Bravida Holding AB (publ)

Good morning, everyone. Oh, what happened with the sound? That was a great start. Welcome to this Q3 report of Bravida's presentation today. It seems like we have some issues with the sound, but meanwhile, together with me today is... Petra Branjes.

Hello.

Our CFO, yes, and together with Petra, I will take you through and guide you through this presentation. So thank you for that. I think we start immediately. Are we fine with the sound? Yes thumbs up then we start. Bravida as you know presence in 190 different locations. We were 14 000 employees in 24. We are unfortunately a few people today but hopefully we can when the market get back again start to grow the company again. We had in 24 close to 30 billion in sales in four different countries. So by that we are going into the highlights for this third quarter of 2025. Very happy to see a very strong performance in Denmark. And Denmark is contributing to the margin improvement for the whole group with 80 basis points. We are improving our margin to 5.3% in a very demanding market. I think that is very strong. As a CEO, of course, you work daily with things you can improve. You think that you can have done some things better. But I also... have to admit that in this market condition I think it's very strong to be able to improve the margin like we have done in this quarter. EPS increased with 24%. Denmark is executing due to the plan we have communicated earlier or slightly better actually. The guidance for the full year is still close to 5% but we throughout this year have been more and more confident that Christian and his team will deliver on that one. Acquisition contributes with two and a half percent. We also see an increased order intake in Finland with healthy margins which is really good and we have an operation cash flow that is due to timing issues slightly weaker than we want it to be. On the other hand at the same time last year we were around 130% cash conversion so there is a timing issue depending on some large projects. The net sales is down 2% roughly and The main reason except for the market as such is of course that we are very thorough what kind of projects business we bring into our portfolio. So the restricted project selection has contributed to the low net sales and of course also the improved margin that is going hand in hand. EBITDA in the quarter, the margin increased to 5.3%. And as I said, the driver behind this is that the margin is significantly improved in Denmark, despite a weak market. So very good from the Danish team at the same time as we have very stable margins in Norway and Sweden in a tough market. Finland, a lower margin. And that is more depending on an isolated issue in one branch or few projects. And I guess Petra will come back to that later. Order intake and backlog. The order intake is up 5%. might be a positive sign i think it's still too early to say that the market will turn we still think that it will take some a bit into the 2026 before we see that the growth is coming back in our books activity has increased a bit but the order backlog is on stable level and we are very happy with the quality of the orders we have in our books today so The market is a bit challenging but an increased or improved order intake and a stable order backlog is of course very good to see. And maybe worth mentioning is that the order book increased in Sweden and Finland in the quarter. So ESG, the change in CO2 emissions is down 42% if we compare to the net sales in 2020. It is improved with close to 15% the last 12 months and especially happy. we are with the improved work with the health and safety. The accident rates is improved and it's now at five which is lower than our target and it's lower than last year which was 5.9. A low number is good. Norway, Sweden is better than our group target. Finland has improved a lot. Denmark is working hard to get down in this KPI as well to improve that work and it's very good to see that we are moving in the right direction regarding the ESG KPIs as well as we are improving the margin at the same time as we're improving the margin I would say. Acquisitions, we have done two acquisitions until the third quarter adding 300 million plus in annual sales. In the fourth quarter we have added another two acquisitions one in Sweden and one in in Norway, slightly smaller ones, but with good margins. And the pipeline is still strong. We have good quality in the pipeline, a lot of discussion. But as I said, the last couple of quarters, it is a bit more tricky to close the deals depending on the main reason is the market condition, because sometimes we want to do the deal, but the sellers might think that they are performing slightly below what they are used to do. When some want to sell, we maybe are a bit too cautious because their performance is going south or is not in the level we want it to be. So a good pipeline, but slightly more tricky to actually close the deals. With that, I hand over to Petra, who will take you through the different segments.

