Lagercrantz Group Stock

Welcome to Lagercrantz Group Q1 Report 2026-'27. [Operator Instructions] Now, I will hand the conference over to President and CEO, Jörgen Wigh; and CFO, Karin Mellegard Djarf. Please go ahead.

Yes. Thank you, and good morning, everyone, and welcome to our intervene report for the Q1. And As you know, we are starting our year 1st of April. So this is the quarter ending at April through June then. Welcome, everyone. A bit puzzled around for the reaction here this morning. We thought we posted a strong quarter, well in line where we have been before or even a bit slightly stronger with some earnings per share growth of 20% and some 6 M&A deals over the last quarter, which is more than we've done before. So it's -- but we will get into that as we move along here.

Together with me here, I have Karin with us as well, our new CFO since a few months ago. And we will go over the presentation in sort of three chapters or parts, where we will start with a short introduction to Lagercrantz Group for those that are new to us, and then we will jump right into the quarterly report, and then we will end up with some, yes, some comments on where we are with the group going forward.

So welcome, everyone. I will start with an introduction to Lagercrantz Group then, I mean, we are -- you've seen this many times. We are a tech group building through M&A and development of the companies that we have, building leading positions in expansive niches. You can see over to the right where we have most of our companies, it's Northern Europe that we cover now. And -- but we also have some really export-related businesses. So all the way to the right, you can also see where we have some footholds all around over the world, with some in the North America, with some in Asia as well. We have our scope where we would like to work is the B2B tech or B2B industrials, where we have offer value-creating technology in expansive niches. And we have organized ourselves into these five divisions that you can see, and we will comment on how the developments are in these divisions as we move along.

We are very keen on working in a decentralized fashion. So we have all our companies organized individually under their own brand name in their own market, addressing their own market and customers. And you can see where we have our profit units or companies as we call them here with 17 companies in Electrify, 17 in Control, 15 in TecSec, 21 in Niche Products and 16 in International. We have just surpassed SEK 11 billion. It wasn't long ago since we went above SEK 10 billion. And now we also, with this quarter, surpassed SEK 11 billion in sales or total revenues for the group, and we have about 3,800 employees as of today.

And as you all know, we are a buy and build or we are a serial acquirer, acquiring companies. So acquisitions is a very central part of our business model. We expect 2/3 of our growth to come through M&A over the years, and that's where we were also in this quarter. And we were part of the Bergmen & Beving Group up until 2001, where we were split out and have been listed as a separate unit, separate entity since 2001. So that's a bit of a background.

So let's move into the quarterly report or the interim report. And here, we can see that we posted another strong quarter, we think, in terms of growth, and we are well on the way towards the SEK 2 billion goal. And you can see that the trajectory has been very strong over the last 3, 5 years here and that we continue that with another strong quarter. You can see that the scales left to right here are proportional, meaning that you could also see that we have a strong growth also in terms of margins over the years, and we have continued that also here in the last quarter. So that's -- and yes, we'll get into the numbers in a while here in just a bit.

We also believe that we saw some improvements in terms of the business conditions during the quarter. On the aggregated level, we have a lot of different segments, so it varies between the segments. But on an aggregated level, we've seen a continued positively stable activities during the quarter and especially in the sectors where we are strong in terms of electrification, infrastructure, security and defense, also within marine. And also some of the clusters that we're building within Niche products have had a good development during the quarter. And along the way here, where we also see some uptick in the order intake, as you can see here. While we still feel that the demand in the construction sector have remained sluggish, that is the sector lagging behind, even though we've seen some slight improvements also there, but from a very low level and small ones.

The order intake, then, was very strong. We have posted some 6% or 5% or so in the last couple of quarters. But here during this quarter, it was -- the order intake was 10% higher than the invoice sales. And when sales are growing like it is, it's actually a very good number compared to previously. But we also saw that some of these orders that came in were more project-related orders with longer lead times. Those are around sort of different types of sectors, construction, infrastructure projects with some lead times of 6 to 18 months or so, but still good that those project orders are happening, which is also, I think, a sign of that we see some improvements in the market and in the general business climate.

Gross margins remain stable, but we also saw some signs of -- or strong signs of cost inflation, driven by higher raw materials and freight prices. And therefore, we are working also with compensation through price increases to customers in many of our companies. That, I think we learned over the years and especially during the pandemic, where we've got used to really drive things through price increases and price adjustments as we see raw material prices and freight prices really change. And I think we have learned that over the years. I think we're pretty good at it. And therefore, we -- but now we are in a phase where we need to push that a little bit more even.

We can also see that during the quarter here, we continued our good growth in terms of proprietary products. We're currently at the 80%. And we also see over the years that we are becoming more and more international over the years. So you can see that we are -- especially -- you see that Sweden is growing, but as part of the total group, the net revenues are currently at some 30%. Denmark is our second biggest market. And we have also been quite acquisitive and active in the United Kingdom. And therefore, that is currently our third biggest market in the same level as Norway, but still at the 9%. It used to be much smaller. So we are growing and becoming more international over the years.

By that, I think we're going to move right into the numbers, and I'll hand over to you, Karin, to describe a little bit what happened during the quarter in terms of figures.

Good. Thank you. And as Jörgen already mentioned, we believe that we started our financial year with a really strong first quarter. As you can see, our revenues increased by some 18% with acquisitions contributing with 12% and the organic growth reached 6%, and this is the same level as in quarter 4. We had no currency impact in this quarter. EBITA increased by 15% and landed at SEK 498 million, and the EBITA margin ended up at 7.1% (sic) [ 17.1% ] compared to 7.5% (sic) [ 17.5% ] last year. The cash flow from operation was more or less in line with prior year and was relatively strong, and ended up at SEK 279 million. Profit after financial items, EBT, increased with 18% to SEK 405 million and profit after tax improved with some 20%.

Earnings per share in the quarter improved with 20% and increased to SEK 1.53 per share. And rolling 12 months, we reached SEK 6.07 per share. And as we have communicated earlier, the Board proposes a dividend of SEK 2.50 per share. During the quarter, we have completed 6 acquisitions with approximately SEK 400 million in annual sales. And Jörgen will talk more about these acquisitions later, but they are divided both between divisions and countries.

And then just very briefly on the outcome by divisions. If we take a look at the outcome per division in the first quarter, we can note that the strongest divisions are Electrify and Niche Products, both continues to grow and maintain an EBITA margin over 20% for another quarter. TecSec has improved the EBITA margin compared with prior quarters, and International is in the quarter impacted by seasonality in two newly acquired companies that will be mentioned later.

And Control is not on the level that we would like them to be. But Jörgen, you will tell us more about the divisions now.

Yes. I think it's worth mentioning why we're on this -- when we have these numbers in front of us that you see the International division. I mean, we have also had some seasonality to the business. And we have commented on that earlier, and you can see that here. There is some sales being added in the International compared to last year, but you can see that the volumes are significantly lower than they were here during the winter time. So we have the Friggerakers and Epoke that is affecting the numbers in a negative way here in terms of how the quarter came out. They have a strong tendency towards the fall and the winter with a very slow season here during the summer, which we have commented on. And that's, of course, affecting the international numbers here, which we have communicated earlier to you guys.

So -- and a little bit more on what happened in each of the divisions. Well, we had some segments that were really strong for us during the quarter and especially the Electrify and the electrification and infrastructure that they have their business related to. Here, revenues were up some 13% and acquisitions were 3% and organically some 10% growth. So here, we see some good organic growth in this. EBITA was up 25% to SEK 153 million, and the EBITA margin was for another quarter then above the 20%, which is the target. So 20.1% as opposed to 18.3% last year. Here, we saw some broad-based organic -- positive organic development in these companies. Many of them performed very well and particularly so for the company Mastsystem in Finland, Nordic Road Safety, Elfak and Elpress. Four major companies within the division that have all posted good numbers and good development during the quarter.

Here, we also concluded one acquisition during the quarter, which is Michael Smith Switchgear in the U.K., a leading provider, which I'll come back to of low-voltage switchgear solutions. And I'll describe the company a little bit later here during the presentation. But a really good add-on straight into where we would like to be in the segments, with what we're offering. And also, I mean, where Electrify is being set up in the U.K., they haven't been there before in that division.

The Control division increased their revenues by 14%, but most of that came from acquisitions. And the acquisitions has been landing very well. But we also have had some companies that have been lagging behind. So organically, it was only 2%. The EBITA stood still then at the SEK 51 million, and the EBITA margin fell slightly then to 14%. Some companies still are doing it very well in the division, Direktronik, Radonova and Stegborgs showed good improvements, while others, especially smaller businesses related to the construction sector, which we have been discussing before, the Vanpee companies, especially in Norway, a couple of smaller companies have been struggling. And therefore, we are also taking some measures during the quarter here, which has also added some one-offs in terms of costs here during the quarter.

And also, we had the Precimeter, which has been performing very well for us over the years, reported a weaker quarter, and that is behind the somewhat disappointment in terms of EBITA here in this division. And the newly acquired Danish company, Hycon, which I will also introduce later on, made a strong start within the division. So good acquisitions and a good development and also dealing with some of the low performers in the division during the quarter here, which adds up to these numbers.

In the TecSec division had a positive development during the quarter. Revenues were up some 28% and acquisition was 17% on organic 12%. So really good growth from both acquisitions and organically within the division. EBITA was up 20% to SEK 101 million as opposed to SEK 84 million last year and the EBITA margin at 15.1%. Several of the division security business delivered improvements in a continued sluggish market environment. We are still dealing with that, but somewhat better here and especially Idesco in Finland and ISG Nordic, CW Lundberg and R-Con had good performance during the quarter. While others struggle a little bit more, PcP in Denmark and Northern Europe with their ratings struggled and also some construction-related U.K. businesses with specialist a couple of the door companies, Door and Joinery and Principal Doorsets did not live up to last year's performance.

On the other hand, we had the Holland acquisition that was acquired in November, reported a strong result during the quarter. That is a significant acquisition for TecSec and for Lagercrantz, and that had a very, really good start. That is also bringing us to a new segment with MedTech businesses, and that showed very -- has been very promising for us. So the Holland, we're very keen on. And during the quarter, we also landed another one, a second one within the MedTech segment, which is the Marsden acquisition, which has also come back with some weighing solutions and weighing scales for NHS and other customers within -- especially in the U.K.

The fourth division is then the Niche Products posted revenues up with 16% -- most of that came through acquisitions, the 15%. So organically it was a bit slow. They're still struggling a bit with the companies related to the U.S., but maybe less so than before. So EBITA was up 21% to SEK 137 million, and EBITA margin improved slightly to almost 21%, which is a really good number for Lagercrantz and for the companies that we have and where the normal where Niche products usually are.

Posted a stable quarter with good profitability in several of the businesses, especially Truxor, Wapro and Thermod delivered clear improvements in earnings compared to last year. While we saw some weaker organic growth, especially in the more U.S.-related businesses, the Asept and the Tormek, which are really important and still are on a good level, but not living up to last year's very strong performance. And the more recently acquired Sit Right and Enskede Hydraul had off to a good start within Lagercrantz. And here, we concluded two acquisitions during the quarter, Nivex Topsafe and Stalon, and both of them have had a good start within the group. I'll come back to those as well.

Last but not least is the International division. Revenues there were up 16%. Acquisitions stood for 13%, organically 3%. And the EBITA was down then SEK 66 million, mostly down due to this seasonality effect that I already described. The market situation was stable overall, and the division delivered a quarter with a solid growth across many of its businesses. And especially the marine businesses, the Libra in Norway and Tebul in Finland, as well as also the companies that have been strong performing for us before is the DP Seals and also G9, a fairly small company, but still doing it really well for us in Denmark in the last year or so. We have a new management team on board there and then, doing a great job with that company.

But the seasonality effects are the big factors here due to why the EBITA was slightly down was down. And that since we included them their P&L first consolidated in July 2025, so we didn't have them last year this quarter. And that means that they're coming in with some -- yes, losses really, and that means that, that is affecting the EBITA for the whole division.

So that's comments by division. And by that, I think we should look ahead. I think that we should come back to our vision and financial goals. And I mean, we continue building our group with all these really nice niche-oriented businesses. And I think this quarter was no exception, a strong growth. And we also have been talking about that we should grow EBT long term by more than 15%. I think the EBT grew by 18% now. And during the quarter, the earnings per share was up 20%. So it's actually growing faster than our long-term goal. And we also talked about that at least 1/3 of that should come organically and the rest through 8 to 12 acquisitions per year, and that's where we've been also this quarter. We concluded some 6 acquisitions during the quarter. And the split between organic and inorganic was exactly 1/3 organic and 2/3 inorganic. So that also meets those targets and what we expect.

Return on equity should be at least at 25%. And if I remember correctly, I think the figure was 29% now. So it's been really good in terms of also return on equity. So we're continuing building our five divisions. I think that we have five really strong divisions that we've seen. And it's good to see that they're growing and taking on over responsibilities really driving it like they were an individual Lagercrantz, all of them, becoming really sort of important both in terms of developing the companies that we have, but also adding some 2 to 3 acquisitions per division per year, which adds up to the number that we expect from the total group then.

