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 create 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 of the utmost importance 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 -by-unit basis. In Sweden, where we have national surveys for care receiver satisfaction, we publish the results for each care home on New Tiders and War Doggers web pages 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 War Doggers Wilar Årholmen, which had the opportunity to participate in Lars Lerins series broadcasted on the national Swedish television channel, SVT. Together with Lars, our care receivers explore painting and creative activities, highlighting how such activities can boost the wellbeing 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 New Tider and War Dogger 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 or employees experience, which is the foundation of our strong employer brand. During the quarter, we celebrate the graduation of 28 Ukrainian employees as certified care assistants. These individuals complete a training program established by AMBEA, Beretskov Slivstedt 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 balance these studies with the Swedish language qualification besides their roles in War Dogger on New Tider, 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 oil management pipeline is paramount to our growth agenda, so we turn 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 own 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 Newtita 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. Newtita 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 bold on acquisitions. In quarter four, Newtita acquired care providers, free apps, operations and foster homes, HPB homes and assisted living facilities, and thereby adding 180 million SEC 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 .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 MBEA, marked by strong financial performance, continued organic growth, improved occupancy and a sizable bold on acquisition. Net sales increased by 7%, reflecting 5% organic growth. Group we beat arose 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. Alteen in Denmark continues to see profitability improvements from strength in operations and overhead cost reductions and showed positive earnings this quarter and for the financial year in total. Nutita acquired three years operations in quarter four. This is a great compliment to our Nutita 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've just highlighted the good organic growth we have seen in the last quarter continues. In Q4, we achieved 7% to growth in net sales, largely driven by increased occupancy and due to the acquired and startup units. All business areas contribute to the growth except for Clara. And as you can see in this slide, Vardaga and Nutita were the largest contributors in the quarter. 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 .5% which reflects the significant EBITDA improvements in Vardaga, Stendi and positive earnings in Alteen. As Alteen continues to show positive earnings this quarter, EBITDA increased by strong 7.4 percentage points compared to the same quarter last year. Vardaga's EBITDA was higher last year, up 2 percentage points mainly due to higher occupancy and Stendi's EBITDA increased significantly by 2.5 percentage points also supported by positive one-time effect in the quarter. Now turn it 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 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-like model for growth but also favorable cutoff of the year end. Over time we think that the networking capital contribution to 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 slide. So this slide shows that 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 the last years. And on that positive note we continue to the overview of our five business areas. We start with Newtida. 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 To meet the long-term increasing demand for care services we continue expanding our capacity. Newtida increased their own management pipeline with new beds during the quarter. During the quarter Newtida 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 SEC. 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 cost in fact affecting that quarter positively. The reported EBITDA margin in the quarter was .9% and at .7% rolling 12. In the quarter Newtida acquired free apps operations in foster homes and various presidential care services adding 180 million SEC in annual net sales. And then turning to the Swedish LV Care Badaga. In Badaga net sales increased by 9% -on-year driven by higher 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 SEC which was significantly higher than last year up 39% and primarily because of the higher occupancy but also driven by earlier measures related to rental contracts handed back. Material units showed an improved margin of .3% which is one percentage point higher than average margin for Badaga's total portfolio. On the next slide we turn to our business area in Norway called Stendi. Net sales in Stendi increased by 3% in SEC 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 remained strong. In the quarter Stendi signed six new contracts adding 42 PEDs to our pipeline. EBITDA increased to 93 million SEC. 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. Stendi showed an underlying EBITDA that was more or less in line with last year's strong Q4 performance. EBITDA margin in the quarter increased by two and a half percentage points to 11.2 and the rolling 12 margin increased to 10% thanks to the good earnings development over the last quarters and Stendi now performs at consistent high levels supporting the Norwegian society with high quality social care. We see good opportunities to expand operations going forward through organic and acquired growth. So let's take a closer look at Alteiden. Our Danish business area Alteiden stood out this quarter. Improved occupancy, operational improvement and strategic initiatives have all contributed to the results. We have in the quarter continued to strengthen our market position and laid the foundation for future growth. Net sales in Alteiden 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 QEENSEIT own management sales was 12% in local currency in the quarter thanks to the high occupancy. Alteiden 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 Clara net sales decreased by 9% due to the continued weak demand for staffing services. EBITDA decreased by 3 million to 11 million SEC due to the lower net sales we could not fully be offset by lower costs. EBITDA margin was .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 services and adaptability to change market condition is of course ranked. And with that

