Fasadgruppen Group AB (publ)

Hello and good morning everyone and welcome to this Q1 call. And here in the room we have our CEO Martin Åkesson, our CFO Kasper Tamm and me, Magnus Blomberg, head of IR. With that being said, I hand over the word to Martin. So please go ahead.

Thank you, Magnus. And good morning also from me to everyone. I am glad to present the Q1 results for Passagegruppen today. So let's dive into the presentation. So first of all, we implemented a new organization here in Q1, a more flatter organization and partly new group management team as well. And I'm pleased with the development so far, with the organization in place and the new group management team. It's been well received throughout the organization. In the quarter, we saw a continued organic sales decline, roughly 10% down. And that was mainly due to the low new-build activity we've seen in the market pretty hesitant markets around new build activities still and pretty early to tell here where the new build market is going but in the quarter at least we saw still muted activity. In Q1 we also achieved an adjusted EBITDA of roughly 77 million compared to 20 million the same period last year, meaning a margin of roughly 6.5% compared to 1.9% a year ago. It was a strong contribution from Clearline in the results. We'll get back to that. In the important order backlog, we saw an organic growth by roughly 4%, mainly driven by the Swedish entities. and that was the first organic improvement in your backlog in the Swedish entities since 2022 so that's quite positive as we see it then for the first time we also present our new segments for transparency reasons mainly and then we've divided into three divisions or segments called Total Solutions. The Total Solutions segment, that's where we mainly have the full ownership of the project. We coordinate various services on the building envelope. That's the main focus for the Total Solutions segment. Whereas in the Specialist Solutions segment, We provide a niche service and mainly work as a subcontractor. In Clearline, it's quite obvious it's only Clearline and we have it as our own segment due to its large importance for Fasagripen. And then looking at our net debt to adjusted ebda pro forma um that came in at 3.25 times here in the end of march and uh that's down slightly from q4 it's noteworthy and uh still focus here on taking leverage back allow below 2.5 in accordance with our financial goals So moving on to net sales, we saw a total increase of 12.2%. And as I mentioned, it was down roughly 10% organically. And some more flavor to that, if we divide it into various geographies. In Sweden, we saw double digits down. In Denmark, it was slightly up. Norway and Finland, slightly down. And in Sweden, as you mentioned, especially when we saw continued low activity in the new build. Remember here that back in, go back to 2023, whereas it was an okay new build activity, there were some spillovers into Q1 2024. And that affects these numbers. Then, if we move on to our segments, our new segments, total solutions segment was down roughly 10%, of which then 14% was organically, and specialist solutions was actually up 3.4% in total, but down 6% organically. Both of these segments were mainly affected by the lower activity And then Clearline had sales of 174 million. We don't have a comparison number here since they were acquired in the last of October here last year. Yeah, move on. Then looking on the results on an adjusted EBITDA level. As I mentioned, the result was roughly 77%, margin of 6.5%. And all in all, you could say, of course, Clearline is performing according to plan, which is important for us, obviously. Then of these, 77 million stood for roughly 61 million of the adjusted EBITDA. Looking at the total solutions, we came in at an EBITDA level of 23 million, a margin of roughly 4% compared to 5% a year ago. On specialist solutions, we saw an EBITDA level of 13.5 million, a margin of 3.2% compared to 1.3%. a year ago then looking at the total adjustments of the group it was roughly 2.5 million so nothing out of nothing special there really and i'm pretty glad to see that the beta if you took it take a look at it in the last 12 months have improved here if you compare Take a look at the graph on the right-hand side. The trend is going in in the right way. And then moving on, take a look at order backlog. As I mentioned initially, we saw an organic increase in the order backlog of roughly 4%. And that was mainly driven then by renovation demand. and if we take a look once more at the various geographies it was quite flat development in in denmark norway was actually down significantly compared to last year and finland significantly up in sweden was also strong set of numbers compared to to last year here, if you take a look at the organic order backlog. Then, obviously, the