Bravida Holding AB (publ)

Hi everyone and welcome to this presentation of Bravida's first quarterly report in 2024. My name is Mattias Johansson, CEO and Group President for Bravida and as usual my colleague Åsa Neving is here as well. CFO and we will take you through this presentation. So let's start. Thank you very much for joining. I start with this slide. Bravida brings buildings to life throughout the Nordic region. Bravida is the Nordic region's leading supplier of holistic climate smart solution for buildings and facilities. Our long-term goal is to be climate neutral throughout our value chain by 2045 so that our customers can be as well. We have 14,000 employees in around 365 different branches in the Nordic countries, Sweden, Norway, Denmark and Finland. Our initiatives within building automation and energy management enable a continued competitive offering for our customers. So that is in brief Bravida. And Bravida as an investment case. First, stable and profitable growth with strong cash flows. We are leader in our industry in the Nordic region. We are well positioned for the future, meaning that we are one of the providers in the industry who will take care of energy efficiency in buildings, which is very important for all our customers. But we also contribute to increased automation and energy efficiency in the society as such. Stable sales with good risk diversification and good opportunities for growth through acquisitions is also part of the investment story of Bravida. So going into this quarter and the highlights for the first quarter. Net sales is down with 2%. As expected, the organic growth is down, minus 6% in the quarter, and we are growing 4% throughout our acquisitions. Order intake very strong, increased with 16%, and it increases all over the group. Order backlog, more than 800 million up compared to the last quarter, which gives us a strong position, a good position for the quarters going forward. Strong cash flow, 90% cash conversion. Cash flow is 399 million in the quarter compared to 60, mainly driven by improvement of networking capital. Cash conversion, as I said, 90%, and that is the highest number since Q1 2022. The margin is down from 5 to 4 as expected and as guided. Low margin in Denmark. We have improved margin in Norway. We are struggling a bit in the south part of Sweden as well. Important to mention is that Norway are improving the margin at the same time as they are integrating the acquisition of Tunestvet. The acquisition of Tunestvet is going due to our plan, which is positive. Very happy to say also that our KPIs regarding sustainability, all of them is improving and going in the right direction and very happy to see that the frequency of lost time because of injuries is down 25% and we are improving in all the countries. The bridge regarding the net sales, we started last year at 7,429,000,000. The organic growth takes it down with 435,000,000. We have M&A who is contributing with 370,000,000 and then we have some currency effects around 36,000,000 and that is how we end up at 7,275,000,000. quite positive about that number. So as you all know, we have a quite difficult market out there, but we are very sustainable and we have been able to actually change or sell another type of project even if some of the part of the market is down because of higher interest rates we have been able to offset those low demand with some other segments which is really positive. We also see in the quarter that the service mix the service part is improving a bit as well. Regarding the EBITDA, margin 4% instead of 5%. As I said just a few minutes ago, a number of measures are taken to improve profitability, such as integrating the growth segments division into our ordinary business. We have taken a cost of one-off of 9 million in the quarter. That is, of course, impacting our numbers. But we also have reduced staffing centrally as well as locally. EBITDA margin is improved in Norway despite the integration of Tunesträtt Group and decreased in other countries due mainly to the tough markets in Finland, south part of Sweden, but also the turnaround in Denmark as we mentioned as the last bullets. Last week, our new head of Denmark, Christian, also started, which is, of course, very positive. Really looking forward to start to work together with him. And I know he's very welcomed in the management group as well. Otherwise, the margin at 4% is very much in line with what we expected due to the fact that we are making a turnaround in Denmark and facing some tougher markets in the south part of Sweden and Finland. The order intake and the backlog together with the cash flow is probably the most positive numbers in the report. As you can see on this slide, the order intake is up 16% year on year and we have an increased order intake in all our countries. We see a growing order backlog in the quarter with 835 million, mainly because of two larger contracts in the central middle part of Sweden, which is two data center orders. And I think it's important to understand and