WALL TO WALL GROUP INTERIM REPORT Q3 2024

INTERIM PERIOD 1 JULY – 30 SEPTEMBER

• The Group’s net revenue amounted to SEK 206.0 million (217.4), adjusted EBITDA amounted to SEK 21.5 million (25.3) corresponding to an adjusted EBITDA margin of 10.4% (11.6%), and adjusted EBITA amounted to SEK 5.6 million (11.1) corresponding to an adjusted EBITA margin of 2.7% (5.1%). For comparable entities, revenue declined -13.6% (15.8%).
• During the third quarter, development was sluggish in relining and energy, despite variations between geographies. Increased demand was noted in Denmark and Finland, but their contribution to results remains insufficient and not on par with comparable operations in Sweden and Norway. The flushing business, on the other hand, continued to develop strongly.
• Operating profit (EBIT) amounted to SEK 23.6 million (11.2). Items affecting comparability for the period totalled SEK -20.9 million (-3.1) and primarily pertained to the write-down of contingent earnouts, restructuring costs, and costs for the change of system and implementation.
• The Group’s net earnings amounted to SEK 20.7 million (4.4).
• The Group’s basic and diluted earnings per share amounted to SEK 1.52 (0.32).

SIGNIFICANT EVENTS DURING THE QUARTER

• André Strömgren has taken up his role as Wall to Wall Group AB’s new CFO and member of the company management.
• During the quarter, the company repurchased its own shares, corresponding to 99,951 shares, and as of 30 September 2024, treasury shares amounted to 241,444.

1 JANUARY – 30 SEPTEMBER PERIOD

• The Group’s net revenue amounted to SEK 679.9 million (681.3), adjusted EBITDA amounted to SEK 69.6 million (85.9) corresponding to an adjusted EBITDA margin of 10.2% (12.6%), and adjusted EBITA amounted to SEK 24.1 million (46.6) corresponding to an adjusted EBITA margin of 3.5% (6.8%). For comparable entities, revenue declined -9.6% (13.4%) adjusted for currency.
• Operating profit (EBIT) amounted to SEK 33.2 million (32.7). Items affecting comparability for the period totalled SEK -18.1 million (5.1) and primarily pertained to the write-down of contingent earnouts, restructuring costs, and costs for the change of system and implementation.
• The Group’s net earnings amounted to SEK 24.9 million (6.1).
• The Group’s basic and diluted earnings per share amounted to SEK 1.81 (0.45).

SIGNIFICANT EVENTS AFTER THE PERIOD

• On October 21, 2024, it was announced that the Board of Directors of Wall to Wall Group AB appointed André Strömgren as the new CEO with immediate effect. The company’s former CEO Joachim Welin is leaving the company. André was previously the CFO of the company, a role he will retain until a successor has been appointed.

OUTLOOK

• During the third quarter, an improved market was observed with increased inquiry activity and stronger sales towards the end of the quarter, which positively affected the order book. Signs of increased willingness to invest in the main customer segments are in line with the Company’s previously communicated outlook for a normalized demand for the relining and energy businesses, with some impact during the remainder of the year and full impact from 2025 onwards.

DEVELOPMENTS DURING THE THIRD QUARTER OF THE YEAR
During the third quarter, the Company’s pipe relining and energy operations, which address property owners’ needs for planned maintenance and energy efficiency measures, experienced sluggish development, albeit with continued differences across geographies. Increased demand was noted in the Danish and Finnish pipe relining operations, but their contribution to results remains insufficient and not on par with comparable operations in Sweden and Norway. For the Company’s pipe flushing services, which address property owners’ needs for ongoing maintenance and service, the development during the quarter has remained strong.

The relatively low activity levels within pipe relining and energy have impacted the Company’s margins, and resulted in lower contribution, which could not be fully offset despite an 11% reduction in indirect costs compared to the previous year. In addition to previously initiated measures, the Company is therefore planning further actions to reduce indirect costs.

FINANCIAL DEVELOPMENTS
Net sales for the third quarter amounted to SEK 206.0 million (217.4), a decrease of -13.6% on a fully comparable and currency-adjusted basis, of which the impact from discontinued operations accounted for -4.9 percentage points. In operations held for at least 12 months, adjusted for discontinued units, the currency-adjusted organic growth was -8.5 percentage points, primarily driven by the pipe relining and energy operations. For operations acquired thereafter, the currency-adjusted organic growth was -0.1 percentage points. Other impacts during the quarter amounted to -0.2 percentage points. The adjusted operating profit (EBITA) was SEK 5.6 million (11.1), corresponding to an adjusted EBITA margin of 2.7% (5.1%). Net sales for the third quarter are on par with the same quarter for 2022, despite stronger market conditions two years ago. At the same time, the adjusted operating profit has improved, from SEK 0.7 million and an adjusted EBITA margin of 0.3% in the third quarter of 2022 to SEK 5.6 million and an adjusted EBITA margin of 2.7%.

CONSOLIDATION AND EFFICIENCY FOR ENHANCED GROWTH
The implementation of a group-wide ERP system is nearly complete, which will facilitate the consolidation of the administrative platform, improve efficiency, and enhance economies of scale. In parallel, other initiatives are underway to strengthen revenues and margins. These include the coordination of materials and purchasing, as well as a more unified market presence under a common brand. Along with a more developed and coordinated sales process, these efforts will contribute to increased sales.

MANAGEMENT TEAM CHANGES AND COMMENTARY
On October 21, 2024, it was announced that the Board of Directors of Wall to Wall Group AB has appointed the Company’s CFO, André Strömgren, as the new Chief Executive Officer with immediate effect. André succeeds Joachim Welin, who is leaving the Company. André assumed the position of CFO in August 2024, coming most recently from Quant, a leading provider of professional industrial maintenance services with a global presence. At Quant, he held commercial roles, led business transformations, and served as the Group CFO for the last four years. Prior to joining Quant, André has successfully worked in international corporations within the Oil & Gas, White Goods, and Pharmaceutical industries.

The chairman of the Board of Directors, Anders Böös, comments: “The real estate sector in general, and the housing sector in particular, have been severely impacted by the higher interest rate and cost environment, which has affected their investment levels. In the housing sector, investment in planned maintenance is one of the few areas property owners can influence in the short term, as rental income and other expenses are largely regulated. This has affected the Company’s operations, particularly in pipe relining and energy. Although Wall to Wall Group has quickly established itself as the leading player in the Nordic region, the company is still in a development phase. The changing market conditions and the demands of the ongoing development and industrialization of Wall to Wall Group require a change in leadership. I would like to thank Joachim for his valuable contributions in various roles over the years, and at the same time welcome André in his new role and the responsibility of leading the company in its continued development.”

”Wall to Wall has established a strong market position in the Nordic market for pipe relining, energy, and pipe flushing services, a position that has been built through acquisitions and organic growth. This, along with the ongoing development and transformation work it entails, is something I am very familiar with from previous assignments. During the two moths I have worked at the company, I have met dedicated and driven employees, and I am excited about the opportunity to lead the Company in its continued development”, comments André Strömgren, Chief Executive Officer.

OUTLOOK FOR THE YEAR
During the third quarter, an improved market was observed. Customer have demonstrated increased willingness to invest, which is expected to drive normalized demand for the Company’s relining and energy operations, which some impact expected for the remainder of the year and full impact expected from 2025 onwards. This is in line with the previously communicated outlook.

For full interim report, see appendix.