strong increase in the total order backlog was heavily affected by the Cleveland acquisition, which was not part of the group a year ago. So now we've reached an order backlog of roughly 4 billion here. When we take a look at the order backlog margin, that was pretty stable compared to the Q4 numbers here. So nothing really dramatically in the order backlog margin since Q4. If we take a look at our various segments, in total solutions, we saw an organic decrease of roughly 2.2% in the order backlog. but up somewhat and then on a total level. Special Solutions, we saw an organic increase actually by roughly 9% and also then up on a total set up level. Then Clear Alliance, order backlog came in at roughly 800 million Swedish, somewhat affected by FX. and what you could say in general by the clear for clear line was in a very strong demand throughout the quarter and their kind of niche services is still very much in need and going forward as well Some general comments as well around the market. We've seen obviously lower interest rates and all in all, that's net positive for us and our customers. And we've seen, especially then in public tenders and housing associations, positive development around the demand situation. Then moving on to cash flow. Since we've seen now that the business is ramping up, that has had an effect on our cash flow. So we are, because the net working capital is roughly minus 127 million. And that's an unusually, I could say, strong number in one way because it's a net positive for us that the business is ramping up but of course it negatively affects our cash flow in that instance then we also have a one-off that is then come in conjunction with the clearland acquisition of roughly three million pounds that was paid out here in the quarter it was a delayed payment in conjunction with the clearland acquisition yes moving on okay we took a look at the financial capacity in our net debt we saw the interest rate was pretty stable we continue with the interest period of one to three months and as i mentioned initially the net debt to adjust the dbt pro forma came in at 3.25 somewhat down compared to q4 and this is obviously our focus area for us we continue to monitor this and going forward as well yes okay then we wanted to give also a deep dive in a historical cash flow for clear line since it's so big a part of the group and we wanted to give some granularity and transparency for Clearline all in all Clearline delivers strong cash flow with low capex needs and as you can see in the table on the right hand side if we take a look on the The three-year period that is closely similar to Fasalgruppen's fiscal year. Remember, Klärland had a fiscal year in the end of March. But then the three-year average of the cash conversion is roughly similar, as you can see. So Klärland had roughly 87% cash conversion. similar to what Fasol Groupen had in roughly the same period. So we can expect similar pattern as Fasol Groupen in cash conversion wise going forward. Hopefully we can improve it somewhat. Then just to clarify, there is a line here called EOT contributions and in the clear line statement that is then connected to So when Clearline acquired, we could say that the employees and the management acquired the company from the entrepreneur and repaid throughout these EOT contributions to the entrepreneur. It's just important to note that was a big, you say, distortion with the cash flow if there were any questions about that then we've shown this now what what happens so to speak so nothing unusual there and with that said i want to reaffirm our priorities now and forward so still focus on profitability and leverage obviously this is the same as we mentioned in our capital markets day here last year and of course we want to ensure the continuous improvements in our subsidiaries we want to still focus on efficiency within the group and the cooperation within the group and as i mentioned initially with the new organization in place i see this as going according to plan and i'm pleased with the development so far Then on the leverage side, we've talked about that. Of course, it's a focus area to decrease leverage. Okay. And then some concluding remarks before we open up for questions. So we've seen a stronger order backlog and some positive signs in the market with that. especially in the Swedish market. But also still a low activity within new build. So it's not, it's too early to tell if it's, how the year will pan out if you put it like that. Then if we look at, what we've seen business-wise, it is really ramping up and that's having a negative effect on our cash flow here in Q1. I'm also pleased to say that Clearland is performing according to plan and focus and forward go is still on profitability and our deleveraging as we talked about. I think that sums it up.

