Inwido AB

Good morning, everyone, and welcome to this webcast and telephone conference covering Invido's third quarter and nine-month year-to-date performance in 2024. My name is Fredrik Møller, President and CEO of Invido, and joining me on today's call here in Stockholm is Peter Willin, our Group CFO. You know the drill by now. The structure of this call is that I will start with a run-through of where our Group is finding itself right now, our latest achievements and financials, and then Peter will provide an educational deep dive into the financials at both group and business area level to pay close attention to this. And as usual, this presentation material is already available on InVido's website. At InVido, we are on a mission, an exciting growth journey towards becoming a 20 billion SEC turnover company by year 2030. Through our 35 business units and across 12 countries, our employees are making good progress on that journey and it will be further boosted by the EU's green transition, as well as by synergistic acquisitions. We are de facto Europe's leading window group with particularly strongholds in the Nordics and in the UK. This year, we celebrate 20 years as a group, 10 years as publicly listed on Nasdaq Stockholm, and the Least Fundster are marking their centenary. So we're obviously in it for the long haul. Importantly, we are not just producing high quality windows and doors, we also improve people's quality of life to our energy efficient and aesthetically appealing solutions. Now let's look at the quarter that just passed, and I'm proud and pleased to announce that our profitable growth has continued also across July through September. Both our order intake and order backlog continue to grow for the second consecutive quarter. Despite our invoicing being slightly down quarter on quarter, InVito's operating EBITDA margin edged higher than Q3 last year, as a result of increasing efficiencies originating from our investments made in people and in operations. Importantly, our endless efforts to cater for the well-being of our co-workers are continuing to bear fruit in the form of further improved figures within both health and safety and sick leave. While leading market indicators are gradually becoming more positive, primarily within consumer-related segments in Denmark and Sweden, we as a group are not yet out of the doldrums. In fact, several entities in Finland, England, and Norway still face a tough market, substantial competition, and related price pressure. In light of this, however, Invido's business units handled the situation in an impressive fashion, delivering on their customer promises and being perceived as a flight to safety when some peers struggle, thereby gaining market share. On this slide, we summarize our key financials for Q3 this year relative to Q3 2023. Order intake grew by 3%, also organically, and order backlog reached an impressive 2.6 billion SEC, up by 9%. Net sales in turn declined by 3% quarter-on-quarter. Organically, the decline was 1%, reflecting the harsher conditions witnessed this year. In spite of this, our operating EBITDA reached 304 million SEC, a tiny 4 million SEC down versus last year, but equaling a margin of 13.4%. up from 13.2% in 2023. All business areas fared better, with the exception of Eastern Europe. Net debt in relation to operating EBITDA went up from 1.1 times last year to 1.2 times now, or 0.9 if not applying IFRS 16 accounting. Accordingly, safely within our set target and still offering ample room for, for example, acquisitions. All of our business areas performed well this quarter, particularly considering their different operating contexts. Scandinavia keeps delivering strong profit margins, leveraging its leading positions and enjoying a favorable mix. Within consumer, i.e. renovation, Denmark is rather stable and Sweden is showing signs of recovery, but Norway remains soft and so does new build across all three countries. Eastern Europe, in turn, bucked its sharp demand drop in new builds by enhancing the efficiency of its operations. Both order intake and backlog grew nicely compared to Q3 last year. Business area e-commerce goes from strength to strength, now growing both top and bottom line and taking some strategically important marketing measures that will pay dividends further down the line. Last but not least, Western Europe's strong results now came from a broader base than last quarter, where all larger entities perform well alongside Saidi and Karlsson, while still experiencing a tough market climate. If we stay with Western Europe, I'm very pleased to announce that Jonna Opitz has now been made permanent in her EVP role for this BA, in addition to her responsibility as Head of Communications. So well done, Jonna. Big congrats. Other examples of matters worth celebrating this quarter, of course, include our exciting acquisition of Finland-based sun protection supplier Arctic Kaidin, as well as our continued investments in sustainability. Listen