter. That we completed it on time and according to plan. Now we have Guideline Geo Australia as a fully owned subsidiary. It's the first quarter that we close with them as our subsidiary. We've already received the first sales through the new subsidiary. It's really pleasing to see. If we change our perspective from sales to profitability, here is a slide around EBITDA and EBIT. The top graph is EBITDA quarter by quarter 2020 to 2024. The one below is EBIT during the same period. This EBITDA and EBIT is weak, negative. It's, of course, driven by the weak sales.
You can also here see the impact of the seasonal variations that you typically see that EBIT and EBITDA is negative in the first quarter and typically stronger in the second half of the year. It's a correlation to sales directly. If you see the difference between EBITDA and EBIT, it's the depreciation. And depreciation, this quarter was SEK 3.7 million compared to SEK 2.4 million last year. And the two things to highlight here is, of course, the Australia acquisition that we completed January and we've started to depreciate. But also the MALÅ MIRA Compact R&D project that I've talked about. We launched it, or we launched it last year. We started shipping and closing the project end of last year. And we are now depreciating that project. That was a big R&D project and investment for us.
I want to emphasize that our cost development is according to our plan. So we don't see that EBIT, the poor and the weak EBIT and EBITDA is because of a large cost increase. The cost development is according to our plans for the year. Moving our eyes to cash flow, we're pleased to see that we had a positive operating cash flow in Q1, SEK 6.0 million compared to SEK 3.8 million, same period last year. And one reason behind that is that we did a lot of shipments to our customers end of December last year. And those customers have now paid. And we've got a positive cash flow out of the strong end of Q4. If you look at the cash flow from the investment activities, they include specifically Australia. And we also continue to invest in R&D and activate some of the R&D expense.
To fund the acquisition, we took a bank loan for the acquisition. The bank loan was SEK 8.4 million when we completed the acquisition in early January. That helped us get above the red line on the net cash flow for the quarter, SEK 1.7 million. Our net cash is SEK 23.8 million compared to SEK 19.8 million last year. Moving our eyes into product and product sales, here is a slide showing the split between our two brands, ABEM, the orange one, and MALÅ as the blue one. As you can see, we have two equally important brands. The ABEM brand was the stronger one in this quarter, driven by the water sector, as well as our higher volume ABEM product, which is the ABEM Terrameter LS 2, our resistivity instrument. That went pretty well in Q1. MALÅ, on the other hand, had a really weak quarter.
Again, you can see that Q4 last year was an exceptionally strong MALÅ quarter for us. The weak Q1 for MALÅ can partly be explained by MALÅ MIRA Compact. Let me tell you why in the next slide. MALÅ MIRA Compact was a big R&D project and a big launch for us last year. We launched internally by summer. We launched externally in September and started taking orders. We shipped the orders that we had received in December last year. Most of these orders went to distributors, our partner network that bought so-called demo equipment from us. What happened then? They got shipments end of year by Christmas. In Q1, they have done a lot of sales activities. It's a big investment for our smaller partners. They want to make sure that they get customer interest in it. They do workshops.
They do demos. They do conferences. They do user conferences. And they do a lot of sales activities with this new MIRA solution. But we do also see that this type of larger solution, for us it's larger and for our customers it's larger. It's an investment up to roughly SEK 1 million. It's longer sales cycles to buy one of these compared to one of our smaller solutions. So we do see longer, and we had expected and planned for longer sales cycles. And it is a new and pretty complex solution with the instrument and the softwares. So we know that this has taken focus from our own salespeople, but also from our partners doing all these sales activities around MIRA Compact. So very strong Q4 when they bought the demo systems.
Now they need some time to actually do the sales activities to actually get the sales that they expect out of it. We still think that this is a very promising product line for us. We get good, positive end customer response from all the sales activities that is ongoing at the moment. If we turn our product eyes to ABEM, at the end of last year, we signed the strategic OEM agreement with a Danish company called TEMcompany. The rationale behind this is that we both want to increase the use of TEM methods in the groundwater sector. We really see that their product line is very complementary to our own. It strengthens our existing, without competing, our existing product portfolio for the groundwater sector. We have resistivity and we have other TEM products that are more higher end.
This is a kind of entry-level models. The setup in this agreement is private labeling. TEMcompany designs and manufactures TEM products for us. And we bring them to market and we sell and support and service these globally under our brand name ABEM. We signed the agreement end of last year. In February, February 29th, we did the external launch to our end customers of two models, the GroundTEM i5 and i10. It is early, but we have seen positive response already. We brought them to our two partner conferences to actually have all their partners get their hands on it and be able to buy demo equipment, as this is a key part of their sales. This was the end of my presentation.
The key takeaways from this quarter that I want to send to you is that, yes, we had a weak start of the year. We quite often do see that, but it is a weak start. I'm confident that we have a clear strategy. We are doing the right thing. The underlying markets are there. We are on the right path if you look at the longer-term perspective of one quarter. With that, I'll end the presentation. I will move into a Q&A session if we have any questions from you.
Yes. The first question is, should we expect Q1 to always be this weak? Or are you taking any actions to improve the balance?
