Bravida Holding AB (publ)

Good morning everyone and welcome to Bravida's Q1 presentation for 2023. And as always it is Åsa Neving and myself who will take you through this presentation. So let's start. The agenda for today is the standard agenda, our position in the Nordic market, a deep dive into the numbers for Q1, then also we'll take you through the different countries and then in the end we will have a summary and a possibility for you to ask some questions. So Bravida and our market position in the Nordic market. We are continuing on our growth journey and we are actually close to 28 billion company today. 13,000 employees is what it says on this slide. Actually we are close to 13,500 today. 91% of our customers is recurring and we have 85% of all our orders below 50 million SEK. And as you know, we want to be a partner throughout the whole lifecycle of the property from the design phase, installation, service, maintenance, etc. And want to be a partner for all our customers for all our segments. So 325 branches are serving our customers in a fantastic way every day. This is our history and I think this is a fantastic slide that shows the stability of the business model that we have in Bravida in our industry, but also our skilled people, how they are performing in different markets as well. You can see that we have 9% CAGR on the top line and we have improved the profitability even more, 10% on average since 2015. And in a period with quite difficult market situations, we have had a pandemic, inflation, some issues in logistic chains, etc. And over this time, we also have been able to deliver a cash flow above average. or around 100% on average. It is varying a bit from one year to another, depending on finalizing, how we're finalizing big projects and starting the same. But overall, a fantastic journey that we, of course, think that we in some way want to continue and have a good chance to be able to deliver on that as well. We are the Nordic leader in sustainable technical solutions, as we said. Being a partner to all our customers from early phases of when they are planning a new building, help them build a... a house with the right type of installation, energy efficient systems. If they are not energy efficient enough from the beginning, we can help them to increase the value of a property by maintaining, change some system, do adjustment and also lowering the energy consumption or maybe help them use another type of energy source as well. Every customer has access to our entire offering. We have the lifecycle perspective for every building and we are and want to stay as the industry leader in sustainability. For the moment we are having a lot of employees who are doing a really great job by, in a proactive way, changing the way of working and in a proactive way, help our customers to create value in their own business. It's really amazing to see that we are transforming as a company and are more proactive today than we were before. And we hope that we can continue that journey, of course. So let's go into the numbers for the first quarter then. And we start with the market and the market outlook. We see some increased demand for sustainable and energy efficient solutions. It hasn't really accelerated yet, but I think that the demand will increase going forward. It has started, but it hasn't ramped up yet. We still see an overall good demand for service and installation. And of course, we exclude the new build of residences in that statement. Said that, even if we see a quite strong good demand in the market right now, of course, there is some uncertainties going ahead. Increasing interest rates and inflation may lead to delays in investment decisions, etc. when we're going forward. So let's see what the market will look like in the coming quarters. But for now, the demand is quite okay. It is varying a bit from different geographies, but that is the case all the time. That was the same situation last year as well when the demand were seen as really, really good. So the highlights for the quarter then. 20% organic growth and we are growing in all countries. I think that is the highest organic growth number ever. And maybe you should see it like that as well. We are now entering into... a new quarter. We had a growth, organic growth in Q3, if I remember correctly, 13%. No, Q2. Q3 last year, yeah, with 13%. Q4, 16%. Now we are even higher at 20%. And I think... it will be leveling out, maybe go down a bit, because having this high organic growth is extreme for our type of business and our type of industry as well. And on top of that, as you know, we have had the strike in Norway, which is impacting us with approximately 40 million in sales. 7% comes from acquisitions and we see increased sales in both service and installation. This is the first quarter in quite a long time where we actually have higher growth in service and installation, which is a good thing, of course. Order intake is up 4%. It's improving in Sweden and Finland. EBITDA margin at a stable level, 5%, slightly lower than last year, but having this stable margin in this market situation is fantastic. And at the same time as we are investing a lot in our business and our IT platforms, which we come back to later on in this presentation. Earnings per share up 18%, which is also a fantastic number of course. Cash flow somewhat weaker at 60 million and the injuries is going up a bit with 3%. Sales service 28% growth and the installation is growing with 27%. So high growth on the both segments. If we take the same numbers in another perspective, we can see that we are close to 7.5 billion in sales in the quarter compared to 5.8 last year in Q1. We had said that the service is growing a lot, 28%, organic growth at 20%. And we are also specifying on this slide what kind of investments we are doing, how big they are. 34 million have we spent on new systems and business development in growth segments. And that