remind you that the order backlog is only regarding installation. The service business is not part of the order backlog. So a good order position for the coming quarters, definitely. Sustainability, as I started the meeting with saying that we have a very positive trend in all the KPIs regarding sustainability, which is strength from our company, but also something that I'm really happy to be able to communicate. You can see that the LTIFR on group level is down 25% in the quarter. We have a group target at 5.5 and we are very close to that target, 5.6 compared to 7.5 last quarter. But we are very close to the target at 5.5. We have improved numbers in all countries and both Norway and Sweden are below the target at 5.5. Then when it comes to our CO2 emissions, we have a target that we should lower our CO2 emissions with 30% until 2025 compared to the position we were at in 2020. And as you can see, we have on the last 12 months improved or lowered the emissions with 10%. But compared to the target, 30% compared to 2020, we actually have lowered the emissions with 27%. And that is due to the fact that we have been changing out a lot of our cars in the car fleet. 28% of all our cars today are 100% electrical driven. And that is an investment we have done and that is something we will be able to contribute from going forward. Acquisitions, we have a strong balance sheet, as you know, 0.9 in that level, which gives us the opportunity to continue to pay dividend and invest in Bravida through acquisitions. In 2024, we have so far done five acquisitions, adding 285 million annually. Integration of Tunestvet in Norway progressing according to plan. We are not for the moment focusing on any acquisitions in Denmark. We are focusing on the turnaround. So let's do that first, then we focus on acquisitions. We see a strong pipeline of potential candidates to continue our strategy of selective M&A growth. Leverage, as I said, remains low enabling continued value creative acquisitions. Summarizing, five acquisitions so far in 2024, adding close to 300 million in annual sales. Now I hand over to Åsa, who will take you through the different countries.

Please, Åsa. Thank you, Mattias. So as always, let's start with Sweden, where we had a top line of 3.5 billion. We have had tough comparative figures this quarter, and this goes for all countries. So the growth in sales was negative 4%, and the organic growth was minus 7%. We had a growth from acquisitions of plus 3% during the quarter. EBITDA 172 compared to 198, and the EBITDA margin declined to 5.0%. compared to 5.5. And this is explained by a weaker market in the southern part of Sweden, which is also affecting the turnover, of course. But the rest of the country was stable, so it's the southern part that was a bit weaker. And we also had a one-off effect that Mattias talked about when we integrated growth segment of 9 million, and this is affecting the Swedish result. And adjusted for that, it would have been 5.2%. Order intake plus 4% coming from installation and the order backlog 8% year on year. We got two large orders in the order intake this quarter. One was a data center and the other was in a wastewater treatment plant. And then Norway. Norway had a top line of 1.6 billion, that is a growth of 2%, and the growth is coming from acquisition, 10%. Organic growth, minus 4%, and another minus 4% from FX. As Mattias said, the Tunestet group, the large acquisition that we did last year, is included now in our figures and is expected to add roughly 600 million in yearly sales. And we expect that the EBITDA will be around zero for the year. The share of service sales has increased in the quarter and is accounted for 53% compared to 50% of total sales last year. And very happy that the EBITDA margin improved to 4.9%. That is an EBITDA of 79%. And if we would exclude the Tunis debt group, it would have been 5.2%. Strong order intake plus 19%. And an order backlog year-on-year on minus 16%. Moving on to Denmark, where the top line was 1.6 billion and the sales growth is minus 3%. And this is the installation business that is going down. The organic growth was 4%. The growth from acquisition was plus 1%. Shares of service sales has also increased in Denmark and is accounted for 44% of total sales compared to 41% last year. The EBITDA margin decreased to 1% compared to 4%, and this is, as Mattias said, and as we have communicated earlier, due to the challenges that we have in Denmark right now with write-downs and also with production in low-margin projects due to the previous write-downs that we have done. Very strong order intake, plus 49%, and the order backlog is 40%. This is mainly coming from installation, the order intake, and we have, as you may know, the pharma industry is going very strong in Denmark, and we have roughly 450 million SEC of pharma orders in this order intake. As we have said, we have done a thorough review in Denmark and are taking significant measures to get Denmark back on track again. And one is, as Mattias said, now that we have a