Lagercrantz Group AB (publ)

Welcome to Lagerkrantz Group Q3 Report 2024-25. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key on their telephone keypad. Now, I will hand the conference over to CEO, Juergen Wigg, and CFO, Peter Theisel. Please go ahead.

JURGEN WIGG, Good morning, everyone. I hope you're all hearing this now. Welcome to Lagerkron's interim report, our nine-month report. As you know, we're starting our fiscal year on the 1st of April, so we just concluded our nine-month report ending then in December here. Together with me here this morning is Peter Tissel as well, our CFO, and we will try to run you over some numbers and have some Q&A at the end. We usually spend around 45 minutes or so doing these sessions every quarter. So welcome, everyone. We will have a a setup where we will have a short introduction to the group for those that are new to us. And then we will go over and discuss the numbers and then have a little bit of discussions on where we are more strategically and in the long term perspective at the end. So just to give you a short introduction, Lager Krause is a tech group with really working through M&A and building with all these autonomous companies that we have within the group. Currently, we have some around 80 companies within the group. all aiming at getting a leading position in an expansive niche where we see some growth and good opportunities to be a very strong player in these niches in the companies. Every company work under their own name in their own market and we try to be a very good owner of these companies, encourage them then and challenging them and supporting them in their growth and improving their growth and profitability in each of the companies. You can see here that we have organized ourselves into these five divisions, the electrified control tech sec niche products and international, you can see how many sort of profit centers or companies that we have within each of the divisions. This setup is new as of some three years ago. And we see some some good things coming out of it now that we have a more of a focused approach in each of the in each of the divisions. trying to get them into growth areas and building where we see there's some underlying structural growth. We have reached revenues of around 9 billion Swedish and we are currently some 3000 employees in the group. You can see all over to the right where we have our companies with the needles there. We have been focusing on Northern Europe for quite some years. And since many of our companies are also working with exports, you can see also all the way over to the right that we also have some footholds in other parts of the world in Asia and also in North America. M&A is a very simple part of our business model. So we're acquiring some companies along the way, some eight to 12 companies per year, adding approximately 10% of the group is our ambition every year. We were part of the Bergman & Biening Group up until 2001. But since then, we've been on our own since 2001, listed on the Nasdaq Stockholm. And we started out as a small cap company, went through mid cap and are currently since some three years on the large cap segment. So that's an introduction to us as a group. We released our numbers here this morning. And it was good to see that we had a very strong quarter, we think, with some improvement in terms of growth rates compared to where we have been in earlier quarters. We came back to positive organic growth already last quarter, but now it was improved a little bit. So we posted some 3% organic growth. But on top of that, we've been also then very inquisitive here for some time. and acquiring more than the 10% I talked about ourselves along the way. And here in the quarter, it was around 16% that came in organically in terms of sales growth. Sorry, not organically, non-organically through M&A. So we have been having a good trajectory for quite some years now. And that continued here or even strengthened a little bit here in this last quarter, which was very good to see. We have, since we were at some 500 million or so, we set the bar that we should double. Since we're growing with some 15% per year, meaning that we're doubling every five years or so, we set the bar there that we should go towards the 1 billion, which was a goal for ourselves along the way. And we actually achieved that as of last year. And now we put the bar at 2 billion. And we have now some quarters that where we see that trajectory is really continuing over the year or along the way here. So, yeah, thank you. Next. In our report this morning, we communicated that we feel that the sort of overall market conditions have been stable and continue to be stable for most of our businesses. We see some variations between the segments. We see some segments that are actually showing some good and better growth along the way. We see the electrification taking a growth path along the way. And we also see some of the parts within the niche products also doing it very well. We also see that in other parts of the businesses along the way. But we also see that the construction sector, which has been sluggish for some time now, continue to be sluggish. I think most of us expected that that would pick up here during last year, but that has been delayed. And then therefore we see that this construction sector is still sluggish for affecting some of the companies that we especially have within the control division and also some in the tech sector division. Looking from a geographical perspective, we feel that most of our main markets, Sweden, Denmark, Norway, and the UK are showing some good recovery. while we still see that especially in Germany we don't have that much in Germany as you can see already six percent or so so it's not that much in Germany but that is of course also affecting some of the Nordic companies as Germany is a very important export market for for all of the Nordics, really, not only us, but many other companies as well. And we also see that Finland is also a bit sluggish. So we see a pattern there. But our largest markets, the ones that are put up there, have developed and show some recovery also along the way, allowing us to have a stronger earnings trend here in the last quarter. We also stated here in the report that our order intake were in line with or actually slightly a little bit above invoiced sales in the quarter. That varies over time and it's hard to really make a huge conclusion of that, but still it was a little bit better and a book to build that was a little bit above warm here then. here in the quarter, which was good to see and is also sort of supporting the thinking that it actually, it is a little bit of improvement along the way here. What was also good to see is that we continue, you know, that we have the great ambition of our proprietary products and that went to the 78% here now. I have a slide later on covering that as well. So that was our sort of general comment on the business trends or the business conditions. And Peter, maybe you should go over the actual numbers then as we presented them.