should be compared to 17 last year. Order intake up 4% and the backlog is down with 6%, but still on a very high level. We see that the order backlog goes down slightly more in Norway and Denmark. If that depends on the market, it's too early to say, but you know that we are growing extremely fast in those countries. So we are slightly more conservative when we try to build on new projects. let's see what the the root cause is of that but we are not stressed we still have a really high order backlog which we have been stated for a number of quarters now and i think that is what you're seeing the in the organic growth today as well and the net sales bridge it goes from 5.8 billion organic is adding one and our 1.1 billion we are growing with more than one billion in a quarter organically and their acquisitions is adding another 400 million and then we have a small effect at one percent on the currency effect as well. If we look at the margin EBITDA 5 compared to 5.1 and now we are specifying slightly more on what we are doing, what kind of investments we are doing. First I should say that the margin is improved in Norway, unchanged in Sweden and Finland and a bit lower in Denmark. EBITDA is also affected by non-recurring costs for implementing new digital systems and digital solutions. That is something we need to realize the business plan that we are working with. That sums up to 24 million compared to 14 million last year. and the forecast for this year 2023 is around somewhere between 100 and 125 million and I think that is another way of showing the strength of Bravida to be able to present high growth stable margins at the same time as we are investing in our future to be able to continue to deliver top quality service helping the customers with their taxonomy issues helping they save energies etc in a more digital way so I think it's really interesting to see the outcome of these investments going ahead. We also have some effects on EBITDA for development in new business, sustainability and modern IT platform according to our plan. And the new world also means that we need to invest in some new roles, competencies, systems, etc. to be able to report what the market and our customers request for us. And driving the business plan forward increases, of course, as I just mentioned, the administrative expenses, but it will enable an improved margin long term, both margin as well as growth. And the increased recurring costs is connected to the IT platform, as I said, but also digital development capabilities and new type of resources, increased sustainability focus and also an improved and strengthened HR support. We have some, to the right, initial cost for investments in the new businesses. In technical facility management, automation, energy management, we are investing in new systems, but also new people, new capabilities to be able to deliver new type of services to our 80,000 plus customers going ahead. And we hope or expect that these will add positively to the margin in the end of this year. The order intake and backlog. We have said that the order intake is up 4%, the backlog is down 6%. Still have an order backlog that is really healthy and on a high level. And you can see how the order intake developed. We have some seasonality as well in the order intake as well in the order backlog normally. But you can see the green line that is continuing upwards, which is quite natural. Let's see, we have quite strong order backlogs in many places. We are now soon entering in our quarterly reviews where we, Åsa and myself, will have a discussion on order backlogs on branch level to discuss what measures we need to do to continue to grow or to make sure that we defend the margin. And having all the acquired companies into the same platforms gives us the possibility to manage the company, to see the order backlog, to see the trend in margins, etc. And that is probably the most important task for us the coming weeks. But still a healthy and strong order backlog, both regarding margin as well as size. Sustainability, the injuries LTIFR is up 3%. It's quite sensitive KPI, so that means that we have had a few more accidents with sick leave this year compared to last year. It is increasing slightly in Sweden and Denmark. Norway is well below the target. And then I'm happy to say that 15% of our vehicle fleet is electric power today. We said last time that we ordered, I think it was 73% of all ordered cars last year were electrical. And now we are using those cars when we need the new ones. So there are some timing issues when the cars will be delivered as well. But the work with our cars and our sustainability focus on our car fleet actually started already in 2019. So it's quite a long cycle to change a KPI like this. And we were really early in starting discussing this actually before it started. it was possible to order electrical service cars, for example. So now we have a system in place which will give us a good development on this KPI going forward. And I think we are well ahead of the competition in this perspective, which is really good. And you can also see that the change in CO2 emissions from vehicles related to sales is down 3.6% in the quarter. Last year, we lowered it with 13.6 or eight, I think. So good to see the great development on this side as well. When it comes to acquisitions, we have done five in Q1, another two in the beginning of Q2. The five I mentioned in quarter is adding 155 million in sales. Strong pipeline, attractive multiples, and we now see a trend shift as well in the M&A market because Even if it's early in the new type of market, we already now see that there are more owners, et cetera, who is interesting to discuss and maybe sell the companies. And having a strong balance sheet to try to use that situation as a market leader in the Nordic market is, of course, really good. So now I hand over to Åsa who will take you through the different countries.

