Core Viewpoint - Nilfisk's Q2 results indicate challenges and progress amid market caution and geopolitical uncertainties, with a slight decline in organic growth but stable gross margins and a focus on cost improvements and supply chain strengthening [1][4]. Financial Highlights - Revenue for Q2 2025 was 268.9 million EUR, down from 278.4 million EUR in Q2 2024, reflecting a decline of 9.5 million EUR [2][4]. - Organic growth was negative at -1.1% for Q2 2025, compared to a positive 2.4% in Q2 2024 [2][4]. - Gross margin remained stable at 42.0%, a slight decrease from 42.2% in the previous year [2][9]. - Overhead costs decreased to 92.2 million EUR from 94.2 million EUR year-on-year, with an overhead cost ratio of 34.3% [2]. - EBITDA before special items was 36.4 million EUR, down from 39.2 million EUR, resulting in an EBITDA margin of 13.5% [2][9]. - Free cash flow was negative at -16.3 million EUR, compared to a positive 8.4 million EUR in the same quarter last year [2][11]. Regional Performance - EMEA region showed organic growth of 0.7% in Q2 2025, driven by strong commercial execution and new products, although the Consumer Business faced declines [7]. - APAC reported moderate organic growth of 2.7%, while the Americas experienced negative growth of 4.9%, primarily due to soft demand and production capacity issues [8]. - Latin America continued to perform well with a strong growth rate of 14.0% [8]. Specialty and Consumer Business - The Specialty Business achieved robust organic growth of 10.8%, supported by strong sales in the US and demand for new products [5]. - The Consumer Business saw a decline of 5.1% due to weak demand in the high-pressure washer category [5]. Cost Management and Outlook - A cost reduction program was initiated in Q2 2025, leading to workforce reductions and expected gradual savings throughout 2025 and into 2026 [10]. - The financial outlook for 2025 remains unchanged, with organic growth expected between 1% and 3% and an EBITDA margin before special items projected between 13% and 14% [3].

Group 1: Event Overview - The eighth China International Import Expo (CIIE) is focusing on technology equipment, automotive, and smart mobility sectors, with a series of pre-exhibition supply and demand matchmaking events held at the National Exhibition and Convention Center in Shanghai [1] - The CIIE aims to transform exhibits into commodities and exhibitors into investors, optimizing exhibition areas and enhancing the artificial intelligence experience zone [1] - Various activities such as trade investment matchmaking meetings and important buyer selection events will be held during the exhibition to facilitate precise connections between exhibitors and buyers [1] Group 2: Company Highlights - Karcher, a global leader in cleaning equipment, will showcase six new products at the CIIE, emphasizing its growth and investment in China, including the expansion of its Asia-Pacific production base and the establishment of a global R&D center [3] - Michelin will continue to highlight its advancements in green low-carbon technologies and smart manufacturing, showcasing high-tech tire products and innovations in composite materials [5][6] - Asahi Kasei will present diverse materials and solutions at the CIIE, focusing on new products like the environmentally friendly interior material Dinamica and the innovative Bembreez™ fiber for high-end crafts and apparel [7] - Toray will exhibit innovative materials and technologies aimed at sustainable development, aligning with China's "new quality productivity" initiative, and will feature a special area dedicated to hydrogen energy and circular economy [8]

Group 1 - The eighth China International Import Expo (CIIE) will take place from November 5 to 10 in Shanghai, focusing on key national industry planning and optimizing exhibition areas [4] - HRC Group will globally launch a new generation of low-altitude unmanned transport aircraft at the expo, showcasing innovative composite material solutions for future smart mobility [3] - Asahi Kasei will present innovative products such as biodegradable clothing materials at the expo, emphasizing the need to keep pace with China's rapid development [3] - Kärcher will debut six new products, including commercial AI cleaning robots, highlighting its significant investment of over 3 billion RMB in China since participating in the first CIIE [3] Group 2 - The expo will feature trade investment matchmaking events and important buyer selection meetings to facilitate precise connections between exhibitors and buyers [4] - The exhibition will upgrade the artificial intelligence experience area and create a future mobility zone to showcase new topics like the low-altitude economy [4]

