Volati AB reported a strong first quarter in 2025, highlighted by a 50% increase in sales and a 48% rise in EBITDA. Despite these gains, the company remains cautious about market conditions, citing mixed signals in the European markets and a slow agricultural sector. Volati’s stock rose 3.51% to 118 SEK following the earnings announcement. According to InvestingPro data, the company has demonstrated consistent strength with a 16.2% year-to-date return and maintains healthy liquidity with a current ratio of 1.82.
Key Takeaways
- Volati reported a 50% total sales growth in Q1 2025.
- EBITDA increased by 48%, with a 33% organic growth.
- The company completed two acquisitions, adding 300 million SEK in annual revenue.
- Stock price increased by 3.51% to 118 SEK post-earnings.
Company Performance
Volati’s Q1 2025 performance was marked by significant sales and EBITDA growth, driven by strategic acquisitions and operational improvements. The company’s focus on add-on acquisitions and platform expansion contributed to these results. Despite the positive financial performance, Volati remains vigilant about market conditions, particularly in the construction and agricultural sectors.
Financial Highlights
- Revenue: Increased by 50% in Q1 2025.
- EBITDA: Grew by 48% compared to the previous year.
- Net Debt to EBITDA Ratio: Stood at 2.9, aligning with the upper range of the company’s financial goals.
- Return on Adjusted Equity: Achieved 17%, below the target of 20%.
Market Reaction
Following the earnings report, Volati’s stock price rose by 3.51%, reaching 118 SEK. This movement reflects investor optimism about the company’s growth strategy and successful acquisitions. The stock’s performance is notable as it approaches its 52-week high of 125.8 SEK. InvestingPro analysis suggests the stock is currently trading above its Fair Value, with analysts setting price targets between 13.74 and 16.43 USD. For deeper insights into Volati’s valuation and 8 additional exclusive ProTips, consider exploring InvestingPro’s comprehensive research report.
Outlook & Guidance
Volati is targeting a 15% annual EBITDA growth and aims to double its EBITDA every five years. The company anticipates a gradual market recovery and is focusing on both organic and acquisitive growth strategies. Despite the cautious optimism, Volati acknowledges the challenges posed by mixed market conditions in Europe.
Executive Commentary
- Andreas Janbeck, CEO, emphasized the company’s long-term evaluation, stating, "We are best evaluated over time, so individual quarters may vary."
- CFO Martin Ariansson highlighted acquisition potential, saying, "We see significant potential to grow further through acquisitions."
Risks and Challenges
- Market Conditions: Variability in the European markets could impact growth.
- Agricultural Sector: Continued sluggishness may affect related business segments.
- Financial Goals: Achieving the target return on adjusted equity remains a challenge.
- Currency Effects: Financial net expenses related to currency fluctuations could pose risks.
Volati’s Q1 2025 earnings call showcased a strong financial performance, driven by strategic acquisitions and robust sales growth. While the company remains optimistic about its long-term growth prospects, it continues to navigate a complex market environment. InvestingPro data reveals the company’s solid financial health with an Altman Z-Score of 6.84 and analysts expect 13% revenue growth in FY2025. Get access to complete financial health scores and detailed growth projections through InvestingPro’s comprehensive analysis tools.
Full transcript - Volati (VOLO) Q1 2025:
Moderator: Good morning, everyone, and welcome to today’s presentation where we have Vlatti presenting. With us, we have the CEO, Andreas Janbeck and CFO, Martin Ariansson. We’ll open up for q and a after the presentation. And you can either type in your questions using the form. And with that said, please go ahead with your presentation.
Andreas Janbeck, CEO, Vollati: Thank you. Very happy to have all of you listening in today. So let’s get get into the present say presentation of the q one result. So, Melotti, we’re a growing group of well managed companies with strong earnings. I would like to remind you about that we are operating with six platforms.