Yes. So overall, as Jörgen mentioned, we're quite happy with our Q3 report. The net revenues increased by some 20% where acquisitions contributed with 16% and the organic growth was 3%. And as you may remember this time last year, we had a couple of quarters with negative organic growth. So this is a gradual improvement. Last quarter, the organic growth was 1%. So we see a small improvement there on the EBITDA increased by 21%. And the margin was quite stable and slightly improving from 17.2% to 17.4% in the third quarter. Our most important earnings is the after financial items and this increased by 18% in Q3 and profit after tax increased by 19%. The cash flow was quite strong in the quarter. This is partly driven by some of our entities like the Nordic Road Safety, which has quite strong cash flow during the late fall, but improved by some 32% in the quarter. And then in addition to the Well, in November, we made the acquisition of mask system that only was included in December in the numbers, but that added some 175 million in annual revenues and that totals to some 1,320,000,000 acquired since October in 2023. So this is roughly the 15-16% acquired growth that you could see above. And in December, we also signed agreements for the acquisition of Van Leeuwen Test Group in the Netherlands and TASL in the UK. And they are both subject to regulatory approval and will most likely be added to the group in the beginning of 2025. If we sum up the financial year so far, we noticed that the acquired growth was 15% and the organic growth was slightly positive, but zero. And the currency didn't affect the net sales. And a beta increased by 15%. And the beta margin was very stable at 17.4. And the profit after or before before tax increased by 14%. So as you may know, this is slightly below our target of 15%. But we're quite positive to achieve that in the full year. And cash flow improved to 980 million. Return on equity was the same as last year, 28%, and the equity ratio was at 35%. Profit over working capital was at 82%, so an improvement from last year, 77%. And the earnings per share improved to 4.61 Swedish kronor. So if we then turn to the outcome per division. We noticed that all divisions improved their EBITDA in the third quarter, except TECSEC. So we're quite happy with that. And you noticed that the A beta margin for the group improved from 17.2% to 17.4%. But there are some variations across the divisions. And the most strong performance is from the niche products divisions, which has had a couple of quarters now with above 22% beta margin. So that's very, very strong. A comment on the electrified division is that this is affected by Nordic road safety, for example, which has a rather weak season in the Q3. And yeah, those are probably the most important comments. So then maybe, Jörgen, you can comment