Thank you, Mattias. So looking at the different segments, we will start with Sweden as usual. And in Sweden, we have seen a growth of negative seven percent and mainly explained by the softer market in the southern parts of Sweden. And we have also closed down some branches there in quarter four. So that brings the sales down. We do have an impact of acquisition in the quarter isolated. It's positively impacted by 4%. And when we look at the year to date, the number is 2% of the impact from the acquisition. Sweden has closed on an EBITDA margin of 172, which is 6% flat on the quarter, down from 6.3% with the lower sales and top line then. And when we look at the year to date, we can see that Sweden is performing on a flat EBITDA margin of 5.7%, so very good performance considering the lower top line that we see there. On the order side, we have had a positive book to bill in the quarter and the orders book came in 33% higher than last year's quarter. For the year to date, Sweden is down on the backlog with 9% year over year then. I should also mention that in Sweden we have an ongoing review of the organizational governance and steering, and we are expecting some efficiencies from that to come. When we then look at Denmark, Denmark has performed very good and they're executing diligently on their plan. And with that, they have increased the sales with 23% organically impacted by the currency effect of 3%. We are at 20% positive growth in the quarter. We can see that both services sales and installation sales are increasing services up 15% and installation by 24% year over year. The EBITDA margin to 5.5% from a negative EBITDA margin last year. So Denmark is contributing with more than 100 million in the isolated quarter. And if we look at the year-to-date numbers, we have Denmark up 470 basis points year over year. On the order intake, Denmark is down 32% in this isolated quarter. However, looking at the year-to-date numbers, we can see that the backlog has increased with 8%. So very strong from the Danish team on the execution on their plan. Norway, here we can see that Norway came in on 1.2 billion and that is a sales decline of 10% in the quarter. Also Norway is affected by the currency exchange and they are down 3% on the currency exchange. So organically 7% decline for Norway in the isolated quarter. Norway is also performing well on their EBITDA margin considering the sales decrease. They are coming in on 5.7% EBITDA in the quarter and we can see that the year-to-date number they are improving the EBITDA margin to 5.6% from 5.4%. So strong execution on securing the cost side from Norway. On the order booking we have a slight decline 9% in the quarter and the year to date then order backlog is up also in Norway. And then looking at Finland, Finland has closed on 528 million with a close to zero EBITDA margin, depending on the low top line in Finland and a couple of two projects that we have taken write downs for in Finland in one branch. So that brings the EBITDA margin to 0.6% in the quarter. The growth or decline of 18% is affected by currency exchange rates in Finland as well, 2% down and also positively from acquisitions where we see a 5% increase in top line. Year-to-date EBITDA margin is of course also impacted by this quarter's write-downs and is landing on 1.6% to 3.8% in last year's year-to-date numbers. On the order side, Finland came in very strongly. They are booking small, medium-sized orders, but they also have in this quarter closed the deal for the industrial facility in Finland and the orders are then 66% for the isolated quarter. Finland actually booked 749 million in order intake in the quarter. Backlog is also up 15% on the year-to-date numbers. So that was the segment. Let's look at the net debt and cash flow. On the cash conversion like Mattias was mentioning we do have a weaker cash conversion in the quarter so we are at 63% compared to 134% last year and then we have a negative cash from operating units it came in on negative 111 million and this is due to build up of contractual assets for some of our larger projects that are executing so in the larger projects we have early advance payments, which we have received earlier years. We had a very good cash conversion last year on above 130%. And now we are executing on those contracts. They are invoicing according to the contracts and contractual terms and conditions and executing as they should. But cash varies over the quarter for those large contracts. When we look at the net debt, we can see that we have a 3.5 billion of net debt and interest bearing liabilities close at 4.1 billion, including 1.5 billion of commercial papers and 1.4 billion of lease. And our credit facility of revolving credits is 2.5 billion, of which we had 2.1 as unused credit facility end of September. Our net debt to EBITDA ratio is at 1.5 and our target is to be below 2.5. So we are well within that target. And with that, I welcome Mattias back to take us through the highlights.

