Bravida Holding AB (publ)

Hi, and good morning, everyone. I am Mattias Johansson, CEO of Bravida, and I will take you through this presentation of the second quarter 2024 for Bravida together with... With myself, and I'm Åsa Neving, CEO of Bravida. Great, welcome again and we kick off immediately and we will tell you of the experience when it just works. Some things in life we just expect to work. You expect the light to turn on when you press the switch, for water to flow from the tap and to be able to trust the security systems in a building. Bravida provides technical solutions for everyday life and the future in a way that cares for properties, people and the environment. Bravira, in numbers, figures, we are present in 190 different locations. We are close to 14,000 employees, and last 12 months we have had sales at close to 30 billion. We have more than 80,000 customers, a lot more than 300 branches, and we are approximately 40 regions in four countries. Bravida helps create a resilient society today and beyond. I don't know if you hear the sound or the noise, but if you do, that is something happening in this building. And I think that just shows you all how important installations are in buildings that we are servicing and maintaining. We will serve, and we have plenty of opportunities in the market going forward. Automation that provides energy-efficient buildings, energy-saving measures in buildings. We're working with hospital buildings with operational certainty, energy-efficient technology solutions for industrial customers, future infrastructure projects. and reliable security systems. On top of that, you can also add defense properties investments depending on Sweden, Finland joining NATO, Norway expand that budget as well going forward. So, why is Bravida an investment case for you? First of all, stable and profitable growth with strong cash flows. In recent years, Bravida has delivered stable growth with maintaining EBITDA margins and strong cash conversions. And if we look back for the last 10 years, we have been able to deliver a cash conversion above 100% as an average for the last 10 years, which I think is very, very good. We are leader in our industry in the Nordic region. With our size and broad competence we are well positioned to grow in a market with excellent opportunities. Well positioned for the future as well. Energy efficient buildings are high on customers wish lists. With our offering we contribute to increase automation and energy efficiency. And going forward, I think this is even more exciting because the new rules from EU, the EPBD, Energy Performance Energy Directive, will force or motivate the owners of different buildings to invest in buildings to make sure that the energy consumption is going down. Stable sales with good risk diversification, more than 80,000 customers, 14,000 employees in many, many different places creates a portfolio effect. We have a very high diversification in our customer portfolio in different segments, etc., The high sales stability enabled through many recurring assignments, low dependence on individual customers and large service revenue share. And we also finally have good opportunity for growth through acquisitions. We have done more than 150 acquisitions over the past 10 years, which have added 11 billion, all financed by our strong cash flow that I started to mention on this slide on the top. The highlights for this quarter then. Despite expected challenges in the market of Finland and in south of Sweden, as we have communicated in the last quarter, we are able to present an organic growth at 1%, total growth at 5%, and we have a service sales growth at 8%, including some organic components. plus continued high order books that gives us visibility as well as comfort to offset some regional challenges going forward as well. 4% of the growth comes from acquisitions and the FX effect in the quarter is zero. Order intake increased slightly, driven by Sweden and Norway. And that is even if we haven't received any large orders in the quarter. And I think that is also important. sign of our ability to be in many places, high competence. We have been able to be attractive to many different customers in different segments. Order backlog remains at high 17.6 billion, one of the highest order backlogs ever, actually. The EBITDA margin is the thing in this report that we are not happy with, of course. But as expected, it's going down 4.5% compared to 5.6%. And it's primarily affected by operational challenges in three regions in Denmark and weak market in south of Sweden, which we all have told you about earlier. On the other hand, Norway are on the same level as last year, even if we have done the strategic acquisition of Tunisvet, which dilutes the margin. So adjusted for the acquisition, the Norwegian business is improving and very happy to see that they are organically growing 10% and the acquisition of Tunisvet is also delivering due to our plan. Everything all good in Norway and then in Finland improved as well, which is impressing by depending on the tough market they are facing. The best KPI maybe in the quarter is cash conversion of strong operating cash flow. 548 million shall be compared to 134 million last year. Cash conversion improving in the quarter to 112%. And the injuries is going down with 19%. And we have really strong KPIs for the moment regarding the ESG, which is very, very good. The bridge regarding the net sales, last year we had 7.3 billion. This quarter we are adding 45 million in organic growth coming from service, as well as some installation in some parts of the company. M&A adding 319 million, and you have some currency effect adding 24 million, and that brings us to 7.3. 7 billion in sales for the second quarter this year. Again, organic growth 1% in this environment is really, really strong. Regarding the EBITDA, margin 4.5 as I said, compared to 5.6. The margin is improved in Finland and Norway, if we exclude for the acquisition I just told you about. As expected, we have continued operational excellence in three Danish regions and a weak market in the south part of Sweden that brought down the group margin as well. In Denmark, we can see that we are definitely ahead of the transformation if we look at the organization. We have some projects we need to finalize, but I will tell you that If you look at medium term target, Denmark will be a strong part of the company going forward. It will take some time, but our communicated plan from last quarter where we see tough margins in Q3 and normal margins again Q4 is still what we are chasing and are expecting. Of course, continued implementation of cost reduction initiatives to improve the margin is carried out where we think it's needed. Order intake and the backlog in the quarter. As you can see to the left, we have a quite positive development of the order intake over the quarters since mid-21. There are a seasonality in the order intake. So you can look at the line. Quite solid and good improvement of the order intake. To the right, you have the order backlog. which only contains the installation projects. It's one of the highest, as I said, it's decreasing only 276 million in this quarter. I think that is good due to the selectiveness we are using on the project selling side, as well as a tough demand or tough market conditions we are seeing in some areas. Order intake increased slightly year on year and increased in Sweden and Norway. When we come to the sustainability or ESG, today 33% of all our vehicles are electrical driven. We can actually see quite some impact in the KPIs regarding sustainability today. The CO2 emissions from vehicles is down 11%. If we compare, that is not on the slide, but if we compare to the emissions we had in 2020, just for the sales, we have actually lowered the CO2 emissions from our Carfleet with more than 30%. LTIFR on group level is down 19% and we're getting closer to our group target at 5.5%, which is really good. We have lower LTIFR in Sweden, Norway and Denmark. And Norway and Sweden are already today below the target. And as previously reported, we have dealt with the incident of over-invoicing in a specific branch in Sweden decisively. And no other such issues have been identified as part of the reviews we have conducted. meanwhile since this happened in april we have been asked to do some audits with customers around 30 customers have been doing an audit together with us in bravida and we have no not find any signs of the same issue that we had in one branch in malmo that we also filed to the police in the spring and that is of course good The inflow from customers who wants to do audits has decreased a lot. We are seen as a very strong, reliable and good supplier for most of our customers. And I think that is really good to see. We also have presented some new contracts the last weeks from public customers, which is the sign of that we have a big trust in the market, which is good. With that said, we have to deal with this certain matter in one branch of south of Sweden. We have done it and we will continue to do it. Regarding acquisitions in 2024, eight acquisitions is completed so far this year, adding around four acquisitions.