Yeah, a few highlights and how we commented on each of the divisions. So let's start with Electrify came in revenues up 34% and 28 of that was through acquisitions and organically some 6%. We feel that Electrify delivered a very good third quarter through yeah also then now consolidating and getting an effect from both nordic road safety they required here this last spring but also that mass system in in december which both contributed very well we also have some but underlying several units especially within electrification but also within the infrastructure had a very good development. For example, Elpress has been a very strong company for us for many years now, having a good trend of electrification. It's actually the growth rate that is actually picking up along the way a little bit, which is affecting Elpress and VP Metall as well to some extent. Tycoflex and Swedwire also had posted good quarters. The control division, there we had the revenues were up some 26%, which was 24% through acquisitions and organically 2%. So EBITDA was up 27%, which is better than we've seen from control in a while. And that's a good development along the way. Especially the Nicodon and also the newly acquired CP cases in the UK posted a good start and a good quarter here along the way. But here we also see some still sluggish development in a challenging market situation, particularly in the more construction related companies in the Vampia. denmark and norway and also this the egg bars here in sweden is also is suffering a bit from from a reconstruction sector which obviously is going to be delayed here along the way we had hoped that it would have picked up already but and we see some yeah along the way it will probably do that but it's it's been delayed to some extent along the way good to see was that rather nova continued to do it very well for us They have been very strong for the control division for some years now and are having a strong sort of year this year as well, leaving up the last strong last year, really. And in December, Radonova also then made the acquisition of Tassel or the track analysis system in the UK. Not very big, but still very important in the development of Ravanova building a stronger market position in the UK as well and all of Great Britain along the way. So that was the control. Let's move on. The tech sector division posted that was maybe the weak point in the report. Revenues grow by 6% there. And 89% came from acquisition. So organically, this was the division that was slightly down with with 5% 4% organically down. So here we're struggling a little bit more along the way. We see some of the companies still doing it very well with the security companies. And the Aras and Fireco and Fricktape are still doing it very well and growing and posting a very good quarter, while some of the more construction-related businesses, the Arkon, the Doran Joinery and ISG Nordic, continue to be affected by the big market conditions. PCP, which is the division's biggest unit, also slightly had a weaker development in the third quarter, also affected with the construction-related issues. from the construction-related sort of sluggish market there. The niche products division was really the strong one with posting 28% together with Electrify was the strong one. Revenues were up 28% of which acquisitions was 21% organically up 7%, so a good organic growth there. The EBITDA was up 41%, very strong, and the EBITDA margin was also up to 22.9% as opposed to 20.8% last year. Had posted a strong quarter very broadly, especially for a number of companies, the ASEC, the Vapro, the SIB, SIAS in Finland, Thermal and Westmatic posted all very good quarters. And that was also then... boosted by Credo coming in, which is the company we acquired here this spring, has been very good for the group, contributed with a strong result in this quarter as well. And here we also continue our building the division with also the VLT or the Van Leeuwen Test Group acquisition in the Netherlands, which has not yet affected the numbers, but it's a somewhat bigger company as well that will add to the numbers here starting from early 2025. As soon as we get the approval there, we will communicate that and close that deal We move on to the last one, which is the international and posted some 9% in revenues of which acquisitions were 3% and organically a good 5%. The beta was up 6% and the beta margin at 17%. Another good quarter from international. As for those of you who have been with us for many years, you know that the international was the division that was lagging behind earlier on but has picked up and is now sort of in the midst of the group and really have been building along the way and providing some better margins along the way. Here we see that the improvements came both organically and through acquisitions, but we also noted that especially the marine sector or the marine segment has picked up for us over the last couple of years, and especially the Libra in Norway did post yet another good quarter. A couple of other companies that stand out are the newly acquired Global Rail and DP Seals. They've been with us slightly more than a year now, or more than a year, but still they're posted good earning improvements being part of Logicrafts. While we're more struggling with especially the companies that we have in Germany and within the international divisions, there are two of them. So that is the German market is still sluggish and lagging behind in the recovery. Yeah, that was what the comments by division. We move on to looking at where we will move forward. I mean, we feel very happy with where we are. We feel happy with the strategy and how we're working with things. I think the reorganization of the group that we did some Three years ago, it's been working very well for us. Now, with the divisions really building their portfolio companies through M&A and organically. And through this, we will build a very strong group of companies and a very strong group all in all. And our sort of long-term ambition is to have an annual profit growth of more than 15% per year, i.e. doubling every five years, and have now set the bar for the $2 billion, as you see up above the headline there. We've been talking about that. We feel that it's reasonable to think that we should have at least one-third of that growth come organically, while the rest through some 8 to 12 acquisitions per year. So it should be basically one third of our growth organically and two thirds from acquisitions. From time to time, it may vary how many acquisitions we make. We will still sort of try to post at least 10% growth through acquisitions, whether they're smaller or bigger ones. So the numbers might sort of change over time, but at least 10% is what we're aiming for. And we've been above that threshold here for some time now. We will try to do this very sort of profit in a very profitable way. And then therefore, and the return on equity should then exceed 25% within the group, a financial goal we had for many years and that we lived up to most of the years, especially here more in the recent years. I'll have something showing that as well in the buildup of the group. We think that one strategic thing has been very, yeah. Okay. We'll start there. Okay. the building of the five divisions. So we are, we've organized ourselves into these five divisions and we feel that they are