Indutrade AB (publ)

Thank you and good morning on our behalf as well. We are of course glad to present another strong Q1 report from Indutrade. Let's start with some overall highlights. In general I would say that the quarter was very good on basically all accounts. If we start with the order intake and top line, we saw a stable and high demand level in terms of order intake. We were up in total 14% and we grew 3% organically. And we also had a sales level actually also in order intake for the first time in a quarter at above 8 billion SEK. And sales grow 26% and 13% was organic growth. We also had a new all-time high level for the first quarter in terms of EBITDA margin at 15.2%. And our EBITDA increased with 28% to 1.2 billion SEK. And we also had a cash flow which increased versus a year ago significantly. However, we had a slight continued inventory build up, which we will comment a bit more on later on in the presentation. Also a good start in terms of acquisitions. We completed three acquisitions in the first quarter and we have finalized one project now in April. And if we add all this in terms of annual sales together it equals 655 million SEK. So also a good start here. If we then start to look at order intake a bit more in detail. As I said a good order intake high and stable and actually broad across basically all business areas. And we obviously measure order intake in all our companies and it was a bit more than 50% of the companies which had a positive organic order intake in the quarter. And the total level was above 8 billion SEK, so a respectful number for Indutrade. If we take the numbers as such, again, 14% up in total. We are 3% organic, 8% linked to acquisitions and 3% linked to currency. We had a fairly strong organic order intake in Q1 a year ago. It was then up 12%, so topping that now with 3% was good. I think it's also interesting to reflect a bit on how last year was in terms of organic order intake. So in quarter two and quarter three, we were at seven, 8%. And then as you probably remember, we went down to a flat organic order intake situation in Q4. We wondered a bit initially in the quarter where order intake would take us, but really good now to see that we were actually sequentially improving to 3% in quarter one. It was a number of segments which was strong and good. I would say general engineering stands out. You have seen a lot of strong quarterly report from a lot of large engineering related companies and they all have strong order books and now when the supply chains are improving they start to deliver on these order books and then they need obviously components and equipment to do that. So a lot of our companies have had strong demand linked to that. But we continue to see a good sort of demand level from the energy segment quite broadly. Basically a lot of investments going into that, not least electrification. But we also now see that there are more and more for example hydrogen related projects. We have some companies working with leak detection for tanks and they have in the past have big business linked to leak detecting tanks for petrol and diesel and now there starts to be building production lines for hydrogen tanks instead which needs these types of equipment. So that's been positive in the quarter. We see mining equipment being very strong globally and we deliver filter solutions to a lot of mining equipment. In terms of pharma and medtech I would say that for example the diabetes area stands out. We have some companies linked to production equipment to diabetes production. But we also have a company for example delivering diabetes devices for patients or people and they have a very strong development. So that's just to mention a few segments of fairly broad and it's basically only the infrastructure and particularly the construction segment which stands out to be a little bit weaker I would say. It was also so that order intake was slightly higher than sales so we actually had also a positive book to build in the quarter. And if we then turn to sales, continued strong development I would say. We have been fortunate to have a double digit total sales growth now for all of 2022. And actually all quarters also in 2021, except for the first quarter in 2021. So it's been a strong sales situation for quite a long time now. And most companies and all business areas, they also grew organically. And as I said, we were at a level above 8 billion SEK for the first time in a single quarter. And if we take the particular numbers in total plus 26%, we're off 13% organic, 9% linked to acquisitions and 4% currency. I would say also for our companies, we see improvements in terms of the supply chains. However, the lead times still remain fairly long in some cases, but it's becoming better and better step by step. It's difficult to estimate what is volume and what is price effects. We don't really have that level of detail. But I would say our guesstimate is as previous quarter that the price effect is somewhere around maybe seven to eight percent. We still have a good order book and it's basically at the same level as it was a year ago. And sequentially from quarter four these numbers were exactly the same actually. 