We have Solix Group, Ecket Group, and the four platforms within business area industry. We’ve had an average annual growth of 17% since 02/2019, so more or less the last five years, and that’s despite the recent year’s market headwinds. Looking at q one, one could see that the trend from last quarter remains. It’s the second quarter in a row where we see some signs of recovery in the market after many years of tough conditions. Sales growth was 50%, but I’m more even more happy about looking at the organic sales growth, which was 4%.
We’ve also, thanks to improved margins, seen seen the effect in the EBITDA growth, which was 48%. We’re off 33% organic. And all platforms except for Coraventa contribute to that profit growth. We will get into Coraventa a bit later on, but to just say one sentence about it, it’s mainly because of Coraventa having a really strong quarter last year. So tough comparables for that platform.
As I said before, we do see some signs of recovery in the market, in particular, to when it comes to the construction related segment, which everyone knows is important for us at Vollati. But I have to remind everyone that it’s from low levels. It takes time, and we expect it to take time. And this market still varies a lot between months. So it’s not that we’ve seen any dramatic shift, but we’ve seen some kind of stabilization and and and slight improvement in the market, which is very promising, and that’s what shows in in the organic growth.
Tuna Group within business area industry, still facing headwinds. We’ve said that now for a few quarters. It’s a slow market in large parts of Europe, but we still have the Lundtmannen project, which somewhat compensate for that market. Trade tariffs, it has limited direct impact on Moloti. We see it in communication and in particular to the North American volume that they deliver.
But other than that, it’s it’s not that much direct effects that we see within Vollete. And we’ve done two acquisitions so far this year, adding a little more than 300,000,000 of annual revenue. One could also take the acquisition that we did in December into account, and then we’re up at 750,000,000 of annual turnover that we’ve acquired the last four, five months. We have expanded the credit facilities during the quarter, and that’s just to be on top of things and and make sure that we have the liquidity needed to continue growing with acquisitions. And as you’ve heard me say before, we haven’t delivered on our financial growth targets for the last two years, and and we’re supposed to grow 15% annually on EBITDA, and that means doubling the EBITDA every five years.
So that’s something that we haven’t delivered on the last couple of years, which have created a growth gap. We have, however, taken several long term structural measures during the last years, and our platforms are very well prepared to monetize on the market recovery once we see it. And I think already in q one, we see some small signs of that. In addition, we have continued acquiring companies. And thanks to that, we have companies with strong cash flows, and we also went into this period with a low net debt to EBITDA levels, we have been able to continue acquiring companies.
And this will also help us closing the growth gap once we see that that the market will get back to more normal levels. A little more a bit more on the actual numbers then. So these are the q one numbers. I already touched upon the net sales and EBITDA. Operating cash flow, q one is typically because of seasonality, negative operating cash flow quarter for us.
And that also means that if you take that into account and also that we did the acquisition of Clever, our net debt to EBITDA has increased to 2.9. So it’s now in the upper part of our financial goal, but that’s very much expected. And I will also like to remind you, I do that every every time this part of the year that we have the strong cash generating quarters ahead of us in particular in the second half of the year. If you look at the numbers of last twelve month base twelve month spaces, which I actually think is better when it’s comes to Balati, more or less everything points in the right direction. Sales, margins, and EBITDA increased in q one compared to q four.
And as I said in the introduction, when it looks to when we look at the last five years, we have grown our EBITDA on an annual average base of 75 17%. So looking at this, q one was the first step to compensate for the last year’s slower growth rates in relation to our financial goals. And with that, I leave to Martin to give you a bit more information about the financial targets.
Martin Ariansson, CFO, Vollati: Yeah. Thank you, Andreas. So let’s look at our performance in relation to our three financial targets, and let’s start with the EBITA growth during the last twelve months. And as Andreas mentioned, we have a strong EBITDA growth in the quarter, which is then also resulting in that our EBITDA growth per ordinary share during the last twelve months of 5% now in the quarter, which is an improvement from 11% minus 11% in full year 2024. This is still below our target, but it’s also worth noting that our target is over business cycles.
