Bergman & Beving AB (publ)

Welcome to the Bergman-Bevian Q2 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to speakers CEO Magnus Söderlund and CFO Peter Schoen. Please go ahead.

Good morning, everyone. This is Magnus Söllen here. And on my side here, I have Peter Schoen.

Good morning.

So we will today present the latest financial report for the quarter ending September 30th. And as a starter, if we look at the market condition we have been facing this quarter, I would label it as we don't see any pickup in the construction nor the industry sector in the Nordics during the last months here. It hasn't gone worse, but it hasn't gone better. We have some positive sub-market that has, you know, showed some increased demand, but also we have some specific segment that still is struggling quite a lot. But despite this, we have been able to increase the earnings, the profitability, the earnings per share in the quarter if we adjust them for the non-recurring items in the quarter of 36 million crowns. And we will come back later on to explain more in details what those 36 millions include. The turnover totaled 1,127,000 SEK and the EBITDA increased 11% and we now have 23 consecutive quarters with improved profits. We also improved the margins in a quarter from 10.5 to 11.8%. That is a combination of that we have divested skydda, that typically has a lower profit margin level, in combination with acquiring high margin companies, and also that we see some margin improvement in some of our companies. Our profitability measure, profitable working capital, is also moving in the right direction. It increased 4% units. It's now up to 33%. And the earnings per share adjusted improved from 8.3 SEC to 7.5 after dilution. So overall, I would say we are moving in the right direction, despite that we have a sluggish market on an aggregated level. We have taken some structural measure during the quarter and the quarter before. We have earlier communicated that they had divested the Sweden Nordic business. But during this quarter, we also divested part of the Luna business operating in the Baltics. And we did that through an MBO. And those companies represent a turnover of roughly 100 million SEK. The businesses was more looking like a retail store business. So it was not really fitting into the Luna business as such. So this gives Luna better condition to streamline its business model. But in the deal, we also secured the sales from our product company that is channeled through the Luna Baltic operation, as well as the business Luna have with the Luna Baltic companies. So overall, we think this is a very good setup, enable us to focus our businesses in a better way and at the same time secure the business volume as such. We also continue to acquire according to our plans and our targets. So we made two acquisitions during this quarter with an annual sale of 170 million SEK. And after the end of quarter, we did another acquisition in the UK of a company called Modus Gags. And if we look at acquisitions so far this year, we have acquired 360 million. Four companies in the UK, one in Sweden, and one in Finland. Some of these companies are add-on acquisition to current platforms. And some like HE Coils and RainTide are new platforms in new niches that we think is attractive ones. As you can see, we are really focusing on acquiring well managed companies. So all the companies acquired have an EBITDA margin above 15%. And also profit of working capital in all those companies is above 45%. I mentioned it earlier. We now have 33 consecutive quarters with increased EBITDA. And in this quarter, we have 133 million adjusted, including non-recurring items of 36 million. And we now have a category of 24% in the period starting Q3 fiscal year 19-20. So we are moving in the right direction. You can also see the red line, the EBITDA margin is picking up in a good way, I would say. So we are heading for the targets we have on the group level as such. If we look at the top line, we had this quarter and an organic decline of 4%. I would say that is reflecting the reality many of our companies are operating in. And we have some negative effect on the currency as well, 2%. But acquisition has compensated for that and is adding 5% to the top line, giving us a net of minus one actually on the actual level. The acquisitions we made and the phase-out of low-margin, high-volume products and the structural changes we made had a positive effect on the product mix, I would say. We now have 77% of own products in our portfolio and 23% is then other products. This is the wholesaling business and the distribution business that we have. We don't see any reason why we shouldn't continue on this path going forward. So that's a good sign, I would say, and then we're going in the right direction. You can also see on this slide the gross margin and the gross margin trend as such. And as you can see, it has been a little bit flat now. We have communicated learning. The majority of the phase out of low margin products has taken place. You can see that in the period, you know, Q1 2021 up until Q1 2024-25. But we still have some improvements, but you will not see the same steep curve as we have historically. And also the new companies that we acquire, even if they have a profit margin above 15%, they may not have a profit margin above, you know, 47, 48% that we're currently running at. um so so that is kind of i'm very happy with this gross margin it's now about adding volume and and continue to adjust cost along the way so if we look at at the group target that we have communicated the the 500 uh in ebit the the 10 ebit margin and the 45 profit working capital where we said that the EBIT and EBIT margin, we had a target for this fiscal year and the profitable working capital for next year. After divesting Skydda, that contributed roughly 45 million in EBITDA, we have said that we will not reach the 500, at least not likely, during this fiscal year, and they will take some additional quarters before we get there. We are on track, but we are not able to increase the profit and compensate for the loss of the EBITDA in the Shida divestiture in this fiscal year. So the target is still there, but we have only delayed the EBIT and the EBITDA margin some quarters. And we're still aiming for the 45% of profit of working capital in the end fiscal year 26-27. With that said, I hand over to Peter.

