Lagercrantz Group AB (publ)

Welcome to Lagerkrantz Group year-end report 2023-2024. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Jörgen Wieg and CFO Peter Theisel. Please go ahead.

Thank you and very welcome everyone to our year-end report presentation. We released our numbers and as you all know we have a year ending end of March so we're releasing our full year numbers this morning and it's me Jörgen Wig speaking and together with me I have Peter Tissell here our CFO will go over the numbers with us. We have had a presentation is on here right but it's also available online on our website so you can watch it there and take notes if you'd like. But otherwise, we'll just go over the different slides here. So very welcome. I think we summarized in our report here a very strong end to the year and a very strong year, really. We feel very confident and very confident around our business idea and how we run things. And we have been doing this for many years now, building on our strategy and working with our decentralized model and making acquisitions along the way and then we posted another good year with their earnings per share then at the new all-time high for the 14th consecutive year which i think i feel very proud around and we are really painting something strong here and and have been doing that for many years and will continue to do so going forward we normally start these presentations with a little introduction to the group And then we will move right on to the numbers. The introduction is for those of you that are new to the group. So we will look at the overview here. I mean, Logikrans is one of those serial acquirers without an exit horizon. And we view ourselves as a tech group, and we are really strongly believing in building with proprietary product type companies. building leading and having leading positions in expansive niches. So we have a group with all types of dependencies when it comes to products, customers and geographies. We organize all these companies into the five divisions that we have. All are doing B2B tech. So it's B2B industrials and tech companies that we have within our group. And that is sort of the boundaries that we put on ourselves. But we have organized them into these five divisions, Electrify, Control, TechSec, Niche Products and International divisions. And you can see the number of companies or the number of profit units that we have in each of the divisions. They're of similar size, Control being a little bit smaller than the others, but building as well. The other ones are of fairly the same size. So and all in all in the group, we have a revenue of some 8.1 billion and we have some 2,800 employees working in all these companies that work under their own name, under their own label, addressing their customers, their markets with their products in each market. And we can be a good, hopefully a very good owner of these companies. Usually they have been owned by entrepreneurs or owned by smaller type companies that we've been able to acquire over the years. We are currently some 70 or even 75 profit centers within the group and organized into these five divisions. M&A is a very central part of our DNA and our business model and we are making some 8 to 12 acquisitions per year. We have been on the stock exchange in one form or the other since 1976 and under our own names in 2001. We were previously part of the Bergman & Beving Group that made some spin-offs over the years and are currently on our own since 2001. You can also see that we have where we are operating and it's mostly in the Nordics and in Northern Europe. But we also have some footholds in other parts of the world as we are doing quite a lot of exports in our companies. So we are addressing the US, for instance, with a number of our companies. We are also addressing China and India and other parts of the world. So you can see all the way over to the right here where we have our footholds in different parts of the world. So that's a small introduction to the group. as said we we think we posted another strong quarter and a very strong year you can see our trajectory here when it comes to revenues and profits and as you also also can notice is that we have the the the scales here on these axes proportional and that meaning that we can also see how margins are developing along the way here and you can see that the margins have picked from being very very low we think back in 2005 and since then we've gradually grown profits and also growing margins along the way and we set a couple of years back we set the target of going from 500 million in terms of profits to the 1 billion and we surpassed that here during this last fiscal year going by the 1 billion and have during the fall here communicated that we are now moving towards the 2 billion as you can see here. And we have come some way already on that here in our first half year or so building on that new goal setting. That also comes with some activities. We are broadening the scope of where we're operating. We are also addressing a couple of new markets and things like that as we go towards the 2 billion. Also building some capabilities on a divisional level meaning that we can also make more acquisitions along the way. We feel that we need to acquire some 10% of ourselves every year. Coming back to the Q4, then, on the next slide. I mean, Q4, we have, as most companies have seen, we have seen a slowdown in the market during the year. We see that especially within the construction, within the infrastructure and those type of markets. While we see in many other markets where we're addressing within the niche products, within our safety products, within a number of others that we see things holding up very well and growing in some instances as well. So we think all in all that we, from a group perspective, we think that the market situation remains stable during the year. As you all know, we've seen interest rates coming down and we see that inflation rates are coming down or expected to come down. And we see that the opportunities for investments among our customers are to some extent picking up. We see some more requests than previously. But we also see customers holding back, not really making the decisions to go forward just yet. So it probably will make the case a couple of more quarters or so before we see that the market might be coming back in more broadly. And that's what we see. We also saw here in the quarter that we had some really tough comparables towards last year. And we also had an Easter effect where we, as you know, we're doing March through April. So April through March every year. That means that we actually had two Easters in our fiscal year last year. So that was in March this year as opposed to April last year, which is affecting the end of the quarter here to some extent. which we have also communicated here. We saw that demand, generally speaking, was stable, a little bit less. We had an organic growth of 6% reported. But due to the calendar effects, we have calculated that it's roughly 3% underlying negative organic growth. But we are compensating that with strong cash flows and also some more M&A activities in those periods. And that we've seen also with some two good acquisitions during the quarter here. which I'll come back to in a short while. We saw demand holding up very well in some parts of the businesses, which was especially within the niche products division, but it was slightly weaker in the tech sec, where we have some construction-related type companies, and also in the electrified division, where we both have some infrastructure and construction-related type businesses, but also some project-based sales that happened last year, but that was not repeated this year. has also affected the numbers of the electrified division. You can see down here to the right that we are gradually becoming more and more international as well. We see that we are picking up especially when it comes to sales in the UK. We probably will report that separately going forward but you can see other Europe is growing there and that is the acquisitions and what we're doing in the UK where we see things happening along the way. So we're gradually becoming more and more international as we are building with more proprietary products. We also see that those proprietary products are usually viable for also some export sales. So our export share of sales will probably gradually increase as we move forward as well. We also see down to the left that we are also building with the proprietary products and we are currently at the 76%. We are gradually seeing that improving or picking up even further. We are strong believers that that will add to our margins, to our profitability and also to our opportunities for organic growth as we move along. And therefore we set a clear target that we would like the proprietary products to grow. We had previously the goal of 75%, but we also in connection with the 2 billion program, we have raised the bar there to 85%. So that we will see happening as we make more acquisitions going forward. Looking a little bit at the Q4 numbers, I will hand over to Peter, and you can go over some numbers here.

