Asker Healthcare Group AB

Hello, welcome to Askers Q3 Interim Report. This is Johan Falk speaking, the CEO. I'm happy to present the third quarter result that was increasing with 25% out of which 6% organic. So we have a good quarter behind us. If we give you some highlights from the quarter, we have strong earning growth and driven by radiant West and Central. As you have seen, we have some tough comparables in North. That's why you see some negative numbers there. We'll come back to that later, but no big worries about that. The EBITDA increased with 25% to 383 million SEK, out of which 6% was organic. The sales went up with 15% to about 4 billion this quarter, also with a good 5% organic growth. Our EBITDA margin that we have promised to get to 10% within the mid-term future is also going up to 9.3% for the last 12 months. And we have operationally in Western Central seeing some really good operational performance and some soon in this effect, some positive operational effects that gives us really good growth numbers there. As a serial acquirer, we have our twin engine, as you know, organic growth plus M&A growth. We have a lot of good acquisitions, both historically in the last 12 months, but also a fantastic pipeline to come. I'll come back to that later on in the presentation as well. So all in all, very proud to present this quarterly report. Our key measure R over RK or EBITDA over networking capital is keeping steady at 66%. So getting a good free cash flow to buy new companies. Looking at a bit longer time perspective, the last 12 months, we have, as you know, our most important promise to you is to grow the earnings with over 15% per year. And we're rolling 12 now is at 20%, 25 for the quarter. So feel good about that. R over RK steadily at 66. So we have efficiency gain from squeezing out working capital and being efficient with our working capital, making sure we have a good free cash flow. Our margins creeping up towards the 10% that we promised. The rolling 12 is now at 9.3 and the leverage is now at 2.2. We have said that we will not go about 2.5 as you might remember during the IPO we took in some new cash that we have used to establish a few new platforms. So we have successfully managed entry to new countries and also a new product segment. So 2.2 is kind of normal level and will be between 2 and 2.5, I would say, for the near term future, but not about 2. Looking down at the acquisition pipeline and also the list the last 12 months, we are doing the 2025. We have done 12 new acquisitions and we are now luckily or depending on how you see it, we are attracting a lot of good companies now, small and medium sized businesses that are successfully run during sometimes several generations that come to Asker. Totally 2.2 billion in sales. All of them are now delivering over 10% EBITDA margin. So there is also a positive mix effect from adding new companies to the group. We have a platform Finmed that we use to enter into France. We also have entry into a lot of new interesting product segments. I don't have the time to go into everyone, but all in all, we're strengthening our base. We're now present in 19 markets. We have bought over 60 companies. and during the period here, we have welcomed a handful of new companies as well. So the pipeline looks really, really good. I think our position as a market leader in Europe in our market has also helped us to attract new good companies. So the pipeline is stronger than ever for us. To do a little bit of a deep dive, I usually do this in the quarterly summaries, the FINMED, is a not very large 380 million SEC but it's an important starting point in France very good management team that have done acquisitions themselves and are knowledgeable in that field they have a good reputation in the market and we feel that that could be a good good platform and as you know we're buying companies 10 to 20 companies a year paying roughly six to eight times EBITDA for the platforms we pay one to two multiples higher and that is what we have seen these 12 companies come in as well but from now on you can expect us to use our cash flow to buy more of both small and medium-sized companies and maybe once a year or once every two years we open up a new platform to have a good new stable base. With that, I'll leave the word to Tom to talk a little bit more about the financials.

