Green Landscaping Group AB (publ)

So, good morning and welcome. Today I'm again joined by our head of investment relation Magnus Larsson and he will be covering the financial section of this presentation as our new CFO will join us later in the year as we have previously communicated. Just a short introduction to report there that the third quarter, from my perspective, it was We deliver an organic growth of 3% and we are at 2% organic growth for the rolling flow months and this is despite having faced market headwinds for more than a year and of course during this time our EV-day margin has remained above 8% which is our main focus and we're quite happy to see that we have a stable margin going on here. The cash flow in the quarter was very strong as we did have somewhat weakened cash flow in the first or delayed cash flow in the first and second quarter and as anticipated that resulted in a very strong cash flow performance in the third quarter. And of course we would like to welcome the three new companies joining our landscape family and we also announced the arrival of yet another one and our ambition as we previously have communicated that is roughly doing 8 to 10 investments in new company in 2024 and that plan really remains intact. Now moving into the report, Green Landscaping were one of the leading landscaping companies in Europe. If we look upon the market we believe the market is quite attractive because it's a stable, it's a big market and in particular it's supported by two macro trends and that is urbanisation meaning that the cities are growing and that's where we're active and also from a sustainability perspective that is really supporting our growth in the marketplace. Applying the right business model is really about having the local entrepreneurs being able to serve the customers in the way the customers should be served and they are quite, what do you say, agile in what they can do in the local marketplace and that turned out to be a very successful strategy for us in particular in terms of how to make money in this business and then of course we have been investing in new companies for quite some time and I believe we are getting better and better in choosing what companies to go with, how to onboard them and how to develop them into the future. So we do have a well proven M&A strategy. Moving on, just to sum up for the last rolling 12 months, sales increased by 7% where we're having organic growth of 2% and of course investing in new companies contributed with 7%. And again given the market condition I believe that is a solid performance. Profit margins increased by 1% and that is of course if you look at the margin per se we are actually going from .9% to 8.4 and that is a slight decrease in the profit margin and that really is a reflection on the market condition that we are feeling the headwinds in the market, there are an increased competition and our absolute main priority here that is on the profit margin per se. So we would like to see stable revenue and basically a stable profit margin as well and I think that's pretty much what we are looking at. So we are clearly keeping it together given the market conditions. Now in the third quarter it's basically the same trend really where we see that the net sales increased by 8% where we had a 3% organic growth and I think the 3% organically in the third quarter was that is a solid performance. I won't say I'm surprised about it but it was a tough quarter and having an organic growth of 3% in the quarter that was really hands down to the local managing directors that they really performed in this aspect. And then again the EVA increased by 1% so we see that we are having a volume but we have a harder time keeping in line with the profit margin per se but still delivering an .4% profit margin in the third quarter that is a strong performance. And then of course in terms of the financial gearing we made three acquisitions and we had a good cash flow that basically meant that the gearing stays at .7% and that is I'm not overly concerned about it but I would prefer it to be at .5% so we see what's going to happen in the future here but we are keeping a very close track on that one and as stated before given the company's performance we are in control of that one so we are comfortable with that level then we are slowing down the pace on the acquisition side and then we will see a de-leverage by itself given what we are doing. And as I mentioned we did three acquisitions in the quarter so that's to sum up really what's going on here so all in all we are keeping it together and I think our local MDs deserve the praise for what they are doing. Next slide please. As I did mention if you look upon the road in 12 months we are sales is growing by 7% and EVTA by 1% and it's a very stable development I would say given the market conditions. We are on track and if we didn't have had I would say a very strong focus on the profit margins we might have seen slightly higher revenue really but perhaps a bigger contraction on the profit margins side so we try to keep a very close eye on profit margins we want to make money we don't want to be locked in into any long contracts where we do not make money and so forth. So the focus is on the profit margin and as I said our managing directors are doing a solid work keeping our profit margins up. Next slide please. So if we look upon Sweden the revenue side of 2.8 billion SEK it's pretty much a flat curve there and then we see a slight decrease in even though it's at 10% again we are moving from .7% EVTA to .1% and to be frank I'm not too happy about the profit margins we are performing but there are more that can be done there. Then of course in the third quarter we saw a slight increase in revenue but again we see a decrease in the profit margin there and as we have communicated earlier we had one major loss making contract and I'm so glad that contract is ended by the end of the third quarter so we can move on in the Swedish section again. And being at this profit margin my opinion is that the should not trade some of the other regions so I'm not happy with being at 6%. Now this is not a quick fix either but this is something that we will work on moving into the future and I would like to see a steady increase in the profit margin on the Swedish market because there is no reason why we should make more money in this particular market and again it's our biggest market of course so it is of great importance to us. Moving on to Norway. Here we can see that the sales increased by 4% and we actually had quite a nice organic product of 5% in Norway for the road of 12 months and that given again given the market conditions that is very well done by our colleagues from Norway and then again being at the .9% margin that is a healthy margin given the industry we are in. Then in the third quarter we see that the net sales was a rather flat curve but we saw a 4% increase in EBITDA and that is very well done by our colleagues from Norway and that means they are right now 40% of the group's revenue and 42% of the profit from the group so that is quite nice. And then again looking upon other Europe and from an investment of capital allocation standpoint that is our primary focus because our plan or aspirations really to become number one in Europe and in order to do so the biggest market in Europe that is the general market and it's not the consolidated market so of course we are focusing very much on capital allocation and which company to go with and so forth and that means for the road of 12 months we see a revenue increase of 63% and so quite a high number but when you are coming from low numbers then the percentage goes up but from a revenue we are at 866 million. Organic we saw a slight contraction of 2% while Acquisition contributed by 64% and of course the EBITDA is fantastic margins we are at .3% they will come down to more normalized as we grow this particular market and in the last quarter we saw that again we are growing by huge percentages 41% and the EBITDA again at 22% margin in the last quarter that is a really healthy margin. So I believe we are quite successful we have been working on developing the German market and we are getting into what do you say a more I won't say stable increase but now we have a number of companies we have the platform in place meaning we have the Munich office we have local employees we learn German and now we are basically coming into more of I won't say steady state but we can clearly see the future we have a good pipeline we have established ourselves in a good way in Germany and we have some really fantastic companies in Germany as well so I am happy with the performance in particular Germany. And then yes mentioning a few companies that joined the Green Landscaping Group. So we are starting out by Markussen and that is led by Florian up in Norway and that is quite north of Norway it is a really great company and they do offer a full range of services in that area they have an annual revenue of 130 million Norwegian kroners with 45M freeze and it is really a sweet spot company in terms of size in terms of what they are doing and they will clearly be a great addition to the group. Moving on to the next company and that is Mr. Stange. This is Stange Grunanlage in the Middle East and they are located in Neuf-Wandemberg that is one hour north of Berlin and this is also to some extent a sweet spot company for us because it is very much a recurring revenue business they have they serve the municipality of Neuf-Wandemberg and they actually have both summer where they are doing the street cleaning and that type of thing but in that region of Germany you actually have winter as well so it is quite full service and 90% of the revenue is actually to the municipalities in that area so it is a stable business model and it will fit nicely into the group as well. And the next one this is Sascha Buch in a book called Landschaftsbau in Minsjön and this is to some extent slightly different from what we typically do because he is serving the high end gardens within and around the Munich area so you have high net wealth individuals who have very high requirements that work with architects and that type of thing and he is the number one company who serves that market in Minsjön. Revenue wise 8.5 million euros with 30 employees have been doing this since back in 2011 so he knows what he is doing and it is another great addition into the group so welcome to Sascha Buch and his team. And then the last one that we actually announced that we haven't closed yet this is Turun in Finland and they operate in Turku and again it is a full range of landscaping services but this company also has something that we to some extent have been missing in Finland and that is the recurring revenue side on the maintenance so this is maintenance with long contracts and that type of thing and we do want to see that as part of our business as well. They have an app and revenue of 3.6 million and 20 employees so welcome to Turun and being part of the group. So I think that really concludes my part of the presentation here so I am going to hand it over to Magnus who will walk you through the financials.

