Inwido AB

Good morning and welcome to this webcast and telco covering Invido's first quarter performance in 2024. My name is Fredrik Møller and I'm delighted to say that I joined Invido as president and CEO on the 10th of April. This is my 10th day in office actually, very exciting. By my side is Mr. Peter Verlien, our Group CFO and Deputy CEO and of course someone many of you are already familiar with. Let me start off by stating my appreciation to Peter for a job very well done as acting CEO during this interim phase between my predecessor Henrik Hjalmarsson and myself, taking great care of the company together with the rest of my management team and all of our co-workers across Europe. While we in this call will cover the highlights of quarter one in detail, it may be worth also taking a quick look at what InVido today is all about. We are the leading window group in Europe with rolling 12 turnover of 8.7 billion SEK and return on operating capital of 13.7%. We employ some 4,200 fantastic individuals across our 34 business units. And while the strongholds are in the Nordic region, plus the UK and Ireland, we actually cover a total of 12 European countries. A lot of the rationale behind my decision to join InVido is listed on this page. And I have to say that my early impressions of our company further strengthen my belief in this value proposition. We do enjoy a favorable exposure towards megatrends such as the green transition and a leading market position and proven track record together with our financial muscle enable us to really drive the consolidation within our industry going forward. In addition, we have a scalable e-commerce platform that broadens our offering, adding value to our customers by making it easy for them to do business with us. Let me now turn your attention to the quarter that just passed. It is no surprise to anyone, of course, that new-build activity was very low, particularly in Sweden and in Finland. We were affected through substantially lower volumes, but despite these challenging market conditions, our profitability was solid, in fact, higher than pre-pandemic levels, proving the inherent strength of our business model. In an agile fashion, we raised efficiency and reduced costs while also deliberately retaining critical competence and capacity in order to be ready for when demand returns. It's not all pitch black. On the contrary, I would say, we're starting to see positive signs on the consumer and renovation market, so far most evident in Denmark and within e-commerce. If we look at the figures again in a more normalized and seasonal context, where the first quarter is typically the weakest of the four, our top line declined by 14% versus previous year. Adjusted for acquisitions, net sales declined by 21%. Our EBITDA profit reached 91 million SEC, equaling a margin of 5.0%, down from 168 million SEC and 8.0% respectively. Our large UK acquisition last summer has added to our order intake and backlog, growing by 1% and 41% in total. Organically, however, the same parameters were minus 9% and minus 13%. Return on operating capital decreased from 17.6% to 13.7%, and our net debt in relation to EBITDA went up from 0.7 times to 1.4 times, or 1.1 times if not applying IFRS 16 accounting. Sustainability remained high on our group agenda, and we yet again harvested on previous efforts, also this quarter, as shown in our absolute figures. Relatively speaking, some KPIs were naturally hampered when shown as a portion of lower volumes. Seeing our accident and sick leave related figures improving brings a big smile to my face, as this is very, very important to me and to the rest of the group. And so is this. After the quarter ended, we obtained formal approval of our climate targets from the Science-Based Target Initiative. This is an important milestone for us and a seal of us contributing to a better planet by doing what we do best, namely developing and launching even more energy-efficient products and solutions. one key pillar for a long-term success is innovation and it was therefore extra pleasing to note quite a few product launches throughout q1 further solidifying our market leadership and our strategic position towards improved indoor climate and energy efficiency what better way for elite funster for example to celebrate its centenary than by launching its best windows ever in the elite 100 series And Diplomat Doors, they did a collab with Assa Abloh's Yale brand to launch Diplo Smart. And last but not least, Hayom launched a new exciting platform for sliding doors. Now it's time to dig deeper into our Q1 numbers, and I therefore hand over to you, Peter.