And our five year average performance on EBITDA growth is 17%. Our second financial target is our return on adjusted equity, which came in at 17% versus our financial target of 20%. It’s below our target now driven by a lower EBITDA growth. But during the last five years, we have delivered on average 33% return on adjusted equity. And lastly, our capital structure, which is our where our net debt the ratio came in at 2.9, which is in the higher range of our financial target ratio between two and three times.
But as Andreas mentioned, the development in the quarter was expected as q one is the quarter with the seasonally lowest cash flow, and we also completed the acquisition of Clever during this quarter. So let’s look at how our business areas are performing, and let’s start with the Salix Group, who saw a net sales growth of 25%, of which roughly two thirds was acquired and roughly one third was organic growth. And at the same time, EBITDA almost doubled compared to last year, and the margin in the quarter increased with three percentage points in the quarter quarter. And, thus, this is really showcasing the great work that the Salix Group has done working with cost control and then also extracting synergies from acquisitions and working with coordination benefits. And Salix Group saw a cautious market improvement in the quarter.
However, it was at a slow pace, and still there are quite some uncertainties regarding the future development. And regarding currency, we saw a positive currency effect for Salis Group since they do a lot of purchasing in foreign currency, while the majority of the sales is in in Swedish kronas. We’re also happy to see that Salix completed acquisition on Hans Eggstrand after the quarter, and we also see significant potential to grow further through acquisitions in this business area. So let’s move over to Ethiketa Group who continues to deliver another strong quarter. Sales increased with 32% in the quarter driven by the acquisition of Keyword, but also through strong organic growth.
And if they, in nominal terms, increased with 35% and margins increased slightly, which to us is quite impressive given that the newly acquired Clever, Ketan has significantly lower margins compared to the rest of the Clever Group. And speaking about Clever, the integration of Ethiketa is progressing well, and the work with extracting synergies and operational improvement has started. And as mentioned before, there was a good organic growth for Ethiopia Group during the quarter, and they also saw solid order intake, especially in the Swedish business, and that is putting the complete capacity expansions in in good use. And also with new home market platform to grow from, we see significant potential to grow further through acquisitions. So let’s look at our last business area industry who saw a slight revenue decline of 2% in the quarter.
Sorry. So it’s it’s like the revenue decline of 2% in the quarter, and it they declined over roughly 2,000,000 to 22,000,000 in the quarter. But this is the smallest quarter in the year for industry. And also, as Andreas mentioned, three out of our four platforms in the industry is improving data contribution from last year. Communications performed well in the quarter, increasing the EBITDA contribution despite the lower deliveries to The US market.
And Thornlie Group is still facing a weak market, however, increases the result from last year, partly driven by the London and Prokrete. And then Sancterix continued to face a challenging market situation in the construction segment while the demand in the infrastructure segment is is stable. And lastly, Coraventa, who in this quarter did not see any significant effects from floodings and was also facing strong comparables from the last first quarter in 2024 and who did see quite significant effects from cloudings. And that sums up the industry. And with that, I leave the word to you, Andreas.
Andreas Janbeck, CEO, Vollati: K. So let’s talk a bit about the acquisitions. This is a slide that I was like looking at. It shows that our strategy with doing add on acquisitions to existing platforms really worked. 27 acquisitions since 2020 in five out of six of our platforms.
And we’ve done three acquisitions since December 2024 and two of them done this year. And looking at this slide, the 710,000,000 of annualized turnover that we have acquired, the two acquisitions in the last twelve months, that do not then include Eggstron. So including that, we’re up at up at 750,000,000 Swedish crowns of acquired annual growth. Then I would just like to spend one or two minutes on the acquisition that we did in q one, ClearVerityKetan. And as as you all know by now, Etiquette have done quite an impressive journey for the last five years or so, quadrupled or in size.
