Green Landscaping Group AB (publ)

My name is Johan Åström and today I'm joined by our head of Investoration, Magnus Larsson. So welcome to him, the first time he's participating. He will cover the financials today as we are in transition between CFO as we have previously communicated. So without any further ado, let's move into the report. From my perspective, we are closing yet another successful quarter. We were surpassed our financial targets, we came in strong in sales and we also had strong margins. Cash flow was somewhat weaker and we'll come back to the reasons why that one was weak so to say. We have a stable order book and we are also very happy to welcome four new companies into the group. We had one in April and we had another three after the end of the period coming in in the month of July. So given the market conditions, it's a strong performance for the company and we are on track to become the premier player in Europe. Looking upon just a few words about Green Landscaping Group, we are a leading company in the ground maintenance and the landscaping industry in Europe. We believe our market is quite attractive as it's a large and stable market. We can see for the last few years where we have had disturbances, so to say, with interest rates and the coronavirus and stuff, while we continue to deliver at a good pace and with a good performance. And that is to a large extent due to the market characteristics. Also, we have a very nice or effective business model where we have very skilled entrepreneurs who are close to the market. They're close to the customers, the employees, and they are navigating the environment in a very good way. And of course, we are an M&A driven company where we invest in the best companies in Europe. And we have a great experience in doing so as we are about 55 companies today. And we really know what we are looking for. So those three items, I would say, are the pillars for the successful company we are running today. Next slide, please. So to sum up the road in 12 months, we actually surpassed 6 billion SDK in revenue, and that is something of a milestone to us. That's really good. And then, of course, we are quite profitable as we have a profit margin of 8.5%. So given the asset-light company we are and the industry we're in, we're quite happy with that result, and that's a very strong performance, and we are on track. Looking upon the second quarter more specifically, we can see that we grew by 11%. And where are the 5% organic? I think that's, again, given the market, it's a very strong performance. We like when we see that our subsidiaries are growing with the market, and that is typically 3-4% organic growth. That's what I'm looking for. And I do want our companies to be above industry average in profitability. And again, looking upon the EVA margin for the second quarter, we came in at a very strong 8.7%. That is somewhat weaker than the previous quarter we are comparing with, which were at 9.2, but that's more of a product mix than anything else. We also did some chair back in order to minimize the delusion effect for our shareholders, In terms of financial discipline, the net debt to EBITDA, we are right now at 2.7, and that is mainly due to the cash flow that was weak in the quarter. We came in to some extent late in the invoicing period, but that meant that we did the invoicing in the month of June, and then we're getting paid in the month of July. And so that has already happened, so to say. And then, of course, as I did mention, we did one M&A in April, one company joining us in April and another three companies joining us in the month of July. Next slide, please. We are a growing company and we are investing in new companies coming into the group. And of course, that can be seen in the numbers there that we are growing. For the last, I would say, 12 months, we have had a focus on Germany, and we've built a platform in Germany, and that's the main focus area where we are looking for growth in the future. Profit-wise, we are at 8.5% EBITDA, and that is our main focus. As I mentioned, I like when the companies are growing by 3% to 5%, and I would like to have clearly above the industry average in terms of profitability. And of course, that generates a very strong cash flow that we can reinvest into the business by investing in new companies. Next slide, please. Looking upon the segments and going down to Sweden, there we can see that we basically had a flat or a slight decrease in terms of revenue for the last 12 months. We have been focusing heavily in Sweden for the last three, four, five years, I would say. on improving the profitability there. And even though the profit margin has come down from 7% to 6.2%, I would actually say that we are improving in Sweden and we are happy talking about the one contract we had that we have been suffering with for the last 12 months. And that contract expires by the end of the third quarter. So for all practical purposes, it's one month to go on that contract. And then I would actually expect to see an uptake in the profitability in the Swedish markets. Looking upon the quarter, we can see that there was a slight decrease in revenue, but we did increase in the profit margin in the quarter per se. But I would more look upon the rolling 12 months figure there and that we leave that particular contract. Then I do expect that the Sweden as a segment will start to show margin. Next slide, please. Norway, we are continuing to grow in Norway. So again, we grew by 9% for the row in 12 months. And that quite a large growth in the second quarter by 12%. And then of course, the EBITDA are quite high. For the quarter, they are 8.9, so it's a 9% EBITDA margin. That's a product mix between the previous quarter and what we are looking upon here. But I would say it's a solid performance from Norway where they are. They are growing and they are showing healthy profit margins. Next slide, please. And then we have, of course, rest of Europe. Kind of a broad definition, but anyway, if we look upon the road in 12 months, we can see that we're growing by 110%. And of course, that's given the situation where we are in. So they have a healthy organic growth of 11%. New companies coming into the group, they grew by 95%. And of course, EVTA is growing by 151%. So that's very high numbers, but that segment, so to say, is becoming quite large. So I think it's, or I believe it's very good margins and we are on a very good track, both in the Baltics as well as in Germany, because that's where we are focusing. And right now, we are eight companies in Germany. We had our headquarters in Germany based in Munich. We have local employees working in Germany at this point in time. So I'm pleased with the development we can see in Germany. And I also note that Germany is important to us as we are aiming to become the premier player in Europe and our entry into the European market that is through Germany and that is clearly one of the biggest countries in Europe. So by being the number one player in Germany, we will use that as a platform for further expansion into other regions in Europe. So all in all, it's a strong quarter and we are well on track on becoming the number one player in Europe. So by that, that's the data. Then I'm presenting the following for companies. So we have gotten it in Kusloff, who came in to our family in the month of April. They are based north of Munich in Ingolstadt. It's a very stable, quite old company, very skilled employees, broad customer base, providing landscaping and maintenance, and as well as services in the outdoor environment. They fit extremely well into the group, both from a quality perspective, but also in the type of work they are doing. And they have about 14 million euros in annual revenue with 100 employees. Next slide, please. And then we have another company up in the northern part of Norway. So now we're quite far up north. And that is Makkasen, a very well established company with great leadership and as well as employees founded back in 1978. And it's a full range of services they are providing in that region. They have an annual revenue of 130 million NOK. So it's a very suitable size. We like companies who have that size. And they have 45 employees who are performing that work. So we do welcome them to the group as well. And then, of course, we have the next company, and that is Stange. This is about one hour north of Berlin. So it's a northeastern part of Germany founded back in 2009. The absolute mainstay of their business is officials. It goes into the city of Neubrandenburg. So it's a local company serving local customers. They have several contracts, even though it's one main customer, so to say, there are several contracts that is part of their business. They have an annual revenue of about 4 million euros and 15 employees taking care of the city. So we do welcome that company into the group. And then the last company, but not the least, this is Book Garden Couture based in Munich, founded by Mr. Book back in 2011, operates in and around Munich. And the customer base is basically private customers. but very high end so they are like small businesses if you like. Very stable business working with architects and high-end customers. Annual revenue of about 8.5 million euros and 30 employees and we do welcome them into the group as well. So by that I hand it over to Magnus Larsson to go through the financials.

