Green Landscaping Group AB (publ)

Welcome to the Green Landscaping Group Q3 presentation 2025. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the CEO, Johan Nordstrom, and CFO, Markus Holmstrom. Please begin your meeting.

Thank you. And welcome to today's earnings call. And as mentioned, my name is Johan Holmström. I'm the Managing Director for the company. And I'm also joined by our CFO, Markus Holmström, as mentioned. And he will take care of the financial section of this presentation. But always, let me tell you about our most recent performance and putting that into context. So all in all, for the third quarter of 2025, we believe that we delivered reasonably well in the third quarter, in particular given the market headwinds. However, if you look upon the results, they do differ quite a bit between our segments, and in particular Sweden and Norway, who faced the toughest market conditions, they did struggle to meet our expectations. But on the contrary, other Europe, and that is Finland, Lithuania, and Germany, they continue to outperform and deliver a very strong set of results. We have also, in the meantime, invested in two good companies so far this year. And that has taken us halfway to our ambition of acquiring 8,200 million SEK of EBITDA for the full year of 2025. And this ambition remains valid for the remainder of the year. We have also renewed and extended our bank loans during the last few months. And together with the bonds that we issued in May, we have effectively secured our financing for the coming years on, I would say, very good terms. So that's to frame in the performance. So let's dive into the presentation. So let's move on. the slides here and just an overview of the company per se, the Green Landscaping Group. So we are, I would say, the leading landscaping company in Europe for ground maintenance and the landscaping industry. And there are three headlines I would like to go through there. And that is that we are active in a very attractive market. And what do we mean by that? Well, it's a very large market to begin with. enables us to choose what type of services we would like to provide, what type of customers we would like to have and so forth. That is a strength that we are not in a niche. We are in a broad market. And of course, it's a stable market. And even now we are facing market headwinds. There's a great stability. So there are still an attractive market out there, even though it's, I would say, more competitive than usually. And this market is also supported by, I would like to highlight two mega or big market trends, and that is the urbanization and the environmental. And we do seek to be in those part of the market that benefits from those two mega trends. And then in terms of our strategy about applying the right business model, We have learned since many years that being close to the customer is really the way to go forward. And that means that we have a delegated responsibility and that it's when we talk about decentralization, it's about delegating the responsibility and authority to people who are close to the market, close to the customers and close to the people who provides the services. And the upside is, of course, that we are agile. and that we are more profitable than many of our competitors as we can provide a better service to the customer and getting paid for it. And then the last item is about the M&A strategy as we are an active company who choose to invest in other companies and we have been active for a long time, meaning that we have a long experience. We really know what we are looking for and also we know how to take care and improve of the companies And I think that's a critical part on the M&A story. It's not so much about finding the companies, even though that is very important. It's even more important on how you take care of the companies, meaning how do you do the onboarding and how do you develop the company to be even better once they are being part of the group? And also to mention that we do have a solid pipelines of companies that we are in communication with. So I think those were the three headlines we had on who we are. Now, to sum up for the role in 12 months, our revenue is pretty much unchanged. It amounted to 6.2 billion versus 6.35. And organically, we are down by 9%, while acquisitions contributed to 9%. And we have to keep in mind here for the early 12 months, we have the first quarter that was basically a very weak quarter for us, given that we didn't have any winter activities or hardly any winter activities, I would say, in Sweden and in Norway. So we started out the year in, I would say, in a kind of a tough way. And then, of course, we have the market headwinds. And that's why we're basically flat on the net sales side. And then profit wise, we decreased by 12%, 463 million. And that means we have an EBITDA margin right now for the role in 12 months at 7.5% versus 8.4% a year ago. I think that's kind of the telling for the story. If I look upon their revenue, it's kind of a slow development, I would say for this year, while we lost 1% in terms of their profit margin. I think that's kind of a solid performance, even though I'm not happy with the performance. But if I look upon it from a macro perspective, that's where we are. I think that's an okay performance. Cashflow from operating activities amounted to 390 million SEK, slightly down compared to previous year. And of course, for the last 12 months, we have completed five investments in other companies. Now, moving into the third quarter, we can see that net sales increased by 4% to 1.6 billion SEK. While organically, we actually had a negative 3% in the quarter. So from that perspective, I think we're doing okay. While we saw that we were down on EBITDA by 12% to 140 million. And you have to bear in mind here that what we typically don't work with adjusted EBITDA. So we did adjust for a project write-down in Norway to the tune of 21 million SEK. So if I add that one back to 135, that actually put us back on where we should have been under normal circumstances. So from that perspective, Evita was 140 million and that gave us a margin of 7.1%. And then of course we have the cashflow of 47 million, That one came in, I would say, slightly lower than our expectations. The third quarter is a strong quarter from a cash flow