very well positioned and that we find good opportunities, both organically and through acquisitions in these areas where we are positioning ourselves. And you can see that, that if we look down here, you can see that we are aiming for, for segments where, where we see sustainable and underlying structural growth along the way. Uh, and, and, uh, Yeah, I won't go over that very much more now here, I think. So let's move on. One key ambition for us has been that we would like to drive the proprietary products. And you can see that we started out already in 2006 and 2007 with the acquisition of Yieldpress. And we, since then, have been very keen on driving this share of proprietary products along the way. And you can see that it continues to improve. For some time, we had the ambition of having 75%. But now, as we put up the logic grants towards the 2 billion, we have raised the bar to 85%. And you can see that we here in recent years also are picking up with a percentage point per year or so. As we approach the goal, it will be increasingly sort of Yeah, challenging to get there, but I feel confident that we will get there by a couple of two, three years as we continue acquiring more proprietary product type companies rather than the other categories here. Yeah, and coming down to acquisitions, I mean, acquisitions being a serial acquired without an exit horizon, we would we are, we are would like to, we would like to see ourselves as a perpetual owner that we have an ambition to own the companies that we acquired for, for, for eternity. And we will And that's what we're doing. And since 2006, we've acquired some eight plus 80 companies. And you can see the list there with the acquisitions we've done since 2021. And it's good to see that we're keeping up the pace or even increasing the pace a little bit along the way. And since now, this is Q3 of last year, we have posted some eight acquisitions. billion and that is slightly above the 10% we talked about. It's more 14-15% or something like that. depending on how you measure it. But it's a good pace that we've had. And we also see that we have now signed two more deals down to the right there, Van Leeuwen and Tasso. And that adds around another 245 million to our acquisition pace here. And that's the way we would like to work with it. we have over the years also expanded with putting a little bit more of resources especially in different markets so we have been very acquisitive in the nordics looking back but along the way we have been more present in the uk and also in central europe so i think we will see that at least yeah my guess or a rough estimate would be that we probably will make 50 of our acquisitions outside the nordics going forward So we'll be balanced there. We're still very keen to continue in the Nordics, but we also feel that as we're becoming bigger and need to do more acquisitions, we also feel that we should expand our scope a little bit along the way. And then looking into the acquisition we just posted, we tried to make a fact sheet on all the acquisitions. So if you look back, you could look at the type of companies we have acquired and also some numbers around them. And the more recent one, the most recent one we closed here is the MAST system, which is a Finnish company, a leading provider of high performance telescopic MAST for defense purposes, for defense systems. As you can see down there, an excellent performance with some EBITDA margin of around 40%, which is really great to see. And that will of course add to the numbers. and this company is located in yuen so in finland and we are a happy owner of this company since now yeah we closed the deal in late november but has included in the numbers from only december so a somewhat bigger in terms of profits somewhat bigger company than the average and and a very good performer and we expected to be here going forward and that they started up with a really good December here as well the first month and And then on top of the ones we've closed, we've already highlighted that we have also signed a couple of more deals. And the first one I'd like to go over is the Van Leeuwen test group. Here, this is a company in the Netherlands that designs and manufactures and calibrates and service robust equipment for testing heavy vehicles. brake testers and integrated software together with that. A set of products and have a very strong market position in the Netherlands and also in the UK where they're present. A company with a revenue of a little bit more than 20 million euros per year and also a very good EBITDA margin there, as you can see, coming in and adding to the niche products division along the way. We have since before only one company in the Netherlands, and this will be the second company we have in the Netherlands. And so we're also starting to build in those type of geographies, especially the Netherlands and probably Germany along the way as well. So that is also an interesting development for us as we grow and go forward here. The other one I'd like to highlight is the track or the tassel. This is a smaller add-on acquisition. You can see the sales down there. It's not that big for us, but still very important that we support the companies that we already have with making add-on acquisitions. So this is important and will continue the journey of building the RADANOVA group. with the radar measurement sort of equipment and the radar measurement services that we provide there being the global leader in within the radar measurement with some operations all over Europe and also in the North America with this very niche oriented business that we have within the control division. So this is fairly important, even though it's small, it's important to rather know what to get this business on board. which will also then be done after we have the regular approvals, uh, sort of done in the UK, uh, which we don't anticipate any problems with, but still it needs to be done before we can close the deal. Yeah. I have included a couple of more here, the CP cases. This is the couple of other companies that we've included. sort of in the last six months. So the CP cases came in here during the summer and it has had a good start within the group. I've gone over this before, but just for your reference, we put in the slides here as well. A good company that has had a good start within the group adding to the control division as well. And another example of that is the next one, which is a principal door sets is also a UK company. So we have been more active in the UK along the way here. This is coming in, adding to the tech sec division and has had a good start also to the group along the way here. So I will round off there with some numbers with looking at sort of our financial overview that i usually conclude with here and we can see that we are still at the running 12 months at a very good level here we were at some ebt growth of 10 i think it was in the last quarter so it's actually been picking up a little bit here in the last quarter and we are of course aiming to to be at the return on equity of more than 25 along the way but also have the ebt growth of more than 15 That will be over a business cycle. So we will see what happens here. But it looks like we are in the neighborhood also this year. So I think I'll round off there and we will open up for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad.