Yes. Thank you, Jo, again. So our last quarter to the fiscal year, was quite solid, although we could see a slight slowdown. In terms of net revenues, they increased by some 6%, where 11% growth came from acquisitions, and we had negative organic growth of some 6%, where about half of that were three percentage units. was due to the Easter, and then last we had 1% growth from currency effects. Then we saw that our EBITDA increased by 14%, where the EBITDA margin was at another record high level of 18.1% compared to 16.8%. in the last year. The cash flow continued to be quite strong, a little bit lower than last year's really strong cash flow. And the profit after financial items increased by some 10% in the quarter to 298 million. We completed two acquisitions in the quarter, a little bit larger. in size, the PREDO, and then the Nordic Road Safety. And I'm sure Jørgen will talk a little bit more about these two acquisitions later on in the presentation. If we move to the full fiscal year, we note that the net revenues increased by 12%, where most of it came from acquisitions. 11% growth. The organic growth was marginally negative by 1% and then we had 2% growth from currency effects. The EBITDA increased by a good 19% to 1 billion 431 million and the EBITDA margin increased by 1% to 17.6%. The cash flow from operations increased by 24% to 1,327,000,000, corresponding to a cash conversion of about 78%. And the profit of the financial items increased by 15%, which is the group's goal over a cycle. So this was right on target. The profit of the tax increased by 16%, where the earnings per share increased by 15% to four crowns, 25 per share. And the return on equity was 27%, a little bit over our targeted level of 25%, and the equity ratio was 35%. Our internal return measure profit over working capital was about the same level as last year, which is a good level at 77%. Entire financial year, we completed nine acquisitions that add about 1.2 billion in annual net sales. And finally, the board proposes an increased dividend of 1.9 crowns per share, which corresponds to about 45% payout If we look into the outcome per division, we can notice that the electrified division had slightly lower margins this quarter at 14.7. And the control division ended a strong season where they, for example, have the Radenova rate of measurement season is over. And they concluded at a very good level of 20.2%. The tech sec division also had a little bit lower margin in in this quarter um probably attributed to to the civil londberg business where they had no season um it was more that this year is more typical i would say than last year where where civil londberg for example issued new devices for solar panels that helped them last year The really strong division in this quarter was the niche products that reached a record high level of 22.5%. And last, the international division also continued their very positive development and achieved 17.6% in the quarter. And as already mentioned, the group reached a new all-time high of 18.1% EBITDA margin in the quarter. Thank you.