Thank you so much for that, Fredrik. I'll start with this page. This page is showing the income statement for Q1. To the left, we can see 2024. Then we can see 2023. And to the right, we can see the latest 12 months. Sales is down by 14%. Organically, it's down by 21%, meaning we have lost $495 million in sales compared to last year per four months. The gross margin was slightly down from 23.4% to 22.5%, a decline of 0.9% units. due to the volume decline. NVIDIA has a large seasonality in the business, where the Q1 is the lowest quarter for NVIDIA. The season starts in Q2. To be able to increase capacity, as well as sales in Q2, we must balance the capacity level in Q1 and not reduce the capacity too much to handle the growth in Q2. Thereby, in Q1 this year, with a sales decline, a volume decline, but more than 20%, We have not been able to fully compensate and defend the gross margin in the quarter as we did in 2023. Operating EBITDA declined to 91 million compared to 168 million last year. Operating EBITDA margin was 5% compared to 8% last year. In the quarter this year, InVida had a restructuring cost of 7 million, mainly related to the one factory project in Vetlanda in Sweden. The profit of the tax declined from 112 to 28, and the earnings per share from 190 to 0.37. Looking at the latest 12 months, sales have declined to 8.7 billion. Nvidia has, during the latest 12 months, lost more than 20% in volume. I said this before, I said this in February when I presented the Q4 report. I've been here for 26 years. And I've never seen such a decline during my 26 years within this business. And that is still valid for the Q1. So we have lost more than 20% of sales during the last 12 months, and still we can deliver an operating beta margin of 10.9%. This page is showing the sales development for Q1 as well as the order intake development for Q1 the year 2019 until 2024. To the left you can see the sales development and to the right we can see the order intake development. We also marked the latest acquisition Saidi that is the golden color in the blue stables for 2024. Sales is down by 40 percent compared to last year organically down by 21 percent If we compare to a perform of last year, that means a sales decline of 495 million. We can see growth in e-commerce. E-commerce has been growing by 8%. E-commerce is selling only to the consumer markets, mainly to the renovation markets. We have industry or new build sales in Sweden, and we have it in Finland. Sweden is reported under Scandinavia, and in Scandinavia, we can see a sales decline in the quarter of 25% compared to last year. Finland is reported under East, and in Eastern Europe, we can see a sales decline of 44% compared to last year. Western Europe, we have an increase in sales of 90% compared to last year. Organically, it's down by 1% compared to last year. The order intake development can be seen to the right on this page. The order intake is plus 1% compared to last year, including SIDI. If we exclude SIDI, the order intake is down by 9%. Once again, we can see growth within the e-commerce business selling to the consumer market. They have a growth of 12%. Grenada has a decline of 12%. Eastern Europe is down by 26%. And in Western Europe, we have a growth of 130%, of course, impacted by Saudi group. Excluding Saudi, we still have a positive audit tech development compared to last year due to the development in Ireland. So the decline of 9% excluding Saudi is mainly related to the industry markets, the new built markets. Whereas we can see positive development in the consumer market when it comes to e-commerce, We can also see a positive growth, small growth in Denmark, and we see less decline compared to industry markets in Sweden and in Finland when looking at the consumer sales. This page is showing the order backlog end of each quarter from Q1 2020 until Q1 2024. Once again, we have separated the Saidi because Saidi has a different business model compared to the rest of the group. Saidi, they are selling to the social housing in Scotland, and they have a quite a large order backlog compared to the rest of the group. Saidi has an order backlog, more or less one year of sales, whereas the rest of the group, when we're selling to consumer markets, we have order backlog just a couple of weeks ahead of us. The total order backlog compared to last year is plus 41%. Excluding Saudi, it's down by 13%. So the difference excluding Saudi is less now compared to previous quarters, because in the Q1, sales declined by 21% organically, whereas the order intake was only down by 9%. This page is showing operating a beta and operating a beta margin for Q1 from 2019 until 2024. As I said before, Individa has a high seasonality, and the Q1 is always the lowest quarter with the lowest profitability. Before the pandemic, the margin was around 3 to 4%. On this page, you can see that the margin 2019-2020 were 3.1 and 3.3%. Then during the pandemic, the seasonality was reduced because of the high order intake in autumn. We had a high order intake in 2020, 2022, and that impacted the sales and deliveries in the beginning of the year, 2021 until 2023. So we had a positive impact, especially for the Q1 during the pandemic. And now in 2024, we don't have that impact anymore. And the margin has been declined. It's more normal, still above the level pre-pandemic. 