Absolent Air Care : Interim report Q2

Air care for healthy growth

1. 2

Interim report 2022

Q2 2022

Summary

1 April - 30 June 2022

• Net sales amounted to SEK 350.7 (269.6) million, which corresponds to a growth of 30.1 (37.2) %.
• Operating result before amortizations and depreciations (EBITDA) increased by 45.5 % and amounted to SEK 73.4 (50.4) million, corresponding to a margin of 20.9 (18.7) %.
• Operating result (EBIT) increased by 54.2 % and amounted to SEK 63.4 (41.1) million, corresponding to a margin of 18.1 (15.2) %.
• Earnings per share amounted to SEK 3.75 (2.72).
• Cash flow from operating activitites amounted to SEK 20.6 (34.2) million.

1 January - 30 June 2022

• Net sales amounted to SEK 672.8 (502.7) million, which corresponds to a growth of 33.8 (5.7) %.
• Operating result before amortizations and depreciations (EBITDA) increased by 59.0 % and amounted to SEK 135.5 (85.2) million, corresponding to a
  margin of 20.1 (17.0) %.
• Operating result (EBIT) increased by 73.5 % and amounted to SEK 115.3 (66.5) million, corresponding to a margin of 17.1 (13.2) %.
• Earnings per share amounted to SEK 7.17 (4.33).
• Cash flow from operating activitites amounted to SEK 62.9 (61.9) million.

002	Absolent Air Care Group

Q2 2022

Group key figures

Key figures	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun	Jan-Dec	Rolling 12 months
	2022	2021	2022	2021	2021	Jul 2021-
						Jun 2022
Net sales, SEK thousands	350 688	269 643	672 793	502 723	1 029 807	1 199 877
Sales growth, %	30.1	37.2	33.8	5.7	15.0	30.0
Operating result before amortizations and	73 374	50 438	135 516	85 228	168 538	218 826
depreciations (EBITDA), SEK thousands
Operating margin before amortizations and	20.9	18.7	20.1	17.0	16.4	18.2
depreciations, %
Adjusted operating result before amortizations and	73 374	50 438	135 516	85 228	181 162	231 450
depreciations (EBITDA1*), SEK thousands
Adjusted operating margin before amortizations and	20.9	18.7	20.1	17.0	17.6	19.3
depreciations*, %
Operating result (EBIT), SEK thousands	63 381	41 101	115 320	66 469	131 542	180 393
Operating margin, %	18.1	15.2	17.1	13.2	12.8	15.0
Adjusted operating result (EBIT1*), SEK thousands	63 381	41 101	115 320	66 469	144 166	193 017
Adjusted operating margin*, %	18.1	15.2	17.1	13.2	14.0	16.1
Cash flow from operating activities, SEK thousands	20 620	34 168	62 873	61 888	114 510	115 495
Total assets, SEK thousands	1 577 598	1 412 900	1 577 598	1 412 900	1 457 227	1 494 066
Equity ratio, %	39.1	33.0	39.1	33.0	36.4	36.3
Net cash (+) / net debt (-), SEK thousands	-395 506	-276 557	-395 506	-276 557	-392 098	-336 032
Earnings per share, SEK	3.75	2.72	7.17	4.33	8.68	11.52
Equity per share, SEK	54.52	41.21	54.52	41.21	46.82	47.87
Number of outstanding shares at the balance	11 320 968	11 320 968	11 320 968	11 320 968	11 320 968	11 320 968
sheet date
Average number of employees	456	403	456	403	446	460

• Adjusted key ratios are excluding items affecting comparability for the full year 2021 and rolling 12 months Jul 2021-Jun 2022. Key ratios for these periods have been adjusted for items affecting com­ parability, partly a negative impact on the result of SEK 8.1 million related to the divestment of Bristol and partly costs of SEK 4.6 million related to restructuring of parts of the operations in China and our project-based business in the UK. No adjustments have been made for the other periods.

Absolent Air Care Group

003

Q2 2022

CEO comments

The strong trend continues

During the second quarter of the year, the Group reported the hig­ hest net sales and the highest operating result for a single quarter ever, a clear sign of strength given the current challenges on the world market. Net sales increased by 30.1 % to SEK 350.7 (269.6) million and thanks to continued improvements of the operating margin, the operating result before amortizations and deprecia­ tions (EBITDA) increased by 45.5 % to SEK 73.4 (50.4) million.

The Group's own sales companies have made strong efforts by winning deals and gaining market shares, and despite a season­ ally calmer summer period, the Group's business areas, Industrial and Commercial Kitchen, have strong order books. However, the challenges of managing component supply and inflation are still palpable. Our efforts to manage the disruptions are becoming increasingly effective, but there is still a time lag from when cost increases from suppliers arise to corresponding price increases for

customers can be implemented, which temporarily puts pressure on the gross margin. Due to the component supply challenges, we have chosen to slightly increase the Group inventory levels to ensu­ re security of supply to customers.