Thank you, Magnus. And yeah, as I'm sure all of you have read, we do have a lot of items that are affecting the comparability in the report. So I will just try to go through what those items are and how they have affected the P&L. So if we look at this slide on the left side, you have the Q2 2025 figures unadjusted. So that's how they are reported then. And then you have the skydda divestment and then you have the Baltic divestment. And then you have the purchase consideration. And then we have the Q2 25 adjusted or underlying P&L. So if we start out with the skydda divestment, we did have a capital gain from the deal affecting other operating income by 15 million. And as I'm sure you remembered, we had a write-off of 270 million of goodwill in Q4 last year. And within the capital gain calculation here, we have added additional 200 million of goodwill. So in total, we have now written off 470 million SEC in goodwill. But the skydive is affecting the operating income by 50 million positive. But then we have some restructuring cost affecting the total operating expense with 66 million. And then we have some tax effect from that as well. And if we move down to the Baltics, we then had a capital loss of 22 million. That goes into the total operating expense. Since it's a loss. And then we wrote off a loan to the Baltics of 5 million. That's why it's included in the financial income and expense here in this slide. Then we did a purchase consideration within the core solution division, but it was more of a one-off consideration or change. So it's 37 million affecting the result positive then. So all in all, the... EBITDA, you can see it at the bottom, goes from 97 then to an underlying EBITDA of 133 million, where the Skida deal is affecting 51 million, the Baltics 22 million, and the purchase considerations with 37 million. If you look at the earnings per share, it continues to improve. So it's a slow and steady progress. And here it's the earnings per share adjusted then for non-recurring items as well. So we're both in Q4 last year for the 270 million write off and this quarter as well for the non-recurring items. If we look at the inventory level, we do have some effects here as well. The divestment influenced or reduced the inventory by 110 million. So the inventory amounted then to 1 billion and 75 million compared to 1 billion and 136 million last year. Yeah, as I said, divested businesses affected lowered the inventory by 110 million. Organic the inventory reduction was 30 million SEK. And the ITO continued to approve. As we said before, it's a slower progress from here on as well. So we are working on reducing the inventory level. But of course, it's a bit harder the longer you come on that journey. And if we look at the cash flow from operating activities, I would say it's according to plan. It's not, you know, surprisingly strong or weak. It's a good cash flow quarter. It's 112 million compared to 87 last year. And the difference being lower working capital. So, yeah, according to plan, I would say. And acquisitions and dividend increased the net debt in the quarter, even though we had the divestments. So the operational net debt was 1 billion and 424 million compared to 1 billion and 115 the year before. But it was... roughly the same level as last quarter. And the reason for that is, of course, the 205 million in acquisition during the quarter and also the dividends of 100 million. And if you compare to last year, we have now done acquisitions for 737 million SEC in the last 12 quarters. And as we said before, the acquisition target remains intact. The pipeline is still strong. So we'll continue on our path. After the quarter, we also did one acquisition, as Magnus said, acquiring Modus Gauges in the UK. And with that, I hand over back again to Magnus.

