Bergman & Beving AB (publ)

Good morning, everyone. This is Magnus Söderlind, and on my side here I have Peter Schoen. So welcome to our financial report for the last fiscal quarter up until March 2025. So we will have, as normal, a Q&A in the end, and it's also possible for you to post questions along the way that we will then answer when we have ended this session. So just starting with some highlights from the first quarter, we have experienced still a sluggish market. I previously said that the best KPI from an aggregated group level is number of employees in the construction and industry sector in the Nordics. And new figures indicate that there has been a 2% decrease in the Nordics. This is a mixture from Q1 calendar figures in Sweden and Finland and Q4 figures for Norway. But overall, This is very representative for how we perceive the underlying market during the last quarter. Despite that, we have increased earnings and profitability and also the earnings per share. So we increased the turnover by 8%. The majority of this is acquisition driven turnover. We also increased the EBITDA with the same figure, 8%. and we were able to maintain the EBITDA margin 9.5% compared with 9.6% last year quarter. And we have now seen the effect of lower interest rates. So the EBIT adjusted has increased 23%. And when I say adjusted, we have adjusted for the goodwill right on we have made this quarter and why I will come back to that later on is related to the agreement of selling skydda Nordic. We have continued to work on capital efficiency. So we have now increased the profit of working capital, our measurement with 5% units in this quarter and this year. This is a roll in 12 figures. And I said earlier, the earnings per share, and this is also adjusted for the Goodwill write-down, has improved to... 805 compared with 715. And we have the board has also proposed an increase in dividend that we have communicated in the report this morning. And last but not least, we have made an agreement of selling skydda, the Nordic part of skydda to Alsell. And I will come back to that specifically later on in this presentation. I've said earlier that diamonds are formed under pressure and based on the underlying market development, we still have challenges in the market. Really, we continue to do company by company according to a capital allocation model that is named focus model, where we adapt the agendas based on their profitability as well as their earning growth potential. So it's really having different agendas for different companies. And some of our companies have actually a good underlying market and good growth possibilities. So it's not about having one recipe for all companies. In some companies we invest for growth, but in some companies we need to improve efficiency. So it's really not a standard recipe across all 35 companies. We didn't make any acquisitions in Q4. I would say, as communicated earlier, we are very cautious in making high quality company acquisitions. So in the Q4, we didn't succeed in meeting those kind of criterias. But on the year in total, we delivered on our acquisition target, i.e. to acquire 50 to 80 million in earning per annum. And as also communicated, we made two acquisitions in April, the Q1 quarter this year. So I don't see, and you shouldn't expect any changes in the acquisition tempo we will have going forward. we will still commit to the acquisition target that we have communicated. I mentioned it, we made six acquisitions last fiscal year. I will not go through them in detail, but it's a combined earning of 385 million SEK. As communicated earlier, we focus on acquiring companies with a profit margin above 15% and a profitability well above 45%. That is kind of the group target as such. And if you apply the 15% profit margin on the 385 million in turnover, you will then mathematically understand that we have reached the acquisition target interval that we have communicated. for the fiscal year. So if we look at the trend, we now had 21 consecutive quarter with increased EBTA. And last quarter we increased 8% as communicated earlier. And we have a CAG now of 26% over the time period. So we have a positive trend and the aim is of course to continue that trend despite we foresee a continued sluggish market going forward at least in the next coming quarters. If we look at the gross margin, as communicated earlier, and as you can see on the graph, we have improved the gross margin significantly, close to 7%, 8% units during the last three years. We have communicated that this is mainly due to we have phased out low margin, high volume products. And we have also communicated some quarters ago that we have more or less finalized that kind of effort. And you shouldn't expect any kind of increase, at least significant increase in the gross margin going forward. What you can observe is that we have a little bit lower gross margin in the last quarter, but underlying, we are kind of on the historical levels. We have had some new customer onboarding during the quarters that had one-off negative gross margin effect. And I will come back to that later on under the core solution division to explain more about that. We continue to focus on growing the own product. And as you can see on the graph now, we are close to the target of 75% set for this fiscal year. We're at 74% now. And I can't see any reason why we shouldn't reach the 75% during this fiscal year as communicated as a target. so with that said uh we have set some targets uh related to the property working capital ebit in absolute terms and the ebta margin and we have said we should reach 45 percent in profitable working capital laced this next fiscal year ending march 27. We are now at 31% and we had had a 5% improvement in percent unit during this quarter. And as you can see, that is kind of the tempo we had last fiscal year as well. So we now see the effects of the efficiency activities we have taken during the last two years. And I expect, and we can also see that rolling free, that we will continue on this improvement path. And I expect that also to accelerate during the next coming quarters and years. So I think still the 45 is reachable as such. We have set the target of reaching 500 million. We ended at 399 during this fiscal year, ending in March. We have now went into agreement to sell Skydda. That is an underlying EBIT level of 45 million SEK. So that will, of course, affect the target of EBIT of the 500 million, but we will come back to that later on. And the EBIT margin is 10%. We are now a little bit behind that, and it will be challenging to meet that, big in the tough market underlying conditions. But still, we were working ahead of that. I don't see any reason why the group shouldn't be able, the potential is there and should be able to reach 10%. For me, it's more like a timing issue now. So with that, I will hand over to Peter talking about earnings per share. Thank you, Magnus.