I think we have also very well-positioned companies. We are within safety technology. We are within electrification and infrastructure. We are within defense. So I also see that a slight pickup in the market will be good for us as we move along here. So we are like to build these divisions in attractive segments with underlying structural growth, which has been the theme that we've been talking about for some time now. We will also have -- continue with our strategic ambition of driving the proprietary products to the 85%. We said that we would do that within five years. We are on that sort of level of improvement or gradually changing it. So we are currently at 80% halfway from the 75% we used to be. So it's -- we are well underway but also delivering on the 85% proprietary products.

Looking a little bit at the acquisitions. I mean that is really important. That is 2/3 of our growth should come from acquisitions. And we have now -- and I said 8 to 12 companies per year or acquisitions per year. And currently, we have a pace of 14 since April 2025, adding some SEK 1.5 billion in annual business volume, which is more than the -- since we have SEK 11 billion now in total, so it's more than 10% that we expect. So it's on a good level. I think what we've seen, we've seen a good M&A market over the last year, and we continue to see a good market. And here during the quarter, we posted some six acquisitions here. You can see them down there to the right. But since 2025, the April, it's been 14 acquisitions. So a really good sort of level. And I think we are up and running in terms of how the divisions are working with this and really closing more deals along the way and really drive things through M&A as well.

Just -- and as you know, we try to illustrate what type of companies we are acquiring by having these type of fact sheets on all of them. And I'll just flip through a few of them. During the quarter, we acquired here Michael Smith Switchgear. And it's a U.K. company with manufacturing of bespoke low-voltage switchgear and electrical distribution assemblies. Headquartered in Leicester and a really good company, used to be family-owned, and we're working together with the management team and the family there going forward as well and looks very promising in a sector where we really would like to be. And this is then for the Electrify, a very important step into the U.K. market. So this is the Electrify's first U.K. acquisition, which is also a bit of an achievement.

Within the Control division, we acquired Hycon, which is a Danish company based in Stovring in Denmark, which is a leading supplier of high-performance hydraulic tools and power packs for cutting, drilling and pumping in harsh environments. So you can see from the picture there. So in subsea, for instance, you need to use hydraulic as opposed to electronic -- electrical sort of tools, and that's where Hycon is positioned. And you can see a good development and also some high EBITA margins down to the right there expected of that company. So really a traditional good company with proprietary products in the Nordics, which I think will be a good add-on then within the Control division.

Within the Niche Products division, we acquired Nivex Topsafe, which is -- will be a stand-alone business, but it is related also to the Profsafe that we already own within this sector or within the segment. With safe storage products and other types of cabinets, fire cabinets and safe rooms that they're providing for especially the Nordic market with also some good developments. And some stable and good developments you can see there, but also some -- yes, in terms of purchasing, in terms of manufacturing, we're also looking into some synergies there together with the Profsafe business that we already own, which is of the same size as this one. So building a bit of a cluster here with a strong market position with these two companies in the same -- under the same owner.

Another company we acquired within the Niche Products division is the Stalon business, which is the manufacturer of silencers for hunting firearms. Another proprietary product type company, which -- and you can see down there, it's not that big, but it is having really good numbers in terms of EBITA and EBITA margin. So it will be a good add-on for the Niche Products division going forward, will be a stand-alone business.

And last but not least, I will like to introduce the Marsden business, which is another U.K. business. We talked about TecSec getting into the MedTech business as well with the Holland acquisition here of last November. And this is the second one coming into the Marsden business. This is smaller than the Holland, but still on a very good level in terms of the EBITA and EBITA margin. A very appreciated supplier of and trusted company delivering to NHS and other sort of public type character or buyers or customers and doing it really well over many years. It's been -- they've been around for more than 100 years, and we can come in as a good next owner of this type of company. So a good example of how we would like to work with things.

So to round off this, here we have the financial overview. As said, I think -- we think that we posted a very strong and just a quarter adding to what we've done before. We see that we had some good organic growth, 6% in the quarter and also a book-to-bill of more than 1.1, which is really good on top of that strong growth in sales. We increased our earnings per share by 20%. He says 18%, which is on an annual base. But in the quarter, it was actually 20%. And we concluded some 6 M&A deals, which is more than we have done in any quarter, I think, before. So -- and also entering some new sectors with MedTech along the way as well. So it's -- I think we are in a very good position and looking forward to the future with some -- yes, given what's happening geopolitically, we'd like to be a bit careful what we say going forward. But as of now, it looks good for the future.

So with that, I think we'll round off and open up for questions.

[Operator Instructions] The next question comes from Zino Engdalen Ricciuti from Handelsbanken, please go ahead.

First one on the International segment. We seem to not have captured the full seasonality in our estimates. But I'm wondering if we put the Epoke and Friggerakers aside, is it possible to elaborate on how the margin developed year-over-year?

The year-over-year, they were a slight improvement in margins. So the Friggerakers and Epoke effect is significant. Yes, it is.

Very clear. And regarding your outlook comments in the report, I think you've written for a while now that you've been cautiously optimistic and now you are entering the future with confidence, is how you're wording it. Would you say that this increase in confidence, is it due to you now having seen organic growth for a while now? Or is it something in the quarter that has made you more confident?

I think we've seen a gradual improvement over the last couple of 2, 3 quarters, but that has, yes, materialized even further and gone and been slightly even stronger here during the quarter, which we indicate by saying that the book-to-bill was 1.1 in the quarter or about slightly more than that. which is strong was about 6%, I think, before. So we're now at 10% and that is, yes, giving us some increased confidence, yes.

Very clear. And just last question for me, the higher cost inflation that you're seeing, you have a track record of handling that. But I'm wondering if there's any mismatch in the quarter we see now between cost and price.

I think that we have some growth. And you could see that the gross margin on a group level is about the same as it has been. So I don't think there is a significant mismatch. But on -- when I look down certain companies, we could see that we need to push pricing even further to get fully where we would like to be. And we also see some cost inflation in terms of our own overhead and things like that, and that we also need to be very careful with as we move along. So not significant, but still some things to work with there.

The next question comes from Johan Sundén from DNB Carnegie.

Actually, a couple of questions that touch upon what in just asked about. Is it possible to get some kind of quantitative figures on the quarter-to-quarter step down in EBITA in -- due to Epoke and Friggerakers?

Well, I don't think it's fair to communicate that here. We should do that in a more -- in another fashion then or yes, communicate that with the press release and stuff like that. So I think that's -- but as I said, it is -- and we have talked about it ever since our last quarterly report, right? So we have talked about it. So it is a significant effect as it is.

Yes. I just try to get some more color there. Second one is on -- also on cost side. Note that the admin cost in the P&L is ticking up quite a bit here in Q1 versus Q4. What is happening there? Is there anything worth flagging why admin cost is coming up, say, SEK 30 million quarter-on-quarter?

I don't think there is something worth flagging for now. I think it will -- there are always some sort of one-offs or things like that, that we need to address in every quarter. So it will go up and down, but it's not like it's a structural change or anything. I don't know, Karin, if you have some color to that.

No. But yes, I agree what you say. It's kind of -- you need to have a look at the more rolling 12 thing here. So it's nothing particular.

Fair enough. And on Electrified, just curious to hear your thoughts about kind of pipeline coming quarters regarding specific kind of product deliveries that we should be aware of? -- delays or big projects that ought to be delivered?

Yes. I think we have a few of those in all divisions. I'm not sure it's more related to -- we have the Mastsystem business, as most of you are aware of, it's project related. And that has been -- yes, they have built and gained some new orders as well along the way. So I think that business is picking up and becoming slightly less project-oriented along the way. But besides that, I don't think there's something specific within the Electrify. There are a couple of other divisions. There is -- within the control, we have gained some orders and also within the Niche Products division and also with International. So we have some project-related business that's come in during the quarter. that has slightly longer lead times, as we said...

That's how we explain the, sort of, extraordinary growth that we had during the quarter, which is a good thing. So it's a positive.

Yes, for sure. And my final question is on the balance sheet, looking at inventories coming up a little bit here. Anything special there worth flagging mentioning why inventories is coming up?

No, I think what you see there is actually some of the seasonality that I talked about that we see for NRS business, for instance, within the Electrify division. That is -- have some seasonality in order -- also when it comes to stock. And that also goes for the Epoke and Friggerakers business that we have within the International division. I mean they're now preparing and building and working quite hard to put together the products to be sold here in the next couple of quarters.

And therefore, we will have some increased seasonality when it comes to -- yes, both sort of working capital buildup, but also some -- when it comes to cash flows, where it will be slightly stronger during the winter and the fall and winter as opposed to the summer.

And just one final, if I may. It's on the gross margin also was down a little bit year-over-year. How much is it possible to give some kind of divide that into mix effect regarding the Friggerakers, Epoke and potential kind of squeeze from raw material inflation, et cetera?

That we can't really -- that is really hard to calculate for ourselves. So it's more of a gut feel. I think most of it is volume, but still some of it is price related when it comes -- I mean, we had an organic growth of 12% during the quarter, right? No, sorry, 6%. And I think most of that is volume, but still some of it is price as well. So yes, 2.5% and 3.5% or so maybe in terms of -- but that's a rough estimate from my side because we can't calculate that with all the different businesses that we have with all the different products that we have. So it's a lot of mix effects as well that goes in there.

But at least the feeling is that you keeping up with the cost inflation with your pricing and try to continue?

We're also highlighting that we need to do a little bit more to be totally satisfied, yes.

Perfect.

But that's what's happening, right? When we see cost inflation and freight prices and material prices -- raw material prices pick up, then it takes a while before we -- yes, we need to adjust and we need to communicate with our customers, and we need to sort of get it through. And it usually takes, yes, three to six months or so before we are through with that.

[Operator Instructions] The next question comes from Patrik Schwartz from Pareto Securities.

I think most of my questions have already been answered, but I have two left actually. The first one is on the order intake here. So previous quarters, you have communicated how the growth was in order intake organically. But I think in this quarter, you just reported book-to-bill. Is this -- I might have missed it, of course, but is this a change in how -- what data you report? And can you comment on the organic order intake in the quarter?

It's -- as we are indicating what we are communicating, it's slightly better than this quarter than it was last quarter. So it's moving in the right direction. what we communicated is the book-to-bill. It's been more than 1.1, as already said. And given that we had good organic growth in the sales figure, the order intake was really very good this quarter.

All right. That's great. And then on the second question, which is acquisition related. Since you closed quite a lot of acquisitions here in the last 6 months, I believe. How is your pipeline going forward? Have you closed several of the acquisitions you're planning on completing this year? Or how are the prospects?

I think we are working on -- if you like to call it all 5 cylinders with all our 5 divisions are working quite intensely with finding new acquisitions. And I don't think we have -- you shouldn't expect a slowdown or anything. I think we have a good pipeline. And we have -- yes, we have concluded some of the deals. I think that what we have seen in the last six deals that I already presented is that they are more of a typical sort of size and typical kind of acquisitions that we made over many years. I think what we did before that was also closing some deals, but those were slightly bigger.

And I think we will continue to look for bigger deals and smaller deals. But we expect to close at least 10% in terms of adding 10% of additional sales with good volume and a good margin and good profitability into the group every year and that we have now communicated that we are above that target both this year and last year. So it's actually looking very good.

Okay. And actually, one final question on Friggerakers and the Epoke here in International. If I remember correctly, their seasonal downturn is always during the summer months where it's quite warm. I think it's -- is it fair to assume that next quarter will be equally soft for those two companies, after which it will accelerate seasonally in your third quarter?

Yes. It's -- to some extent, that's true. I think that some of the orders are shipped already within the quarter that we have ahead of us. So our Q2 then before the end of September, but most will happen between October and December. Delivering these salt spreaders and sort of equipment for road or snow treatment on roads. And of course, that is related to the winter. But you can't buy one and expect it next week. So you need to place your orders early in order to get it for the next season, and that's how the business works. So it will be something here during Q2, but most of it will happen in Q3 and Q4. Q3 is more related to additional new sales and Q4 is usually related to more spare parts and things like that when things sort of depending on how the winter turns out.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Thank you, everyone, for listening in. I think you -- we will -- yes, we will be available here, both me and Karin, for some time. So if you would like to call us and have additional questions, feel free to. Otherwise, I wish for everyone to have a few weeks of the summer holiday, and then we'll get back to you soon. Keep up the good work. And thank you very much for listening in.

Welcome to Lagercrantz Group Q4 Report 2025/26. [Operator Instructions]

Now I will hand the conference over to President and CEO, Jörgen Wigh, and CFO, Karin Mellegard Djarf. Please go ahead.

Good morning, everyone. Welcome to Lagercrantz's year-end report call. We, as you know, have our ending of our financial year end of March every year. So we have just concluded our numbers and released them here this morning. So welcome, everyone. Together with me here, I have Karin with us as well, our CFO, and we will try to do this together. We usually end up having a 45-minute call or so, and we'll open up for questions at the end if you don't have any along the way.

So with that, I think we can get started. Yes, a short -- I will start with a short introduction, then we'll get right into the numbers, and then we'll look a little bit on where we are with the group and how we build the group for the future and some future priorities as we move forward, and then we open up for questions.

So let's start with a little bit of an overview. I think you -- this slide and this perspective you've seen many times, it's our -- an overview of the group where we have our 5 divisions and how we rephrase ourselves. We are a tech group with leading position in [indiscernible] niches. We have currently some 85 companies, growing with some 10 to 12 new companies every year. We have, during the fiscal year, surpassed SEK 10 billion in terms of sales or are now approaching SEK 11 billion here with SEK 10.6 billion or so in moving 12 months, I think we have.

