Inwido AB

Good morning and welcome to this webcast and telephone conference covering InVido's second quarter and half year performance in 2024. My name is Fredrik Møller and since the 10th of April this year, I'm the president and CEO of InVido. And joining me today here in our Malmö head office is also Peter Wellin, our group CFO. Over the past three months, I've had an intense but fun and promising onboarding to our group, including visits to many of our sites in Sweden, Norway, Finland, Denmark, Poland, England, and Scotland. I've met with a lot of our coworkers, and I certainly know more about the window and door business now than I did before. Above all, I can conclude that InVito is in a good place. It is well-functioning, professional in all aspects. Our current activity level is high, and I notice a lot of smiles on people's faces, which bodes well for what's to come. While many of you are, of course, familiar with InVido, it may be worth reiterating that our 34 business units comprise what is de facto Europe's leading window group. The strongholds are in the Nordic region plus the UK and Ireland, but we actually cover 12 European countries in total. Our rolling 12-month turnover equals 8.8 billion SEC with a return on operating capital of 13.1%. Furthermore, we're not just producing high quality windows and doors. We also improve people's indoor life through our energy efficient and aesthetically appealing solutions. We are on an exciting journey towards doubling the size of the company by year 2030. I find it achievable. As there are still many profitable growth opportunities for us to pursue, and based on my impressions from these first three months, I dare to say that we have only scratched the surface yet. We enjoy a strong value proposition for the years to come, and our proven performance track record gives us comfort and credibility. Me and my management team are in the process of clarifying our vital few strategic priorities, as well as determining how we can speed up their execution a bit. In short, it's about realizing organic and acquisitive growth options while getting that volume flowing through a more efficient setup, harvesting on recent investments made in our people and in our operations. Let me now turn your attention to the quarter that just passed. I'm proud to report that we as a group are back on a positive growth trajectory with order intaking increasing across all of our four business areas. Our order backlog went up by an impressive 68%. largely driven by our side acquisition and an uptake in consumer sentiment, in turn boosted by lower inflation and interest rates. It was particularly pleasing to note our performance leap within e-commerce, more than doubling its profitability, and within Western Europe, where our Irish entity Carlson booked InVito's largest order to date. All of this gives us cautious optimism for the second half of the year. Still, I, of course, remain humble over the fact that uncertainty still prevails in the marketplace, particularly given the continued low new build activity hampering industry and project-related demand overall, particularly in Sweden and in Finland. With regards to acquisitions, which form an important growth driver for us, we have noted a higher activity level in Q2 and can conclude that our target funnel is healthy. Last but not least, The green transition is definitely gaining momentum, and here InVito is getting quite a lot of positive recognition for both our positioning and our efforts. If we then look at the quarterly figures, order intake grew by 22% and by 10% organically relative last year's Q2. Our order backlogs increased of an impressive 68%, of course, includes last year's acquisition of SIDA Group, but even if adjusted for this, it grew by 10%. Net sales were up 3% quarter on quarter, but declined organically by 5%. I can conclude that several entities have gained market share during spring, in most cases with maintained margins. Operating EBITDA reached 263 million SECs equaling a margin of 11.4%, up from 261 million SEX, but down from 11.6% respectively. Net debt in relation to operating EBITDA went up from 0.7 times last year to 1.4 times now, or 1.1 if not applying IFRS 60 in accounting. Still safely within our set target though. As usual, certain achievements are worth celebrating a bit extra, and this quarter is no exception. First, I'm very pleased about our healthy progress within e-commerce, displaying strong growth in top line and translating that to appropriate more than twice the size of where it was one year ago. So well done, Boo and team. Secondly, our longstanding efforts and our favorable position within sustainability are getting more external recognition. Here exemplified by Financial Times listing of InVido as one of Europe's top 500 climate leaders. And by TMF, the Swedish Wood and Furniture Manufacturers Association, handing its NOVA award to our lead French entity for their innovative work on total window recycling. And this is also worth highlighting, of course, our Ireland-based entity Carlson, which joined InVido already in 2006, booked a record high order in the quarter, worth around 9 million euros, and spanning over a timeline of almost two years from now. This is a sign of trust from our customers and of Carlsson being perceived as the clear leader in its field. Congratulations are definitely in order for Michael and his team. As you know, sustainability is high on both our management and board agendas, and it is gradually becoming a part of our company DNA. Visiting our sites recently, I noted with satisfaction our particular efforts within work safety. While our vision for lost time accidents is zero, our trend line continues to slope downward, which is very, very positive. Some of the patents seen and communicated already in the first quarter have also been present in Q2. In terms of challenges, I'm again thinking primarily of the soft market for new build, what we typically refer to as industry or projects. In the case of Sweden and Finland, activity is still at historically low levels here. Accordingly, this has hampered our performance for the full six-month period, causing net sales to decline by 13% organically relative to the same period last year, and our operating EBITDA margin to decline from 9.9% to 8.5%. The negative delta in earnings per share from 5.26 krona last year to 2.89 in the first half of 2024 is largely related to items affecting comparability and to positive currency effects in last year's financial net. Now it's time to dig deeper into our consolidated Q2 numbers, as well as our business area's performance, and I therefore hand over to you, Peter. Please go ahead.