It's a nice topic, so I'll be glad to cover that. And as you can see on the graph, the EPS is continuing to increase. It's all time high this quarter. Of course, excluding the goodwill costs. But it has, of course, the underlying EBIT result is the main factor for increasing EPS. But it is also boosted, of course, with the lower financial net. So we have both effects and we have an increased EPS both in the quarter and the rolling 12. If we look at the inventory level and look at the quarter, we had an inventory of 1157 and it's lower towards last year. Organically, we have reduced the inventory by 80 million since last year. But you can see also it's lower than in Q3. And there it's a seasonality effect where SV is delivering a lot of spring orders to their customers. So if you look on the history, it's normally a bit lower in the fourth quarter. But I'll come back to the cash flow effect regarding that. So even though we have improved or reduced the inventory, we still are not on the ITO levels that we used to have, even though it's beginning to get closer. so we'll need to continue to reduce the inventory but it will be in a slower pace and and as you can see it has been slower also this year compared to last year so it's a gradual effect going forward And if we look at the cash flow, it's lower this quarter by quite a lot compared to last quarter, but it's mainly due to the normal seasonality effect. And if you go back a bit to 2021 and 2021-22, you can see that the fourth quarter is a really weak cash flow. So that's the normal seasonality effect. Of course, the improved profitability makes it the positive cash flow, but still weaker. If you look at the last two years, we had quite strong cash flow, but then we had larger inventory reductions during these periods. And the main reason for the lower lower cash flow is that SV is invoicing their spring orders. It, of course, decreases the inventory if it becomes accounts receivables and they pay their accounts payables to the suppliers. So the cash will come into the company in June, July for those orders. So that's the main reason for the seasonality effect. And then even now we had some start orders for SV also influencing a bit on the lower side. And as I said on the previous slide, it will be and has been a bit lower pace in inventory reduction. And yeah. So if we continue to net debt, we do have an increased net debt. It's 1278 compared to 1057 last year. So it's roughly 200 million. But then we have made acquisitions of 402. million during the year so a lot has come from our own cash flow so now it's a net that dbda of 2.3 so it's a bit higher than last year but still very comfortable And there's nothing in our debt situation that hinders us to make acquisitions. So we will continue to do that in the pace that we have communicated. And we do have a very strong pipeline, so we don't see any issues on that side going forward.

Thank you, Peter. I will now go into the three divisions specifically. Core solution is still facing a slow underlying market. The majority of those companies is addressing the construction sector. It's specifically not to a great extent new build of housing, but still it's partly reflecting the overall construction industry in the Nordic. And that has been a tough market during the last years, I would say. But SV, who is the biggest company in this division, have made three new large customer agreements. And when making those agreements, you need to make a take back set up where you actually take back the current supplier and replace them with SV in their retail stores. And this is something that then those takebacks is very difficult to get a decent margin when you try to resell them to other companies. So that is the main reason why the gross margin on the group level, as shown earlier, has to be a little bit lower. If we would take back, if we would kind of not count those take back effects, the gross margin will be on a previous level, on a group level. As earlier communicated, we haven't made any acquisitions in the Q4 quarter, but already in April 16, Core Solution made an acquisition in England, Raintight. They are actually making specific products that you use when you build or repair big commercial buildings or installations. to kind of guide out waters from specific building areas as such. So very niche company addressing a very niche market. And this is a very profitable company as such and great growth opportunities going forward. So that's a really good acquisitions. As you can see, this division increased the revenue by 30% and increased the EBTA by 11%, and the EBTA margin is a little bit lower. But if we look at the revenue and the EBTA increase, it's mainly due to acquisitions then. Then SV had some startup orders that was delivered to replace those take-back volumes. That has affected the revenue as well, but has then also affected the EBITDA margin that actually is a little bit lower in this quarter. But once again, this is a one-off effect that we expect to be back on a previous level in the next quarter. If we then look into safety technology, the main event here during the quarter was the agreement that was signed on March 23 to DaVest Skydda, the Nordic companies of Skydda, that's Sweden, Finland and Norway, to Alsell. So this is a venue with a turnover of 550 million with an underlying EBITDA of 45 million. And the reason for us to sell that is that the skydda is a niche wholesaler within personal protective equipment. But mainly they have been addressing independent resellers. because typically the big reseller have that knowledge in-house. And if you know about the Nordic reseller market, that has been partly consolidated over time. So we think that Alsel, that we already have a lot of business relationship through our product companies as well. It's a very good match for the skydda people, employees and the customers and also for the Bergman Vering Group, because we see some good growth opportunities for PPE product companies after this deal has been settled. This is still subject to approval from competitive authorities in all the countries, but we expect that to be cleared in June, July. So the EV we got for this agreement is 300 million SEK and a possible earn out of maximum 80 million. This is something and we have communicated that the capital loss is 270 million, which is goodwill related then. I don't know if you'd like to comment that specifically, Peter, in any way.