And we are currently some 3,600 employees within the group. You can see over to the right where we have our needles where we are located. And it's a lot in the Nordics and Northern Europe, but we also have footholds in the rest part of the world, as you can see all the way to the right there with both in North America, but also in Asia. So we are a Nordic-based group, but moving and expanding in other markets. And we have definitely put our feet on the ground in the U.K. in the last few years, but are also now looking more into countries like the Netherlands and Germany and other sort of mid-Europe markets or still Northern, but still. Acquisitions is a central part of our business model.

And as I said, we have closing some 8 to 12 deals per year. We have been on the Stockholm Stock Exchange since 2001. And before that, we are part of the Bergman & Beving Group. I was listed already in 1976. So we've been on the stock exchange now for 50 years and our own name during 25 years. So that's a bit of an overview. We posted another very strong and solid quarter. We have the next one. Yes, there we are. With really some good developments during the quarter, even though we've seen quite a volatile market and a lot of uncertainty going on in the world with the geopolitical situations and what is happening in different parts of the world. And that is, of course, in the long run, affecting us as well, but we have seen very limited effects during this quarter.

And hopefully, we don't see any big things going forward either, but we see some volatility in the markets when we talk about raw material prices and things like that. But we posted a very solid quarter and continued our trajectory towards the SEK 2 billion in terms of profits, as you can see over to the right there. So another strong solid quarter. We commented in our report on the business conditions. So we move to the next one. We see some volatility and some uncertainty in different markets. But all in all, we still feel that we have a very diversified and strong portfolio of companies working in our niches.

So on an overall level, we felt that the market situation was continued to be stable also in the fourth quarter. We see a strong development and strong growth in electrification, infrastructure, security and defense-related businesses, while we see a slower demand still in the construction sector. Everyone has been expecting an uptick on an improvement in that sector, and we've seen a little bit of that, but very, very limited so far. So we think that the construction sector remains weak, even though we see some improvements in some areas.

The order intake, all in all, was then slightly higher than the invoice sales during the quarter and increased organically by some 5% adjusted for the exchange rate fluctuations, which negatively affected the order intake by 3%. And you can see down here that we have continued our development over the years. We see that we are becoming in the right one. We see that we are becoming more and more international. The Swedish part is growing, but still as a percentage of the total is going down a little bit. And we see that other markets are picking up, especially the U.K., then you can see that it's now the third biggest market within [ Direktronik ] with 9%, similar to the Norwegian one, which is also 9%. We also saw during the -- our key strategic focus has also been that we should increase the proprietary product share of our sales. And now that reached 80%. I will come back to that strategic aim of ours later on. So stable market and good market conditions along the way, as we've seen.

And here, Karin, maybe you can comment on the actual numbers here.

Yes, absolutely. And as you already mentioned, Jorgen, we are delivering another very strong quarter. The revenues increased by 13% and acquisitions was contributing with 12%, while the currency had a negative impact of 4%, while Yes. And on the other hand, our organic growth improved and reached 6% in the quarter. EBITA increased by 20% and improved steadily over the course of the year quarter-by-quarter, and the EBITA margin expanded to 19% compared with 17.8% last year. Cash flow from operations was 20% higher than last year and ended up at SEK 410 million compared to SEK 342 million last year. The profit after financial items and profit after tax both increased with 19% to SEK 438 million and SEK 368 million.

And -- when we conclude for the full year, we can see that we completed another very successful performance with the net revenue increasing by 13%, and we are now ending the full year with SEK 10.6 billion. Acquisitions contributed with 13% and currency had a negative impact of 3% and the organic growth amounted to 3% for the full year. EBITA improved with 17%, and the EBITA margin is still on a very high and a good level at 18.1% compared to 17.5% last year. Cash flow from operations remained strong for the full year, increasing by 14% compared with the prior year and ending up over SEK 1.5 billion.

Profits after financial items increased with 17% to SEK 1.5 billion and profits after tax increased with 18% to SEK 1.2 billion. Earnings per share increased by 18% and ended up with SEK 5.81 per share, while the return on equity amounted to 29% and equity ratio at 35%. Profit over working capital improved by 2 percentage and units ended up at 81%. And for the full financial year, we completed 8 acquisitions that corresponds to roughly 11% of the net sales for the group for the previous years. And also during -- and we will come back to that one. And during April of this year, we completed 4 more acquisitions with a total approximately revenue of SEK 300 million. And then also the Board proposes an increase of the dividend with 14% to SEK 2.5 per share compared to SEK 2.20 last year.

And then on a very, very high level, just -- and we will come back to this one, Jorgen will in short by division. In the fourth quarter, 4 out of 5 divisions reported solid growth and with a particularly strong performance in the International division, both organically and through acquisitions. And then from an operating profit perspective, 3 divisions, Electrified Control and International delivered strong EBITA growth as well as margin improvements.

But we would also like to highlight niche product that this still remains on a very high level on 22.5 percentage. And then before I hand over to you, Jorgen, I think that we should highlight Electrify division that really increased their EBITA with over -- close to 40% in the quarter compared to last year and has actually the last 3 quarters, they have had an EBITA margin over 21%.

Yes. And as you can see here, all in all, we have 5 very strong divisions with really good margins and good performance over the years. We are very happy with the 4 divisions. TecSec is lagging behind a little bit, but improving a lot here in the quarter as well. So we're very happy with where we are with our 5 divisions at the moment. So -- and just to have a few comments by division then. I mean, Electrify posted some 8% revenue growth and organically it was 9%. So really strong organic growth in Electrified division, driven by the increased demand that we see within the electrification area, but also within the infrastructure, which is also an important part of the division.

The EBITA increased by 38%, so really strong, and the EBITA margin was now at 21.8%. So they have established themselves above 20% now some 3 consecutive quarters or so within this division. We see a really strong quarter with good growth and improved margins. And we saw that especially within the companies like Elkapsling posted a really good year, Mastsystem, which we acquired a little bit more than a year ago, also posted a really strong quarter and also Nordic Road Safety, NRS, Elfac and Elpress, big good companies, all of them and performing really well at the moment. So that was a couple of comments on the Electrify. We move on to the Control division, where revenues were up 9% and of which acquisitions stood for 10% organically 3% and then they have some headwind from the currency development of minus 4%.

So all in all, 9%. EBITA grew by 15% to SEK 68 million, and the EBITA margin was at 18.9%, so up a percentage point from last year. Here, we see some strong developments within the companies that are related to the defense sector and especially then CP Cases, but also Leteng in Norway had a really strong performance during the year and also in the quarter. Stegborgs and Radonova also showed good improvement in earnings during the period. So a really strong quarter there as well. But we also have some smaller business units in -- especially in Norway and Denmark that are still struggling, which we have commented on earlier, and they're still struggling with the construction sector not really coming back as we had expected.

So we are taking even more measures in these companies as we move along. Within the TecSec divisions, revenues were up 21% and 16% came from acquisitions and organically up 10%, which is a really good number for TecSec. FX was against a little bit, so minus 5% from FX. EBITA amounted to SEK 96 million as opposed to SEK 83 million last year, so a good growth there as well. And the EBITA margin was up -- was at 14.4%, a little bit down from 15.1% last year. The division's largest company, PcP in Denmark and Northern Europe and the more construction-related businesses, Laurea, Door and Joinery, Principal Doorsets and CW Lundberg continued to be affected by the challenging market that is the construction-related market.

But the company I Holland that we acquired, that is a new area for us with the [ MedTech ] business that we acquired in November had a good start in the division. So that was also a strong factor within TecSec, the development within the TecSec division. So within Niche Products, the revenues grew by 1% and also -- and 10% actually was positive coming from acquisitions, but organically, it was down 4% and FX was minus 5%. So the EBITA was up only 3% to SEK 146 million and EBITA margin still at a very good level of 22.5%. So strong EBITA margin development, but some headwinds when it comes to the market development and especially that is related to what we have seen within -- with currencies, with raw material prices and also with the exposure that some of these businesses have toward the U.S. where we've seen the trade tariffs and stuff now coming into play a little bit along the way.

So Asept, Tormek and Westmatic had a weak development connected to what's happening in the world and geopolitical uncertainty going on. But the recently acquired Swedish company, Sit Right and Enskede Hydraul had a good start in the group or within the division as well. And last but not least is the International division then had a good development with revenues growing 31%, where 25% came through acquisitions and 12% organically and FX was minus 6% within this division. So EBITA was up 45%, really strong development and an EBITA margin of 19.4%, a really strong development within the international divisions. We felt that the market here was overall on a stable level despite the negative currency effect.

So a strong quarter with good growth and improved margins, especially the marine businesses within Libra in Norway and also the DP Seals in the U.K. continue to show strong performance. And here, we also commented on that we felt that the seasonality that we have seen within the acquisitions we made starting from 1st of July last year with Epoke and Friggeråkers with the [indiscernible] and winter treatment, yes, with [ salt spreaders ] and things like that, they have a low season here now in the coming quarters. So that -- and we didn't have that last year. So that will probably affect the numbers going forward a little bit. So that is the comment that we have down here below. So we have usually a weaker spring and early summer period that we didn't have an impact of last year that we will have this year.

So that will probably affect the quarter going forward here. So a bit of a heads up there. So -- and with that said, I think we've gone on with most of the numbers. Once a year, we also released the numbers in terms of return on working capital or profitable working capital per division. It's good to see -- and we released these numbers not on a quarterly basis, but on an annual basis, and you can see how that development has been over the years here. Good development in most divisions, so -- and at a very good level that we're having the whole group now at above 80%, which is really good to see. And we see also that the divisions are performing very well all in all here. So that is very satisfactory to have it like that. So we move on. We also have -- once a year, we also disclose the net sales per segment.

This doesn't make sense to have every quarter, we think, to add all these numbers up, but we do it once a year. And here, you can see the development over the years, not the huge changes really. We see that we have a very broad portfolio of companies in a wide set of sectors, which then make the whole portfolio very diversified. A couple of things then is still that we see that the power and electricity distribution and the infrastructure is growing as a percentage due to organic growth, but also some acquisitions there. The Mastsystem acquisitions came in and also the Tykoflex acquisition came in within infrastructure, and that is adding to that exposure, which we think is very positive for us. You can also see that we are now highlighting the MedTech business that is currently some 3%.

We acquired -- we had some smaller businesses within that sector before, but we now have a bigger one, which is the I Holland we acquired here in November that has been only part of the last year. But the [ MedTech ] will probably be bigger as we move forward here as we are moving into that sector somewhat. So some developments here as well. You can also see all in all, the building and construction exposure. And you can see that especially the part that is the Residential One is still -- is where we see some headwinds in the market and that you can see it's very small here all in all for us and it's actually declined as well as part of the group. So I think we have a good balance and a very diversified portfolio of companies within the group.

Moving forward, I think a couple of highlights here. I think we are building our group with delivering on the 15% target every year over a business cycle, where we feel that 1/3 of that should come organically and 2/3 from M&A, and that corresponds currently to some 8 to 12 acquisitions per year. And since 1st of April last year, we actually made 12 acquisitions here. We posted 8 during the fiscal year, and then we posted another 4 here in April. So we are at the 12 acquisitions per year, adding some 10%, 12% of the group along the way, and then the rest should come organically. And it's very satisfying to see that organic growth has picked up here in the last quarter.

We have been struggling with 1, 2, 3 percentage points for a couple of years, and now it's very satisfying to see the 6% here in the last quarter. Return on equity then should be at 25%, and we are currently at some 29% or so as we will see. So we are -- should do this in a very profitable way. So we continue with a very established and well-functioning business idea around what we'll be doing. And I think we have shown that so many times now that the model is very, very strong, and it works. So a couple of other highlights. Yes. What we have been occupied in the last couple of years is then to scale in [ Lagercrantz ]. And I think to be able to deliver the 15% or at least 15% EBT growth annually.

And I think it is about building the organization and culture. It's about finding and delivering on the M&A opportunities and then to have the financing and get the flywheel working, to get the cash flows out of the business in order to acquire more businesses. And that has been working very well for us. We have been thinking quite a lot about this and how to develop that. And therefore, we also did the reorganization in 5 years that I think is now part of why we're doing a payback because we have now established our 5 divisions in these sectors and they're up and running now in a very good way, all 5 of them, and that is adding to our growth and profitability over the years. We work in a very decentralized way. So it's good to see that this is functioning now on a divisional and the company level.

And you can see that the divisions are somewhat similar. Control is slightly smaller than the others, but picking up along the way as well. So growing and having healthy margins there as well. So building acquisitions in sustainable segments with underlying structural growth is what we're aiming for and that we have proven here in the last couple of years that we are able to do as well with some really good M&A -- good M&A pace over some time now. And that also made us during the year then update our financial targets. The 15% we reiterated and that we should reach the SEK 2 billion within 5 years, we also reiterated it, but we then set the EBITA target of 20% in 2 to 3 years. And it's very satisfying to see that we now had it at 19% for a quarter.

We will see whether we'll be at that level going forward every quarter, but because we have some seasonalities and stuff in there. But I think we are really pushing to get to the 20% within 2 to 3 years. We communicated this during the fiscal year. So that was in -- was it November or somewhere yes, no, it was in the Q3 report we communicated this. So it was in February, right? And we also then moved our profit over working capital from previously 45% up to 60% and that is the target for existing and acquired businesses or when we're acquiring businesses. And we reiterated the return on equity target of 25%.

