Beijer Alma AB (publ)

Good morning, everybody. And this is my third and last quarterly report in Beiralma. So next Monday, the permanent CEO, Oscar Friedel, will join us and he will take care of this company for the future. I'm glad to say this is the best report during these three quarters and probably since many years ago also, I think. In spite of that, we have not really pushed everything to be maximum. It's a very normalized result we see after this quarter. We had a healthy growth in the period, an organic growth that was very nice. The reasons are among other things, we have for instance expanded, it's four factories within Beotech that we have expanded and two of those, well actually three of those houses during this period started to deliver from the expanded production. area and that has also caused me meant that we can actually work down the backload we have from those factories that have been too long delivery times and that is why the reason one of the reasons why we have more deliveries in this quarter and also better result And demand has improved in general, but it is normal in our case. It's a volatile market depending on where in the world and in what segments we are. Lykkefors has mixed demand and we have organic growth both in sales and bookings. And what is especially good in this quarter is Chasse Springs. that has expanded dramatically, and it's mainly Germany and the UK that are the strongest markets. In industry, Asia and Europe are growing. In Sweden, we see a very stable market, but we see large customers like ABB and Volvo Trucks are reduced, but we have others growing like Hitachi and other smaller is growing. So in total, it's a stable market in the Nordic. In the US, we see a market that is down depending on some large customers we have in industry, but also that the Dexcom project, as some of you might have heard, for the medical market, according to plan now, is on a lower level. But at the same time, one of our companies in the United States has actually got more orders to the medical market. But I can foresee a more push for sales in the United States in the future. Our problems like Alcomex, we are halfway through. We have done a lot. Not everything is finished yet. But it's going according to plan. And so probably end of this year, most of the outstanding problems are solved. And we have also taken care of the problems in Turkey and reduced costs there. In Bay Tech, there is also variations, but overall a stable demand. But we see some companies, as I said, that has expanded their capacity, has really boomed in the quarter with deliveries to customers. And it's a growing organic growth in the quarter. And of course, as you've seen, there are profitability improvements. It's a combination with mixed effects, but also some specific companies. And after the quarter, we have acquired a company, Evona in Finland. And I can say we have more coming up in the future. We have a backlog of potential acquisition targets that we are working on just now. As you can see here now, the order bookings increased by 7% to 1.7 billion Swedish crowns. And net revenue by 12%, organic to 7. And the adjusted EBITDA margin was now on the good level of 15.8%. My view is there is a potential to grow that further in the coming quarters. Of our turnover, most part comes from Lykkefors, but 34% comes from Baytech. And at this moment, it's in Baytech we are acquiring businesses, but acquisitions will come later on in Lykkefors in the future. Specifically for Horses, we have the net revenue increased by 7%. I can comment there that even though this medical project in the United States, in John Evans, has slowed down according to plan, but we are actually growing in other areas of the world to the medical sector. And we have a special sales resource working in that area. And they are working with customers worldwide. And Chasse Springs are doing very well. And they see optimistic on this year in general. And we have some plans eventually to also expand that business for the future. So the adjusted operating margin increased to 80%. So it's on the way to the long-term goal. In BayerTech, all the bookings increased by 18% to almost 600 million, and net revenue increased to 650 million. But as I said, we have now reduced the backlog, and that's a healthy reduction, because delivery times for a couple of the companies was far too long for our customers. So they were forced to say no to orders earlier. So now we can cope up with the demand from the market. And all are doing well, but of course, niche technologies are extremely well, and thus niche-oriented companies selling mainly outside the Swedish market that are doing very well. And regardless of the general market, they have their niches, so they're normally always performing very well. And the adjusted operating profit EBITDA increased to 84 million, and also the margin was slightly increasing in this area. I leave the financials to Peter.

