Ambea AB (publ)

Welcome everyone. Today we will review Ambea's performance for the fourth quarter of 2024. My name is Mark Jensen, I'm CEO of Ambea and I'm joined by our CFO Benno Eliasson. Together we will walk you through our results and highlight the key developments during this period. After that I will summarize the quarter and compare to our financial targets before we open for questions. I would like to begin with a brief overview of Ambea. Ambea remains the leading care provider in Sweden, Norway, and Denmark, offering high-quality care and support for over 15,000 care receivers across 980 units. We are delivering care across a wide spectrum of services, including elderly care, disability care, and psychosocial support. Our competency-based approach ensures that every person receives high-quality personalized care. Let's go straight to some of the important achievements within care quality. Quality ultimately arises in the interaction between our care receivers and our employees. We always want to make it easy for employees to do the right thing in any given situation so that they can spend their time on things that creates quality and value. We have a systematic approach to quality and sustainability where we carefully follow up all our units every month. In the quality report, we highlight some of the activities that we carried out during the last quarter and relevant KPIs. The satisfaction levels of our care receivers and their loved ones are the utmost important to us. In quarter four, we received strong results from care receiver surveys carried out in all three Scandinavian countries. As well as reviewing overall trends, we follow up results and create action plans on a unit-by-unit basis. In Sweden, where we have national surveys for care receiver satisfaction, we publish the results for each care home on Nytida's and Vardaga's webpages to create transparency and highlight our work on care receiver satisfaction. Providing high-quality care is also about creating meaningful activities in everyday life. An example of this comes from Vårdagarsvilla Aaltollman, which had the opportunity to participate in Lars Lerins series, broadcasted on the national Swedish television channel SVT. Together with Lars, our care receivers explored painting and creative activities, highlighting how such activities can boost the well-being of our care receivers suffering from dementia. Unit surveys are once a year carried out by the National Board of Health and Welfare in Sweden. These surveys cover areas such as care receiver involvement and influence, employee development and the various routines in place at each unit. Results for both Nytida and Vårdager remain strong and are at higher levels than for both other private and public care providers. We use the unit results as the basis for tailored action plans in line with our goal of continuous improvement of quality of care. Our mission states together we create a safe, secure, and sustainable care for everyone. So let's focus on some of the recent achievements within sustainability. Our commitment to creating a supportive and engaging environment for both employees and residents have been a key focus this quarter. In a highly labor-intensive organization, employee Net Promoter Score, or ENPS, is very important. Employee referrals are a key recruitment channel for us, and ENPS also measures engagement and overall employee satisfaction. It makes us very proud to be able to demonstrate what a positive work culture our employees experience, which is the foundation of our strong employer brand. During the quarter, we celebrated the graduation of 28 Ukrainian employees as certified care assistants. These individuals completed a training program established by Ambea, Beretskogslyftet, Svea International and MedLearn in late 2023. This initiative was created to strengthen their position in the Swedish labor market while supporting their professional growth. All participants balanced these studies with a Swedish language qualification besides their roles in Vårdokker on Utida, demonstrating incredible dedication and resilience. As part of EU's Green Deal, Ambea will report in line with the new CSRD directive in the 2025 annual report being released in spring 26. During 2024, we have conducted a dual materiality analysis to identify the areas where operations have the greatest impact on society and our stakeholders. In 2025, we will continue to develop our processes for sustainability reporting to enable efficient data collection for accurate reporting and transparency in line with CSRD. A strong old management pipeline is paramount to our growth agenda, so we turned the page for a fresh view on the pipeline. We remain focused on expanding our care services to meet the growing demand for care fueled by an aging population and increasing care needs. In quarter four, we reached a milestone with over 10,000 beds or care places in all management operations. Furthermore, there are 1,308 beds or care places in our own management pipeline, most of them in Sweden. The pipeline increased slightly compared to the previous quarter due to newly signed contracts in both Nutita and Stendi. Our pipeline is by far the strongest in the Scandinavian care sector, and we are working hard to expand it. Looking at Ambea as a whole, more units are under construction, positioning us for future organic growth in our markets. Acquisitions are an important part of our growth agenda too, and we will now have a look at what we have achieved in 2024. Nytida acquired four companies in 2024, expanding our footprint within social care in Sweden. This is a part of our strategy to strengthen our service offering through qualitative bolt-on acquisitions. In quarter four, Nytida acquired care providers, free apps, operations and foster homes, HVB homes and assisted living facilities, and thereby adding 180 million SEK in annual net sales. Further acquisitions are expected in the coming quarters as we continue to identify strategic opportunities for growth. And with that in mind, let's look at total revenue growth. The organic growth illustrated in the purple bars continues to follow the strong development we have seen since 2022. The total organic growth in this quarter was 5.3% and acquired growth was 1.5%. We remain positive about our overall growth potential in the coming quarters where volume, service and price mix as well as acquisitions are expected to contribute. So, summing up the highlights of the fourth quarter. In conclusion, the fourth quarter of 2024 has been another successful quarter for Ambea. Marked by strong financial performance, continued organic growth, improved occupancy, and a sizable bold loan acquisition. Net sales increased by 7%, reflecting 5% organic growth. Group EBITDA rose by 20%, reaching a margin of 9.5%, a significant improvement compared to last year. The growth highlights our strong operational performance and our continuous investments in leadership, innovation, and care quality. Altina Denmark continues to see profitability improvements from strengthened operations and overhead cost reductions and showed positive earnings this quarter and for the financial year in total. Nytida acquired three years operations in quarter four. This is a great compliment to our Nytida business. And the board proposes a dividend of 2.20 Swedish kronor per share. Now I will pass the presentation to Benno, who will provide a financial overview of our performance this quarter.