So we are sort of stretching ourselves a little bit here by also then adding the buying and building niche businesses as a tagline a little bit on what we are trying to do. We are trying to buy really good companies and making them great. And so the buying and building is a key thing that we are really working within our companies even to a larger extent than before. And one strategic aim is then also to have the proprietary products up to 85%. And it's good to see that we communicated that goal when we have surpassed the 75%. You can see that it's been going up since then, a percentage point or 2 every year, and we are currently at 80%. And we will hope that we will get to 85% maybe in 2, 3 years' time or so. So it's -- we are basically on that trajectory as well.

Acquisitions then, let's talk about a little bit about the acquisition as we are post closing the year, we have now concluded some 12 acquisitions since April -- 1st of April 2025 that added SEK 1.4 billion then in sales. And you can see that, that's well above the -- yes, 10% that we're aiming for. It's more like 14%, 15% of the group. So it's a really good level. And we have made some -- and this is part of our DNA. This is where we would like to be, finding these nice niche-oriented companies and building a group around that. We can look a little bit about the more recent acquisitions. So we move to the next one, which is I Holland I think is worth highlighting.

We have -- when we're looking at different acquisitions, we have -- we come across 1 or 2 bigger ones along the way, and this was one of them. This is slightly bigger than the average of the group. So it's GBP 27 million in sales and an EBITA of GBP 4 million. So an EBITA level of 14%, 15%, as you can see down there. And we are aiming then to improve this a little bit by both working on the sort of revenue side, but also then working on the cost and yes, making sure that we are charging the right thing for our products. So this will be a major and important add-on to the TecSec division. And it will also be a good new line of businesses that we will put in there also from a group perspective with adding the MedTech sort of area into the TecSec. So we are -- yes, that was one. You can see what -- during the quarter, we also then acquired Michael Smith Switchgear, which is another U.K. company.

And it's working -- operating in a niche with -- around electrification with different types of sustainable switchgears, low-voltage switchgears and doing different type of electrical distribution assemblies, headquartered in Lester, and we acquired 100% of this in April. And you can see down there to the right that it's a very healthy company as well with some good margins there as well. So adding to the Electrify division. And it's also the first acquisition the Electrify division is doing in the U.K. So it's also a bit of a geographical expansion for that division. During the quarter or here in April, we also acquired Nivex Topsafe, a company that is similar to the [ Lepropsafe ] that we already have within the group, really strong market position in Sweden and as within safe storage with different types of safe storage solutions. Some SEK 100 million in sales, Swedish and a 15% EBITA margin, doing it very well in their niche, and we acquired 100% of this in April into the Niche Products division.

The H is another one we did here in April, which is then a supplier of high-performance hydraulic tools and power packs for cutting, drilling and pumping in harsh environments. These are then -- these tools are hydraulic, which is important and niche there where we find some really strong special applications that need these types of tools. And here, you can see a strong development as well. You can see that this is in Danish. So it's around, yes, SEK 90 million or so million and an EBITA of 20% or so. A good acquisition and a good add-on to the Control division from April.

So that was the presentation we plan to have here this good to close another really strong year. I think we had a strong performance in basically every aspect with some 6% organic growth with a new all-time high in EBITA margin and an EBITA of SEK 1.9 billion. So you can see how the figures are developing over time here. And then EBT above SEK 1.5 billion and a 17% EBT growth of the year. And the return on equity is a very strong 29% and an earnings per share at an all-time high and an earnings per share growth of 18% during the year. You can see how that developed year-by-year here. And then also an increase in the dividend per share from [indiscernible] to SEK 2.20 [indiscernible] so we're also planning for some additional M&A going forward and having a strong but -- and a growth in dividend, but not exceeding that to an extent. So to build a strong balance sheet going forward as well.

So with that, I think we will round off and open up for questions.

[Operator Instructions] The next question comes from Max Bacco from SEB.

Well done here in the quarter. A couple of questions from my side, if I may. Perhaps starting with not that surprising, but you highlighted here that you saw particular strength in electrification, infrastructure, security and defense during the quarter. Do you see any variances in terms of subsegments within respective end market or anything geographically that stands out that's worth highlighting? Or is it broad-based?

No, it's broad-based. We are always looking into whether we see some really differences in between geographies or so. But this time, it was very broad and yes, a lot of different sectors and geographies as well.

Okay. Understood. And on the topic of your defense exposure, I didn't see that specific label in the end market exposure that you included in the presentation this time. Is it still below 5% of the group? Or has it climbed above, if you have any comments on that?

Right. I think it is around 5% at the moment. I don't think it's -- used to say that it's 3%, 4%, and I think it's climbed a little bit, but not significant. It is still a fairly small part of what we're doing. It depends on how you define things as well. I think we are not doing very much of active sort of weapons and stuff that we don't do, but we do a lot of supporting materials and supporting equipment around, yes, building things around the defense sector. It might be -- the cases, the CP cases business, for instance, they're making cases for sensitive equipment to be transported.

Understood. And then turning to the Electrify segment, as you mentioned yourself, very nice profitability improvement here in the quarter compared to Q4 last year, but at the same time, fairly in line with what we have seen during the last 2 quarters, somewhere between 21%, 22% margins. Would you say that, that is the new normal level for that segment, of course, given a continued strong market, but is it fair to assume roughly those levels going ahead as well?

I think we are trying to establish the whole group at 20% and above. And I think it's good to see that we have seen that above 20% in niche products for some time now. And I think our next goal is to establish electrify above 20% sustainably as well. And I think we're about to do that now. They have still some more project-related businesses like Mastsystem, for instance, that we -- I think we've discussed a couple of times. And so they have some project-related businesses that might vary over time. But all in all, I think we are definitely on the track to establish them permanently about 20% more sustainably.

Okay. Sounds promising. And then the final short question. I noticed in the report that you highlighted that 2 of the more recent acquisitions, [ Stegborgs ] and [ Friggeråkers ], if I understood it correctly, had a nice contribution here in Q4 as well as it was in Q3. But you highlighted that it will be a bit softer, most likely here in Q1 due to the seasonality in the business. Do you expect this to have -- I mean, on a group level, would this have an impact? And do you think.

Well, it's a bit difficult to say. And I mean, they're not huge on a group level, but they might affect the division and they might affect the margin slightly. So I think it's worth highlighting. The seasonality in that business is pretty strong. So it's something we need to account for going forward. And as you're suggesting, it's mostly in Q1 or maybe a little bit in Q2 as well.

The next question comes from Gustav Berneblad from Nordea.

It's Gustav here from Nordea. So I thought maybe just to build on Matt's question there on the profitability in Electrify. Is it possible to give any sort of indications of how much of the 480 basis points year-over-year margin delta here that is driven by Mastsystem and if there are any extraordinary projects that you are delivering on currently?

Yes, I don't have that number on the top of my head, but it is fairly broad-based. I mean we are highlighting in our comments here that it's both Elkapsling, Mastsystem, Nordic Road Safety, Elfac and Elpress. And those companies are all big and significant for us. So it's -- I think most of what we see is improvements in these companies. But then on top of that, we get in Mastsystem. But we have not sort of derived sort of what exactly Mastsystem stands for here that we have not disclosed. It is an important company and the business there will be chunky or project related also going forward. And they had some deliveries here during the quarter. So that they have elevated the number somewhat.

That's very clear. And then on Nordic Road Safety, I mean, when you press released that acquisition, I mean, you had -- it had a margin of roughly 14%. I mean is it possible -- or is it fair to assume that this contributes actually positively on the year-over-year delta, meaning that it is slightly above 17% or something like that now?

Yes, it is -- NRS has been a really strong performance since we acquired them. So they have improved their numbers since we acquired them, definitely, yes.

Perfect. And then on TecSec, I mean, growing 10% organically here in the quarter. I mean, yet you still comment on sort of a weak construction-related end market. Should we assume that it is, however, stable on low levels, the construction end market? Or is it still on a year-over-year decline, would you say?

No, it's stable or slightly improving, but not at the pace that we expected earlier on.

Okay. Perfect. That's very clear. And just the last one here for me as well. Halfway through sort of Q1, I mean, you highlight sort of the weaker seasonality in international, but is there anything else that you want to highlight? Or is it fair to assume that it's continuing on a stable pace here?

It is -- I mean, we are living in an uncertain world, but it looks -- as we're saying, we are cautiously optimistic also going forward. And we have highlighted the Epoke and Friggeråker effect, but we have not highlighted anything else. So I think the rest you should expect to be as normal. We have been very stable over many years. So we hope to stay that way.

The next question comes from Stefan Knutsson from Redeye.

Congrats on the strong report. I have a question regarding the TecSec division and the profitability there. I'm interested to hear how you view it from a strategic point of view? Like are you happy to wait for a cyclical return in the construction markets? Or are you taking any actions to improve the profitability within TecSec?

We are taking quite a lot of actions within the TecSec. I mean the development has been a bit of a disappointment, and therefore, we are increasing pressure on to do more. we had also expected the construction sector to bounce back more than it has. So therefore, I think we also need to adjust for that so that we -- we have some of the companies there that we have -- that you see on Page 10 in my deck here with some companies that have a high dependency on the construction sector. And when they see some headwinds in the market, it's hard to outperform themselves. So it will improve as the market gets better, but we are all taking serious measures in the meantime.

Okay. Very good. And then another question on the acquisition you did within Electrify in U.K. How are you viewing the possibility to add more acquisitions within Electrify in that particular market?

I think it looks good. I think we are well positioned. I think people or companies that are within that sector see that we have a cluster of companies addressing that market and that they could see that we would be a good home when they sort of look to sell their company. They will fit right in with the structure and how we are set up. So -- and I think that was the case with Switchgear. They felt that we have some companies doing really well in that sector and that we can see also some benefits from being in the same group. And therefore, they decided to go with us. So -- and I think there are more of those in the U.K., but also in other markets. But it's also fair to say that this is a very sort of a market that is developing really well now. So there is also some competition when we're looking at acquiring into that space.

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

A couple of follow-ups from me. Again, in TecSec with a good organic growth and you comment that construction is relatively stable, but no improved margins. Could you give a bit more color on the dynamic in the quarter on the margin side?

Yes. I think it varies in between the companies. We also have some seasonality with some of the companies. Some of them are more sort of -- yes, some of the installations are doing more in the summer or not in the winter time. So there is also some seasonality to the whole thing. And how that plays out varies in between the years. We have some really good performing companies within that division. So we have the Frictape, for instance, in Finland is doing really, really well. And we have Idesco in Finland did also really well, while a couple of the bigger ones that we've highlighted here and the door manufacturing companies are seeing some headwinds in the market. So I think what you see in the EBITA margin development is more of a mix sort of mix and seasonality effect than anything else.

Understood. And back to the International segment with Epoke and Friggeråkers, you highlighted pretty clearly on the seasonality. And I'm just wondering if you could comment further on how their margins have looked during this period of time before you owned it during the low season. Do they make a profit during that period? Or is it maybe single-digit margins?

I think they have a strong seasonality. So I think the pattern has been more that they're making losses in the weaker part of the year. and then they sort of earning their monies in the fall and in the winter time. So -- and of course, we are trying to sort of balance that out over time and change a few things in the company. So the seasonality effect won't be as strong. But looking back further on -- further back before we own them, then I think the seasonality meant that they're making losses in some parts of the year, a couple of 2, 3 months there.

Very clear. And lastly for me on Niche Products, which saw, of course, a very strong margin despite some organic headwinds. Could you explain a bit more on the margin strength despite the weaker top line?

Yes. It's a good question. I think we have some companies that really moved up and performed really well. And I think we've highlighted those in our comments here with the Truxor Waterproof and Sajas, especially Sajas in Finland has really outperformed themselves for a while. And they also have a strong seasonality in this part of the year. So it's -- that has an effect as well. But I think the ones that are struggling is the more U.S. related -- with more U.S.-related sales, the Asept, the Tormek and the Westmatic we have highlighted here. And those companies are struggling -- have been struggling a little bit with margins over time here as well. So I think it's a mix effect for the other companies that is adding to the improved margin here in the quarter.

The next question comes from Albin Barnevik from ABG Sundal Collier.

This is Albin standing in for [ Karl ] at ABG. So I believe you already answered some of our questions. But if I may, another one on Electrify. This segment, of course, posted very strong growth and margins in the quarter. As the electrification and infrastructure projects that you mentioned continue to scale, are you seeing any bottlenecks on the customer side here?

Yes. I think it's always when you ramp up, you see some type of bottlenecks. I'm not sure that, that's strong. I think for a while there, a couple of years, 2, 3 years back, we saw bottlenecks in improvements approvals of, yes, different type of infrastructure projects to get started. I think some of that we've seen -- now we're building more. And I think that the bottleneck now is really installers. They are struggling to find the right people and the right sort of resources to do all the installations that are planned for. And that, of course, is hampering a little bit on our growth and our -- the need for our components that are usually used when they're building these type of infrastructures.

The next question comes from Emil Nystedt from Kepler Cheuvreux.

It's Emil Nystedt from Kepler Cheuvreux here. I have a couple of questions. First, I was wondering about the order intake that was organically up 5% here in Q4. Could you please give us any color on where the order intake and book-to-bill is the strongest and whether there are any divisions where order intake is lagging invoiced sales here?