pretty well and with that we open up for questions to ask a question please dial pound key 5 on your telephone keypad to enter the queue if you wish to withdraw your question please dial pound key 6 on your telephone keypad The next question comes from Elvin Rolder from Carnegie Investment Bank AB. Please go ahead.

Good morning, Martin and team. I hope you can hear me well. Good morning. I just have a couple of questions here. If I begin maybe on the cash flow side, I can see that the working capital is quite negative here in Q1. But then also we have higher adjustments for non-cash items. And you mentioned that there was 3 million pounds there from Clearline affecting the working capital. Is that portion offset by the non-cash adjustment items as that is not seemingly fully explained by DNA items and such? Or can you give a little bit of comment so we understand the dynamics of the working capital here in Q1 and how we should think about that impact?

in q2 and the coming quarters yeah well mainly say that working capital that that's such a big negative is is of course in one way a positive as i mentioned since when you start a lot of new projects there can be some initial purchasing around materials as an example and i would more put it like with this kind of networking capital situation you could more expect an increase in the business so the business is ramping up in that instance and i think it's too early to tell whether how this will pan out for the rest of the year if that's the the question i think In Q1, there has been a lot of project starts. And it's more like you could see that this is a startup cost, you could initially say. But I don't know if that answers your question, Elvin, or if you had any more thoughts about that.

Partly, but just one question maybe so I understand because the adjustment for non-cash items is let's say 135 million here whereas depreciations and amortizations and such were 75 if I'm not remembering wrong here. Is the difference there explained by this £3 million related to the clear line? Or what explains that difference? Because it seems that it offset the negative.

Sorry, yes, it's Kasper here. No, no, I think when you look on the adjustments for non-cash items, the big difference there is the exchange rate differences. which we have had on the income statement. So that's the main reasoning because they are not cash flow driven, so to say. It's just the recalculations, so to say, of our loans and things like that. So that's the main reason why it's increasing here.

Okay, perfect. Thank you. I mean you talk about a little bit I would say more positive renovation side of the market but whereas new build continues to be quite low. Is it possible to give any comments on the margin for the projects that you're taking in now on the renovation side? Is it a similar kind of pattern as we've seen the last couple of quarters here where it's still

uh i mean lower prices than normal or have you seen any changes there queue over queue or year over year that you can comment on yeah so we mentioned regarding the order backlog margin was quite stable in q1 compared to q4 But it is, I could say, a mix of new kind of new orders, I would say, of course, in some geographies, if you put it like that, like Sweden, we've seen. and increased demand and henceforth we also managed to raise prices, but somewhat then offset in other markets. But as I usually say, remember that the order backlog margin is not the true answer to what will be at the end. you can say this when you to write the contract is one thing with the customer but that's that's when the project starts and then you have a lot of work ahead of you of course and and with that said then the the project uh will move forward in in a better situation than we thought initially, or worse. And there are various things that affect the project along the way. So it's not like the initial price is everything, but in total then, as I mentioned, it is on a stable set of levels since Q4. in various geographies. There are some positives, but also some negatives in other geographies. But at the end of the day, it does not give the full picture, because as you remember, Elvin, we talked about this before, but usually a project grows by roughly 20-30% along the way in various extra works, you could say.

Yes, good. Then I just have one final comment here regarding calendar basically in Q1. Has there been any help here in Q1 that we should take into account going into Q2 with the effects of Easter or how should one think about that coming into Q2?

Yeah, good question. Yes, of course, Easter was, since Easter is in April this year and last year was in March. So then March this year, of course, obviously was somewhat helped by that. And then it would be somewhat negative then for this year. Absolutely. But, that's i would say it's it's hard to tell exactly how much it will affect but but since it was in another quarter last year that's it distorts the comparison figures yes okay perfect thank you that was all for me uh thank you for taking my questions and have a good day you too thanks

No more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

All right, so we have a few written questions here. The first one from Max here, if you could elaborate a little bit on the clear line for the book decline.

and and also what clear line the the comparable numbers to to q1 2024 yeah yes so yes there was a decrease in clearance order book and that was somewhat you could say distorted by fx since the british pound was weakened here compared to the swedish krona and then we've also seen that it's more of a seasonal pattern in that instance so it's nothing unusual that i'm worried about in the order backlog for for clear line and regarding the comparison figures for clearline we write that in the report as well but we say that for Q1, here in 2025, the margin for Clairon was somewhat better than the average margin in the same period in the last couple of years here. So that's net positive on that side.

Right, moving on. if you could elaborate on the so-to-speak old FG, the Nordic Fossavgruptan, which has margin in line with the comparison period. Do you see any improvement or possibility going forward?

Yeah, the usual, let's say outlook question, but I mean, Obviously, there are positive signs in the market, but also, I mean, some negatives. So it's actually too early to tell here, Max. It's a mixed kind of set of numbers in that instance. And obviously, we said it before that the on the net side, 25 has the opportunities, you could put like that, to be better than 24. And I think I can stand by that comment still.