Some things will happen year-over-year. Like we can't change the climate. Surveying in cold climate doesn't happen as much as in warmer temperatures. That customer behavior and end user behavior, we can't affect that. Public tenders worldwide, that they are doing a push by the end of the year, we can't change that. We can change our own internal behavior. Typically, we had a very strong end-of-year push to serve our customers, get fast deliveries. We could change that behavior a bit. We have, of course, also reflected if it was really smart to do the price change from January 1st because that also boosted the behavior to place orders and get deliveries before the year end. Yes, of course, we have reflected. There are some things that we can do to change.
You mentioned currency effect. How did it affect this quarter?
If you look at net sales, we have a positive effect of the currency. SEK 0.8 million for the quarter compared to SEK 3.3 million something. It's in the presentation last year, same quarter. So it's still a positive currency effect on net sales, much lower than last year.
I guess you're not happy with the SEK -5 million in EBITDA. Is there any one-time cost that could explain this?
No, it's not a one-time cost that made the negative EBITDA. Of course, we are not satisfied with that number. It's a kind of general cost increase that we have set up for ourselves and planned for that gives this result. But there are one thing or a few things that stands out. Something that I want to highlight is the contribution margin. The margin on our products is affected by the product mix that we sell during that quarter. And when we have a weaker, lower sales than the product mix, it becomes even more important. So we have had a lower product margin on the portfolio that was sold in Q1. And we were, as you could see, we were heavier on ABEM than on MALÅ than we used to. It used to be the other way around.
With the ABEM sales, we saw unusually strong sales of accessories that are not our own, third-party accessories like cables and like other third-party accessories where we don't have the same margin. The overall margin was hit in Q1 a bit. That was one example of a one-time effect that we could see that impacted the EBITDA.
Following that question, we got a question, how does the gross margin of the MIRA Compact compare to the full product portfolio?
I think you could see that as MIRA Compact was such a large part of the sales in Q4, we had a strong margin in Q4. MIRA Compact does not, it's a solid margin where we should be.
Despite the start of the year, do you think we can reach the same result EBIT in 2024 as in 2023?
I cannot comment on any forecast going forward, either on net sales or on profitability. I'm saying that we are in this for the long term. We knew that Q1 is weak for us. This was a bit exceptionally weak, but Q1 is always weak for us. We have a plan for the year that I'm confident in.
Is the weakness of demand in EMEA only due to lack of tenders? Or is there also a general weakness in the market?
We've given that a lot of thought, of course, because EMEA stands out. Again, I would like to say that last year, EMEA was exceptionally strong. We had many large tenders going our way. And this year, it was vice versa. We had quite a lot of orders that didn't go our way for different reasons. Another thing that was, if we look at Q4 EMEA, EMEA was exceptionally strong. And many of the MALÅ MIRA Compact sales went to our partners in Europe. And they have been extremely busy, perhaps busiest in our partner network with sales activities on the MALÅ MIRA Compact, which has affected their time spent for normal sales and normal orders and other things. So I think EMEA has perhaps been a bit ahead of the rest of the partners in MALÅ MIRA Compact. And that is part of the explanation of the weak EMEA.
So no, we don't see a problem in the underlying market needs in EMEA.
Did you think you gained market share or had a pullback of Q1 orders when closing Q4? Communication in Q4 indicated that you expected sales to continue up. How is order intake so far in April?
I think that we saw some effect of pulling in Q1 orders into Q4, looking back. That is part of an explanation. Not the full explanation, but part of it. And I think we can see that looking back in the trends, strong Q4s gives us weaker Q1s. Do I still believe in growth? Yes, I do. So I think this is a Q1 effect that we shouldn't, of course, take seriously. But it's not that the market is not there or is disappearing for us.
Can you comment on the increase and change of the products in work and your stock with a quite high number?
You mean the balance sheet?
Yes.
Yes. Yes, we have increased our stock levels in the balance sheet. You can see that. And I think it comes from two reasons. First, because of the weak sales. But also the way we work with purchase is that we build our equipment not to stock, but to our forecast. And we also buy material towards our sales forecast. So those two methods in combination is what has given us an increase in stock levels in our balance sheet.
Do you have any sales to the defense industry in, for example, Ukraine or Israel?
We have some, but it's absolutely not one of our main markets. The main markets are the three that I mentioned in the beginning. It's the groundwater sector that is really growing for us, infrastructure and building markets, and specifically in utility locating and general ground investigations. You might say that it will be impacted by defense and perhaps also even NATO activities in part of the world in terms of infrastructure. We see a growth in infrastructure investments worldwide. Typically, if you invest in infrastructure, you need to know your ground prerequisites. If you need to build a new airport or a new railway or a new tunnel. But we're not targeting the defense sector specifically. But indirectly, absolutely.
The MIRA Compact sold for demo in Q4. Were they sold at discount or full price?
No, we typically, when we have an indirect channel with our partners, we offer demo equipment at a demo discount as an incentive for our partners to invest in demonstration equipment. Because in our industry, we have a saying, seeing is believing. Our customers need to try the gear, see the results before buying, especially for the larger investments. So having demo equipment as a partner is key for strong sales. And yes, they get the discount on the end user price.
Unless we have some more incoming, I believe that was the last question.
All right. If you have any other questions, please send us an email or attend the next Q2 report. Thank you for attending. See you again in a quarter's time.