Inwido AB

Thank you and good morning, everyone. Welcome to this webcast and telephone conference covering InVido's fourth quarter and full year performance of 2024. My name is Fredrik Muller, President and CEO of InVido, and I'm joined on this call by Peter Wellein, our Group CFO and Deputy CEO. I'm in Malmö today and Peter is in Stockholm, but I'm sure we will work out the logistics just fine. We will start off with a run through of the highlights from the quarter and year respectively, followed by a more in-depth review of group and business area financials before rounding off with summary conclusions and outlook and Q&A. As usual, this presentation material is already available on InVito's website. While you may already be familiar with InVito, it's always worth underlining the unique features of our group. creating healthy shareholder value since more than two decades, of which one in the public domain. We are Europe's leading window group consisting of 35 business units across 12 countries and enjoying a number one position in the Nordics and number two in the UK. Strong brands are synonymous with genuine craftsmanship and high quality. Our windows and doors improve quality of life by, for example, being energy efficient, safe and aesthetically appealing. Importantly, we are making solid progress on our exciting growth journey towards becoming a 20 billion SEC company by year 2030, displaying a strong financial performance and strengthening our strategic position for what's to come, namely the normalization of demand, the green transition across Europe and the synergistic acquisitions that we are working on. Envito finished the year in style. After seven long quarters, we are now back on the growth track, reporting solid sales growth in both total and organic terms and across all of our four business areas. On the same theme, our order intake kept the positive momentum from last spring, growing for the third consecutive quarter and in a major way. organically plus 19%, meaning we ended up with a strong backlog that, since it grew by 29%, gives us confidence for the coming months and quarters. Profitability-wise, I can proudly conclude that we managed to maintain a healthy level overall of 12.2% operating EBITDA margin despite market conditions varying quite a bit between our 35 entities and not all stars being aligned at the same time. Naturally, some of the BUs, particularly in Finland, where we did really well in Q4 2023, now lack the volume required to fully absorb their fixed cost base and are fighting daily with the price pressure that comes with a smaller pool of business. Through our effective decentralized governance model, we constantly work on improving each entity's performance. When we don't see signs of improvement despite our efforts, we proactively take measures to restructure it, as was the case this past quarter when we announced the closure of one smaller BU in England. Yes, it hampers our EPS in that particular quarter, but it enables management to focus on other things and it improves the consolidated InVito profit margin in the longer term. Now let's go to Bonnie Scotland and our Saidi group, which I sometimes refer to as the gift that keeps on giving. As mentioned at our Capital Markets Day in December, Saidi and Walker Profiles have won their and InVido's largest order to date, worth £22.5 million over the coming two years, and with a possible extension that would double it over another two years. Apart from this being yet another stamp of approval for the quality of this business, It is an excellent example of what we expect to happen across the EU over the next few years as governments in member states abide by the EPBD directive and renovate old houses, making them more energy efficient with a particular focus on replacing windows and doors. All of our business areas performed well also this past quarter, particularly considering their different operating contexts. Scandinavia, first of all, delivered strong profit margins yet again, seeing more volume flow through a more cost-effective structure. Denmark is stable on a high level, and in Sweden, the consumer market showed signs of recovery. Norway, however, remains soft, and so does new build across all three countries. Eastern Europe remains severely hampered by the historic low new build levels, whereas renovation at last seems to have bottomed out, illustrated by the healthy order intake growth of 16%. Business area e-commerce continues to grow profitably as per its plan, and operating EBITDA almost doubled, which is really impressive. Western Europe also did well across most parameters, and particularly in Ireland, where market conditions are more favorable than in England. I've said it before and I'll say it again, sustainability has become a natural part of our DNA and last quarter was no exception. We reached yet another key milestone by introducing Scope 3 to our SPTI reporting and throughout all my site visits since I joined, I've witnessed our focused work within this important field and it's definitely paying off in reduced emissions, less waste, lower absence and in fewer accidents. And while many out there still perceive sustainability as a cost-driving must-do, we at InVido are increasingly