perspective. It's basically the fourth and the first quarter that are strong cash flow quarters. But it's on the weak side, I agree, on the cash flow. And that gives us a financial leverage at 3.0 versus 2.7. And as we move forward, we will see a natural deleverage in the fourth quarter. Anything else? And also, as I did mention, we did have the new finance agreement in place in October 2025. And then, of course, we completed one investment in the third quarter, and we confirm our ambition to invest in about 80 to 100 million SEK for the full year effect of 2025. So long-term performance. So we are a high, I would say, a fast-growing company and have been growing quite significantly during the course of the years. And also that we have a resilient in adverse market conditions. If I look on the year 2025, I would say that this is a year where we do not see that high growth. Organically, we are down while we are adding companies to this routine. growth is working while the market headwinds are actually negative contributing. And that's basically why we are flat on the growth side as a company. Coming back to the profit margin that we are at 7.5 versus 8.4. And I would say that given the market conditions that with the Q1 performance without winter and the headwinds in Norway and Sweden, I'm not overly happy with the 7.5%. But on the other hand, it's one unit of a percentage down, so it's still a stable performance. So I think that proves that we are working in a stable environment. So even though we are facing a lot of headwind, I think the performance is, given the circumstances, I would say okay in terms of profitability and cash flow. Looking upon Sweden's moving into that one, Then we see that we are down quite significantly by 40%. There are two reasons for that we are shrinking in Sweden. The number one is, of course, the headwind in the market. But the other way, the other thing is also that we are closing down unprofitable businesses. So those two items together are the ones that is accruing to 14% down on the net sales. And then, of course, the EBITDA is down by 39%, and that is a significant number. And that is also with the conjunction we have with market condition as well as cost for closing down the companies that is not performing. But as a whole for Sweden, when I look upon it, even though the numbers are bad, I agree. But I think we have turned a corner on Sweden. So for the coming, not so much for the fourth quarter, but coming into the year of 2026, we see a significant upside in Sweden and we do expect a significant increase. both recovery and that which actually should succeed or surpass the profit margins level we have shown historically in Sweden. So it's actually looking good that we finally have turned a corner in Sweden, and I'm looking forward to the performance in the coming year to show the numbers in Sweden. So that is actually looking quite good. Moving on to Norway, and we look upon the road in 12 months there. They are, given the conditions again, they are actually keeping it together revenue-wise in a very good way in Norway. So they are keeping up the volume. However, it comes with the price, that is the profit margins. So we are getting the work, but it's a high competitive environment in Norway. So we are keeping the revenue at, I would say, a good level while we are doing this by lowering the prices. And by that, we are sacrificing our profit margins in order to keep up the volume. So the net sales achieved in Norway was 2.467 million SEK, where you had an organic negative contribution of 7%, while we had one acquisition, if I remember correctly, that contributes with 5%. And as I did mention, we have a significant decrease in profitability by 40%. That's quite a big swing. And that's to a large extent, the market conditions that we have in Norway right now. And moving on to the third quarter performance, we saw that we only shrunk by 1%. So again, we are keeping the revenue high while we had a significant drop of 75% on the profit. And that is two reasons for it. It's the challenging market conditions, as I did mention, but also we made one project write down, or actually it was more than one project per se, but it's in one company. So it's an isolated event in one of our bigger entities in Norway, where we, in the beginning of the year, had a change of the managing director, and later on we changed the CFO. And as they started to look into the company, they were not happy with the performance or the way the project were accrued for. And that led us to a project write-down to the tune of 21 million SCK, that we actually went for in the third quarter this year. So it's from that perspective, it's a significant right down here, but it's one off in Norway. Moving on to other Europe. So for the rolling 12 months in other Europe, we have a significant increase of close to 50%. So they were achieved almost 1.3 billion SEK. So they were fast growing. They have an organic growth of 2%, while their acquired growth was 48%. So there's both organic as well as fatigue growth in that market. And then, of course, we had an even higher increase in profitability by 52%. That led us to a margin of 19.8%. So I would say it's a fantastic performance in that region. So that is Finland, Lithuania, and Stipoli. And we can see that Finland is since three quarters, I believe. on a very positive trend, so I'm happy to see that one. Lithuania continues to perform in a very good way, and then we have a stable performance of our entities in Germany. And again, looking upon the third quarter performance, we saw that we had a growth of 35% in the quarter, and we had an EBITDA increase to 96 million. And they actually delivered a stellar performance of 22.7% EBITDA margin in that region. So that is really working for us. And then of course, to the last slide here that we do welcome Tesma and Zon, who is a company that we acquired a while back. They operate in Hannover and it's kind of a classic company in terms of what we are doing. They're offering landscaping, earthwork and drainage services. They have a revenue of about 16 million euros, and they do that with about 45 employees. So we do welcome Testmanzon into the group of green landscaping companies. So by that, I hand over to Marcus to go through in more detail on the financial side. So welcome, Marcus.