next question comes from max bacco from seb please go ahead thank you and uh hello jorgen and peter thank you for taking my questions and well done here in the quarter um so three questions from my side uh the first one you said it yourself you're gonna enter in a presentation that the acquisition pays both in absolute numbers but also relative has been a bit higher as of lately and compared to your historical average. Should we expect the relative acquisition pace to normalize when organic growth returns or do you aim to stay at this slightly higher level also going forward?

I think it's hard to be general about that. I think we will always look at acquisitions and try to sort of, yeah, make those that we think are relevant and that we feel that could add to the group. And it will vary over time how much we actually conclude or get done, right? But I think that what has been good for some time and what is good with our dual engine of growth both organically through the mna is that when the organic growth is slightly lower we actually have better cash flows and that means that we can be to some extent a little bit more inquisitive i think that the long term i think the sort of what we have communicated i i one third organically and two thirds um through M&A, I think that's still relevant. And I think we will sort of normalize at that level, looking at it from a long-term perspective. On the other hand, I also think in short term, I still think that there's a lot of M&A out there and that we have a good pipeline. So we will look at closing more deals here in the next six to 12 months.

Okay, understood. And the next one, I mean, it seems like looking at your five different segments that niche products and international as well are performing very well, both in, well, once again, absolute numbers, but also relative to the other segments. Going ahead, do you see any reason to become a bit more sector agnostic and focusing more on those segments compared to the more vertical or cluster strategy that you have had historically, if you understand the question.

I think we are very sector agnostic today. I think the scope we've set out is really that we should do B2B tech or B2B industrials. And I think that we will stay with. I think most of what we do will still be hard work. because that's where we're working at the moment. But given that broad sort of scope, I think we can do most things within that broad scope. And that's where we've been all along, right? So I think that international and niche products, that allows us to be very sector sort of agnostic, but we also feel that the electrification and and and so the things that we're working with in electrify. So I think we actually have the scope that we need. I think that that we I don't think we will do B2C or yeah, go sort of into services or more installation type businesses or, or we will we will stay where we are. And I think that scope has been significantly significant and very good for us.

Okay, understood. And then the final one, a bit more detail-oriented. And perhaps you mentioned this during the presentation, but some margin pressure here in the electrified segment, despite quite good organic growth. Anything specific to explain that? Is it just mix or something else?

Yeah, it's entirely mixed, I would say. We don't see that pressure that you talk about really on the existing businesses. We see that when we acquire companies, it might be that the new ones are sort of changing the mix in the division a little bit. So that is what you see in that number.

Okay, understood. That was all from me. Thank you very much.

Thank you.

The next question comes from Zeno Engdalen Richudi from Handelsbanken. Please go ahead.

Yes, good day. Thanks, Jörgen, for taking our questions. Just starting off on a follow-up to the question on electrify, you also mentioned that there is a seasonality effect of NRS. Could you share kind of the bridge effect on the margin decline which was due to NRS?

Well, I need to look into that a little bit. I think the seasonality of the NRS, NRS are building, are providing safety solution and road barriers for roads, right? and they're working in sort of Sweden and the Nordics. And that means that in the wintertime, you don't do very much of those sort of installations. So they have a quite strong seasonality towards the summer. They put the projects together in the spring. They install that in the summer and early fall, but they're also getting paid. So they also have a seasonality towards the end of the year when it comes to cash flows coming in. So they actually have a strong sort of water intake during the spring. They have a good revenue during the summer, but they're getting a lot of the cash flows at the end of the year. And that is more of a seasonal pattern that we see in other areas, in other companies. When it comes to... when we talk about margins if you want sort of the bridge there but it's it's it's the companies that are coming in actually that is lowering the margin a little bit but adding to the top line and profits yes okay okay thank you and when we're looking at niche products of course very strong and a strong increase in the modern from last year

Of course, there's some M&A effect into that, but can you share how you're viewing the margin when we're looking at the organic basis? Do you think this is a fair level, so to say?