Thank you, Mattias. As always, let's start with Sweden. As in all our countries, Sweden had a high growth in the first quarter. Growing with 21% leads to a top line of 3.6 billion. The growth is coming both from installation and services, but mostly from services, which we are happy to notice. The organic growth is 16% and the growth from acquisition is 5%. Sweden has an unchanged EBITDA margin of 5.5% and a strong order intake of plus 25% and the order intake is also coming from both services and installation. Order backlog is strong 9.1 billion. So almost on the same level as last year minus minus 1%. Moving on to Norway. Norway also has a strong sales, so the growth is 25%, leads to 1.6 billion of sales. And the growth is coming from both installation and services. Here, Norway is growing more on installation. The organic growth is even higher than the total growth, so 27%. And the growth from acquisition is 2%. And then that leads us to a negative effect on the FX with minus 4%. EBITDA is 77 million compared to 60 last quarter, last year's first quarter. And the EBITDA margin improved to 4.8%. The order intake is minus 20, less in local currency, so minus 7%. And the decrease in the order intake is coming from installation. And the high production that we've had during the quarter together with the decrease in order intake then leads to an order backlog that is negative on minus 27% year on year, a little bit less in local currencies, minus 21%. We're actually, both Norway and Denmark has been growing really fast. So we are actually a bit pleased that the installation growth is coming down a bit. Denmark has had the highest growth of all our countries, growing by 42% in the quarter. That leads to a top line of 1.7 billion. The organic growth in Denmark is 20% and from acquisition it's 13%. You can see that we have some positive effects from the currency as well here. The growth is coming both from service and installation. It's a bit higher on installation. The EBITDA margin declined to 4% compared to 4.4%. Leads to an EBITDA of 68 million compared to 52%. And the decline is explained by a bit lower project margins. And as I said, and as we talked about before, both Denmark and Norway has been growing very fast in isolation. And then it's a bit of a challenge to keep up with the EBITDA margin. Order intake is minus 19 and also here there's a decrease in installation. So it's minus 23 in local currency. And this also same as Norway, high activity and a lower order intake leads to a decrease in the order backlog with minus 10%. So order backlog is still high on 3 billion. And then we have Finland. And Finland has also grown a lot, 36%, leading to a top line of 554. Growth here is coming both from service and installation, but has been very high on service, which we are pleased to see. The organic growth was 21%, and the growth from exposition was 6%. EBITDA margin, or the EBITDA was 20 compared to 15 last year and the EBITDA margin was unchanged. Finland had a strong order intake and growing both on services but also on installation. And we're happy to see that because Finland has needed to fill up the order backlog a bit. So order intake plus 51% and in local currency plus 45%. And this also leads to a strong order backlog that is on 1.2 billion and that is an increase of 58%. Finland is also the country where we have the least share of service. But in the first quarter, the service share was 31% compared to last year's first quarter, 27%. So we're also pleased to see that. That was our countries. Then let's look at our net debt and cash situation. And I think we start with the middle there. If you look at the operating cash flow, you can see that it's a bit weaker this quarter than last year on 60 compared to 341. And this is due to a decrease in working capital and the working capital decreased with minus 377 million. And the main reason for this is the strong growth that we have had. So we are tying up capital in receivables. And also the net POC or the net WIP is not contributing mainly because we have had Previously, like a year ago or a bit more, we had a lot of large projects coming in with really good payment plans and prepayments. And they are now facing out and we are not getting any new large projects that can actually compensate for that right now. So it's a bit of a timing issue also. If you look at the left hand side, you can see the financial position. cash balance of 1.1 billion and then we have loans of 1.6 billion and that is that is a term loan long-term term loan of 500 million we are drawing on the rcf 200 million and then we have commercial papers for 900 of 921 million. And then we had the leasing according to IFRS 16, so-called cars, on 1 billion. That leads to a net debt of 1.6 billion. And with a long-term rolling 12 EBITDA on 2.3 billion, we get a net debt LTM EBITDA ratio of 0.7. And on the right hand, you can see our loan structure. And what's worth mentioning there is that we have the RCF of 2.5 billion that is sustainable linked, that is maturing in October next year. So we now have started the work to set up a new RCF. I think that's it on that page. So let's look at our financial targets then. We have, as you know, we have an EBITDA margin of 7% and the LTM is on 6.4%. Cash conversion now a bit lower than as I said on 70%. The net debt to EBITDA ratio is on 0.7. So a lot lower than our target. Sales growth very much higher on 24% LTM compared to 5% which is or more than 5% which is our target. And we have paid out in a dividend 52%, which is our target, says more than 50%. And by that, Mattias, I will hand over to you again.

Thank you. And just a summary to repeat what we think is a good report. And I think it's fantastic to be able to present yet another strong report which we have been doing throughout the year. many, many years now. And today, the summary goes like this. Increased sales, 28%. We are increasing the sales in all countries. Organic growth at 20%, highest number ever. We are growing in all countries. Acquisition is adding another 7%. And we have a slightly lower but very stable EBITDA margin at 5%. And the beta margin is affected, which we have said a couple of times, by an increased cost for developing the business according to plan and according to our strategy, which of course will lead to an even stronger and better company going ahead. Earnings per share, which is maybe the most important KPI, is up 18%. And we have some increased injuries, which is not good. And we are now addressing measures to be able to improve that again. So by that, I think we can open up for some questions. And thank you so much for now. And let's see what you are thinking about and want to know more about. So please.