Perfect. Thank you, Johan. And I will cover the main financials. Moving into the quarter, we can see that in Q3, we had a net sales of 1.6 billion, concluding our rolling 12 months to 6.2. And as Johan mentioned, our strategic acquisition compensated for the negative organic growth we have had during rolling 12 months. So from that perspective, we've been flat. On an EBITDA margin perspective in the quarter, we delivered 140 million, which was lower than last year. But then we must have in mind that we then absorbed this project write downs of 21 million from one subsidiary in Norway. And adjusting for that, EBITDA would have been 135 million, which is slightly exceeding last year. and doing the same calculation to an adjusted EDITA margin would be roughly in line with last year on that level. I will cover cash flow in more detail in upcoming slides, but we conclude that operating activities contributed with 47 million, which was slightly weaker than we had expected, but we foresee that it will come back to us in Q4. Financial leverage increased sequentially to 3.0 times. The order back low amounted to 7.4 billion, which was lower than last year. And we've seen it for a few quarters now. And the decline was particularly noticeable in Norway and to a lesser extent in Sweden, while other regions were more stable. But it's also as well. always say it's important to note that the water bag fluctuates between quarters, so it should not be viewed as a short-term leading indicator. And looking at our earning per share in Q3, it declined 42% to 0.56 crowns compared to 0.96 last year. And the drivers behind that was the lower profits delivered from operation. But we also had last year a positive net currency effects in our financial items that impacted that year positively. Moving to cash flow in line with the seasonality, our cash flow turned sequentially positive now in Q3, but it was slightly behind what we had expected. And that was mainly due to that the working capital increased by 71 million compared to 25 million during last year. But this will come back to us during Q4. And we have a high focus on this conversion rate. Rolling 12 months cash flow came in slightly below last year at 390 compared to 399. And working capital development and cash flow generation continue as always to be a high focus area for us. And we expect the cash flow to be strengthened in the fourth quarter in line with normal seasonality. Looking at the quarter's cash flow bridge, as mentioned, operating activities contributed with positively 47 million. Then we made one acquisition impacting cash flow negatively of 77 million. We have capex and lease amortization of minus 73. And then the net difference of new loans and debt repaid was plus 50, concluding our cash position negative for the period at 53 million. And looking at financial leverage or financial leverage and financial position, financial net debt increased to 2.5 billion, which was sequentially roughly 100 million higher than in Q2, driven by working capital and investment activities, as we could see in the previous slide. Previous slide, leverage increased sequentially from 2.9 to 3.0, which is temporarily above our financial target. However, we maintain sufficient headroom to meet our financial confidence in our funding agreements. And as we enter Q4, which is usually our strongest cash flow quarter, we have a high focus to deliver upon that seasonality. The loan maturity overview, it has been updated since the last quarter. Following the end of the third quarter, we successfully renewed our bank loans in line with our long-term plan as they were maturing in 2026. Together with the bond issue during the second quarter, we have now secured and broadened our financing base for the coming years. The new loan terms were significantly more favorable than previous ones, which will help us to reduce interest costs going forward. This is not only strengthening our financial position, it's also sending a clear signal that the credit market has a strong confidence in us. And the concluding slide on my end was reviewing our financial targets. We can see, as both Johan mentioned and I mentioned, we have a financial target of 10% of total growth, but in light of the market and when we have faced during this year, we are actually on flat despite us continuing on the strategic acquisitions. The EBITDA margin, we came in at 7.5, rolling 12 months perspective, which for us is, of course, below our financial target. But once again, it's for us a testament of that our business model has the margin resilience we foresee in tough market conditions. And then looking at financial leverage, which is at 3.0 times and temporarily above the financial target. But as expected, we should come down towards the financial target at the end of the year if we follow the normal seasonality. We have a fourth financial target of distributing dividends, but in line with the previous year, the AGM decided that we should not distribute any dividends for the fiscal year of 2024. And with that, I hand back to you, Johan.