to this. In our Sokolka factory in Poland, our new paint line will from now on save us some 23,000 liters of paint on an annual basis. How about that in terms of making a concrete positive difference to the climate? Time flies when you're having fun, and since we are already in the month of October, and since lots of achievements have been recorded across InVido during the first nine months of this year, it is worth taking stock of what some of those strategic milestones are. The first edition of myself and Michael Johnson to our strong group management team and board of directors, respectively, is, of course, highly pleasing, he says humbly. The fact that we have developed and launched innovative and sustainable new products, like the CO2 window in Finland recently, or Elite Funds' Energy Efficient 100 series, or Diplomat's collaboration with Yale on smart doors, is so important for our organic growth and for solidifying our leading market position. The Arctic Kylin acquisition also sent a strong signal that we are back on the M&A track. And while others have stepped on the brakes, we have done the opposite, investing further into operations and sustainability to come out from the cycle downturn even stronger. Getting our climate goals validated by the SPTI is yet another proof of us doing the right things. At the end of the day, though, I'm most impressed by how we handled the sharp drop in demand in such an agile fashion without destroying either our short-term capacity or our long-term competitiveness. Those of you following us closely have, of course, registered that Indira's performance has improved stepwise so far this year. Q1 was still severely hampered by low market demand, but in Q2, we started growing our order intake again. And even more importantly, that pattern has continued also now in Q3, despite sentiment out there not being back where it should be. Do note that our profitability has remained rather high throughout all three quarters. I'm very pleased about that. In short, our nine-month figures comprise an organic net set decline of 10% and an operating EBITDA margin of 10.2%, down from 11.0% in the same period last year. Returning operating capital has been 13.1% compared to 16.2% in 2023. And the negative delta in earnings per share before dilution from 8.52 SEC last year to 6.12 is largely related to items affecting comparability and to positive currency effects in last year's financial net, as per our Q2 communication. Now, before I hand over to Peter, let me just briefly share with you a highly positive personal InVido experience. This summer, I replaced old windows and doors with new Elite Fenster ones at my house on the island of Öland in the Baltic Sea. Yes, I'm biased. And yes, I bought them prior to joining the company. And yes, it's a big investment. But still, the seamless process in which our just-in-time delivery and top-notch quality is worth a lot in this business. And above all, the fantastic impact this type of renovation has on your quality of life is just mind-boggling. It goes far beyond, quote-unquote, just windows and doors. Peter, over to you. Please go ahead.

Thank you so much, Fredrik. And we start with the income statement. On this page, we can see the income statement for Q3 to the left this year as well as last year. In the middle, we can see the development January to September. And then further to the right, we can see the latest 12 months as well as full year last year. Starting with the quarter, sales was down by 3%. The organic sales decline is 1% compared to last year. The gross margin has been improved. from 26.7 to 27.1 due to mix, but also positive development when it comes to pricing as well as sourcing, as well as improved efficiency. The operating EBITDA as well as the operating EBITDA has declined by 1% compared to last year, and the operating EBITDA margin has improved from 13.2% to 13.4%. Looking further down the econ statements, we can see that profits after tax as well as earnings per share was minus 1% compared to last year. Looking at development January to September, sales have declined by 4%. Organically, sales have declined by 10%, equal to 728 million lower sales compared to last year. The gross margin is slightly down compared to last year due to the performance in Q1 and beginning of Q2. Operating EBITDA is down by 7% compared to last year and operating EBITDA is down by 11% compared to last year. And operating EBITDA margin has declined from 11% to 10.2%. And the main reason is the lower sales, the organic sales of 728 million, mainly from Q1. Further on the income statement, we can see that profit after tax is 25% lower than last year, and the earnings per share is 28% below last year. And that gives us a rolling of the latest 12-month development of sales of 8.7 billion, and operating EBITDA of 947 million, equal to 10.9% units, and the earnings per share of 9.32 per share. On this page, we are describing how we calculate organic growth. We do it somewhat