Thank you so much Petra and yeah the highlights of summary for Q3 is I think that we have an improved EBITDA and improved margin. The EBITDA is 342 compared to 294 and the margin is 5.3 compared to four and a half and I think that is very much Because of a great job from all the local leaders and their branches and all the personnel in the branches. Good cost control and very thorough work with all the businesses we actually are providing to all our customers. EPS up 24%. and this is at the same time as the top line is actually down with 2.2% with that I think also you can see that we had a negative organic growth I think it was 7 or 8% last quarter it's slightly better now so I think that the market has bottomed out it hasn't improved and it will take some quarters before that will happen I guess if that happens sooner I think that's better of course We can see that installation sales is flat and we are losing some percent in the service business and I think that is because that the normal type of business is impacted by the market demand but then we have some infrastructure projects, defense facilities etc that actually driving the installation portfolio a bit more than it normally does. organic growth minus three and then we have acquisitions where we're actually adding two and a half percent and then we have some headwinds from the currency we see all increased order intake in finland and sweden operating cash flow petra just talked about which is a timing issue you can say as she said it was above 130% this time last year and now it's slightly lower. We are of course working with that but also there are some contracts that is deciding when to let us invoice so it's not any other reason behind that. and then we have improved LTIFR and very good KPIs regarding our CO2 emissions so going to the market outlook service activity will continue to be stable there will be challenges in installation business but there will be some positive opportunities regarding slightly bigger projects in the infrastructure segments and also of course the defense facilities I earlier have said that the defense investment hasn't really started in Sweden but we now can see that that are starting to grow which is of course positive and can give us some tailwind going forward And with that said, it is important to understand that we will continue to be very selective regarding what kind of business we bring into our portfolio, because having a balance between the risk exposure and the business we're bringing in is important. And I think that is the main reason why we have been able to improve our margin in this quite tough market. but again it seems like the market has bottomed out from now on i hope we can go up it will probably take as i said a couple of quarters more before it does but we are preparing us as a company improving us as a company so we can go into the new in the next cycle as a better company than we entered into this existing cycle so with that i think we open up for q and a's

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Carl Ragnastam from Nordea. Please go ahead.

Good morning, it's Carl-Evan Rodilla. A couple of questions. Firstly, coming back to the cash flows, I appreciate your comments on it. We have previously, in the previous quarter, we discussed the milestone payments of what is suspected to be the bypass project. What is your view on that right now and how certain are you? I mean, that to ensure me and the market that it's not a conflict coming up or an issue at all in those contracts where you're not getting paid.

so thank you carl for the question and good morning when it comes to the large projects they do have this cash intake in in advance a lot of cash comes in early in this specific project we got a lot of cash a couple of years ago and it's been ongoing so when we are talking about milestones there are many many milestones in the project And we are invoicing as we go. So it's not like the project is stagnant and not doing any invoicing. We've got a lot of cash up front. We are executing. It builds up assets and we are invoicing according to the contract. It will have a... build up of assets first before we actually do get out of it. If you look at the project in total, there's not a issue with the cash conversion in those large projects. But if you look at an isolated quarter or year, you might see the tendencies of a fluctuation.

Okay, that's good. But I can sense quite a big difference in the communication between what you said in Q2 and now Q3. When we listened to your Q2 conf call, it sounded like it was specifically one big project where you had a couple of hundred million that you expected to invoice during Q3 or Q4. And now I sense that you no longer expect this or you don't see that dynamic at all. What is the difference there?

Well, we are actually expecting invoicing, and we are invoicing. So this project invoiced quite significant amount of money in Q3 as well, and we'll do that in Q4 as well. However, we are building more on the assets than we expected. and we expected because we haven't been deep diving into the project per se so now we have done that a bit more that's why we have more information and it's not just one project you had if you look at the cash intake in the last year so if you look at 2024 you have 130 plus percent of cash conversion You do have more other projects primarily from Denmark coming in with a lot of cash in last year. So that's why you hear a little bit difference in the tone because we have more projects coming in that have a conversion earlier and now are in the same phase as the big project in Sweden.