Thank you so much, Fredrik. We start with this page. This page is then showing the income statement. To the left, you can see the Q2. In the middle, you can see the year-to-date. To the right, you can see the rolling 12 months as well as last year. Starting with the Q2, net sales is up by 3% compared to last year. Organically, it's down by 5%. Gross profit is slightly down, minus 1%, and the gross margin went from 26.7% in the quarter to 25.6% this year. However, Invida has taken some restructuring costs in the quarter of about 23 million Swedish crowns related to the one factory project in Vetlanda and also due to write-downs of inventories. the gross profit has been impacted negatively by these two restructuring costs. Excluding these restructuring costs, the gross margin was more or less the same as last year. Operating EBITDA was up 3% and the margin was the same as last year, 14.8%. Operating beta is up by 1% compared to last year, meaning the margin went from 11.6 to 11.3. It will come back more when it comes to operating a beta margin. The EBITDA was down from $222 million last year to $240 million. The restructuring costs then impacted this $23 million. That's the difference between operating EBITDA and EBITDA. Further down in the income statement, we can see that profit after tax is down by 22%. NVIDA had also last year, in Q2 last year, a positive currency impact in the financial net. So when comparing the financial net compared to last year, we had a positive impact last year and that thereby lower results this year. So profit tax as well as earnings per share was then negatively impacted by the restructuring cost of this year. And when compared to last year, we had a positive currency impact. Thereby low earnings per share, even though operating at beta was more or less in the same level as last year. Looking at year-to-date Q1 plus Q2, sales is down by 5%. And operating at beta is down by 18% from 430 to 354 due to the performance in Q1, the more normal Q1, I'd like to say, compared to previous years where we had a positive COVID impact in Q1. And the margin has declined from 9.9 to 8.5. Earnings per share is down from 527 to 289. Rolling 12 months or later 12 months, Sales is about $8.8 billion. Operating in beta is $10.9 billion. And the earnings per share is $9.35 billion. This page is showing the development and the calculation of organic growth. We do it a little bit differently compared to other companies because we change the history. In that sense, we make a performance. So starting to the left, Sales last year was $2,263,000. Then we add on the acquisitions, their sales, what they had in Q2 last year, meaning Saidi had a sales in Q2 last year of $196 million, meaning we went on a pro forma from $2,263,000 to $2,459,000. The acquisition gave us 9%. Then we recalculate the proforma with the currency of this year. And now this year, it's a quite small impact, only plus 1 million, and the percentage is more or less the same. And then we then compare the proforma last year with the FX of this year compared to the sales in this year. And then we have the decline of 5% organically, then minus 5%, meaning minus 128 million. The total sales is plus 3%. Organically, it's minus 5% when comparing to a performer last year adjusted with the currency of this year. Let's start with a big area. We go starting with Scandinavia. Scandinavia continues to be impacted by low volumes in the new-build market, especially in Sweden. where the Danish business units benefit from increased activity in the consumer market. Sales is down by 7% to $1,170,000,000. Operating beta margin was more or less the same as last year, 14.2% this year compared to 14.3% last year. The order intake was improved by 4%, and the order backlog end of the quarter is plus 6%. To the left, Yeah, to the right, you can see in the graph, you can see the development, the rolling 12-month sales, as well as the rolling 12-month operating beta margin. And as you can see, the peak was in Q4 2022, and the sales is now rolling 12 months, 21% behind the sales in Q4 2022. And the margin has, even though, despite the sales decline, been quite stable. If we then go over to Eastern Europe, Eastern Europe continues to be a challenging market, especially the Finnish market. And Finland is hampered by the strong volume decline in the new build segment. And we have taken action. However, we have not been able to keep operating a beta margin. But the decline in Q2 this year was minus 22% in sales. went from 569 million to 441 million. The operating EBITDA margin went from 13% to 5.5%. The order intake in a quarter was, however, positive, plus 2% compared to last year, and the backlog is more or less the same as last year, minus 4%. You can see the same graph to the right showing the development from Q2 to 2022, the sales later 12 months, as well as the operating EBITDA margin later 12 months, And as you can see, compared to the peak in Q1 2023, sales is now 29% lower compared to Q1 2023. And the margin has declined the latest two quarters. Next one is e-commerce. E-commerce has a positive development. We have increased the market share and we have substantial profit growth. So we continue to have a pot development in all markets when it comes to e-commerce sales. And April was actually the all-time high monthly order intake for e-commerce. In a quarter, sales is plus 50%, from 271 million to 311 million. The operating beta margin has been improved from 3.9% to 10.8%, meaning the operating beta in a quarter was plus 220%. The all-in-take is plus 60% in the quarter, and the backlog end of the quarter is minus 6%. And here you can see that to the right, same development, same graph showing development in Q2 2022. Sales have started to increase, and the margin has started to increase as well. And we have a positive development, latest two quarters when it comes to operating a beta margin. Going over to Western Europe. In Western Europe, we have a positive order intake and we have improved profitability. We