Bergman & Beving AB (publ)

Good morning everyone and welcome to the Berman & Beving financial report for our Q4 quarter. I hear on my side also Peter Schön that will come in later on in this presentation. But I will start to give some highlights from our Q4. And related to the market, the market uncertainty continued. As you all are surely aware of, it's still a geopolitical lot of uncertainties. And there has happened a lot of unpredictable things in the world that has caused what we perceive the customers to be a little bit cautious about the future. And that has partly reflected what we see that the demand in some of our companies at least. And overall, I would say the underlying market from the group level has been cautious during the quarter. And the recovery we kind of had in the last quarter, last calendar year in our Q3 quarter has weakened a little bit, I would say. It's still very uncertain to give a steady forecast what we expect going forward. But overall, I would say it's not more favorable than it was some months ago at least. But that could change hopefully in the next coming weeks or months. But still we achieved, I think it was a good quarter. We continue to have improved earnings, margins, returns, and also earnings per shares improvements. We have a focus on profit over turnover. So the turnover was in total 1% down, even if we had some organic growth 1% in this quarter. And the adjusted EBITDA was plus 11%. And we now have 25 consecutive quarters with improved profits. And also the margin continues to improve. We then had an adjusted EBITDA margin in the quarter of 11%. That's 1.5% unit improvement compared with the previous year quarter. And our profitability measured as profitable working capital increased 5% units and is now up to 36%. And the earnings per share rolling 12 adjusted improved to 8.45 compared with 8.05 previous year. So overall, we have improvement in, I would say, all the important financial metrics during the quarter, despite the weak markets. We also took some structural initiatives to further strengthen Bergman & Beving long term. We divested Logistikpartner, that has been our internal logistic company that has up to 90% only supplied group companies, i.e. a very small portion of external customers. So we thought that we were not a good long term owner to owning a logistic company. We're not expert in that functional area. And also it's a scale business and we are not interested in building a scale within the logistic space. So we choose to divest that company to a company called Voxflow. So our companies will continue to use the logistic partner services. at least in the next coming years as it looks now. So there will be no change in the way we operate. It's just a question about who owns the operation as such. We made one acquisition during the quarter. It's a US-based company called A1S. Sorry, UK company based in the UK with an annual sale of roughly 110 million SEC with good profitability and good returns. And they are a product company making fire curtains, mainly for commercial buildings. And that is a space where we order to have presence through one of our company, BVS, who is present in Sweden and Norway currently. So this is, I would say, a strength and opposition within that space. And it looks very promising. The underlying market has a good kind of outlook. So we expect some good development in that company, as well as the current company BVS operating in the Nordic region. We also made one acquisition after the quarter end. It was one of our subsidiaries within the sheet metal space, Uveco, who acquired all coating April 1. It's quite a small company, 25 million SEK, with very good profitability and very good return figures. So that will strengthen our position within this sheet metal space in the Nordic region mainly. If we summarize the year in terms of acquisition, we had a very good year. As you can see in this slide, we made eight acquisitions. And we had set the target to acquire 50 to 80 million per annum. So if you sum up the volume in turnover we acquired and map that towards the profit margin, uh i all of them have a profit margin about 15 percent uh you realize that uh we are kind of above the the the target this uh calendar year sorry fiscal year so it has been very uh successful in terms of acquisitions and those acquisitions will strengthen the the group going forward in many aspects both in new niches but also add-on acquisitions within our current niches mentioned initially that we had now had 25 consecutive workers within improved ebta and this is despite that we have been facing a weak underlying market for for the last three years i would say and we'll also have strengthened our ebt margin along the way um and and i don't see any reason and i expect us to continue on this path going forward as well um even if the the a lot of uncertainties around the market development going forward If we look at the net sales, I mentioned that we had an actual decline in this quarter, the 3%. And that is correspond more or less to the currency effect of minus 3%. And we then had an organic growth of 1%. Previous quarter, we'd have 4%, and this is 1%. And as indicated, we perceive that we have a little bit weakening the underlying demand during this quarter. And our kind of hypothesis is that this is very related to the uncertainty on the macro level that we have been facing during the quarter. The gross margin continues to improve and increase. We have now an all-time high gross margin in this quarter, and that is a result of divestments. Skydda, that we divested earlier this, in mid-summer last year, that divestment had a positive effect on the gross margin. We've also done a lot of organic improvements, phasing out, continue to phase out low margin businesses. And we also have a positive mix that has this contribution to the gross margin. And as said earlier, the improvement in the gross margin is mainly driven from organic improvements. We actually made a calculation and concluded that we have a 10% organic gross margin improvement roughly that has been the result of the last five years. So that is kind of the result of a systematic work quarter on quarter to optimize each individual business unit in terms of what they should focus on going forward. And you can also see on the right part here, as we have phased out some low margin business that typically distribution related businesses, our portion of all product has increased now to 80%. So that's also an effect of the organic kind of development we had across the group during the last years, as well as the acquisitions we made during the last year has been mainly product companies as such. So if we take a kind of look into the targets that we set, it's related to the profit of working capital, EBIT and EBITDA margin. And as you can see on this development, we had a positive development across all those three dimensions during the last quarters. We set the target to reach a profitable working capital of 45%. We are now at 36%. We had the aim to get into the 45% this fiscal year. That's still reachable, even if it's challenging, but we still aim for that. And the EBIT margin is now 8.6 and we had a target of 10%. So we have some improvement here. We're not really happy with the speed of the development. So we have still some work to be done. I'm coming back to that later on when we get into the division. results as such. And the EBIT margin, as you can see, has also steadily improved. But we still have some headroom to the 500 million. That's partly a result of the divestment of Skydda that had an underlying earning of 45 million SEK in EBIT. But we still are aiming to get into the 500 here in the next coming quarters. So with that said, I hand over to Peter to talk about the earnings per share.