So I will shortly go through our three divisions and the key highlights from there. This is the core solution division. And overall, they are the division that has the highest exposure to the construction sector. And the biggest company in this group is SV Group, roughly with a turnover just below 1 billion SEC. and they are selling fastening and fastening products. And they have seen some small pickups in the market, mainly related to the root, this subventions that the government is giving in Sweden, but also some pickup in the Norwegian market. And also SV has gaining some customers during the last quarter that has had a positive effect on that. The core division also acquired the new platform HE Cowles that is doing bespoke cooling and equipment for the industry focusing on the UK. And as you can see on the trends here on the lower side, they have had a very, very positive revenue development rolling 12. That is mainly driven by acquisitions so far. So when we get some more tailwind from the underlying markets in our current companies, we will see also a positive of that going forward. And the acquisitions and the work that has been done with the companies has also strengthened the profit margin. So this is now with an EBIT margin of 13.5% in this quarter, compared with 11.7% in the last quarter. So it's really a good development in the margin, both once again from acquisition, but also from working with our companies in these divisions. And we had an EBITDA increase in absolute terms with 51% in this quarter from 39 million to 59 million. And you can also see the rolling 12 figure for this division has a very good traction. So overall, I'm very happy with the development in the core solution divisions. And I see some further opportunities when we get a better underlying market in combination with acquisitions going forward. If we look at the safety technology division, their Cresta group acquired Donut Safety in the UK. It's an add-on acquisition and Donut is focusing on personal protection equipment for the offshore sector. It's a good complement to the Cresta Group. And here we had also an EBITDA increase of 14% from 29 to 33 million. And it was an increase in the EBITDA margin to 11.5 compared with 8. And if we look at the revenue figures, we also need to consider that Skyrda has a turnover of 95 million in the previous quarter Q2. to have some comparable figures. So overall, you can see on the revenue slide, it's going down a little bit. That's explained by this skydive divestiture. But we have a positive development now in the EBTA rolling 12 figures. You can see we had a period with first going up and then going down. And now we are seeing that the rolling 12 figure is going up. And we still have some opportunities to improve both through acquisition, but also organically. And we can also see that the EBITDA in absolute terms now have a positive trend. And I don't see any reason why we shouldn't see that to continue going forward. So our third division, industrial equipment, this division had faced a tougher quarter, I would say. It's really depending company by company. We have some companies, for example, AT and Orbital, very niche in the UK market that had had a very good development during the quarter. But we have some companies, and then especially Lund and Teng Tools, selling for retailers in the Nordic primary, has experienced a continued weak demand. And PolarTerm, it's a Finnish company working globally, producing mobile heaters. They are selling volumes to the U.S. And here the uncertainty on the kind of uh tax conditions has affected uh polar time in a negative way during this quarter and they also have a lot of rental customers that is facing low rental demands and that has materialized in a very low demand to polar term This is something I expect to pick up when the market gets a little bit more quicker and we get some more demand in the market. And I also expect that part of the polar term is going to the defense sector in the US. And there are some positive signs there that this special import taxes will not hit polar term going forward. And that will... enable them to be more competitive towards that sector in the US. So this is the only division with underlying declining revenue. And also you can see this EBTA margin, rolling 12, has flattened out. I don't see why we shouldn't have an improvement in this division going forward as well. But we need to speed up the changes and the work we are doing here. uh as the ebta rolling 12 you can see or has also declined uh during the last quarter so we now have three quarters in a row here with declining development and that is of course nothing i can be satisfied with and we are taking measurement to address this uh going forward uh so hopefully we will and i expect to see some improvement in this division going forward as well So to summarize the underlying market, I don't see any recovery here in the near term, but I hope and expect we will see some more positive signs in the beginning this year. It's very uncertain, but that is the best forecast I can give when I talk to our companies and when our companies talk to our customers that we can give today. But that's still to be seen, I would say. Anyway, we will continue what we always are doing, focusing on profit expansion over revenue growth. will continue to allocate capital according to our focus model it's really company by company approach some of our companies were investing for growth some of our companies like luna we do some structured changes to enhance profitability so it's really company by company priorities And we have our B&B toolbox. It's a way for us to support our companies in the development. And that is something that we will always do and we will continue doing. And we will continue to acquire highly profitable B2B companies with leading position in growing niches. We don't see any reason, if we look at our pipeline and the opportunities in the market, that we shouldn't continue acquiring companies. It's very uncertain in what kind of path and how many acquisitions we will be able to do. But that is not, I would say, mainly dependent on that it's not... a market with good companies or we have the capacity. But still, it's a lot of things that need to be right. And we don't want to compromise with quality. So we then rather not acquire a company if we don't feel that we have the right quality and the right valuation. And that will, of course, reflect the number of acquisitions. But overall, I don't see any reason why we shouldn't continue to acquire a company in this fiscal year going forward. And then based on the situation we have in the group, we have some specific group themes that we're working on specifically. And as Peter was saying, we have some improvement in ITO, but we are not finished yet. So we continue to push our companies to get back to the pre-corona level and continue to work on that. That is important for us to reach the profitable working capital target. And given the market condition, we still have a tight cost control, even if the companies that are in the green zone in our capital allocation model, we invest for growth there. But in a general term, I would say we keep close eyes on the cost and encourage our companies to really prioritize where they spend their money, given the underlying market situations. I mentioned earlier about the gross margin development and the expectations going forwards, but that to maintain the current gross margin levels, we need to work continuously on the supply side as well as the customer side. And that is something that we continue to focus on and our companies are continuously working with. I said earlier that we see some some but maybe too few positive signs in the markets where that is heading. But we ensure that we're able to capitalize on the improved economic situation that we expect to improve during next year and hopefully in the beginning of next year. So overall, I think we are in a very good position. We have been able to improve the profit and the profit margin and the profitability despite a very tough underlying decline in the underlying market. And when we now see, we don't see any reason why we shouldn't keep up this acquisition path we had had historically that has been a big contribution to this profit development we had. And then hopefully we get some help from the underlying market that will then boost the profit development going forward. So overall, I see some very good opportunities to continue on the track we had had and even enhance that over time when the underlying market is more supportive. So with that said, I think we are ready for the 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 Zeno Englund-Ricciuti from Handelsbanken. Please go ahead.

