Slide 1: The overall situation remains challenging
The overall situation remains challenging Q324 Webcast | October 31, 2024
Slide 2: Agenda
AGENDA • Big picture • Q324 highlights • Q324 financials • Q&A
Slide 3: The Overall situation remains Challenging
The Overall situation remains Challenging Modest performance compared to recent history & potential of the portfolio Operational ebit (€) & ebit%, r12 Roce% net debt/operational ebitda Q324 * -29% 7.9% 3.3x (15%) (15%) (2-3x) minimum annual average minimum net debt / operational EBIT growth ROCE ope
Slide 4: The acquired companies perform better than the old portfolio
The acquired companies perform better than the old portfolio Challenges with the investment driven portfolio in place before introduction of boreo Operational ebit, m€1) Commentary 1▪ Continued investments in illustrative growth – e.g. Delfin, Filterit, Pronius 2▪ Reorganizations completed – e.g. Ma
Slide 5: Confidence in the business model & strategy
confidence in the business model & strategy well positioned for a significant earnings improvement as market conditions improve Business model & philosophy Decent returns for acquisition despite challenging times 16 acquisitions Improved quality of the firm ~15% roce since Q3 2020 companies w/ high
Slide 6: Focus on executing our back to growth -plan
Focus on executing our back to growth -plan Costs decline +2m€ p.a. – inventory down by 10m€ since summer 2023 – reorganizations completed 1 2 3 Acquisitions Investments Re-organizations of companies with ability to in the growth of our companies which in companies operating below the 50% generate e
Slide 7: Agenda
AGENDA • Big picture • Q324 highlights • Q324 financials • Q&A
Slide 8: Q324 highlights
Q324 | highlights Moderate result Cost actions kick-in well Operational EBIT 1.8m€ (Q323: 3.0m€) Fixed costs declined more than communicated Profitability at 6.2% (Q323: 7.0%) Annual cost savings over 2m€ (vs. 1m€ Decline of sales to 29m€ (Q323: 41m€) communicated earlier) Decent trading outlook Pri
Slide 9: Q324 significant decline in sales
Q324 | significant decline in sales Challenging market conditions continued Commentary 200 Sales -30% or -12.2m€ vs. Q324 Sales, R12 ▪ Sales under pressure in majority of 180 170 172 169 the companies 160 161 155 153 160 144 Acquisitions & exits 140 140 130 132 ▪ No impact from acquisitions 120 104
Slide 10: Q324 strong gross margins & stable profitability
Q324 | strong gross margins & stable profitability Costs decline more than expected – annual cost savings over 2m€ (vs. 1m€ communicated earlier) Commentary 40 % Gross margin Gross Margin%, R12 EBIT%, R12 ▪ Up from 27% to 32% 35 % 33 % ▪ Successful management of margins 31 % 31 % ▪ Impact of sales m
Slide 11: Q324 moderate cash flow
Q324 | moderate cash flow Cash flow below expectations due to slight increase in working capital Commentary 229 % ▪ Trade Working Capital increased by c. 0.5m€ to 28.5m€ in Q324 ▪ Inventory declined by 1m€ from Q224 and is 6m€ below 151 % 156 % Q323 129 % 17.6 96 % 97 % ▪ Target to lower working cap
Slide 12: Q324 returns negatively impacted by profitability
Q324 | returns negatively impacted by profitability Actions taken with costs and working capital not enough to offset decline in sales Commentary 60 % ▪ Weak profitability in the recent ROTWC%, R12 quarters impacting returns negatively 50 %50 % 50 % 46 % ▪ Strong cash generation in the last 2- 43 %4
Slide 13: Q324 decent performance outlook
Q324 | decent performance outlook Cost actions kick-in better as expected – order books grew back to Q124 levels 1 2 3 order books Cost declined as planned Continued positive outlooks increase of order books to Q124 level – annual cost savings of over 2m€ continued stable outlooks for cls deliveries
Slide 14: Agenda
AGENDA • Big picture • Q324 highlights • Q324 financials • Q&A
Slide 15: Q324 net sales and operational EBIT
Q324 | net sales and operational eBIT Sales and operational EBIt declined, while relative profitability remained at decent levels Net sales * Operational ebit & ebit% * -31% 7.7 % 6.9 % 7.1 % 7.0 % 6.3 % 6.2 % 5.8 % 5.6 % 5.6 % -29% 4.9 % 5.0 % 4.9 % 5.1 % 3.6 % 1.8 % 43.3 45.0 41.0 42.3 41.0 39.2 4
Slide 16: Q324 direct cost ratio and indirect cost ratio
Q324 | direct cost ratio and indirect cost ratio Direct Cost efficiency continued to improve. indirect costs steadily declining Direct costs (R12) and Direct cost ratio (%)* Indirect costs (R12) and Indirect cost ratio (%)* 23.8 % 76.2 % 75.5 % 75.0 % 75.0 % 74.8 % 74.8 % 75.2 % 75.4 % 75.2 % 74.9 %