5% this year compared to the level of 3% to 4% pre-pandemic. And 2019 to 2020 were 3.1 and 3.3. have a financial target and related return operating capital return operating capital is defined as a beta rolling 12 months in percentage of the average operating capital and the average operating capital is the average latest four quarters the target is 15 percent and due to the lower results due to the lower volumes and The return on operating capital has declined in the quarter. It's now down to 13.7%, below the target and still above the level of the pre-pandemic. The operating capital has increased during the last four quarters, and the main reason is the acquisition of Saidi in Scotland, which was made in July 2023. This page is showing the net depth and the net depth, including as well, excluding IPR16 and as well as the net depth in relation to operating EBTA, including as well as excluding IPR16. We have also high seasonality when it comes to our net depth due to the working capital. The working capital is always as low as in December, and then it starts to increase in Q1. And this has also been impacted on the reality for this year. The net debt has increased in Q1, which is normal for the business. However, the increase this year was a little bit higher compared to last year due to the pandemic. We had higher and better sales in Q1 last year compared to this year. Still, the net WBTA is still giving us a headroom for growth. It was 1.4, including RFIR 16. And excluding RFIR 16, we are on 1.1. Compared to last year, we were on 0.7, including RFIR 16. If you then look at our different business area, starting with Scandinavia, In Scandinavia, we have lower volumes in a challenging market, especially the new-build market. We have continued low activity in the market, the new-build market in Sweden. And as I said before, we see an increased demand notice amongst consumers in Denmark. We defended our gross margin. It was down by 0.3 percent units, even though sales declined by 24 percent from 1 billion 73 to 860 million and a quarter. Operating in beta went down from 116 down to 60, and the operating beta margin went from 10.8 to 7.4. The order intake declined by 12%, and the backlog end of the quarter is down by 14% compared to last year. In Eastern Europe, we are facing historically low activity in the new-build market in Finland. We have to go back to 1940 to see the same activities. We have taken efficiency measures and we have made cost savings while retaining competence and capacity for the peak season. If we cut down too much in Q1, then we cannot increase sales when the season starts in Q2. Sales is down by 43% compared to last year, from 565 million to 321 million. The operating EBITDA went from a positive of 38 million to a loss of 15 million. The margin went from 6.8 positive to a minus of 4.8. The order intake declined by 26%, and the backlog end of the quarter is down by 28% compared to last year. In e-commerce, we can see a growth and improved margin. E-commerce is selling to the consumer market, so we can see a growth in the consumer-oriented online sales. Sales is plus 8% in a quarter from $236 million to $255 million. The operating EBITDA went from $4 million last year to $11 million. The margin went from 1.5% to 4.2%. The order intake is also growing. It's plus 12%. And the backlog end of the quarter is more or less the same as last year. The last but not least, Western Europe. In Western Europe, we have, of course, SIDI Group, and SIDI Group has a large impact on the performance of Western Europe. However, SIDI Group has been a good contribution to NVIDIA and has delivered well despite the challenging market. And SIDI is also less cycle than the other business units. and has a good contribution to the results and margins in Q1 for Western Europe. The other businesses in the UK have a negative impact affected by low demand and the consumer market. The total sales is plus 90% from 223 million to 424 million. If we compare the sales to a performer last year, sales is down by 1% compared to last year. Operating in beta from 19 million to 43 million. The operating beta margin has been improved from 8.7 to 10.2. The order intake is plus 130% in total. Excluding Saudi, we still have positive order intake compared to last year, mainly due to the performance of Ireland. And the order backlog end of the quarter is up compared to last year from 230 million to 1,124,000,000. mainly due to Saudi. However, excluding Saudi, we still have a higher order backlog end of March compared to last year. I now hand over back to Fredrik to make a short summary and the outlook.

Thank you, Peter. To sum up then, we can conclude that Indido showed resilience in a quarter where markets continue to be challenging, particularly in the new build sector and in Sweden and Finland. But there are definitely positive signs on the horizon in Q1 exemplified by consumers in Ecom and in Denmark and longer term by our positioning towards EU's green transition, as well as our opportunity to further grow in Europe organically and via acquisitions. And before we open up for Q&A, we would like to market both our upcoming events, including our AGM in Malmö on May 16, as well as our annual and sustainability reports that are hot off the presses. There's lots of useful information in there. And now, Peter and I would be delighted to answer any of the questions that you may have.