If you look at the numbers for 2020 and at that time we also said that we have a lot of pre-invoice in one big project and I think that is explaining why we have slightly weaker situation in this quarters where we are right now. And that is actually a couple of years ago. And that is also... things that happens in these large projects where we actually are one of the few who have the competence but also have the balance sheet to provide those services and we of course price the risk and the cash part into the margin when we are bidding for these projects.

Okay that is clear. And it's just that finally on this discussion, sorry for not letting it go that easily. The four or five hundred million we discussed before, you don't anticipate it for the Swedish operation to come in Q4 or Q1. I mean, those money are not existing anymore than that we discussed before.

The four or five hundred million.

Or a couple of hundred million. We discussed that in previous quarters.

Definitely in the range of 100, 200. There are hundreds of millions absolutely coming in. But we're also building the project at the same time.

So the milestone payments are not coming basically in Q4 or Q1.

There are some coming, but on the other hand, we have a very high production now. And part of the production we're doing now is things we invoiced three years ago. So another way to answer it, Carl, is that this is a cash flow issue. It is not a margin issue. And we have not a dispute with the customer. It's just that we have a professional customer who want to tick the boxes for the different milestones before we are allowed or can send the invoice. And that is the situation for now. But again, 2020, I think we had a cash conversion 135%. And the main reason behind that, as we said then, was pre-invoicing in a large project. So I think overall in the project we have a good or okay cash situation but now if you look at the certain period of that project a project that is actually going on for many many years then for now these 12 months it is a week and the explanation for the numbers you see these last 12 months and in this quarter.

Okay, that's good. And looking into Denmark, quite strong word in the quarter, definitely. But you're still guiding, as I interpreted, below 5% or maybe touching 5%. Sequentially, we have seen Q4 typically being significantly stronger. Why are you not more confident in reaching above 5% or is it just to be prudent?

No, but we have no reason to. I think we have delivered on what we have said in Denmark, absolutely. And as I said in an interview earlier, we are more confident today than we were. We have been more and more confident for every quarter that we will reach the guidance we have given to you. So I think if it's prudent or not, I don't know, but we'll stay with the guidance slightly below or at around 5%.

But do you still expect the seasonal pattern?

Yeah to some extent then of course we I think it's written in the report as well we still have some projects with lower margin to to finalize they they are fewer today than they were a quarter ago they are impacting less than they did before so Yeah, maybe you're right, Carl. I hope you're right. But we normally not guide at all. So we stay with what we have said before. And we are very confident that we will deliver on that. Yeah, that's my answer.

That's clear. The final one, if I may, sorry for that, is regarding the reviewing of the Swedish organization. You say it's to improve efficiency and governance. What are you actually doing in Sweden? Could you shed some light on what the plan is?

Yeah, absolutely. So and of course, you haven't seen that externally because we have had the segments as countries, Sweden, Norway, Finland and Denmark. However, internally, Sweden has been steered and governed differently from the other countries. So we have had. more than one. So we have had three to four in times, I understand. Also divisions. And now we are reviewing that to consolidate some of this and to get a clearer and better steering of Sweden as a country like the other countries as well. And in that we are expecting some efficiencies to come out.

OK, very clear. Can you quantify the efficiencies as well?

Not at this moment. We cannot. So we are still reviewing.

Okay, very clear.

Thank you. Thank you, Colin. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Johan Lankvist-Sunden from DNB Carnegie. Please go ahead.

Good morning. Thank you for taking my questions.

Good morning. Good morning.

If we start a little bit on the Swedish business, just curious to hear a little bit more color on the kind of lower organic growth we see in the Swedish service business. Any indication or what what's behind it basically?