a little differently compared to some other companies. What we do is that we recalculate last year. So if we start with Q3 in 2023, we had a sales of 2,339,000,000. And then we add on, on last year's sales, the acquisition. And this is mainly in an Arctic that we acquired in September. So we add on 8,000,000 because that was their sales last year in Q3, in September. And then we had a performer for Q3 of 2,347,000,000. And then we recalculate the performer with the currency as of today, meaning sales declined by 2% or minus 46,000,000. And then we compare to the sales value as of today, showing an organic sales decline of 1% for 29,000,000 Swedish grams. This page is showing a waterfall, showing the sales development as well as the operating A development for Q3, where you can see the different business areas and their performance. Starting with sales, we can see we have a negative sales development in Scandinavia of minus 46 million, as well as Eastern Europe of minus 87 million. And then we have a growth in e-commerce as well as Western Europe. And then group-wide elimination from other is more or less the same as last year. Looking at the operating EBITDA, it is from 308 to 304 million. In Grenada, we have a decline of 2 million due to lower sales. Eastern Europe is also declined, 20 million due to lower sales. We lost 50% of sales in Eastern Europe in a quarter. Whereas in e-commerce, we have positive development on operating EBITDA, plus 2 million. And in Western Europe, we also have positive development of 60 million. And Western Europe is actually a like-for-like growth right now, because we acquired a Saudi group beginning of Q3 last year. So we have the same group this year as last year when we compared the groups. And then group Y denominations, others are exactly the same as last year, ending up on and on operating EBITDA of 304 million. So despite the negative development of Eastern Europe, we have been able to improve the margins and the operating EBITDA margin for the quarter was 13.4%. This page is showing sales as well as operating EBITDA margin for Q3 for the period 2019 until 2024. And the margin of this year, or 3.4, is above the margin of last year, as well as above the margin of Q3 in 2022. It is, however, below the margins during the pandemic. We had a really strong margin in Q3 in 2020, as well as 2021. And if we look at more historic perspective, the margin of this year is also above the pre-pandemic level. Looking at the cash flows, The cash flow from the operating activities was up 2% from 330 million to 335.7 million. Then NVIDIA is operating with negative working capital. And this, of course, is very positive. However, not when you are declining. So looking at the change in working capital, last year we had a positive development of 11.6 million. This year we have a slightly negative development of 3.4 million. Then NVIDIA has also increased the CapEx level. The CapEx level for investments in activities excluding change of financial assets and excluding acquisitions is up 20% for Q3 compared to last year, meaning that cash flows before financial activities is slightly down by 8% when compared to last year. The graph to the right is showing our capex level for the full year 2019 until the rolling 12 months now in september and then also the year to date for last year as well as this year and as you can see we have an increasing capex level june 2023 as well as 2004. prior to pandemic invido had a capex level of about three percent then during the pandemic the capital level decreased um and now we have to have a bit of catch up during the low levels between 2020 and 2022 and thereby we have improved the capex level and it's today on 4.3 percent rolling 12 months but despite the higher capex level we have been able to reduce our net debts the net debt was reduced in q3 comparing to q2 and this is normal for the business we have a large seasonality and the seasonality has always a positive cash flow generation in Q3 as well as in Q4. So in normal business, the net debt is decreasing in Q3. This was not the case last year, but that was due to the acquisition of SIDI. Excluding SIDI, the net debt was also reduced in Q3 when compared to Q2. Today, the net debt is more or less the same level as last year. And if we look at net debt versus EBITDA, we can see we are today on 1.2 compared to 1.1 last year, including RFI 16 and excluding RFI 16, we are on 0.9 compared to 0.8 last year. And both those KPIs have been improved when compared to Q2. So NVIDIA has a good headroom compared to the financial target of maximum 2.5. Another net financial target of NVIDIA is return on operating capital. There we have a target of 15% and we are today on 13.1%. The development has stabilized compared to the peak in Q4 of 2022, and we have the same return on operating capital in Q3 as we had in Q2. When comparing to the peak in Q4 of 2024, The main reason why we have lower return on operating capital is, of course, a lower