Beijer Ref AB (publ)

to this Q4 and full year call. I'm sitting here together with Joel Davidson, CFO. So we'll run through the normal presentation and then we'll open up for Q&As. So on the first slide that we usually go over is more a rolling 12, more the trend. We continue to grow. I keep saying this when I started Three years ago, our rolling 12 was 16 billion, so it's nice to see it's doubled now to 32 billion. We continue to add people across the world, and we're now active in 45 countries in the world. So we continue to grow, we continue to add businesses around the world, and of course, we'll cover some of that today. So just a little bit of recap. I think it's worth also mentioning the full year, 2023. I think the heading says a lot on it, and it's been a very eventful year, and also a year with good development, strong development that we're very proud of, as BRF has, I would say, developed extremely good during 2023, which is a little bit of a year with a lot of different phases. You know, growing the business over 40% in sales, EBITDA 50%, you know, driven, of course, by a strong acquisition year and entering the US to the heritage, but also good development, I would say, in all of our acquisitions and also in the underlying business across not only the US, but also Europe and the APAC region. also the cash flow being on the agenda for for some time going through the pandemic building up inventory to support that longer lead times issues with supply chain that i think the company has managed extremely well and then also as we have stated over the last quarter we started our inventory alignment during the end of q2 and of course we expected a good cash flow in Q3, which we delivered on, and also an even stronger in Q4, driven by inventory adjustment and also the seasonality. So in the end, I think it's a decent cash flow here, operational $2.5 billion for the year. We'll come back a little bit. We see opportunities in 2024 as well to continue the normalization of inventory in the business. Net profit, an increase of 44%. Close 15 acquisition, of course, the biggest one in heritage in the US. We did a rights issue, I'm sure you all know. And then also the first capital market stays. All in all, I would say a very good year. And then we'll come in here to a little bit more on Q4 in the next slide. So Q4 heading record cash flow, which is good. And this is also what we've been seeing all along. We follow Inventor on a daily basis, so we know what's happening in the different regions. So we continue to drive that down. And then, of course, you have seasonality, especially in your accounts receivable as your quarters are affected by seasonality. And I'm sure we'll come back to that when we talk about 2024. We had a total growth of 31%, mainly acquisitions, and organic was minus four. We'll come back to that in the next slide. EBITDA developed well, stable margins across the board in the US, even a little bit better in APAC and stable in EMEA. Of course, we had some effects. We had negative organic growth, and it's not like we're restructuring the business. We still believe it's good growth ahead. Good stable margin, which has also been key. As I stated before, that as we draw down inventory, we don't see any negative effects on our gross margin. And that's also what's happening as we expected. Tesla, good. 1.8 billion. Of course, a record, but it's been a record every quarter and also driven by how the business is growing. Good increase of the profit. We'll come back a little bit on the financial net. Earning for shares as we have a different amount of shares as we did average number of shares. We come back to that. And then also a proposed dividend of 130, which is an increase of 38%. So also a strong signal on the market for the future of aligning the inventory according to the growth of the company. So moving on to the next slide, a little bit focused on the sales side. If you look at this picture, I would say on commercial industrial refrigeration, a stable quarter, continue to be positive on the OM side, continue to be driven a lot on the transformation that we continue to see in Europe, both on the heating and cooling side, and Europe continues to grow double digits in the OM segment and a little bit weaker in APAC. And we'll come back to that a little bit later as well. But in general, good activity on the OM segment. Also, we started another 40% drop of refrigerants here in January 1st. So we expect long-term this segment to continue to accelerate as we as we draw down all these F-gases around in Europe and across the world. HVAC minus 8%, I would say very good, you know, comparing to plus 29% in Q4 last year. And I think most of you that have been close to Bayer have understood that we've been saying that Q3, Q4 last year in Q1, um was very very strong on hvac mainly driven in europe mainly driven by the energy crisis we had here and as we see that you know continuing to to q1 on very strong comps and then it tails off as we move into the summer season q2 q3 but i would say a good stable development in hvac especially if you compare it to plus 29 in q4 last year Then a little bit, we'll come back to the divisions, both EMEA, APAC in North America, I would say Stable Development. And then we also finished off with closing four acquisitions in the quarter. Another add-on in the US, a smaller one in Grönklima focused on HVAC accessories, Turner on HVAC in Australia, and then also another nice add-on in India, Chiller focused more on the HVAC segment. So it was a good stable development in Q4 on the acquisition side as well. So moving on to the next slide. If you talk a little bit about EMEA, I would say a stable quarter as they run down inventories quite a lot in the quarter as expected. And also HVAC here, EMEA would be the biggest affected by the strong HVAC growth last year in the energy situation