Industrial

The growth in the quarter for the Group's largest business area Industrial amounted to 36.3 % and the operating margin before amortizations and depreciations (EBITDA) amounted to 23.2 %, an increase by almost four percentage points compared to the same quarter previous year. Organically, the growth has been strongest in the EMEA region, where mainly the Group's premium brand Absolent has had great success. Region APAC experienced a slightly slower development during the quarter, mainly due to severely limited delivery capacity as our warehouses in Shanghai for the Chinese market have largely been affected by the extensive lockdowns in the country. Sales increased sharply in the Americas region, mainly because the newly acquired Canadian companies Quatro and Aerofil have developed very positively and contribute to growth as well as margin improvement.

Commercial Kitchen

The Commercial Kitchen business area reported a growth of 8.2 % compared to the same quarter last year and sales in line with the first quarter of the year. The challenges from the first quarter with sharp, rapid increases in material prices have continued, causing the business area to report a gross margin four percentage points lower that previous year. The challenges mainly relate to the Swedish market, where we have own production and a large share of contracts with long order cycles. However, the order intake for the business area is still on a good level and we expect to see a gradual improvement of the gross margin during the autumn.

Altogether, we are proud of a record-strong quarter and look with confidence on the future in terms of both growth as well as margin improvement.

Axel Berntsson, CEO and President

Gothenburg, in August 2022

004	Absolent Air Care Group

Q2 2022

The Group April - June 2022

Net sales

Net sales for the Group amounted to SEK 350.7 (269.9) million, which corresponds to a growth of 30.1 (37.2) %. The Industrial business area showed the largest growth, with a net sales increase from SEK 209.6 million to SEK 285.7 million. For Commer­ cial Kitchen, the Group's other business area, net sales amounted to SEK 65.0 (60.1) million. Net sales increased in the regions EMEA and Americas, while APAC was on par with the previous year.

Result

Operating result before amortizations and depreciations

(EBITDA) amounted to SEK 73.4 (50.4) million, which corresponds­ to a margin of 20.9 (18.7) %. Operating result (EBIT) amounted to SEK

63.4 (41.1) million with an operating margin of 18.1 (15.2) %. Transla­ tion effects of foreign Group companies' results have impacted the operating result (EBIT) for the period with 1.9 (1.2) million. The result improvement is driven by the Industrial business area, for which operating result (EBIT) increased from SEK 33.8 million to SEK 58.8 million. The increase is an effect of both improved margin and in­ creased net sales. For Commercial Kitchen, operating result (EBIT) amounted to SEK 7.9 (11.1) million, where the decrease mainly is an effect of the combination of sharp, rapid material price increases and long order cycles.

The operating result also includes gains from a real estate sale finalized during the quarter. The gain amounts to SEK 3.5 million and is recorded as other operating income.

Net financial items amounted to SEK -7.4(-2.9) million, of which exchange rate effects amounted to SEK 1.0 (-0.2) million. These

effects are mainly related to the credit facility in foreign currency­. Net financial items for the quarter also include an impairment of a financial receivable of SEK 5.4 million related to a transfer of assets made during the previous year. Result after tax amounted to SEK 42.5 (30.8) million.

Investments

During the period April-June, the Group has invested a total of SEK 11.1 (3.9) million in intangible and tangible fixed assets, where this period's investments refer to capitalized development costs, software and machinery.

Cash flow

Cash flow from operating activitites before changes in working capital amounted to SEK 60.0 (37.9) million and the cash flow after changes in working capital amounted to SEK 20.6 (34.2) million. The lower cash flow has been negatively affected by mainly larger pay­ ments of current liabilities as well as increased inventory.

Financial position

Interest-bearing liabilities at the end of the period amounted to SEK 650.5 (669.1) million, of which SEK 73.6 (84.6) million refers to lease liabilities. The net debt for the Group amounted to SEK 395.5 (276.6) million. The increase is mainly attributable to the acquisition of Quatro Air Technologies Inc. and Aerofil Inc., which was finalized during the fourth quarter 2021.

The equity ratio improved by 6.1 percentage points and amounted to 39.1 (33.0) % at the end of the period. The Parent company's­ credit facility totals SEK 600 million and expires in 2024.

Net sales, SEK million

EBITDA, SEK million

	285.7
209.6
		60.1	65.0
Industrial	Commercial Kitchen
Q2 2021	Q2 2022	Q2 2021	Q2 2022

66.3

40.8

13.0	10.0

Industrial	Commercial Kitchen
Q2 2021	Q2 2022	Q2 2021		Q2 2022

Absolent Air Care Group

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