Slide 1: HMS Networks Q1 2024 presentation
HMS Networks Q1 2024 presentation Staffan Dahlström, CEO, Joakim Nideborn, CFO April 16, 2024 Hardware Meets Software
Slide 2: Agenda
Agenda Summary and introduction Business update Acquisition of Red Lion Controls complete Financial results Q&A
Slide 3: Financial summary of Q1 2024 and R12
Financial summary of Q1 2024 and R12 Q1 summary R12 • Net sales 616 MSEK (773), -20% • Net sales 2,868 MSEK (2,762), +4% • Order intake 473 MSEK (682), -31% • Order intake 2,094 MSEK (2,889), -28% • EBIT 130 MSEK (211) (Adj. 133) • EBIT 672 MSEK (725) (Adj. 698) • EBIT margin 21.1% (27.4) (Adj. 21.6
Slide 4: Our field: Industrial ICT
Our field: oO ees Industrial ICT SG": = atthe forefront of devices connected to networks +500,000 (Information and Smart Grid = technology ate eee Communication Al ee ene Technlogy) Oo 1200 “i ve seniaReE Offices in 18 4 employees ells countries Hate \ | SE Te GEIR Deteercin en Head office in b C\ j
Slide 5: HMS Playing Field - Overall Market Segments
HMS Playing Field - Overall Market Segments Industrial Building Automation Automation Transportation & Manufacturing Power & Energy Infrastructure Ports, Marine, Power Generation, Commercial buildings, Factory Automation, Utilities, Data Centers, Power Distribution, Industrial buildings, Process Aut
Slide 6: Two main customer groups – Makers and Users
Two main customer groups – Makers and Users Makers of industrial equipment Users of automation systems
Slide 7: Different market channels for Makers and Users
Different market channels for Makers and Users Makers of industrial equipment Users of automation systems Device Machine End users & manufacturers builders System integrators 44% of revenue 25% of revenue Revenue 31% of revenue Specified as standard Project Sales Design Wins or Business model Produc
Slide 8: HMS Strategic framework until 2025
HMS Strategic framework until 2025 Organic growth M&A People Planet Organic growth M&A People Operational Efficiency Sales Excellence Planet Operational Efficiency Sales Excellence
Slide 9: HMS Strategic Targets 2025
HMS Strategic Targets 2025 Science The HMS Effect qf based feam x3 Boni targets by 2030 lu Zz 7 z= a 7H +50 O730% Customer Female managers NPS by 2025 73,14 illion LTE ae » by 2025 PEOPLE GROWTH
Slide 10: Agenda
Agenda Summary and introduction Business update Acquisition of Red Lion Controls complete Financial results Q&A
Slide 11: Business update – first quarter 2024
Business update – first quarter 2024 • Mixed market indications – weak demand in Asia due to high inventory levels, Europe shows signs of improvements of the order intake, still from low levels • In North Americas HMS had a temporary set back in orders from large embedded customers – while Red Lion
Slide 12: Agenda
Agenda Summary and introduction Business update Acquisition of Red Lion Controls complete Financial results Q&A
Slide 13: Red Lion acquisition completed on April 2nd 2024
Red Lion acquisition completed on April 2nd 2024 Red Lion update • Acquisition completed as planned on April 2nd, all necessary approvals are in place. Consolidated from April 1st • Integration is on full speed and expected to be finalized during 2025 – focus now to define and execute sales synergie
Slide 14: Red Lion – business update
Red Lion – business update Red Lion business update • Order intake pace is improving since second half of 2023 and also gradually improving throughout the first quarter • In 2023, Red Lion reached Net Sales of 1,314 MSEK and an operating margin of 21% • Over the last five years Red Lion has managed
Slide 15: Agenda