back

to you Mark

for some concluding 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 .5% in the medium term. We reached our profitability target for the first time with .7% rolling 12 and we remain committed to the target. On leverage we target the net debt to EBITDA ratio to be below 3.25 times. As of Q4 we remain well below this target at 1.7 times thanks to the strong EBITDA 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 bold on acquisitions, future dividends according to our policy, for share buybacks and eventually for debt reduction. 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 operations to support society and deliver high quality care. And before we open for questions I would like to provide an outlook post quarter 4 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 Nutita and Stanley 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, adults 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 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?

Thank you. As a reminder to ask a question you will need to press star 1.1 on your telephone keypad and wait for your question to be announced. To withdraw your question please press star 1.1 again. We will now take our first question. Please stand by. And the first question comes from the line of David Johansson from Nordaer. Please go ahead your line is now open.

Hi, good morning. Thank you for taking my questions. I have three. So first one on Vardaga which obviously looks very strong here, the .7% margin. And you comment on handed back rental contracts having an impact here. So first if you could elaborate a bit on the magnitude here and also if you could quantify what has been the cost of this historically. I think maybe on a full year basis would be helpful. And then secondly looking at the growth trajectory also in Vardaga. I think entering the fourth quarter now without any new openings. It seems to me like growth in Vardaga should come down a bit from here until you start to open new homes. So first if this is the right way to look at this and you comment a bit on the pipeline from here. So does that mean that maybe we should expect a weaker H1 before growth takes off again with new homes towards the end of the year? Thank you.

I can start with the handed back rental contract. That was something we did in the beginning of 2024. And the effect of that on a yearly basis is around 20 million. So around 5 million a quarter. So that is the financial effect. On the growth side of Vardaga we have a little bit lower growth pace than we are this quarter. 8% in own management. We have had double digits for some quarters previously. So exactly as you said we have not that many openings the last years. So that means that the growth pace has come down a little bit and we will open next Vardaga unit in the later part of 2025.

Okay. Thank you. Two openings later part of 2025 and one significant extension of an existing facility. But that will come in the second half of the year. Okay. Thank you.

Then just my last question. If you could comment on Stanley and the demand situation for children and youth care. So growth also looks to have come down a bit here sequentially. Do you think we should see this as demand maybe dropping off now a bit entering into 2025? Thank you.

I don't think we should see the demand dropping off. That's not what we experienced. We experienced a stable high demand for children and youth care and also children and youth with complex needs. So with the outlook we have as far as we can see into the future we expect that occupancy to be stable on the existing level within children and youth. Thank you. Those are my questions.

Thank you. We will now go to our next question. Please stand by. And the next question comes from Jakob Lanker from SEB. Please go ahead. Your line is now open.

Hi. First question on Vardaga. I mean you have very strong margin improvement here across entire 2024. I'm wondering a bit how much more potential is going into 2025?

As you said we have had a really good margin development in Vardaga. We see that there is still occupancy gains to gain in some units. Not as much as 2024 but there is still room for higher occupancy. And there is also of course always room for more efficiency. But I think that the development we have had in 2024 we won't see that increasing margin in 2025 of course. But there is still room for improvement for sure.

Okay. And then on Alltiden. Good to see two quarters now with clearly moving in the right direction. But when you look forward do you see any risk that these improvements are going to revert or is it smooth sailing ahead?

Nothing in this industry is smooth sailing. But we have a good confidence in Alltiden and in the Danish team who has done a tremendously good job in turning around the business. We still expect that there will be improvements to gain going forward. We do not see that the team is slipping on the improvements that have been done so far. So the platform is much more stable now. The team is in good shape and we also see a better demand situation in the Danish market. So overall we expect continuous improvements in the Danish business also into 2025.

Okay. And with the sort of setup and platform you have now what is the sort of margin potential you could do in Denmark?

So we have said in the midterm that we think we could reach -5% in the Danish market and that is still absolutely our ambition to get to that level. And that is what we are working on. It is of course also a question of how much you want to grow as if you would open nursing homes as an example with the new reform coming into play in Denmark in July this year. Obviously there will be costs linked to that, attached to that if we would expand faster in the elderly care segment in Denmark. But as we see it it is absolutely possible to reach -5% in the Danish market and that is what we are aiming for.