I think we all in all have had that level of order intake and book-to-bill ratio for some quarters now. I think we see some growth and it's coming back, but it's not huge or sort of double digit. That is not what we're seeing. We see a sort of single digit, but at a good level. That is what we see. So we are growing in the pace that we would like to do. I think that we see the trends that we've seen earlier on in the year continue.

So we see that it is still the infrastructure, the electrification, the defense, those are the strong ones, and that's where we see the increased order intake and the strong book-to-bill figures as well. We have seen an improvement in the TecSec division in terms of -- they have been lagging behind earlier on, but they have filled up a little bit more now lately with some projects that is going to be delivered in the coming 1 to 2 years. So they have a bit of a longer lead time there. But I think it corresponds very well to what our comments in general when it comes to where we see the sort of stronger growth versus the weaker growth.

Perfect. That's clear. And on niche products, it has faced some headwinds here from U.S. exposed companies over the recent quarters. Could you give us a sense of the U.S. drag going forward? Do you see any signs of stabilization here or improvements heading into the new financial year?

I think that we will see a more of a balance, more of -- a little bit of a calmer sort of. I think since the liberation day or when the tariffs and everything was shaken up a bit, I think we will see things sort of calm down a little bit, and we will adjust to where we are. And therefore, we will go back to sort of normal circumstances along the way. I don't think -- I hope the big drama is over. But who knows, right? It's hard to know what happens. But as it looks right now, it is a little bit more stable along the way. And that opens up for adjustments and then we can continue growing like we normally have done.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Yes. Thank you. We have one Yes. We have one more question, written, which is, do you still expect your -- to meet your margin ambition to be possible in this market environment?

And yes, the answer to that is yes. I think we have a broad-based strong portfolio of companies. I think looking back, we used to have 1 or 2 or 3 or 4 or 5 companies that stood out really strong for us. But over the last few years, we have really built a stronger set of companies. So now it's more 2025 companies that I consider being the really core parts and the really strong parts of what we have within the portfolio. So the quality of the portfolio have increased and thereby also the opportunities for us to work in different markets and to still drive the margins. And we have an ambition to get to the 20% within 2 to 3 years.

And of course, the general market will affect how fast that will happen. But all in all, I think the 2 to 3 years is still very doable. So we will aim for that and continue to do that also in this market environment. And with that, I think we can conclude. I think we had a really strong set of numbers this time. I think we outpaced our own sort of expectations in basically all aspects. I think we have a good M&A engine going on. And we have also had some organic growth here in the quarter. So a strong quarter, and we are looking forward to the future. Thank you, everyone, for listening in.

Welcome to Lagercrantz Group Q3 Report 2025-26.

[Operator Instructions]

Now I will hand the conference over to CEO, Jorgen Wigh, and CFO, Peter Thysell. Please go ahead.

Thank you, and welcome, everyone, to the quarterly call from us. Great to have you with us all. And yes, as normal, we try to have this as a 45 minutes or roughly, plus/minus 5 minutes or so, session where we go over sort of -- give a brief introduction to the group and then over the numbers and then look a little bit ahead at the end and also look at the acquisitions, the most recent one we've done. So welcome, everyone, and we will get going.

Together with me here is Peter as well, of course. So we're 2 of us here. So as a short introduction to the group, well, for those of you that are new to us, we are a tech group or a buy-and-build company that are buying and acquiring sort of niche businesses, which we will highlight along the way more as we go along. We have organized ourselves into the 5 divisions you can see there, but we all run the companies very autonomously and independent companies running under their own brand name addressing their own markets.

And currently, we are some 85 companies within the group. We -- our revenues are now exceeding SEK 10 billion on a moving 12 months for the first time. That was like a milestone with this quarter, and we are currently some 3,600 employees, growing with some around 15% to 20% per year. We run, as I said already, in a very decentralized fashion with 85 profit centers organized into the 5 divisions. You could see over to the right here where we have our companies. And most of it is in Northern Europe, but you can also see that we have some footholds and smaller operations addressing especially export market activities in North America, but also in China, in India and a couple of other places. You can see those footholds all the way to the right here on this slide.

And M&A, is, of course, a very central part of what we're doing of our business model. And we have been listed on the stock exchange since 2001 as a separate company. We were part of the Bergman & Beving Group before that. So we're one of the companies coming out of that environment and have that type of philosophy and culture within our group. So that was a short introduction.

Yes. Well, getting into the interim report then, we posted, we think, is a very solid and strong quarter, another one, adding to our fine trajectory here, as you could see, we are heading towards the SEK 2 billion as planned. And you can see that we are close to SEK 1.5 billion here now in terms of profits, and we have then surpassed the SEK 10 billion in terms of sales. Quite satisfying to see. I just realized myself that I posted my 81st quarterly report now with this one. And it's great to see where we started. We started with some SEK 400 million in sales in the quarter we are comparing with now, and we had an earnings of SEK 13 million in terms of EBITA in that quarter.

And currently, we're at the SEK 13 million. So it's been quite a journey. And back then, we had some 3.1% EBITA margin, and now we surpassed the sort of 18% or are at 18% with the quarter that we just posted. So it's been a tremendous journey and quite satisfying to have another good quarter behind us here.

We communicated in the report also the business conditions that we have on the next one then. We feel that the market situation has generally been stable and slightly along the way better, gradually better, maybe not at the improvement pace that we had hoped for, but still on a good trajectory here in the last few months or in the quarter as opposed to earlier. It's been gradually improving. And especially, we feel that we have some differences in between the segments we're working with.

So the electrification and the infrastructure and the defense showed strong development, which we see in especially the electrified divisions sort of the outcome there. But we also saw the Nordics slightly improving along the way, while the U.S. is, yes, hampered and held back a little bit when you're exporting there. That is only some 5% of sales, but it's affected by a geopolitical situation and all the tariffs and the different things happening there, but also with the differences in the currency, the currency effect has also been against us in some companies, especially affected the Niche Products division, as we will see later on.

But it's satisfying to see that the order intake increased organically with some 7% compared to the same quarter last year. And that was then after adjustment for the currency effects impacted negatively by 4%. So a good market, slightly better than before, but no dramatic improvement, but slightly better than before is what we communicated here this morning.

With that, I think we should go in and look at the numbers. Maybe, Peter, you can go over the numbers here.

Yes. Thank you, Jorgen. And as Jorgen said, we think that this is a very solid quarter with strong order intake first and also quite high net revenues growth that increased by some 16%. 18% came from acquisitions, but we also had 2% organic growth and then currency headwinds of 4%. The EBITA grew by 20% and the EBITA margin improved to 18%. The cash flow was strong. It was up 12%, but it was strong also in the same quarter last year. So we are quite happy with that. And as you can see, the conversion ratio is quite high. Profit after financial items were up 19%.

If we look into the accumulated numbers, we see similar numbers with net revenues up by 13%. Most came from acquisitions, but we also had 2% organic growth. And the currency headwind was 3% in the first 9 months. EBITA grew 16% and the EBITA margin is also improving on the 9-month period to 17.8%. And similar cash flow is -- and cash conversion is quite high also in the 9-month period. This was probably the area that we were not entirely happy in the last quarter, but now it has been improved. The return on equity is on 29% and the equity ratio is 32%. The profit over working capital, one of our key ratios is 80%. It's on the same level as last year.

And earnings per share also increased to SEK 5.53 on -- in the last 12 months. Jorgen will come back and present some of the acquisitions that we did in the last quarter. But so far, we've completed 12 acquisitions in the last 12 months, and this has added SEK 1.4 billion in business volume, and this corresponds to an acquisition pace of some 15%. So we are upholding a rather good pace of acquisitions. If we look very briefly into the -- primarily the EBITA margins per division, we are happy to see that Electrify division are now another quarter above 20%, so 21%. Jorgen will come back and tell you the reason for this. But we also see that the Control division and also the International division are -- have good margin improvements. We see on the other side, TecSec and to some extent, also Niche Products with slightly lower EBITA margin in this quarter compared to 1 year ago. But maybe, Jorgen, I will hand back to you.

Yes. But before we leave that one, I think it's good to see that we have really 5 strong divisions. You could see that we are -- we're very happy with what's happening in like 3 of them at the moment, the Electrify, Control and International division, while we're lagging behind a little bit in the TecSec and the Niche Products. But it's very satisfying to see now. We communicated the EBITA goal of 20%. And you can see down there, we actually have like 2 divisions that are basically already there, and then we need to work with the rest ones to get there as well.

So it's satisfying to see the levels of performance in all divisions, but especially then within the Electrify and margin-wise in Niche Products as well. Some comments on the outcome by division. Electrify posted a really strong quarter. Revenues were up 17% and acquisitions was 10% out of that and organic is some 9%. So a very strong quarter from the Electrify division. They have had a very strong market, especially both within Electrification and Infrastructure. So they also posted a very strong EBITA growth of 55% here during the quarter and an EBITA margin of 21.2% as opposed to 16% last year. So it's very, very strong and a very strong quarter posted by Electrify. We saw improvements in most businesses, but particularly in Nordic Road Safety, Elkapsling and a few others, as you see mentioned here.

But really strong broad-based improvement within the Electrify. And also very happy to see that Mastsystem that we acquired a little bit more than a year ago, reported good earnings and also some continued strong order intake during the quarter. That is a very good company that we acquired some year in Finland that we acquired about a year ago, and they had a very strong quarter here and both in terms of earnings and deliveries, but also in more order intake along the way, which is very important for the division.

The second division and a few comments there is the Control division, also posted a strong quarter with 8% and acquisitions was then 16%. Here, we have deliberately been working quite a lot with acquisitions because we would like to grow this. But organically, they're still struggling with the construction sector, especially in Norway and in Denmark that we have highlighted before. But they also, along the way through the acquisitions or the more recent acquisitions, they have increased their exposure towards the defense sector and especially companies like the CP Cases in the U.K. and the U.S. and also Leteng in Norway had a strong quarter here due to that -- due to good order intake and market development within the defense.

Also highlighting is that Radonova with the radon measurement business had a very strong season this year. They have a peak season during the winter, and it's been especially strong this year. And also Precimeter and Stegborgs posted really strong outcome through the quarter. And the newly acquired companies, the He-Man in the U.K. and Orax in Sweden contributed with good results also within the division. So we're very happy with also the outcome within the Control division.

Within the TecSec division, that is the one struggling the most, their revenues increased by 10% and all of that came -- sort of -- most of that came from acquisitions, but also some organic growth, especially within the order intake. So it is within the TecSec with some good order intake along the way. But EBITA then amounted to SEK 90 million as opposed to SEK 92 million last year, so we're slightly down and also the EBITA margin came down a little bit. And that is for the same reasons as before, that the market situation has not yet improved within the construction sector. the companies with that exposure are suffering a bit here or not delivering to last year really. They're doing quite okay, but not living up to what they have been doing in the last few years.

Happy here also around the I Holland acquisition that we made here in the U.K. in November. That is sort of a new area that we are taking TecSec into more of MedTech and other type of exposures where we see some stability and also some underlying structural growth in that area. And that is a significant acquisition for the TecSec division with I Holland, adding some SEK 335 million on an annual basis. So that will be an important acquisition along the way. That is also -- yes, it's affected the numbers only in November and December, but came in quite okay with the first couple of months here.

We move on to a couple of comments on the Niche Products division. Their revenues grew with 17% and acquisitions, there were some 23%. So organically, it was actually down 2%. And here, we are -- we have a number of very nice companies within the Niche Products division. So -- but some was also hampered by the development, especially related to the U.S. They have some volumes going into the U.S. with some exports going there and due to tariffs and sort of FX and currency effects, they are struggling a bit more than they used to be -- used to last year. So that is affecting those companies and affecting the whole division.

On the other hand, [indiscernible], which is a Swedish company, had a very strong quarter, continued to do very well. And also the Van Leeuwen in the Netherlands showed also continued good development and a couple of others with Water Proof, Sajas and a few others there as well showed clear profit improvements. And here, we also made some acquisitions during the quarter. I'll come back to that with the Sit Right and Enskede Hydraul were acquired and will add along the way as well very good to the Niche Products division.

Last but not least is the International division. Here, revenues grew by 28%. They posted a strong quarter as well, and acquisitions were 30%, but organically, they grew by 5% or sort of long-term target in terms of organic growth, but FX was against them a little bit with minus 7%. So top line, it grew 28%. EBITA then grew by 30% to SEK 90 million, and the EBITA margin picked up slightly to 17.3%. So good development and a strong quarter there as well. Here, we have acquired Epoke and Frigger�kers here during the summer, and those had -- yes, they had a strong sort of season here and did very well here during the quarter. So that is affecting the numbers somewhat, but also other companies like the Libra and DP Seals and G9 in Denmark continued their strong development.

And also important to highlight was the Unitronic in Germany. It's a company we've had for many, many years and have been struggling a bit over the years, but it's now doing a lot better here as of this quarter, but also in the last year or so, Unitronic's performance has picked up significantly with some new volumes and some new sort of supply lines and doing it very well for us at the moment. So yes, that was good to see as well. So good development in many companies.

So with that, I think we leave a little bit of the quarterly report. Let's talk a little bit of where we're heading and our new goals then. Well, I'd like to reiterate where we are. I mean, we are still sort of very keen on building our group with these really strong niche-oriented, primarily product companies where we have our own product rights. And we have that as a strategic aim as well to improve that share along the way. And we are strong believers in our business model. The business concept that we're running is really strong, has been that for many years. And for many years, we've also had the target of growing the EBT with some 15% per year, i.e., doubling the group every 5 years.

