Idun Industrier AB (publ)

Hej och välkomna till Iduns Conference Call för det första kvartalet 2025. Carl Korset heter jag och jobbar som analytiker här på Carnegie med fokus på sådana här serieförvärvare. Och jag ska då moderera det här samtalet. Jag ska bara påminna om att det finns en chattfunktion, så ni som lyssnar in, skjut era frågor där om det är några så kommer jag sedan framföra det till VD och CFO här i rummet. Det var det jag tänkte säga, så lämnar jag över till er för att prata lite mer om Idun.

Thank you. This is the first time that we at IDUN are presenting a quarterly report, so we thought we'd take a few minutes to repeat IDUN Industries, which we are, before we go into the quarterly report. IDUN Industries is an industry group with what we think are some of Sweden's finest small and medium-sized companies. Vi består av 18 gruppbolag, oftast familjeägda, som har ett starkt fokus inom ett eller ett par områden. Vi är värdeinvesterare, vi letar bara efter företag som tjänar bra med pengar, har höga marginaler, goda kassaflöden och som har haft det under en lång tid. Vi har en dogmatisk inställning till pilotskolan. Alla vi som arbetar centralt på idun är delägare med det mesta av det vi äger och har i idun. Alla i styrelsen på idun är delägare i idun. Inte minst i samtliga gruppbolag så är ledningen delägare i respektive bolag. Det tror vi är något som är ganska unikt för börsnoterade företag i Sverige. Om vi tittar lite vidare, vad investerar vi i? We invest only in companies where we feel that we can understand them fundamentally. And for us it was about manufacturing industry, industry trade and industry service. And the high market share for us often meant more than 50% in its market. If we look at the profitability, where high profitability is important for us, then the gross margin on IDUN companies is around 60% and the turnover margin after writing off is around 14%. We have mentioned the pilot school, we are over 100 shareholders in the IDUN group, and then we count with CEOs in group companies, financial managers, marketing managers, production managers and such people as well. And we have made 30 investments in 10 years. 30 investments over 10 years. Here we see a good development. Since 2018, there has been an annual increase in profits of 30% step by step from year to year. If we take a look at IDUN, we are a small group that works on the mother company. There are seven people sitting there, plus our working CEO and founder, Adam Samuelsson, up to the left. We are a group of people who have worked together for a long time. We have a mix of experiences, both from having led companies and from making investments. All of us, as I said, are well-invested in IDEN. And what separates us, one thing is that we do almost everything, all investments on our own. We use very few consultants. And the last thing to say about this is that in this group, we have plenty of space to invest and take care of significantly more companies without the need for this group to expand. And so far, it is actually no one who has finished at IDEN who has started at IDEN. I leave it to you, Oskar.

Thank you, Henrik. A little about our financial goals for IDUN. We have a goal to increase EBITDA by at least 15% this year. We see that around 5% will come from organic growth. Historically, we have reached this level. I think that between 2020 and 2022 we had two-digit organic growth. If you look at a five-year period, we are at over 10%. If you look even further, we are at around 8% organic growth. And then there is growth in Bita. Then I would say that at least as important for us is the profit development per share, since we are all shareholders in Idun. And then you can see that during 2023 we had negative organic growth, like many others. But now 12 months have passed since last March and we are positive again with 7.6%. If we go to the debt, and all of these financial goals are from before our notations in 2021. And then we put a quote on that net debt through EWTDA should exceed 3.5. And we may not have plans to lie that high, but we can think of going up over time or during periods when we see nice acquisitions. But if you look at the history, we may have leaned around. Two and a half, somewhere there. And I think, if I were to guess something in advance, I think that we will be somewhere between two and three times. Now we are at 1.9 times EBITDA. The last goal, the allocation goal, is that we will share up to 10 percent. And we still see a lot of opportunities for investment, both in the form of new group companies, And also the additional value we have for group companies and investments in our companies, for example machine investments. So we believe that the capital will be compensated, but that we still have a division and up to 10% of the results adjusted for goodwill. And we do this according to K3 and not according to IFRS in order to get comparability. We can move on.

