Lagercrantz Group AB (publ)

Welcome to Lagerkrantz Group Q1 report 2024-25. During the question and answer session, participants are able to ask questions by dialing pound key five on the telephone keypad. Now we'll hand the conference over to CEO Jörgen Wieg and CFO Peter Tjussell. Please go ahead.

Thank you and good morning everyone. Jörgen Wieg speaking here, CEO of Lagerkrantz and together with me here today, this morning, we have our CFO as well, Peter Tjussell. We will guide you through the interim report. We just a few weeks back released our annual report and everything. So I think you're fairly up to date with what we have. So we will keep this session a little bit shorter than normal. It's only our first quarter here. But as we think, it's a solid good quarter and a good start to the year. We have put together the presentations as we normally do with just a brief introduction to all of those that are new to the group. But along the way, we will discuss then in the second phase, the numbers and the Q1 and where we are with everything. And then we will round off with also some discussions, a little bit more future looking and what we're about to do in the group and also the more recent acquisitions we just closed here. We actually closed one last night, as you may have seen this morning. So we have concluded some two acquisitions here very recently. So with that, I will start off with the first slide of the introduction. I mean, Lagerkrantz is the tech group and a serial acquirer without an exit horizon, where we are building the group through both organically and through M&A. And we have currently some 80 or 75 to 80 companies, depending on how we define them, between 75 to 80 companies within the group. and we have organized ourselves into the five divisions that you can see here with the electrify control tech sec niche products and the international divisions we we are working in a b2b space building a tech group where all our companies are offering some value value creating technologies in expansive niches either with our own proprietary products or through products from leading suppliers Revenues of the total group is around exceeding some 8 billion at the moment, 8.3 is the current number. And we're growing some 15% per year or so. And we are currently some 2,800 employees within the group. We are true believers and are working very much with our decentralized organization, with our decentralized model, where each company are working under their own brand name independently working and driving their businesses with their local management. And we are owners and working through boards with different companies throughout the group. And as true believers in a lot of independence, a lot of freedom, but also accountability in our decentralized model within the group. You can see over to the right where we have our companies. It's in Northern Europe, most of them. And we are gradually growing more into the central Europe with the UK or this northern central. And you can see Germany and the Benelux and also Poland, while we're also growing continuously with acquiring more companies in the Nordics. All the way over to the right, you can see where we also have some footholds. We are growing our businesses outside the Nordics and the Northern Europe also with some additional volumes coming in, for instance, the US, but also in China and in India are some important export markets for some of our companies. M&A and acquisitions is a very central part of our business model as we acquire some eight to 12 companies per year. growing the business through as I said organically and through acquisitions and we have been on the stock exchange since 2001 where we were formerly a part of the Bergman & Wieman Group before that but have been on our own feet since 2001 gradually growing the group over many years now. And to jump into the numbers then, our Q1 figures, I think we posted another solid quarter according to many of the expectations and also according to the consensus, as I understand it. And it was where we have seen the trends really continue. We have over the last year or so, due to the downturn in the economy, seen some slowdown in the markets. But we feel that it's bottoming out in some aspects and as we see interest rates and inflation rates coming down. But currently we have some slower organic growth and we have been compensating that with some more through M&A instead. Posting some two major acquisitions for us in the early here in February and March and now adding a couple of more here in July. So we are compensating to a large extent the slower organic growth with some more M&A, as we normally do in time periods where we see some slower organic growth and the downturn in the market. We have some companies that are related to the construction sector, and especially those that have had some slower market at the moment. We see that within the control division, within the tech sector division especially. We've seen that for a while. I'll come back to that later on. But another solid quarter. And as you can see here from the bubbles, we are aiming higher every year. We have the ambition to grow some 15% per year. And here we surpassed the logger grants towards 1 billion goal here last summer. And now here the fall, we put up the logger grants towards the 2 billion. And you see that where sort of the trend is heading. And we have said that we will reach that within five years. And we think that we are approaching that in a good way here, also with this recent developments. With that, I'll hand over to you, Peter. Yeah, sorry, I should cover this one as well. We also commented a little bit on the business conditions. We feel that the market situation remains stable for most of the businesses. This is really a headline we've had for a couple of quarters now. But we see it's bottoming out in some areas. Demand was strongest in the Electrify and niche products divisions. Electrify actually posted a very strong quarter, given that they also had some project volumes last year. So Electrify did it really well this quarter. And some of the niche products division companies did that as well. They posted a very strong Q4 within the niche products. So that was a lot to live up to. but still a very good continuous path for the niche products division while it's been slightly weaker within the control and tech sec divisions within the control divisions we have a couple of companies that are more related to the the construction sector also to some some aluminium production in europe which has been holding uh been a bit down for a while uh and within the tech sec division we have the cw lumber and the archon businesses that are more construction related and late cyclical to some extent and and those have also been struggling a little bit through the quarter here but otherwise it's holding up very well for us um within the demand continue to be good especially with the within international division especially with the customers related to the marine sector we have a two, three companies there that are related to that. And that has been a driving force for them or for that division here during the quarter and previously as well. And that looks to continue as we're looking forward. And all in all, I think the order intake for comparable units, which is the measurement we're using, the order intake for comparable units were in line with invoiced sales. during the quarter and that was slightly better than in previous in the previous quarter so i think we see some trends that it's it's actually improving to some extent or at least stabilizing any and some some type of improvement we see along the way and we hope that or see that that as inflation rates and interest rates are coming down that we see more projects coming in more requests coming in and it looks promising for the fall and winter. So a little bit further. We have also as we see here down here we could see also that the share of proprietary products which is a key KPI for us has continued to improve over the years and it's currently at the 76% And we also see that we are gradually becoming more international and we have actually split this up compared to previous reports. So now you can see the share of UK and the share of Germany and some other markets which have been important to us in the last few years. And we can see that those markets are actually picking up over the years as we are acquiring more companies, especially in the UK. So a couple of comments around that. Looking at the hard numbers, I will hand over to you, Peter, then.