Thank you, Mark. I just highlighted the good organic growth we have seen in the last quarter continues. In Q4, we achieved 7% growth in net sales, largely driven by increased occupancy and due to the acquired and start-up units. All business areas contributed to the growth, except for Klara. And as you can see in this slide, Bardaga and Nytida were the largest contributors in the quarter, going into Ebitda. This slide shows how the different business areas have contributed to the Ebitda growth. of the group and the total EBITDA increased by 20% and our margin improved to 9.5% which reflects the significant EBITDA improvements in Vardaga, Stendi and positive earnings in Alltiden. As Alltiden continues to show positive earnings this quarter, EBITDA increased by a strong 7.4 percentage points compared to the same quarter last year. Vardaga's EBITDA was higher than last year up to percentage points mainly due to higher occupancy And the standard EBITDA increased significantly by 2.5 percentage points, also supported by a positive one-time effect in the quarter. Now turning to cash flow. Operating cash flow increased by 138 million to 876 million, with strong cash conversion in the quarter. The cash flow development over the last quarter reflects the strong EBITDA development and a positive effect for networking capital, especially in the last quarter. This slide shows the way from the full year reported EBITDA down to the free cash flow post tax of 875 million SEK, excluding IFR 16. Free cash flow is 43% higher than full year 2023, which we reported last year. We can see here in this graph that we have invested 100 million in fixed assets, have paid 149 million in interest and 138 million in taxes. We had also a positive effect from working capital of 101 million SEK due to our asset-light model for growth, but also favorable cutoff of the year end. Over time, we think that the net working capital contribution to the cash flow will be rather neutral to slightly positive. This allowed us to maintain the financial flexibility, supporting both dividend payments and strategic investments, including acquisition and share buybacks, which I will show on the next So this slide shows how we have used the generated 875 million SEK. 130 million was distributed to our shareholders as a dividend. 253 million was spent on the four acquisitions in 2024. And 431 million was spent on the two share buyback programs. And based on our strong cash flow, we continue to reduce our debts full year by 58 million SEK. And as we conclude the year, I would like to bring attention to the favorable development in earnings per share and dividends on the next slide. This slide shows the strong development of our earnings and dividend per share over the years. For the full year 2024, we have increased the reported earnings per share by 42% and the proposed dividend by 47% versus last year. And the positive development over the years in earnings per share and dividend per share is, of course, mostly due to the strong underlying earnings development, but it's also positive affected by the share buyback programs that we have conducted in the last years. And on that positive note, we continued to the overview of our five business areas. We started with Nytida. Sales increased by 9%, which is driven by new and acquired operations, as well as higher prices. As an offsetting effect, we saw continued lower occupancy in some parts of the individual and family care. To meet the long-term increasing demand for care services, we continue expanding our capacity. Nytida increased their own management pipeline with new beds during the quarter. During the quarter, Nytida expanded the capacity of an existing unit by adding 14 new care places and signed a contract and planned an extension for a total of 16 new care places. EBITDA decreased by 9 million compared to the same quarter last year and landed at 121 million SEK. The decrease in earnings was partly due to the occupancy challenges within the individual and family segment. But this quarter had also a slightly negative calendar effect compared to last year, where we also saw a reimbursement of energy costs, in fact, affecting that quarter positively. The reported EBITDA margin in the quarter was 10.9% and at 12.7, rolling 12. In the quarter, NITIDA acquired free apps operations in foster homes and various residential care services, adding 180 million SEK in annual net sales. And then turning to the Swedish LLD Care Vardaga. In Vardaga, net sales increased by 9% year-on-year, driven by high occupancy in our own management unit, and new contract management units. In the own management portfolio, net sales increased by 8%, and net sales in the contract management portfolio increased by 11%, which is a result of commenced operations of previously won tenders. EBITDA amounted to 122 million SEK, which was significantly higher than last year, up 39%, and primarily because of the higher occupancy, but also driven by earlier measures related to two rental contracts handed back. Mature units showed an improved margin of 10.3%, which is one percentage point higher than the average margin for Vardaga's total portfolio. On the next slide, we turn to a business area in Norway called Stendi. Net sales in Stendi increased by 3% in SEK and by 4% in local currency. due to stable occupancy and better service and price mix, which means that the high demand for care services for children and youth with complex needs remains strong. In the quarter, Stendi signed six new contracts, adding 42 PEBs to our pipeline. EBITDA increased to 93 million SEK. Earnings were positively impacted in Q4 by 30 million for a reversal of provisions for salary reviews as