turning it into also a commercial opportunity. Perfectly exemplified by our Finland-based Pila Group that in Q4 launched a groundbreaking low CO2 window. Through exclusive collaboration with our main suppliers within glass and aluminium, we completely revolutionized the industry and reduced the emission standard by more than 40%. Construction companies already embrace it since it drastically helps them meet regulatory and shareholder requirements. On this slide, we summarize our key financials for Q4 2024 relative to Q4 the previous year. And it's a strong set of numbers, I think. Order intake grew by 20% and by 19% organically. And our order backlog reached a healthy 2.5 billion SEC up by 29%. Net sales in turn increased by 7% quarter on quarter and was plus 5% organically. Operating EBITDA edged up a bit from last year to 296 million SEC, which equates to a margin of 12.2%, slightly down from 12.7% in 2023, where the lion's share of the delta is related to BA Eastern Europe's much tougher market conditions. Net debt in relation to operating ABDA went up slightly from 1.0 times last year to 1.1 times now, or 0.7 times if not applying IFRS 16 accounting. Accordingly, well within our set target and leaving a healthy headroom for further growth, including acquisitions. Okay, let's now take a deeper look into the rear view mirror of 2024 and a sample of our achievements across organic and acquired growth as well as sustainability is listed here. We have a clear strategic roadmap, so focus is really on execution, the how. I was therefore really pleased by the way we as a team took further steps to strengthen our market leadership and our operating platform so that we can grow faster over the coming years. In parallel, We manage the soft market conditions prevailing in several markets in an impressive fashion. Yet another proof that we have the best people in the business and that our governance model works really, really well. When our peers stepped on the brakes, we went for it instead, leveraging our financial muscle and making long-term investments in people and in equipment. Several great new products offered ammunition to our sales force and boosted our confidence. On dividends, a key component, of course, of our total shareholder value creation, NVIDIA's board of directors is proposing 5,950 euro per share, which is you're just for restructuring costs totally in line with our policy also bearing in mind that we have strong cash flow generation and that we have plenty of acquisition opportunities out there to pursue as i'm sure you recall 2024 was a bumpy ride but we fared really well overall and that positive momentum and experience is highly useful as we have now entered a new year Q1 last year was still severely hampered by low market demand. But in Q2, we started growing our order intake again. And that pattern continued throughout also second half of 2024. And do note that our profitability has remained rather high in all four quarters, which is quite impressive, I think, given the circumstances. Our full year figures comprise an organic net sales decline of 6%. and an operating EBITDA margin of 10.8% down from 11.4% in 2023. Return on operating capital equal 12.7% compared to 15.4% in 2023. And the negative delta in earnings per share from 11.72 SEC last year to 9.29 now was largely related to items affecting comparability and to positive currency effects in last year's financial net. Peter, over to you for an in-depth review of the consolidated Q4 and full-year financials. Please go ahead.

Thank you so much, Fredrik. We start with this page. This page is showing the income statement. To the left, you can see the Q4. In the middle, as well as to the right, you can see the full-year results. Starting with the quarter, sales is down by 7% compared to last year. Adjusted for acquisitions and the currency, the sales is up by 7% and adjusted for acquisitions and FX, the organic growth is plus 5% compared to last year's. The margin is lower compared to last year. Gross margin as well as operating EBITDA and operating EBITDA margin is below last year due to Eastern Europe. Eastern Europe is still challenging a tough market and with lower margins. All other segments has higher gross margins as well as operating EBITDA margin in the quarter compared to last year. So operating beta margin declined from 12.7% to 12.2%. In a quarter, we have a restructuring cost of 23 million due to the close down of the sales organizations of one business unit in the UK, and also due to restructuring within e-commerce. Close down of the logistics centers and two showrooms. We have also positive tax impact in the quarter when compared to last year. It's a tax adjustments related to 2023 to SAIDI before we acquired companies and that gave a positive impact of 22 million in the quarter when compared to last year. So then profit of the tax is up 1% and the earnings per share is down by 1% compared to last year due to our minority interests. Looking at the full year, sales is down by 1%, organically is down by 6% compared to last year, meaning InVido has lost, during the last two years, 2023 as well as 2024, combined organic sales of 2 billion. At the same time, or for the full year of 2024, the margin is