Bergman & Beving AB (publ)

Good morning, everyone. This is Magnus Söderlund, and welcome to our financial report for the first quarter presentation here. And together with me on this call, I also have our CFO, Peter Schoen. And we will, as always, have a Q&A in the end session. And you also have the opportunity to put some questions live here that we will take care of them after we have made this presentation. So I will then start with some highlights. So, sorry, the first quarter we increased earnings, EBTA. We increased profitability that we measure as profitable working capital and adjusted. We also increased earnings per share. So overall, I think we did a good quarter despite still tough underlying market conditions. So we increased the turnover by 5% and this is driven by acquisition and selective some some of our companies has also had had an increase in turnover. But on aggregating level organically, we had a small decline actually in the quarter. And this is reflecting the market conditions, I would say. So despite this, we increased the EBITDA by 9%. And we now have 22 consecutive quarters with improved profits. And we also strengthened the EBTA margin, so it's now 9.9 compared with 9.5 the previous Q1 quarter. And we also had an increase in EBIT and EBT of 3%. The difference from EBTA, the 9% EBIT is of course reflected over higher amortization since we have acquired a lot of companies. during the last quarters. And the EBT is partly reflected that we have some extra financial cost during the quarter as well. So the profit of working capital continues to increase. We have made a lot of efforts during the last years to improve capital efficiency. And that together with increased EBITDA has increased the profit of working capital ratio in 5%. And we are now at 32%. So we are on the way to the 45 that we have as a target for next fiscal year. And also earnings per share rolling 12 adjusted and for the goodwill we took last quarter improved to 8.3 crowns compared with 7.4 and that's before dilution then. As announced in Q4, we signed an agreement to divest Skydda Nordic operations. This deal was conditioned that the authorities in the Nordic countries approved this divestment. And that has now been improved, so the physical takeover took place July 1 here. I briefly mentioned about the market, it still remains sluggish, both, I would say, within the construction or in the industry sector. It's variation across the different sub-segments, but on an aggregated level, we don't see any signs, unfortunately, that neither the construction or the industry sector is picking up. It's more like a steady state situation. As we have communicated before, we are not so exposed to new building of housing. So there are some pickup in that sector, but that doesn't kind of affect our underlying markets that our companies are addressing in a big way. So we continue to kind of work with our company by company approach related to the capital allocation model. So we have different recipes for different companies. Some companies have a good underlying market, have good returns and and also have some growth opportunities so we invest in growth in those companies and some companies have a lower profitability and tougher markets and there we work with efficiency measurement like cost reductions and mix improvements to kind of improve that that company specifically We have continued to acquire companies in line with our acquisition strategy and targets. So we have made four acquisitions so far this year, three during the Q1 quarter and actually one acquisition yesterday. And those four together represented annual sales of 300 million SEK. So we don't see any reason why we shouldn't be able to deliver on the target that we had set 50 to 80 million in earnings per annum in acquisition volumes. And we are well on that path currently. So looking into the different acquisition we made. The first one we made was a Finnish company called Ontek. That's within the safety technology division. It's quite a small company, a turnover of 45. But this is the company now in the group with the highest profit margin as such. And it has a couple of hundred percent of profitable working capital. This is a company, they are building systems that are the software component is an important part of these solutions where they make measurements and documentation of transportations of liquids and typically then fire sensitive equipment or explosive sensitive liquids. And this is something that they have built a fantastic system where they have built a very strong position in the Finnish market with big chemical companies as the main customer base. We also acquired a company called Rain Tide in the UK. A little bit bigger company. They have a turnover of 90 million. They have a profit margin of about 15%. We have communicated that earlier that we have the acquisition strategy to only acquire highly profitable companies. And we have set the hurdle at Sorry, 15%. So this is also in line with that target level. And also we have communicated that part of our acquisition strategy is to acquire companies with a profit of working capital margin above the 45%. And they are well above that range. And Raintight is a leading manufacturer of PVC laminated steel products that is used in roof applications such as gutterings and so forth. And this is typically applied in big commercial buildings, big warehouses, stadiums, like the Wimbledon stadium, for