review dates were postponed in several contract areas. Excluding that effect and the fact that Q4 last year had some temporary positive effects, Stanley showed an underlying EBITDA that was more or less in line with last year's strong Q4 performance. The EBITDA margin in the quarter increased by 2.5 percentage points to 11.2, and the rolling 12 margin increased to 10% thanks to the good earnings development over the last quarters. The standard now performs at a consistent high level supporting the Norwegian society with high quality social care. We see good opportunities to expand operations going forward through organic and acquired growth. Let's take a closer look at Altiren. Our Danish business area Altiren stood out this quarter. Improved occupancy, operational improvement and strategic initiatives have all contributed to the better results. we have in the quarter continued to strengthen our market position and lay the foundation for future growth. Net sales in Altiden increased by 4% in SEC due to increased occupancy in both OSHA and Elderly Care. The decrease we see in contract management sales was mainly due to one large Elderly Care contract that expired in the first quarter of 2024. That means that the increase in management sales was 12% in local currency in the quarter, thanks to the highest occupancy. And Altina once again delivered a strong profitability improvement. EBITDA was up 24 million SEC compared to the same quarter last year, thanks to the continued profitability improvement measures regarding capacity, reduced overhead costs, and organizational adjustments that gained effect. And now EBITDA margin in the quarter was 3%, and rolling 12, we achieved break even with a margin of 1%. Now over to Clara. In Klara, net sales decreased by 9% due to the continued weak demand for staffing services. EBITDA decreased by 3 million to 11 million SEK due to lower net sales, which could not fully be offset by lower costs. EBITDA margin was 10.4%, which is a robust margin given the situation with the public healthcare regions, limitations on the use of temporary nurses. And Clara's EBITDA margin is still significantly above staffing competitors' margins thanks to Clara's diversified portfolio consisting of different welfare services, for example, mobile nursing teams and student health services. The diversity in Clara's services and adaptability to change market conditions is our core strength. And with that, back to you, Mark, for some concluding remarks.

Thank you, Benno. To sum up our financial development versus our targets. We aim for an annual growth rate of 8 to 10%, driven by organic and acquired growth. 2024 shows solid organic growth with a total growth of 7%. Going forward, we will see more growth coming from acquisitions, adding to the overall growth level. In terms of profitability, our target is to reach an adjusted EBITDA margin of 9.5% in the medium term. We reached our profitability target for the first time with 9.7% rolling 12, and we remain committed to the target. On leverage, we target the net debt to EBDA ratio to be below 3.25 times. As of Q4, we remain well below this target at 1.7 times, thanks to the strong EBDA and cash flow development. These financial targets underscore our commitment to delivering sustainable financial performance while investing in our long-term growth. Free cash flow will be used for bolt-on acquisitions, future dividends according to our policy, for share-by-backs, and eventually for debt reductions. In combination, this will ensure that we continue to deliver value to our shareholders, which is also reflected in the new share buyback program decided by the board and communicated yesterday. For the financial year 2024, we have reached two out of three financial targets and are close to the third. We are committed to consistently deliver on all three financial targets. And further, we will invest in our people and operation to support society and deliver high quality care. And before we open for questions, I would like to provide an outlook post Q4 2024. We continue to see strong demand for care placements, which is driving increased occupancy across our operations. This solid demand provides a strong foundation for continued growth. As part of our expansion, we are planning to open new units within Nytida and Stendi during the first quarter of 2025. These openings will help us to meet the growing need for high-quality care services. At the same time, we are actively exploring opportunities to further strengthen our business. Discussions with potential acquisition targets are ongoing and we remain focused on identifying opportunities that align with our long-term goals and deliver shareholder value. In Altina, we expect further improvements in profitability supported by operational efficiencies and an increased demand for care services. From my recent visits to our care homes in all countries and from dialogue with our employees and operational managers, it is evident that care needs are getting increasingly complex. It comes across in most of our services being children, youth, adult or the elderly. It is therefore most important that our ability to adapt to society's needs and continuously develop our teams is on top of the agenda. In the light of society struggling to cater for a constantly increasing care need, I will raise attention to our 35,000 employees who are going to work with the aim to give all care receivers a better and more independent life. Our employees are the true reason Ambea is developing and getting better by the day. Thank you all. And this concludes our presentation, and we will now open for questions. So, operator, can we have the first question, please?