Yeah, maybe I can contribute on that part. If you look at the niche products during the last four quarters, you notice that you've been on this level quite all the time. In the Q4 last year, you had a 24.7 and then it was slightly lower in Q1. I think that was a timing effect. And then you've been on this 22.9%. So I think the average has been on this level and it's a rather broad based increase that we see in the niche products. So I think it's fair to assume that it can be on this level going forward.

It varies between how the company here on a specific quarter. So it is about the 20 to 23% range is where they probably will be on it's hard to say that they will be yet yeah but we are not that sort of stable that we can talk about sort of tenth of percentages but but rather rather in that level the way they've been i think and if you look at it as peter is suggesting and look at it from quarter by quarter you can see that they've been at this level some some of the quarters

Yes, very clear. Thank you. And looking at the book to Bill, you mentioned in the report that it's basically in line or slightly above one. Of course, I understand that the construction-related companies struggle a bit, but how broad is it, or is it a lot of pulling from these problems and Electrify?

Yeah, I think it is. Besides the construction sector, it is quite broad-based, and we also have seen some of the... a little bit more project related that is more of the customers or the willingness to invest we feel is coming back in some sectors and that that is also positive not not huge projects but still sort of more of a small smaller sort of smaller type projects but to a greater number than before and broad-based very good and my last question

on your profit divided by working capital, which is at very impressive levels. And we've seen inventories also come down. Could you just share how you're viewing your working capital, what you're looking at the development when you're looking ahead? How much do you think there is to grab here?

Yeah. Yeah, I think that the profitable working capital that was in 81, 82% is among the highest we've had. So that we've satisfied with. On the other hand, we still feel that we have a lot to struggle with when it comes to not a lot, but still some some to struggle with when it comes to our inventory levels. We feel that there still needs to be more to do there and free up some cash around that. I think we have too much tied up in stock levels still after the pandemic has not come down to the extent that we had expected. We have not put a number on that, but there is still some work to be done there.

Yes, very good. Those were my questions. Thank you a lot.

Thank you.

The next question comes from Niklas Savos from Redye. Please go ahead.

Hello, Jörgen and Peter. Hello, welcome. Thank you. I have a question around the PCP in the tech-tech division. I mean, PCP is, as far as I know, the largest acquisition you have done and has performed more or less every quarter good results. since the acquisition in 2022. And you mentioned a slightly weaker development in the quarter. And I just want to know if that's sort of company specific or more market related issues.

No, I think it's more market related. I think what they're building is I think they're benefiting from the electrification to some extent. They have an assortment that is dedicated towards the electrification building, power stations and that type of thing. They have specific products that is benefiting from that. But they also have a dependency on the general construction sector. And I think that's been, since this is a Danish company, that has been holding up quite well for some time. So they've actually been doing very well also in the downturn. But here in the last quarter or so, we've seen that it's coming down a little bit. Whether that is sort of a new trend or whether that was just a bad quarter is a little bit hard early to tell. But still, it's a strong company. It's doing very well for us. It was very important for us when we acquired it. Since then, we've acquired a few other big companies. So it's not that it's sort of the overarching company for us. It was very, very important, but still, that PCP is important to us and of course we would like things to improve from here.

Good and I'm just thinking a bit about because it has some exposure to Germany I guess with it being located in Denmark and you also mentioned I mean the two the two business units that you have in Germany. I'm thinking a bit broader here. I mean, do you see a way to increase your acquisition activities in Germany? I mean, due to the challenging market climate that you have there now?

Yeah, I mean, we are definitely looking into different markets and we are, yeah, I think we're not looking at it from sort of a more of a macro perspective. We're looking at it more of company by company. Do we feel that this company has a good future or where are they at? And can we acquire it at the sort of the price tags we're interested in? So I think we are more sort of looking into the sectors or actually the sort of pros and cons of the company and where they are with that company rather than to look into sort of the more broad macro perspectives. I think those macro perspectives usually sort of, they might prevail for a couple of two, three, four years, but we are the perpetual owner, right? We would like it to be a strong company 10, 15, 20 years down the road. So we have a much more long-term perspective on it. But there might arise some opportunities in Germany now when the market is more sluggish. Yes, that might be true.

