Lifco AB (publ)

Thank you and good morning, everyone, and welcome to the LIFCO Q1 presentation. And we can start by directly going into page number two in our investor presentation, where we have the overall numbers for the group in the quarter. And as you can see on this page, it's been a very good quarter, basically in all dimensions. We have a net sales growth of 19%, and it consists of organic growth of about 8%, acquisitions of about 10%, helping positively, and then also positive effect from exchange rates of about 4.5%. We also have a negative impact of one divestment that was done in 2032 of about minus 3% in those numbers. If we go further into the numbers, we also have even stronger growth in our EBITDA profits, which basically means that our margins are improving up to 22.3% in the quarter, which basically has to do with a few factors. Obviously, our continuous improvements in our companies continues to go very well. We always strive for improving our margins and being more differentiated and strong in our niches. We also have implemented price increases during the last, I would say, quarters, but also earlier than that, and that now has come into full effect. It also demonstrates our pricing power in many parts of our portfolio. What also is impacting our profit is that our dental business area had a more normal quarter. If you remember last year, we had this first quarter where we had some issues with one part of the dental where there was some lockdowns in China that impacted that business negatively. In this quarter, it was more back to normal. And also, obviously, as I mentioned, the price increases are now coming into play. That also is contributing both in net sales growth, but also in the margin expansion. If we go further down, we see that profit-for-tax is increasing 26%, which is then obviously lower than our EBITDA growth. This has maybe to do with the increasing interest rates. That comes as no surprise, and that's obviously going up rapidly also for LIFCO. We always had certain debt, and now those debt items have obviously higher interest rates, and that is very much correlated with the overall market. And then if we talk a little bit further down about cash flow, we had a very strong growth in cash flow, which is of course satisfying, but we should mention here that last year In first quarter, we had a very weak cash flow due to the buildup of inventories during that period about a year ago. These quarters were more like the normal cash flow for the first quarter, which is not the best cash flow for the first quarter. We normally build up more receivables and also some inventory in the first quarter seasonally. And then we can go over to page number two and look a little bit more into the different business areas. uh if we start with dental as i already mentioned it was a quarter more back to normal uh we are growing sales and and profits um and the main impact here is of course the normalization of the prosthetics business that's now been uh going uh more normal also in the last quarter of last year and then this first quarter of this year is also more normalized so that's satisfied to see that we are back to normal there uh if we go further down to demolition tools uh there we had We have had strong growth for quite some time and that also continues in the first quarter and it's a combination once again of organic growth and acquisitions and that translates also into a strong profit margin. I can already hear also mention that I normally get some questions about the ordering take in this part of the business and basically the same pattern continues. We had the extreme ordering take in many of these businesses up until about a year ago. the order intake has been more in a normal, still solid level, and that continues also in the first quarter. That order intake is strong, but it's not on that peak level that it used to be in the period where there was very strong demand and also the value chain issues was also maybe leading to some pre-ordering here and there that we don't see now. So the orders that come in now are very relevant and for deliveries that are, on average, a bit closer to the order intake time. But still lower levels than, for example, one year ago in the order intake. When we talk about system solutions, here we have, first of all, we should mention this is the area where we have the divestment last year, so that also impacts the sales growth numbers. But underlying development is still very strong with 10% growth in sales and 24% growth in profit. So continued strong development in margin, which is supported both by organic development and also acquisitions in this field. So all in all, if you look at all these areas, we are developing margins in all areas, which is very pleasing and also important part for LIFCO. We can then go into page number four, the next slide. And this is a slide that we already talked about last quarter. I just want to remind everyone that LIFCO, this is now looking back for the last eight years. We only publish this data annually, but on this page, I just want to highlight that LIFCO is extremely important with our organic development. We have a strong ambition in every company to develop profits every year organically. On average, we've done that with about 8% over the last eight years. But then we also, as you know, are very actively and trying to find very good companies to take into LIFCO, and that has contributed on average with 12% of our growth. So the combination is extremely important. Obviously, the organic development has been more volatile because it's more related to, of course, market development that can go a little bit up and down. And then we can jump further to page number six. And just briefly looked at our net depth and our balance sheet. And here you can see on the net depth situation, we are very stable in the ratio net depth to EBITDA. And we've been that quite some time, which basically means that we are, the cash flow we generate is then being consumed on the same pace on average in terms of acquisitions. And where we sort of end this quarter, we end with an interest-bearing net debt to EBITDA of 1.2, which is well below our target of 2 to 3 times. And we've been below that for quite some time. But it means, once again, that we have a very solid financial position and also further room for acquisitions going forward. So this is quite normal. And then we can go to page number seven. And this is, once again, a more long-term graph looking at our development. And I just would like to, once again, highlight that we are continuously looking to improve our businesses, and we have done so. If you look from 2014 until now, our average EBITDA margin has gone from 14% up to now rolling 12 months to 22%, which is, once again, a combination of constant small improvements in our companies combined with on average, better quality companies coming into Lithgow over this time period. So nothing new in this perspective either. And then we can move all the way down to page number 18. And just look a little bit about the dental numbers. I mentioned in previous slides that we had some problems in last year, especially with the prosthetics business. And as you can see on the right-hand side of the graph, we actually dropped EBITDA in dental due to this effect last year. And now with a strong first quarter, we are back to more normal levels, and the margins is also moving in the right direction. It's also worthwhile highlighting that the margins in 2021 were extraordinarily strong due to the still lower cost levels following the pandemic, and the companies had lower activity in the beginning of that year, but now it's getting back more to normal, especially now in the last two quarters. And if you go to page 20, we can look at the same type of data then for the initial tools, a more long-term perspective, and here we can see that We've had now for quite a long time, very strong development in terms of sales and also profit development. And the margins are on a high level, as we have been noticing for many quarters. It can be a bit volatile between quarters, but the business area as a whole has a very strong margin and has been on a high level for quite some time. And then if we do the same thing on page 22, looking at our system solution area, Here we are still improving our margins. So if you look at the right-hand side, we are going up. This is, once again, a combination of many small improvements of the existing companies combined with, on average, very high-quality companies coming into this area, which leads to a record high margin also in this field now in the rolling 12-month numbers. And then we can go to page 31. just to round things off and just mention briefly that we have actually been quite active in acquisitions in the first quarter. We have acquired a number of companies and it's always a combination of companies in our demolition tools area, our dental area and also Some more, I would say, unrelated niche companies for system solutions. And this is the same pattern we've seen for quite some time. So it's a strong start of the year. But once again, as I've said many times before, when it comes to acquisitions, we are very, very careful to make sure we buy the right companies at reasonable valuations. It's something that comes and goes a little bit, but our ambition is very high and our focus on developing in this dimension is, of course, very high. But the actual outcome can vary between quarters and months, as you've seen historically. But a strong story to be here, which is very good. And that's basically all I wanted to say on this stage of the presentation. So I open up for any questions.

If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Carl Bockvist from ABG Sundal Collier. Please go ahead.

thank you and good morning my my first one is just on the acquisitions that you have made so far this year um and based on the numbers that you you provide uh it's it's still just one quarter but the implied profitability is very very high in those companies i'm just curious i mean yeah we're used to you acquiring companies with you know plus 20 margins but is there any or a few of the companies that really stand out there or is just the aggregate of all of this business reflective of that margin?