in In Europe, you can see a plus 43% last year. So I'd say good stable still on the HVAC business. OEM continues to grow well, plus 16% and good double digit growth for the year. As we usually talk about the OEM segment, that's what we expect as the world continues to transition into other type of refrigerants. And of course, we're focused on the CO2 based segment. Good stable margins, good gross margin development. And then, of course, you have some dilution on the organic in the HVAC segment, but I would say we cover that very well in the business area. We'll continue to see the transition into the technology on the OEM side. We'll continue to expand on our private label, both in refrigeration, but also on the HVAC side, as we talked about before in the Sinclair segment. I will also add another acquisition, Condex, one of the leading HVAC distributors in Eastern Europe and also based with Mitsubishi Heavy, that's a strong strategic partner trust. So a good quarter in the EMEA segment. APAC moving into summer season here in Q4. So a very active season and good development. Q4, Q1 is for summer in in the main markets in APAC, and good growth here, both driven by acquisition and organic. HVAC here is not affected as much with the strong comps because it's mainly Euro. We'll continue to see the OM segment a little bit lower, compared to very strong, a lot of projects last year. But we're also seeing the trends now on orders within retail and other segments in Australia and New Zealand picking up. But of course, quite long lead times when it transitioned from orders into sales, as most of that is coming from our factories in Italy. So we see better activity in the OM segment as we close out Q4 and also starting in Q1. Margin good and improving. uh in the segment as part of our work here is to of course move apec into uh the margin target for the whole of the company south korea new market for us has been a very good entering with with acquisitions the good synergies both on the sales side product side and cost side so it supports the business and in the end we also continue our journey into india of course smaller add-on acquisition so a good quarter in apec finishing off the year North America, I would say a stable quarter. You see the volumes down a little bit. I think if you follow all the statistics, you have some weakness in the housing market. That for us is probably most likely building up pent-up demand, a little bit more repair and replacement that of course will also start breaking in the future. I think a very good quarter, very good margins for being a Q4, almost 10% EBITDA. Of course, the US is very seasonal with focus on Q2 and Q3, while Q4 and Q1 are lower season. So a stable quarter with good margin, stable gross margin development, two acquisitions, add-on pipeline continues to look good. We'll continue to build, you know, the platform and refrigeration is growing nicely, private label. we have already launched for mainly for the season new branches that we are evaluating and also working with our strategic suppliers here with more strategic agreements as we have in the rest of the world to support us and support them and drive growth to the business so very happy with the stable development in the us and of course interesting now talking to our key suppliers as in towards, I would say, Q3, Q4, transitioning into the A2L product side for the US. A new product portfolio being launched by the OEMs and good cooperation with our strategic partner in that product. And that should be coming in towards the end of 24 and be a very good driver also for 2025 and going forward for the US. Next slide. So wrapping that up for Q4, 31% growth driven by acquisition. Organic 4%, we went over that. EBITDA growth of 26%. Then the EPS change, we'll come back to that as we all go through the numbers a little bit. Change of number of shares because of the share issue we did. Moving on to the next slide. The next slide here, you see again a summary where The currency continues to decrease. I think you have that in all your models as well in there. And then organic minus four, and then M&A plus 33%. Next slide. I think we usually go over this slide just seeing a little bit on the sales side, how it's developed. And of course, if you look for quite some quarters here, very, very good development. But also if you look on the organic side, We're comparing the quarters here in Q3 of 19% last year, Q4 18% and Q1 15%. And those comps were mainly driven by the EMEA and Europe and the HVAC and the situation on energy last year. So we have another quarter to go to flush that out, and then we'll move into more normal comparables, but also moving into the high season for us in Q2 and Q3. Moving on to the next slide. Here we focus a little bit on the HVAC. You could see the organic growth levels here last year. Also, again, same driven by mainly EMEA, 29% up and only, I would say, 8% down. So you look at the more trend over the last couple of years, it's still a very, very good development. And then you see we have another quarter here in Q1 to flush out with the situation we had last year. Next slide. EBITDA growth continued to be good, 26%, and then for the full year, 53%. So a good year and a good quarter and continue to grow profit. And also we'll come back a little bit later on the cash flow with Yoav. As you see the margin development, we are a seasonal business. The main difference on percentage margin is sales is higher in Q2, Q3. at the main area we have is on cooling equipment of course also getting strong and strong in heating that that will help q1 and q4 going forward but good margin development uh in the business good gross margin stable uh as we continue to flush out inventory so i would say very good q4 on the margin side as well then i'll hand over to you all to go over the the peanut All right. Thank you, Christopher.