Group 1 - The eighth China International Import Expo (CIIE) held its first roadshow in Zhejiang, aiming to facilitate early connections and secure new orders for exhibitors [1][2] - The roadshow featured a new format with small round tables for discussions, allowing exhibitors and buyers to engage in direct communication before the official start [1] - A total of 20 exhibitors participated, including 13 from the Fortune Global 500 and industry leaders across various sectors, such as Nippon Paint and Karcher [1] Group 2 - Over 120 buyers from Zhejiang engaged with exhibitors, establishing initial business contacts, including large companies like Zhejiang International Trade Group and smaller enterprises [2] - The Zhejiang Provincial Department of Commerce emphasized its commitment to organizing high-level events and facilitating connections with high-end exhibitors to promote investment projects in the region [2] - Important procurement cooperation memorandums were signed between the China International Import Expo Bureau and several local companies, indicating strong interest in collaboration [2]

Core Viewpoint - Nanhua Instrument's acquisition of Jiadelin marks a significant step in transitioning from traditional vehicle inspection to "environmental + intelligent cleaning" sectors, with Jiadelin expected to become a core growth engine for the company [2] Group 1: Company Overview - Jiadelin is a leading player in the commercial cleaning equipment sector in China, specializing in high-end cleaning devices such as intelligent floor scrubbers and sweepers [1] - Jiadelin has developed a smart service system with remote monitoring and digital management capabilities, enhancing product value and expanding its product range [1] - The company has successfully tested its large commercial unmanned floor scrubbers in major properties like Vanke, demonstrating its advanced technology [1] Group 2: Financial Performance - Jiadelin is projected to achieve revenues of 133 million yuan and 128 million yuan in 2023 and 2024, respectively, with corresponding net profits of 21.99 million yuan and 17.66 million yuan [1] - The gross profit margins for Jiadelin are stable, recorded at 39.53% and 38.39% for 2023 and 2024 [1] Group 3: Market Potential - The global B2B cleaning equipment market is expected to reach 28.3 billion yuan in sales in 2023, with projections of 47.52 billion yuan by 2030, indicating a compound annual growth rate (CAGR) of 7.7% from 2024 to 2030 [2] Group 4: Performance Commitment - Jiadelin has made performance commitments to Nanhua Instrument, promising a net profit of no less than 18 million yuan in 2025 and 20 million yuan in 2026, with cumulative targets for those years [3] - This commitment reflects Jiadelin's confidence in its technological capabilities and market prospects, providing a boost to Nanhua Instrument's future profitability [3]

Investment Rating - The report gives a "Strong Buy" rating for the company, marking its first coverage [5]. Core Views - The company, Ousheng Electric, is a leading player in the air power equipment sector, focusing on air compressors and expanding into pneumatic tools and cleaning devices. The company has established a strong presence in the U.S. market over the past 15 years and is transitioning from an OEM to a solution provider [4][14]. - Revenue growth is expected to rebound significantly in 2024, with a projected increase of 45%, reaching 1.8 billion RMB, driven by new product categories and a recovery in inventory levels in the U.S. tool industry [4][27]. - The company has a robust competitive edge through established relationships with major retailers like Walmart and Lowe's, and it is enhancing its product offerings with high-margin products [4][51]. Summary by Sections Company Overview - Ousheng Electric specializes in air power equipment, including air compressors and wet/dry vacuum cleaners, and is also venturing into smart care robots. The company has developed core technologies since its establishment in 2009 and has seen significant growth in sales to major U.S. retailers since 2015 [4][14][19]. Revenue Performance - The company experienced a doubling of revenue before 2021, reaching 1.3 billion RMB. However, revenue stagnated in 2022-2023 due to high inventory levels in the U.S. tool industry. A recovery is anticipated in 2024, with revenue expected to grow by 45% [4][27]. Profitability Analysis - The gross margin is projected to recover from 2022 to 2024, primarily due to a shift towards higher-margin products and a decrease in raw material costs. The gross margins for vacuum cleaners and air compressors are approximately 40% and 25%, respectively, with net profit margins expected to rise from 8.8% in 2021 to 14% in 2024 [4][30]. Market Position and Competitive Advantage - Ousheng Electric is a leader in the North American air compressor market, with a strong focus on pneumatic tools. The company benefits from established relationships with major retailers and a commitment to R&D, with a research expense ratio of around 5% [4][51]. Product Categories and Growth Potential - The company has seen rapid growth in its wet/dry vacuum cleaner segment, with a significant portion of sales coming from brand authorization agreements. The revenue from this segment is expected to exceed 900 million RMB in 2024, accounting for over half of total revenue [4][27]. - The service robot segment is also poised for growth, with the market for elderly care robots in China projected to grow at a CAGR of around 15% over the next five years [4][30]. Future Outlook - The company anticipates continued revenue growth of 41%, 27%, and 27% for the years 2025 to 2027, respectively, with net profits expected to reach 346 million RMB in 2025 [4][5].

