Inwido AB (publ)

Good morning to you all. Thank you and welcome to this webcast and telephone conference covering InVito's first quarter of 2025. My name is Fredrik Möller, president and CEO of InVito, and I'm joined here in sunny Stockholm today by Peter Villene, our group's CFO and deputy CEO. We will start off with a run through of the financial, operational and strategic highlights from the past three months, followed by an in-depth review of group and business area financials. Before concluding our key messages, outlook and opening up for a Q&A. And as usual, this presentation material is already available on InVito's website. Many of you are of course familiar with InVito already and our unique features. One year into the CEO role, I'm still taken aback by, for example, the shareholder value track record since our 2014 IPO, or the fact that our 35 business units collectively form a number one position in the Nordics and a strong number two in the UK. Our well-known brands are synonymous with genuine craftsmanship and high quality. Our windows and doors improve energy efficiency, safety and aesthetics of any property. I'm proud to conclude that InVito is off to a good start to 2025. Performance improved gradually throughout the first three months, and we continued on the growth trajectory from last year. Our net sales grew by 10% organically, our intake increased as well for the fourth consecutive quarter, now up by 13%. Our order backlog ended up at plus 19%, i.e. offering lots of comfort for the seasonally important months and quarters ahead. Profitability followed suit with operating a beta edging higher in all business areas except e-commerce. Our consolidated figure was a massive 22% higher than in Q1 last year at 111 million SEC, equaling a margin of 5.5%, i.e. 50 basis points above Q1 2024. This improvement should be seen in the light of continued tough market conditions with fierce price pressure and in the seasonally softest part of the year. Manufacturers have added to these figures from pricing and purchasing to productivity enhancing investments beginning to kick in. The latter bodes well for the future as volumes at many entities are currently far from normalized. Let me also stress that in a world where tariffs are the talk of the town, InVito has no direct exposure to the USA. We can still be affected indirectly though through a general deferral of project starts or consumer purchases or via supply chain disturbances. In this past quarter, we did see an improvement in market sentiment across a few key geographies, albeit from very low levels. Scandinavia did really well with several entities reporting higher sales and margins. Renovation is picking up speed and higher route incentive in Sweden of course makes a positive difference. Denmark is very solid and Norway seems to be about to bottom out, at least for us. Eastern Europe in turn bounced back in a nice way driven by the consumer market and housing unions in Finland. Nubil however remains quiet. Poland where exposure is limited is rather stable. Business area e-commerce was hampered by somewhat sudden and surprising general decline in consumer spending online as evidenced also by fewer Google searches for windows. Geographically, Germany was particularly demanding. Western Europe performed well given the circumstances where England remains sluggish and fiercely competitive. Furthermore, budget cuts and severe weather resulted in certain product deliveries being pushed out in time. Green is good. Lots of arrows pointing in the right direction which in this case is downward. Q1 marked another solid performance across all key sustainability parameters, most notably energy use, waste as well as health and safety. This doesn't happen just like that. No sir, I see this hard work myself across all our sites and offices on a daily basis. When I joined in Vito one year ago, I clearly stated transparency as being one cornerstone in my leadership philosophy and so here you see an honest summary of where we are on the so-called vital few priorities. The what and the how that will make a difference on our strategic journey. With the exception of M&A which is covered on my next slide, I won't go through these in any detail but I will say that I'm pleased about our progress made across the line here and particularly on number four where I witnessed a bit of a cultural revolution of synergy exploiting collaboration in the horizontal dimension. Okay, let's talk about M&A. This is a key building block on our road towards doubling the size of InVito by year 2030. No, we did not announce any transaction in Q1 but it was not for lack of trying. We have been and still are active in this field. Rather, we have taken a healthy stance and decided to disembark from a few processes as one or several of our selection criteria have simply not been met. We will not compromise on asset or transaction quality just for the sake of growing top line, not on my watch. Now, the market is quite healthy. InVito is perceived as an attractive buyer and we are involved in several promising discussions so I definitely remain optimistic. On this slide, we display a snapshot of our Q1 2025 key financials relative to the same course and last year. I can proudly conclude that it's a strong set of numbers. Order intake grew by 13% in 2020. We have seen a growth of absolute and organic terms and our order backlog grew further to almost 2.7 billion SEC up by 19%. Net sales in turn increased organically by 10% quarter on quarter. Operating a beta gained 20 million SEC from last year reaching 111 million SEC which equates to a margin of .5% up from .0% in 2020. The main positive delta came from BAs, Scandinavia and Eastern Europe. Net debt in relation to operating EBDA decreased from 1.4 times last year to 1.1 times now or from 1.1 times to 0.8 times if not applying IFRS 16 accounting. In these turbulent times, it is highly comforting to have such a strong balance sheet that also offers substantial firepower for M&A. Now for more flavor on EBDA's consolidated Q1 financials, I hand it over to you, Peter. Please.