slightly down, gross margin from 25.8 to 25.4, also mostly related to development within Eastern Europe, and operating beta margin is down from 11.4 to 10.8. Further down the income statement we can see that profits of the tax is down by 18% from 703 million to 576 million and earnings per share is down by 21% compared to last year. This page is showing a waterfall and to the left you can see the development in Q4 for sales and to the right we can see developments in operating EBITDA. Sales is up on all segments. All segments have higher sales this year compared to last year in Q4. However, the result is down in Eastern Europe, whereas Scandinavia, e-commerce and Western Europe has higher results in SEC and also higher margins when compared to last year. As I said before, and also as Fredrik said, Eastern Europe, especially Finland, is still facing challenging markets. The margins of Eastern Europe is below last year. However, the margin of last year was historically quite high. So when comparing the margins in Q4 for Eastern Europe, to levels of 2019 until 2021, it's slightly below those levels. Then we had extra really high margins in 2003 as well as in 2022. Looking at the margins and a long-term perspective, the margins for Q4, the margin Q4 this year is below last year, 12.2 compared to 12.7. However, it is above the level of 2021 as well as 2022. And looking at an average during the last six years, the margin is slightly above the average of the last six years. Looking at the cash flows, the cash flow is more or less the same level as last year. It's slightly positive when looking at cash flow before financial activities and then excluding financial assets and also acquisitions. Then it's up 1% compared to last year. The cash flows from operating activities is down by 7% and then it has that be compensated by more positive when it comes to changes in working capital. Then NVIDIA is investing more this year compared to last year or last years. On the graph to the right, you can see the development for the full years 2019 until 2024. Prior to the pandemic, NVIDIA had a capex level of about 3% to 3.5% of sales. Then during the pandemic, and due to different reasons, the capex level went down, and NVIDIA must compensate that for those lower levels during the pandemic. So it has been increased, was 3.4% of sales 2023, and 2024 is now 4.1%. And you can expect a little bit higher capex level around four percent in the next coming years to compensate the lower levels into during the pandemic With the stable results slightly above last year and with the cash flows on the same level as last year, the net debt has decreased in the quarter. The net debt, including IFR 16, was 1 billion 305 million in December this year. Excluding IFR 16, it was 784 million, meaning we have an IFR 16 debt of 521 million. Looking at net debt in relation to operating EBITDA, it was 1.0 including ARPA 16 compared to 0.9 last year and excluding ARPA 16 is 0.7 compared to 0.6 last year. InVidu has a target not to go above 2.5, meaning InVidu has financial headroom and for future growth both when it comes to investing in our facilities or in our production units And also when it comes to acquisitions. Another financial target of NVIDIA is return on operating capital. Return on operating capital is defined as EBIT A, rolling 12 months in relation to operating capital. And the operating capital is the average last four quarters. In 2022, it was on the highest level on 18.3%. And since then, InVIDE has facing tougher market conditions. During the last two years, as I said before, InVIDE has lost 2 billion of sales, organic sales decline. In 2022, the operating beta margin was 11.4. And now, 2024, the operating beta margin has declined to 10.8, a decline of 0.6% units. When it comes to EBIT, of course, it has declined due to the lower sales. So we're calculating the return operating capital. We have a lower profit level. It leveled out in Q2 and Q3 on 13%, 13.1%. Now in Q4, we have this restructuring cost that has a negative impact when calculating return operating capital. So adjusted for a structuring cost, it would have been around this 13%. We have somewhat higher operating capital in Q4 compared to Q3, the average, and that is due to tax payments, but also due to a weaker Swedish krona. And that has a negative impact when calculating the operating capital. InVIDE has also changed the market segment definition. In the past we talked about consumer and industry. That has now been changed to consumer and projects. We have reclassified some of the customers. mostly associated to house manufacturers and housing units. They were in the past classified as consumer sales. Now they are classified as product sales. The reason behind this is to a little bit better explain the order intake as well as the order backlog. Because after the acquisition of Saidi, we have more more variance in the order intake between the different quarters because SIDI when they take orders they can take really big orders as we show we could see in December 2024. So by changing the definitions we can then live it better see the development especially when it comes to order backlog and also the order intake between the different customer segments. So