Fasadgruppen Group AB (publ)

Welcome everyone to this conference call regarding the third quarter result here at Asadgruppen. In the room, we have our, well, myself, Magnus Lundberg, and we have our CFO, Kasper Tahn, and of course, our CEO, Martin Jakosson. And with that being said, hand over to you, Martin.

Thank you, Magnus. So good morning, everyone, also from me. I'm very glad to present the Q3 results for you today. So let's dive into the highlights. We saw an organic growth of 2.2% in the third quarter, actually the first time with an organic growth since Q2 2023. And organic growth was actually mainly driven by strong Danish entities. I will get back to that. In the quarter, we also saw an adjusted EBITDA of 136 million compared to roughly 93 million a year ago, corresponding to a margin of 9.9% compared to 7.7% a year ago. and i would say that this is a confirmation that we're on the right path and if we take a look on the order backlog we also saw a total order backlog of 4.1 billion which means a more or less flat organic development we are still affected from delays from the building safety regulator which I've mentioned before, affecting our subsidiary Clearline in England. On the net debt to adjusted EBITDA pro forma level, we came in at 3.76 times. And we received a covenant here from our banks, which we believe we have a strong dialogue with, which is then this waiver value for Q3. After Q3, we also announced divestment of Alnova. We'll get back to that. So moving into the sales, there was a total increase of roughly 15%. And as I mentioned here, we saw an organic increase where the Danish entities, as I mentioned, was very, very strong. And we also saw positive numbers in our Finnish and Swedish entities, but softer in the Norwegian market. And generally, I would also like to say that it's still a continued low activity within new build for us in all our markets. In the total solutions segment, we saw sales of roughly 731 million compared to 751 a year ago, meaning it's down roughly 3%. Moving on to the specialist solutions, we saw sales increasing up to 508 million compared to 452 million a year ago, roughly up 13%. And then for Clearline, we saw sales of roughly 142 million, but these sales are also impacted by the BSR. Can you move on, please? On the adjusted EBITDA level, as I mentioned, we saw strong figures here, an increase compared to last year. And it's also on the similar pattern as I mentioned, Sweden, Denmark and Finland are all on the right path. whereas we see the Norwegian entities and markets challenging. And moving on to the segments, we saw that the total solution segment came in at an adjusted EBITDA level of roughly 51 million compared to 78 million a year ago, meaning a drop in the margin from 10.4 down to 6.9%. On the specialist solution side, we saw an increase from 28 million last year up to roughly 61 million this year, corresponding to a margin of almost 12% compared to 6% a year ago. So very glad to see this development. Regarding Clearline, we saw an adjusted EBITDA level of 47 million in the quarter. corresponding to a margin of roughly 33%. However, we estimate that the BSR effects have had a significant impact for us on Clearline in the area of roughly 20 to 30 million on the adjusted EBITDA level. We saw some adjustments in the quarter of roughly 13.4 million, which is mainly related to earn out revisions. And just noteworthy is here, if you take a look on the top right table, we see an increase of roughly 53% on the adjusted EBITDA from the rolling 12 months compared to 2024. And the margin going up from 5.7% up to 8.1% on a rolling 12-month basis here as you see per Q3. So glad to see that development. Moving on to the order backlog. We saw a more or less flat organic development as I mentioned here initially. And that also corresponds to the As I mentioned, 4.1 billion in total order backlog. And if you take a look at the geographies, we saw a strong organic order backlog growth in the Swedish entities. And that's actually for the third consecutive quarter. But the other geographies, excluding England, because that's not included in the organic comparisons, they were a bit softer. On the total solution side, we saw a decrease from 1.8 billion down to roughly 1.6 billion. And on the special solution side, we saw an increase from roughly 1 billion up to 1.1. And we're very glad to see that Clearline's order backlog is at an all-time high level of roughly 1.3 billion here at the end of Q3. Moving on to our cash flow. Following the seasonal pattern, we came in at an operating cash flow of 148 million in Q3 compared to 126 million a year ago. And that corresponds to a cash conversion level of roughly 93% compared to 109% a year ago. And I would say that this continues to be on a strong level. And if you take a look at the net working capital, we still see positive numbers there, however, a bit lower than last year. Okay, moving on. To the financial capacity and net debt, we saw here that the average interest rate level is down somewhat for the first nine months, down to 5.8 compared to 6% a year ago. Remember here we have interest rate periods of one to three months. And as I mentioned initially, the net debt to adjusted EBITDA pro forma came in at 3.76. And we still, as I mentioned also, have a continued constructive dialogue with our banks. Can we move on, please? On the divestment of Alnova. We are optimizing our portfolio structure here in the segment specialist solutions. And we've seen that we could not really extract all the synergies as we wanted. Remember, we acquired this company back in 2022. And after a strategic review, we deemed this as the best solution going forward. We see that this is a limited impact on the cash flow. However, there will be a write-down of goodwill. We have an earn-out structure in place, which is linked to the coming years. And this strengthens our financial position, which will improve the importance covenant which we mentioned here by roughly somewhere between 0.15 to 0.2 times. The expected close of this divestment is here in December. So we also want to reaffirm these priorities that we mentioned here since the capital markets day last year. still focus on profitability and taking leverage down just as a reflection for the first nine months here on the profitability side we came in and then adjusted a beta level of 345 million with an 8.7 margin we can compare that to the same period last year so the first nine months of 2024 we came in on an adjusted EBITDA level of 194. So that's an increase of roughly 150 million. And the margin last year was roughly 5.5%. So that's also an increase of roughly 3.2 percentage points. Then some concluding remarks before we open up for questions. So, We saw organic growth for the first time since Q2 2023. Very, very glad to see that we're on a positive trend here. We see also that we are still affected by the delays of the building safety regulator. We are not alone in this. You could say this is a massive problem in England. But we know that the regulators are doing a lot to improve the situation. We are still maintaining close bank dialogue and have been doing so for quite some time, which is very positive to see that we have strong bank dialogues. And then we could say that the focus is still on profitability improvements and deleveraging. And we're also with our new kind of management method, we're optimizing the portfolio structure. And Elnova is an example of that. So I feel that in general, we're on the right path. With that said, we open up for questions.

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