Thank you so much, Fredrik. I start with this page. This page is showing the income statement for Q1 and to the right you can see the latest 12 months as well as last year. Starting with a quarter, sales was plus 10%. Reported as well as organic sales was plus 10%. The gross margin was improved from 22.5 to .9% mainly due to volume. And we have a better capacity utilization this quarter compared to last year. We have improved gross margins in Scandinavia as well as Eastern Europe whereas e-commerce was slightly down compared to last year and Western Europe was also down mainly due to the loss of the operating margin. The operating margin was plus 16% and operating EBDA was plus 22%, meaning the operating EBDA margin was improved from 5% last year to .5% this year and improvement by 50 basing points. We have restructuring costs in the quarter of 7 million, same level as last year. This year is mainly related to e-commerce and closed down of showrooms. And we have an improvement on EBDA of 24% and the APS is plus 78% compared to last year. Looking at the latest 12 months, we have sales just above 9 billion, 9 billion 26 million and operating EBDA of 973 million equal to .8% operating EBDA margin, same level as last year, and we have an APS of 958 today. This page is showing the sales as well as operating EBDA development in Q1 from last year to this year. So you can see the development of sales from 1.8 billion to just below 2 billion and to the right you can see the operating EBDA development from 91 million to 111 million. Starting with Scandinavia, Scandinavia grew by 111 million and operating EBDA was improved by 18 million in the quarter. Eastern Europe had a growth of 58 million and operating EBDA was improved by 8 million. In e-commerce, we have planned and expected higher sales in the beginning of the year compared to the outcome, meaning we had too high capacity and too high costs in the beginning of the year in relation to sales. And thereby we have also lower sales as well as lower profitability within e-commerce compared to last year. Western Europe as well as group-wide eliminations and others were more or less on the same level as last year looking at operating EBDA. And thereby we went from 91 million to 111 million. And looking more on historic performance of the quarter, this page is showing sales as well as operating EBDA margin from 2020 to 2025 for the Q1. And looking more in historic performance, we can say that pre-pandemic the operating beta margin of NVIDIA was between 2 and 4%. Then during the pandemic we had higher margins because we had low seasonality. We have a seasonality business and we are right now in the low season in Q1. But during the pandemic we had higher sales in Q1, especially on the consumer sales in the first quarter and thereby higher margins. So the operating EBDA margin of .5% this year is 50% basic points above last year and also above the level of the pre-pandemic. Looking at the cash flows, we also have a seasonality when it comes to cash flow. We always negative cash flow in the first quarter. Our best quarter looking at the cash flow position is always in Q4. This year is less negative compared to last year. We have an improved cash flow this year compared to last year, but still negative cash flow. Looking for cash flow from operating activities, they have an improvement of 78 million compared to last year. We have a higher net results as well as we have paid lower taxes. We pay lower taxes beginning of this year because of the results 2024 was less compared to 2023 and thereby the tax payment was lower this year beginning of the year compared to beginning of 2024. Then we have a change in working capital. There we have an improvement compared to last year of 85 million. We had less increase in inventory compared to last year. We also have less increase in accounts receivables compared to last year because they were a little bit higher in December 2024 compared to December 2023. Looking at accounts payable and other short-term liabilities, there we have less decrease compared to last year. So in total improvement of 85 million. If you calculate and see the working capital in relation to sales, you take the average working capital in relation to sales, there we see a small improvement in Q1 compared to Q4. Then we have capex. We had lower capex this year compared to last year. And last year we had a capex of 84 million in the first quarter. This year is only 42 million. So it's more or less a half compared to last year. This shall be seen as a temporary deviation. It will increase in the coming quarters and a full year of 25 will more or less be in the same level as last year looking at percent of sales. So it's a temporary deviation just looking at Q1 when it comes to capex level. So with a higher cash flow, less negative working capital cash flow in Q1 compared to last year, the net debt has increased less this year compared to last year. This page is showing net debt as well as net debt as an EBTA, including as well as excluding IFR 16. And as I said before, we always have a negative cash flows in Q1. This year is less negative, meaning the net debt always increases in Q1. But this year the increase was lower compared to last year. Looking at Q1 this year, we had an IFR 16 debt of 492 million. And our net debt was an EBTA is 1.1, including IFR 16 was 1.4 last year and excluding IFR 16 is 0.8 and it was 1.1 last year, meaning we have a quite large compared to our target of maximum of 2.5, meaning we have headroom for future growth. Another positive development is return on operating capital. This page is showing the return on operating capital. Return on operating capital is defined as EBTA rolling 12 months in relation to average operating capital with average calculated the latest four quarters. And there we can see an improvement. We have higher results this year and Q1 compared to last year. That is a positive for the KPI. We have also lower operating capital due to less increase in working capital and also due to less capex. And thereby we are on .2% compared to a target of 15%. This page is showing the order intake as well as the backlog. To the left you can see the graph on the backlog development from Q1 2023 until Q1 2025. And to the right you can see the table how the order intake has developed. Starting with the backlog, the backlog is plus 19% compared to last year equal to 424 million. Here of course we have a negative impact from stronger SAKE, the currency SAKE. So adjusted for SAKE the backlog is plus 24%. Product is plus 31% compared to last year and consumer is minus 4% compared to last year. However adjusted for SAKE is more or less the same backlog on consumer compared to last year. Looking at the order intake, the total order intake as well as the organic order intake is plus 13%. Consumer is plus 3% and organically is plus 2% and the project is plus 33% or plus 32% organically. We have growth in Scandinavia of 13%, East is up 18%, West is plus 14% and then e-commerce is negative by 4% in the quarter.