Financial Data and Key Metrics Changes - In Q1 2025, the company reported net sales of $290 million, reflecting a 6.8% decrease from $311 million in Q1 2024, with an organic decline of 5% [7][25] - GAAP net income for the quarter was $13.1 million, down from $28.4 million in the prior year, impacted by lower net sales and increased costs related to ERP and restructuring [23][24] - Adjusted EBITDA was $41 million, or 14.1% of sales, compared to $54.9 million and 17.7% in the prior year [32] Business Line Data and Key Metrics Changes - Equipment sales declined by 9%, while parts and consumables sales decreased by 4.7%, with service and other categories showing a slight organic growth offset by unfavorable foreign exchange impacts [26][28] - The Americas saw a 6.9% decline in organic net sales, primarily due to lower sales of Industrial Equipment, although order rates increased by 20% [10][29] - EMEA experienced a 2% growth on a constant currency basis, driven by acquisitions and pricing realization, while APAC faced a 7.5% decline due to demand issues in China and Australia [11][12][29] Market Data and Key Metrics Changes - Order rates at the enterprise level increased by 13%, marking the fourth consecutive quarter of near or above double-digit order growth [8] - The company anticipates order growth in the range of 3.5% to 7% for 2025, despite the challenges posed by a $125 million backlog reduction from the previous year [9] Company Strategy and Development Direction - The company is focused on executing its enterprise strategy, which includes pricing discipline, innovative product launches, and targeted market investments [12][15] - The introduction of the Clean360 program aims to enhance AMR adoption by offering a subscription model that reduces upfront costs for customers [18][78] - The company is committed to navigating economic uncertainties and tariff impacts while maintaining strong order growth and market leadership [20][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing economic uncertainties due to tariffs and trade wars but expressed confidence in maintaining strong demand and order rates [20][63] - The company is implementing mitigation strategies to offset tariff impacts, including pricing actions and sourcing adjustments [35][57] - Management remains optimistic about achieving 2025 guidance, with net sales projected between $1.21 billion and $1.25 billion [37] Other Important Information - The company reported a gross margin of 41.4%, a decrease of 280 basis points from the prior year, primarily due to shifts in product mix and inflation [30] - Free cash flow for the period was negative $7.4 million, influenced by ERP investments, but the company expects to convert 100% of net income to free cash flow by year-end [33] Q&A Session Summary Question: Concerns about margin guidance and inflationary pressures - Management explained that the margin decline was influenced by a backlog headwind and a mix of strategic customer shipments, but they expect a return to normalized margins as the year progresses [43][46] Question: Insights on the Clean360 program and its potential impact - The Clean360 program was developed in response to customer feedback regarding high upfront costs, aiming to facilitate AMR adoption through a subscription model [76][78] Question: Observations on order influx following price hikes - Management noted that it is too early to assess the impact of announced price hikes on order volumes, as they are also returning to normal seasonal patterns [65][66]