Yes, good morning and thanks for taking our questions. Thanks, Peter, for clarifying the one-offs. I've just got a follow-up on this. Ernest revaluation within core solutions, which are labeled as one of if you can nuance it a bit on why it is so large, and if it's a few companies or targeted to to one or two.

Yeah, I can do that. As you're aware, we're very restrictive what we pay the companies up front. We pay on what we feel is the historic level that they have been. And we have, of course, built in a lot of... safety in that when they were in this business climate right now. But of course, it has been for these three companies that it's related to has been quite a discrepancy between the seller's view and our own, which has made the division, you know, book quite a large to add on a payment on these acquisitions. But with the current market condition, we feel that they will not reach those targets. So we felt it was time to do this re-evaluation on that one. Yeah, still they are performing relatively good to what we paid up front. So they will come back when the market turns as well. So that's the reason why it's quite a large number this quarter.

Just to emphasize what Peter is saying, we use this add-on payment as a bridge between the seller's expectations and our willingness, what we would like to pay up front. And as Peter is saying, the seller typically have high expectations on the future earning growth. And we are very cautious in calculating earning growth when we pay up front. And in this specific situation, as Peter was mentioning, this is the result of this bridge hasn't materialized, i.e. the seller's expectations hasn't been met. It's more like they have met our expectation and what we have paid up front.

That is very clear. uh jumping or got a couple of questions on on the margin starting in uh industrial equipment as you you said um magnus you think or you're working on improving the margin and expected to do that but how quickly do you think that's going to happen is that something we're going to see in the in the short term or something that we're maybe going to see more more next year

I mean, this is a long game. You have seen our margin development over time. So over time, I would expect to see a steady improvement. Then it's very difficult to forecast the speed and the steepness in this curve. And we could have a quarter in the future where actually the margin is going down, but there will be some specific regions around that. But I feel very confident that over time, we will continue to improve the margins. But the tempo and when exactly, what would be the effect in each individual quarter is something that is very difficult to forecast. But I expect you to see the same development over time that we have seen historically.