We have done that for many years, for many decades, really, and we continue to see that as a good opportunity going forward as well. There are some increased competition in the market along the way, but we still feel that we are able to deliver on our profit targets here. We've also highlighted along the way that we would like to see at least 1/3 of that come organically and the rest through 8 to 12 acquisitions per year. And the bar of 8 to 12 has been increased over the years. We would like it to be 10% of our sales basically that comes in through acquisitions.

And that profit growth of 2/3 should come through M&A and 1/3 organically is the way we think about it, even though the overall target of 15% is where we would like to be measured. So in periods where we have a slower organic growth, we might sort of compensate that with more M&A, which has been the case now for a year or 2. So that you've seen also from the numbers that most of our growth in the couple of recent years have come through acquisitions. And we would like to do this in a very profitable way with our return on equity target has been 25%. We struggled to get there for some years. We started out, as I said, some 20 years ago, then we were at 10% or so.

And currently, we're running at 29% or so. That has picked up quite significantly over the years as well. And that translates then to the profitable working capital. So what we communicated here this morning as well, we have been discussing this internally for a while, is that we should clarify where we would like to be. So we are reiterating some profit growth target of the 15% and that we also would like then to continue on our journey towards the SEK 2 billion in EBT within 5 years. That was communicated in October of 2023.

So we are basically 2 years down the road, and we are well sort of underway to deliver on that target as well. But we also see that along the way that our performance have picked up. We have been growing our EBITA margin over the years with basically a little bit every year, up to percentage points or so. And we feel that we have the opportunity to really push for the 20%. So we will have now highlighted that, that will be a target for our companies. That will be a target for the existing companies that we have, but it will also be a target for the companies that we acquire. Not everyone will be there to start with and not everyone will get there. But on an average base, we should be at 20% on the divisional and group level, at least. So we are now discussing how to get there with each individual business.

We have also, over the years, really been pushing our profitable working capital target. And for those of you that have been following these type of companies and us for many years, you know it's been 45% for many, many years. But we feel that we have sort of been well above that for many years. Many -- we felt that sometimes that was maybe sort of -- yes, to promise too much to get it -- to have it like very high for many years. But now we have really been delivering on that. And we feel that we have basically the opportunity to have everyone at 60%. And that is also now a target for all our existing and acquired businesses along the way.

So we set a new target and increasing the 45% to 60% and then reiterating the return on equity target of 25%, which is the one we use externally. We would also like to highlight that we also would like to position ourselves as someone that is really buying good companies and making them great. So we're buying and building niche businesses. That's sort of the tagline and where we would like to be seen. The old [indiscernible] was used some 20 years ago and are still used in some areas, but maybe we feel that buying and building niche businesses is sort of a stronger wording of where we actually would like to be highlighting, where we would like to be with the companies, highlighting to our organization, but also highlighting to you guys in the stock market where we would like to be and how we would like to be seen. So we also put it there alongside our logo going forward.

So a little bit of the financial targets there. And we will then continue to scale larger customers. I think that we really feel when we're doing our modeling that we could, with the setup we have sustainably deliver more than 15% EBT growth annually over a long period of time. We will be very occupied with along the way, really driving our organization and culture to sort of bring everyone on board and make sure that everyone is working under our freedom and accountability and simplicity and different types of words connecting to our culture and make sure that everyone is on board with that.

And that is a key area in order to be able to sustainably deliver the 15%. Then of course, it's also about finding M&A opportunities and also making sure that we free up enough cash flow from operations. We have always had the idea that we should finance our growth -- the growth ourselves. So we don't do capital raisings and stuff like that. We would like to finance our growth with our free cash flows from our operations. So that is what we will be occupied with going forward.

So we will continue -- if you move to the next one, please. We will continue to build our 5 divisions. We feel that they have a very good positioning. We did this reorganization some 5 years ago, and we are now adding more companies to each of the divisions, growing each division along the way. We have sort of made sure that we have the right resources on board and are working with growing these 5 divisions with the separate companies into the segments where we see some underlying structural growth. So we will continue building the divisions as they are.

We move to the next one, please. And we will also have a strategic ambition to grow the share of proprietary products. We are now at -- on the moving 12 months, we're at 79%, but we are aiming for the 85%, which goes hand-in-hand with delivering the 20%, but also hand-in-hand with delivering the SEK 2 billion in a couple of years' time. So it's a good gradual development also in this metric. I will round off with some acquisitions. Yes, acquisitions are very important. We will continue doing them. As I said, we have raised the bar to 8 to 12 companies per year and posted some 90 acquisitions since 2006. And here, you can see how it's developed.

And compared to many others, we have been quite acquisitive here in the last year. So posting some 12 acquisitions with the SEK 1,440 million in an annual business volume, which corresponds then to 15%, roughly 15% of the volume we had when we entered this period. So it's been a nice sort of add-on with the acquisitions we made. We are happy with the acquisition we made as well. It's been a good quality, and they've added to the group, yes, all of them or yes, all of them, no exceptions really.

And just to look at the ones we acquired here in the last quarter, from the same sellers, we acquired the Sit Right and Enskede Hydraul, a company that's located in Sweden or 2 companies really doing a little bit of different things. So Sit Right develops and manufactures proprietary products, including leveling systems under the Sit Right brand and also Grapples under the Dala-Gripen brand. So you can see the products over to the right there related to the forestry and construction machinery within the forestry. So it's a quite nice business where we have some niches within in Northern Europe or in Scandinavia, where we usually are very strong. And these companies come in very nicely here.

And then we have Enskede Hydraul, it's more of a spare parts business for the forestry machineries aftermarket as well. And you can see we also tried to post sort of some highlights in terms of numbers. And you can see down to the right there, there's a very sort of good, nice growing and successful business with some EBIT margin of 19%. So a very good add-on to the Niche Products division.

And -- but the more -- the bigger one in the quarter was the I Holland then that I touched upon already earlier, a company founded in 1946 and making these type of punches and dies and other critical products for tablet producers. So within health care or pharmaceutical companies are the customers all over the world really. So they are very global, based in Nottingham in England, serving customers in over 100 countries. And you can see this is a more significant acquisition, both for Lagercrantz. So it's GBP 27 million in sales and an EBITA of roughly GBP 4 million, so an EBITA margin of almost 15%.

So -- and this, of course, we will like to develop further in order to also be supporting the 20% goal eventually, part of the TecSec division from November 2025. So it's a fairly new one as well, but we're coming nicely here in the coming quarter and years ahead of us. So very nice in that sense. I will round off with the financial overview. Yes, we are very happy with the quarter. As I said, we -- our sales went above SEK 10 billion. Our EBITA is at 17.8%, so a new all-time high or 18% for the quarter, as we said earlier on. And the EBT growth is 19% and the earnings per share growth, which is maybe the most important metrics, is increased by 20% and the return on equity of almost 30%, of 29%, as you can see there. So a very strong quarter and happy to be able to present that to you guys today. Very much good work being done by the organization.

So thank you. Then we will open up for Q&A, I think.

[Operator Instructions] The next question comes from Jakob Marken from Danske Bank.

First of all, congratulations on yet another strong quarter and to reach the SEK 10 billion top line mark. So a couple of questions from my side. And firstly, on the new margin target. I'm just wondering how do you see the margin possibility in the current structure? And how much do you think will need to come from acquiring higher-margin businesses? So sort of trying to get an understanding of where you think the group would be in 2, 3 years without acquisitions and how much you think would need to come from acquiring above group average companies?

Yes. I think the ambition internally will be that for everyone to sort of grow their EBITA margin with some 2% or so. I think that's the way we're going to work with it. Then I don't think it's fair to expect that of everyone to succeed in that ambition. So maybe 1 percentage point will come from sort of internally, and I think 1 percentage point would probably come from acquisitions. So half-half, I would say, in the improvement that you're discussing there. I think that's a fair estimate. But I think the ambition will be there for all our companies to sort of improve with a couple of percentage points.

Okay. Yes. I see. That's reasonable. And then the -- my second question was on cash flow. So quite a lot higher CapEx in the quarter and also on 9 months. I'm just wondering if that's just timing effects? Or is it a specific company doing a big investments here now? And how should we look at that in the coming couple of quarters?

No, I think you should view that a little bit on sort of an annual base. So you shouldn't sort of put too much attention on a certain quarter. I think what we have now is that we have some businesses that are a bit more seasonal. So for instance, we have the Nordic Road Safety business that is very seasonal towards -- they have their volumes coming in during spring. They deliver during summer and then they're getting paid just before Christmas. So that's seasonality effect. So the Q3 should be a very strong cash flow quarter for us and was this quarter as well as it was last year as well. But we have some seasonality when it comes to cash flows from the operations. But -- so I think you should basically look more on it from an annual sort of -- yes, rolling 12 months perspective, I think it's more fair to do that.

Okay. And that goes also for the CapEx part.

Yes.

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

I'll also start with one related to the margin target. And I'd like to hear your reason about how you view it when it comes to future acquisitions, how strict you will be that they should be able to reach this 20% or that on average, acquired units should be able to reach that?

I think -- I don't think you should view it too strictly. I mean when we look at our portfolio, we think that it's reasonable for us to have 20%. But I think the more important one is really the return on capital employed and profitable working capital. So if we -- I mean, we have a couple of businesses that have margins that are lower than 20% or lower than 15% even, but they're delivering very good sort of returns in terms of return on capital employed. And therefore, you can't be too strict on it. But what we are saying is that we feel that the group and on a divisional level, we should be able with sort of the structure of these companies and how they're set up most of them, we feel that we should aim for that in terms of how we look at it on a sort of portfolio and yes, with the areas and the segments and type of companies that we're acquiring, it's fully reasonable to get to the 20%. That's what we're saying. But it won't go...

Very good. And then over to Electrify. And as you said, another strong margin and demand quarter, and it sounds like conditions are still good. I'm just wondering if you have anything you think that should be highlighted as extraordinary positive related to maybe project deliveries or anything like that? And if now we're looking on the upcoming quarter from a demand side, the comps are starting to get more difficult, if there are anything you want to send our way from related to that?

Not really that we would have highlighted. It's fair to say that Electrify consists of some, what is it, 17 businesses, 16, whatever. And some of them are very sort of stable and very delivering sort of, yes, their components and Elpress is one of those. It's like a freight train. It's consistently delivered. But we also have a couple of other companies that are more project related. We have a seasonality in our NRS business, and we have a more of a project-related business in the Mastsystem and also in the QD company.

It's also more sort of project related. I don't think that the quarter stands out very strongly, but we also highlighted that Mastsystem had some deliveries during the quarter that also affected the numbers, but they also had some good order intake that we will take with us in the coming quarters. I'm not [indiscernible] Q4, but it might be -- along the way, we are -- we feel that Mastsystem is picking up and they have good growth and they will deliver. But the business is a bit project related, yes.

Very good. And lastly from my side, if you were able to say anything related to the U.S. in Niche Products related to, how do you say, the renewed political turbulence at the beginning of this year. If you can comment on anything related to any eventual impact you might have seen?

Well, it's been ongoing, and it's been changing sort of every day for a while there. So it's very hard to tell really where we're heading. But I think we've seen some sort of slowdown in the market and also quite a lot of is just currency effects, right? We have a couple of companies manufacturing and shipping from Europe into the U.S. And then we are suffering both from the strong or weak dollar and -- or weaker dollar and the stronger krona, but also then to some extent, from the tariffs. I think the currency effect is more severe. Still they're posting a good quarter, we think. So it's in line with last year. So it's no drama really, but -- it's not dramatic, but it's still something there, yes, that we highlighted.

The next question comes from [ Victor Forst ] from SB1 Markets.

Starting off with Electrify, very strong margin here for 2 consecutive quarters. Just wondering if you could walk us through the sort of key drivers in terms of volume versus maybe mix and pricing in that margin.

I don't -- it's not very much pricing. I think we have followed the market with the pricing so that we've been adjusting each -- but it's not like someone has really picked up their gross margin. I think it's mostly mix. And mix in my world then is sort of in between companies, right? So it used to be quite a lot around Elpress, and they're doing it very well, but to push it even further, we are also adding some volumes from Mastsystem, for instance, that is improving the margins along the way. So it's more of a mix. The NRS business is basically on the average, more on the average sort of level.

I think one addition is maybe that it's very broad-based within the Electrify division and some are really performing on a high level, but we have a very broad base.

Yes. Okay. Great. That's clear. And then just on the demand side of Electrify sort of is there -- or are there any specific end markets to point out? I mean, are there any -- in addition to the sort of general, industrial and electrification trends, are there any sort of specific end markets that is driving the growth we are seeing right now?

No. What we are in -- our companies are providing is sort of broad-based components that are used for the whole electrification. Building electricity grids, that is one key thing. But most of what we're doing is going out to wholesale and deliver it to installers and are using these type of materials. I think it's also fair to say it's not only electrification, it's also the infrastructure part that is picking up. So for instance, where we build not only electricity grid, but also fiber connectors, we have the subsea fiber connectors from Tykoflex, for instance, that is doing good at the moment. We're having also the NRS business with providing road safety. That is also -- and we're building roads and infrastructure more than we used to as well. And I don't think that's temporary. That is a continuing thing. So it's a growth in that market that will be sustainable for a while at least.

