Fasadgruppen Group AB (publ)

results call with Fasadgruppen. We have announced our quarter three results earlier this morning. With me in the room, we have our CEO, Martin Jakobsson. We have our CFO, Kasper Tamm, and myself, Adrian Westman, Head of Communications. So we'll start off with the presentation as always, and then we will conclude with the Q&A. So please, Martin, go ahead.

Good morning, everyone. Welcome to this Q3 call. So, we already announced headline figures. This was Tuesday here. So, in this presentation, we will dive into some of the details that was not presented. but some highlights then to start off we don't see any large market changes since q2 here still see in a competitive situation in sweden and the recovery may take some time however if you look at the earnings side we see a positive development compared to the first half of 2024 In looking at the order backlog, we had a negative of 20% organic. But bear with us here that when you compare between new production and renovation, new production often have much longer lead times. So I wouldn't say that that gives the full picture of where we're heading looking at the organic order backlog. And some more details is also that if we look at the material prices, we've seen some of those also decreasing. And remember here that material prices is roughly one third of our costs. So that's a pass-through effect which affects the organic growth. And if the material prices goes down, that affects the organic growth negatively. In the quarter, we had two acquisitions, and I will get back to those later in the presentation. And then, of course, we announced our largest acquisition as of yet in terms of Clearline. We'll also note that. But I also recommend you to go to our web page where we have the conference call recorded from Tuesday. looking at the balance sheet is also could say in relative terms an improvement here with with the clear line but we'll get back to that so diving into our net sales total decrease of four and a half percent of which roughly ten percent was organically here also affected by decreasing material prices If we especially look at the Swedish operations, that is where the largest decline is. Remember here that our Swedish operations is also the one that the largest output of new build. And then both in Norway and in Finland, we had organic growth and then our Danish operations were slightly down. all in all i would say swedish market stands out the rest holding up fairly well looking on the adjusted beta levels we came in at the margin of 7.7 percent here in the quarter and we saw improvements both in norway and denmark and um I'm glad to see that the measures that we took earlier this year has given effect. Remember here that if you just look at the head counts, roughly 170 full-time employees have been redundant since Q3 2023. So we have adapted somewhat our total cost profile. But of course, it's important for us to keep key employees, key competences in the company so that we are ready for the future expansions when the market turns. Looking at the order backlog, there was a negative decrease of roughly 20%, as I mentioned. You could also point out here that in the Q3 of last year, we had quite high levels of the order backlog. There is I could say it's quite important to note here that in the order backlog margin, that's up against the same period last year, and I would say quite flat to Q2. But that also means that we are very selective around the projects that we enter into. And with that said, We believe we passed the bottom around the market here and ready to act when it turns. Just looking at Denmark and Finland, they exhibited growth there in the backlog organically, whereas the other two countries did not. Cash flow wise, I'm glad to see that the measures we've taken are giving effect here. We saw an improvement in working capital of roughly 39 million in the quarter. And just looking on the last 12 months, it's roughly up 139 million compared to, I could say, 124 million in the end of 2024, end of 23, I should say. I think it's there, but okay, maybe it's wrong there. But anyway, so in cash conversion wise, I'd say we're above our target of 100% looking at the last last four months. But with that said, I would also say that see that there's more to be done here in the cash flow remember still quite a young company in those terms and we're acquiring companies as we go and and implement implementing our measures going along and that's not done overnight Looking at financial capacity and net debt, first of all, average interest rate in the nine month period here was roughly 6% compared to 4.6% in the same period last year. But however, we've seen, of course, rates going down and going forward, we see that rates were also go down for us as where we have an interest period of one to three months that means also that decreases in the interest rate environment is gives a quite immediate effect for us looking and on the net debt to adjust the dbt a pro forma excluding clearline then obviously that was just below three and a half percent high as of last of september Looking at our credit facilities, we announced that also yesterday, that we now have sustainability linked those loans, which we're very glad to do. Then we announced two new acquisitions in the quarter. First, I can mention Brenden, which is a leading scaffolding company in Norway. second generation family business we acquired it from from the local entrepreneur local entrepreneurs still with us and continue to to add value and we have been working with brendan for many many years with our existing companies within norway so very glad to be welcoming them into the family now and It's noteworthy here that we also acquired 15% of a company called Prostylas, which is a software where you have the project management connected to these scaffolding companies with the option to acquire Prostylas 100%. And Bränden especially have seen huge effects when it comes to productivity and efficiency using this software. So we are very excited to be part of the Prostelast journey and hope to implement it in many more of our companies. The revenues of Bränden, roughly 185 million with an excellent EBITDA margin. looking at the next acquisition years and smeed smaller company of sales of roughly 30 million focusing on steel structures and building forging very specialized it's going to complement our existing subsidiary guy and it's actually guy that is acquiring the company so with guy and gea we have a very strong position now to to assist our customers in in getting these kind of services and products out in in especially in the mela dalen area of stockholm then we announced the clear line and acquisition earlier this week we went through it quite in in detail and on the last call which i referred to at the beginning of this session so i implore you to explore that conference call if you want to to dive deeper into the Clearline situation. But note here that next week we'll have a Capital Markets Day and we're glad to announce now that part of management from Clearline will be participating at the Capital Markets Day. So with that said, we can sum highlights, of course, regarding Clearline. It's, as I mentioned back then, milestone acquisition for Fasadgruppen. uh we see it is a unique player complementing us extremely well and maybe something that stands out of course is the profitability levels but it's important to note that clear line is is in one term a bit broader than the typical facade group and company where they provide a total solution from the design phase, the planning phase, the construction calculation phase, and then also doing the actual work. And with that said, all of the needed documentations for these quite complex projects. So that is also, I would say, key factors for the profitability level. Maybe one thing also that stands out is a few questions around this acquisition. after the announcement. And it is regarding the preference shares financing, which we announced. And it's important to note that is linked to the profitability levels of Clearline going forward. So with that said, the range of where the preference shares could be valued is in the range of roughly zero to 80 million pounds, depending on the performance of Clearline. So that's important to note. Just want to highlight that. then of course some ballpark figures here client clearline roughly 50 million in sales and then adjusted a bit there if you look at just the average three year last three years here of 18.4 million Some concluding remarks before we open up for questions. We saw an improved earning situation for us here in the third quarter compared to the first half year. We also saw a strong cash conversion, which I'm very glad to see. There is still a tough competitive situation, especially in Sweden, and I would say stable to positive development in our other markets. I would also like to highlight that there's still plenty of M&A opportunities out there. And with that said, we've said it quite a few times now, but please register to our Capital Market Day on the 7th of November. Link is below here.

Great. So with that, we'll go into the Q&A session and we'll start off with the people waiting on the phone.