Vestum

Highlights of the period October – December 2024

• Net sales amounted to SEK 1,153 (1,182) million
• EBITA amounted to SEK 133 (125) million, corresponding to an EBITA margin of 11.5% (10.6%)
• Adjusted EBITA amounted to SEK 102 (127) million, corresponding to an adjusted EBITA margin of 8.8% (10.8%)
• Operating profit (EBIT) amounted to SEK 60 (56) million
• Cash flow from operating activities amounted to SEK 117 (159) million
• Operating cash flow amounted to SEK 225 (168) million, corresponding to a cash conversion of 125% (99%)

Highlights of the period January – December 2024

• Net sales amounted to SEK 4,246 (4,416) million
• EBITA amounted to SEK 447 (494) million, corresponding to an EBITA margin of 10.5% (11.2%)
• Adjusted EBITA amounted to SEK 415 (493) million, corresponding to an adjusted EBITA margin of 9.8% (11.2%)
• Operating profit (EBIT) amounted to SEK 164 (214) million
• Cash flow from operating activities amounted to SEK 377 (463) million
• Operating cash flow amounted to SEK 665 (635) million, corresponding to a cash conversion of 105% (94%)

Summarising comments by CEO Simon Göthberg
Vestum's focus on reducing debt continued in the fourth quarter, and we have successfully reduced the financial net debt to EBITDA to 2.2x, which is within our financial target. During 2024, the financial net debt, including contingent considerations, decreased to SEK 1,427 million, corresponding to a reduction of SEK 886 million or 38% compared to 2023, driven by a combination of strong cash flows and divestments. The lower debt level creates headroom for investment in organic and acquisition-driven growth in growing niches and technologies in infrastructure. At the same time, we continue to face a challenging market but note that organic growth, amounting to -7.7% in the quarter, improved sequentially compared to the second and third quarters.

The Water segment continues to develop strongly, generating sales growth of 31%, driven by both acquisitions and organic growth. Demand has been good in all markets. During 2024, the acquisition of the UK company PDAS was completed, and we expect to make further acquisitions in 2025, particularly in the UK, which is one of the most underinvested water infrastructure markets in Europe. Profitability decreased as expected in the quarter, amounting to 15.7%. For the full year, the segment generated an EBITA margin of 19.1%.

In the Infrastructure segment, we improved profitability for the second consecutive quarter, generating an EBITA margin of 11.0%, an increase from 9.9% compared to the previous year. The solid profitability is again mainly driven by the segment's product companies as they improved their margins due to a stable market. The product companies accounted for 50% of the segment’s results in the quarter. Parts of the segment are simultaneously facing a challenging market, which is reflected in the continued decline in sales from the second and third quarters.

In the Services segment, sales growth remains negative, but the positive trend of a decreasing rate continues, and the fourth quarter shows the highest quarterly sales in 2024. The segment's EBITA margin amounts to a weak 5.3%, driven by credit losses, low utilisation in December due to fewer working days, and some margin pressure in projects taken on during the spring. There have been several bankruptcies in the market, and although our exposure has been quite limited, we have reserved our full exposure to these customers. The property market continues to be uncertain, although demand is increasing in some regions.

Cash flow was stable in the quarter, with operating cash flow increasing from SEK 168 million to SEK 225 million, while free cash flow amounted to SEK 72 million, or 71% of adjusted EBITA. For the full year 2024, however, free cash flow in relation to adjusted EBITA decreased to 49%. This KPI should be over 60% and will increase in 2025, driven not least by the improved capital structure established as Vestum's last outstanding bond of SEK 600 million is resolved on 3 March 2025. The improved capital structure leads to approximately SEK 70 million lower interest costs on an annual basis.

To clarify Vestum's strategic focus on growing niches and technologies in infrastructure, Vestum has introduced a new Group structure from 1 January, dividing the Group into three segments as follows.

• Flow Technology
  • Market-leading products that improve water infrastructure.
  • The segment accounts for 44% of the Group's results with an EBITA margin of 18%.

• Niche Products
  • Leading product companies in selected technology niches.
  • The segment accounts for 19% of the Group's results with an EBITA margin of 12%.

• Solutions
  • Specialised solutions for maintaining, developing, and streamlining properties and transport networks.
  • The segment accounts for 38% of the Group's results with an EBITA margin of 7%.

Vestum's strategic direction to increase the share of product companies has been successful during 2024. The product companies' share of the Group's EBITA increased during the year from 44% to 63%. New platform acquisitions will in the future focus on leading businesses in growing niches with high profitability and limited cyclicality.

The market situation is generally better than a year ago, but still uncertain, which contributes to humility regarding short-term developments. At the same time, Vestum's capital structure has continuously improved with significantly lower debt and interest costs. The existing platform has been streamlined through increased specialisation thanks to divestments and operational development. Overall, our positioning has strengthened, and in 2025 we will continue to focus on cash flow and margins, but also allocate capital towards growth through both organic initiatives and acquisitions.

The Year-End Report is available on Vestum’s website: https://www.vestum.se/en/ir/financial-reports/