400 million in sales.

We continue to see a good pipeline or opportunities regarding acquisitions. The pipeline is strong of potential candidates and that will give us the opportunity to continue the strategy of selective M&A growth. With that, I hand over to Åsa who will take you through the different segments.

Thank you, Mattias. And then, as always, let's start with Sweden, which is our largest country, where we had the top line grew marginally to 3.7 billion. And then the organic growth was negative in minus two, compensated by growth from acquisitions of plus 2%. We have a really strong production in the installation business in Sweden and also service declining a bit in the southern part. So that means that the service part was 48% of the total sales compared to 50% last year. The EBITDA was 221 compared to 248 last year. year and that is a margin of 6% compared to 6.7% last year. So the margin is declining a bit and that is, as Mattias said, because of the very weak market that we see in the southern part of Sweden that also has an effect on the margin. We have been taking actions there to adjust to the market conditions and we will continue to do that. Order intake plus 17% and the main part of that is coming from installation. We have a large activity in installation projects in Sweden now from infrastructure and industrial projects. So backlog increased plus 15% year on year and also increased in the quarter. Then let's move on to Norway. Norway did a very good quarter this second quarter. The growth in sales.

was high, 22%.

So, the top line was 1.6 billion compared to 1.3 billion last year. And the growth came both from acquisitions and from organics, so 10% from each. The two nesteds, the acquisitions, the larger acquisition that we did last year is included in these figures, and it's adding about 600 million yearly. And year-to-date, it was almost 300 million that are in the books. So Ibiza was 92 compared to 75 last year, and that is an Ibiza margin unchanged of 5.7%. And if we would have excluded Tunestat, that is diluting the margin, it would have been 6%. So we are improving in Norway. The Tunestat is going according to plan, and that is We planned that it would be a zero margin in this year, and they are on a black zero. So that is all as planned. The order intake was 25%. That is mostly coming from service. Service grew a lot in Norway this quarter, I should say, and the service part of the sales was 54% compared to 52%. And if you look at the order of intake, most of the order of intake came from service, but it was also an almost double digit coming from the installation. side. Order backlog minus 17% year-on-year, also decreasing in the quarter, but we see that there are many interesting projects in early phases in Norway that we hope will be going into our order books later on. Then moving on to Denmark, where we have a new division manager, started 1st of May, Kristian Albrecht, And in Denmark, we had an unchanged top line on 1.7 billion. And the service part actually grew a lot. So installation went down and the service part is 45% compared to 38%.

last year. And this is according to a plan we