resource. EBITDA has decreased during this period, and at the same time, operating capital has increased due to acquisitions, also due to higher CapEx level, and also due to somewhat due to the working capital, because we have a negative working capital, and the working capital is then increasing. looking at our working capital in percent of sales and the operating capital is more it's quite stable so the main reason why we have lower lower turnover capital is then a lower volumes and thereby the lower operating ebitda and talking about volumes this page is showing the order intake as well as the order backlog to the left the graph to the left we can see the order intake with q3 for the period 2019 until And to the right we can see the order backlog end of September 2019 until 2024. The order intake this period is plus 3% in total and when we exclude acquisition is still plus 3% because acquisition has quite a small impact on order intake this year. It's very hard to see the small, small line. We can see the figure of 5 million, and that is the impact from Arctic in Q3. The order backlog is plus 9%, and if we then exclude acquisitions also from the order backlog, it's plus 8% when comparing to last year. And the Arctic has an order backlog of 11 million, thereby the figure of 11 on top of the stable for 2024. If you look at the different business areas, starting with Scandinavia, in Scandinavia we have improved the margin and we have increased the order backlog. Sales is down by 4% to 1 billion 14 million compared to 1 billion 60 last year. Operating beta margin has been improved from 16% to 16.5% in a quarter. The order intake is plus 2% and the order backlog end of the quarter is plus 18%. compared to last year. Eastern Europe is still struggling when it comes to sales. Sales is down by 15% compared to last year. However, we have improved the order intake on our weak markets. The margin has improved in the quarter compared to the first half of 2024. And it's also above the operating beta margin for Q3 is also above the level of 2021 to 2022. So in a story perspective, we are below last year, but we are above the level 2021 and 2022. Sales minus 15% to 473 million. The operating beta margin declined from 12.7 to 10.8. And the order intake is plus 11%. And the order backlog end of the quarter is also plus 11% compared to last year. E-commerce. In e-commerce, we have a higher order intake, and we have also improved the margins. And we have improved the margin despite increased marketing investments for future growth. Sales is plus 7%, an increase from 267 to 286. The operating EBITDA margin has been improved from 7.5 to 7.7. The order taken a quarter is plus 16% and the order backlog end of the quarter is plus 5% when compared to September last year. And then we have Western Europe. In Western Europe, we have a positive development for all larger business units and the profitable growth continued in the third quarter. Sales is plus 11% from 456 to 506. The operating EBITDA margin has been improved in the quarter from 11.4% to 13.5%. The order intake, however, is minus 8%. And in Western Europe, especially in Ireland and Scotland, we're working with quite large projects. So it depends on when we take these large projects. But nevertheless, the order intake is minus 8% compared to last year. The order backlog, however, is plus 4% compared to last year.

And now I hand over back to Fredrik. Thank you very much, Peter. This slide adds flavor to where InVido is finding itself strategically as a group right now, and above all, what the main building blocks are on our exciting growth journey towards 2030. We foresee a gradual increase in tailwind from external factors starting already in 2025, where EU's Green Deal is a big deal, and where a return to a more normalized demand level in both renovation and new builds will make a substantial difference as well. On top of that, our own efforts within, for example, new product development coupled with synergistic acquisitions will definitely be value-added. Combined, this new volume shall flow through a more efficient structure, ensuring profit margins stay healthy. To recap then, in the third quarter, InVito further proved that it can grow profitably even though market conditions are far from optimal. Order intake, order backlog, and operating EBITDA margin all improved for the second consecutive quarter. Our position has strengthened through gained market share and the acquisition of Arctic Kaidin. Leading indicators are gradually becoming more positive, and EU's Green Deal for energy efficiency is being worked on in all member states. Altogether, we remain enthusiastic about what lies ahead. And last but not least, 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 on the 11th of December. As always, you can find a lot of useful information on our website and via our frequent post on LinkedIn. And now Peter and I would be delighted to answer any of the questions that you may have. Please.