Lifco AB (publ)

Thank you very much and a warm welcome to everyone. Good morning. And we would like to present the LIFCO Q4 2021 numbers. And we can start already by going into page number two in our investor presentation, where we have the summary of the key figures for the quarter and for the full year. And as you can see from this page, we can conclude that 2021 was another very strong year for LIFCO. And we also saw the same trend in the last quarter with very strong development driven by strong underlying markets in demolition tools and system solutions area. Overall, in the quarter, we had a sales growth of 32%, of which 20% was organic growth and acquisitions contributed with about 15%. And for the full year figures, LIFCO grew the sales with 27%. And there we had organic growth contributing with 15%. And acquisitions, 13%. And if you go down to the EBITDA level, we had also very nice growth. In the quarter, we had 30% growth. But, however, a slightly lower margin compared to the same quarter in 2020. And I'd like to remind everyone that in 2020, Second part of 2020, we had extraordinary good margin development due to lower cost levels following the early phase of the pandemic. And for the full year, the EBITDA grew by 37% due to a combination of strong organic development and acquisitions helping our EBITDA development. And further down in the graph, you can see that the cash flow has been solid and growing compared to previous years. Thanks to increased profits, but partly offset by slightly increasing inventory and receivable levels due to the very strong market conditions that have led to this development. But all in all, if we go all the way down to return on capital employed, we have ended the year at the quarter on a very high level, 23% return on capital employed. And if you take the return on capital employed, excluding Goodwill, we are now at 162%, which is a very strong level for NIFCO. And then we can go into page number three and go a little bit more into the different business areas. And if we start with dental on the top. We had, and here I'd like to remind everyone, we had a very strong end of 2020. Last quarter and also the third quarter in 2020 was a little bit of a comeback situation from the early phase of the pandemic where we suffered severely in Q2 2020. and in the second half of 2020 we had the lower cost levels due to the sort of freeze coming out of the early phase of the pandemic which led to extraordinary high module developments in 2020 and then if you look in q4 2021 we are back into more normal levels more in line with how things were in end of 2019 and we are now seeing in the dental that you know activity levels uh have now been back in sales and marketing activities etc more back to normal levels since uh basically mid 2021 uh and the companies are more in a forward-looking mindset uh if we go further down down to demolition tools uh we have had now for quite some time very strong market conditions and that has continued in the fourth quarter uh we are growing sales uh with 55 percent uh thanks to very strong organic development and also quite substantial acquisition help. We have done some larger acquisitions during the year in this field. And the higher margin that we have now generated in the last quarter in demolition tools is mainly explained by strong operational leverage due to this strong sales growth in this business area. If we go down to seasonal solutions, we are growing sales strongly, both thanks to the underlying market demand and from acquisitions. uh the margins in the last quarter of 2001 are slightly lower than previous years or previous year i should say and that's also the same reason that we had also extraordinary low cost levels in the later part of 2020 and now we're back into more normal levels and here i also like to mention that in this area we have few entities that have longer order books which have had more difficulties getting the quick compensation of the increasing raw material pricing or the material prices overall in the value chains. And this has been a challenge for many companies, but we have overall managed very well, I have to mention here. So on the whole ISCO level, we've been doing a very good job in quickly adapting our price levels. And the ones that are suffering more, of course, are the ones with longer order books, where it takes longer time to transfer this over. And with that, I'd like to move over to page number four. And that's a little bit more of a Historical review, a long-term perspective on LIFCO. And this is, once again, another reminder of how LIFCO have been growing our business for now the last seven years since we came into the stock exchange. And I know there's a lot of data on this page, but if we go to the third row, we can see the growth from acquisitions that have been last year in 2021 was a record year. In modern time, we grow LIFCO's EBITDA from acquisitions with 18%. But as you can also see, it's been a strong growth driver for us for many years historically as well, ranging from 9% to 14%, and then last year jumping up to 18%. If we go further down in the table, you can see that organic EBITDA growth has been more volatile, but it's a very important area for us. We have a strong focus on buying high-quality companies and then developing the profits in these companies organically. And last year, 2021, was a record year here as well. We had 21% organic growth in the profits, thanks to very strong market conditions. But also, historically, we've been doing a decent job on this category. It's a very critical area for us. And these two things together, basically buying very good companies, and then, of course, having