No, but I think that is the reason behind the tough market. And I think if you should take out or take away the slightly larger projects in infrastructure, defense industry, the pharma, etc., I think you would see the same pattern on the installations. I think that is just... sign of a tough market. So it's still very stable. There are some positive segments on the installation business that might be seen then from your perspective that the installation is stronger than the service business. But the service business is still very stable. There are some impact from for example small project on the service business where our customers is more cautious about their investment. So they are doing the normal service but the small renovation project etc. is missing for the moment. But I think that is just how the market looks. That's how I want to answer that one. Did you understand what I meant?

I just don't understand the wording of stable when it's falling 11% year over year.

Yeah, I think also that has been the trend. My view on the market is that it has bottomed out. It has stopped being worse, but it hasn't really improved.

Also, a wider question, we'll come back to the pricing in general. Is there a big pricing pressure on the service contract that makes you step away a little bit, or is it? Any of those kind of elements?

The new contracts there are of course a price pressure. Existing contracts we are delivering on as is. But of course there is a price pressure in a market like this, absolutely.

And you go to the installation business and just looking at the order intake and visibility from your side going into Q4, Q1 here. How much of a step down on pricing should we anticipate?

We try to defend our margin, of course, but I think also the volume might be... In some places we actually have reached some kind of critical size where we maybe don't want to scale down more. So I think it's not... I think the margin will probably more be impacted by slightly higher cost than a lower price from now on, I think. So the prices is... If I should say something about the prices, I think they have maybe improved a bit, but on low levels.

And when you say it has improved, it's on tenders in Q3 that should be delivered upon H1-26.

Yeah, exactly. Yeah. But it's not a big change. I think it's still a quite demanding market. From time to another, we hear some competitors taking prices very, very low. But that is happening in a good market as well.

If we look at the Finnish business, some write-downs in this quarter.

Yep.

Should we anticipate more write-downs coming in Q4-Q1 or is it isolated to this quarter or how do you view it?

We think that the Finnish margin will go up the coming quarters and this is an even if we have a tough market in Finland those write-downs is isolated to one branch you can say so we have a very good control and our eyes on it we have done measures already and we will continue to focus to improve that branch of course. So the margin in Finland will improve the coming quarters?

Yes, we are expecting that. So the Finnish business is otherwise a bit hampered under low sales. And as you can see, they have closed some good projects and good contracts. So we're not expecting that part. The isolated write-down was two projects in one branch, and that one we're not expecting going forward. Things can, of course, always happen. We do price risks in our projects, and you can always have write-downs coming up every now and then. We're not expecting that in Finland, in the near future at least.

A final question from my side. It's related to the question from Carl before. It's on the cash flow profile and working capital profile. What should we anticipate on the working capital profile? swings in the coming, say, two, three, four quarters.

So, well, we are expecting an improved sequential cash conversion for Q4, and now I'm not supposed to guide. So Mattias is telling me every now and then I'm not supposed to guide. But we are expecting, of course, a bit improved cash flow. I wouldn't be expecting the 130 bars unless we get some really big contracts and then they bring on board

advanced payments so i would expect a bit lower than that definitely but improved compared to this quarter yeah and i just want to add another way to look at this as well and i understand this is of your interest of course but if you take a look at the last 10 years in bravida we have actually an average on cash conversion at i think it's 99 or 98 percent even if we include this quarter So I think if you isolate one quarter, then of course we can have these differences. I think we had the same in 2019 or something. And then in 2020, we had 135%. So as we see it in Bravida, some of the large projects is historically very profitable for us. And that is because we are good at it. We are choosing them very carefully. But it also means when we are very... try to be front loaded our cash terms in a contract means that after a while the customer actually want to have something delivered for the money we actually invoice them earlier and in this specific case without mention the project that these contractual terms that was decided when we were bidding for the project where we had a big invoice in the beginning We have a middle phase where we are producing a lot and we are invoicing slightly less. And then in the end, there are some testing where we have a big invoice where we have lower production as well. And I think that is what you get as well in these type of projects. So it is a timing thing in the contract. It's not the margin thing. And we definitely have not. no dispute with the customer i think that is what we can say so take a look at the 10 years average cash conversion and we are very close to 100 even if we yeah put this third quarter into that calculation yeah i understand i think given the kind of dynamics and the