Thank you, Johan. Let's have a deep dive into the financials. Obviously, this being a summary page, and I think we've mentioned most of it, I'd like to just emphasize the solid order backlog that we have. It varies over time. So just as a reminder, it should not be regarded as a lead indicator in the short term, but rather sort of a good insurance for us in the long term. Now, cash flow, which is of particular interest, perhaps in this quarter. If you look at the graph on the right hand side, you see that Q2 and Q3 are the seasonally weaker quarters for us. whereas Q4 and Q1 are the strong ones. Now, as Johan mentioned also, this year we were a bit back-end heavy with the invoicing, which made the trend a bit more pronounced. And if we double-click on the quarterly cash flow, There are three things that I'd like to bring to your attention. The first being to your far left, the EBITDA, which of course for every company is the backbone and for us too. And for us, it is particularly reliable. This is something that we can lean on and it goes back to the stability of both the company as such, but also the market, of course. So it's always there. The second part, is the change in networking capital. It's the purple pillar in the middle. It varies up and down. In Q1, this was bright green, indicating a release. And this quarter, obviously, the AR increased, particularly which is obvious here that this brings down the cash flow. The third part that I'd like to emphasize is the capex and other investing activities at the center of the chart. It's minus 14 only, it's small. In fact, it always is. We are asset light. So it always looks pretty much like this as well. So the moving parts for us are really the working capital and of course the acquisitions of which we can control. And I think that's important to emphasize in a court like this. The financial leverage, obviously, We're moving around our target. We were slightly above it now. Mind though that it's okay for us to be above the target for a shorter period of time. We stated in the financial targets already. So it's not an issue to us. And to mention as well, it leaves us with significant headroom to the financial covenant. And that's the only covenant that we have. loan maturity profile and nothing to say really and nothing new to report it's it's there same as as last quarter and the financial targets as well they are the same too so and we're trending on or about them which just brings us back to the summary and over to you again you want okay thank you

Just to make a quick summary then, we are quite pleased with the quarter per se. So given the market conditions, when we see that we are growing both by inviting new companies coming into the group, as well as we have a healthy organic growth, the margins that we are showing are quite strong margins. So I'm pleased with those margins as well. The order book and let's say the workload on the individual companies I won't say pleasant, but a satisfactory situation. So all in all, we are performing pretty much according to plan and I'm happy to see the development of the company. And as I did mention, we have made a good entry into the German market and our ambition or goal is to become the premier player in our industry in Europe. And I think this is just another step on the road of becoming the number one player in Europe. So by that we end the presentation of the quarterly report and open up for questions.