Agenda Summary and introduction Business update Acquisition of Red Lion Controls complete Financial results Q&A
Slide 16: Order intake of 473 MSEK in Q1 2024, -31%
Order intake of 473 MSEK in Q1 2024, -31% Order Intake, MSEK Analysis and conclusions • Q1 2024: 473 MSEK (682), -31% (organic -36%) 1 000 3 500 857 815 -31% 3 000 • R12: 2,094 MSEK (2,889), -28% (organic -28%) 800 699 718 703 606 669 675 682 2 500 • Customer inventory adjustments not reflecting und
Slide 17: Major de-stocking impacting order intake in Q1
Major de-stocking impacting order intake in Q1 Normalized order intake, MSEK 857 815 50 718 703 669 699 250 675 682 35 492 473 150 85 426 605 50 0 18 565 140 200 50 65 100 633 682 698 642 635 607 615 575 618 500 505 529 499 -30 -42 -150 -180 -150 Q121 Q221 Q321 Q421 Q122 Q222 Q322 Q422 Q123 Q223 Q32
Slide 18: Order intake Q1 2023 – Q1 2024
Order intake Q1 2023 – Q1 2024 MSEK -31% -7% 682 682 0 0 47 635 180 473 18 Order Boost Q123 Revaluation Normalized Underlying Normalized Destocking Revaluation Reported Order intake Q123 backlog OI Q123 market decline OI Q124 in Q124 backlog intake Q124
Slide 19: Net Sales 616 MSEK in Q1 2024, -20%
Net Sales 616 MSEK in Q1 2024, -20% Net Sales, MSEK Analysis and conclusions • Q1 2024: 616 MSEK (773), -20% (organic -20%) 1 000 -20% 3 500 764 773 789 3 000 • R12: 2,868 MSEK (2,762), +4% (organic 0%) 800 760 703 2 500 571 601 624 616 • Book-to-bill excluding FX effects of 0.74 in Q1 600 517 2 000
Slide 20: Backlog now back to normal levels
Backlog now back to normal levels Backlog, 2019 – 2024, MSEK Backlog/Net Sales, 2019 – 2024, MSEK 3 500 0.7 0.65 0.63 0.59 3 000 0.6 0.56 2 500 0.5 0.48 0.46 0.44 0.41 2 000 0.4 0.37 1 453 0.32 1 408 1 407 1 500 1 316 1 316 0.3 0.26 0.25 1 195 -137 0.22 1 106 0.19 1 000 864 0.2 0.17 0.17 0.17 0.18 7
Slide 21: Q1 2024: Sales per region
Q1 2024: Sales per region Sales per region Q1 2024, MSEK 23% 57% 20%
Slide 22: Q1 2024: Adjusted EBIT 133 MSEK (21.6% margin)
Q1 2024: Adjusted EBIT 133 MSEK (21.6% margin) EBIT, MSEK Analysis and conclusions • EBIT Q1: 130 MSEK (211) (Adj. Q1 2024 133 MSEK) -37% • EBIT margin Q1: 21.1% (27.4) (Adj. Q1 2024 21.6) 250 800 223 • EBIT R12 (Adj.): 698 MSEK (725) 211 700 200 192 193 • EBIT margin R12 (Adj.): 24.3% (26.2) 179 60
Slide 23: Understand HMS restructuring program
Understand HMS restructuring program Understanding of the current situation Impact from the restructuring program • Underlying OPEX in Q1 2024 of 252 MSEK, 13% organic • Restructuring program is initiated to be able to keep decline vs Q1 2023 and more in relation to Q4 run-rate growth initiatives th
Slide 24: Q1 2024: EPS 2.28 SEK (Adj. 2.35)
Q1 2024: EPS 2.28 SEK (Adj. 2.35) EPS, SEK Analysis and conclusions Q1: -36% • EPS of 2.28 SEK (3.70) (Adj. 2.35) 4.00 14 3.70 3.70 13 • Net financials of 3 MSEK (2) 3.50 12 3.25 11 3.00 2.90 2.87 10 2.41 2.48 0.51 9 2.50 2.33 2.35 R12: 0.07 8 2.02 2.00 1.81 1.85 0.57 7 • EPS of 10.82 (12.17) (Adj.
Slide 25: Q1 2024: Cash flow from ops. of 58 MSEK
Q1 2024: Cash flow from ops. of 58 MSEK Cash flow, MSEK Analysis and conclusions Q1: 200 125% • Cash flow from ops. of 58 MSEK (155) -63% 177 167 • Changes in NWC → -72 MSEK (-70) 155 148 100% • Reduction in AR by 58 MSEK 150 126 • Reduction in AP by 71 MSEK 118 119 75% 104 • Inventory buildup of 22
Slide 26: Q1 2024: Net Debt of 309 MSEK
Q1 2024: Net Debt of 309 MSEK Net debt and leverage, MSEK Analysis and conclusions • Net debt / EBITDA of 0.39 (0.46) 600 1.0 540 • Net debt / Equity: 0.15 (0.22) 0.9 500 416 347 299 • Interest bearing liabilities on same levels as at 84 410 415 390 309 0.8 78 80 383 289 year end due to investments
Slide 27: Questions?
Questions’? Ss aE, <A SSS