Thank you Peter and let's now look into our four business areas and let's start with Scandinavia. Mats and the team did a really good job. We're getting used to being spoiled by the red and white Danish Dynamite, but also many of the entities in Sweden and Norway performed well in Q1. Elite Fönster is one key example here in Sweden. Stronger market tailwind added to order intake growing by 16% and then almost a billion SEC of sales flowed through a well-oiled machinery to raise the BA's operating EBITDA margin from .4% last year to .5% now. Moving eastward, activity levels began to bounce back in the quarter, particularly for our large PILA group and within housing unions. Antti and his team generated healthy growth in sales, order intake and order backlog, which bodes well for what's to come. Albeit still in the red, operating EBITDA and margin improved substantially to minus 7 million SEC and minus .8% respectively. Turning our focus to BA e-commerce, we saw a dent in the positive trend curve from last year at the beginning of 2025 as general e-trade demand was suddenly lower. Still, Boo and the team did a good job of recovering lost ground towards the end of Q1. They have also taken additional restructuring measures to improve the BA's future cost efficiency and competitiveness. Somewhat lower sales meant that operating EBITDA decreased to 6 million SEC with a corresponding margin of 2.3%. We head back to the UK and to Ireland, where storm U-IN as well as short-term budget cuts for a few municipalities meant that some project deliveries had to be put on hold for Q2 and beyond. Given that lost top line and fierce price pressure in England in particular, Johna and her team did a great job more or less maintaining the profit level from last year. Both order intake and backlog grew in a healthy fashion and our assessment is that we have gained market share. It is time to summarize our key messages of today's Q1 report. In a macroeconomic roller coaster of historical proportions, Inbido stands firm. Organic growth rates in the high teens for organic sales, order intake and backlog are clear testimony to this. Profitability is up with earnings per share almost doubling. And furthermore, a strong cash flow strengthened our solid balance sheet even further. Accordingly, we remain cautiously enthusiastic about the remainder of the year, particularly since we are also making progress on our strategic priorities. I'm content and would like to take this opportunity to thank all of Inbido's fabulous employees that have once again gone above and beyond to produce a strong performance. Really well done, guys. And now Peter and I would be delighted to answer any of the questions that you may have. Please.

The next question comes from Johnny from Seb. Please go ahead.

Yes, thank you. Good morning, Peter and Frederick. Thank you for taking my question. I want to start off a little bit on the cost side of things. I mean, looking at the operating expenses, it seems like they are up some 9% here. And you already touched upon the e-commerce business a little bit here. But I also assume that you are preparing to meet higher demand going forward as well. So how should we think about the cost base on the group going forward here? Would you say that you are ready to meet higher demand becoming quarters with the current personnel and cost base so that the operating cost base in Q1 is that representable for the coming quarters as well? Of course, there's some seasonality here, but any comment here would be helpful. Thank you.