example, Reintat has delivered to that. So that is kind of more addressing to big commercial building segment. And they have come in in a very good way in the group so far. And the pipeline for that company looks very promising as well. We also made a Swedish acquisition in Q1, that was Mana & Company. And this was an add-on acquisition to a company in the group called Garm. And this is 30 million turnover with a profit margin of roughly 15%. And then having a profitable working capital of 45. So this is in line also with our acquisition criteria. And as said earlier, we actually encourage many of our companies with good profit levels to look into growth, both organically, but also through add-on acquisition. So this is an example of a profitable group company, Garm, who last year bought another company called Sandberg, and now they bought Manning Company. So now they really have a leading position across the whole of Sweden. in supplying houses and couplings for fluid handling applications. So very niche market, but good profitability. So this will enhance the market position of Garm in the Swedish market as such. And as announced yesterday, we acquired a company yesterday, Hosea Coils, also based in England. with a turnover of 130 million SEK, profit above 15% and also profit of working capital above 45%. This is a company who produce made to order heat exchanges used for temperature control, air conditioning and refrigeration. So the customers here are typical big industries, it could be food industries, it could be pharmaceutical industries, where they have an heat exchanger somewhere in the typically in the production or the warehouse areas. So these are tailor made to each of those specific situations. So this is really niche company, and they have a very strong position in the UK market if you really would have those customized heat exchanger. So all in all, this is a total annual revenue of 300 million. And that, I would say, is a strong start for this fiscal year. Already made four acquisitions and acquiring an annual revenue of 300 million. And overall, I would say we have continued a good pipeline in many cases. So I expect us to make So, as mentioned earlier, we now have 22 consecutive quarters with increased EBTA, and this period mostly covers the COVID area and the kind of tough markets that we had had in the Nordics and also in other European countries for the last three years. So, despite that, we have been able to actually increase profits quarter on quarter, and that is the ambition we have also going forward. And if you look at this period since Q3 fiscal year 2019-20, we have an ECAREG EBTA growth of 20%. And also you can see on the red line here is the EBTA margin that we have gone from 4% now up to just below the 9%, 9.9%. And that is something we don't see and the reason why we should be able to continue on this journey going forward, both through acquisitions that will enhance the margin, of course, and the absolute EBITDA, but also to over time see some organic growth in profit and in profit margin as well. If we look at the revenue, we had this 5% revenue growth this quarter. But as you can see on the right side of the graph here, it's actually 11% from acquisitions. And then we have a 3% organic decrease. And then we have a negative currency effect of 3%. So this revenue growth is mainly due to acquisition. But once again, we have companies currently organically growing, but on an aggregated level, it's down. And here, of course, Luna is still a big portion of the total revenue, and they still face some tough markets. So that's, I would say, the biggest explanations if we look at the organic development. We set the target to reach 75% on products in this fiscal year, and we have now achieved that in the Q1 quarter this fiscal year already. That has been an important reason and cause that we have been able to improve gross margin over time. You can see here that we, in beginning 2021, were just 30%. And we are now just below 48% in gross margin. And this is the result that we, for several quarters and actually several years, worked with phasing out high volume, low margin product. That is mainly this development is mainly organically driven. And actually some of the acquisitions we made recently has a lower gross margin than the group average. So even if the EBTA margin is above the 15%, some of the companies actually have have a gross margin below the group average. And that is something that has affected the gross margin in a negative way. But on the EBITDA level, we had a positive effect of that. So as communicated earlier as well, you shouldn't expect a big increase in the gross margin from where we are today going forward. instead. So if we look at the three targets we set is that we should reach 500 million and EBITDA margin of 10% during this fiscal year. And then we should reach the 45% profit to working capital next fiscal year. And as said earlier, we are now at 32%. We don't see any reason why we shouldn't be able to reach the 45 here in next fiscal year.

But as we did in the report, we are now selling off skydiva in Nordics, and we will then lose 45 million.

So that will make it very challenging to reach the 500 million this fiscal year. And that will also affect the EBITDA margin targets. So we now expect to reach those targets, but some quarters later than end this fiscal year. With that said, I hand over to Peter Tell us something about the EPS improvement.