And in addition to this, there are some defense-related end customer segments with the, of course, Mastsystem, but also for Elkapsling and some other entities.

Okay. Great. And just a final one on acquisition pace. Jorgen, you mentioned it has been quite high for some period now. And yes, in sort of a period of a bit slower organic growth maybe. Just wondering on your thoughts going forward. Should we expect the 15% as sort of a sustainable rate? Or do you expect it to fall down a bit?

Yes. I think 15% is on the high end. I think we should expect somewhere between 10% and 15%. That's where we would probably be. And it will be slightly higher when we are sort of generating more cash flow since we don't need it for organic growth because the market is low, then we might use a little bit more for M&A. But generally speaking, I should -- I'd like us to be measured on the 15% total growth. And then they might vary a little bit along the way.

The next question comes from [ Dan Heimer ] from SEB.

Dan from SEB on behalf of Max Bacco. We had one additional question and it was related to the M&A contribution in the quarter looks a bit higher than what we had assumed. Is there any seasonal impact in acquired units we should be aware of? Or is it just fair representation of profitability?

Yes. I think there is some seasonality to the newly acquired sort of road, yes, road equipment companies there, the salt spreaders that we have within Epoke and Frigger�kers. There we have a bit of seasonality that comes in with those companies that we acquired here this summer. So there is a small -- there is -- yes, there is such component.

[Operator Instructions] The next question comes from Gustav Berneblad from Nordea.

It's Gustav here from Nordea. Just to come back here on your margin ambition here. I mean, based on your assessment here to reach 20%, do you still expect it to be possible in this market environment? Or do we need to see a pickup in the underlying market across your segments here?

I mean we live in a turbulent world, right? We expect that to happen within reason. If we see a significant downturn or significant sort of slowdown in the market, then of course, it will be hard. Then we will push out the ambition time-wise, but the ambition is still there, right? But generally speaking, I think we are looking at a market that is at this level or slightly better to get there.

And then maybe just to come back on your comment here previously that you aim to raise the margin here by 200 basis points for -- or that's the ambition across the group. I mean it's quite substantial, I guess, for certain companies already running at quite high margins. So would you just -- can you just elaborate a bit more on this? What key factors are you seeing across here that will raise the margin so much across the group? Is it price? Or is it lean work or...

Yes. The way we work is that we look at each individual company and try to set up sort of an ambition and support that with activities to get there and to get to that improvement. And those might incorporate all of those things. Price is, of course, important. It might also be that we are cutting out some low-margin businesses. We have -- I mean, even though we are doing well on a total, I think we have still some couple of low performers in the group and by addressing those, we did a couple of those here in the summer, addressing a couple of those, but we have a couple of more that we need to address.

And so it's working on all fronts really. And also -- but by finding the niches, really building a strong market position in each niche and doing a good job supporting and serving customers is generally something that we can aim for in most of our companies. Then, of course, it will be some companies that have a higher target than 200 basis points and some have lower. But yes, that is sort of dealt with internally. So generally speaking, it's 200 basis points for everyone.

Perfect. And then just one final last one on Control. I mean, also the very impressive margin uplift year-over-year. Would you say that, that's mainly driven by recent M&A? Or is there something extraordinary that sticks out for Control besides the seasonality that is in the comp?

Not really. I don't think there is anything sort of extraordinary there. I think we have been acquiring a couple of high-margin businesses, the CP Cases being one of them, but also some of the older ones that are doing really extraordinary well this year, which is the Radonova especially. But it's nothing that stands out to me. They should be -- this should be a level they should be at. Then they still have a bit of seasonality. So they have this posting quarter in Q3 is strong and also Q4 is usually strong for them, but then they have a bit of a slower summer in that division due to the Radonova business being very seasonal.

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, I can note a written question from Stefan at Redeye. And first part, I think we have already discussed, but he is asking if in the TecSec and International division, we saw organic growth in this quarter, and he's asking for specific drivers for this organic growth in those divisions, Jorgen?

Yes. Within the TecSec division, I mean, we are also sort of delivering to penitentiaries and a couple of big projects that is coming there. So companies in IG Nordic, for instance, had good organic growth in the quarter and have had that for a while also in terms of order intake. So TecSec is picking up due to those factors, I would say. Let's see what else. And a few others around that also had a pretty decent quarter. So that was the TecSec.

The International division, what do we say there. Yes. I think it's also Germany is picking up, improving a little bit. We have some German exposure within the International division. So that's picked up a little bit. So a couple of specific -- not sort of specific markets and segments, but really no one-offs or anything. It's more of a slightly improved trend along the way, I would say.

Good. So with that, I think we've round off, right? We are available here. So if you have any additional questions, please don't hesitate to call us and hope to speak to you all soon. Thank you for listening in, and have a good day.

Welcome to Lagercrantz Group Q2 Report 2025, '26. [Operator Instructions] Now I will hand the conference over to CEO, Jörgen Wigh; and CFO, Peter Thysell. Please go ahead.

Thank you, and welcome, everyone, to our interim report. We do this every quarter. So this is our Q2 report. As you know, we are starting our year 1st of April. So we are concluding the numbers at the end of September as of today. Together with me here, myself, Jörgen Wigh speaking and also Peter Thysell right beside me here. When we get to the numbers, we'll let him do that part as well.

So welcome, everyone. I would like to start off with just a short introduction to the group for those of you that are new to the group and then carry on with the report in a couple of slides. Well, Lagercrantz is the tech group or an industrial group, where we are working with a buy-and-build model, building a group around a number of subsidiaries, currently some 85 subsidiaries or profit centers as we call them, building leading position in expansive niches is where we are.

We have -- all companies are working autonomously, but we are gathering them into our 5 divisions, as you can see here, the Electrify, Control, TecSec Niche Products and International divisions. You can see the number of profit centers or companies within each of these divisions. We have been on the stock exchange since 2001. And before that, we were part of the Bergman & Beving Group, but under our separate name since 2001.

We are currently just going through the bar of SEK 10 billion in terms of sales or revenues, and we are some 3,400 employees within the group. All our -- what we're doing in the companies are B2B. So we're selling hardware and all types of industrial products in niches to other companies. So it's B2B all of it. And we are firm believers in running it in a very decentralized way with a decentralized organization with some 85 profit centers gathered in these 5 divisions.

You can see over to the right where we have our locations. We are Northern European today with a number of footholds around in Europe. And you can see some 30% or so is in Sweden. Denmark is our second biggest market, but then Finland, Norway and the U.K. are of similar size, as you can see from one of them -- if you look into it. You can also see that most of what we're doing in the businesses are also, to some extent, export related. So you can see all over to the right where we also have some footholds through our subsidiaries in a number of places around the world.

So it's in the U.S., in China and in India as well, where we have some footholds where we try to sort of establish ourselves and drive exports through those hubs as we call them in different parts of the world. So that's an introduction to the group.

Coming into the interim report then, yes, I think we closed another strong quarter. You could see here that we have had a strong trajectory with our profits picking up every quarter for a number of quarters now, and this was in line where we expected -- we expect to grow profits or earnings before tax with around 15%, and the figure now was 17%. So slightly above where we have our profit targets and a strong really sort of solid report, we think it was.

You can see where we have our -- where we've been over the years, and you can see that we have also increased our margins a little bit along the way, and that was the case also this quarter. So a strong quarter and approaching the SEK 1.4 billion in terms of profits. We communicated a SEK 2 billion goal some -- about 2 years ago, and we should reach the SEK 2 billion within 5 years that we said, and we are well in line with that pace here as you can see.

So yes, we move to the next one, I think. Talking about the interim report and the Q2 and the business conditions. We noted that the market situation was generally stable and slightly better during the second quarter compared to the same period previous year and earlier on. So slightly better. This quarter is always very sort of affected by the summer. So it's actually not in September where we see that things are actually where things are turning out, and it looks fairly good in September.

So a strong end to the quarter as well. Of course, demand continued to vary across companies and segments, but we saw some strong demand, especially within the Electrify, electrification and the infrastructure within the International division and within the TecSec division that had all good order intake, while demand was weaker in Control and Niche Products divisions.

We also concluded that the order intake was comparable -- for comparable units was slightly above invoiced sales and increased organically with 5% compared to the same quarter previous year. And that was also then adjusted for the currency effects that impacted some negative by 2%. So stronger order intake than the organic growth that we had in sales that was only 1% really in the quarter, but we see that as more of an effect of sort of how much we managed to invoice during the quarter.

So that's why we also highlighted here the percentage in order intake. You can see down to the -- further down here on the slide that we also have the net revenues by business type. And it's good to see that we're also in line with our proprietary products target of reaching the 85%. We are currently here on moving 12 months at 79%. But in the quarter, it was 80%. So we crossed that sort of limit as well or that bar as well now here during this quarter.

And you can see also that we -- from the far right there, you can see that we are over the years getting more and more international with the share of -- Sweden is growing, but as a percentage of the total, it's actually declining a little bit, but as we become more international.

Peter, maybe we should hand over and look at the numbers a little bit.

Yes. Thank you, Jörgen. As mentioned before, we are quite pleased to report another strong quarter with earnings before tax up by some 17%. Net sales increased by 13% with acquisitions contributing with 14%. The organic growth in sales were 1% and the currency effects were negative 2%. The EBITA increased 14%, and the EBITA margin improved to 17.9%. We're not entirely happy with the cash flow in the quarter, but we feel it remained quite robust.

If we turn to the 6-month period, the net revenues increased by 11% with, again, the acquisitions contributing with the majority of 12%. The organic growth was slightly higher at 2% and the currency effects were negative 3%. And the EBITA increased 13% and EBITA margins also improved to 17.7%. And as Jörgen mentioned before, we are well on track towards our long-term target with our earnings before tax improving by 15% in the first half year.

And as you can see, cash flows in a little bit longer period increased by 11%. Return on equity was at 30% and the equity ratio was 31%. Our internal measure, the profit of working capital was at 73% compared to 75%, a little bit stronger last year. And so far this year, we have completed 5 acquisitions, but the pace is 10 acquisitions in the past 12 months, contributing with some 12% growth in net revenues.

If we look at divisions, we noticed that we have a solid growth in 4 out of 5 divisions and especially strong in the International and Electrify divisions. We also saw strong EBITA growth and margins improvements in 3 out of our 5 divisions that is in the Electrify, Control and International divisions. But we also saw some headwind in the quarter, especially for TecSec that we have seen in a couple of quarters, but this quarter also for niche products.

And maybe, Jörgen, you can comment by division?

Yes. Let's make some comments on each of the divisions. We'll start with Electrify. Electrify posted a very strong quarter, I would say. Revenue is up 17% and 9% coming from acquisitions. So organically, it's 9%, a really good quarter for them. And FX was, yes, minus 1%. The EBITA rose by 23% to SEK 132 million and a strong EBITA margin. They haven't been used to really having it above 20%, but here we are -- and that's the goal we've had and now they posted their first quarter at 21.2%, which is really good compared to 18.8% last year.

Electrify is working in a favorable market within both the electrification and infrastructure segments they're addressing. And that contributed to a strong second quarter with good growth and improved margins. We noticed especially that we had good performance in companies like Nordic Road Safety had a really strong quarter, but also Elkapsling, Elfac, EFC, Enkom, KPRO and Norwesco, a number of companies there. We'd like to highlight the companies here to you guys. And of course, they have their own web pages to understand what they are really doing, what they're all about. You can go to their web pages and see what -- if you're interested.

But the Nordic Road Safety company stood out here during the quarter, but also the more traditional companies like Elpress, they posted a good quarter, even though they're not mentioned here, but also Elkapsling and the other one was mentioned here. The small but still very good company, PPV, newly acquired, reported good earnings and Mastsystem, which was a major acquisition we have made last year, had a strong order intake during the quarter, which will be -- is promising for the future -- looks promising for the future.

We move to the Control division, their revenues grew by 13% and acquisitions then was the whole thing. So 13% through acquisitions, but also organically 3%, but FX minus 3%. So EBITA picked up nicely with 43% to SEK 48 million and the EBITA margin at 15.1%. A strong EBITA margin. Control is, for those that have been with us has been usually having a very strong Q3 and Q4, but have also done through some acquisition, balance that out over the year. So now the EBITA margin is really strong here also during the summer with 15.1%.

A stable market with some successful acquisitions especially CP Cases in the U.K. and the U.S. continue to have a positive development, but also companies in Norway like Leteng, MH Modules in Sweden, Stegborgs in Sweden and Precimeter in Sweden, but also working very internationally showed good earnings improvements. But meanwhile, we, in this division also have a number of smaller businesses with still reliant on the construction market.

And that market, we still see has been very sluggish and slow with some real major headwinds there in that market. But that is affecting some of the smaller companies here, not the major ones. The newly acquired He-Man posted a good start to the year and also this quarter. And during the quarter, we also made an acquisition, a bolt-on acquisition to Direktronik with the Qvintus acquisition. I'll come back to that later on.

So 2 really strong divisions there. What we're struggling more with is the TecSec division. Here, we saw revenues fall back a little bit, 4% and organically minus 1% and no acquisitions here. They're still looking at acquisitions and like everyone else. So nothing new there really, but they have been -- yes, they're looking at some interesting things going forward. But during the quarter, they are lately still not been very much of acquisitions within the TecSec division.