Very good. And quickly in safety, if there is on the margin improvement, if you have calculated how much is related to the skydda divestment, particularly in the quarter.

We don't give that type of information, but I can say that much. It's a combination of the Shida divestment and the acquisitions that has been made in this division. So it's a combination of both.

Understood. And just very lastly from me, on the Luna divestment, firstly, if the roughly 100 million impact is counting with eliminations and such and also if the divestment has been closed in the quarter or just signed and if we should expect any other one-off costs related to the divestment going forward.

Yeah, the divestment has been closed, so there will be no additional costs related to the Baltics. And the 100 million is what their turnover is. There is, of course, a slightly elimination effect, I don't know, around 30 million, maybe, I don't know, something like that.

And you should also note that the Luna Baltic is not only selling products from Luna and our product companies. So their turnover of 100 million is not 100% equal to buying those products from other of our companies.

Yeah. Very clear. Thank you. I get back in line.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Emanuel Jansen from Danske Bank. Please go ahead.

Good morning, Magnus and Peter. Thank you for taking my questions. I think a lot of them have already been answered, but going back to the one of items, I don't want to hang on to that area for too long, but giving the large continued consideration within the core solution, would you describe this as an extraordinary occurrence, or should we expect similar sizes moving forward, or is this just an extraordinary event, you would say?

No, I would definitely say it's an extraordinary event. So you shouldn't expect any large considerations going forward.

Okay, great. Thank you. And also, thank you for mentioning within the core solution, which seems to develop quite well, listening to what you're saying about SV, et cetera, and giving the initial signs of recovery within the root deduction or the root markets. and the significant increase we have seen in applications in Sweden this year for the market in general, should we expect growth maybe to accelerate moving forward for SV in the coming quarters, you would say?

I mean, you should remember that SV as a company has an exposure towards the Nordics. They're quite big in Norway. They also have an operation in Eastern Europe, in Poland, Estonia, Latvia and Lithuania. And they also have a business with prefabricated housing. So Root in Sweden, yes, it seems to grow as a market and that has a positive effect on SV. But on a total ESFI level, it's not that important or that big, I would say. And overall, even if we talk about a positive development, the road is not accelerating. So I don't think you should expect an accelerating growth on top line or profit in ESFI in the next coming quarters. I expect to see some improvement, but not an accelerated improvement.

yeah so as we had organic growth in the quarter but it was driven both of course a small part to this road to market but also to the new customers that sv acquired last year so yeah great thank you that's that's very helpful and maybe last question from my side uh magnus have been talking about the the market

You hope that it will start to recover at least in 2026. No one knows, of course. But would you describe that the market is stronger or weaker compared to what you observed the last quarter in general?

In general, that's a very difficult question. I mean, I have some examples of companies that actually face a little bit weaker demand in this quarter, and some have shown a stronger demand. So, I mean, as I said before, I think our organic development is on an aggregated level reflecting what we see as such. I mean, I noticed one of our peers, their division, they had a report where they indicated both an order decline and a top line decline in the previous quarter as well, facing the construction and infrastructure sector. So I think generally speaking, that sector still have some challenges. uh the industrial sector is even uh very diverse i would say some markets there are growing and and some are are flat and some is actually declining so i think if you should have the group level i think you should look at the aggregated organic top line development in this quarter yeah okay that's that sounds uh sounds fair and i i assume that you also

see very big variations between the markets from the end market from acquired entities and older companies within the group? Or do you see higher momentum from the end market from acquired entities?

I'll go back to the different markets. I mentioned the English company, Orbital and ATI. They have a very strong order backlog. They have a very strong top line development. But that is more related to the markets they're operating in. ATE, for example, is quite exposed to the defense sector in the UK. And that has a strong demand currently. Orbital has exposure to high-tech production companies and there's a lot of investment made in the UK in that sector currently. So it really goes down to what type of market are the different companies addressing. And some of those are growing and some of those have a little bit tougher situation currently. So I can't give any kind of general perspective that is relevant for the whole group or all our companies.