Great. Thanks, Johan. Yes, let's dive into the numbers in a bit more detail. If we start with a look at the group as a whole and the P&L, as Johan mentioned, we've had a good Q3. Net sales up 15% in the quarter, of which 5% of that growth is organic. And again, as Johan mentioned, we have good performance in regions west and central, a weaker performance in region north. I'll come back to that in a second to give you a little bit more colour on the differences between the regions. But adjusted EBIT A up 25%, of which 6% is organic, as Johan already mentioned, and the margin nudging in the right direction up to 9.3% in the quarter. And then if you look on the right hand side of this picture, you can actually see the year to date figures presented and the Q3 really mirrors the year to date picture as well. So we have 6% organic everyday growth, 14% coming from acquisitions, A negative effect, a small FX headwind. You'll remember that we had a slightly larger negative headwind in Q2, which has moderated a little bit, but still there to some extent. But net-net, an 18% adjusted EBITDA growth in the first nine months of the year. If I turn now to the regions, I'll step through them in turn, starting with business area north. And really, the story in north is in two parts. The first part, the core sales that we make on a regular basis to regions and municipalities across the business area continue to develop very solidly through the period. But what you see is that EBITDA and EBITDA margin are lower year on year, and these have been significantly affected by the project-based sales in defense and preparedness that we got a lot of during 2024, but have not returned in 2025. And those sales also come with significant scale effects. They're quite concentrated large orders, which perhaps explains the large effect on the margins as well. It's worth noting, and we've noted this before, that we still see good opportunities in this area in the future. And it's an area that we see will develop. We have good relationships. We have good products. We don't believe that we have missed out on deals. It's simply that they haven't come through yet. And we remain optimistic in the medium term that this will be an important area of business for us. If I turn to Business Area West, strong performance in the quarter in Business Area West, net sales up 24%, adjusted EBITDA up 57%, and that together is obviously driving the EBITDA margin upwards as well, up to 9.6% in the quarter. And I think the pleasing thing for us is when you look a little bit into the details and into the individual countries and companies in the region, we see that that really is a broad based performance across the region. And particularly notable is the operation improvements we see in the organic businesses where we see more cooperation, more collaboration between our companies, particularly in the very interesting and developing home care area. There's a lot of good things going on driving this performance. And then on top of that, obviously in the region, we have very positive contributions from our recent M&A activities. The two larger ones being ones that Johan mentioned, ScanModule and HSL Group as well, contributing very, very strongly to the region and strongly to the growth year on year. And then finally, if I turn to our third region, Business Area Central, also a very pleasing, solid performance in the region. Sales up 15%, EBITDA up 39%. And again, driven by a good combination of acquisitions, historic acquisitions performing well, organic expansion in the region, driving the margin up to 8.9%. And I think in Region Central, we see particularly nice development in new product areas, new customer categories, new channels, new routes to market. So a genuine drive across the region and broad based contribution to that performance in Region Central. A brief look at RO over RK, EBITDA over Networking Capital, our key metric around operational working capital utilization. Relatively stable at a very attractive level of 66, just over 66%, demonstrating to us the continued high capital efficiency across our whole business. And I would note that we always and still see opportunities to improve this metric. And we are in this constant push and pull as new companies come into the group, acquired companies. Working capital focus tends not to have been their highest priority. So we have an opportunity to improve those as they come in and generate additional cash flows from that. So an important area of focus for us. A brief note on the cash flow, a positive picture on cash flows in Q3. If I start at the top of the chart, 439 million of operating cash flow. You may remember back in Q2, I mentioned that we had a little bit more locked up in working capital than perhaps I would have liked, but we were very confident that that would flow back in cash flows later on in the year. So I think this figure is a testament to that, which is good to see. CapEx a bit lower in the quarter. We haven't had any big expenditures on the Gothenburg warehouse that I mentioned earlier. There will be some money flowing out for that in Q4. And then finally for me, before I hand it back to Johan, a look at the leverage picture. Leverage is at 2.2, as Johan mentioned, net debt to EBITDA in the quarter. This is very much in line with what we would consider historically normal levels. We had a brief dip with the new equity injection that came in at the IPO. And as we said at the time, we intended to deploy that capital into some interesting and exciting, slightly larger deals. And we've done HSL, we've done ScanModule, and now we've done FinMed, bringing the leverage back, as I say, to normal levels. And we will be in and around that range going forward. We want to have the capacity to continue to drive our M&A agenda using our own cash flows and continuing to make the very clear statement and commitment that we will remain below the 2.5x threshold.

Johan, hand back to you. Thank you very much, Tom. OK, to summarize before we leave the floor for questions. So all in all, a good quarter, strong performance in the quarter, 25% earnings growth, which is our most important KPI, I would say towards the US owners and who follow us. We have said more than 15%, so 25% is of course something we're proud of and also making sure that the organic growth is on par or better than the market, which 6% clearly is. We see Central and West showing really good numbers and there's some comparables that are tough in North. And to give you the perspective, a little bit longer perspective, I've been here now close to 14 years and the way to view Asker is anything that is spiking super high or super good, you should take down and something that is really bad and so it's not as dramatic. We have a very good and stable market here. 19 markets, we are 60 companies selling millions of products every month to the healthcare sector that is growing slow and steadily, and we're spread across that. So there's very little drama if you take a little bit longer time perspective. But of course, you shouldn't be too super enthusiastic of positive things or super negative of negative things. I think that's a good word of advice that I've learned during my years here. The acquisition, as the second ending is all about, I really must say is a good uptick since we became a listed company. So many good companies are turning to Asker, seeing what we're doing. We are the market leader and the pipeline we have right now is better than we've ever seen. That doesn't mean we're going to buy a lot more companies, but we're going to pick the best ones. I mean, in every market situation, you have A, B, C, D, E players. And we are in a situation where we can pick A and B players. And, you know, building a team of any kind, being able to pick A and B players over time, that gives you better results. So that's something that is really a positive effect, I think, and I'm very proud of. So with that, I think we'll leave the word to you and some questions.