Yeah, thank you, Magnus. Hi, everyone. OK, if we look at the EPS and it's the adjusted EPS after dilution, it continues to increase, even though we're not at the same pace as the EBITDA. due to higher amortization and a bit higher financial costs, but still it improves over time. So we're on track there. If we go forward to the inventory levels, So the inventory amounted to 1 billion 86 million. It's a 70 million reduction towards last year. But then we have divested the Skida business, for example, that have a positive impact. So the organic reduction was 20 million SEK. So as we said before, the inventory reduction pace is a bit slower going forward and also now in this quarter. If we look at the ITO, it is somewhat decreased and it's mainly an effect of divestments and then especially Skydda that had a bit higher ITO actually. than the group. So if we move forward to the cash flow from operating activities, it was according to plan. It is a seasonally week, a quarter, the Q4, as you can see also in this slide, but a bit over last year, so as expected. And the main reason why we have this cyclicality is due to our company SV that has spring orders that they invoice with higher, longer payment terms. So, yeah, good. and moving forward to the net debt it increased to 1 billion 656 million the net debt ebta went up to 2.7 and it is in in total i would say an effect of the high acquisition rate that we have had during the year and also in the quarter. So we made acquisitions for 200 million in the quarter and almost 800 million during the year. We also repurchased some chairs in Q3 that was 65 million SEK. And the divestments, of course, had a positive impact, a bit offsetting the acquisitions with 36 million in the quarter and almost 300 million in the accumulated during the year. Yeah, even though the net debt has gone, EBITDA has gone up a bit, the acquisition target remains intact and we still have possibilities to make an acquisition that we will continue to do that going forward as well. We did one acquisition after this Q4 quarter, as well as Magnus mentioned, the oil coating acquisition. Good and then I'll hand back to Magnus.

Thank you and I will dig into the divisions as communicated earlier as of 1st of October last year. We expanded into four divisions from three divisions and we partly regrouped some of the companies across the different divisions. You can see all the company names here on the slides that is part of the core solution. You will see also the company names on on the other divisions in the coming slides. But overall, in this division, core solution division, SV is a big part of that division, having a turnover just below one billion SEK. And as you can see on the lower end of this slide, this division have had a very positive development in terms of EBITDA. You have the rolling 12 figures there. It has increased quarter on quarter. And also we had some improvement along the way on the EBITDA margin as such during the last quarters. And this is partly due to revenue increase and acquisitions, but also that the WED had a positive organic development in many of the companies, including SV. SV had a major three new customers last year. And when SV get new customers within fastening, you typically need to take back the customer's current supplier stock and then replace that with the SV products. And that caused some margin decline when you do that type of change. But that is now out of the book, sort of. So we now see the running SV margin that has been improved. And SV is making a very good result in this quarter and had had a very positive profit development in this quarter that contributes in a good way to the core solution development as such. We also face in the public property segments and the infrastructure segment a continued good demand. As I said earlier, we're not so exposed to new building of housing. So overall, the core solution division has had a good demand in this quarter. And as you can see on the slide, EBITDA now is at 14% and the pro EBITDA profit is now 56%. Sorry, it was not the margin. The margin has increased to 13.4% compared with 11.9%. So a lot of things is going the right direction here within the core solution. And my hope and expectation is that we should have continued good development in this division going forward. If we look at the safety technology division has also had a very good development during the last quarters. As you can see, the EBTA rolling 12 figure has been in a good kind of increase, except for one single quarter in Q2 last year. But overall, we have a very good EBITDA development here and also a good margin development that is driven partly by acquisitions and revenue. But we also have some organic improvement that is contributing to the good development in these divisions. So the revenue increased 33% in this division and we had a very good development in this quarter in Cresto and Orbital. Cresto has been delivering some good orders within the wind segment. They have Vestas, they have GE and they have Siemens Gamesas customers and they got some good order delivery order and good some deliveries from all of those three customers in this quarter. And the EBITDA increased 128% to 57 million compared with 25 million last fiscal year. And the EBITDA margin increased to just about 16% compared with 9.4%. So that's a significant improvement in this year. in in this quarter uh and the the acquisition of one a1s is is part of this division and also will contribute to this division going forward as well The machinery equipment division, the revenue increased 7% here. They were facing a lower demand within welding and sheet metal cluster and also within process equipment companies. One of the companies here in this division is Polartel, making mobile heaters, selling a lot to the US. They are still very affected of the US trade tariffs. overall on the group level we only have three percent in revenues in the u.s and some of that is actually produced in the u.s and but specifically polar time has facing some challenges based on the tariffs that they currently face exporting to that market But still we had an increase here. The EBITDA increased 23% to 27 million compared with 22 million last quarter. And we also have an EBITDA margin increase to 21.4% compared with 18.6%. and we acquired april