Lifco AB (publ)

Thank you and welcome everyone to the LIFCO Q1 presentation. I'd like to start directly by going into page number two and give a short overview of the overall performance in the quarter. And as you can see from the numbers, we are quite satisfied. It was a solid quarter across the board. We can conclude now that the first quarter of this year had not the same effects of COVID-19 that we were experiencing during 2020, especially in the second quarter. And we had some of these effects also remaining in the fall and now in this first quarter we are overall very limited impacted by COVID-19. I'd like also on this high level summary to Just pinpoint the operating cash flow, which is the only number that maybe stands out. All the others are very good. But here I would like to highlight that the numbers from last year are extraordinary good. We had record cash flow in Q1 2020, partly due to release of inventories, but also the fact that COVID-19 came in in early March had an effect on extraordinary good cash flow. And it's also important to acknowledge that normally LIFCO has the weakest cash flow quarter in the first quarter. So what typically happens is that we have a release of special receivables and also to some extent inventory in Q4 and then we build that up in Q1. You can look back in historical numbers, for example, in 1918 as a reference and conclude that also the cash flow in this year was stronger than historical numbers. also to summarize the high level we had an organic growth of around two percent in the first quarter we had a negative effect from exchange rates of about three percent and then acquisitions contributed with about seven percent for the quarter but with that we can go into page number three and talk a little bit about each business area yes the dental area came back quite strongly in the first quarter and we now see that I would say most or all of our markets in dental are back to more novel levels. We are then helped by acquisitions that we've been carrying out in the dental field that also contributes to the growth and then we have a very strong margin expansion in the quarter partly due to acquisitions but also due to the fact that we have lower sales and marketing activities because of the basically, it's not possible to carry out the normal activities. And this is the same trend we have now for the last couple of quarters that remains in the dental field. If we then move over to the demolition tools area, we experience better market conditions. They were quite good in the first quarter. And here I would like to highlight that the numbers from Q1 2020 actually included some special projects that we didn't have this year. So that's important to understand. It has not a huge impact, but it has an impact on that. So there was that. And also we are helped here by better margins. It's the strong market conditions and then the continuous work on trying to improve margins in LIFTCO is coming up well here. Also in this area, of course, we have some lower sales and marketing activities as many companies are experienced during the COVID-19 times. And in sister solutions, the same story. We have good market conditions. And the reason we are not growing top line here is more related to specific companies. For example, we have a product business that is volatile and they had a fairly weak quarter that is dragging down the overall sales numbers. But for the most part, most of our companies in this area are performing well in the first quarter. And also here we are improving our margins due to acquisitions, due to organic improvements. And then on top of that, we also have some effect of the lockdowns that we are carrying out lower sales and marketing activities also in this area. And with that, we can move over to page number four. And this is just a reminder for everyone who's listening that LIFCO, what we're trying to do is to grow LIFCO on a continuous basis from acquisitions. Historically, we've been generating around 9% to 14% every year from acquisition in EBITDA growth. And then, of course, we are striving to also improve our organic performance in our EBITDA. And for the most part, we've been successful historically, with the exception of last year, where we had a lot of difficulties during the COVID-19 times. So that's just a reminder that acquisition is extremely important for us. Also on this slide, we can highlight that we have been able to do this type of growth from acquisitions without stretching our balance sheet, which is an indication that our cash flows from operations are very strong over time. So we can go to page number five and just continue on the cash flow and balance sheet. We are at the end of this quarter. Despite quite a few acquisitions, we are having a very strong financial position. Our interest bearing net debt to EBITDA is 1.2 times, which is very, very low. So it gives us good room to continue to try to buy good high margin companies that are very strong in their niches also going forward. I can also highlight that the 1.2 times EBITDA in this quarter should be compared to the 1.6 one year ago. So we are actually in a better position now than one year ago. And then we can go into page number six. And normally I don't talk much about this slide, but I just would like to remind everyone that LIFCO, we are striving for profits and for margins. We have it in our DNA. to continuously make all our companies even more niche so that they become even stronger in the more profitable part of their business. And as you can see on the bottom of this slide, LIFCO has been growing our margins continuously over the last six, seven years. And we are now standing at an EBITDA margin on rolling 12 months at 20.5% compared to 14.2% in 2014. And this is a continuous work that we're doing in all our companies. It's also being, of course, helped by acquisitions that we've been making over the last seven years that they have been on a higher margin level than the portfolio we had going into the stock exchange in 2014. And then we can go to page number seven and just conclude that our focus on strong margins and trying to buy assets like companies leads to a situation where our return on capital employed, excluding goodwill in our operations, is very strong. now standing at 151 percent if you take the rolling 12 months data and this is a key criteria in our acquisition work we want all our companies to be very cash generative so we can continue to build let's go to acquisitions for many years to come so after that i'd like to go to page 28 all the way back in the presentation and just highlight that we had a very strong period in acquisitions in the last few months or last few quarters. So we have actually now from the 1st of January this year consolidated in roughly 1.2 billion Swedish kronor of businesses into LIFCO. And it's a good mix of dental, assisted solution and demolition tools companies that we've been able to acquire. It's also a good mix of geographic spread. And I can come into page 29 and just highlight that we have during the last four years on the right hand side of this slide, we can see that we have now a very broad sort of hunting grounds for companies to acquire. And as you can see, the period from 17 to 21, we've been pretty broadly spread out between Sweden, Germany, Norway, Italy and UK, and then added complementing geographies from time to time. And this is continuous work to expand our our acquisition opportunities in as many markets as possible because we're looking for really good companies that we hopefully can acquire at reasonable valuations and to do that we need a huge or enormous big funnel to be able to source these deals and that's not an easy job but we work very hard on improving that and get as many good opportunities as possible and that was my last point here in this presentation, and with that I'd like to open up for any questions.

Thank you. If you do wish to ask a question, please press 01 on your telephone keypad. If you wish to withdraw your question, you may do so by pressing 02 to cancel. There will be a brief pause while questions are being registered. And our first question comes from the line of Carl Reintalsam from Nordea. Please go ahead, your line is open.

Good morning, it's Carl here from Nordia. In devolution of tools, obviously quite strong margin for a Q1. So could you please help us bridge the 460 basis points, year-over-year margin uplift, especially as regards that you have fewer special orders today compared to last year? Thank you.