And during that time, also being able to acquire them, and it’s been driven by six acquisitions, one of them this quarter. And with after having done all the work with operational improvement and the synergy realization, also being able to maintain the margins that we have prior to starting this journey. And now we did the acquisition of Cleaver in in Germany, and I think the case with that acquisition is twofold. Firstly, as we pointed out, they operate under or significantly under the margins that ETIKATO have proven to be able to operate under, which means that we see significant operational and improvements and synergy realization. Secondly, we now have a platform in Central Europe where we can continue doing a similar acquisition driven journey as we did we’ve done in The Nordics for the last couple of years.
So basically, that as a platform to continue doing the acquisitions in in in Central Europe. So this this is a very strategic for Ethic at the group, but also for for Vollati. And then in order to to continue doing acquisitions, we have to have a a look at the financing and our liquidity and and what we’ve already touched upon in the is the operational cash flow, which is as expected negative in q one. And and, basically, what I want to point out with this with this slide is that the last bullet is there. That’s once the market normalized, once we see that the organic growth, that trend continues, we would have a positive effect of net debt to EBITDA ratio.
Of what the problem that we’ve had the last couple of years because of the negative organic market driven organic growth, we haven’t had the EBITDA expansion required or that we need. But in this quarter, we had quite a significant such, and expect once the market continues to recover, we expect that trend to continue. To summarize, very happy about the first quarter. It’s a solid performance. The numbers are very good, and it’s laying a strong foundation for the rest of the years, of course.
But we I want to remind you and we remind ourselves that we are best evaluated over time, so individuals’ quarters may vary over time. We still feel that market conditions are uncertain, but we still we also see that positive trend, and and we’ve seen it now at least in two quarters, and we’ve talked about the positive organic sales growth. And if we continue to have that that organic sales growth and and if the market continues to recover, then we’ll also gonna see an accelerated organic growth when it comes to Volloti overall. And our platforms, they are in great shape. They are very well prepared to capitalize on the organic growth, but also to continue doing extra acquisitive growth.
So we’re looking forward to continue doing this. With that, I leave for any potential questions.
Moderator: Thank you very much for that presentation. Now we’ll open up for the Q and A here. And we have Carl from with a question. Please go ahead. You have the word.
Carl, Analyst: Hi, Carl. Hello, Andreas and Martin. Can you
Andreas Janbeck, CEO, Vollati: hear me? Yes. We can. We can.
Carl, Analyst: Yes. Hi. Yeah. So, I mean, obviously, a very strong profit development here in in Salix. Just just curious to hear perhaps, if you could add a bit color here on what caused the build in terms of margins year over year, and if you could perhaps split that up roughly how much of this delta is due to M and A and how much that is due to organic initiatives?
Andreas Janbeck, CEO, Vollati: We don’t okay. So so so SOLIX, yes, very strong profit development. And if you look at it, they’re actually now at the mornings that they were in q one twenty twenty two, I think. So we’re well done. And and as you said, it’s it’s two factors driving that margin development.
One is that we now see an organic growth in that business area for the second quarter in a row. But before that, we had several quarters where we didn’t have we have negative had negative organic growth. And at that point in time, it was much about protecting the margins, which I think they’ve done in a very, very good way. And now when we see the organic growth, it’s also have the effect that we’re actually expanding in improving improving the margins. So that’s thanks to all the good work that they’ve done the last couple of years.
So that’s one part of it. And the second part of it is acquisition driven. And and we’ve had some of the acquisitions that have been done in in Solix the last year that strengthen the average margin, strengthens our margin overall. So so so that’s also contributing to that development.
Carl, Analyst: Got it. Very clear. And if we could perhaps just split up Salix into the DIY versus the professional side of the business. Could you provide any color there on how those two have developed respectively here in the quarter and if you see any change in dynamics compared to last quarter in any of those subsegments?
