Beijer Alma AB (publ)

Welcome to the Bayer RefQ3 presentation for 2026. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the acting CEO and President and CFO Joel Davidson. Please go ahead.

All right. Good morning and welcome, everyone. It's Joel here. Today, I will be alone running through the presentation. I will start with presenting our Q3. Then, as usual, we will finish off with some Q&A at the end of the presentation. As you will see, I have updated the presentation format a bit. No drama, and I hope you like it. If not, you're just going to live with it because we're going to stick to this now for a while. But let's go, starting with a summary of the quarter. As I'm sure you have already seen, we delivered an overall very strong quarter. We report sales growth of 20%, 8% organic growth and acceleration from the already good underlying growth in Q2. we deliver an EBITDA growth of 19% and a record margin of 11.9% if you adjust for the acquisition expenses. Our EPS grew by 19% in the quarter and we delivered a record operating cash flow of almost 2.2 billion. On top of this, we have had a very active M&A quarter signed for acquisitions with a combined annual sales level of around 3 billion. But I will come back to the acquisitions as we talk around the divisions. Looking into sales at the high level, total sales growth, as I said, 20%, composed by 8% organic growth, 9% acquisition growth, and then 2% FX tailwind. The acceleration in organic growth was primarily driven by strong growth in our EMEA business, coupled with continued good execution in our OEM business. Demand was positively impacted by good weather patterns in Europe, together with accelerated demand levels for HVAC in Europe, which fueled the growth on top of the what I would call already strong underlying growth we reported in Q2. In the quarter, we also saw an uptick in the organic growth in the US, I would say in line with expectations. As you know, we had a bit of a messy quarter in the US in Q2, and the 3% organic growth here in Q3 was more in line with what we saw at the end of Q2 when the price turbulence was settled. So, as expected, no major changes to the US market. Product side, starting with the OM business, which continues to develop very well, 19% organic growth, overall high market activity, good execution of our order books, continue to see an active market in Europe. I would say although activity in APAC was slower in the quarter, we continue to see a good project pipeline across that region. With respect to the OEM business, we closed the acquisition of Refra here in the beginning of October. This will be a very nice complement to our existing OEM businesses as it will both strengthen and broaden our product assortment in natural refrigerants. So this is something we're very excited about here going forward. On the HX side, segment grew by 10% organically in the quarter, primarily, as I said, driven by Europe and the normalization in the US. As mentioned, we saw good trends already in Q1 and Q2, but the group figures were hampered by the extreme comms in Eastern Europe first half, which is now behind us. We saw strong performance on the majority of European markets throughout the quarter, obviously positively impacted by the strong summer that is expected to continue to drive HVAC penetration going forward. On the commercial industrial refrigeration side, stable growth, 4%, so also a solid quarter on that side. Moving over to group level profitability, As mentioned in the beginning, underlying margin of 11.9 in Q3 with 22% EBITDA growth adjusted for 30 million of acquisition expenses here in the quarter. I would say overall, solid margin. Really happy about the operational performance in the quarter and the work that has been done in our network in Europe, shifting products around, which is also reflected here in our operational cash flow, which I will come back to later. Moving over to the divisions, starting with EMEA. Very strong performance across the platform. In Q3, we saw an acceleration in organic growth. Majority of the markets developed well, with larger markets in Central and South Europe being particularly strong, I would say. Worth noting here is that the exceptional comps in Eastern Europe, as we have talked about in Q2, is significantly here in Q3, and through the improved demand levels in the quarter, the region had some positive growth in Q3. Hot summer. I'm sure we'll come back to this, but it was obviously a tailwind quarter. It is, however, I think, worth mentioning that July last year was also a hot month, and the big difference versus last year is really that volumes continued throughout the quarter. And as all of you know, HVAC penetration levels is low in Europe, and summers like this is potentially a catalyst for gradual acceleration of penetration. in Europe, which could support a positive outlook here. There is a lot of investments needed in cooling in Europe. On our OEM business, it continues to develop very well. We have strong order books, good market momentum in our key platforms, Fenergy and Frigo. As already mentioned, we did sign Refra, which closed here in October. This will be a strong complement under the OEM umbrella with its proprietary technology for indirect cooling using natural refrigerants and with an expertise in hydrocarbon based solutions. On the margin side, EMEA delivered a record Q3 in the 12.3% stellar execution on utilizing the network, making sure we have products available on all markets to serve our customer needs. So very, very good. Acquisition signed two in the quarter, Refra, which I've already talked about, and then FG Europe as well, which is a Greek HVAC distribution business with presence across the Balkans, UK and Turkey. Just to clarify here, this acquisition is not closed yet as it is subject to the standard approval process by competition authorities. All in all, a very solid quarter in EMEA. Move on to