that we are in the dark from the outside, I think it would be good for visibility if you can improve kind of guidance on this topic a little bit going forward. But we can take that in a separate discussion.

Yep.

Appreciate.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Oscar Ronquist from SEB. Please go ahead.

Hi, good morning guys. Just a couple of questions for me. So the first one is just on the market outlook. So it seems like you shifted your comments a little bit from the Q2 report. Just wanted to hear your thoughts on the direction of travel. So is it just that you have pushed out your recovery expectations or is there any difference in the Q2 communication? Thanks.

No, but I think we get new information not every day, but quite every month at least. And we also saw that the construction industry in Sweden actually, they kept the growth numbers for the industry, but they actually pushed them a couple of quarters further. And I think that is, of course, what we see as well. And I think if you go back a year and a half, I think most of the people in the whole society or our industry said that the market will turn after Christmas 24. Then it was after summer 24. Then after last summer, it was in spring 25. So no one really wants to guess anymore. And I think what we really have to focus on is what are we doing in this market? Because the market is nothing we can do anything about. But we can decide what to do in a challenging market. And that is... continue to work with our cost side be very focused on meeting a lot of customers try to develop new services and improve our way to deliver existing services and that's what we work really hard on every day so my ambition our ambition is to become an even better company when we enter the next phase of the cycle as i said earlier so Of course, the communication is therefore changed since the last quarter, but we also have some more information. And I know everyone wants me to say that the market is improving and changing, but to be honest, we can't see it today. We see it, it's stable. We think we are a very strong company with many good people but we are not magicians. But we can see that the market is definitely more stable today. It has stopped being worse. It is now leveled out and hopefully we can go up from this point and the quicker the better of course. The honest answer is that we can see a positive order intake. We can see an order backlog that is improved in some areas. We see an increased activity in the tender phases. But we can't see it until this year that we are increasing the production. And I think that is what is actually important.

Perfect. Thank you. Just a small question on... Finland. So you talk about increasing margins, obviously the Q3 margin wasn't that appealing at all at 0.6. So first of all, do you have any sort of comment about the magnitude of the project write downs? And also when you say that the margin should improve, is that from sort of an adjusted basis, not including the one offs from your side, or is it just saying that it should improve from 0.6?

If I start then, Petra, if I miss something you want to add, you can do that. I think first, it is an isolated problem. And while Finland is quite small in a tough market, we really can't stand these mistakes that we have done in one certain branch. We are now fixing that. So improving the margin going ahead means that we will have a better margin in Q4 compared to Q3, obviously. If I remember correctly, I think we had a quite good Q4 last year in Finland. I don't think we will meet that one. But then it will be better and better. So the good thing in our business model is, of course, when we have finalized those projects with downright things, then they are gone. And then we have a healthier portfolio immediately. Was I right, Peter?

Absolutely. You are absolutely correct there. And maybe I should also add that Finland, to your point, there is such a small market. So the write downs of two projects that would maybe not even surface in a bigger market are impacting the EBITDA margin quite significantly in Finland. So it's double digit on the millions, but it's not a huge number in the content of Bravida.

Understood. Thank you very much. Thank you.

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

Thank you so much for all questions. And we know that it is a very busy day in the stock market today in Sweden. A lot of companies is reporting. I think that is why we have slightly fewer questions today. But thank you for participating. And we will go back to continue to improve Bravida while we are waiting for a slightly better market. Thank you all.

Thank you, everybody.