Hi, Peter here. Yes, there is an increase in the quarter, this quarter compared to last year. Last year we had quite a tough situation in the market. We took extra cost cuts in Q1. We also had some temporary layoffs. We had some people working less and was paid less. So some people went in white collar, went down to 80% in some countries and was only paid for 80%, etc. Now this year we have a little bit more positive view on the future and thereby we are planning for the future. And you can see that the order take, the order take is plus 30%. And looking at our cost, the main cost, we look at overhead cost is sales cost. So first we have to take a cost and then we get the benefit, meaning higher order take. So we have improved the order and take more than the sales has been proven in the quarter. And this is due to we have taken some extra costs also planning for the future. How to interpret that for the coming quarters? Yes, you should calculate with some higher increase in overhead cost compared to last year, especially Q2. And then Q3, Q4 will look like them. We have to always react and adjust ourselves for the market situations.

Maybe to add to what Peter said, I think we are generally trying to review the cost base and particularly the overhead on a regular basis, particularly when we stand in front of decisions to replace certain vacant positions, etc. It always gives an opportunity to rethink the organizational structure and so forth. And in the case of e-commerce, I think they've taken a healthy restructuring stance towards making the business even more competitive now. They were taken a little bit by surprise early in the quarter by the softer demand, but really recovered ground towards the end of the quarter.

Okay. And then just following up what you said there at the end, Fredrik, on the e-commerce side, should we interpret that the demand picked up in the e-commerce segment during the end of the quarter and the adjustments that you talk about on capacity and cost in the e-commerce segment? Can we expect that showing already in Q3 and onwards?

Yeah, to answer your first question, yes, the situation did improve towards the end of the quarter. We are trying to follow some market statistics here as well. And I think we are quite aligned with what we have seen in terms of e-trade KPIs for at least Sweden. It seems we've done an even better job than the market, but it's very difficult to tell. But again, overall, it turned for the better towards the end of the quarter. When it comes to the cost, I'm not saying it will kick in from day one, but at least we're taking the measures. There's always a bit of a lag in the system and in the process before we see the full effect. But these measures are and should be seen more as long-term measures to improve our competitiveness in the long run, rather than a drastic cut right here, right now to compensate for lower demand in Q1. I think it's more of a healthy strategic decision where we looked at, to be very concrete, we looked at two showrooms in Denmark that were simply not profitable because they were in the wrong location. So this is a business, the nature of which forces you to be super efficient, not only in your production -to-day work, but also on the overhead side. And that's exactly what Bo and the team are working on.

Okay. And then just shifting focus a bit here to Western Europe segment. It looks like the gross margin there took a little step down here year over year. So could you maybe shed some more elaborating comments there, what happened here? And also, how should we read this onwards? How is the margin profile in the backlog? And also, did you say that some sales in Western Europe were pushed into Q2? And if it's possible to quantify the magnitude of that, we'll be helpful. Thank you.

We start with the latter part of your question. Yes, we did see a few projects, particularly in Scotland, that were moved out in time because of no access being granted to the sites, primarily because of weather, where we and the whole country of Scotland had to shut down for a few days. But also in terms of some budget cuts for a few municipalities where they have the year end being end of March. So we always see some volatility towards the end of March or towards the end of Q1 as they prepare for the next budget year, so to speak. But I want to underline that these projects have not been, and which is not typically the nature of the business either, they have not been cancelled in any way. So it's more of a deferral and a delay than anything else. Some will happen in Q2, some will come later this year. When it comes to profitability, it was more of a mix change, I would say. And again, I think comparing to last year, we had, yeah, it varies a bit from project to project. And this year we had somewhat other deliveries than compared to last year.

Okay, so if I read you correctly, the pushed orders, we shouldn't read too much into that since it sounds like it's recurring every year. So in some extent due to the budget.

Yeah, again, I think it's more the nature of Q1 to some extent, where we are also more dependent on the weather situation. We have no reason to be less secure about this business going forward for the remainder of the year. On the contrary, I would say.

Okay, that's good. And then just one final, I mean, it's following up on your M&A comment. I mean, as you say, you need to increase the M&A pace here. It would be necessary to reach your 2030 targets that you are committed to. And you are mentioning that the activity is high, but I think that that comment has been seen for soon, one year almost. So maybe could you give some indications of what we can expect when in time this could happen? I understand you cannot give any guidance, but maybe on how the pipeline is developing is helpful, especially tying that to your comment when you said that you have terminated some discussions. And how should we read that with the pipeline? And also, I think the comment there on the building competition on the acquisitions is somewhat new. So who are you meeting and how has that changed? That would be helpful. Thank you.