Thank you, Johnny. Yeah, a brief look on the financials. I think we have gone through most of them. We present a fairly strong cash flow. That's a metric we haven't really discussed, driven by the good profitability, but also that we have a little bit positive effect from Chassis Springs, that the stock buildup has been a little bit slower in the quarter compared to last year, giving a positive cashflow effect compared to last year. Net debt are at 1.8, meaning the depositions that Jonja talking about, we should have had room to do without sort of say gearing up the debt too much. Yeah, that was all for me.

acquisition then was the Evona company, it's a niche company in Finland who is a nice size of business and it's a high margin business so it fits in very well to their tech portfolio of companies and in this industry when you win a project it's not only price it's also the connections you can get between the buyer and the seller. So it's very much up to the people from our side that meets the seller and they like the future ideas. And that is, I should say, more important than the exact price you pay. And in this case, obviously, we have been good in meeting the demands or wishes from the sellers. And as I said before, We see a lot of activity going on on the acquisition market at this moment. Then we'll see how many of these deals we can win, but I hope there will be a number of them during the coming months. If you look at the history, we have done 32 acquisitions since 2019. This year is will be a better year than last year. And I expect that this is the trend that will continue in the future. And we are going to put more efforts on acquisitions in the future. We have hired another person to work with acquisitions coming in the beginning of next year. And conclusion is Lykkefors, as we have reduced the overhead and we have clarified that the geographical area managers are really fully in charge of their businesses. And I think we have good people out there in the organization, very competent, many of them with very long experience. And they have full understanding of also how the market looks like, who is the customer, and how to take care of the customer. So I think we have a very good base now for future growth in the Leche Forge area, combined also with future acquisitions in other areas with similar products and not only springs. And Bayer Tech, as you've seen during last year, are performing better and better, and obviously have the ability to convince sellers that we are the best buyer. And in a week, Oscar Fredel will take over. And he has a very long experience of acquisitions. And with the setup where you leave them in like a compounder. So I think there are opportunities for the future development of Beira Alma is extremely good.

Great, then we go to Q&A.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Carl Korshedin from DNB Carnegie. Please go ahead.

Yeah, good day, Johnny and Peter, and thank you for taking my questions. Obviously, a very strong quarter, so thank you for that. And if we just turn the page a little bit and look on order intake, that was perhaps something that came in slightly weaker combined or compared to the rest of the report, which looked very, very strong. Could you perhaps elaborate a little bit what you're seeing there in terms of order intake here?

Well, I'm not that worried about water intake. As I said, we had a very huge backlog in a number of businesses. And that's why the delivery level has been very high. And then also we have companies who really have no book. They get orders from delivery within a few days. So I feel pretty confident in for the next quarter.

And if you also go back a little, So I say we had a little bit the opposite situation in Q2, where we had higher organic growth in the orders than in the revenues delivered out. And that also created a sort of backlog. Adding to that, third quarter book-to-bill tend to be a little bit lower due to the summer season as well. I think you only summarized it good that strongest in tech and then most difficult to sort of say estimate in chassis and then industrial. There we have a mixed demand with good markets and bad markets. And I mean, that's where we see the biggest uncertainty for Q4 as well, for sure.

Yeah, that's very clear. And could it perhaps also help us break down, I guess, the variable parts here driving the clear margin uptick in Leche-Forge year over year? I'm guessing it's a combination of I mean, the chassis mix, medical mix, you have a solid organic growth and obviously the Alcomix cost savings program is starting to yield effects. Would you say those are the key drivers here or is there something else we should keep in mind as well driving this uptake?

No, I think you summarized it very well. It's a mix of those. I mean, the cost saving effects are solid in the quarter as well.

Yeah, all right, thank you. And could we, if we get into a little bit more detail, could you give any indication where we are currently in terms of margins in Alcomex now that you have seen some effects from the cost savings program? And just remind us again, perhaps, where you see this business over time. Is this a 10%, 15%, 20% EBITDA margin business? Or what's your ambitions in the more long term with Alcomex?

I mean, you know, Alcomex was like a group in itself. We had a head office with a lot of people and there was a kind of centralized organization. We have removed the central organization and we are now building up. So each individual company will act as it should do and it will take time. So I think in a few years they will be on an average level level as other companies within Leche Forge. But, you know, to change the culture, it takes time.

Yeah.

But it's positive at this moment we are on the positive side.