have continued profitable growth in the second quarter, both organically as well as acquired. In England, we have gained new customers since some of our competitors have gone bankrupt. And in Scotland, Saudi, we continue to have good development. And we have also good development in Ireland, in our business in Carlsson. In the quarter, sales is plus 108%, from 227 million to 471 million. The operating beta margin has been improved from 6.8 to 11.4, and the oil intake is plus 169 million. Of course, possibly impacted by CIDR's acquisition, as well as the largest order ever for a leader taken by Carlson in Ireland, as Fredrik mentioned. And the order backlog is plus 480%. And here, CIDR has a different business model with large order backlog compared to the rest of the group, and thereby we have a high growth in the concept order backlog. This page is showing the sales development as well as operating a data development from Q2 2022, so 2023 to Q2 2024. Starting with sales, we can see we have lower sales and declined sales in Scandinavia, Eastern Europe, where we have growth in e-commerce and in Western Europe. And looking at the data, we can see that we have declined in Scandinavia by 12 million, Eastern Europe was down by 49 million. However, e-commerce has improved the result by 23 million and Western Europe has improved the result by 38 million. The reason why we are lower operating beta margin this quarter, went from 11.6 to 11.3, is due to development of Eastern Europe, where sales declined by 22%. Scandinavia, their margin was more or less the same as last year, and we have a higher margin or improved margin in e-commerce as well as Western Europe. And when comparing the margin compared to previous year, Q2 previous year, we can see the margin this year is more or less the same as it was pre-pandemic or even higher than pre the pandemic. NVIDIA had a really high margin in Q2 2021, due to the pandemic especially due to the performance of e-commerce so the margin this year is slightly down compared to last year from 11.6 to 11.3 once again due to eastern europe meaning due to finland and the margin for total group is more or less what was pre-pandemic looking at the cash flows the cash flow excluding Acquisitions of subsidiaries is more or less the same as last year, minus 2%. Cash flow from operating activities is minus 2%. Then we have a positive deviation when it comes to changes in working capital. Minor adjustments when it comes to inventory. We have a positive cash flows from operating liabilities and negative from operating receivables. And a total impact of plus 8% compared to last year. And this changes in operating capital has then compensated the higher CapEx in the quarter. CapEx in the quarter is plus 22% compared to last year. To the graph to the right, you can see the development when it comes to CapEx since 2019. Before 2019, the normal CapEx level of NVIDIA was 3% to 3.5%. Then during the COVID time, the capex was reduced due to different circumstances. And now in 2023, as well as the beginning of this year, the capex level has increased. And we are today in a rolling 12-month level on 4.1. We must compensate the lower capex that we did during COVID. So instead of being on 3% to 3.5%, we should be on 3.5% and 4% the coming years. So with a strong cash flow in the quarter, more than same as last year, the net debt is more than same in Q2 as it was in Q1, meaning the cash flow generated in Q2 has compensated the dividend payment that we did in May Q2 this year. So net debt It's more than same as in Q2, and net depth in relation to EBITDA is today 1.4, same as in Q1, and it was 0.7 last year when we include IFR 16. Excluding IFR 16, net depth with EBITDA is 1.1 compared to 0.4 Q2 last year. This page is showing the return operating capital. Return operating capital has declined and is now on 13.1% compared to the target of 15% still above the pre-pandemic level. The main reason why we had lower return of its capital is a lower EBIT in sake compared to one and one half years ago. And This page is showing the order intake and the order backlog. To the left, you can see the order intake development in Q2 2019 to 2024. And to the right, we can see the order backlog from 2019 until 2024 end of Q2. The total order intake was plus 22%, excluding acquisitions, meaning excluding insider is plus 10%. And all business areas have higher order intake compared to last year. Scandinavia plus 4%, Eastern Europe plus 2%, e-commerce plus 16%, and Western Europe plus 169%. Excluding Saidi and excluding a large order in Carlsen, Western Europe has still a positive order intake. And then the order backlog is plus 68% compared to last year. Excluding acquisition is also here, plus 10%. We have a higher backlog in Scandinavia as well as in Western Europe. And now I hand over back to Fredrik. He will make a summary and outlook.

Thank you very much, Peter. Excellent run-through as always. To sum up, we can conclude that InVido is back on a growth track. While markets remain uncertain, particularly in the new build segment, we have grown our order intake across all four business areas We've raised sales and we've raised profits too. And we do see macroeconomic signs of consumer sentiment moving in the right direction. This morning's inflation figure in Sweden is one good example of that. The M&A climate is also improving, meaning that altogether we are cautiously optimistic about what the second half of the year has in store for us. The green transition is gaining momentum across Europe, which is also exciting for the medium to long term. And before we open up for Q&A, we would like to make some noise about our upcoming events. So please make a note of these in your calendars already now, particularly our Capital Markets Day that will take place in Stockholm. As always, you can also find a lot of useful information on our webpage and via our frequent posts on LinkedIn. And now Peter and I would be delighted to answer any of the questions that you may have.