Ja, det var lite om idunindustrier och nu pratar vi lite om kvartalet Q1 2025. Vi är väldigt nöjda med det här resultatet i första kvartalet. Vi är ju i en situation med It is a tough situation in the world, and in this situation we have an organic growth of 8%, which we are very proud of. The gross margin is strengthened, the EBITDA margin is strengthened, the profit per share continues to increase significantly, so we are very pleased. We have made two follow-up investments in the quarter. One we did in the quarter, we went up in Eugen Wiberger from 71 to 86 percent and now in April we went up in 2B from 70 to 98 percent. These are two of our great group companies and we are very pleased to increase ownership in both of these companies. If we look at it a bit operationally, we have two business areas, service and entertainment and manufacturing. Both go upwards, so profit and turnover increases in them. And you can mention two companies, Stea goes strong in the quarter, like LMI Norotec and the new supply is Interagro Skog. Vi har gjort stora investeringar i maskinlinjer i Fredalrydéns i kvartalet. Then it is worth mentioning something big that happened here also in March was that we did about the entire central financing on Idun where we secured a loan space together with Danske Bank and SEB for one billion. It was then used 250 million kronor to pay back an obligation in advance at 250 million and about 300 million kronor in förvärvslån som vi hade ute i våra förvärvsbolag, för respektive gruppbolag, är också ersatt med det här lånet. Och sen har vi 450 miljoner kronor i en revolverande kreditfacilitet som då finns tillgänglig för nya investeringar. Och det här betyder ju flera saker. Det betyder dels att vi har väldigt god likviditet, en finansiell ställning för att kunna göra fler förvärv. Det betyder att vi har en... financial situation that is more adapted to our business and what we do, and also means that we come on a yearly basis and save about 20 million kronor in interest costs. If we look a little further ahead, it is of course a The uncertain economic situation with the trade war and what we are in, we will not get around that. With that said, we have our group companies that have strong, stable positions, well-managed companies. Not least, we have a focus in Sweden that few others have. About three-quarters of the sales generated is in Sweden and over 90% is in the Nordic countries. Så vår exponering mot Nordamerika och så är ju ändå begränsad och vi känner oss väl rustade för framtiden.

So, we think this graph shows the stability and the fine group of companies that are developing with growth. If you look at the past 12 months, the turnover has increased by over 2% and in pieces by just under 8%. And our group companies that we have had the opportunity to invest in, they are, as Henrik was talking about, often previously family owned, well-guarded, strong in their niche, with high market share and appreciated customer service. We think that these high gross marginals, which are around 60% over time, and also our turnover marginals, presented in the form of bits, show the good quality of our group companies. And then you can see that the margin changes over time, and that also depends on the fact that we have grown a lot during the years that are presented. So a lot of mix effects there. And also happy, as Henrik mentioned in the video, that this is the 21st in the order of the quarter, where EBITDA increases compared to last year's EBITDA quarter. And we have done that since 2020. Q1, worth mentioning too, we made an acquisition of Interagroskog here through Group company LMI in October. And there is a strong seasonal variation here in that company, so we see here under Q2 and Q3 that revenue from this company should end up at 12 to 13 million kronor here, which is not yet in the books. And a little conclusion just on the quarter. We see that The net income in the quarter is increasing by about 20 million kronor, from 549 to 569 million kronor. At the same time, we are strengthening our EBITDA margin from 13.4% up to 13.6%. And the organic sales value, as I said, is just under 3%, where EBITDA organically increases by over 8%. And EBITDA goes from 74 to 78 million in the quarter. If you look at the cash flow, it's completely okay. Free cash flow of 54 million against 73 million last year. And the biggest explanations are that last year we got a little more out of the RÖS capital and that we have had Machine investments, as mentioned, and a little higher tax payments. But as we can see, it will normalize during the year. Also exciting to see that profit per share increases from 2.5 to 3.2 kronor. Finally, a short summary. Another strong quarter for Iden and we are very proud of our group companies and how the management and employees are fighting out there despite the time-consuming situation and the joy, as I said, that the company and the group of companies continue to show profit growth.

Yes, thank you very much for that. I remind you again that there is a chat function, so if you have any questions, send them in and I will read them out. While we wait for any questions, I would like to start by talking about some things I was thinking about. One thing that is interesting, as you mentioned, is that IDEN has a very Swedish focus, with roots in Sweden and so on, and it feels Can you say anything about how it looks on the cost side? Is it a similar distribution in terms of currencies and so on? Is there also a lot that is produced and costed in Sweden? Or is there that kind of aspect that makes the country happy?