And good morning, everyone. As Chris already covered the sales and EBITDA, I will focus here on the rest of the P&L. As communicated in the press release in connection with our capital markets, our Q4 net profit is impacted by items affecting comparability in both our operational results as well as on the tax line, which are related. The non-recurring cost in operational results amounts to 60 million SEK in Q4 and is primarily related to consultancy and advisory costs connected to this tax restructuring in the US. And those 60 million is what is making up the difference between EBIT excluding items affecting comparability and EBIT. Moving on to net financial expenses, which amounted to 117 million SEK in the quarter, And it's worth noting here that it was impacted by positive FX effects of approximately 10 million SEK in the financial net. Taxes in the quarter was positive of 274 million SEK and was impacted by the tax restructuring in the US and the tax impact of items affecting comparability in the operating results. In total, the tax effects associated with these items affecting comparability amounted to 434 million SEK. Taxes in the quarter excluding items affecting comparability amounted to 160 million, corresponding to an effective tax rate of 28.9%. The tax rate was impacted by high non-tax deductible transaction expenses and an adjusted assessment of the local tax loss carry-forwards. Net profit excluding items affecting comparability amounted to 393 million SEK, which is an increase of 6% compared to Q4 in 2022. So moving over to the next slide. Despite the increase in net profit, our EPS, as already mentioned by Chris, decreased by 14% to 0.76 krona in the quarter. And that is, of course, related to a different number of shares as well, following the rights issue in March 2023. EPS for the full year amounted to 4.33 krona, which corresponds to an increase of 23%. Next slide. As communicated, we continue to deliver a strong cash flow in Q4 amounting to 1.8 billion, out of which 1.1 billion was driven by the release of working capital, which was essentially split 50-50 between lower inventory and seasonally lower AR. Moving over to the next slide. Overall, the last two quarters have represented a significant pickup in our operational cash flow generation and the operational cash flow for the year amounts to 2.5 billion SEK. I will go over to the next slide. Thanks to this strong cash flow, net debt was reduced by approximately 500 million in the quarter, despite our continued high M&A activity. And as a result, net debt to EBITDA, excluding leasing and pensions, decreased to 1.7 times from 1.9 in last quarter. And with that, I hand back over to Christopher.

Thank you all. So trying to wrap up the presentation with first a summary of 2023. We started off here, but we're very happy with not just the financial development, but also the business development during the year, entering the US, entering new markets, strong margin development, good growth, catching up on the cash flow that we've been talking about. for a while. Also, you know, looking at what you all just mentioned on the net debt, strong balance sheet here to continue to support our growth journey going forward. Good acquisition activity and all good, I would say, development in these acquisition plus, of course, entering North America that will have a huge potential plus over the long-term future and a lot of things happening there that supports our business. We did, of course, do a rights issue, but also positive. Our shareholders oversubscribed by 44%, so very appreciative of our shareholders believing in us and the strategy that we're doing. And then, of course, also some of you were at our capital market stand, streamed it, where we talked a little bit more about our new financial targets, the vision, and the strategy going forward. So we close out 23, very... strong, I would say, and a good platform for the future. Then moving on to the final slide, we'll try and talk, you know, summing up Q4 and also talk a little bit on the business here going forward as we see it. So a good finishing off stable on the year, I would say a quarter as expected, at least from our side. Acquisition continued to perform well. uh a track uh negative compared to a very very strong uh few for last year uh cash flow coming in uh at our expectation and also then wrapping up the year with a with a good cash flow and we expect that to continue good activities on the acquisition side four in the quarter and of course 16 on the year and then also uh with the dividend uh increasing that to our shareholders uh by 38 so all in all i would say stable quarter to finish off a a very good year for for bay ref so a little bit you know looking forward we we you know we focus more on the long term and we see the trends that we've been talking about all along continue to to support we have a lot of activities on on phasing out the f gases Here on 40% cut on the quota levels in EU, 30% in the US to continue to see in Australia and New Zealand. Of course, this is very positive for our whole business model and the OEM side as we move into in the next five to 10 years in that segment that will accelerate the pace on that business. And that continues to be very active. The U.S. air more and more, of course, short term will, through regulation, move into a new type of HVAC equipment based on more natural refrigerants, A2L. So we see that, you know, starting to talk into OEMs being active already in Q3 and Q4 of this year. And that will also have an impact on our business. The U.S. platform continues to build up well. And we have a lot of good initiatives together with the team there and our expertise at Bayer on the refrigerant side, private label branches, and also more active with our partners to have strategic agreements. And then the pipeline continues to look positive. Worth mentioning this short term for Q1 next year, I think I've been fairly clear on this. This is the quarter we continue to, you know, have very strong comps, especially in the MAEA, plus 17% organic in 2023. And again, we saw that ebbing out in March of last year, this very, very high demand due to the energy prices. So we still have one quarter left of that. Another thing worth mentioning, being a trading business like us, a number of working days matters quite a lot. we do have two last days in uh as easter is moving from uh march to april uh but of course this will be picked up in q2 and q3 so there's no effect on the year but i think it's worth mentioning that it will affect q1 but of course on the year uh he will be neutral so that would be our last slide so now we're open for for questions from from the audience so thank you very much for listening and um and we're ready for the for the questions thank you