a strong focus on making sure the companies develop in the right direction. In combination with the discipline in valuation, basically buying smaller-sized companies has led to a situation on the very bottom of this graph, where you can see that we can do all this through self-financing and still keeping our net debt-GDTA ratio fairly constant, while paying a small dividend or a dividend every year to our shareholders. And with that, we can move over to page number five, and just a little bit more details around the net depth development obviously we are growing our nested in in absolute terms as we are growing but in relation to our profit development it's been a very stable level ranging just below the the two times net depth edta if you include all all depth positions and we ended the year uh with a net debt tbta of 1.7 times compared to 1.6 times one year ago and we have done quite a number of acquisitions in 2021 i have to mention here as well the interest bearing depth is the interest rate net step gbta is at 1.1 times which is the same level as one year ago so we are basically ending the year with a very strong financial position and giving us room for financial room for more acquisitions going forward And with that, we can move over to page number seven in our presentation. And, yeah, we already mentioned the numbers here. We have strong developments in return on capital employed, both if you include the goodwill. And also on the right-hand side, we have been looking at the company portfolio. Without the goodwill, we have a very strong position now at 162%. And this has been, and it's a very fundamental part of LIVCO, because it basically means with this type of key ratios, we can grow organically, like we've done in 2021, and still generate a very strong cash flow, which means that we have the possibility to continue acquisitions through self-finding in our own balance sheet. And we have a lot of emphasis on this when acquiring new companies, and of course a lot of emphasis in the existing portfolio to make sure we are developing in the right direction when it comes to these type of measurement and then i'd like to go all the way down to page number 13 which is a slide that i normally don't present but we update this data every second year so now we have a new data set it's it's a it's a slide that we actually presented the first time we went public in 2014 trying to summarize how Lifco had grown some of the portfolio organically. And we have now measured the original dental portfolio on the left-hand side. This is now pure organic development of the original dental companies that we followed all the way back to 1997. And as you can see, we had very strong development through the first 15 years up until 2013. basically doing a lot of operational improvements in this subset of the portfolio. But since then, we have been more on a plateau, but still developing overall nicely. And in the last two years here, between 19 and 21, we have 6% CAGR in organic EBITDA development in this subset. So I'd just like to remind, these are examples. We try to follow these examples from a very, very long time perspective. Obviously, we have also strong organic development in companies that we've added in the later part of LIFCO's development. But I think these are very interesting because they follow the very long time perspective. And on the right-hand side of this page 13, we have then followed our original demolition robots company in Brock, which LIFCO then has had in the portfolio since 2000. You can also see that this is one example of very long-term focus on gradually developing business from organic improvements, both improving margins and sales and leading to a situation where we now have reached another 10% CAGR between 2019 and 2021 and then a record high EBIT margin. I'd like to mention here on the block data that this is now measuring only the Swedish entity Because that's the entity we had from the start, but it's giving a relevant picture of the organic development of this type of company. And then we can move all the way down to page 28, which is the list of acquisitions in 2021. And as you can see, we have been very active in all our three business areas. uh we are slowly you know developing and gradually developing our acquisition capacity which has led to this effect that we are now able to to do a little bit more acquisitions than we were maybe able to do uh four or five years ago and this is a continuous development of organically developing our own resources in in being active in finding companies but also being being able to take care of new acquisition that is equally important that we can make sure we set the foundation to continue organic development of the acquired entities and and we take a big emphasis on having the right people involved in in steering that development from this perspective and this is a journey that hopefully will continue it's always difficult to buy you know great companies uh in small niches but we we do very uh hard work here and uh hopefully we can continue to to find new exciting companies in the future in this area And I think this was all for me right now. And then I'd like to see if there are 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. Our first question comes from Carl Ragnarstam with Nordea. Please go ahead.

Hi, it's Carl here from Nordea. Firstly, a question regarding cost ramp up. You said that sales and marketing expenses came back from the beginning of Q3. So I guess, could you give some flavor on If you're back to the 2019 level currently or in Q4 at least, or if it's sort of more to come if we're entering a more, or a period with less restrictions in 2020?