Yeah, I mean, yeah, I'm fully aware that I stuck my chin out on this one. And it just goes to show that the nature of M&A is binary, to say the least. I would be frustrated if we hadn't had enough activity or a structured approach in the work that we're doing. But that is really not the case. I would say I'm more actually proud of us. Yeah, leaving one or two discussions because the the I mean, the stars were really not aligned in a good way where we saw too much risk, to be honest. And this was risk could, for example, be related to environmental matters that if you don't get security or comfort around that, it can be a huge negative surprise blowing up in your face. And we don't want that. And we don't want to destroy the the rather nice performance track record we have within M&A. So I won't really I won't really promise or provide any particular timing on M&A. We've also seen the nature of privately held companies where the owners are considering an exit is just very emotional and psychologically tough to push the button right there and then. So we've seen some of that, you know, going back and forth a little bit. And we've of course, the current uncertainty in the market in general, from a macroeconomic perspective, doesn't really help where buyers and sellers need to agree on where the business is coming from and where the business is heading from here. I remain overall optimistic. So even though we've jumped out of one or two processes, it doesn't mean that we have nothing else to work on. On the contrary. And again, the firepower we have on our balance sheet is, of course, very useful in these times as well.

Yeah, I understand that. But the comment around the bidding competition on the acquisitions, please say who for me that's a little bit new. Who are you? Who are you meeting? And would you say that the I mean, activity is still high. I understand that. But would you say that the M&A climate should read that as it has become more cautious since the start of the year? Or how should we read that? Yeah, it's

yeah, maybe that's a good summary. Actually, it's of course, it depends on when and where we see structured auction processes, then for sure we will meet some competition, depending on the nature of that particular transaction. So it could be PE firms, but it could also be larger competitors. And there is an abundance of capital still out there. So of course, for the more attractive targets, I think it's fair to say that we need to be prepared for a little bit more competition on and in some cases bid levels going up. That's fine. I think we are quite comfortable with the processes as such and with the synergies that we typically can exploit when we do do the transactions.

Okay, that was all for me. Thank you for taking my questions.

Thank you, Johnny. Good questions.

The next question comes from Albin Nordmark from Nordia. Please go ahead.

Yes, hello Albin from Nordia. Just some questions. Just to continue here firstly on Western Europe to understand the underlying operations here. The EBITDA margin was down some 30 bips year over year. And I can put some numbers on the effects from the from the storm mainly affecting. Would EBITDA margin still be down without the storm, so to say?

It's very hard to say exactly what it would be, but in general, we'll say we'll be more or less the same levels last year.

All right, that's clear. And then if you could comment on the consumer versus project order intake for Scandinavia, Eastern and Western Europe would be helpful.

We don't disclose that information and we just show it for the entire group, but it's more or less the same for the group that we have a little bit lower order intake in consumer compared to the project. So the project business has been driving Scandinavia, Western as well as Eastern. But we have some growth in the consumer as well.

So the consumer order intake is positive for the three of those?

Yes, slightly positive, yes.

And

then we have a high

growth on product sales on all these three. Yeah,

exactly. That's clear. And then just finally, you mentioned some entities in Eastern lost some 60% of volumes. I think you mentioned that, Fredrik. And how much would you say Eastern or let's say Finland as a whole in volume upside to let's say normal levels? How much upside is there? Yeah.

That's a tricky question. It varies quite a lot from entity and entity. PILA group that we mentioned is larger and covering a broader base of the market and even geographically, I would say. And then we have a couple of smaller and more sensitive entities, some of which are exposed more to, for example, a premium, premium niche of the whole market. So there, of course, the volatility in demand can be higher compared to the mid-size, the medium segment of the market.

All right. But let's say in two or three years, you're back to normal levels. How much volume is there up from here than in Eastern?

The total is, we have lost between 20 and 30% in volume during the last two or three years.

Yeah, right. Thanks for that. That's all for me. Thank you.

Thank you.

There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

We have received one question from Johnny and the question is, what is the time frame between order and take and sales? It depends between consumer and project. Consumer orders in some companies we can, we have speed deliveries, we can deliver in two weeks, but in general, the consumer orders have delivered time between six and eight weeks. So for consumers between six and eight between order and take and sales, when it comes to product sales, there's a bit longer. It can be between even more than one quarter up to one year, but the average is around two quarters plus. So maybe more than two quarters when it comes to product sales. And then we don't have any further questions. So I hand over to Fredrik for some closing remarks.

Okay. Thank you, Peter. And thanks, everyone out there for attending. We show all a very nice day. Have an in-vito day. Thank you very much. Bye bye.