Lagercrantz Group AB (publ)

Welcome to Lagercrantz Group Q1 Report 202627. 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 5 on their telephone keypad. Now I will hand the conference over to President and CEO Jorgen Wigg and CFO Karen Meligard-Jarf. Please go ahead.

Yes, thank you. Good morning everyone and welcome to our interim report for the Q1. As you know, we are starting our year 1st of April. So this is the quarter ending April through June then. Welcome everyone. A bit puzzled around to the reaction here this morning. We thought we posted a strong quarter, well in line where we have been before, or even a bit slightly stronger with some earnings per share growth of 20% and some six M&A deals over the last quarter, which is more than we've done before. But we will get into that as we move along here. Together with me here, I have Karin with us as well, our new CFO, since a few months ago. And we will go over the presentation in sort of three chapters or parts, where we will start with a short introduction to Lagerfrans Group for those that are new to us. And then we would jump right into the quarterly report. And then we will end up with some comments on where we are with the group going forward. So welcome everyone. I will start with an introduction to Lagerkrantz Group then. I mean, we are, you've seen this many times. We are a tech group building through M&A and development of the companies that we have, building leading positions in expansive niches. You can see over to the right where we have most of our companies. It's Northern Europe that we cover now. But we also have some really export-related businesses. So all the way to the right, you can also see where we have some foot tods all around over the world with some in North America with some in Asia as well. We have our scope where we would like to work is the B2B tech or B2B industrials where we offer value creating technology in expansive niches and we have organized ourselves into these five divisions that you can see and we will comment on how the developments are in these divisions as we move along. We are very keen on working in a decentralized fashion. So we have all our companies organized individually under their own brand name in their own market, addressing their own market and customers. And you can see where we have our profit units or companies as we'll call them here with 17 companies in Electrify, 17 in Control, 15 in TechSec, 21 in niche products and 16 in international. We have just surpassed 11 billion. It wasn't long ago since we went above 10 billion and now we also with this quarter surpassed 11 billion in sales or total revenues for the group and we have about 3,800 employees as of today. And as you all know, we are a buy and build or we are a serial acquirer, acquiring companies. So acquisitions is a very central part of our business model. We expect two thirds of our growth to come through M&A over the years. And that's where we were also in this quarter. And we were part of the Bergman & Behring Group up until 2001 when we were split out and have been listed as a separate unit, separate entity since 2001. So that's a bit of a background. So let's move into the quarterly report or the interim report. And here we can see that we posted another strong quarter, we think, in terms of growth and we are well on the way to towards the 2 billion goal and you can see that the trajectory has been very strong over the last three five years here and then we continue that with another strong quarter. You can see that the scales left to right here are proportional, meaning that you could also see that we have a strong growth also in terms of margins over the years. And we have continued that also here in the last quarter. And yeah, we'll get into the numbers in a while here, in just a bit. We also believe that we saw some improvements in terms of the business conditions during the quarter. On the aggregated level, we have a lot of different segments, so it varies between the segments. But on an aggregated level, we've seen a continued, positively stable activities during the quarter. And especially in the sectors where we are strong in terms of electrification, infrastructure, security and defense, also within marine and also some of the clusters that we're building within niche products have had a good development during the quarter and along the way here. We also see some uptick in the order intake as you can see here. While we still feel that the demand in the construction sector have remained sluggish, that is the sector lagging behind, even though we've seen some slight improvements also there, but from a very low level and small ones. The order intake then was very strong. We have posted some 6% or 5% or so in the last couple of quarters. But here during this quarter, the order intake was 10% higher than the invoice sales. And when sales are growing like it is, it's actually a very good number compared to previously. But we also saw that some of these orders that came in were more project related orders with longer lead times. Those are around sort of different types of sectors, construction, infrastructure projects with some lead times of six to 18 months or so. But still good that those projects orders are happening, which is also, I think, a sign of that we see some improvements in the market and the general business climate. Gross margins remain stable, but we also saw some signs or strong signs of cost inflation driven by higher raw materials and freight prices. And therefore, we are working also with compensation through price increases to customers in many of our companies. That I think we learned over the The years and especially during the pandemic where we've got used to really drive things through price increases and price adjustments as we see raw material prices and freight prices really change. And I think we have learned that over the years. I think we're pretty good at it. But now we're in a phase where we need to push that a little bit more even. We can also see that during the quarter here, we continued our good growth in terms of proprietary products. We're currently at the 80%. And we also see over the years that we are becoming more and more international over the years. So you can see that we are, especially when you see that Sweden is growing, but as part of the total group, the net revenues are currently at some 30%. Denmark is our second biggest market. and we have also been quite acquisitive and active in the United Kingdom and therefore that is currently our third biggest market in the same level as Norway but still at the nine percent it used to be much smaller so we are growing and becoming more international over the years but I don't think we're going to move in red into the numbers and I'll handle with you Karin to describe a little bit what happened during the quarter in terms of figures

Good, thank you. And as Jörgen already mentioned, we believe that we started our financial year with a really strong first quarter. As you can see, our revenues increased by some 18% with acquisitions contributing with 12% and the organic growth reached 6%. And this is the same level as in quarter four. We had no currency impact in this quarter. EBITDA increased by 15% and landed at 498 million SEK and the EBITDA margin ended up at 7.1% compared to 7.5 last year. The cash flow from operation was more or less in line with prior year and was relatively strong and ended up at 279. Profit of the financial items EBT increased with 18% to 405 million Swedish kronor and profit of the tax improved with some 20%. Earnings per share in the quarter improved with 20% and increased to 1.53 SEK per share. Enrolling 12 months, we reached 6.07 SEK per share. And as we have communicated earlier, the board proposes a dividend of 2.50 SEK per share. During the quarter, we have completed six acquisitions with approximately 400 million SEK in annual sales. Jörgen will talk more about these acquisitions later, but they are divided both between divisions and countries. Yeah, good. And then just very briefly on the outcome by divisions. If we take a look at the outcome per division in the first quarter, we can note that the strongest divisions are Electrify and Niche Products. Both continues to grow and maintain an EBITDA margin over 20% for another quarter. TechSec has improved the EBITDA margin compared with prior quarters, and International is in the quarter impacted by seasonality in two newly acquired companies that will be mentioned later. And Control is not on the level that we would like them to be, but Jörgen, you will tell us more about the divisions now.