one uveco one of the companies within the the sheet metal cluster acquired all coating april one and and even if it's small company it will have a very healthy profit margin and we give some contribution to this division going forward This is the vision, as you can see on the slide, that had a negative development in EBITDA. It will take a longer kind of time horizon on this, as well as the margin. And that is partly due to the tough underlying market conditions that the companies are facing in this division. And the fact that there has been very few acquisition in this division in the last quarters. But still we have some good potential and it historically been on a very good level and my expectation is that we should continue to see an improvement in this division in the next coming quarters. lastly then the pe and utility division this is the vision that has a lot of companies and the the majority of the companies here are selling through the nordic industrial and construction reseller sellers and this is i would say mirroring the the underlying market in the construction and and the industry as a total in the Nordics, because it's mainly Nordic business in this division. And here we have a decline in the revenue, but then you need to consider that Skyrda and Luna Baltic has been divested, and they had a turnover of 130 million in the comparable period. And Lund & Tengdal, however, had a tough quarter and have continued facing a lower demand for the products and that is affecting the result of this division. Whereas the PPE, the personal protective equipment product companies, had quite a good demand in this quarter. So if you look at the development in this, it's mainly due to the Luna Group and the TENG tool that is affecting the result in this quarter. And the EBITDA was only at 11 million compared to 34 million last quarter. And the EBITDA margin went down from 6.6 to 3.0 in this quarter. Based on the current situation, we have continued to take on actions to address the underlying market and the lower kind of expectation we have on that going forward. But still, this is not a quick fix and you shouldn't expect this division to be on a very good profit margin level in the next coming quarters. We still will have some things we need to address and to get really this division getting into a reasonable profit level, we need to have some help on the underlying market as such. So with that said, we continue to strive for the target 510.45, but we are some quarters delayed, mainly due to the weak underlying market, but also partly due to the divestment of Skydda, as I said earlier, that had an underlying profitability of 45 million SEK on a yearly basis. But we still are perceiving that we have an underlying market that is a little bit volatile. Some of the markets are facing stronger demands, but we are still facing a kind of a weak demand in some segments and uncertainty among the customer base, not contributing to the underlying market demands. And we will see what that will take us in the next coming month, but still currently we are kind of facing a lot of uncertainties in what type of demand we can expect in the next coming month. But we will continue to do what we always do, to focus on profit before revenue growth. We will continue to use our capital allocation model to make sure we allocate capital to the companies with the greatest growth potential in terms of profit. We continue to support our companies using our BBB toolbox. There's a lot of AI initiatives taking place across the group now. And we really try to support our companies in that space because we see some great benefits and contribution in that area in many of our companies that is taking on some good movements within that space. So that is a priority for the group going forward. And last but not least, we will continue to, as Peter was saying, acquisition is an important growth vehicle for the group. And we will continue to acquire companies and focus on companies that have good profitability and good return figures and to help them grow going forward. And we currently also have some specific group teams. As Peter was saying, we need to work down the debt rate over time. And then one important part is that is continue to work with the inventory in the approved ITO to get it back to the pre-corona level. We are close to that level, but still not there yet. So we need to work on that. And we also need to work on our gross margin protection. As shown, we had had a very good development in the gross margin during the last years. But we are currently facing some price increases, mainly due to the kind of Iran conflict. We see some increases in raw material costs and we have taken some actions across the group to kind of address that. And that is something we will continue to do and make sure our companies are proactive in that area. So already now, some of our companies have had to increase the prices. to meet the cost increases that we are facing due to increased raw material cost and also increased freight costs and also some production are energy intensive and that will also that also are affected due to the increased oil prices as such. So that is something that we work on specifically now across the group to make sure we are not behind those cost increases that we will be facing and has already faced. But we still are kind of preparing for kind of a stronger underlying market, especially in some of the companies that we see some positive signs now and we are making sure that we capitalize on the strong underlying market that we expect in some and we face already in some markets that we hopefully will see in several more markets in the next coming month or quarters. So overall, I would say we are happy with the quarter. We are proving in all the financial kind of key parameters that we have, despite that we are still facing on a group level a weaker underlying market. We have some organic growth to 1% in this quarter. but we are increasing profit well above those one percent and also the margins so even if we will continue to face a slower underlying market we'll continue to work both organically to further improve our businesses but also continue to work on acquisitions to add on to the group going forward in the next coming quarters So with that said, we open up for questions.