I totally understand. Thank you very much, Magnus and Peter, for answering my questions. Thank you.

Thank you.

The next question comes from Linus Allenton from Nordia. Please go ahead.

Yes, hello and good morning. Thanks for the presentation. Just a few quick couple of questions here from me. First, I was just wondering if you could give a little bit more flavor on the gross margin improvement here. I know you said some of it is due to the divestment of Skida, but the other part, is it a mix shift or cost deflation or pricing power?

Then that's also, I was previously looking, it's really a company by company approach. And I would say the gross margin development in the latest quarter is partly due to the Shida investor. It's partly due to the acquisitions we've made. Some of them have had a very good gross margin that is then helping the group margin development. But also that we have had a structural program across the group working on gross margin enhancement for many, many quarters. And in many companies, we see a positive effect of that also in this quarter. So it's, sorry, I can't give a specific answer and a specific explanation, single explanation to the development. It's an effort of many things in parallel.

Yeah, okay. Thanks, thanks. Another question on the working capital efficiency here that reached 33%. I was just wondering, looking forward, if this level is sustainable or if we should expect some normalization if or when demand recovers and you rebuild inventory?

I mean, we will have a short-term effect when we rebuild the stock. But at the same time, we really worked across the last quarters to improve the purchasing processes across the group. So I expect to see a positive effect of that work. But of course, in some companies, we will have a stock build up initially when the market starts to pick up. But once again, I said it earlier, we still have some improvement opportunities from on the stock level in terms of ITO as such. So that will also go on the other direction in terms of the working capital levels. So we are still committed to the 45% next fiscal year. The figures you are currently look at is rolling 12. So you have a delay effect of the improvements we do in working capital. So... We may temporarily have in a single quarter some stock build-up effects, but I don't expect them to be significant.

Okay, super, thanks. And just on the M&A, can we expect the same pace here going forward for the rest of the year and into 2026?

I mean, we have communicated the target to acquire 50 to 80 million EBTA per annum. We are committed to that level, this fiscal year as well. We will have to increase that level, that span over time as we get bigger. So when we are at the 510, the EBIT of 500 million, we need to step up the acquisition path. And we have already prepared for that and you can see some effects during this fiscal year so far. We have acquired the number of companies we have historically acquired in one year in two quarters. But once again, it's very difficult to just prolong a curve like this because it's so many things. that need to be in seeing it for us to go all the way and acquire a company and to forecast if that will be the case in the same path we had so far this year. It's very difficult to say. But over time, we are committed to deliver the 50 to 80 million this fiscal year. And in the near term, we will increase that span And we have built the resources to step up. We are prepared to step up. But that will not be, I would say, a step up. It will be a continuous increase in terms of EBITDA acquired in the group going forward.

Super, understood. And just one last question here from me. I know you've talked a lot about the number of FTEs in the construction industry sectors in the Nordics here. How is that developed?

We haven't got any figures for the last month, for the last quarter. So we don't have the data yet. We expect to get the data here in November, December, and then we will know. But what I see today, I don't expect any big changes.

Okay, understood. Okay, thanks for answering my questions. Thanks.

Thank you. There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Yes, so I will go through a few written questions as well. The first one is then, what is your view on UK macroeconomics? Not worried. You're focused on that region when it comes to acquisitions.

Yeah, I mean, once again, it's very difficult to generalize when we talk about acquisitions. the markets that we are acquiring within. If we, for example, Cresta Group did the add-on acquisition on this company Donuts, it's based in the US, sorry, in the UK, but it's very exposed to the oil and gas sector in the North Sea. And if you look at that specific market, we see positive the kind of demand for security generally speaking that will be positive for for this company donut and also over time we see if we talk about number of people working in the oil and gas sector in in the north sea area that that should be positive so the macroeconomics for the uk maybe doesn't look that promising going forward. But that is very important when we're a CAI company that not looking only on the macro level, but specifically we do the majority of the work to understand the underlying market in this specific market, the company we're looking at address. And so I talked about this ATE company, Orbital company in the UK, that has had a very positive development that is not aligned with the macroeconomics in the UK. And that is an approach we take in all our acquisitions, independent if it's in the UK or the Nordics. So you really need to dig into, I think, the specific underlying market that you are looking into. But as a general view, I think the macroeconomics in the UK, to my understanding at least, even if I haven't looked into it in detail, is not very strong in the near term at least.