13% organic growth and 26% in total. So a stable and strong sales situation. If we look at sales in more of a geographic perspective and we start with Scandinavia, it was basically a good level in Sweden and Norway and a bit of extra good in Denmark, driven mostly by the pharma sector and not least the diabetes related business I spoke about earlier. Sweden is our biggest market and Denmark is continuously improving I would say. It's on number five, the fifth place in rank. Finland was actually quite okay if we look at Finland as a market. Finland as a business area was maybe slightly weaker but that was more linked to that. We have some export related businesses in Finland and they had I would say really strong order intake and sales a year ago and was not equally strong this quarter. UK and Ireland was really good mostly driven by the pharma sector on Ireland. But there were also some good general engineering oriented business development in the UK. Business area UK doesn't come across as doing fantastic this quarter. But we have quite a lot of UK oriented companies or UK based companies in for example business area flow and also business area measurement and sensor technology. in some of those areas the business in the UK was actually quite good. And also in the Netherlands Benelux really strong sales and there we have a cluster of pharma related companies but also I would say the general engineering was quite good in that market as well. Germany did well, Switzerland, Austria did quite okay, also North America Asia stood out as a weak point this quarter and that's because we have lost some COVID-19 related business in China where those customers have turned to buy locally rather than import from some of our companies. If we look at sales in a timeline perspective you can now see that we have had quite a Quite a lot of quarters with very good organic sales levels at above the 10% level. And if we look at the quarter, the first quarter, I would say that In March we actually had an all-time high daily sales level so it's been been strong in the quarter and as I said before it's really driven by a strong order backlog and now supply chains which are eating up and improving step by step and it's a combination of both volume and some price increases. And it's organic growth as I said in all business areas and in most of our companies. And again the order backlog remains good and at the same level as a year ago. If we then look at EBITDA profitability, it was continued strong and a good improvement. We reached above 1.2 billion SEK, which is a very high level in absolute terms for Indutrade. The increase was in total 28%, organically plus 14%. Acquisition added 10% and currency 4%. And as I said before, we came in at 15.2% in terms of a beta margin, which was a record for a first quarter. And sequentially also an improvement versus Q4, where we were at 15%. So I think it's a strong record. find that that we are remaining at the 15 percentage level now here and with the order book we have I'm quite confident that it will improve or it will continue to be good also in in the coming quarters The improvement was driven by the strong organic growth in combination with stable high gross margins. We also had a positive contribution from our acquisitions. We see that our companies are managing costs in a good way. However, the activity level is high now. More travel, more fairs, exhibitions, more activity level in general, which are impacting cost levels a bit upwards. But even though we came in at the record high EBITA level. If we then turn to the business area perspective, as I said, all eight business areas grew sales organically. but some variations between them. If we start from the left with Benelux, as I said before, the medtech and pharma sector were strong contributors. We have a large company in producing and developing valves for the PowerGen sector, which they are doing really great at this time. General Engineering did well and also actually some infrastructure construction related companies did well in the Benelux area. So they were up 25%, which was really strong. DASH up 6%. I would say in general broadly continue to be on a good level. They had tough references in their medtech pharma sector, which made it a bit difficult to be on higher levels, but a good situation in the DASH area. Finland up 2%, good level, but they had very strong references also. I think they increased with 14% a year ago. And as I said, two companies in particular had very strong sales situations a year ago linked to some big export projects, which they didn't have this quarter. Flow is doing really, really well. They were up 23% and they are also benefiting from a strong Medtech Pharma situation. But also I would say the green transformation is benefiting Flow. A lot of investments in the energy sector. Also a company doing really well in the marine sector, but quite broad positive situation in terms of Flow technology. FMS did well, plus 7%. They had a strong situation, plus 17% a year ago. But basically growth in all segments except construction within this business area. So a broad-based good organic sales situation. Industrial components were up 9%. Also a strong development in the Medtech area. Also good in general engineering and also a bit weaker in terms of the infrastructure area. MST were up 13% and strong development overall in engineering related areas quite broadly I would say. And UK up 1%. They had companies linked to the aerospace segment, energy, defense, but also a bit weaker in terms of infrastructure and construction. And some companies in the UK business area linked to engineering were also a little bit weaker. If we then look at profitability in a business area perspective, I would say we are in general at high levels in basically all business