APAC. APAC had, in comparison to Europe, a slightly more challenging quarter with flat organic growth, but still with good development on the margin side, continued expansion, so very solid development in a quarter with limited growth. worth reminding here is maybe that Q3 is still a low season in APAC. In Asia, we continue to see positive development, continued investment into the cold chain and the transition towards natural refrigerants, which will continue to support our business over time. Activity on the Australian market was weaker on the OEM side after two very strong quarters, but it is project business, it is a bit lumpy and the pipeline still looks very promising here. On the HVAC side, we met tough comps from last year, but still relatively stable demand in the quarter. On the strategic initiative side, in APAC, we launched our private label offering in Australia and New Zealand here in the quarter. We also finally closed the RefSpecs acquisition in New Zealand. We also did a smaller asset deal of an HVAC accessory business in Australia. All in all, a small quarter for the region. Q3, continued solid development on the margin side. Also very excited here to have our private label in the market now when we enter the high season. So let's see where that will take us. Moving over to North America. It has been and continues to be an active M&A market where we continue to drive consolidation and building out our platform successfully. In the quarter, the divisional sales grew by quite massive 30% compared to a year ago, mainly driven by M&A. Following the relatively messy Q2 we talked about, our North American business grew by 3% organically in Q3. More in line with what we saw coming out of the price turbulence at the end of Q2. As expected, I don't think we saw any big trend shifts in the US in the quarter, but we continue to operate very well in the stable of the market repair place. We continue to We want to focus on strategic initiatives like our private label rollout, which is going very well, organic branch opening strategy, which is short-term weighing a bit on margin, but both of these will continue to support growth here going forward as we wait for the replaced market to catch up back to trend. On the margin side, EBITDA was stable at 13.4% in line with Q2. In the quarter, we continue to execute on the M&A pipeline. We closed, as I'm sure you have seen, the first acquisition in the Canadian market, which is an important milestone for further expansion in that region. So all in all, when you summarize, put everything together, very strong quarter, 20% sales growth and EBITDA growth, 19%, 22% when you adjust your acquisition cost. Net financials in the quarter continue to be stable despite the acquisition activities, of course, and support from good cash flow generation. tax in the quarter 24% slightly up versus last year on country mix but all in all good all the way through and we post an EPS in the quarter of 1.71 sec per share representing an EPS growth of 19%. Moving over to cash flow, which is another highlight in the quarter. Total operating cash flow in the quarter almost 2.2 billion, which is the highest operating cash flow ever generated by Bayer F in a single quarter. Here, really pleased that our continued efforts to drive our capital efficiency continues to pay off. And for those of you who remember our Q2 call, I said we lacked a bit of cash flow in Q2 on the AR side in the quarter due to sales pattern that I expected to come back here in Q3, which it did. So all in all, very, Very good development and rolling 12 month operating cash flow is now at 4.6 billion. Leverage side I would say despite acquisition activities in the quarter our leverage ratio came down 0.2 turns here sequentially in the quarter to 2.0 balance sheet still a very good shape to continue to execute on our deal pipeline From here, I expect another strong cash flow quarter in Q4 as we, as always, collect the accounts receivable from the high season in Europe and will continue to drive down inventory. Summarizing Q3, another record quarter, overall growth 20%, accelerated organic growth of 8% above the already strong growth in Q2. with continued good trading throughout the quarter. Very strong demand in EMEA on the back of the summer and what we believe is an uptick in underlying HVAC demand. As already said, HVAC penetration in EMEA is low and although not changing overnight, there is a lot of investments required across Europe, so that feels pretty good on our side. OEM business continues to develop well. Very strong order books and high activity levels. On the US, no major shift in the market, but strategic initiatives running very well. Private labels continue to grow at a good pace. We will continue to expand our product portfolio and build out our branch network. EBITDA margins developed well, 11.9% adjusted for acquisition cost, which is the highest margin ever in the Q3. Cash flow very strong. All initiatives on capital efficiency is running well, resulting in strong balance sheet. Q4, as I said, is in front of us, which is another seasonally strong cash flow quarter. And then you have the acquisition, good execution on very strategic deals in the quarter. As I said, we did sign the closed inner track early August, expanding footprint into Canada. We signed the acquisition of Refra, strengthening the OEM portfolio. That acquisition closed here in early October. Then we also signed an agreement to acquire FG Europe, which I talked about. This transaction is not closed yet. and finally we also did a smaller asset deal HVAC accessory business in Australia and we finally closed on the acquisition of RefSpecs in New Zealand so all in all very active quarter very strong quarter So really pleased with that. And with that, my presentation is concluded and I will open up for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Adela Dashian from Jefferies. Please go ahead.