Good. And then the next question. It seems to me that you have paid five to seven times EBIT for the acquisitions upfront. Could you comment on what the multiples typically are on the incremental earnings growth for the companies when you pay the earnouts? Is this also a range? And if so, what are the drivers for paying a higher or lower multiple on incremental earnings growth?

That's a very good question, I would say. That's correct that we pay in the range 5 to 7 EBIT on the acquisition upfront. When we pay that, we don't pay that on an EBIT level that the seller is expecting to generate in the future. It's really based on what they have historically delivered. And it should be an EBIT level that we feel confident that they will be able to deliver going forward. Then typically the earn out component is a bridge from the seller expectations and the great forecast they typically present. And this historical earning level that we are well willing to pay for. And what we typically do, we use a lower multiples on the own outs. And that if you see, generally speaking, it's in the range of half of the upfront multiples, roughly speaking.

Good. Next question. Could you comment on your ability to continue to invest at such high in reinvestment rates? Do you have the capacity from a balance sheet and credit point of view to continue the pace over multiple years to come?

Yeah, if we talk about the credit point of view, I don't see any reason and there are no restrictions in that. Of course, we need to, you know, we had said that we should be on a net debt EBTA level of roughly, you know, 2.5 in that range. But we have also said that we temporarily can exceed that level. We are currently at 2.5. So that is currently not... prohibit us from continuing to acquire. We are generating good cash flows and we expect to generate good cash flows going forward. So currently, nor the credit nor our balance sheet is restricting our acquisition capacity as such. And as I said earlier, we have strengthened our acquisition capacity in the group, preparing for stepping up in the acquisition path in the next coming years. So currently, I think we are in a good place in terms of our acquisition tempo and our capacity and the underlying market to doing good acquisitions going forward.

Good. Next question. Are you thinking about further divestments of structural weak companies that will never reach your profitable working capital of 45 targets? If so, how do you think about a multiple you would be happy to receive for selling those operations? Should it be in line with what you're paying when you deploy capital or below or above multiple arbitrage? Question mark.

Yeah. We have said internally to qualify to be part of the Bergman & Beving Group long term, you need to reach a profit of working capital of at least 45%. We communicated internally as well externally. I think it was two years ago.

Yeah, I think so.

Two years ago. that we have a timeframe for reaching that to four to five years. And of course, you cannot judge all the company on the level they are delivering currently based on the underlying market situation. But we need to see and believe that the company should reach the 45% within that time range. along the way, for us not to take some structural actions. We have communicated earlier that the Skydda divestment was a result that we, together with the management of Skydda, we didn't believe that they should be able to reach the 45% in that time range. And that was one of the reasons why we divested that businesses. We also look individual at separate business entity. So that I would say was one of the reason also we chosen to sell Luna Balticum in this MBO because that operation were not on the level that we expected and we couldn't see that they would reach that level in the timeframe we had set. So we are ready to act. on companies that don't deliver on the profit working capital 45% within the set timeframe. Going back to the multiples we're expecting to get, unfortunately, we are not decided on the multiples we get. It's really about the market conditions. If we look at the skydda, we have communicated the 300 million EV we got for that business. And that has an underlying EBITDA level, as we also communicated, of 45 million. So that is in the range that we roughly pay for companies. But if we look at the Luna Balticon, for example, that investment was below the range that we typically buy. So in the end, it will be the market that decides and we have to judge, are we willing to sell to the multiples we are offered? But I don't exclude that we could sell companies below the range we are paying for companies. And hopefully we get better than that. But that is still something that the market decides in the end. And we need to then decide if we are willing to proceed with that based on the valuations we get.

Good. That was the last question, written question.

So thank you very much for listening to this report and looking forward to connect you when we present the Q3 report in February.