areas except maybe for the UK. And the reasons I have particularly already elaborated on link to the top line. So I think the explanations are similar also in terms of profitability three business areas really stood out flow technology 17.7% strong increase there and Benelux also had a really strong profit level at 16.3% And also DACH had an all-time high for the first quarter in terms of profit margin, 14.5%. And they benefited also a bit from newly acquired companies in the DACH area. But otherwise, I would say that most of the comments are similar to what I already said in terms of the top line situations for the business areas. We had a good start in terms of acquisitions. We were able to acquire three great companies in quarter one. Saks Lift making scissor lift tables in Denmark but selling quite a lot internationally with a very Very strong, quite unique digital sales platform. We have HOBE developing, producing precision tools, micro tools for application areas in the dental segments, medtech area. watches and other things. A company in the Netherlands SKS in the flow technology area. A bit larger company. They are for example the biggest partner agent to Alfa Laval in Europe. They are also experiencing a good business situation. So we are very happy with that start and also now in April we were able to add a company in Denmark Safematic working with filters. So all in all now we have added about 655 million of extra top line on an annualized basis and I would say that we have a very good pipeline in terms of projects we are working with and I think the multiples are basically on the same level as before, maybe have come down slightly, but not too much. As we are basically acquiring really good companies, stable companies with high profitability, the owners, they know what type of price they want for these businesses. And if they don't have to, they rather delay their decision to divest. But yeah, Even so I would say that we have a strong and good pipeline and I think 2023 can be basically an equally good acquisition year as 2022 and the previous years. If we look at acquisitions in a timeline perspective you see here that we have had a really good situation in 21-22 and we measure this on obviously annualized but also in a longer perspective and the three-year average right now is currently at 15 companies. So I think that's basically at the lower point of the scope where we want to be in and we have a positive outlook in terms of staying at that level or slightly increasing that level going forward. If we look at how much the acquisitions add in a quarterly perspective on the other slide there you see that we have been adding around 60-70 million SEK per quarter for quite some quarters and thanks to the good acquisition activity in quarter four last year and in quarter one now this year we are adding a bit above 90 million SEK. So a strong contribution from the acquisition side. So by that I give the word over to our CFO Patrick to elaborate more on the financials.

Thank you, Bo. So let's go a bit deeper into the financials. Total growth for orders and sales was high and good for the first quarter, 14% and 26% respectively. And as Bo talked about, good to see that book to bill, again, slightly above one and both of them above 8 billion. Gross margin 34.6, stable, same level as last year. And I would say our companies continue with price increases to mitigate supplier price increases that we still see. And also inflation and also the weak CX that impacts a lot of our Swedish trading companies. EBITDA grew 28% and the margin was an all-time high for Q1, 15.2%. Further down in the P&L, of course, the finance net is now increasing as an effect of both higher interest rates and also that we increased our borrowing the last year. Tax costs increased with 30% in the quarter. That implies a tax rate of 23% versus 22% last year. And earnings per share up 18%. And looking at the return, it's still a step above our target. So it's at 22%, but slightly lower than last year. And the main reason for that is the high acquisition pace adding capital to the balance sheet and also of course higher working capital the last year. Cash flow substantially higher than last year. So that's good. And net debt EBITDA at same level as year end but higher than last year. But if you look at a more longer term perspective, I think the level we see now is basically in line with the history. Then moving on and looking a little bit more on the cash flow side, and as you can see here, we came in at the good level of 632 million. Quarter one is normally a seasonally low quarter for us in cash flow, so 632 million is good. And the improvement comes from, of course, the high result and also a lower working capital build up this year. We normally have a build up of working capital during the first half of the year, particularly Q1. So that's not strange. And because of the maintained good situation and that there are still a lot of lonely times from suppliers and also the seasonal effect inventory continue to increase slightly in the quarter. But as we continue hopefully to see gradual improvements in the supply chain more and more of our companies will manage to reduce their inventory levels going forward in both quarter two and quarter three we think. Earnings per share grew in the quarter with 18% so it's now up to 2.06 kronor. The increase is given of course mainly by the operational result the EBITDA and dampened somewhat by the increased finance net. And if you look