Lifco AB (publ)

Thank you, and good morning, and welcome to everyone. We will now present the LIFCO Q1 2024 earnings. We can start directly by going into page number two in our investor presentation, where we present the high-level numbers for the entire LIFCO group for the first quarter. And as we can see on that page, sales grows with 1%. with an organic decline of negative 7.8%, which is then offset by 8.4% growth from acquisition and a marginal positive effect from foreign exchange. If you go further down and look at EBITDA, EBITDA declines with 4%, mainly due to the negative operational leverage that we have in Demolition II's business area. which is the area where organic sales is declining due to weak market, continued weak market conditions, I should say, which we have now experienced since the spring-summer of 2023. We will come back to that in the next slide. Profit before tax declined by 11 percent, which is obviously more than the decline in EBITDA, and this is related to higher financing costs compared to one year ago as interest rates have increased during the last 12-month period. And if we also look at operating cash flow, it's 14% lower in the first quarter, and this is mainly related to lower profits. I can also then mention that quarter one is normally and the seasonally weaker cash flow quarter, just so everyone is aware of that. If we then go further into page number three, we will go a little bit deeper into each business area within LIFCO. And we can start at the top with dental. And the overall message here is that it's very much business as usual. We have in the first quarter some negative effects from an early Easter that obviously impacts sales and profits to some extent. This effect is then partly offset by small positive effects from acquisitions. And overall, this led to a flat development in profits in the first quarter for the dental business area. If we then move on to the demolition tools area, we have now experienced actually the fourth consecutive quarter with weaker market conditions, which is then related to the weaker construction market. And this is then impacting our attachment and also the machinery business negatively. It's important to remember that we still had a very strong quarter or first quarter in 2023, which was following a long period of very high demand in 2021 and 2022, which then led to high leverage all the way into early 2023. And then, as you remember, during the second half of last year, we actually saw a similar weakness in market conditions that we now experience in the first quarter of 2024. But the effect during the second half of last year was then partly offset by strong delivery of non-construction-related machinery. We had, for example, in Q4 2023, we had extraordinary impact, positive impact from those type of deliveries. And I just want to highlight that these type of deliveries can then vary, have been varying over all these years between different quarters. And I think many of you are aware of that effect. And in the first quarter of this year, we didn't have any impact on that. So now it is basically, I would say, weak market condition affecting the whole demolition tools area in Q1. And if we go further looking at the beta, the negative development in sales for this business area has then led to a negative operational leverage. So despite a lot of actions to reduce cost levels, it's not possible to fully compensate as many of the products we sell in this area have very high gross mortgages. So that also leads down to a lower EBITDA margin compared to one year ago. If we then go further down and look at the system solutions area, we have a sales growth of 12% and a beta growth of 60%. And the main driver for growth in this area is coming from acquisitions. which means that the underlying organic development continues to be on a stable level during, actually during the last 12 months, we have been in this type of situation here in this area. And this is unfolding a period of very high growth up until Q1 2023. And as you all are aware of, these solutions consist of many different companies with different end market exposures. And also in this quarter, there are, you know, some companies with market development. I can just give an example. In the infrastructure product segment, we have a few companies that are exposed to construction, which are having tougher market conditions. But we also have companies in this area that have actually continued to grow sales and profits. So it's a mixed picture, just like we saw in Q4 2023. So it follows the same pattern in this area. And then we can go further into page, all the way to page number seven. and look at the balance sheet, and I would like them to just conclude that the interest-bearing net depth EBITDA is now at 1.0 times, which is a solid level and actually slightly lower than one year ago, despite that we have done quite a number of acquisitions during 2023. And this leverage situation gives LIFCO plenty of room to continue to make acquisitions. Once again, when we find attractive, profitable niche companies to acquire at reasonable valuation, we are very motivated to do more deals. And we are continuing to increase our capacity in this dimension. So we are able to identify and also then obviously take care of new acquisitions at an increasing level. But as I mentioned in many of these previous calls, the timing of when acquisition materialize will and should always be fluctuating. The development of LIFCO is not a short-term sprint. It's a long-term perspective. And we then try to combine our high ambitions levels to continue to grow from acquisition with a very disciplined strategy in acquisitions where we always are ready to sort of turn down potential transactions if we don't feel fully comfortable that this is a company LIFCO should own forever or if the price tag of the potential acquisition is too high. And so far this year, we have acquired two companies with a combined turnover of around 650 million Swedish kronor. And we can just put that in perspective that during the full year of 2023, we acquired a total of 2.2 billion Swedish kronor. We continue the hunt, and we have the financial capacity to do so going forward. If we then go to slide number eight, this is the long-term trend that we normally also would like to show in every quarterly call. And as you all know, LIFCO has one overall target, which is to increase our profits every year. And we have actually done that every year, except for 2009 and 2013, since LIFCO started its journey in the late 90s. And now, after a period of very high growth during the last few years, we have now started with a weaker start in 2024 compared to last year. Our EBITDA margin remains solid at 22.9% on the rolling 12-month basis. But did fall slightly in Q1 as we have looked in previous slides. And this is basically related to the weaker market conditions and demolition tools and the operational or the negative operational leverage that we then have when volumes are falling in this extent. And I just want to round off by saying we continue to very hard to achieve our target every year to work with organic improvements and also acquisitions. And this is our target also for this year. With that final remark, I would like to open up for any potential questions. Thank you.

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

Good morning, Per, and thank you for taking our questions. I would just like to start off with demolition and tools. If you could give some more insight into how you're thinking about the development going forward for the underlying markets, if you expect it to get worse before it gets better in that kind of sense.