Yeah. Yeah. And just one other bit, I mean, that will be hard for you to estimate, but I guess, I mean, you have some companies that, that are impacted by the sort of market for construction. And do you still foresee that that will, you see a turn maybe in the second half of this year, or how do you look at that first half will continue to be rather sluggish?

Yeah, I think that's a fair estimate. I don't see that it will come back very strong in the very near term, but probably, yeah, later on in 2025 or fall or something, it should, I mean, since interest rates are coming down and what we see, and if that's still the case, at least I'm foreseeing that it should improve.

Great. I mean, congratulations to another really stable quarter here and looking forward to speak soon.

Thank you.

The next question comes from Gustav Berneblad from Nordea. Please go ahead.

Yes, good morning. It's Gustav here from Nordea. I was just thinking there, when looking at several of the companies you chose to talk a little bit more about there, Jörgen, you know, Mastis, the MCP cases, and also the new companies you have signed. I mean, it seems basically all of them have a very strong sort of hockey stick between 2022 and 2023 into 2024 in terms of the margins. So I was just thinking, are there any reasons that we are at unsustained levels here or abnormally high levels in terms of margins on a group level? Or are you seeing any other drivers to this? Or are they coming from low levels? What's your view there?

Yeah. I think that's more of a coincidence. We would like we would like them to have a long history of good performance. Right. But when we see a company at the 19, 20, 25 percent beta margin, we usually dig down into that opportunity as well. And if we see sort of strong evidence that actually something has changed, that we feel that the company has improved sustainably in an area and that we can believe that the new level is sustainable, then we might go ahead with acquisition anyway. it needs to be we have we're looking into companies that have built a very sort of strong aftermarket position in the last couple of years driving margins through that and that we usually that that we could believe in this is more of a long-term sustainable thing while while others are have been driving things by moving in and and yeah pricing differently or stuff like that then we also might view it as sustainable and then we might that we then we might go ahead with acquisition anyway that you see that that you see a pattern there i'm not sure there is a pattern it's a more of a coincidence i think but but along the way we will I mean, we, we would like to push our, our group, uh, into higher margins as well, but we also are more, we were, I mean, we are here to build earnings per share, right? That's, that's what we're doing. So it's a, it's a, it's a bit of mix when you get to the 20% or, or somewhere there in terms of you meet the margin that, that, uh, that, um, um, yeah. Is that a good level or should you push it even higher? That's that's.

we are pushing all our companies all the time but still we need to yeah i i i think it's more of a coincidence related to the question you're asking yeah okay uh understood understood and then just the the final one there on on the reversal of continued consideration you had there of uh six million is that linked to a specific segment or

Not really. And it was 6 million last year as well, right? I think so. It's not that we are sort of getting that as a, as a boost here. This quarter was the same. I mean, this is part of the model. You could argue that this is sort of, and it is to some extent, I agree with that. It's a, it's a bit of a funny money thing, but still that's, that's how the model is set up. Right. And the IFRS sort of, set up is leading to us doing that, all of us in this market, right? And I say 6 million is a fairly small number, but we feel that there are a couple of companies that we won't be sort of paying out the earn out, and therefore we are reversing that, and this is the way to do it.

No, I understand. It's not a large figure. It was just more so how we should think forward. If there is a link to control, then maybe we shouldn't extrapolate the margin there or anything similar to that.

I think it was more related to niche products this time, I think.

Yes. It was a few to two or three projects and spread primarily to niche products.

Okay, that's helpful. Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

So would you sit there?

No, I think we have also received a written question from David.

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.

Right. Yeah, we have one written comment here asking about the estimate of the percentage of revenues from defense across all your businesses. And I think it's below 3% within the group. It depends on how you define defense. We have a couple of companies that are providing more of sort of passive materials and stuff like that to that sector. But when we talk about more, types of things that are more defense related is definitely less than three percent just a quick answer to that question thank you everyone for listening in and i think we posted a a really good quarter and we're looking forward to the future because we feel that we have a strong balance sheet and a strong position with some good trends in what we're doing and position very well and and along the way we'll we'll hopefully post more acquisitions. So let's talk soon again. Thank you very much.