Thank you, Jörgen. And before going through these numbers, I want to remind everyone that Lagerkrantz had a relatively tough comparables from a very strong Q1 report last year. Anyhow, our net revenues increased by 10% to... to billion 253 million and some eight percent to twelve percent growth came from acquisitions and the organic growth was minus three percent this is to a high degree explained by a project that we had in qd last year of some 45 million that was not covered in this quarter this year. So about two percentage units out of the three is explained by this. Our EBITDA increased by 8% and the EBITDA margin was at a good level of 17.1% compared to a record high 17.5 last year. The cash flow from operations were at a good level of 235 million. And profit after financial items increased by some 9%. And this is, by the way, a record for a single quarter. So relatively good level. The return on equity is 26% and the equity ratio is 36%. Our profit over working capital was at 74% compared to 72% last year. And as Jørgen mentioned earlier, we completed two acquisitions after the Q1 report. It should have stated more clearly in this slide that it was after the quarter. So in July we completed two acquisitions, the principal door sets And the CP cases, I believe Jörgen will come back and present these cases a little bit later on. And these add some 280 million in annual net sales. And this means that in the last 12 months, we have acquired some... 1,175,000,000 in annual net sales. And this is some 15% compared to the net sales in the previous year. So a relatively high rate of acquisitions. And the earnings per share increased to 4,030,000. to Eure up from the previous financial year. And as you know the board has proposed an increased dividend to 1.90 crowns per share. If we look into the division I want to emphasize that we have moved two entities from the niche products division to control from the 1st of April. And all these numbers that you can see on this slide are pro forma numbers. They are changed with respect to this move. The overall conclusion is that here that the net revenue growth and EBITDA growth in all divisions have improved from the previous years. And for the EBITDA margin, we can see improvement in three out of five divisions. and special notice is that the tech sector vision where we have most of our construction related businesses are holding up pretty good and has actually improved the EBITDA margin in Q1 compared to Q1 last year. We can see that niche products has has a little bit lower EBITDA margin this quarter, but please notice that they had an exceptionally high EBITDA margin in Q4. So some of that is probably explained by this. And we also noticed that the international division continues to improve and the achieved average group level on a rolling 12-month basis, which we're very happy about. Jörgen, back to you.