new CEO ahead of Denmark in place from 1st of May, which we are very happy about. And yeah, even though we have had a challenging quarter, we believe that we will be back on normal margins again in the fourth quarter in Denmark. And then last but not least, Finland, where the net sales was 0.6 billion. That is a growth in sales of 3%. Organic growth minus 7%. And there is a soft market in Finland. The growth requisition is plus 10%. Also, EBITDA margin declined to 1.3% compared to 3.7% last year. And this is explained by a lower margin in the installation business and lower volume and also margin in the service business. Order intake increased also in Finland with plus 8% and the order backlog was plus 12% year on year. And then if we look at the net debt and cash flow and our financing position, If you look at the chart in the middle, you can see that we have improved the cash flow, the operating cash flow to 399 this quarter compared to 60 last year. And this is mainly due to the improvement in working capital. And also, if you look at the L2M figure, cash flow has been improved to 1.8. billion and this has then also affected the the cash conversion that is improved to 90 percent it was 70 percent last year and as matthias said this is the the highest levels in two years on the left hand side you see the net debt and the net debt remains low on 2.1 billion and that leads to a net debt ratio of 0.9 times EBITDA. As we have said before, we still have three large orders or three large unpaid receivables, I should say. that we expect that they will be resolved during the next year. And this is two projects in Denmark and one project in Norway. Then if you look at our financing, that consists of a commercial paper program of 1.5 billion SEK and 50 million euros. And also we have a three-year loan of 500 million SEK and that one is maturing in 2025 in August. Well, Mattias, by that I will hand it over back to you.

Thank you so much. Thank you, Åsa. And a short view on the market. We still see a very stable amount for the service activities. There are some challenges in installation continuing, of course, and there are definitely variation between geographies. There are though favorable market conditions in segments like infrastructure, industry, defense facilities and civil engineering which gives us quite significant opportunities and I also think that is what you can see in the strong order backlog as well. We will maintain our project selective strategy with continued focus on cost control across all projects and margin over volume. So take a look at the financial targets. We have a margin target above 7% EBITDA. We have a cash conversion target over 100%. The net debt target at below 2.5 is something we, as Åsa said, have delivered upon. We have a sales growth that this quarter is below the target. The target is above 5%, a combination of organic growth and acquired growth. In many, many quarters now, we have been above that target as well, well above as well. And we have a target of paying out more than 50% of the net profit in dividend. And later today we will have an annual meeting where we hopefully will decide upon the dividend as well. To summarize the quarter, sales growth, we have a growth from acquisitions, but have a negative organic growth in total. Not a surprise, what expected slightly down with minus 2%. The EBITDA margin is down from 5% to 4% also as expected due to the fact that we are making a turnaround in Denmark and are facing a tougher market in Finland and Sweden. But improved margin in Norway and very stable margin in the rest of Sweden is positive of course. I'm very happy to see the good performance in Norway. I think that Norway will come back to the old great margins in the future as well. And we now see the first positive signs of that. We are doing significant measures in Denmark. And as we have said a couple of times, we are welcoming Christian Alsø as the new CEO and head of Denmark. Really looking forward to work together with him and the management team in Denmark that I have learned to know for four or five months now. And I can tell you that they are very skilled, slightly a bit bad of confidence, but we have improved a lot in our way of negotiating contracts, terms in contracts, pricing, etc. So I'm really looking forward to see what Denmark can do in a couple of quarters from now. In total, strong order intake and a strong order backlog, improved cash flow and cash conversion and the highest level since the beginning of 2022. And most importantly, maybe that we are improving the LTIFR for all our employees. We are a much safer employer today than we were before. So improving a lot in that area, which is very important. Good to see. And CO2 emissions is down significantly as well. So we are delivering very well on the sustainability KPIs, which I'm very happy to be able to communicate. And now we have a stable order backlog and we will start delivering on the margin as well going forward. So thank you for that. And I think we can open up for some questions.