at the development in a more longer term perspective the three-year average is at 2% increase per year and the five year average is 21% increase per year. And finally the debt situation and the interest bearing net debt increased to 9.4 and the increase is mainly connected to the high acquisition pace especially in quarter four and also now in quarter one when we acquired a few larger companies Then the slightly dampened operational cash flow, of course, impacts also a little bit, I would say. But I think if you look at the net debt ratios, they are still stable, as you can see from the graph, and not high from a longer term perspective. And the net debt equity ratio, 69%. And as I said then before, the net debt EBITDA, 1.8. And if you exclude the earn out liabilities, they were slightly lower than 1.6 at the end of the quarter. Good to mention as well is that we, during the quarter, renewed and also increased our unused revolving credit facilities. to better align them with the size of company we now have become. So the total size of the unused guaranteed backup facilities are now 5.5 billion. So if you summarize, I would say that the financial position is still strong, stable, relatively low debt ratios and maturity curve is balanced and also the guaranteed long-term facilities well balanced and aligned with the size of company we now are so thanks and then I turn back to you thank you some brief comments on strategic priorities maybe starting with a short term I would say that

All our companies are basically working with the pricing power and protecting the gross margin, fundamentally important. We see that there are still price increases, there's still inflation and their job is to protect the gross margin and obviously the bottom line and I think they have proven track record to do that in a good way, but that's obviously still high on the agenda. And the other area I would say is working capital efficiency and working with step-by-step bringing down inventory. We see that we are making progress in this area and there are some dimensions which makes this taking more time. Obviously inflation but also to some extent currency translation effects. So step by step we are improving capabilities and will drive down the inventory level. So I'm quite confident that we will see good results in this area in the coming quarters. In terms of more fundamental strategic priority, it's still on organic growth and improving our capabilities in terms of organic growth, also impacting our acquisition strategy, I would say. And then increasing our acquisition ambition, but still being very selective and making sure that we buy strong good companies which will be value accretive going forward. We also have strategic priorities on a group level. This is not on a per company basis but more on how we operate as a group with different types of priorities and People development is very central. We are very active in terms of improving our platform for knowledge sharing in a lot of different areas. We work in terms of sustainability broadly but more particularly with the decarbonization and view that as a business opportunity. We are trying to step by step become more and more professional owners and be obviously both active but still balancing the decentralization and keeping that true. And we are also working with the scalability dimension when We grow as much as we do. We need to be half a step ahead in terms of recruiting leaders, board members and facilitating this growth in a broad sense in a good way. And if we look more particularly in terms of our sustainability work, you have hopefully seen now that our sustainability report was published now for 2022. And we see positive trends in most of our KPIs. We have also last year added scope 3 and started to work with that step by step in our companies. This will obviously give us a better understanding of those emissions and how we should include that in our objectives and strategies going forward. Most of you know that we have joined the science based target initiative and also here we are step by step understanding more about this and how that will be integrated into our objectives and ambition levels. We have singled out the environment, the climate as being the most prioritized area. And right now we have actually launched a new quite broad and comprehensive climate training for all our companies. That basically concludes the presentations and it's time to basically summarize what we have said and what we want you to take with you from this presentation. So it's a new record quarter with continued high profitable growth. The demand remained high and stable and improved a bit sequentially organically. But there is still some variations between our companies obviously. We had a really strong sales situation and profit growth with a record EBITDA margin level for the first quarter. We have a large high quality order backlog and this gives confidence for sales and earnings in the near term. Although we obviously understand that we have challenging references. We have made four acquisitions so far in 2023. We have added 655 million of top line on an annualized basis. And we are still working with a good pipeline with a lot of interesting projects. And we are also as a management team and also broader than that working with our strategic platform to step by step strengthening that and this will add to our long-term sustainable profitable growth. And by that I say thank you for listening and I think we open up for Q&A.