NVIDIA has now, with the new calculations, about 60% or 61% consumer sales and 36% when it comes to product sales. And thereby we have also split up the order backlog as well as the order intake for these two new segments consumer and projects. On this page to the left you can see the order backlog and the order backlog was end of December 2 billion 490 million and last year it was 1 billion 937 million. The order backlog then consists of consumer of about 23% of the order backlog is consumer and that has increased by 13%. And the project orders is about 76% of the order backlog and has increased by 35%. The consumer orders or the backlog, consumer order backlog is quite short. That means it's going to be delivered next coming quarter. Six to eight weeks delivery times is the normal delivery times on consumer orders. The product orders, on the other way, can be quite long. It can be one year. It can also, in some cases, be up to two years, but one year to two years. And it can also, of course, be a little bit shorter, six months as well. But in normal circumstances, the product orders are quite much longer delivery times compared to consumer orders. Looking at the order intake, the order intake was plus 20% adjusted for FX, excluding acquisitions and FX, it was plus 19% compared to last year. Consumers was minus 2% and the projects was plus 60%. And then of course the large order of SAIDI has a positive impact looking at the order intake for projects. The Western Europe had a positive oil intake growth of 86% compared to last year. But we had also positive growth in Eastern Europe with plus 10% and e-commerce, which is only selling to consumer markets, was plus 12% compared to last year. Scandinavia was more or less on the same level as last year. And I'll hand it over back to Fredrik.

Thank you very much, Peter. Looking at our four business areas then, and starting with Scandinavia, we saw a healthy improvement in both top and bottom line performance. This was driven by the consumer market that remains solid in Denmark, and that is gradually improving in Sweden, whereas Norway remains soft still. Costs are generally under control, meaning the highest sales volume had a nice drop through to the operating EBITDA margin, which increased from 15.0% to 17.1% in the quarter. Moving eastward, the rapid worsening of market conditions has resulted in a sharp decline of demand and a related increase in competition and price pressure for this BA. Our entities have generally adapted very well to the situation and done better than their peers, but still came out at a much lower profit level than the same period last year. The operating EBITDA margin went from 14.5% to 6.3%. However, there is a silver lining to this story in the form of BA sales, order intake and order backlog increasing, which bodes well for what's to come. Turning our focus to the next BA, e-commerce, we can proudly conclude that the team is continuing its growth in online sales and that the profitability follows suit. Excellent figures all around, with the icing on the cake being operating EBITDA almost doubling from 12 to 23 million SEC, resulting in a margin of 8.6%. The new year has already seen positive news in the form of Poland having been added as a new market through the brand Sparokna, and a second brand being added in Germany. We head back west and like the upward sloping curves of this BA, meaning they also made excellent progress on their profitable growth journey, despite market conditions in England being far from where we expect them to be. Still, we have a broad portfolio of several well-established entities and collectively they grew top line, which also meant operating EBITDA margin ended up higher than last year at 11.6%. Ireland looks solid. And in Scotland, we of course enjoy the already mentioned record orders to Citigroup. The BA's order intake growing by a staggering 86%, I think is quite okay. To wrap up then, I want to thank all my co-workers for a job well done throughout 2024 in general and during Q4 in particular. We have weathered this storm very well and are now better positioned than ever for what's around the corner. After a desert walk of seven quarters, we are now back on the organic net sales growth track. And furthermore, for the third consecutive quarter, we also grow order intake and backlog. Pricing, cost efficiency and restructuring measures are beginning to bear fruit. although there's more to come in this field, as well as in M&A where we keep pushing. Leading indicators are gradually improving and our energy level is high. All in all, me and my management team are enthusiastic about what lies ahead. I'll leave you with this page, an illustration of the external and internal organic and acquisitive building blocks that will take us all the way to the 2030 flagpole we have put in the ground. We expect demanding consumer and projects to bounce back, the EU's green transformation to kick in from 2026, our own efforts to add value, and new businesses to be added to our portfolio. We are making good progress on this super exciting journey, and I dare to say that we have only scratched the surface yet. And now, Peter and I would be delighted to answer any of the questions that you may have.