Thank you for that. And moving on, we have several questions, of course, related to our leverage. Could you elaborate a little bit on that part going forward to Q2 and Q3?

Yes. So, of course, leverage, we spoke about that in the last quarter report as well, regarding our covenant situation as well. If you remember here, towards our banks, we have an agreement in place that the cap on Covenant should decrease during 2025, you could say. And obviously, the key focus area to be within agreed levels. And there are various, let's say, solutions to that. And we want to optimize Fasalgruppen in that way that we still run as efficiently and profitable as possible, but still have that, let's say, covenant level in regards to to the situation. So ... of course ... I'll put it like this, the net debt situation is, is ... yeah, I've stressed it enough, but a focus area. And ... of course ... throughout the year ... we usually, if we put it like this, usually, the we have a large dividend or not a dividend list and that is due to be paid here q2 and we don't have that this year so that helps we've taken a lot of various actions around cash flow and leverage which we see yes as good measures in order to to be within our agreement.

Thank you for that. And speaking of cash flow, big increase in the working capital. Yes. Do we see any loss risks here?

Not really. Of course, there were some bankruptcies, especially in Sweden, on large construction companies. and we've talked about those before and we were affected back back then but but we don't see any real great risks here at this moment of course continue to monitor that closely and you can also be quite proactive in various projects, which we are. I see it's also a focus area for us to not end up in a situation like that. And you can also ensure some credit you could say some invoices in that instance. So that can also affect positively in such regard if something like that would happen.

Thank you. You mentioned that our orders typically grow at 20%. And we see, what's the sentiment among the extra work developing your quarter?

Yeah. No, this is also affected, you could say, by the competition landscape, competitive landscape. So in, take Sweden once more, which was affected, especially in 2024, where we had, you could say, various competitors that were into this kind of extra works. Some actually went bust. There's been a lot of bankruptcies within the construction sector in Sweden, which is ultimately positive for us. We've also seen, I don't know if people have read that, but there's a new government subsidy as well, meaning that it could be positive for these smaller players to be more affected to, let's say, the smaller works side towards private individuals, because they get a new kind of subsidy from the government. that's also an indirect positive effect for us as we move towards those kind of projects instead. We are, as you remember, mainly a business to business company then, of course. And so, I mean, with that said, the buildings that we work on are still in the same bad shape, if you put it like that, and usually still the same amount of extra work that is needed on each of these kind of older buildings that we renovate so with that said it's since Q1 is remember here the smallest kind of quarter for us as well so now that the business is ramping up this is something that we will monitor of course closely and be as proactive as you can in that instance to take full full kind of advantage of the situation and hopefully we can see some dynamics going back to let's say the more normal pattern thank you and another question are you planning to buy any more companies in denmark since it's going quite well denmark is going quite well absolutely and of course we are looking into acquisitions in our various let's say geographies but of course as we mentioned uh focus is now on profitability and leverage thank you for that and if you could elaborate on the margin going forward do you have any comments on that martin the margin going forward well not really

All right, we have another question here on the line. So operators, if you could please connect us with Elvin.

Question comes from Elvin Rolder from Carnegie Investment Bank AB. Please go ahead.

Hello again. Sorry, I just have one more question regarding the timing of earn-out payments. Actually, I have... Is it 88 million here that is expected to be paid out within 12 months? Can you give some comments on the timing of those cash flow outflows, so to say?

Yeah. Well, it's not been finalized yet, Elvin, so it's too early to tell, actually. within 12 months, but not really any more comment on that.

Okay, thank you. I'll get back again.

Yeah.

All right, so no more questions for now. I'll hand over the word back to you, Martin, if you have any concluding remarks.

yes okay thank you magnus well i'm i'm pleased with the development for the organizational structure so far and we are poised to take full advantage of the market situation here for 2025 going forward so i am excited for 2025 and i hope that you are too and next week we'll have an annual general meeting here and if you have the possibility to attend you're more than welcome the last day to to notify your attendances today so I want to say you're more than welcome to to attend as a shareholder And with that, I'd like to wish you all a pleasant day and hope to see you again in the next webinar, which we will present in August. Okay, thank you.