Slide 17: Q324 Electronics
Q324 | Electronics Moderate result - operational ebit at 8.1% & rotwc at 43% Comments – q3 2024 Net sales and operational ebit% ▪ Gross margin improved from the previous year due to 6.3 % 7.5 % 8.7 % 8.1 % successful pricing and the sales mix of products and business 3.6 % units ▪ Profitability was
Slide 18: Q324 Technical trade
Q324 | Technical trade Decent Profitability despite declining sales. Operational EBIT at 7.6% & rotwc declined to 27% Comments – q3 2024 Net sales and operational ebit% ▪ Improved gross margins due to sales mix, pricing actions and discontinuing some low margin product segments ▪ Challenging quarter
Slide 19: Q324 EPS and ROE
Q324 | eps and ROE Operational eps at 0.10€. Roe declining through weakened net profit and increased equity Cash flow and earnings per share ROE 2.29 13.7 % 11.4 % 13.1 % 12.1 % 12.3 % 11.3 % 8.4 % 6.7 % 1.83 3.4 % 3.0 % 1.8 % 1.44 0.85 0.39 0.48 0.28 0.28 0.25 0.31 0.25 44 44 42 42 42 43 0.10 37 39
Slide 20: Q324 debt facilities
Q324 | debt facilities Reset date of the remaining old hybrid in 2025. term loan facilities’ maturity in Q126. debt maturity structure, total facilities, m€ Total facilities of 73.0m€ of which 56.5m€ used (q324) 4.0m€ ** 9.5m€ 5% 13% 23.5m€ 32% 4.0m€ 6% * 73.0m€ 20.0m€ 27% 12.0m€ 16% *0.0m€ in use a
Slide 21: Agenda
AGENDA • Big picture • Q324 highlights • Q324 financials • Q&A
Slide 22: yy yj
We, yy yj Wa e “
Slide 23: Grow & prosper
BOREO GROW & PROSPER
Slide 24: A long-term owner of great entrepreneurial companies
A long-term owner of great entrepreneurial companies 161m€ 9.5m€ (5.9%) 323 NET SALES 2023 Operational ebit 2023 Employees 22 companies 11.0% 3.3x Return on capital employed Net debt / operational EbitDA 2023 Q3 2024 Map excluding USA 24
Slide 25: Diversified industrial portfolio in 7 countries
Diversified industrial portfolio in 7 countries Electronics Technical trade 62M€ 2023 Sales 127 Professionals 100M€ 190 2023 Sales Professionals 7 Markets 3 Markets Net sales adjusted for continued operations New organizational structure effective as of 1.1.2024 25
Slide 26: Capable & committed leadership in a decentralized structure
Capable & committed leadership in a decentralized structure Simon Hallqvist, Camilla Grönholm, Jouni grönroos, Ralf Holmlund, Noora neilimo- Jussi vanhanen, Chairman chair of Remco chair of audit board member kontio, board board member committee member Board of Directors 1,913,433 shares 1,277 share
Slide 27: Boreo's business model
Boreo’s business model We own and acquire Great entrepreneurial companies with strong profits and cash flows Ultimate objective is We enable earnings growth by Sustainable profit Supporting & generation coaching in the long-term our companies & developing people we Re-invest capital with attractive
Slide 28: Our acquisition & ownership criteria
Our acquisition & ownership CRITERIA asset light industrial businesses with strong cash generation, proven track record and a management fit with boreo culture Industrial characteristics financial characteristics organisational characteristics investment characteristics B2b high Cash conversion Stro
Slide 29: Our philosophy – Sustainable long-term profit generation
Our philosophy – Sustainable long-term profit generation Decentralization Capital allocation Culture of ownership and release of Focus on earnings and capital efficiency entrepreneurial energy Broad universe of investment Aligned interest of shareholders and opportunities – discipline in capital emp
Slide 30: What's in it for the companies?
What’s in it for the companies? A Long-term owner Leadership development • Stability • Best practice sharing • Continuation • Support from ’Coaches’ • • MD peer group • Credibility Access to funding boreo companies • Boreo Academy Balance P&L sheet Business development Personnel • Board of Directors
Slide 31: Focus on earnings growth and return on capital
Focus on earnings growth and return on capital Updated long-term strategic financial targets to better reflect shareholder value creation minimum annual minimum net debt / average operational ROCE operational EBITDA EBIT growth 15% 15% 2-3x Dividend policy Target to annually increase dividend per sh
Slide 32: Grow & prosper
BOREO GROW & PROSPER