Yeah, exactly. We guided, so to say, last call that we started the year negatively. Then we were at, so to say, losing single digits year to date at Q2. Q3 is in the same range as Q2 in terms of profitability. So we're moving in the right direction, but it's not a fast journey. It will take time. We will also be helped by, so to say, a better construction market and more demand for the door springs that is a hefty portion of the Alcomex business. a good margin increase coming up to the rest of the companies in the group.

Yeah, thank you very much. That was all my questions. Thank you.

The next question comes from Max Bako from Seb. Please go ahead.

thank you and uh good day and we're well done here in the quarter and you'll have very impressive work during your interim period I must say I have some quite similar questions if we circle back to the very nice Martin expansion would it be possible to give some indication of of the drivers or the magnitude of the different drivers I mean, I noticed that the mix were favorable for profitability, where Chelsea Springs increased the share of total sales, and then you also have the cost savings program that is currently being implemented and so on. If you could give some comments on the magnitude of each component, if that's possible, if we start with that.

I mean, if you look at the cost saving initiatives, if you start at that point, I mean, In this first phase, there's quite a lot of people leaving and those costs goes out fairly quickly, meaning that we guided around 35 million on a yearly basis as well. So we are a good pace to reach that target, so to say. And a lot of those actions are a little bit front hefty in the third quarter. And I think on the mix side, you're absolutely right that we are, so to say, Q3 last year for Shashi Springs was, I would say, fairly weak, both in terms of profitability and also in terms of the volume. So, of course, you get a little bit of a mixed effect in that. But the overall mixed effect is a little bit more difficult to comment on. But sure, it's a positive effect.

I must say, I'm impressed by the organization. As you might remember, we had a factory in Finland that was burnt down. And one third of that turnover we have lost, two thirds we have kept, even though some of them by acquiring products from competition, from the market and selling. We also have closed down Foy, the factory we now make, where we also probably have lost one third of the customers. In spite of that, we have these strong figures. So when we can do this and still increase the margin, and not only depending on on reduced costs in central costs, I think the organization has a very strong potential in the future.

Okay, understood. Very good. And then to circle back to one of the other questions. I mean, organic sales growth, very strong in the quarters, 7%. It seems like Some outperformance at least versus the market. And then the organic water intake plus 2% year-over-year organically. And as you mentioned, Q3 normally is seasonally slower and some companies not even having an order book. But which number would you say is more or the most representative of the underlying market and the improvements that you're seeing, if you understand the question?

I mean, it's not easy to answer. We have companies who have said no to orders because they were fully booked. And now when we have increased the capacity, they can start to open up to the market and say yes to orders coming in. So it's not so easy to judge where the real level is.

I mean, if we tend to look at it, I think we tend to look a little bit more positive on the Bay Tech side, and then a little bit more negative on the Fletcherport side, if you look at the volume, so to say.

Of course, I mean, the market was very strong in the quarter, and we don't see any drop in the quarter four on that side.

Okay, understood. But the chassis spring, I mean, they had an easy comparison as well from last year. And I mean, that drives the flying growth to the 22%.

Yeah, sure, sure. And on that topic, how would you describe the comparables here in Q4, perhaps mainly within the chassis springs, just to remind us?

I would say fairly normal for chassis springs.

Okay, okay, understood. And then the final question, you mentioned during the call here, Jonne, that you aim to, perhaps not immediately, but over time to expand the offering and the share of Chasse Springs within Lagerfors. Is the intention to do that through acquisitions or is it through greenfield investments? What's your thoughts on that?

Organically. Okay, understood. With existing resources.

Yes, perfect. That was all from me. Thank you very much for taking the questions. And once again, very well done.

Thanks. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

Well, I want to thank all who has been listening to me during three calls now. And I don't know if this is the last call ever I will have in webcast in my life for you. Some new cases will show up, who knows. But it's been actually, I've liked this period. And my ideas I had during the board time about what we should do and have been able to actually do it myself. That's been very nice. And we can see the outcome also. And I'm also satisfied with what we have seen. And I'm also, I've been involved in the process of hiring in UMD and also very satisfied with the person we have found. So I wish the company and good luck for the future. Thank you.