Most of the business, not just the turnover, is in Sweden, so most of the manufacturing happens in Sweden. Then we have companies that both export and import, so of course we have both. But without putting a figure on the balance, it is probably that we have more imports than exports. That is, a strong crown that we hope will not be to our disadvantage.

You mentioned a bit about this new financing approach during the previous quarter. You mentioned that there are interest savings of about 20 million. Is there anything else that you should bring with you in terms of cash flow? Is there any difference in the form of amortization that can also free up more capital? Or how does it look in relation to earlier?

In the report you can see that we have 55 million in short-term bank debt against the company. So the term limit of 550 million is amortization with 10% per year. So there will be a small amortization on that. On the other hand, it is less than what we have had on existing mortgage loans. So it will be an improvement. We have almost 380 million in cash and bank positions in the group today, plus 450 million more in untapped credit areas. So there are good trading opportunities in the future.

Sounds promising. You mentioned last quarter and the fact that you have bought more shares in existing companies. Could you talk about if that is something you prefer, or if you prefer to look outside the group? Or is there any logic to wanting to acquire more of the companies you already own?

That's a good question. It's not that we prefer one over the other, but we are interested in both. And it will probably be so in the coming years that we will both go into ownership in existing companies and we will make new investments. Now there has been a period during the fall and spring when there has been a lot of going into ownership. It costs quite a lot of money to do it in existing group companies. And we like it. We like it very much because it is, as I think I have said earlier, a company we know without before. We have been the main owners for several years, so it is among the best investments we can make. But that does not mean that we will not make investments in new group companies or new investment acquisitions, but we will also do that.

Just that. I see that we have two questions here in the chat. The first one is, how will you scale up the acquisition pace? Will you let the group companies acquire on their own?

Not on their own, but on the other hand, we will do it together with them. And we have started relatively recently, you might say, a little more structured with, and again, not all, because of our 18 group companies, it is not... 100% of them that we want to invest in additional acquisitions, but some have other things that are more important for them to look at right now. But for a large number of them, it is on the agenda and where it is up to actively search and where we are together with them, of course. To visit, for example, possible investments together, a CEO for a group company with some representatives from Idun, it is something that is happening and will happen in the future.

Vi har en till här. Upplever ni att potentiella säljare av bolag har blivit mer avvaktande den senaste tiden i och med osäkerheten kring konjunkturen?

Yes, there is a little bit of that. It does actually. That there is a lot that shakes, that some dialogue, that someone simply wants to wait a little bit, in the same way as you might wait and see if you put a spade in the ground and build something or want to go to the stock exchange, then it can be that you want to wait and see how something lands before you sell your childcare. It is not unreasonable that it is in that way. It occurs.

And on that, what is your feeling on the acquisition market in general? You have made acquisitions in all the Nordic countries. If you look at market to market, do you see any difference in terms of multiples? That there is a market that is a little more inflated and you have to pay up a little for the acquisition versus if there is another that is a little cheaper? How do you see that?

I think that, if you want to be honest, and that's how it should be, only in Sweden have we made enough concessions to be able to have an understanding of average multiples. So to compare that with Finland or Norway, where there are single investments, I don't dare to do that.

I got another question here. How do you think the acquisition process will develop over time?

That is to say, in and with the fact that you can make more acquisitions? Yes, it is still not a very large company. So if we continue to have an average of two to four acquisitions per year, and it can be both new group companies, it can be additional investments, Some years it will be one and some years it will be four. That's enough for us to keep the growth rate as we have said, that is to say 15% per year in EBITDA, 5% organically, 10% growth via acquisition. So it will probably take a few years before we need to scale up and do many more or many larger companies. We feel quite safe with that we will be able to keep up this growth rate via acquisition.

Just that. I don't think there were any more questions in the chat. I haven't got anything directly either. I'm coming to a standstill. I don't know if we should start the day and you want to say something about the quarter or something like that. Or if we should thank you for us.

Tack till er som har lyssnat på vår första kvartalsrapport som vi sänder. Vi är väldigt nöjda över ett starkt Q1 i en turbulent tid. Tack och trevlig helg.