Okay. And then on acquisitions, these targets you mentioned that you are in discussion with, is it fair to assume that they are of similar size as the one you have done in 2024? So

the ones that we are in discussions with now are smaller mid-size acquisition opportunities, bold on opportunities. And some of them are the same size, some of them are slightly larger than what we have seen. But as you know it always depends and nothing is said before the final word. So let's see where it will take us. But we have a good pipeline within M&A and we absolutely believe that we can continue the acquisition journey that we kind of reignited in 2024 and have a good outlook for this year as well.

And then finally a question on the net financials. I know you hedge some of the net financials but do you expect to see a substantial impact from lower interest rates in 2025?

We expect to see lower interest rates in 2025 and 2024. Substantial, I don't know really what you mean but we expect to see lower interest costs for sure.

I guess the average interest rate you pay that it can come down with a couple of percent?

Maybe not a couple of percent but it has come down.

Okay, that's all for me. Thank you. Thank you.

Thank you. We will now go to our next question. Please stand by. And the next question comes from Carl Johan Bonovier from DNB Markets. Please go ahead, your line is not open.

Yes, good morning Mark and Ben. First congratulations to a very good progression during 2024. Very impressive. A couple of questions from me as well. First looking at what you just talked about in the end and development and the provision that you then reversed in the quarter. Could you elaborate a little how that provision came by and what it means for the future if you see the same thing, if you naturally provision for the same things ongoing so this was more of a temporary effect?

Yeah, I can start with a provision of the salary review. Normally in all Scandinavian markets we have a salary review at first of April or first of May or something. And if the labor contracts are not ready at that time, if the negotiation still is ongoing, we normally accrue for the cost for the salary increases. And it has always been the fact that when the salaries agreements are done, then a retroactive payment from the start of the contract time will occur. But this year that doesn't happen in Norway. So we didn't get when the salary increases were finalized after a long negotiation period in November, I think it was. Then the point from where the salary were increased were postponed from first of April to first of August to first of October. So that made that the reversal we had in our books, we released of course for that matter and that was around 30 million. So you can say in the 2024 we have had the price increase from first of January but the salary increase that were later than usual. So that means that the 2024 was a little bit boosted from that. That won't affect anything going forward.

But when I look at the year on year base you could say that Q2 and Q3 really should have been 10-15 million better looking at that accrual. Yeah,

what

we

know now, we accrued for costs that didn't

occur.

So it's more of an item affecting the quarter but not really an item affecting the year if you are thinking about it in the proper way. Yeah, you could say that. Excellent. Then looking at on the same theme going into 2025, how do you see the balance between the kind of price adjustments you are getting out there for your services and the ongoing cost inflation looking at the salary increase? Salary agreements, rental agreements and everything.

We have no salary agreements finalized yet for this year so it's a little bit hard to predict that. We have got price increases from first of January in most of our contracts in all countries but since we don't know what the salary increases will be that is not so easy to answer that question what the balance will be.

But your gut feeling standing here at this time with I guess probably getting both positive messages and more negative ones.

Do

you see that you are in a good balance between price and cost going into

2020? Yeah, we think that the balance is okay for this year. That is what we expect.

Excellent. When you look at your M&A ambitions you have obviously done a lot of transactions in New Teeg Delft Lake. Do you see yourself now in the efforts you are talking about going also into the other units?

So what we have said is that we are looking at qualitative acquisition opportunities basically in all business areas. Maybe the last years apart from Aaltid and Denmark it's about finding the right targets and then also being able to agree the right price. And we would be interested in basic acquisitions across our business units going forward. Maybe not with high focus on Denmark over the next quarter but that could definitely be in the Swedish business areas and also Norway.

Excellent. That makes sense. And then just on the share buybacks, if you conclude and get up to 8 million shares bought back coming AGM, do you perceive yourself doing what you have done historically cancelling those shares at the AGM?

Yes, that's what we see.

Excellent. Thank you very much and all the best out there.

Thank you.

Thank you. As a reminder to ask a question you will need to press star 1-1 on your telephone keypad and wait for your name to be announced. To withdraw your question please press star 1-1 again. There are no further questions on the phone lines. I would now like to hand back to Merke Jensen for any closing remarks.

So thank you all for calling in. The report for quarter one for 2025 will be published on May 6th 2025. So have a nice day everyone. Stay safe and healthy.