The EBITA amounted to SEK 68 million, and the EBITA margin fell to 13.8% as opposed to 17% last year. Many of the companies still performed very well in the continued stable market like ARAS, COBS, Frictape and Idesco. But some of the bigger ones struggled more with ISG Nordic and Suomen Diesel Voima, they reported a good order intake, but slightly weaker earnings in the quarter.

But some of the larger units, the PcP, R-CON and Door & Joinery, Principal Doorsets and CW Lundberg remained affected by the weak market situation within the construction sector, and that has affected the TecSec development here organically in the quarter and so far this year.

Within the Niche Products division, some comments there. Revenues rose by 10% and out of that came 17% organically -- sorry, through acquisitions and organically was minus 5%. So a bit of a sluggish quarter and with some headwinds. Niche Products have a very broad portfolio of companies dependent on a number of segments and markets. But here, some of the really major ones had some headwinds at the same time. And therefore, we are not entirely happy with the performance of the Niche Products division in the quarter.

EBITA still on a good level at SEK 102 million and an EBITDA margin of 19.2%. So strong still, but not entirely living up to last year, which was a really strong quarter and period for some of the companies and tough comparables for Tormek and Asept, for instance, but also Truxor and Westmatic performed below last year.

And some of these companies also have a dependency up on the U.S., where we have seen some headwinds, partly due to the tariffs and the trade sort of discussions going on, but then also due to that they had really strong performances with some project-related businesses last year that they had difficulties meeting this year. But still, a couple of other companies really standing out very strong. Prido is one, continue to perform very well. And also the VLT or Van Leeuwen Test Group in the Netherlands has been a really good acquisition coming in very well for the Niche Products division. And some of the older ones, Profsafe, SIB, Thermod and Waterproof delivered some good improvement as well.

So -- and the International division then the last one, there, we are very happy. The revenues were up 35% to SEK 500 million. So strong growth there, but most of it came from acquisitions then. So organically, there was 0 and some FX minus 4%. The EBITA was up 47% within the division and the EBITA margin of 19.2%, a really strong quarter. International has been the division that has been behind the others in terms of EBITDA margin, but they have picked up here lately. And in the last few years, it's been a gradual improvement or structural improvement within the International division.

They are having some seasonality to their business now going forward. So we'll see what happens during the full year. But so far, it looks very good with the newcomers here, the Friggeråkers and the Epoke coming in very nicely here, have a strong period at this part of the year. But also the Marine business, Libra in Norway, DP Seals in the U.K. and G9 in Denmark continue to develop strongly. So a number of companies doing it very well also within the International division, but a strong quarter from the International division.

So 3 divisions we're really very happy with the TecSec and the Niche Products have a lot to work with or a few things to work with, but will probably pick up here going forward within -- so temporarily weaker period. So that was the quarterly report.

Let's move on to where we would like to be with the group. Well, to start with, I mean, we're really sort of focused on delivering on the Lagercrantz towards the SEK 2 billion goal. And we -- as we've said many times, we would like our annual profits to get there. We would like our annual profits to grow by 15% per year. So we will double our profits every 5 years. And we've said that 1/3 of that should come organically and the rest through 8 to 12 acquisitions per year.

And as we said already earlier, we posted some 10 acquisitions here in the last 12 months. So we are basically on that pace as we are now. The return on equity, we should do this in a very profitable way. So we say that return on equity should exceed 25%. And as you saw from the numbers, we're trying to get to 30%. So we're ahead on that target as well as we move forward. Building a very strong group of niche-oriented B2B tech and industrial companies.

And building in these 5 divisions. So we are -- have since now 3 years, 3.5 years, building around these 5 divisions, building positions in what we feel is segments with some underlying structural growth, the electrification, the safety type products, a number of areas within the niche products area, but also within the international with the marine businesses, the water cluster that we have within the Niche Products division. So we're really finding -- trying to find areas where we see some underlying structural growth.

Most of our companies should be growing between 5% to 10% per year. So it's not dramatic growth, but still high single digit is the ambition that we have for most or all of our companies, building around these 5 divisions. One strategic ambition, which is also very important to us is the aim for increasing the share of proprietary products. And we have that as a key KPI for us. So -- and here, you can see how that's evolved since 2006, '07, where we made acquisition of Elpress, which is one of the early ones in terms of having -- now we -- go back, you saw that in 2006, '07, 13% there.

But they have been growing. And now when we surpassed the SEK 1 billion goal, we said that we will move from 75% to 85%, and we are currently then on the moving 12 months at 79%. But in the report, you can also read that in the quarter, we were at 80%. So we are approaching the 80% halfway, and that is -- so we are basically on the right pace there as well as we move forward.

With the model, we are also then looking quite a lot at acquisitions, 8 to 12 per year. And again, we posted some 10 acquisitions in -- since October 2024. And you can see which ones those are here on this slide. We are -- have gradually been putting more emphasis on our divisions to do more of the acquisitions, and they're really picking that up. So I think we are looking at a very good pipeline at the moment. And we have also then gone more international with our M&A ambitions.

So we have since a couple of 3, 4 years now been really present in the U.K. market, but we're also now looking into the Netherlands and other markets as well, Germany, Switzerland, other sort of Northern European markets and gradually increasing our emphasis there. So it looks really very well. And I think we're growing and scaling Lagercrantz in a very good way at the moment.

So let's look into some -- to give you an idea of what we've been acquiring. Just a few ones, MT Miljøteknik is a company in Denmark that is a bolt-on to the water cluster that we're building within the Niche Products division around the Wapro Group, not a very big company, but still very good and very niche oriented in their market, strong in their market and delivering, as you can see, good EBITA margins and good growth as well over the last few years.

So it's a nice bolt-on, and that's how we normally work with things. We'd like to do this in a decentralized way and would like to see a lot of bolt-ons to the companies that we have already. So that was one example. Another, which is more of a platform investment is within the Control division, where we acquired a company called Orax, which is a leading Swedish supplier of products for handling and maintenance within the funeral and cemetery sectors.

So it's a company we've been looking at for many years really, but now it came up for sale in the right way. And we -- it's based in the west part of Sweden, close to Gothenburg. And we -- you can see down there, it's around SEK 50 million in terms of sales and an EBITA margin of, yes, close to or slightly below 20%, as you can see there.

So it's a very niche-oriented strong company within that specific niche where we're working. A couple of more acquisitions, the Epoke is another one where -- a slightly bigger one that we made in Denmark, which is a leading manufacturer equipment for winter road maintenance and road safety, especially for spreading sand and salt, a strong player, a clear market leader in Denmark, strong also in Norway and in Germany and in the Netherlands based out of Denmark and slightly bigger than what we've done -- slightly bigger than the average, so to say.

So that -- and related to that, to some extent, at least is the Friggeråkers Verkstäder that was with a brand name Falöping, which is a very strong player in the Swedish market, a market leader in Sweden and Norway with the salt spreaders that they are providing. You see them in winter time and have some annual profits of -- annual revenue of SEK 110 million and some EBITA margin of close to 20% to 25%, as you can see here. So a strong company, and both of these companies are then joining the International division or have been here for -- since summer.

And last but not least, we have another bolt-on, which is a bolt-on also within the Control division now connected to the Direktronik that have acquired some 100% of the shares, a smaller acquisition, but still, as you can see there, a strong EBITA margin down there to the right. Some manufacturing supplies of instrument for measuring temperature and pressure is their niche that they're working in. And Direktronik has other adjacent assortments, and this will add to that. So it will be working in close relationship with Direktronik which is an online sort of provider of different types of -- yes, more IT and network-related products, but this will fit right in with what they're doing there.

So to round off, well, thank you. I think we posted yet another good quarter. You should see that net sales are approaching the SEK 10 billion and probably we'll get there in a quarter or 2. And then we see the EBITA and EBITA margin picking up along the way. You can see the EBITDA growing, going towards SEK 2 billion, as we have said.

And then return on equity should be 25%. You see that's been above 25% for quite some time now. And the EPS growth has also been very good for the last few years, and we continue now with the pace of 21% here. That was not -- we had a stronger period last year, but still doing the 17% here in the quarter, as you saw from earlier.

So with that, I think we will round off and open up for questions.

[Operator Instructions] The next question comes from Jakob Marken from Danske Bank.

I have 2, but I can start with one of them. So I'm just wondering if you can help us a bit on the M&A contribution in international, quite a lot here in the quarter. And I guess that myself and my sell-side colleagues had expected the summer months to be a bit weaker for Epoke and Friggeråkers, but that does not seem to be the case. So if you can help us with the seasonality of those acquisitions, it will be great.

Yes. I think the seasonality is that they are building and working quite a lot with their projects. I mean it's a winter-related products they're selling, right? So they're selling most of what they're doing in the fall. I think they will have a strong sort of October, November -- September, October, November is usually their really strong period of the year. I think they're doing and delivering quite a lot doing that. And then it will take another couple of months before they get the cash flows out of that. But the seasonality in those companies are strong, and we will need to deal with that along the way.

Okay. Perfect. That's good. And the second one, I'm just wondering if you can help us a bit on the organic order growth. Would you say that they are similar to the sales performance in the different segments? Or are there any segment that sticks out both on the positive or the negative side on the order growth?

Yes. I think we have some project-related orders that is also to be delivered here going forward. So if you look into it, you could see that we've highlighted that TecSec actually had a good order intake, but it's not delivering in terms of sort of the quarter here. I think they have picked up with a number of good more long-term related orders. I also see that we have that within the Electrify division.

We also see the Mastsystem picking up with some good order intake, that is also sort of behind the strong order intake. So it's -- I think it's -- generally speaking, it's very related as you're suggesting, but with some sort of things that we've also highlighted in the report that especially within the TecSec and also within the Electrify, we've had some strong order intake. I think...

Actually also in the International division has been strong, while it has been slightly weaker in the last quarter in Control and Niche Products divisions.

The next question comes from Christian Binder from Redeye.

One would be whether you could clarify around cash flow. You mentioned that you're not entirely satisfied with this quarter's performance. Can you just talk a little bit more about underlying reasons and potential measures, how that's going to improve in coming quarters?

Yes. I mean we've seen some seasonality coming into the group, right, with the NRS business in Nordic road safety that we talked about. I mean they're delivering most of what they're doing during the summer. And then they're getting sort of a better cash flow or getting paid during the fall. And that we see happening and it has been so for the -- they've been with the group now for 2 years or something.

And then on the Epoke and Friggeråkers, we have a similar seasonality, but it's more delayed leading towards the fall rather than the summer. And then we see sort of good cash flows. We expect good cash flows to come in here in Q3 and Q4, we'll see.

I can add to that, that we have seen some improvements in the working capital also related to, for example, inventory and things like that, that we are working with and not entirely happy in the quarter.

All right. Perfect. That was clear. And then just one follow-up on order intake. If I understood correctly, niche products was a little bit weak this quarter, and it seems like comparables for organic growth will remain a little bit tough. So should we kind of expect this performance to continue for the next quarter or 2?

Yes, we're working on it, but there was some sort of strong sales in some of the really strong comparables in a couple of companies last year, and that will probably continue for another quarter or so. Yes, that's probably correct.

The next question comes from Zino Engdalen Ricciuti from Handelsbanken.

Two of them on the margin. Firstly, a follow-up on International. Yes, big improvement which you attribute to M&A. And I would just like to understand that a bit more, especially with the slide on Epoke, which is the larger one which you showed, which at least on a yearly basis is margin dilutive, but yes they boosted it in what seems to be a seasonally relatively weak quarter. If you could nuance that a little bit.

Well, there is a seasonality also to the margin, right? What you see there on the Epoke slide is for the full year, right? But we are not -- and we are expecting Epoke should -- as most of our companies, we have definitely the ambition to drive margins in these type of businesses, especially the new ones. And we expect that to pick up.

Maybe it's not done overnight, but that is definitely the ambition going forward that it should live up to the expectation and basically the average or so of the group. So it's -- we have the ambition to always buy companies that have in excess of EBITA margin of more than 15%. And Epoke has been in that neighborhood, but we would like to establish them on about 15% more sort of on a stable, yes, continuously. So we have that as an ambition for that company, yes.

Understood. And secondly, on the margin in Electrify, which continues to be quite strong. Are there any effects in this quarter we should take into consideration so we don't extrapolate something that's maybe a bit better than it should?

I think many of the companies are doing very well within the Electrify division, and we have some really strong companies there. I think what stood out here during the quarter, as we mentioned, is the NRS business that had a strong seasonality, but also had a strong sort of performance here during the quarter. So whether that will be sustainable? Well, let's see what happens, but there is a seasonality in there as well.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

We have one question also around declining interest rates in Sweden. Maybe you should take that one, Peter.

Yes. The question is also if we can see more competition with -- triggered by this cheaper financing and more competition in M&A. And I think we have repeated this message a number of times that over time, our multiples in M&A has been very, very stable. And as we have mentioned in the report, we see a very, very good M&A pipeline. And we haven't seen any material effect of more competition on the acquisitions lately. So I think we're very, very stable and solid, M&A situation.

Yes. We see interest rates coming down a little bit. And that, of course, is making our financing a bit cheaper, but we don't see that affecting M&A to a large extent, we don't know. It's a short answer.

Okay. Good. Thank you, everyone, for listening in. Me and Peter are available here during the day if you have sort of additional questions you would like to ask us. And if not, have a good day. Thank you for listening in. I think a strong solid quarter from us and looks -- and we look into the future with bright eyes. So thank you very much.