Thank you. So let's just dive into a few of these items and just to repeat we have net sales of 1.5 billion for the quarter and 6.2 for the rolling 12 months. We had an EBIT margin that again went above our financial targets and ended up at .4% for both the quarter and the rolling 12 months respectively. We had a very strong contribution from the segment of the Europe partly offset by higher common costs, partly according to a new cruel routine that we have similar to the preceding quarters. A little further down we had a solid order backlog and we conclude that the order intake remains solid. Again you should not read anything into this short term as there is no short term correlation of the book to bill but rather a testament to the stability of the market. Looking at the cash flow, cash flow from operating activities went up quite a bit as we mentioned as we had significant customer payments early in the quarter. As you see from the graph there is not a very clear seasonal pattern to cash flow but a tendency to be stronger in Q4 and Q1 in particular and you see that Q3 in this year stood out from a historical perspective. Breaking down the cash flow for the quarter, I'd like to bring your attention to the center of the graph where we had cash flow from operating activities of 121 million which almost exactly matches what we've spent on investments in companies, acquisitions as you see there. This of course varies from quarter to quarter but this time it's close to a school book example of how we spend our cash being the kind of company that we are. A bit further to your right in the picture you see that we spent another 10 million on repurchasing shares that we will use as part of our payment for future acquisitions. The financial leverage we remained at 2.7 as the CEO mentioned same as in Q2 with headroom to the covenant despite it being above our target level. Low maturity profile is as uneventful as it usually is. We've got our maturities coming in 2026 and just as a reminder we've got only short term interest payments so there's a quite quick correlation between changes in interest rates and our interest cost as well. Quick glance at the financial targets. We are at 7% rolling 12 months with a total growth target of 10. We remain above the EBITDA margin target. We are slightly above the financial gearing target but again it's okay to be there for a short amount of time and we have not paid a dividend. With that.

So just to sum it up in that case as I did mention for the rolling 12 months we see that sales grew by 7% and that is of course a mix between the organic and of course the acquisition side of it but again given the market condition I think that is a solid performance and our main and number one priority that is the EBITDA and keeping a focus on that one. So even though we see a slight decrease that is in profit margin it's only a reflection of the competitiveness of the market but on the other hand when we are at .4% it's still a very solid performance and as I mentioned earlier I do believe that we're keeping it together in a good way and our local money directors are really performing out there so I'm happy to be able to report the progress of the company. So by that I think that concludes the presentation and we do open up for any questions.