Andreas Janbeck, CEO, Vollati: I’m a bit on thin ice here, but but as far as I know, and the trend at least that we’ve seen over time now is that the the consumer related market came into the slowdown six to twelve months before the professional segment did, and that was a couple of years back. We have similarly seen that they also have come out earlier. So we’ve actually seen positive numbers from the consumer related parts for a couple of quarters now, and it’s been the professional side that’s been slower. And up until, I think, if you look at market numbers up until q four twenty twenty four, you know, the overall market was down, and then we had a slight growth in in in in q four. And that was thanks to the then also the professional side improving slightly.
I think we’ve seen the same pattern in in in in in q one, meaning that consumer is slightly stronger, and the professional side is is is lagging a bit. Got
Carl, Analyst: it. And if we just shift the focus to Tulum here, could you say anything there on on how the sort of underlying business has developed in the quarter versus last year if you would perhaps adjust for the contribution from the Landtmannen project just to just to get a sense for how the underlying agricultural market is developing here and how it looks throughout Europe?
Andreas Janbeck, CEO, Vollati: So so the underlying agricultural market is slower q one this year compared to last year, I would say, because the slowdown was more in q two and the rest of the year even though it was slow also in the first quarter last year. But overall, the margin the market hasn’t improved during the last six to twelve months, and it’s still very tough, hesitant out there. But as as as you know, yes, we have the the land project. We’re gonna deliver on that for the whole year, you know, whole 2025 and a bit into 2026. So that’s helped us to compensate for some of that slow market.
But it’s not that it’s you know, we we it’s it’s also that we we still have some markets that are delivering okay. We have the Spanish markets that we said before that are okay. We have The UK markets that’s okay. So it’s not that it’s the all all European countries are are doing very bad, but it’s overall, it’s it’s it’s still a slow market, and we we expect it to be free at some time. But I said that the profit wise, we still improved in in in Tulum in q one this year compared to to last year.
So so we’re doing a very good job protecting margins and protecting profit in in in the slow market in Tulum.
Carl, Analyst: Perfect. Thank you. And just looking just at the business area industry here overall, just so I understood you correctly, is it fair to assume that all the platforms in that business area saw profit growth year over year ex besides Sancterix?
Andreas Janbeck, CEO, Vollati: Yes. Nope. Besides Corvanta. So Corvanta, they didn’t improve their profit. There were some good floodings last year, so they had tough comparables.
But the and communication had better profits this year compared to last year. It’s but it’s got it. One thing that you keep need to keep in mind is also that for industry, q one is really small.
Carl, Analyst: Yep. Yep. Got it. And just final from my side. If we if we look at the net financials here in the quarter, these were a bit higher than at least I had expected.
I think it’s up about 70% Q over Q or so. Could you perhaps share some extra light there on what is driving that? And if there are perhaps any extraordinary items or reevaluation effects here in that is included in the numbers.
Martin Ariansson, CFO, Vollati: Absolutely. Let let me share some light on that, and I think you can you can also look in the cash flow statement if you’re interested in in knowing what the interest expenses were. But the the majority of of or compared to last year, the majority of the difference is that we we get the currency effects on internal loans, which is actually not affecting our cash cash position. So we give loans to our foreign subsidiaries, and that’s the the translation effects on those also end up in in in the net financials, which is this quarter a substantial amount. So but you you can you can if you dig in in into the cash flow statements, you will get some more information about that as well.
Carl, Analyst: Perfect. That’s that’s very clear, and that was all my questions. Thank you very much.
Moderator: Okay. And that’s wrap of the q and a section here. Andreas, do you have any concluding remarks before we wrap up this presentation?
Andreas Janbeck, CEO, Vollati: So so I think my wrap up is that very happy to see a continuous positive trend. It’s not a dramatic shift, but we’re showing slight positive organic sales numbers and the profitability and the profit increased quite a lot. So I’m very happy to to see that. But I also keep in mind that there are still a lot of market uncertainty out there, And we are we are expecting that the market recovery will take time, and we’re very well prepared for that. And, yeah, thank you for listening in today.
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